<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 31, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
NATIONAL EQUIPMENT SERVICES, INC.
NES ACQUISITION CORP.
BAT ACQUISITION CORP.
AERIAL PLATFORMS, INC.
MST ENTERPRISES, INC.
(EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
<TABLE>
<S> <C> <C>
DELAWARE 6719 36-4087016
DELAWARE 7359 76-0522698
DELAWARE 7359 86-0857699
GEORGIA 7359 58-1553416
VIRGINIA 7359 54-1190435
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
------------------------
1800 SHERMAN AVENUE
EVANSTON, ILLINOIS 60201
TELEPHONE: (847) 733-1000
(Address, including zip code, and telephone number, including
area code, of registrants' principal executive offices)
PAUL R. INGERSOLL
1800 SHERMAN AVENUE
EVANSTON, ILLINOIS 60201
TELEPHONE: (847) 733-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
Copy to:
H. KURT VON MOLTKE
KIRKLAND & ELLIS
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
TELEPHONE: (312) 861-2295
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ______
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ______
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================================
TITLE OF EACH CLASS OF PROPOSED MAXIMUM
SECURITIES TO BE OFFERING PROPOSED MAXIMUM AMOUNT OF REGISTRATION
REGISTERED AMOUNT TO BE REGISTERED PRICE PER UNIT(1) AGGREGATE OFFERING PRICE(1) FEE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10% Senior Subordinated
Notes due 2004,
Series B............. $100,000,000 $1,000 $100,000,000 $29,500
- --------------------------------------------------------------------------------------------------------------------------------
Guarantees of 10%
Senior Subordinated
Notes due 2004,
Series B............. $100,000,000 (2) (2) None
================================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(f)
(2) No further fee is payable pursuant to Rule 457(n).
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED DECEMBER 31, 1997
PRELIMINARY PROSPECTUS
, 1998
NATIONAL EQUIPMENT SERVICES, INC.
[NATIONAL EQUIPMENT SERVICES LOGO]
OFFER TO EXCHANGE ITS 10% SENIOR SUBORDINATED NOTES DUE 2004, SERIES B
FOR ANY AND ALL OF ITS OUTSTANDING 10% SENIOR SUBORDINATED NOTES DUE 2004
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1998, UNLESS EXTENDED.
------------------
National Equipment Services, Inc., a Delaware corporation ("NES" or the
"Company") hereby offers (the "Exchange Offer"), upon the terms and conditions
set forth in this Prospectus (the "Prospectus") and the accompanying Letter of
Transmittal (the "Letter of Transmittal"), to exchange $1,000 principal amount
of its 10% Senior Subordinated Notes due 2004, Series B (the "Exchange Notes"),
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement of which this prospectus is a part, for
each $1,000 principal amount of its outstanding 10% Senior Subordinated Notes
due 2004 (the "Old Notes"), of which $100,000,000 principal amount is
outstanding. The form and terms of the Exchange Notes are the same as the form
and term of the Old Notes except that (i) the Exchange Notes will bear a Series
B designation and a different CUSIP number from the Old Notes, (ii) the Exchange
Notes will have been registered under the Securities Act and, therefore, will
not bear legends restricting the transfer thereof and (iii) holders of the
Exchange Notes will not be entitled to certain rights of holders of Old Notes
under the Registration Rights Agreement (as defined). The Old Notes and the
Exchange Notes are sometimes referred to herein collectively as the "Notes." The
Exchange Notes will evidence the same debt as the Old Notes (which they replace)
and will be issued under and be entitled to the benefits of the Indenture dated
as of November 25, 1997 (the "Indenture") by and among the Company, the
Subsidiary Guarantors (as defined) and Harris Trust and Savings Bank, as
trustee, governing the Notes. See "The Exchange Offer" and "Description of
Exchange Notes."
The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time on , 1998,
unless extended by the Company in its sole discretion (the "Expiration Date").
Tenders of Old Notes may be withdrawn at any time prior to 5:00 p.m. on the
Expiration Date. The Exchange Offer is subject to certain customary conditions.
See "The Exchange Offer."
The Old Notes were sold by the Company on November 25, 1997 to Smith Barney
Inc., First Union Capital Markets Corp. and Salomon Brothers Inc (the "Initial
Purchasers") in a transaction not registered under the Securities Act in
reliance upon an exemption under the Securities Act (the "Initial Offering").
The Initial Purchasers subsequently placed the Old Notes with qualified
institutional buyers in reliance upon Rule 144A under the Securities Act.
Accordingly, the Old Notes may not be reoffered, resold or otherwise transferred
in the United States unless registered under the Securities Act or unless an
applicable exemption from the registration requirements of the Securities Act is
available. The Exchange Notes are being offered hereunder in order to satisfy
the obligations of the Company and the Subsidiary Guarantors under the
Registration Rights Agreement entered into by the Company, the Subsidiary
Guarantors and the Initial Purchasers in connection with the Initial Offering
(the "Registration Rights Agreement"). See "The Exchange Offer."
Interest on the Notes will accrue from their date of original issuance and
will be payable semi-annually in arrears on May 30 and November 30 of each year,
commencing May 30, 1998, at the rate of 10% per annum. The Notes will be
redeemable, in whole or in part, at the option of the Company on or after
November 30, 2001 in cash at the redemption prices set forth herein plus accrued
and unpaid interest and Liquidated Damages (as defined), if any, thereon to the
date of redemption. In addition, at any time prior to November 30, 2000, the
Company may, at its option, on any one or more occasions redeem up to 33% of the
initially outstanding aggregate principal amount of the Notes at a redemption
price equal to 110% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of redemption;
provided, that, in each case, at least 67% of the aggregate principal amount of
the Notes remains outstanding immediately after the occurrence of any such
redemption. Upon the occurrence of a Change in Control (as defined), (i) the
Company will have the option, at any time prior to November 30, 2001, to redeem
the Notes in whole, but not in part, at a redemption price equal to 100% of the
aggregate principal amount of the Notes, plus the Applicable Premium (as
defined), plus accrued and unpaid interest and Liquidated Damages, if any, to
the date of redemption and (ii) if the Company does not so redeem the Notes, or
if a Change of Control occurs after November 30, 2001, each holder of Notes will
have the right to require the Company to repurchase all or any part of such
holder's Notes at an offer price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the date of purchase. In addition, the Company will
be obligated to offer to repurchase the Notes at 100% of the principal amount
thereof plus accrued and unpaid interest and Liquidated Damages thereon, if any,
to date of repurchase in the event of certain Asset Sales (as defined). See
"Description of Exchange Notes -- Repurchase at the Option of Holders."
The Notes will be general unsecured obligations of the Company and will rank
subordinate in right of payment to all existing and future Senior Debt (as
defined) of the Company and will rank senior or pari passu in right of payment
to all existing and future subordinated Indebtedness (as defined) of the
Company. The Notes will be unconditionally guaranteed (the "Subsidiary
Guarantees") by all Restricted Subsidiaries (as defined) of the Company,
(together, the "Subsidiary Guarantors"). The Subsidiary Guarantees will be
general unsecured obligations of the Subsidiary Guarantors, will rank
subordinate in right of payment to all existing and future Senior Debt of the
Subsidiary Guarantors and will rank senior or pari passu in right of payment to
all existing and future subordinated Indebtedness of the Subsidiary Guarantors.
As of September 30, 1997, after giving affect to the Initial Offering, there
would have been $0 million of Senior Debt of the Company and the Subsidiary
Guarantors outstanding. See "Risk Factors -- Subordination; Holding Company
Structure."
SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DESCRIPTION OF CERTAIN RISKS
TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES IN THE EXCHANGE OFFER.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 3
Based upon an interpretation by the staff of the Securities and Exchange
Commission (the "SEC" or the "Commission") set forth in certain no-action
letters issued to third parties, the Company believes that the Exchange Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold and otherwise transferred by any holder thereof (other than
any such holder that is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act) without compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such holder's business and
such holder has no arrangement or understanding with any person to participate
in the distribution of such Exchange Notes. See "The Exchange Offer -- Resale of
the Exchange Notes." Holders of Old Notes wishing to accept the Exchange Offer
must represent to the Company, as required by the Registration Rights Agreement,
that such conditions have been met. Each broker-dealer (a "Participating
Broker-Dealer") that receives Exchange Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-Dealer in connection with
resales of Exchange Notes received in exchange for Old Notes where such Old
Notes were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus available to any Participating Broker-Dealer for use in connection
with any such resale. See "Plan of Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to bear the expenses of the Exchange Offer. No underwriter is
being used in connection with the Exchange Offer.
Holders of Old Notes not tendered and accepted in the Exchange Offer will
continue to hold such Old Notes and will be entitled to all the rights and
benefits and will be subject to the limitations applicable thereto under the
Indenture and with respect to transfer under the Securities Act. The Company
will pay all the expenses incurred by it incident to the Exchange Offer. See
"The Exchange Offer."
There has not previously been any public market for the Old Notes or the
Exchange Notes. The Company does not intend to list the Exchange Notes on any
securities exchange or to seek approval for quotation through any automated
quotation system. There can be no assurance that an active market for the
Exchange Notes will develop. See "Risk Factors -- Absence of a Public Market
Could Adversely Affect the Value of Exchange Notes." Moreover, to the extent
that Old Notes are tendered and accepted in the Exchange Offer, the trading
market for untendered and tendered but unaccepted Old Notes could be adversely
affected.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE SUBSIDIARY GUARANTORS. NEITHER THE DELIVERY OF THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, NOR ANY EXCHANGE MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
UNTIL , 1998 (90 DAYS AFTER COMMENCEMENT OF THE EXCHANGE OFFER),
ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT
PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
THE EXCHANGE NOTES WILL BE AVAILABLE INITIALLY ONLY IN BOOK-ENTRY FORM.
EXCEPT AS DESCRIBED UNDER "DESCRIPTION OF EXCHANGE NOTES -- BOOK-ENTRY; DELIVERY
AND FORM", THE COMPANY EXPECTS THAT THE EXCHANGE NOTES ISSUED PURSUANT TO THE
EXCHANGE OFFER WILL BE REPRESENTED BY A GLOBAL NOTE (AS DEFINED), WHICH WILL BE
DEPOSITED WITH, OR ON BEHALF OF, THE DEPOSITORY TRUST COMPANY ("DTC") AND
REGISTERED IN ITS NAME OR IN THE NAME OF CEDE & CO., ITS NOMINEE. BENEFICIAL
INTERESTS IN THE GLOBAL NOTE REPRESENTING THE EXCHANGE NOTES WILL BE SHOWN ON,
AND TRANSFERS THEREOF WILL BE EFFECTED THROUGH, RECORDS MAINTAINED BY DTC AND
ITS PARTICIPANTS. AFTER THE INITIAL ISSUANCE OF THE GLOBAL NOTE, NOTES IN
CERTIFICATED FORM WILL BE ISSUED IN EXCHANGE FOR THE GLOBAL NOTE ONLY UNDER
LIMITED CIRCUMSTANCES AS SET FORTH IN THE INDENTURE. SEE "DESCRIPTION OF
EXCHANGE NOTES -- BOOK-ENTRY; DELIVERY AND FORM."
THE CONTENTS OF THIS PROSPECTUS ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS
OR TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN ATTORNEY,
BUSINESS ADVISOR AND TAX ADVISOR AS TO LEGAL, BUSINESS AND TAX ADVICE. NEITHER
THE COMPANY NOR ANY OF THE SUBSIDIARY GUARANTORS IS MAKING ANY REPRESENTATION TO
ANY PROSPECTIVE INVESTOR IN THE EXCHANGE NOTES REGARDING THE LEGALITY OF AN
INVESTMENT THEREIN BY SUCH PERSON UNDER APPROPRIATE LEGAL INVESTMENT OR SIMILAR
LAWS.
<PAGE> 4
MARKET DATA USED THROUGHOUT THE PROSPECTUS WERE OBTAINED FROM INTERNAL
COMPANY SURVEYS AND INDUSTRY PUBLICATIONS, WHICH THE COMPANY BELIEVES TO BE
RELIABLE. THE COMPANY HAS NOT INDEPENDENTLY VERIFIED THIS MARKET DATA.
SIMILARLY, INTERNAL COMPANY SURVEYS, WHILE BELIEVED BY THE COMPANY TO BE
RELIABLE, HAVE NOT BEEN VERIFIED BY ANY INDEPENDENT SOURCES.
THE PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE UNITED STATES
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). ALL STATEMENTS
OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THE PROSPECTUS, INCLUDING,
WITHOUT LIMITATION, STATEMENTS REGARDING THE COMPANY'S FUTURE FINANCIAL
POSITION, BUSINESS STRATEGY, BUDGETS, PROJECTED COSTS AND PLANS AND OBJECTIVES
OF MANAGEMENT FOR FUTURE OPERATIONS, ARE FORWARD-LOOKING STATEMENTS. ALTHOUGH
THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING
STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL
PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THE COMPANY'S EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE
DISCLOSED UNDER "RISK FACTORS" AND ELSEWHERE IN THE PROSPECTUS, INCLUDING,
WITHOUT LIMITATION, IN CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS INCLUDED
IN THE PROSPECTUS. ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF, ARE EXPRESSLY
QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Exchange Offer Registration Statement," which term shall encompass all
amendments, exhibits, annexes and schedules thereto) pursuant to the Securities
Act, and the rules and regulations promulgated thereunder, covering the Exchange
Notes being offered hereby. The Prospectus does not contain all the information
set forth in the Exchange Offer Registration Statement. For further information
with respect to the Company and the Exchange Offer, reference is made to the
Exchange Offer Registration Statement. Statements made in the Prospectus as to
the contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Exchange Offer Registration Statement,
reference is made to the exhibit for a more complete description of the document
or matter involved, and each such statement shall be deemed qualified in its
entirety by such reference. As a result of the filing of the Exchange Offer
Registration Statement with the Commission, the Company will become subject to
the informational requirements of the Exchange Act, and in accordance therewith
will be required to file periodic reports and other information with the
Commission. The Exchange Offer Registration Statement, including the exhibits
thereto, and periodic reports and other information filed by the Company with
the Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, or at its regional offices located at Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of such materials can
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of such site is http://www.sec.gov.
In addition, the Company has agreed that, whether or not it is required to
do so by the rules and regulations of the Commission, for so long as any Notes
remain outstanding, it will furnish to the holders of the Notes and, to the
extent permitted by applicable law or regulation, file with the Commission (i)
all quarterly and annual financial information that would be required to be
contained in a filing with the
i
<PAGE> 5
Commission on Forms 10-Q and 10-K if the Company was required to file such
Forms, including for each a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and, with respect to the annual information
only, a report thereof by the Company's independent certified public accountants
and (ii) all reports that would be required to be filed on Form 8-K if it were
required to file such reports. In addition, for so long as any of the Notes
remain outstanding, the Company has agreed to make available to any prospective
purchaser of the Notes or beneficial owner of the Notes, in connection with any
sale thereof, the information required by Rule 144A(d)(4) under the Securities
Act.
The Company, a corporation organized under the laws of Delaware, has its
principal executive offices located at 1800 Sherman Avenue, Evanston, Illinois
60201; its telephone number if (847) 733-1000.
ii
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial data, including
the Financial Statements and notes thereto included elsewhere in the Prospectus.
Unless otherwise stated in the Prospectus or unless the context otherwise
requires, "NES" or the "Company" shall mean National Equipment Services, Inc.,
including all of its acquired businesses: Aerial Platforms; BAT Rentals; Equipco
Rentals & Sales; Industrial Hoist Services; Lone Star Rentals; and Sprintank
(collectively, the "Acquired Businesses"). References herein to various
financial information on a "pro forma basis" (i) give effect to acquisitions of
the Acquired Businesses as if such transactions had been completed as of the
first day of the related period and (ii) reflect certain adjustments described
in "Selected Pro Forma Combined Financial Data."
THE COMPANY
GENERAL
National Equipment Services, Inc. is a leading participant in the growing
and highly fragmented $16 billion equipment rental industry. NES specializes in
the rental of specialty and general heavy equipment to industrial and
construction end-users. The Company rents over 500 different types of machinery
and equipment and distributes new equipment for nationally recognized original
equipment manufacturers. The Company also sells used equipment as well as
complementary parts, supplies and merchandise, and provides repair and
maintenance services to its customers. NES is geographically diversified, with
16 locations in Alabama, Georgia, Louisiana, Nevada, Texas and Virginia, and is
a leading competitor in each of the geographic markets it serves.
Management believes that the Company offers one of the most modern and well
maintained fleets of equipment in each of its markets. The Company's preventive
maintenance program increases the dependability, useful life and resale value of
its equipment. The Company rents and sells general industrial and construction
equipment, such as aerial work platforms, air compressors, earth-moving
equipment and rough-terrain forklifts. In addition, NES rents and sells
specialty equipment, such as electric and pneumatic hoists and liquid storage
tanks, to industrial customers. Revenues from industrial and construction
end-users represented approximately 49.7% and 43.9%, respectively, of the
Company's revenues for the twelve months ended September 30, 1997, on a pro
forma basis.
The Company's strategic objective is to continue to grow profitably in both
existing and new markets by acquiring additional specialty and general equipment
rental companies and by expanding the size and breadth of its equipment fleet.
The Company routinely evaluates attractive markets for expansion where a leading
position can be created by acquiring an existing business. Since its founding in
June 1996, the Company has acquired and integrated six businesses as summarized
below:
<TABLE>
<CAPTION>
DIVISION PRODUCTS GEOGRAPHIC FOCUS DATE ACQUIRED
- -------------------------- ---------------------------------- ----------------- -------------
<S> <C> <C> <C>
Industrial Hoist Services Pneumatic and electric hoists National January 1997
Aerial Platforms Aerial work platforms Atlanta, Georgia February 1997
Lone Star Rentals General equipment Gulf Coast March 1997
BAT Rentals General equipment Las Vegas, Nevada April 1997
Sprintank Liquid and specialized storage Gulf Coast July 1997
tanks
Equipco Rentals & Sales General equipment Western Virginia July 1997
</TABLE>
1
<PAGE> 7
NES is led by a senior management team with significant industry experience
and an impressive track record of acquiring and integrating companies in the
equipment rental industry. Previously, senior management of the Company was
responsible for transforming the small equipment rental division of a large
corporation into a leading competitor in the industry. The managers of the
Company's operating divisions average over 16 years of industry experience.
Senior management and members of the Company's operating management together
have a meaningful ownership interest in NES. The Company also benefits from the
financial expertise of Golder, Thoma, Cressey, Rauner, Inc. ("GTCR"), an
established investment firm specializing in the consolidation of fragmented
industries. Golder, Thoma, Cressey, Rauner Fund V, L.P. ("GTCR Fund V"), an
affiliate of GTCR, is the Company's principal equity investor and has invested
$24.5 million in NES since June 1996.
2
<PAGE> 8
THE INITIAL OFFERING
Notes...................... The Old Notes were sold by the Company on November
25, 1997 to the Initial Purchasers pursuant to a
Purchase Agreement dated November 20, 1997 (the
"Purchase Agreement"). The Initial Purchasers
subsequently resold the Old Notes to qualified
institutional buyers pursuant to Rule 144A under
the Securities Act.
Registration Rights
Agreement.................. Pursuant to the Purchase Agreement, the Company,
the Subsidiary Guarantors and the Initial
Purchasers entered into a Registration Rights
Agreement dated as of November 25, 1997 (the
"Registration Rights Agreement"), which grants the
holders of the Old Notes certain exchange and
registration rights. The Exchange Offer is intended
to satisfy such exchange rights which terminate
upon the consummation of the Exchange Offer. Upon
consummation of the Exchange Offer, the Company and
the Subsidiary Guarantors will have no further
obligation under the Registration Rights Agreement
to register Old Notes except in limited
circumstances in which the Company has agreed to
file a Shelf Registration Statement (as defined).
THE EXCHANGE OFFER
Securities Offered......... $100,000,000 aggregate principal amount of 10%
Senior Subordinated Notes due 2004, Series B, of
the Company.
The Exchange Offer......... $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of Old
Notes. As of the date hereof, $100,000,000
aggregate principal amount of Old Notes are
outstanding. The Company will issue the Exchange
Notes to holders on or promptly after the
Expiration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued to
third parties, the Company believes that Exchange
Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale,
resold and otherwise transferred by any holder
thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the
ordinary course of such holder's business and that
such holder does not intend to participate and has
no arrangement or understanding with any person to
participate in the distribution of such Exchange
Notes.
Any Participating Broker-Dealer that acquired Old
Notes for its own account as a result of
market-making activities or other trading
activities may be a statutory underwriter. Each
Participating Broker-Dealer that receives Exchange
Notes for its own account pursuant to the Exchange
Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such
Exchange Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will not
be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating
Broker-Dealer in connection with resales of
Exchange Notes received in exchange for Old Notes
where such Old Notes were
3
<PAGE> 9
acquired by such Participating Broker-Dealer as a
result of market-making activities or other trading
activities. The Company has agreed that, for a
period of 180 days after the Expiration Date, they
will make this Prospectus available to any
Participating Broker-Dealer for use in connection
with any such resale. See "Plan of Distribution."
Any holder who tenders in the Exchange Offer with
the intention to participate, or for the purpose of
participating, in a distribution of the Exchange
Notes could not rely on the position of the staff
of the Commission enunciated in no-action letters
and, in the absence of an exemption therefrom, must
comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any resale transaction. Failure to
comply with such requirements in such instance may
result in such holder incurring liability under the
Securities Act for which the holder is not
indemnified by the Company.
Expiration Date............ 5:00 p.m., New York City time, on ,
1998 unless the Exchange Offer is extended, in
which case the term "Expiration Date" means the
latest date and time to which the Exchange Offer is
extended.
Accrued Interest on the New
Notes and the Old
Notes.................... Each New Note will bear interest from its issuance
date. Holders of Old Notes that are accepted for
exchange will receive, in cash, accrued interest
thereon to, but not including, the issuance date of
the Exchange Notes. Such interest will be paid with
the first interest payment on the Exchange Notes.
Interest on the Old Notes accepted for exchange
will cease to accrue upon issuance of the Exchange
Notes.
Conditions to the
Exchange Offer........... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. See
"The Exchange Offer -- Conditions."
Procedures for Tendering
Old Notes.................. Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a facsimile
thereof (or, in the case of a book-entry transfer,
delivering an Agent's Message (as defined) in lieu
thereof) in accordance with the instructions
contained herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile (or, in the case of a book-entry
transfer, deliver an Agent's Message (as defined)
in lieu thereof), together with the Old Notes and
any other required documentation to the Exchange
Agent (as defined) at the address set forth herein.
By executing the Letter of Transmittal (or, in the
case of a book-entry transfer, delivering an
Agent's Message in lieu thereof), each holder will
represent to the Company that, among other things,
the Exchange Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary
course of business of the person receiving such
Exchange Notes, whether or not such person is the
holder, that neither the holder nor any such other
person has any arrangement or understanding with
any person to participate in the distribution of
such Exchange Notes and that neither the holder nor
any such other person is an "affiliate," as defined
under Rule 405 of the Securities Act, of the
Company. See "The Exchange Offer -- Purpose and
Effect of the Exchange Offer" and "--Procedures for
Tendering."
4
<PAGE> 10
Untendered Old Notes....... Following the consummation of the Exchange Offer,
holders of Old Notes eligible to participate but
who do not tender their Old Notes will not have any
further exchange rights and such Old Notes will
continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market
for such Old Notes could be adversely affected.
Consequences of Failure to
Exchange................. The Old Notes that are not exchanged pursuant to
the Exchange Offer will remain restricted
securities. Accordingly, such Old Notes may be
resold only (i) to the Company, (ii) pursuant to
Rule 144A or Rule 144 under the Securities Act or
pursuant to some other exemption under the
Securities Act, (iii) outside the United States to
a foreign person pursuant to the requirements of
Rule 904 under the Securities Act, or (iv) pursuant
to an effective registration statement under the
Securities Act. See "The Exchange Offer --
Consequences of Failure to Exchange."
Shelf Registration
Statement.................. If (i) the Exchange Offer is prohibited by
applicable law or (ii) any holder of the Old Notes
(other than any such holder which is an "affiliate"
of the Company or a Subsidiary Guarantor within the
meaning of Rule 405 under the Securities Act)
notifies the Company that (A) it is prohibited by
law or policy from participating in the Exchange
Offer, (B) that it may not resell the Exchange
Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the
prospectus contained in the Exchange Offer
Registration Statement is not appropriate or
available for such resales or (C) that it is a
broker-dealer and holds Notes acquired directly
from the Company or an affiliate of the Company,
the Company has agreed to register the Old Notes on
a shelf registration statement (the "Shelf
Registration Statement"). If the Company fails to
satisfy these registration obligations, it will be
required to pay liquidated damages ("Liquidated
Damages") to holders of Notes under certain
circumstances.
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Old Notes are registered
in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender should contact such registered holder
promptly and instruct such registered holder to
tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's
own behalf, such owner must, prior to completing
and executing the Letter of Transmittal (or in the
case of a book-entry transfer, delivering an
Agent's Message in lieu thereof) and delivering its
Old Notes, either make appropriate arrangements to
register ownership of the Old Notes in such owner's
name or obtain a properly completed bond power from
the registered holder. The transfer of registered
ownership may take considerable time. The Company
will keep the Exchange Offer open for not less than
twenty business days in order to provide for the
transfer of registered ownership.
Guaranteed Delivery
Procedures............... Holders of Old Notes who wish to tender their Old
Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes,
the Letter of Transmittal (or, in the case of a
book-entry transfer, delivering an Agent's Message
in lieu thereof) or any other documents required by
the Letter of Transmittal to the Exchange Agent (or
comply
5
<PAGE> 11
with the procedures for book-entry transfer) prior
to the Expiration Date must tender their Old Notes
according to the guaranteed delivery procedures set
forth in "The Exchange Offer -- Guaranteed Delivery
Procedures."
Withdrawal Rights.......... Tenders may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
Acceptance of Old Notes and
Delivery of Exchange
Notes.................... The Company will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Notes
issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration Date.
See "The Exchange Offer -- Terms of the Exchange
Offer."
Use of Proceeds............ There will be no cash proceeds to the Company from
the exchange pursuant to the Exchange Offer.
Exchange Agent............. Harris Trust and Savings Bank.
THE EXCHANGE NOTES
General.................... The form and terms of the Exchange Notes are the
same as the form and terms of the Old Notes (which
they replace) except that (i) the Exchange Notes
bear a Series B designation and a different CUSIP
number from the Old Notes, (ii) the Exchange Notes
have been registered under the Securities Act and,
therefore, will not bear legends restricting the
transfer thereof, and (iii) the holders of Exchange
Notes will not be entitled to certain rights under
the Registration Rights Agreement, including the
provisions providing for Liquidated Damages on the
Old Notes in certain circumstances relating to the
timing of the Exchange Offer, which rights will
terminate when the Exchange Offer is consummated.
See "The Exchange Offer -- Purpose and Effect of
the Exchange Offer." The Exchange Notes will
evidence the same debt as the Old Notes and will be
entitled to the benefits of the Indenture. See
"Description of Exchange Notes."
Securities Offered......... $100,000,000 aggregate principal amount of the
Company's 10% Senior Subordinated Notes due 2004,
Series B.
Interest Rate.............. The Exchange Notes will bear interest at the rate
of 10% per annum, payable semi-annually on May 30
and November 30 of each year, commencing May 30,
1998.
Subsidiary Guarantees...... The Exchange Notes will be unconditionally
guaranteed by all Restricted Subsidiaries (as
defined) of the Company (together, the "Subsidiary
Guarantors").
Subordination.............. The Exchange Notes will be general unsecured
obligations of the Company, will rank subordinate
in right of payment to all existing and future
Senior Debt of the Company and will rank senior or
pari passu in right of payment to all existing and
future subordinated Indebtedness of the Company.
The Subsidiary Guarantees will be general unsecured
obligations of the Subsidiary Guarantors, will rank
subordinate in right of payment to all existing and
future Senior Debt of the Subsidiary Guarantors and
will rank senior or pari passu in right of payment
to all
6
<PAGE> 12
existing and future subordinated Indebtedness of
the Subsidiary Guarantors. At September 30, 1997,
after giving effect to the Initial Offering and the
application of the net proceeds therefrom, there
would have been $0 of Senior Debt of the Company
and the Subsidiary Guarantors outstanding. See
"Risk Factors -- Subordination; Holding Company
Structure."
Optional Redemption........ The Notes will be redeemable at the option of the
Company, in whole or in part, at any time on or
after November 30, 2001 in cash at the redemption
prices set forth herein, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to
the date of redemption. In addition, at any time
prior to November 30, 2000, the Company may on any
one or more occasions redeem up to 33% of the
initially outstanding aggregate principal amount of
Notes at a redemption price equal to 110% of the
principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to
the redemption date, with the net proceeds of a
public offering of Common Stock of the Company;
provided that, in each case, at least 67% of the
aggregate principal amount of Notes remains
outstanding immediately after the occurrence of any
such redemption. See "Description of Exchange
Notes -- Optional Redemption."
Change of Control.......... Upon the occurrence of a Change of Control, (i) the
Company will have the option, at any time prior to
November 30, 2001, to redeem the Notes in whole,
but not in part, at a redemption price equal to
100% of the aggregate principal amount of the
Notes, plus the Applicable Premium, plus accrued
and unpaid interest and Liquidated Damages, if any,
to the date of redemption and (ii) if the Company
does not so redeem the Notes, or if a Change of
Control occurs after November 30, 2001, each holder
of Notes will have the right to require the Company
to repurchase all or any part of such holder's
Notes at an offer price in cash equal to 101% of
the aggregate principal amount thereof, plus
accrued and unpaid interest and Liquidated Damages,
if any, thereon to the date of purchase. See
"Description of Exchange Notes -- Optional
Redemption" and " -- Repurchase at the Option of
Holders -- Change of Control." There can be no
assurance that, in the event of a Change of
Control, the Company would have sufficient funds to
purchase all Notes tendered. See "Risk
Factors -- Limitations on Change of Control."
Certain Covenants.......... The Indenture contains certain covenants that
limit, among other things, the ability of the
Company and its Subsidiaries (as defined) to: (i)
pay dividends, redeem capital stock or make certain
other restricted payments or investments; (ii)
incur additional indebtedness or issue preferred
equity interests; (iii) merge, consolidate or sell
all or substantially all of its assets; (iv) create
liens on assets; and (v) enter into certain
transactions with affiliates or related persons.
See "Description of Exchange Notes -- Certain
Covenants."
Use of Proceeds............ There will be no proceeds to the Company from the
exchange pursuant to the Exchange Offer. The net
proceeds from the sale of the Old Notes in the
Initial Offering were used to repay all
indebtedness outstanding under the Credit Facility
and certain seller notes. The net proceeds after
repayment of such indebtedness will be used for
acquisitions and for working capital and other
general corporate purposes. See "Use of Proceeds."
7
<PAGE> 13
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered before tendering Old Notes in exchange for Exchange Notes. These risk
factors are generally applicable to the Old Notes as well as the Exchange Notes.
8
<PAGE> 14
SUMMARY PRO FORMA COMBINED FINANCIAL DATA
(IN THOUSANDS)
The Company was founded in June 1996 and, in 1997, the Company acquired
Aerial Platforms, BAT Rentals, Equipco Rentals & Sales, Industrial Hoist
Services, Lone Star Rentals and Sprintank in separate transactions. The
following pro forma combined financial data are presented as if the acquisitions
of the Acquired Businesses and the Initial Offering had occurred on the first
day of the related period and also include the effect of certain pro forma
adjustments to the historical financial statements more fully described in
"Selected Pro Forma Combined Financial Data." The summary pro forma combined
financial data should be read in conjunction with the information contained in
"Selected Pro Forma Combined Financial Data" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Financial
Statements and notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, -------------------
1996 1996 1997
------------ ------- ---------
<S> <C> <C> <C>
OPERATING DATA:
Total revenues............................................ $48,220 $36,288 $ 41,145
Gross profit(a)........................................... 20,130 15,028 17,720
Operating income (loss)(b)................................ 9,241 6,634 8,240
Interest income (expense), net(c)......................... (9,800) (7,350) (7,350)
Income (loss) before income taxes(d)...................... (245) (459) 1,020
Income tax expense (benefit)(e)........................... (97) (184) 343
Net income (loss)......................................... (148) (275) 677
OTHER DATA:
Rental fleet purchases.................................... $14,006 $ 9,878 $ 17,236
Non-rental fleet capital expenditures..................... 590 449 1,071
Rental equipment depreciation(a).......................... 6,488 4,866 4,866
Non-rental depreciation and amortization(b)............... 1,785 1,339 1,339
Cash interest expense, net(f)............................. 8,527 6,395 6,395
EBITDA(g)................................................. 17,828 13,096 14,575
Ratio of EBITDA to cash interest expense, net(h).......... 2.1x 2.0x 2.3x
Ratio of net debt to EBITDA............................... 3.4
</TABLE>
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1997
---------------------
ACTUAL PRO FORMA
-------- ----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Rental equipment, net..................................... $45,490 $ 45,490
Total assets.............................................. 92,219 132,876
Net debt(i)............................................... 56,540 60,540
Total debt................................................ 58,144 100,000
Total stockholders' equity................................ 26,031 26,031
</TABLE>
(footnotes on following page)
9
<PAGE> 15
NOTES TO SUMMARY PRO FORMA COMBINED FINANCIAL DATA
(IN THOUSANDS)
(a) Reflects adjustments to rental equipment expenses, rental equipment
depreciation and direct operating expenses in each of the periods as more
fully described in notes (a), (b) and (c) to "Selected Pro Forma Combined
Financial Data."
(b) Reflects adjustments to selling, general and administrative expenses and
non-rental depreciation and amortization in each of the periods as more
fully described in notes (d) and (e) to "Selected Pro Forma Combined
Financial Data."
(c) Includes annual amortization of debt issuance costs and discounts of $571
incurred in connection with the Initial Offering and annual amortization of
loan origination and other financing fees of $702 incurred in connection
with the Credit Facility. Includes unused line fees of 0.5% per annum in
connection with the Credit Facility and interest income from an investment
of the $39,461 of assumed cash on hand after giving effect to the Initial
Offering at an assumed rate of 5.0% per annum.
(d) Reflects adjustments to other income (expense), net in each of the periods
as more fully described in note (f) to "Selected Pro Forma Combined
Financial Data."
(e) Reflects the income tax rate that would have been in effect if the Acquired
Businesses had been combined and subject to a federal statutory rate of 34%
and the applicable state statutory rate for each of the Acquired Businesses
throughout the periods presented.
(f) Excludes annual amortization of debt issuance costs and discounts of $571
incurred in connection with the Initial Offering and annual amortization of
loan origination and other financing fees of $702 incurred in connection
with the Credit Facility.
(g) Reflects operating income plus other income (expense), net, before interest
expense, net, income taxes, rental equipment depreciation and non-rental
depreciation and amortization. EBITDA is not intended to represent cash flow
from operations or net income as defined by generally accepted accounting
principles and should not be considered as a measure of liquidity or an
alternative to, or more meaningful than, cash flow from operations or net
income as an indication of the Company's operating performance. EBITDA is
included herein because management believes that certain investors find it
useful in measuring the Company's ability to service its debt.
(h) In order to calculate the ratio of EBITDA to interest expense, net, annual
amortization of debt issuance costs, discounts and loan origination and
other financing fees have been excluded to reflect the Fixed Charge Coverage
Ratio, as described in "Description of Notes." Includes interest income from
an investment of the $39,461 of assumed cash on hand after giving effect to
the Initial Offering at an assumed rate of 5.0% per annum.
(i) Represents total debt less Company cash as of September 30, 1997.
10
<PAGE> 16
RISK FACTORS
Prospective investors should carefully consider the following factors in
addition to the other information set forth in the Prospectus before tendering
Old Notes in exchange for Exchange Notes. The risk factors set forth below are
generally applicable to the Old Notes as well as to the Exchange Notes.
LEVERAGED FINANCIAL POSITION; RESTRICTIONS IMPOSED BY TERMS OF INDEBTEDNESS
The Company has incurred significant indebtedness. As of September 30,
1997, after giving effect to the Initial Offering and the application of the
proceeds therefrom, the Company would have had $100.0 million of indebtedness
outstanding, its stockholders' equity would have been approximately $26.0
million and there would have been $100.0 million available for future
borrowings, subject to calculation of the borrowing base under the Credit
Facility.
The level of the Company's indebtedness could have important consequences
to holders of Exchange Notes, including: (i) a substantial portion of the
Company's cash flow from operations must be dedicated to debt service and will
not be available for other purposes; (ii) the Company's ability to obtain
additional debt financing in the future for working capital, capital
expenditures or acquisitions may be limited; and (iii) the Company's level of
indebtedness could limit its flexibility in reacting to changes in the industry
and economic conditions generally. The Company's ability to pay interest on the
Exchange Notes, to repay portions of its long-term indebtedness (including the
Exchange Notes and borrowings under the Credit Facility) and to satisfy its
other debt obligations will depend upon the future operating performance and the
availability of refinancing indebtedness, which will be affected by prevailing
economic conditions and financial, business and other factors, certain of which
are beyond its control.
The Indenture and the Credit Facility contain certain covenants that
restrict, among other things, the Company's ability to incur additional
indebtedness, incur liens, pay dividends or make certain other restricted
payments, consummate certain asset sales, enter into certain transactions with
affiliates, impose restrictions on the ability of a subsidiary to pay dividends
or make certain payments to the Company, merge or consolidate with any other
person or sell, assign, transfer, lease, convey, or otherwise dispose of all or
substantially all of the assets of the Company. In addition, the Credit Facility
contains certain other and more restrictive covenants and also requires the
Company to maintain specified financial ratios and to satisfy certain financial
condition tests. The Company's ability to meet these financial ratio and
financial condition tests can be affected by events beyond its control and there
can be no assurance that the Company will meet those tests. A breach of any of
these covenants could result in a default under the Credit Facility or the
Indenture. In the event of an event of default under the Credit Facility or the
Indenture, the lenders thereunder could elect to declare all amounts outstanding
thereunder, together with accrued and unpaid interest, to be immediately due and
payable. If the indebtedness under the Credit Facility were to be accelerated,
there can be no assurance that the assets of the Company would be sufficient to
repay in full that indebtedness and the other indebtedness of the Company,
including the Exchange Notes. See "Capitalization," "Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Description of
Credit Facility," "Description of Exchange Notes -- Subordination" and
"-- Certain Covenants."
SUBORDINATION; HOLDING COMPANY STRUCTURE
The payment of principal, premium, if any, and interest on, and any other
amounts owing in respect of, the Notes and the Subsidiary Guarantees will be
subordinated to the prior payment in full of all existing and future Senior Debt
of the Company and the Subsidiary Guarantors (including, without limitation,
indebtedness incurred under the Credit Facility). In the event of the
bankruptcy, liquidation, dissolution, reorganization or other winding-up of the
Company or a Subsidiary Guarantor, the assets of the Company or such Subsidiary
Guarantor will be available to pay obligations on the Exchange Notes or the
Subsidiary Guarantees only after all Senior Debt (including amounts incurred
under the Credit Facility) has been so paid in full; accordingly, there may not
be sufficient assets remaining to pay amounts due on any or all of the Exchange
Notes or the Subsidiary Guarantees then outstanding. In addition, under certain
circumstances, the Company and the Subsidiary Guarantors may not pay principal
of, premium, if any, or interest on, or any other amounts
11
<PAGE> 17
owing in respect of the Exchange Notes or the Subsidiary Guarantees, or
purchase, redeem or otherwise retire the Exchange Notes, in the event of certain
defaults with respect to certain classes of Senior Debt, including Senior Debt
incurred under the Credit Facility. Although as of September 30, 1997, after
giving effect to the Initial Offering and the application of the net proceeds
therefrom, there would have been $0 of Senior Debt outstanding, additional
Senior Debt may be incurred by the Company and the Subsidiary Guarantees from
time to time, subject to certain restrictions. See "Description of Credit
Facility" and "Description of Exchange Notes -- Certain Covenants -- Incurrence
of Indebtedness and Issuance of Preferred Stock."
The Exchange Notes and the Subsidiary Guarantees will be general unsecured
obligations of the Company and the Subsidiary Guarantors and will be
subordinated in right of payment to all existing and future secured indebtedness
of the Company and the Subsidiary Guarantors, to the extent of the value of the
assets securing such indebtedness. The Credit Facility is currently secured by
substantially all of the assets of the Company and the Subsidiary Guarantors.
The Company is a holding company with no significant assets other than its
investments in its subsidiaries. Accordingly, the Company must rely entirely
upon distributions from its subsidiaries to generate the funds necessary to meet
its obligations, including the payment of principal and interest on the Exchange
Notes. The ability of the subsidiaries of the Company to pay dividends or make
other payments or advances to the Company will depend upon their operating
results and will be subject to applicable laws and contractual restrictions
contained in the instruments governing any indebtedness of such subsidiaries
(including the Credit Facility). Although the Indenture limits the ability of
such subsidiaries to enter into consensual restrictions on their ability to pay
dividends and make other payments to the Company, such limitations are subject
to a number of significant qualifications. See "Description of Exchange
Notes -- Certain Covenants -- Dividend and Other Payment Restrictions Affecting
Subsidiaries."
LIMITATIONS ON CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will be required
under certain circumstances to make an offer for cash to repurchase the Exchange
Notes at a price equal to 101% of the principal amount thereof, together with
accrued and unpaid interest and Liquidated Damages, if any, to the date of
repurchase. If a Change of Control were to occur, there can be no assurance that
the Company would have sufficient funds to pay the purchase price for all of the
Exchange Notes that the Company might be required to purchase. Certain events
involving a Change of Control may result in an event of default under the Credit
Facility or other indebtedness of the Company that may be incurred in the
future. In the event a Change of Control occurs at a time when the Company is
prohibited from purchasing the Exchange Notes, the Company could seek the
consent of its lenders to purchase the Exchange Notes or could attempt to
refinance the borrowings that contain such prohibition. If the Company does not
obtain such a consent or repay such borrowings, the Company would remain
prohibited from purchasing the Exchange Notes. In such case, the Company's
failure to purchase tendered Exchange Notes would constitute an Event of Default
under the Indenture. If, as a result thereof, a default occurs with respect to
any Senior Debt, the subordination provisions of the Exchange Notes would
require payment in full of the Credit Facility and any other such Senior Debt
before repurchase of the Exchange Notes. See "Description of Credit Facility,"
"Description of Exchange Notes -- Subordination" and "-- Repurchase at the
Option of the Holders -- Change of Control."
FRAUDULENT CONVEYANCE
A substantial portion of the proceeds of the Initial Offering was used to
refinance existing indebtedness. Accordingly, the obligations of the Company
under the Exchange Notes may be subject to review under relevant federal and
state fraudulent conveyance statutes ("fraudulent conveyance statutes") in a
bankruptcy, reorganization or rehabilitation case or similar proceeding or a
lawsuit by or on behalf of unpaid creditors of the Company. If a court were to
find under relevant fraudulent conveyance statutes that, at the time the
Exchange Notes were issued, (a) the Company issued the Exchange Notes with the
intent of hindering, delaying or defrauding current or future creditors or
(b)(i) the Company received less than reasonably equivalent value or fair
consideration for issuing the Exchange Notes (including, to the extent the
proceeds from the Initial Offering were used to refinance any indebtedness of
the Company or any of its subsidiaries, by
12
<PAGE> 18
virtue of an invalidation as a fraudulent conveyance of the incurrence of such
indebtedness) and (ii)(A) was insolvent, (B) was rendered insolvent by reason of
such issuance and/or such related transactions, (C) was engaged, or about to
engage, in a business or transaction for which its remaining assets constituted
unreasonably small capital, (D) intended to incur, or believed that it would
incur, obligations beyond its ability to pay as such obligations matured (as all
of the foregoing terms are defined in or interpreted under such fraudulent
conveyance statutes) or (E) was a defendant in an action for money damages, or
had a judgment for money damages docketed against it (if, in either case, after
final judgment, the judgment was unsatisfied), such court could further
subordinate the Exchange Notes to presently existing and future indebtedness of
the Company and take other action detrimental to the holders of the Exchange
Notes, including, under certain circumstances, invalidating the Exchange Notes.
The fraudulent conveyance statutes may apply to the Subsidiary Guarantors'
issuance of the Subsidiary Guarantees. To the extent that a court were to find
that (a) a Subsidiary Guarantee was incurred by a Subsidiary Guarantor with the
intent to hinder, delay or defraud any present or future creditor or (b) such
Subsidiary Guarantor did not receive fair consideration or reasonably equivalent
value for issuing its Subsidiary Guarantee and such Subsidiary Guarantor (i) was
insolvent, (ii) was rendered insolvent by reason of the issuance of such
Subsidiary Guarantee, (iii) was engaged or about to engage in a business or
transaction for which the remaining assets of such Subsidiary Guarantor
constituted unreasonably small capital to carry on its business, (iv) intended
to incur, or believed that it would incur, debts beyond its ability to pay such
debts as they matured or (v) was a defendant in an action for money damages, or
had a judgment for money damages docketed against it (if, in either case, after
final judgment, the judgment was unsatisfied), the court could avoid or further
subordinate such Subsidiary Guarantee in favor of the Subsidiary Guarantor's
creditors. Among other things, a legal challenge of a Subsidiary Guarantee on
fraudulent conveyance grounds may focus on the benefits, if any, realized by the
Subsidiary Guarantor as a result of the issuance by the Company of the Exchange
Notes. To the extent any Subsidiary Guarantees were avoided as a fraudulent
conveyance or held unenforceable for any other reason, the claims of holders of
the Exchange Notes in respect of such Subsidiary Guarantor would be adversely
affected and such holders would, to such extent, be creditors solely of the
Company and any Subsidiary Guarantor whose Subsidiary Guarantee was not avoided
or held unenforceable. To the extent the claims of the holders of the Exchange
Notes against the issuer of an invalid Subsidiary Guarantee were further
subordinated, they could be subject to the prior payment of all liabilities of
such Subsidiary Guarantor. There can be no assurance that, after providing for
all prior claims, there would be sufficient assets to satisfy the claims of the
holders of the Exchange Notes relating to any voided portions of any of the
Subsidiary Guarantees.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the law applied in any such proceeding. Generally however,
the Company or a Subsidiary Guarantor may be considered insolvent if the sum of
its debts, taking contingent liabilities into account, is greater than the fair
marketable value of all of its assets at a fair valuation or if the present fair
marketable value of its assets is less than the amount that would be required to
pay its probable liability on its existing debts, including contingent
liabilities, as they become absolute and mature.
COMPETITION
The equipment rental industry is highly fragmented and competitive. The
Company's competitors include: large national companies; regional competitors
which operate in one or two states; small, independent businesses with one or
two rental locations; and equipment vendors and dealers who both sell and rent
equipment to customers. Some of the Company's competitors have greater financial
resources, are more geographically diverse and have greater name recognition
than the Company. There can be no assurance that the Company will not encounter
increased competition from existing competitors or new market entrants that may
be significantly larger and have greater financial and marketing resources. In
addition, to the extent existing or future competitors seek to gain or retain
market share by reducing prices, the Company may be required to lower its prices
and rates, thereby adversely affecting operating results. Existing or future
competitors also may seek to compete with the Company for acquisitions, which
could have the effect of increasing the price for acquisitions or reducing the
number of suitable acquisitions. In addition, such
13
<PAGE> 19
competitors also may compete with the Company for start-up locations, thereby
limiting the number of attractive locations for expansion. See
"Business -- Competition."
ABILITY TO COMPLETE AND INTEGRATE ACQUISITIONS
A significant portion of the Company's strategy is to pursue and complete
acquisitions that meet its acquisition criteria. The Company has acquired and
seeks to acquire other companies that can benefit from the Company's operations,
management and access to capital. The Company's ability to grow by acquisition
is dependent upon, and may be limited by, the availability of suitable
acquisition candidates and capital, and the restrictions contained in the Credit
Facility and the Company's other financing arrangements. In addition, growth by
acquisition involves risks that could adversely affect the Company's operating
results, including difficulties in integrating the operations and personnel of
acquired companies and the potential loss of key employees of acquired
companies. There can be no assurance that the Company will be able to obtain the
capital necessary to pursue its growth strategy, consummate acquisitions on
satisfactory terms or, if any such acquisitions are consummated, successfully
integrate such acquired businesses into the Company. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
DEPENDENCE ON KEY PERSONNEL
Certain of the executive officers of the Company, particularly Kevin
Rodgers, the President and Chief Executive Officer, are of significant
importance to the direction and management of the Company. The loss of the
services of such persons could have a material adverse effect on the Company's
business and future operations, and there can be no assurance that the Company
would be able to find replacements for such persons with comparable business
experience. The Company does not maintain key man life insurance with respect to
such executive officers. See "Management -- Directors and Executive Officers."
GENERAL ECONOMIC CONDITIONS
A majority of the Company's revenues are derived from customers which are
in industries and businesses that are cyclical in nature and subject to changes
in general economic conditions, such as the construction industry. In addition,
because the Company conducts its operations in a variety of geographic markets,
it is subject to the economic conditions in each such geographic market. General
economic downturns or localized downturns in markets where the Company has
operations, including any downturns in the construction industry, could have a
material adverse effect on the Company and its business, results of operations
and financial condition.
CONTROLLING STOCKHOLDER
GTCR Fund V owns and controls a majority of the outstanding common stock of
the Company. As the controlling stockholder, GTCR Fund V has significant
influence on the election of the Company's Board of Directors (the "Board of
Directors" or the "Board") and, therefore, significant influence on the affairs
and management of the Company. The Stockholders Agreement (as defined) provides
that GTCR Fund V has the right to designate all but one of the members of the
Board of Directors of the Company. Circumstances may occur in which the
interests of GTCR Fund V, as a stockholder of the Company, could be in conflict
with the interests of the holders of the Exchange Notes. In addition, GTCR Fund
V, as a stockholder of the Company, may have an interest in pursuing
acquisitions, divestitures or other transactions that, in its judgment, could
enhance its equity investment, even though such transactions might involve risks
to the holders of the Exchange Notes. See "Certain Relationships and Related
Transactions -- Stockholders Agreement and Registration Agreement."
ENVIRONMENTAL LIABILITIES
The Company's facilities are subject to federal, state and local
environmental requirements, including those relating to discharges to air, water
and land, the handling and disposal of solid and hazardous waste and
14
<PAGE> 20
the cleanup of properties affected by hazardous substances. Certain
environmental laws impose substantial penalties for noncompliance, and others
impose strict, retroactive, joint and several liability upon persons responsible
for releases of hazardous substances.
The Company does not currently anticipate any material adverse effect on
its operations or financial condition as a result of its efforts to comply with,
or its liabilities under, such requirements. Some risk of environmental
liability is inherent in the Company's business, however, and there can be no
assurance that material environmental costs will not arise in the future. See
"Business -- Governmental and Environmental Regulation."
LIABILITY AND INSURANCE
The Company's business exposes it to claims for personal injury or death
resulting from the use of equipment rented or sold by the Company, from injuries
caused in motor vehicle accidents in which Company delivery and service
personnel are involved, as well as workers' compensation claims and other
employment-related claims by the Company's employees. The Company carries
insurance coverage for product liability, general and automobile liability and
employment related claims from various national insurance carriers. There can be
no assurance, however, that existing or future claims will not exceed the level
of the Company's insurance, that the Company will have sufficient capital
available to pay any uninsured claims or that its insurance will continue to be
available on economically reasonable terms, if at all. See "Business -- Legal
Proceedings."
ABSENCE OF A PUBLIC MARKET COULD ADVERSELY AFFECT THE VALUE OF EXCHANGE NOTES
The Old Notes were issued to, and the Company believes are currently owned
by, a relatively small number of beneficial owners. Prior to the Exchange Offer,
there has not been any public market for the Old Notes. The Old Notes have not
been registered under the Securities Act and will be subject to restrictions on
transferability to the extent that they are not exchanged for Exchange Notes by
holders who are entitled to participate in this Exchange Offer. After
consummation of the Exchange Offer, the market for Old Notes not tendered or
exchanged (or tendered but not accepted for exchange) in the Exchange Offer will
be even more limited than their existing market. The holders of Old Notes (other
than any such holder that is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) who are not eligible to participate in the
Exchange Offer are entitled to certain registration rights, and the Company is
required to file a Shelf Registration Statement with respect to such Old Notes.
The Exchange Notes will constitute a new issue of securities with no established
trading market. The Company does not intend to list the Exchange Notes on any
national securities exchange or seek the admission thereof to trading in the
National Association of Securities Dealers Automated Quotation System. The
Initial Purchasers have advised the Company that they currently intend to make a
market in the Exchange Notes, but they are not obligated to do so and may
discontinue such market making at any time. In addition, such market making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act and may be limited during the Exchange Offer and the pendency of
the Shelf Registration Statement. Accordingly, no assurance can be given that an
active public or other market will develop for the Exchange Notes or as to the
liquidity of the trading market for the Exchange Notes. If a trading market does
not develop or is not maintained, holders of the Exchange Notes may experience
difficulty in reselling the Exchange Notes or may be unable to sell them at all.
If a market for the Exchange Notes develops, any such market may be discontinued
at any time.
If a public trading market develops for the Exchange Notes, future trading
prices of such securities will depend on many factors including, among other
things, prevailing interest rates, the Company's results of operations and
market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Company, the Exchange Notes may trade at a discount from their
principal amount.
15
<PAGE> 21
FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES COULD ADVERSELY AFFECT HOLDERS
Issuance of the Exchange Notes in exchange for the Old Notes pursuant to
the Exchange Offer will be made only after a timely receipt by the Company of
such Old Notes, a properly completed and duly executed Letter of Transmittal
(or, in the case of a book-entry transfer, an Agent's Message in lieu thereof)
and all other required documents. Therefore, holders of the Old Notes desiring
to tender such Old Notes in exchange for Exchange Notes should allow sufficient
time to ensure timely delivery. The Company is under no duty to give
notification of defects or irregularities with respect to the tenders of Old
Notes for exchange. Old Notes that are not tendered or are tendered but not
accepted will, following the consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof, and, upon
consummation of the Exchange Offer, certain registration rights under the
Registration Rights Agreement will terminate. In addition, any holder of Old
Notes who tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes may be deemed to have received restricted
securities, and if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale transaction. Each broker-dealer that receives Exchange Notes for its own
account in exchange for Old Notes, where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. See "Plan of Distribution." To the
extent that Old Notes are tendered and accepted in the Exchange Offer, the
trading market for untendered and tendered but unaccepted Old Notes could be
adversely affected. See "The Exchange Offer."
16
<PAGE> 22
USE OF PROCEEDS
The Exchange Offer is intended to satisfy certain of the Company's
obligations under the Purchase Agreement and the Registration Rights Agreement.
The Company will not receive any cash proceeds from the issuance of the Exchange
Notes offered hereby. In consideration for issuing the Exchange Notes
contemplated in the Prospectus, the Company will receive Old Notes in like
principal amount, the form and terms of which are the same as the forms and
terms of the Exchange Notes (which replace the Old Notes), except as otherwise
described herein. The Old Notes surrendered in exchange for Exchange Notes will
be retired and cancelled and cannot be reissued. Accordingly, issuance of
Exchange Notes will not result in any increase or decrease in the indebtedness
of the Company. As such, no effect has been given to the Exchange Offer in the
pro forma combined financial data or capitalization tables.
The net proceeds to the Company from the sale of the Old Notes in the
Initial Offering (after deducting discounts and estimated fees and expenses)
were utilized by the Company to repay all indebtedness outstanding under the
Credit Facility and certain seller notes. The net proceeds remaining after
repayment of such indebtedness will be used for future acquisitions, working
capital and general corporate purposes.
17
<PAGE> 23
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at September 30, 1997, on an actual basis and on a pro forma basis
giving effect to the Initial Offering and the application of the net proceeds
therefrom. The information in this table should be read in conjunction with
"Selected Pro Forma Combined Financial Data," "Selected Historical Financial
Data," "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the Financial Statements and notes thereto appearing
elsewhere herein.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1997
----------------------
ACTUAL PRO FORMA
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Cash........................................................ $ 1,604 $ 39,461
======== ========
Debt:
Credit Facility(a)........................................ $ 57,144 --
Notes..................................................... -- $100,000
Other(b).................................................. 1,000 --
-------- --------
Total debt........................................ 58,144 100,000
Total stockholders' equity........................ 26,031 26,031
-------- --------
Total capitalization.............................. $ 84,175 $126,031
======== ========
</TABLE>
- ---------------
(a) After giving effect to the Initial Offering and the application of the net
proceeds therefrom, the Company has $100.0 million available for borrowing
under the Credit Facility, subject to calculation of the borrowing base.
(b) Consists solely of the seller notes.
18
<PAGE> 24
SELECTED PRO FORMA COMBINED FINANCIAL DATA
The Company was founded in June 1996 to acquire and integrate equipment
rental companies. In 1997, the Company acquired Aerial Platforms, BAT Rentals,
Equipco Rentals & Sales, Industrial Hoist Services, Lone Star Rentals and
Sprintank in separate transactions. While such acquisitions occurred at various
dates during 1997, the following data are presented as if such acquisitions and
the Offering had occurred on the first day of the related period and also
include the effect of certain pro forma adjustments to the historical financial
statements described below.
The selected pro forma combined financial data for the year ended December
31, 1996 and the nine months ended September 30, 1997 have been derived from
Company (the Company herein defined to include the Acquired Businesses) prepared
financial information, the audited financial statements and notes thereto of
certain of the Acquired Businesses for certain periods and the audited financial
statements and notes thereto of the Company since inception, which financial
statements appear elsewhere in the Prospectus. The selected pro forma combined
financial data for the nine months ended September 30, 1996 have been derived
from Company prepared financial information which is unaudited, but which, in
the opinion of management, include all adjustments necessary for a fair
presentation of the results of the related periods. Results for the nine months
ended September 30, 1997 are not necessarily indicative of results that may be
expected for the entire year.
The selected pro forma combined financial data reflect adjustments in
connection with the Acquired Businesses including: (i) selling, general and
administrative expenses to reflect current compensation levels of former owners
of the Acquired Businesses; (ii) depreciation expense to reflect the Company's
depreciation policy; (iii) depreciation expense to reflect the effect of
purchase accounting; (iv) amortization expense to reflect goodwill and
non-compete covenants recorded during purchase accounting; (v) income tax
expense to reflect the effect which would result if the Acquired Businesses had
been combined and subject to an assumed federal statutory rate and the
applicable state statutory rate for each of the Acquired Businesses throughout
the periods presented; (vi) rent expense to reflect the Company's lease terms
currently in effect, as well as in one instance the effect of the Company
leasing rather than owning the related facility; and (vii) rent and depreciation
expense to reflect the Company purchasing rental equipment previously under
lease, all as more fully described in the notes hereto. The selected pro forma
combined financial data also reflect adjustments to interest expense, net to
give effect to the Credit Facility and the consummation of the Initial Offering.
The selected pro forma combined financial data have been prepared for
comparative purposes only and do not purport to be indicative of the results of
operations which would have been achieved had the Acquired Businesses been
purchased and the Initial Offering been consummated as of the assumed dates, nor
are the results indicative of the Company's future results of operations.
The selected pro forma combined financial data should be read in
conjunction with "Selected Historical Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's Consolidated Financial Statements and notes thereto and the
individual financial statements and notes thereto of the Acquired Businesses,
included elsewhere herein.
19
<PAGE> 25
PRO FORMA COMBINED STATEMENT OF OPERATIONS(1)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1997
-----------------------------------------------------------------------------------------------
EQUIPCO
AERIAL BAT RENTALS & LONE STAR THE PRO FORMA
PLATFORMS RENTALS SALES RENTALS SPRINTANK COMPANY ADJUSTMENTS(2) PRO FORMA
--------- ------- --------- --------- --------- ------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental revenues................. $ 406 $1,457 $2,180 $1,455 $5,715 $16,168 $ -- $27,381
Rental equipment sales.......... 51 995 332 188 -- 2,111 -- 3,677
New equipment sales............. 209 1,250 851 -- -- 5,403 -- 7,713
Other........................... 28 100 26 -- 327 1,893 -- 2,374
----- ------ ------ ------ ------ ------- ------- -------
Total revenues.................. 694 3,802 3,389 1,643 6,042 25,575 -- 41,145
----- ------ ------ ------ ------ ------- ------- -------
Rental equipment expenses....... 150 12 94 -- 470 1,369 (152)(a) 1,943
Rental equipment depreciation... 47 707 710 242 1,109 3,143 (1,092)(b) 4,866
Cost of rental equipment
sales......................... 34 352 97 119 -- 1,416 -- 2,018
Cost of new equipment sales..... 180 1,010 570 -- -- 4,116 -- 5,876
Direct operating expenses....... 127 450 547 1,308 173 5,946 171(c) 8,722
----- ------ ------ ------ ------ ------- ------- -------
Total cost of revenues.......... 538 2,531 2,018 1,669 1,752 15,990 (1,073) 23,425
----- ------ ------ ------ ------ ------- ------- -------
Gross profit.................... 156 1,271 1,371 (26) 4,290 9,585 1,073 17,720
----- ------ ------ ------ ------ ------- ------- -------
Selling, general and
administrative expenses....... 249 489 684 177 2,028 5,039 (525)(d) 8,141
Non-rental depreciation and
amortization.................. 8 25 33 26 83 758 406(e) 1,339
----- ------ ------ ------ ------ ------- ------- -------
Operating income................ (101) 757 654 (229) 2,179 3,788 1,192 8,240
----- ------ ------ ------ ------ ------- ------- -------
Other income (expense), net..... -- (1) 20 139 (10) (19) 1(f) 130
Interest expense, net........... (16) (46) (73) (164) (439) (2,439) (4,173)(g) (7,350)
----- ------ ------ ------ ------ ------- ------- -------
Income before income taxes...... (117) 710 601 (254) 1,730 1,330 (2,980) 1,020
Income taxes.................... (6) -- 240 -- -- 519 (410)(h) 343
----- ------ ------ ------ ------ ------- ------- -------
Net income...................... $(111) $ 710 $ 361 $ (254) $1,730 $ 811 $(2,570) $ 677
===== ====== ====== ====== ====== ======= ======= =======
OTHER DATA:
Cash interest expense, net(3)... $ 6,395
EBITDA(4)....................... 14,575
</TABLE>
20
<PAGE> 26
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
--------------------------------------------------------------------------------------------------
EQUIPCO INDUSTRIAL
AERIAL BAT RENTALS & HOIST LONE STAR PRO FORMA
PLATFORMS RENTALS SALES SERVICES RENTALS SPRINTANK ADJUSTMENTS(2) PRO FORMA
--------- ------- --------- ---------- --------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental revenues............. $2,508 $ 4,755 $2,645 $1,827 $6,083 $6,833 $ -- $24,651
Rental equipment sales...... 417 2,425 330 74 886 -- -- 4,132
New equipment sales......... 454 2,639 1,479 1,338 -- -- -- 5,910
Other....................... 134 286 28 820 -- 327 -- 1,595
------ ------- ------ ------ ------ ------ ------- -------
Total revenues.............. 3,513 10,105 4,482 4,059 6,969 7,160 -- 36,288
------ ------- ------ ------ ------ ------ ------- -------
Rental equipment expenses... 500 132 293 254 -- 1,178 (348)(a) 2,009
Rental equipment
depreciation.............. 158 1,819 866 370 1,060 1,482 (889)(b) 4,866
Cost of rental equipment
sales..................... 163 1,069 181 -- 673 -- -- 2,086
Cost of new equipment
sales..................... 368 2,246 1,014 898 -- -- -- 4,526
Direct operating expenses... 490 1,072 682 1,124 4,054 173 178(c) 7,773
------ ------- ------ ------ ------ ------ ------- -------
Total cost of revenues...... 1,679 6,338 3,036 2,646 5,787 2,833 (1,059) 21,260
------ ------- ------ ------ ------ ------ ------- -------
Gross profit................ 1,834 3,767 1,446 1,413 1,182 4,327 1,059 15,028
------ ------- ------ ------ ------ ------ ------- -------
Selling, general and
administrative expenses... 986 1,185 1,094 667 624 2,492 7(d) 7,055
Non-rental depreciation and
amortization.............. 74 68 92 26 163 111 805(e) 1,339
------ ------- ------ ------ ------ ------ ------- -------
Operating income............ 774 2,514 260 720 395 1,724 247 6,634
------ ------- ------ ------ ------ ------ ------- -------
Other income (expense),
net....................... -- (18) (18) 63 249 29 (48)(f) 257
Interest expense, net....... (89) (141) (120) (1) (362) (691) (5,946)(g) (7,350)
------ ------- ------ ------ ------ ------ ------- -------
Income (loss) before income
taxes..................... 685 2,355 122 782 282 1,062 (5,747) (459)
Income taxes................ 320 -- 48 280 -- -- (832)(h) (184)
------ ------- ------ ------ ------ ------ ------- -------
Net income.................. $ 365 $ 2,355 $ 74 $ 502 $ 282 $1,062 $(4,915) $ (275)
====== ======= ====== ====== ====== ====== ======= =======
OTHER DATA:
Cash interest expense,
net(3).................... $ 6,395
EBITDA(4)................... 13,096
</TABLE>
21
<PAGE> 27
PRO FORMA COMBINED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
--------------------------------------------------------------------------------------------------
EQUIPCO INDUSTRIAL
AERIAL BAT RENTALS & HOIST LONE STAR PRO FORMA
PLATFORMS RENTALS SALES SERVICES RENTALS SPRINTANK ADJUSTMENTS(2) PRO FORMA
--------- ------- --------- ---------- --------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental revenues............. $3,385 $ 6,328 $3,605 $2,695 $8,168 $9,172 $ -- $33,353
Rental equipment sales...... 496 2,879 391 74 1,181 -- -- 5,021
New equipment sales......... 693 3,547 1,805 1,572 -- -- -- 7,617
Other....................... 172 386 31 1,214 -- 426 -- 2,229
------ ------- ------ ------ ------ ------ ------- -------
Total revenues.............. 4,746 13,140 5,832 5,555 9,349 9,598 -- 48,220
------ ------- ------ ------ ------ ------ ------- -------
Rental equipment expenses... 697 184 355 323 -- 1,395 (576)(a) 2,378
Rental equipment
depreciation.............. 257 2,576 1,163 457 1,440 2,025 (1,430)(b) 6,488
Cost of rental equipment
sales..................... 184 1,411 181 -- 888 -- -- 2,664
Cost of new equipment
sales..................... 569 2,961 1,232 1,104 -- -- -- 5,866
Direct operating expenses... 665 1,623 852 1,741 5,395 197 221(c) 10,694
------ ------- ------ ------ ------ ------ ------- -------
Total cost of revenues...... 2,372 8,755 3,783 3,625 7,723 3,617 (1,785) 28,090
------ ------- ------ ------ ------ ------ ------- -------
Gross profit................ 2,374 4,385 2,049 1,930 1,626 5,981 1,785 20,130
------ ------- ------ ------ ------ ------ ------- -------
Selling, general and
administrative expenses... 1,302 1,399 1,519 1,101 817 4,333 (1,367)(d) 9,104
Non-rental depreciation and
amortization.............. 74 109 123 29 169 145 1,136(e) 1,785
------ ------- ------ ------ ------ ------ ------- -------
Operating income............ 998 2,877 407 800 640 1,503 2,016 9,241
------ ------- ------ ------ ------ ------ ------- -------
Other income (expense),
net....................... -- 120 (37) 2 271 14 (56)(f) 314
Interest income (expense),
net....................... (124) (196) (143) 2 (530) (891) (7,918)(g) (9,800)
------ ------- ------ ------ ------ ------ ------- -------
Earnings before income
taxes..................... 874 2,801 227 804 381 626 (5,958) (245)
Income taxes................ 353 -- 92 289 -- -- (831)(h) (97)
------ ------- ------ ------ ------ ------ ------- -------
Net income.................. $ 521 $ 2,801 $ 135 $ 515 $ 381 $ 626 $(5,127) $ (148)
====== ======= ====== ====== ====== ====== ======= =======
OTHER DATA:
Cash interest expense,
net(3).................... $ 8,527
EBITDA(4)................... 17,828
</TABLE>
22
<PAGE> 28
NOTES TO SELECTED PRO FORMA COMBINED FINANCIAL DATA
(IN THOUSANDS)
(1) NES has purchased the Acquired Businesses at various times in 1997.
Information presented for each operating division represents results of the
related Acquired Business prior to purchase by the Company. Information
presented for the Company represents the actual results of the Company,
including results of the Acquired Businesses following their acquisition by
the Company.
(2) The adjustments assume the purchases of the Acquired Businesses, the
consummation of the Initial Offering and the application of the net proceeds
therefrom as if such transactions had occurred on the first day of the
period presented:
(a) Reflects the elimination of lease expense resulting from the
termination of certain rental equipment leases which occurred with the
purchase of the underlying equipment by the Company in conjunction with the
acquisition of Aerial Platforms.
(b) Pursuant to SEC reporting requirements, rental equipment
depreciation has been derived utilizing the rental equipment asset values
of each of the Acquired Businesses at the time of their acquisition in
1997, rather than utilizing values of rental equipment assets actually held
by each of the Acquired Businesses in each of the historical periods
presented. Reflects the increase (decrease) in rental equipment
depreciation resulting from the application of the Company's depreciation
policy rather than those of the former owners of the Acquired Businesses.
In addition, reflects the increase in rental equipment depreciation
resulting from the write-up of rental equipment assets to fair value
arising from purchase accounting. The Company's depreciation policy
provides for straight-line depreciation calculated over the estimated
useful life of the underlying assets, while the Acquired Businesses used
accelerated depreciation methods over useful lives consistent with tax
prescribed useful lives. In addition, reflects the increase in rental
equipment depreciation resulting from the purchase of equipment referred to
in note (a) above.
(c) Reflects the rent expense resulting from the Company's current
lease terms as well as, in one instance, the increase in rent expense and
corresponding decrease in depreciation expense and real estate tax expense
resulting from the Company leasing rather than owning the related facility.
(d) Reflects the decrease resulting from differentials between the
compensation levels of former owners of the Acquired Businesses and the
terms of the employment agreements entered into between certain of the
former owners and the Company. In addition, reflects overhead attributable
to the Company's corporate offices and senior management.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED SEPTEMBER 30,
DECEMBER 31, ------------------
1996 1996 1997
------------ ------- -------
<S> <C> <C> <C>
Selling, general and administrative expenses:
Compensation differential............................... $(2,730) $(1,016) $ (525)
Corporate overhead...................................... 1,363 1,023 --
------- ------- -------
Total............................................ $(1,367) $ 7 $ (525)
</TABLE>
(e) Pursuant to SEC reporting requirements, non-rental depreciation
has been derived utilizing the property, plant and equipment values each of
the Acquired Businesses at the time of their acquisition in 1997, rather
than utilizing values of property, plant and equipment actually held by
each of the Acquired Businesses in each of the historical periods
presented. Reflects the decrease in non-rental depreciation resulting from
the application of the Company's depreciation policy rather than those of
the former owners of the Acquired Businesses. In addition, reflects the
increase in non-rental depreciation resulting from the write-up of
property, plant and equipment to fair value arising from purchase
accounting. Also reflects amortization of goodwill calculated on a goodwill
life of 40 years and amortization of non-compete agreements calculated on
their contract terms of two to five years, in each case specifically
related to the purchases of the Acquired Businesses.
23
<PAGE> 29
(f) Reflects discontinuation of unrelated businesses previously
operated by the former owners of one of the Acquired Businesses.
(g) Includes annual amortization of debt issuance costs and discounts
of $571 incurred in connection with the Initial Offering and annual
amortization of loan origination and other financing fees of $702 incurred
in connection with the Credit Facility. Also includes unused line fees of
0.5% per annum incurred in connection with the Credit Facility. In
addition, includes interest income from an investment of the $39,461 of
assumed cash on hand after giving effect to the Initial Offering at an
assumed rate of 5.0% per annum.
(h) Reflects the income tax rate that would have been in effect if the
Acquired Businesses had been combined and subject to a federal statutory
rate of 34% and the applicable state statutory rate for each of the
Acquired Businesses throughout the periods presented.
(3) Excludes annual amortization of debt issuance costs and discounts of $571
incurred in connection with the Initial Offering and annual amortization of
loan origination and other financing fees of $702 incurred in connection
with the Credit Facility.
(4) Reflects operating income plus other income (expense), net, before interest
expense, net, income taxes, rental equipment depreciation and non-rental
depreciation and amortization. EBITDA is not intended to represent cash flow
from operations or net income as defined by generally accepted accounting
principles and should not be considered as a measure of liquidity or an
alternative to, or more meaningful than, cash flow from operations or net
income as an indication of the Company's operating performance. EBITDA is
included herein because management believes that certain investors find it
useful in measuring the Company's ability to service its debt.
24
<PAGE> 30
SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS)
The Company was founded in June 1996 to acquire and integrate equipment
rental companies. In 1997, the Company acquired Aerial Platforms, BAT Rentals,
Equipco Rentals & Sales, Industrial Hoist Services, Lone Star Rentals and
Sprintank in separate transactions. The following data present the Company on an
actual basis and include the results of the Acquired Businesses following their
acquisition by the Company.
The selected historical financial data for the period from inception (June
4, 1996) through December 31, 1996 and the nine months ended September 30, 1997
have been derived from the audited financial statements and notes thereto of the
Company, which financial statements appear elsewhere in the Prospectus. Results
for the nine months ended September 30, 1997 are not necessarily indicative of
results that may be expected for the entire year.
The selected historical financial data should be read in conjunction with
the information contained in the "Selected Pro Forma Combined Financial Data"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Company's Consolidated Financial Statements and notes
thereto and the individual financial statements and notes thereto of the
Acquired Businesses included elsewhere herein.
<TABLE>
<CAPTION>
NINE MONTHS
JUNE 4 - ENDED
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
OPERATING DATA:
Rental revenues........................................ $ -- $16,168
Rental equipment sales................................. -- 2,111
New equipment sales.................................... -- 5,403
Other.................................................. -- 1,893
------- -------
Total revenues............................................ -- 25,575
Rental equipment expenses.............................. -- 1,369
Rental equipment depreciation.......................... -- 3,143
Cost of rental equipment sales......................... -- 1,416
Cost of new equipment sales............................ -- 4,116
Direct operating expenses.............................. -- 5,946
------- -------
Total cost of revenues.................................... -- 15,990
------- -------
Gross profit.............................................. -- 9,585
Selling, general and administrative expenses.............. 333 5,039
Non-rental depreciation and amortization.................. 3 758
------- -------
Operating income (loss)................................... (336) 3,788
Other income (expense), net............................... -- (19)
Interest income (expense), net............................ 4 (2,439)
------- -------
Income (loss) before income taxes......................... (332) 1,330
Income tax expense (benefit).............................. (137) 519
------- -------
Net income (loss)......................................... $ (195) $ 811
======= =======
BALANCE SHEET DATA (AT PERIOD END):
Rental equipment, net..................................... $ -- $45,490
Total assets.............................................. 216 92,219
Total debt................................................ -- 58,144
Total stockholders' equity................................ 106 26,031
</TABLE>
25
<PAGE> 31
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(IN THOUSANDS)
The following discussion and analysis of the Company's results of
operations, financial condition and liquidity should be read in conjunction with
"Selected Pro Forma Combined Financial Data" and "Selected Historical Financial
Data" and the Financial Statements and notes thereto included elsewhere herein.
GENERAL
NES was founded in June 1996 to acquire and integrate businesses that
specialize in the rental of specialty and general heavy equipment to industrial
and construction end-users. Since that time, the Company has acquired six
businesses in separate transactions, having completed its first acquisition in
January 1997. The following discussion is presented as if the six acquisitions
had been completed on the first day of the period discussed. Management believes
that the Acquired Businesses and others that the Company will acquire will
benefit from increased access to capital, the support of experienced and
professional senior management, centrally coordinated purchasing and an
increased emphasis on financial management. Therefore, the pro forma results
discussed below do not necessarily represent the results of the Company had each
of the Acquired Businesses been operated by the Company during that period.
The pro forma results discussed have been adjusted to reflect: (i) selling,
general and administrative expenses to reflect current compensation levels of
former owners of the Acquired Businesses; (ii) depreciation expense to reflect
the Company's depreciation policy; (iii) depreciation expense to reflect the
effect of purchase accounting; (iv) amortization expense to reflect goodwill and
non-compete covenants recorded during purchase accounting; (v) income tax
expense to reflect the effect that would result if the Acquired Businesses had
been combined and subject to an assumed federal statutory rate and the
applicable state statutory rate for each of the Acquired Businesses throughout
the periods presented; (vi) rent expense to reflect the Company's lease terms
currently in effect, as well as in one instance the effect of the Company
leasing rather than owning the related facility; and (vii) rent and depreciation
expense to reflect the Company purchasing rental equipment previously under
lease, all as more fully described in the notes to Selected Pro Forma Combined
Financial Data. Management believes that these adjustments more accurately
reflect the operating results and financial position of the Acquired Businesses
had they been owned by the Company throughout the periods discussed.
The Company's results of operations since December 31, 1996 have been
affected by an increase in interest expense attributable to borrowings necessary
to finance the purchase of the Acquired Businesses and the expansion of the
rental fleet. Prior to acquisition by the Company in 1997, the Acquired
Businesses were capital constrained and as a result had little indebtedness.
Therefore, a comparison of interest expense (and items dependent on interest
expense) for the periods presented is not meaningful and as a result is not
included in the discussion of the Company's results of operations.
The Company derives its revenues from four sources: (i) rental of
equipment; (ii) rental equipment sales; (iii) new equipment sales; and (iv) the
sale of complementary parts and services. The Company's primary source of
revenue is the rental of equipment to industrial and construction end-users. The
growth of rental revenues is dependent on several factors, including demand for
rental equipment, the amount and quality of equipment available for rent, rental
rates and general economic conditions. Revenues generated from the sale of used
rental equipment are impacted by price, general economic conditions and the
fleet maintenance programs conducted by the Company. Sales of new equipment are
impacted by price and general economic conditions. Revenues from the sale of
complementary parts and services are primarily affected by equipment rental and
sales volumes.
Cost of revenues consists primarily of rental equipment depreciation, the
cost of new equipment, the net book value of rental equipment sold and other
direct operating costs. Given the varied, and in some cases specialized, nature
of its rental equipment, the Company utilizes a range of periods over which it
depreciates its equipment on a straight line basis. On average, the Company
depreciates its equipment over an estimated useful life of seven years with no
residual value.
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<PAGE> 32
PRO FORMA RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, information
derived from the pro forma consolidated statements of operations of the Company
expressed as a percentage of total revenues.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
-------------- --------------
1995 1996 1996 1997
----- ----- ----- -----
<S> <C> <C> <C> <C>
Rental revenues............................................. 65.6% 69.2% 67.9% 66.5%
Rental equipment sales...................................... 10.8 10.4 11.4 8.9
New equipment sales......................................... 18.5 15.8 16.3 18.8
Other....................................................... 5.1 4.6 4.4 5.8
----- ----- ----- -----
Total revenues.............................................. 100.0 100.0 100.0 100.0
Cost of revenues............................................ 63.2 58.2 58.6 56.9
----- ----- ----- -----
Gross profit................................................ 36.8 41.8 41.4 43.1
Selling, general and administrative expenses................ 20.1 18.9 19.4 19.8
Non-rental depreciation and amortization.................... 4.1 3.7 3.7 3.3
----- ----- ----- -----
Operating income............................................ 12.6 19.2 18.3 20.0
</TABLE>
Pro Forma Combined Nine Months Ended September 30, 1997 as Compared to Pro Forma
Combined Nine Months Ended September 30, 1996
Revenues. Total revenues increased 13.4% to $41,145 for the nine months
ended September 30, 1997 compared to $36,288 for the nine months ended September
30, 1996. Rental revenues were $27,381 for the nine months ended September 30,
1997, an 11.1% increase from $24,651 in the comparable 1996 period. This growth
resulted from additions to the Company's rental fleet in order to meet customer
demand plus continued increases in the rental of specialty equipment, partially
offset by a slight decline in the Las Vegas market. Rental equipment sales
decreased 11.0% to $3,677 for the nine months ended September 30, 1997 compared
to $4,132 for the nine months ended September 30, 1996 as a result of increased
rental demand and the Company's fleet management policy. New equipment sales
were $7,713 for the nine months ended September 30, 1997 compared to $5,910 in
the comparable 1996 period, an increase of 30.5%. The increase was due primarily
to strong demand for general equipment in the Las Vegas market and strong demand
for the Company's hoists.
Gross Profit. Gross profit margin increased to 43.1% for the nine months
ended September 30, 1997 from 41.4% in the comparable 1996 period. This margin
improvement was primarily the result of increased sales of higher margin new
hoists, partially offset by reduced margins on used equipment sold earlier in
its depreciated life.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses totaled $8,141 or 19.8% of total revenues for the nine
months ended September 30, 1997 as compared to $7,055 or 19.4% in the comparable
1996 period. The increase in expense was attributable to the fact that the
Company hired financial controllers at five of the six Acquired Businesses,
provided increased sales training and hired additional sales representatives to
focus on sales to industrial customers.
Non-rental depreciation and amortization. For the nine months ended
September 30, 1997 and the nine months ended September 30, 1996, non-rental
depreciation and amortization of $1,339 was calculated utilizing asset values of
each of the Acquired Businesses at the time of their acquisition in 1997, rather
than utilizing values of assets actually held by each of the Acquired Businesses
in each of the historical periods presented, and as a result, such amount is
identical.
Operating Income. As a result of the foregoing, operating income increased
to $8,240 or 20.0% of total revenues for the nine months ended September 30,
1997 from $6,634 or 18.3% of total revenues in the comparable 1996 period.
27
<PAGE> 33
Pro Forma Combined Year Ended December 31, 1996 as Compared to Pro Forma
Combined Year Ended December 31, 1995
Revenues. Total revenues increased 11.0% to $48,220 in 1996 compared to
$43,433 in 1995. Rental revenues were $33,353 in 1996, a 17.0% increase from
$28,511 in 1995 due to significant growth in the rental of hoists and tanks as
well as strong performances in the Atlanta and Las Vegas markets. Rental
equipment sales were $5,021 in 1996, an increase of 7.0% from $4,694 in 1995 due
to stronger demand in the Las Vegas market. New equipment sales were $7,617 in
1996 compared to $8,025 in 1995, a decline of 5.1%. This was primarily due to
unusually strong demand for new equipment in Las Vegas in 1995 which normalized
in 1996, partially offset by increased 1996 new equipment sales in Western
Virginia.
Gross Profit. Gross profit margin increased to 41.8% in 1996 from 36.8% in
1995. This increase was largely due to improved new equipment sales margins
resulting from a change in strategy to focus on sales of higher margin items. In
addition, a portion of the increase was due to the implementation of certain SEC
reporting requirements as more fully described in note (b) to "Selected Pro
Forma Combined Financial Data."
Selling, General and Administrative Expenses. Selling, general and
administrative expenses totaled $9,104 or 18.9% of total revenues in 1996 as
compared to $8,739 or 20.1% in 1995. The decrease in expense as a percentage of
total revenues was primarily attributable to the fact that the Company was able
to maintain its fixed list base for the most part while increasing revenues.
Non-rental depreciation and amortization. For 1996 and 1995, non-rental
depreciation and amortization of $1,785 was calculated utilizing asset values of
each of the Acquired Businesses at the time of their acquisition in 1997, rather
than utilizing values of assets actually held by each of the Acquired Businesses
in each of the historical periods presented, and, as a result, such amount is
identical.
Operating Income. As a result of the foregoing, operating income increased
to $9,241 or 19.2% of total revenues in 1996 from $5,455 or 12.6% of total
revenues in 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital requirements are for the purchase of new
rental equipment fleet and for acquisitions. The Company's other capital
expenditures consist of the purchase of vehicles used for delivery and
maintenance and property, plant and equipment. The Company purchases rental
fleet throughout the year to replace equipment which has been sold as well as to
maintain adequate levels of equipment to meet existing and new customer needs.
Combined rental fleet purchases for the Company and the Acquired Businesses were
$14,946, $14,006 and $17,236 in 1995, 1996 and for the first nine months of
1997, respectively. As the Company's business strategy continues to be
implemented, rental fleet purchases are expected to increase. Expenditures for
rental fleet are expected to be approximately $20,000 and $18,000 in 1997 and
1998, respectively.
On an actual basis, for the year ended December 31, 1996 and for the nine
months ended September 30, 1997, the Company's net cash (used in) provided by
operations was $(269) and $5,990, respectively. On an actual basis, for the year
ended December 31, 1996 and for the nine months ended September 30, 1997, the
Company's net cash used in investing activities was $21 and $77,096,
respectively. On an actual basis, for the year ended December 31, 1996 and for
the nine months ended September 30, 1997, the Company's net cash provided by
financing activities was $302 and $72,698, respectively. Net cash provided by
financing activities consists of equity capital provided by GTCR Fund V and
members of management, net borrowings under the Credit Facility and seller
financing in connection with the purchase of certain of the Acquired Businesses.
In connection with the Initial Offering, the Company repaid all indebtedness
outstanding under the Credit Facility and the seller notes. The Credit Facility
provides for a $100,000 line of credit, subject to calculation of the borrowing
base, to meet acquisition and expansion needs as well as seasonal working
capital and general corporate requirements. See "Description of Credit
Facility."
28
<PAGE> 34
The Company believes that the Credit Facility, together with cash on hand
from the Initial Offering and funds generated by the Company's operations, will
provide the Company with sufficient liquidity and capital resources to pursue
its business strategy at least through 1999, including the funding of working
capital, capital expenditures and other needs.
EFFECT OF INFLATION
Management believes that inflation has not had a material effect on the
Company.
29
<PAGE> 35
BUSINESS
GENERAL
NES is a leading participant in the growing and highly fragmented $16
billion equipment rental industry. NES specializes in the rental of specialty
and general heavy equipment to industrial and construction end-users. The
Company rents over 500 different types of machinery and equipment and
distributes new equipment for nationally recognized original equipment
manufacturers. The Company also sells used equipment as well as complementary
parts, supplies and merchandise, and provides repair and maintenance services to
its customers. NES is geographically diversified, with 16 locations in Alabama,
Georgia, Louisiana, Nevada, Texas and Virginia, and is a leading competitor in
each of the geographic markets it serves.
Management believes that the Company offers one of the most modern and well
maintained fleets of equipment in each of its markets. The Company's preventive
maintenance program increases the dependability, useful life and resale value of
its equipment. The Company rents and sells general industrial and construction
equipment, such as aerial work platforms, air compressors, earth-moving
equipment and rough-terrain forklifts. In addition, NES rents and sells
specialty equipment, such as electric and pneumatic hoists and liquid storage
tanks, to industrial customers. Revenues from industrial and construction
end-users represented approximately 49.7% and 43.9%, respectively, of the
Company's revenues for the twelve months ended September 30, 1997, on a pro
forma basis.
The Company's strategic objective is to continue to grow profitably in both
existing and new markets by acquiring additional specialty and general equipment
rental companies and by expanding the size and breadth of its equipment fleet.
The Company routinely evaluates attractive markets for expansion where a leading
position can be created by acquiring an existing business. Since its founding in
June 1996, the Company has acquired and integrated six businesses as summarized
below:
<TABLE>
<CAPTION>
DIVISION PRODUCTS GEOGRAPHIC FOCUS DATE ACQUIRED
- -------------------------- ------------------------------------ ----------------- -------------
<S> <C> <C> <C>
Industrial Hoist Services Pneumatic and electric hoists National January 1997
Aerial Platforms Aerial work platforms Atlanta, Georgia February 1997
Lone Star Rentals General equipment Gulf Coast March 1997
BAT Rentals General equipment Las Vegas, Nevada April 1997
Sprintank Liquid and specialized storage tanks Gulf Coast July 1997
Equipco Rentals & Sales General equipment Western Virginia July 1997
</TABLE>
NES is led by a senior management team with significant industry experience
and an impressive track record of acquiring and integrating companies in the
equipment rental industry. Previously, senior management of the Company was
responsible for transforming the small equipment rental division of a large
corporation into a leading competitor in the industry. The managers of the
Company's operating divisions average over 16 years of industry experience.
Senior management and members of the Company's operating management together
have a meaningful ownership interest in NES. The Company also benefits from the
financial expertise of GTCR, an established investment firm specializing in the
consolidation of fragmented industries. GTCR Fund V, an affiliate of GTCR, is
the Company's principal equity investor and has invested $24.5 million in NES
since June 1996.
INDUSTRY OVERVIEW
The equipment rental industry serves a wide variety of markets, including
industrial, manufacturing, construction and governmental. Equipment available
for rent ranges from heavy duty construction and industrial equipment to general
tools and small equipment. Surveys conducted by the Associated Equipment
Distributors indicate that industry rental revenues have grown in 11 of the past
12 years from approximately $1.1 billion in 1984 to approximately $15.9 billion
in 1996, a compound annual growth rate of approximately 25%.
30
<PAGE> 36
Management believes that the equipment rental industry will continue to
benefit from the trend among customers to outsource non-core operations in order
to reduce their capital investment and minimize the downtime, maintenance,
repair and storage costs associated with equipment ownership. While customers
traditionally have rented equipment for specific purposes such as supplementing
capacity during peak periods and in connection with special projects, customers
are increasingly looking to rental operators to provide an ongoing,
comprehensive supply of equipment, enabling such customers to benefit from the
economic advantages and convenience of rental. According to a survey published
in 1997 by The CIT Group, contractors intended to increase the percentage of
equipment they rent without a purchase option to an estimated 15% of their total
equipment requirements in 1997 from less than 5% in 1994.
The highly fragmented equipment rental industry consists of a large number
of relatively small independent businesses typically serving discrete local
markets within 30 to 50 miles of the store location, and a small number of
multi-location regional or national operators. According to Rental Equipment
Register, there are more than 12,000 participants in the industry, with the
largest 100 rental companies accounting for less than 20% of 1996 industry
revenues. Management believes that the rental equipment industry offers
substantial consolidation opportunities for large, well-capitalized equipment
rental companies such as NES. Relative to smaller companies with only one or two
rental locations, multi-regional operators such as NES benefit from a number of
competitive advantages, including access to capital, the ability to offer a
broader range of modern, high-quality equipment, standardized management
information systems, volume purchasing discounts and the ability to service
larger, multi-regional accounts. In addition, management believes that
multi-regional operators are less affected by changes in local economic
conditions.
BUSINESS STRATEGY
Management believes that NES is well positioned to benefit from industry
trends of growth and consolidation. The Company's objective is to increase its
revenues and operating earnings by continuing to pursue its business strategy.
The key components of this strategy are to: (i) acquire specialty and general
equipment rental businesses; (ii) increase revenues from industrial customers;
(iii) maximize higher-margin rental revenues through efficient fleet management;
and (iv) complement an entrepreneurial decentralized structure with professional
management.
Acquire Specialty and General Equipment Rental Businesses. The Company
seeks to acquire strong specialty and general equipment rental businesses. The
Company generally targets acquisition candidates that (i) have a strong local
market share or participate in a high-growth market, (ii) are led by an
experienced management team that will continue to manage the acquired business
and invest equity capital in NES, (iii) provide opportunities to expand their
customer base through better access to and employment of capital and (iv)
generate a high percentage of revenues from rentals with a significant portion
derived from industrial customers. The Company also seeks to acquire smaller
businesses in locations already served by the Company that offer product lines
or services that are complementary to those at existing locations. Since January
1997, the Company has completed six acquisitions. Management believes the highly
fragmented equipment rental industry contains a significant number of businesses
that fit the Company's acquisition profile.
Increase Revenues from Industrial Customers. The Company is committed to
increasing its revenues derived from industrial customers. Management believes
that these revenues are more stable than revenues from construction customers
due to the fact that industrial customers typically utilize rental equipment for
ongoing and periodic maintenance work on their existing facilities as well as
for material handling applications. The good condition and quality of such
maintenance and material handling equipment are essential for industrial
customers to avoid costly slowdowns or shutdowns. In addition, industrial
customers tend to rent equipment for longer periods and use equipment under less
severe conditions than contractors, thereby increasing the Company's equipment
utilization and decreasing the Company's equipment maintenance costs. The
Company intends to expand its industrial customer base by providing additional
equipment and services to its existing industrial customers and establishing new
relationships through its existing businesses as well as through acquisitions.
For the twelve months ended September 30, 1997, on a pro forma basis, revenues
derived from industrial end-users represented approximately 49.7% of the
Company's total revenues.
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<PAGE> 37
Maximize Higher-Margin Rental Revenues Through Efficient Fleet
Management. The Company is focused on maximizing higher-margin rental revenues
by expanding fleet inventory, efficiently managing fleet inventory in order to
maximize equipment utilization, optimizing fleet maintenance, and systematically
evaluating the optimal timing of used equipment sales. The Company's acquisition
targets have typically operated under capital constraints, which prevented them
from purchasing rental equipment fleet sufficient to meet customer demand and
resulted in lost revenue opportunities. In pursuing acquisitions, NES evaluates
the target's customer base and fleet inventory and, if appropriate, provides
capital to expand the equipment fleet and improve utilization, resulting in
increased rental revenues.
Complement an Entrepreneurial Decentralized Structure with Professional
Management. The Company provides professional corporate management to its
operating divisions while maintaining a decentralized operating structure in
order to utilize the experience and relationships of its local managers. Local
management is responsible for customer service, marketing strategies and
business growth in its markets and is compensated based on the performance of
its division. Local management is complemented and supported by a senior
management team, which focuses on the execution of the Company's growth
strategy, as well as corporate planning and financial reporting and analysis. In
addition, senior management centrally coordinates purchasing in order to
maximize purchase discounts.
PRODUCTS AND SERVICES
The Company's primary business is the rental of equipment to industrial and
construction end-users. In addition, to more fully service its customer base and
leverage its fixed costs, the Company sells complementary parts, merchandise and
rental equipment, acts as a distributor of new equipment on behalf of original
equipment manufacturers and services the equipment it sells and rents.
Equipment Rentals. The Company rents a broad selection of equipment
ranging from large equipment such as aerial manlifts, forklifts, light
earth-moving equipment and portable air compressors to small equipment such as
hand tools to industrial and commercial construction customers. The Company is
the leading renter of industrial hoists in the United States and the leading
renter of portable storage tanks to the chemical and petrochemical industries in
the Gulf Coast region. The Company's rental contracts range from a one-day
rental contract for a small subcontractor to a multi-year contract for certain
industrial customers, with an overall average rental period of 19 days. Four
categories of equipment represented approximately 79.7% of the Company's total
rental equipment fleet (based on original equipment cost) at September 30, 1997:
(i) mobile storage tanks (29.9%); (ii) aerial work platforms (24.9%); (iii)
earth-moving equipment (16.2%); and (iv) hoists (8.7%). The mix of rental
equipment at each of the Company's locations is a function of the demands of the
local customer base and the focus of the local business. At September 30, 1997,
the original equipment cost of the Company's rental fleet was approximately
$60.1 million and the weighted average age of the Company's rental equipment
fleet was approximately three years. Approximately 68.0% of the Company's total
revenues for the twelve months ended September 30, 1997, on a pro forma basis,
were derived from the rental of equipment.
Sales of Rental Equipment. The Company routinely sells rental equipment to
adjust the size and composition of its rental fleet to changing market
conditions and as part of its ongoing commitment to maintain a new, top quality
fleet. The Company achieves favorable sales prices for its rental equipment due
to its strong preventive maintenance program and its practice of selling rental
equipment before it becomes irreparable or obsolete. Senior management works
with local operating management to optimize the timing of sales of rental
equipment by taking into account maintenance costs, rental demand patterns and
resale prices. The Company sells rental equipment to its existing rental
customers, as well as to domestic and international used equipment buyers. For
the twelve months ended September 30, 1997, on a pro forma basis, revenues from
the sale of rental equipment accounted for approximately 8.6% of the Company's
total revenues.
Sales of New Equipment. The Company is a distributor for certain original
equipment manufacturers, including JLG Industries, Inc., Condor (a division of
TIME Manufacturing Company) and Terex Corp. (d/b/a Marklift) (aerial work
platforms and booms), The Gradall Company and Tovel Mfg. (rough-terrain
forklifts), Atlas-Copco Industrial Compressors, Inc. and Mitsui Inc. (d/b/a
Airman) (air compressors), Mustang Manufacturing, Inc. (skid steer loaders),
Thompson Pump & Manufacturing Co. (pumps), Multiquip Inc. (generators) and
Komatsu Forklift USA, Inc. (industrial forklifts). The Company believes
32
<PAGE> 38
that the volume of its equipment purchases creates significant purchasing power
with suppliers, which leads to favorable prices and terms on equipment purchased
for its rental fleet and for sale as new equipment. The Company's ability to
sell new equipment offers flexibility to its customers and enhances the
Company's customer relations. Approximately 11.1% of the Company's total
revenues for the twelve months ended September 30, 1997, on a pro forma basis,
was derived from the sale of new equipment.
Sales of Parts and Merchandise. The Company sells a wide range of parts
and merchandise, including saw blades, drill bits, shovels, goggles, hard hats
and other safety gear, as a complement to its core equipment rental business.
These sales enable the Company to attract and retain customers by offering the
convenience of "one-stop shopping." Revenues from the sale of parts and
merchandise accounted for approximately 6.6% of the Company's total revenues, on
a pro forma basis, for the twelve months ended September 30, 1997.
Service and Repair. The Company provides repair and maintenance services
in connection with the equipment it sells as a complement to its core business.
Revenues generated from service and repairs accounted for approximately 5.7% of
the Company's total revenues for the twelve months ended September 30, 1997, on
a pro forma basis.
CUSTOMERS
Management estimates that the Company currently has more than 5,000
customers, ranging from "Fortune 500" companies to small contractors. For the
twelve months ended September 30, 1997, on a pro forma basis, no one customer
accounted for more than 3.0% of the Company's total revenues, and the Company's
top five customers represented less than 15.0% of total revenues. Customers look
to the Company as an ongoing, comprehensive source of rental equipment because
of the economic advantages and convenience of renting, as well as the high costs
associated with equipment ownership. The Company's primary customer base can be
classified by the following categories: (i) industrial, including manufacturers,
petrochemical facilities, chemical companies, paper mills and public utilities
and (ii) commercial and residential construction, repair and renovation,
including contractors. In addition to maintaining its historically strong
relationship with local customers, the Company is increasing its emphasis on
larger national and multi-regional accounts. For the twelve months ended
September 30, 1997, on a pro forma basis, industrial, construction and other
customers accounted for approximately 49.7%, 43.9% and 6.4% of the Company's
total revenues, respectively.
Industrial. The Company's industrial customers, many of whom operate 24
hours per day, utilize the Company to outsource their equipment requirements to
reduce the capital investment and minimize the ongoing maintenance, repair and
storage costs associated with equipment ownership. Management believes that the
Company is well-positioned to take advantage of the increasing trend among
industrial customers to outsource equipment needs. In addition, the Company's
specialty products, such as hoists and tanks, are tailored to meet the needs of
industrial end-users. Management believes that given its multi-regional
presence, NES is well positioned to increase its industrial revenue base. The
Company intends to expand its industrial customer base by providing additional
equipment and services to its existing industrial customers and establishing new
relationships through its existing businesses as well as through acquisitions.
Construction. The Company's construction customers include "Fortune 500"
companies, national and regional contractors and subcontractors involved in
construction projects such as (i) chemical plants and other manufacturing
facilities, (ii) roads, bridges and highways, (iii) schools, hospitals and
airports, and (iv) residential developments and apartment buildings. According
to a survey published in 1997 by The CIT Group, contractors intended to increase
the percentage of equipment they rent without a purchase option to an estimated
15% of their total equipment requirements in 1997 from an estimated 5% in 1994.
Management believes the Company is a leading supplier of rental equipment to
contractors in its markets and is well positioned to benefit from any increased
rental of equipment by such customers.
OPERATIONS
The Company's equipment rental yards typically include: (i) a customer
service center and showroom displaying selected rental equipment, new equipment
offered for sale and related merchandise; (ii) an
33
<PAGE> 39
equipment service area; and (iii) equipment storage facilities. Each rental
center is staffed by an average of approximately 18 employees, including a
manager, an assistant manager, sales assistants, back office clerks, truck
drivers, mechanics and yard personnel. The rental center employees' knowledge of
the equipment enables them to recommend the best equipment for a customer's
particular application. Each rental center manager is responsible for all
aspects of the center's operation, including establishing rental rates,
selecting equipment and determining employee compensation at such location. The
Company's rental center managers have an average of 16 years of industry
experience.
SALES
The Company offers rental equipment and related services primarily through
its 41 member sales force, consisting of nine sales managers who oversee 32
sales representatives. The sales force at each location is knowledgeable about
all of the services and products provided at that location. Sales managers and
representatives regularly call on contractors' job sites and industrial
facilities in their sales territories, often assisting customers in planning for
their equipment requirements. The Company also provides its sales force with
extensive training, including frequent in-house training by supplier
representatives, regarding the operating features and maintenance requirements
of its equipment. Members of the Company's sales force generally earn
commissions on all equipment rentals and sales that they generate.
PURCHASING AND SUPPLIERS
Management believes that, as a result of the Company's size, it is able to
purchase equipment directly from manufacturers at favorable prices. The Company
has developed strong relationships with many leading original equipment
manufacturers, including JLG Industries, Inc., Condor (a division of TIME
Manufacturing Company), Terex Corp. (d/b/a Marklift), The Gradall Company, Tovel
Mfg., Atlas-Copco Industrial Compressors, Inc., Mitsui Inc. (d/b/a Airman),
Mustang Manufacturing, Inc., Thompson Pump & Manufacturing Co., Multiquip, Inc.
and Komatsu Forklift USA, Inc., and operates as a distributor for certain lines
of equipment in several of its markets. The Company intends to acquire
businesses that are distributors for other vendors, thus allowing the Company to
purchase from additional sources. During the twelve months ended September 30,
1997, on a pro forma basis, the Company purchased approximately $21.3 million of
rental equipment, of which approximately 50.0% was obtained from its top five
suppliers. No single supplier accounted for more than 15.0% of the Company's
total purchases. The Company believes it could readily replace any of its
suppliers if necessary.
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<PAGE> 40
LOCATIONS AND PROPERTIES
The Company's properties (all of which are leased) are identified in the
table below. The Company's properties typically include an outside storage yard
and a small building containing offices, a maintenance center and, in certain
locations, a retail showroom. The Company also leases approximately 1,400 square
feet of office space for its corporate headquarters in Evanston, Illinois. The
Company's interests in each of these leases secure borrowings under the Credit
Facility.
<TABLE>
<CAPTION>
DIVISION LOCATIONS CURRENT LEASE EXPIRATION DATE(1)
- -------------------------------- ------------------------------- --------------------------------
<S> <C> <C>
Aerial Platforms Norcross, Georgia May 1998
BAT Rentals Las Vegas, Nevada October 1998
Equipco Rentals & Sales Harrisonburg, Virginia July 2002
Industrial Hoist Services Brazoria, Texas January 1999
Lone Star Rentals Corpus Christi, Texas March 2002
Houston, Texas (North Shepherd) March 2002
Houston, Texas (State Hwy.) March 2002
Humble, Texas March 2002
Pasadena, Texas March 2002
Sprintank Mobile, Alabama April 1999
St. Gabriel, Louisiana June 2007
Sulphur, Louisiana August 1998
Beaumont, Texas December 1997
Clute, Texas August 2000
Corpus Christi, Texas June 2002
Houston, Texas (Conrad Sauer) (2)
</TABLE>
- ---------------
(1) The Company has renewal options on most of these leases. Management believes
that all of these leases can be readily replaced at similar terms.
(2) The lease for such property will continue on a month to month basis until
terminated (i) by the Company upon thirty days prior notice or (ii) by the
lessor upon six months prior notice.
COMPETITION
The equipment rental industry is highly fragmented and competitive. Many of
the markets in which the Company operates are served by numerous competitors,
ranging from national and multi-regional companies such as Hertz Equipment
Rental Corporation (an affiliate of Ford Motor Company), U.S. Rentals, Inc.,
Rental Services Corporation and Prime Services, Inc., to small, independent
businesses with a limited number of locations. Management believes that
participants in the equipment rental industry compete on the basis of
availability and quality of equipment, service, delivery, time and price.
Geographic territories for competition are usually limited to 50 to 75 miles due
to servicing requirements and transportation costs of the equipment. Certain
specialized equipment renters, such as Industrial Hoist Services, compete on a
larger regional or national basis. In general, management believes that national
and multi-regional operators, such as the Company, enjoy substantial competitive
advantages over small, independent rental businesses that cannot afford to
maintain the comprehensive rental equipment fleet and high level of maintenance
and service that the Company offers. See "Risk Factors -- Competition."
EMPLOYEES
At September 30, 1997, the Company had a total of 299 employees, of which
108 were salaried and 191 were hourly personnel. The Company's work force is not
unionized, and management believes that its relationship with employees is
excellent. The Company is committed to, and has realized significant benefits
from, its formal employee training programs. Management believes that this
investment in training and safety awareness programs for employees is a
competitive advantage that positions the Company to be responsive to customer
needs.
35
<PAGE> 41
GOVERNMENTAL AND ENVIRONMENTAL REGULATION
The Company's facilities are subject to various evolving federal, state and
local environmental requirements, including those relating to discharges to air,
water and land, the handling and disposal of solid and hazardous waste and the
cleanup of properties affected by hazardous substances. Certain environmental
laws impose substantial penalties for noncompliance, and others, such as the
federal Comprehensive Environmental Response, Compensation, and Liability Act,
as amended, impose strict, retroactive, joint and several liability upon persons
responsible for releases of hazardous substances.
In connection with its corporate acquisitions, the Company usually obtains
environmental assessments from independent environmental consultants. These
assessments generally consist of a site visit, historical record review,
interviews with key personnel and preparation of a report. The purpose of the
consultant's work is to identify potential environmental conditions or
compliance issues associated with the subject property and operations. Based on
these assessments, the Company believes that its operations have been and are
operated in substantial compliance with environmental requirements and that it
has no material liabilities arising under environmental requirements. Some risk
of environmental liability is inherent in the nature of the Company's business,
however, and the Company might in the future incur material costs to meet
current or more stringent compliance, cleanup or other obligations pursuant to
environmental laws.
The Company is currently evaluating whether it must take additional steps
at some locations to ensure compliance with certain environmental laws,
including those relating to the discharge of stormwater and wastewater from the
washing of vehicles and other equipment. The Company does not believe any costs
associated with these efforts will have a material adverse effect on the
Company's operating results or financial position.
The Company dispenses petroleum products from aboveground and underground
storage tanks located at some locations that it operates. The Company maintains
an environmental compliance program designed to minimize the potential for leaks
and spills, to ensure proper maintenance of records and to keep track of the
regular testing and monitoring of tank systems. There can be no assurance,
however, that these tank systems have been or will at all times remain free from
leaks or that the use of these tanks has not or will not result in spills or
other releases. The Company does not believe that the presence or operation of
these tanks will have a material adverse effect on the Company's operating
results or financial position.
The Company uses hazardous substances, such as solvents, to clean and
maintain its rental equipment fleet and generates wastes, such as used motor
oil, radiator fluid and solvents, that are stored on site and disposed of at
off-site locations. Under various environmental laws, the Company could be
liable for contamination at sites where hazardous substances used in its
operations have been disposed of or otherwise released.
Each of the Company's locations operates at least one service shop that
inspects and repairs equipment when it is returned by customers. Such inspection
and repair is conducted in accordance with standard operating procedures
designed to minimize risks associated with the release of hazardous substances.
In addition, the Company's standard rental contracts provide that the customer
is responsible for violations of environmental laws or environmental liabilities
that arise during the rental period or because of the customer's conduct.
The Company believes that its compliance with environmental laws has not
had a material adverse effect on the Company's operating results, financial
condition or competitive position to date. See "Risk Factors -- Environmental
Liabilities."
LEGAL PROCEEDINGS
From time to time, the Company has been and is involved in various legal
proceedings, all of which management believes are routine in nature and
incidental to the conduct of its business. The ultimate legal and financial
liability of the Company with respect to such proceedings cannot be estimated
with certainty, but the Company believes, based on its examination of such
matters, that none of such proceedings, if determined adversely to the Company,
would have a material adverse effect on the financial condition or results of
operations of the Company.
36
<PAGE> 42
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information as of October 31, 1997
with respect to the directors and officers of the Company and each of the
Subsidiary Guarantors. Officers of the Company and each of the Subsidiary
Guarantors serve at the discretion of the respective board of directors.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
Kevin Rodgers..................... 47 Director of the Company, NES Acquisition Corp.
("NES Acquisition"), BAT Acquisition Corp.
("BAT"), Aerial Platforms Inc. ("Aerial") and
MST Enterprises, Inc. ("MST"), Chief Executive
Officer of NES Acquisition and MST, Chief
Executive Officer and President of the Company,
BAT and Aerial Platforms
Carl Thoma........................ 49 Director of the Company, NES Acquisition, BAT,
Aerial and MST
William Kessinger................. 31 Director of the Company, NES Acquisition, BAT,
Aerial and MST
Ronald St. Clair.................. 60 Director of the Company
Paul Ingersoll.................... 31 Vice President and Secretary of the Company,
Vice President, Secretary and Treasurer of NES
Acquisition, BAT, Aerial and MST
Dennis O'Connor................... 47 Chief Financial Officer of the Company, NES
Acquisition, BAT, Aerial and MST
James Kowalik..................... 40 Vice President, Industrial Hoist Services
Division, of NES Acquisition
James Horsley..................... 45 Vice President, Lone Star Rentals Division, of
NES Acquisition
Joseph Swinbank................... 45 Vice President, Sprintank Division, of NES
Acquisition
Herbert Butler.................... 58 Vice President, BAT Rentals Division, of BAT
Carter Wilson..................... 43 Vice President, Aerial Platforms Division, of
Aerial
Marc Trubitz...................... 52 Vice President, Equipco Rental & Sales Division,
of MST
</TABLE>
The Company's by-laws provide that the size of the Board shall be fixed
from time to time by resolution of the Board and that vacancies on the Board may
be filled by the remaining directors. The Board currently consists of four
directors. The Stockholders Agreement provides that GTCR Fund V has the right to
designate all but one of the members of the Board of Directors of the Company
and to increase the size of the Board. See "Certain Relationships and Related
Transactions -- Stockholders Agreement and Registration Agreement."
Kevin Rodgers. Mr. Rodgers has been President, Chief Executive Officer and
a director of the Company since he founded the Company with GTCR Fund V in June
1996. Prior thereto, Mr. Rodgers served as Chief Executive Officer of Brambles
Equipment Services, Inc. and Brambles Records Management, Inc. from 1991 to June
1996. From 1991 to 1996, Mr. Rodgers also held the position of Executive
Director of Brambles USA, a subsidiary of Brambles Industries Limited, an
Australian public company with worldwide revenues of over US $2.5 billion. From
1979 to 1990, Mr. Rodgers held several positions at Morgan Equipment Company, a
privately held heavy equipment dealership with worldwide sales of approximately
$300 million, including Chief Executive Officer of Morgan Equipment's Australian
operations from 1986 to 1990.
Dennis O'Connor. Mr. O'Connor has been Chief Financial Officer of the
Company since August 1996. Prior thereto, Mr. O'Connor served as Chief Financial
Officer of Brambles Equipment Services, Inc. from
37
<PAGE> 43
November 1991 to August 1996, where Mr. O'Connor directed the financial and
administrative functions for its seven operating divisions and assisted in
operations management. From May 1986 to May 1990, Mr. O'Connor held various
positions at Morgan Equipment Company, including Chief Financial Officer and
General Manager.
Paul Ingersoll. Mr. Ingersoll has been Vice President and Secretary of the
Company since June 1996. Prior thereto, Mr. Ingersoll served as Assistant to the
Executive Director of Brambles USA from March 1992 to May 1996 and as Financial
Analyst from November 1989 to March 1992. During his tenure at Brambles, Mr.
Ingersoll closed 19 acquisitions related to equipment services and records
management.
Carl Thoma. Mr. Thoma has served as a director of the Company since its
founding in June 1996. Mr. Thoma founded and has been a Principal and General
Partner with GTCR in Chicago, Illinois, since 1980 and has been the Managing
Partner of GTCR since 1993. Mr. Thoma is also a director of Global Imaging,
Inc., ITI Marketing Services, PageNet Inc. and U.S. Security Associates, Inc.
William Kessinger. Mr. Kessinger has served as a director of the Company
since its founding in June 1996. Mr. Kessinger joined GTCR in May 1995 and
became a Principal in September 1997. Prior thereto, Mr. Kessinger was a
Principal with The Parthenon Group from July 1994 to May 1995. From August 1992
to June 1994, Mr. Kessinger attended Harvard Business School and received his
MBA. Prior to that time, Mr. Kessinger served as an Associate with Prudential
Asset Management Asia from August 1988 to June 1992. Mr. Kessinger is also a
director of Answerthink Consulting Group, Inc., Capitol Office Products, Inc.,
Excaliber, Inc., Global Imaging, Inc. and Users, Inc.,
Ronald St. Clair. Mr. St. Clair has served as a director of the Company
since October 1997. Mr. St. Clair founded High Reach Equipment, an aerial
platform rental company headquartered in Baton Rouge, Louisiana. In 1993, Mr.
St. Clair sold High Reach Equipment to Brambles Equipment Services, Inc. In
1994, Mr. St. Clair retired from High Reach Equipment.
James Kowalik. Mr. Kowalik was Vice President of Brazos Rental & Tool,
Inc., Industrial Crane Maintenance Systems, Inc. and Safe Work Load Products,
Inc. (collectively, the "Industrial Hoist Businesses") since he co-founded the
Industrial Hoist Businesses in 1983. As Vice President, Mr. Kowalik directed the
growth of the Industrial Hoist Businesses into a leading hoist rental and
maintenance company with the largest fleet of hoists in the United States. Mr.
Kowalik became Vice President of the Industrial Hoist Services Division of NES
Acquisition after the Company acquired the Industrial Hoist Businesses in
January 1997 and continues to oversee its daily operations.
James Horsley. Mr. Horsley was President of Lone Star Rentals, Inc. ("Lone
Star") since he founded Lone Star in 1982. As President, Mr. Horsley managed
Lone Star's significant revenue growth and consistent profitability and
increased the number of Lone Star's locations from one to five. Mr. Horsley
became Vice President of the Lone Star Rentals Division of NES Acquisition after
the Company's acquisition of Lone Star in March 1997 and continues to manage its
daily operations. Prior to founding Lone Star, Mr. Horsley held various
positions at Grace Equipment Company, including Operations Manager, and was
involved with several other rental equipment companies.
Joseph Swinbank. Mr. Swinbank has served as Vice President of the
Sprintank Division of NES Acquisition since its acquisition by the Company in
July 1997. Mr. Swinbank served as President of Sprint Industrial Services, Inc.,
the former parent of Sprintank, from 1990 to 1996, and served as Chief Executive
Officer from 1996 until the Company's acquisition of Sprintank. Mr. Swinbank has
been involved in the formation of several companies in the Houston area,
including Rustin Transportation. He has previous experience with environmental
companies and other construction-related and industrial companies.
Herbert Butler. Mr. Butler was General Manager of BAT Rentals, Inc.
("BAT") for nearly seven years and has been with BAT for nearly 25 years. Mr.
Butler assisted BAT's former owner, Paul Bronken, with building BAT into one of
the largest construction rental equipment companies in the Las Vegas area. Mr.
Butler became Vice President of the BAT Rentals Division of BAT after the
Company's acquisition of BAT in April 1997 and continues to manage its daily
operations.
38
<PAGE> 44
Carter Wilson. Mr. Wilson served as President of Aerial Platforms, Inc.
("Aerial") from the time he founded Aerial in 1984 until its acquisition by the
Company in February 1997. As President, Mr. Wilson managed and grew Aerial into
the third largest platform company in the Atlanta metropolitan area. Mr. Wilson
became Vice President of the Aerial Platforms Division of Aerial after the
Company's acquisition of Aerial in February 1997 and continues to manage its
daily operations.
Marc Trubitz. Mr. Trubitz served as President of MST Enterprises, Inc.
(d/b/a Equipco Rentals & Sales Company) from the time he co-founded MST in 1978
until its acquisition by the Company in July 1997. As President, Mr. Trubitz
directed MST into a leading equipment rental company in Western Virginia. Mr.
Trubitz became Vice President of the Equipco Rentals & Sales Division of MST
after the Company's acquisition of MST in July 1997 and continues to manage its
daily operations.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company or its subsidiaries are not
entitled to receive any fees for serving as directors. Non-employee directors of
the Company do not receive cash fees for serving as directors, except for Mr.
St. Clair who receives an annual fee of $40,000. All directors are reimbursed
for out-of-pocket expenses related to their service as directors.
COMPENSATION OF EXECUTIVE OFFICERS
The compensation of executive officers of the Company will be determined by
the Board of Directors of the Company. The following table sets forth
information regarding the compensation paid or accrued by the Company to the
Chief Executive Officer and each of the Company's other executive officers (the
"Named Executive Officers") for services rendered to the Company in all
capacities during 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------- -----------------------------------
AWARDS PAYOUTS
------------------------- -------
RESTRICTED SECURITIES ALL
OTHER ANNUAL STOCK UNDERLYING LTIP OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) ($) (#) ($) ($)
- ------------------ ---- ------- ------- ------------ ---------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kevin Rodgers(1)..... 1996 131,250(2) -- -- -- -- -- --
President, Chief
Executive Officer
and Director
Dennis O'Connor(3)... 1996 44,015(4) -- -- -- -- -- 30,741(5)
Chief Financial
Officer
Paul Ingersoll(6).... 1996 52,464(7) -- -- -- -- -- --
Vice President and
Secretary
</TABLE>
- ---------------
(1) Mr. Rodgers became an employee of the Company effective June 4, 1996.
(2) The amount shown includes $43,750 of accrued salary paid in 1997 pursuant to
Mr. Rodgers' employment agreement upon the Company's acquisition of
equipment rental businesses meeting certain financial criteria.
(3) Mr. O'Connor became an employee of the Company effective August 19, 1996.
(4) The amount shown includes $10,909 of accrued salary paid in 1997 pursuant to
Mr. O'Connor's employment agreement upon the Company's acquisition of
equipment rental businesses meeting certain financial criteria.
(5) The amount shown represents reimbursement for relocation and moving
expenses.
(6) Mr. Ingersoll became an employee of the Company effective June 4, 1996.
39
<PAGE> 45
(7) The amount shown includes $13,116 of accrued salary paid in 1997 pursuant to
Mr. Ingersoll's employment agreement upon the Company's acquisition of
equipment rental businesses meeting certain financial criteria. In addition,
the amount shown includes $5,797 of salary paid by the Company for work Mr.
Ingersoll performed for GTCR prior to June 4, 1996 to prepare for the
organization and formation of the Company.
MANAGEMENT EMPLOYMENT AGREEMENTS
Kevin Rodgers. Mr. Rodgers is party to a senior management agreement with
the Company dated as of June 4, 1996, as amended on December 31, 1996. Under the
agreement, Mr. Rodgers will receive an annual base salary of $225,000, which
amount shall be reviewed (but not reduced) annually by the Board in its sole
discretion. Mr. Rodgers will be eligible for a bonus of up to 50% of his base
salary, which the Board anticipates awarding if Mr. Rodgers meets or exceeds
annual operational and financial objectives agreed to by the Board and Mr.
Rodgers. If the Company has not met or exceeded its financial or operational
objectives, the Board in its discretion may award Mr. Rodgers a bonus of less
than 50% of his base salary. Mr. Rodgers will also be entitled to all other
benefits as are approved by the Board and made available to the Company's senior
management.
Under the agreement, Mr. Rodgers purchased 96 shares of Class B Common
Stock at a price of $10 per share. In addition, under the agreement, Mr. Rodgers
agreed to purchase (upon consummation of certain additional investments by GTCR
Fund V in the Company) up to an additional 7,904 shares of Class B Common Stock
at a price of $10 per share; provided that Mr. Rodgers was entitled to purchase
all or any portion of such shares at a price of $10 per share at such earlier
time as Mr. Rodgers determined. Mr. Rodgers purchased all 7,904 of such
additional shares in January 1997. All shares of Class B Common Stock owned by
Mr. Rodgers will vest over a five-year period beginning March 1997.
Mr. Rodgers' employment with the Company will continue until terminated by
the resignation, death or disability of Mr. Rodgers or by the Board in its good
faith judgment that termination of Mr. Rodgers' employment is in the best
interests of the Company. In the event Mr. Rodgers' employment is terminated (i)
by the Company without cause, (ii) by Mr. Rodgers with good reason or (iii) as a
result of Mr. Rodgers' death or disability, until the end of the six-month
period commencing on the date of his termination, the Company shall pay to Mr.
Rodgers (or his estate) his annual base salary and allow Mr. Rodgers to continue
to participate in all of the Company's medical, disability and life insurance
plans to the extent permitted by the Company's insurance carriers at a cost not
materially in excess of the Company's cost for such insurance immediately prior
to the date of termination. In addition, the Company shall have the option to
extend the severance period to the second anniversary of the date of
termination, during which period the Company shall pay to Mr. Rodgers (or his
estate) his annual base salary and allow Mr. Rodgers to continue to participate
in all of the Company's medical, disability and life insurance plans to the
extent permitted by the Company's insurance carriers at a cost not materially in
excess of the Company's cost for such insurance immediately prior to the date of
termination. Mr. Rodgers has agreed not to compete with the Company during the
term of his employment and for six months thereafter and during the extended
period (if any) and has agreed not to solicit any employees or customers of the
Company during the two years following the date of termination of his
employment.
Dennis O'Connor. Mr. O'Connor is party to a senior management agreement
with the Company dated as of December 31, 1996. Under the agreement, Mr.
O'Connor will receive an annual base salary of $125,000, which amount shall be
reviewed (but not reduced) annually by the Company's Chief Executive Officer
with the approval of the Board in its sole discretion. Mr. O'Connor will also be
entitled to all other benefits as are approved by the Board and made available
to the Company's senior management.
Under the agreement, Mr. O'Connor purchased 24 shares of Class B Common
Stock at a price of $10 per share. In addition, under the agreement, Mr.
O'Connor agreed to purchase (upon consummation of certain additional investments
by GTCR Fund V in the Company) up to an additional 1,976 shares of Class B
Common Stock at a price of $10 per share; provided that Mr. O'Connor was
entitled to purchase all or any portion of such shares at a price of $10 per
share at such earlier time or times as Mr. O'Connor determined.
40
<PAGE> 46
Mr. O'Connor purchased all 1,976 of such additional shares in January 1997. All
shares of Class B Common Stock owned by Mr. O'Connor will vest over a five-year
period beginning March 1997.
Mr. O'Connor's employment with the Company will continue until terminated
by the resignation, death or disability of Mr. O'Connor or by the Board in its
good faith judgment that termination of Mr. O'Connor's employment is in the best
interests of the Company. In the event Mr. O'Connor's employment is terminated
(i) by the Company without cause, (ii) by Mr. O'Connor with good reason or (iii)
as a result of Mr. O'Connor's death or disability, until the end of the
six-month period commencing on the date of his termination, the Company shall
pay to Mr. O'Connor (or his estate) his annual base salary and allow Mr.
O'Connor to continue to participate in all of the Company's medical, disability
and life insurance plans to the extent permitted by the Company's insurance
carriers at a cost not materially in excess of the Company's cost for such
insurance immediately prior to the date of termination. In addition, the Company
shall have the option to extend the severance period to the second anniversary
of the date of termination, during which period the Company shall pay to Mr.
O'Connor (or his estate) his annual base salary and allow Mr. O'Connor to
continue to participate in all of the Company's medical, disability and life
insurance plans to the extent permitted by the Company's insurance carriers at a
cost not materially in excess of the Company's cost for such insurance
immediately prior to the date of termination. Mr. O'Connor has agreed not to
compete with the Company during the term of his employment and for six months
thereafter and during the extended period (if any) and has agreed not to solicit
any employees or customers of the Company during the two years following the
date of termination of his employment.
Paul Ingersoll. Mr. Ingersoll is party to a senior management agreement
with the Company dated as of June 4, 1996, as amended on December 31, 1996.
Under the agreement, Mr. Ingersoll will receive an annual base salary of
$80,000, which amount shall be reviewed (but not reduced) annually by the
Company's Chief Executive Officer with the approval of the Board in its sole
discretion. Mr. Ingersoll will also be entitled to all other benefits as are
approved by the Board and made available to the Company's senior management.
Under the agreement, Mr. Ingersoll purchased 12 shares of Class B Common
Stock at a price of $10 per share. In addition, under the agreement, Mr.
Ingersoll agreed to purchase (upon consummation of certain additional
investments by GTCR Fund V in the Company) up to an additional 988 shares of
Class B Common Stock at a price of $10 per share; provided that Mr. Ingersoll
was entitled to purchase all or any portion of such shares at a price of $10 per
share at such earlier time or times as Mr. Ingersoll determined. Mr. Ingersoll
purchased all 988 of such additional shares in January 1997. All shares of Class
B Common Stock owned by Mr. Ingersoll will vest over a five-year period
beginning March 1997.
Mr. Ingersoll's employment with the Company will continue until terminated
by the resignation, death or disability of Mr. Ingersoll or by the Board in its
good faith judgment that termination of Mr. Ingersoll's employment is in the
best interests of the Company. In the event Mr. Ingersoll's employment is
terminated (i) by the Company without cause, (ii) by Mr. Ingersoll with good
reason or (iii) as a result of Mr. Ingersoll's death or disability, until the
end of the six-month period commencing on the date of his termination, the
Company shall pay to Mr. Ingersoll (or his estate) his annual base salary and
allow Mr. Ingersoll to continue to participate in all of the Company's medical,
disability and life insurance plans to the extent permitted by the Company's
insurance carriers at a cost not materially in excess of the Company's cost for
such insurance immediately prior to the date of termination. In addition, the
Company shall have the option to extend the severance period to the second
anniversary of the date of termination, during which period the Company shall
pay to Mr. Ingersoll (or his estate) his annual base salary and allow Mr.
Ingersoll to continue to participate in all of the Company's medical, disability
and life insurance plans to the extent permitted by the Company's insurance
carriers at a cost not materially in excess of the Company's cost for such
insurance immediately prior to the date of termination. Mr. Ingersoll has agreed
not to compete with the Company during the term of his employment and for six
months thereafter and during the extended period (if any) and has agreed not to
solicit any employees or customers of the Company during the two years following
the date of termination of his employment.
41
<PAGE> 47
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In 1996, the Company had no compensation committee or other committee of
the Board performing similar functions. Accordingly, decisions concerning
compensation of executive officers were made by the entire Board. Other than
Kevin Rodgers, there were no officers or employees of the Company who
participated in deliberations concerning such compensation matters.
401(K) PROFIT SHARING PLAN
The Company maintains a savings plan (the "Savings Plan") qualified under
Section 401(a) and 401(k) of the Internal Revenue Code. Generally, all employees
of the Company in the United States who are at least 21 years of age and who
have completed six months of service are eligible to participate in the Savings
Plan. For each employee who elects to participate in the Savings Plan and makes
a contribution thereto, the Company makes a matching contribution of 50% of the
first 5% of annual compensation contributed. The maximum contribution for any
participant for any year is the maximum amount permitted under Internal Revenue
Code.
42
<PAGE> 48
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Class A Common Stock and Class B Common
Stock as of October 31, 1997 by (i) each stockholder known by the Company to own
beneficially five percent or more of the outstanding shares of the Company's
Common Stock, (ii) each current director of the Company, (iii) each Named
Executive Officer of the Company and (iv) all directors of the Company and
executive officers of the Company as a group. As of October 31, 1997, there were
25,011 shares of Class A Common Stock and 89,900 shares of Class B Common Stock
outstanding. To the knowledge of the Company, each stockholder has sole voting
and investment power with respect to the shares indicated as beneficially owned,
unless otherwise indicated in a footnote. Unless otherwise indicated, the
business address of each person is the Company's corporate address.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK(A) CLASS B COMMON STOCK(A)
-------------------------- --------------------------
NUMBER OF SHARES PERCENT NUMBER OF SHARES PERCENT
---------------- ------- ---------------- -------
<S> <C> <C> <C> <C>
GTCR Fund V(b)................................ 23,750 95.0% 75,000 83.4%
Kevin Rodgers................................. -- -- 8,000 8.9%
Dennis O'Connor............................... -- -- 2,000 2.2%
Paul Ingersoll................................ -- -- 1,000 1.1%
Carl Thoma(c)................................. 23,750 95.0% 75,000 83.4%
William Kessinger(c).......................... 23,750 95.0% 75,000 83.4%
Ronald St. Clair.............................. 97 * 300 *
All Directors and Executive Officers as a
Group (12 persons)(c)....................... 24,494 97.9% 88,550 98.5%
</TABLE>
- ---------------
* Less than one percent.
(a) See note 9 to the Consolidated Financial Statements of NES included
elsewhere herein.
(b) The address of GTCR Fund V is 6100 Sears Tower, Chicago, Illinois 60606.
(c) Includes 23,750 shares of Class A Common Stock and 75,000 shares of Class B
Common Stock held by GTCR Fund V, of which GTCR V, L.P. is the general
partner. Each of Messrs. Thoma and Kessinger is a principal of GTCR, the
general partner of GTCR V, L.P., and therefore may be deemed to share
investment and voting control over the shares of Common Stock held by GTCR
Fund V. Each of Messrs. Thoma and Kessinger disclaims beneficial ownership
of the shares of Common Stock owned by GTCR Fund V. The address of each of
these holders is 6100 Sears Tower, Chicago, Illinois 60606.
43
<PAGE> 49
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN LOANS TO EXECUTIVES
The Company loaned $64,000 to Mr. Rodgers, $20,000 to Mr. O'Connor and
$10,000 to Mr. Ingersoll pursuant to promissory notes (the "Executive Notes") to
finance their purchase of the Company's securities. See "Business -- Management
Employment Agreements." Each of the Executive Notes is secured by a pledge of
the securities purchased with such Executive Note pursuant to an Executive Stock
Pledge Agreement between the Company and each of Messrs. Rodgers, O'Connor and
Ingersoll. The Executive Notes bear interest at a rate per annum equal to the
applicable federal rate as set forth in Section 1274(d) of the Internal Revenue
Code of 1986, as amended. The principal amount of the Executive Notes and all
interest accrued thereon mature in part on June 4, 2006, with the remainder
maturing on January 6, 2007. The Executive Notes may be prepaid in full or in
part at any time.
PROFESSIONAL SERVICES AGREEMENT
The Company has a Professional Services Agreement (the "Professional
Services Agreement") with GTCR pursuant to which GTCR provides financial and
management consulting services to the Company. Under the Professional Services
Agreement, GTCR receives an annual management fee of $200,000 (plus
reimbursement of out-of-pocket expenses) and a fee of 1% of the amount of debt
or equity capital raised by the Company from any source, for their assistance in
obtaining such capital. GTCR agreed to waive the fee which was payable upon
consummation of the Initial Offering. For the year ended December 31, 1996 and
through September 30, 1997, the Company had paid or accrued $417,238 and
$580,000, respectively, in fees under the Professional Services Agreement. The
Professional Services Agreement will be terminated automatically upon GTCR Fund
V ceasing to own at least 10% of the Company's Common Stock.
STOCKHOLDERS AGREEMENT AND REGISTRATION AGREEMENT
The Company and its stockholders entered into a Stockholders Agreement
dated as of June 4, 1996 (the "Stockholders Agreement") which (i) provides for
the designation of the Board of Directors of the Company, (ii) imposes certain
restrictions on the transfer of shares of the Company, (iii) requires the
stockholders to take certain actions upon the approval by a majority of the
stockholders in connection with an initial public offering or a sale of the
Company, (iv) requires the Company to offer to sell shares to the stockholders
under certain circumstances upon authorization of an issuance or sale of
additional shares, and (v) grants certain of the stockholders certain
participation rights in connection with a sale of shares by other stockholders.
The Company and its stockholders entered into a Registration Agreement
dated as of June 4, 1996 (the "Registration Agreement") pursuant to which the
stockholders have the right in certain circumstances and, subject to certain
conditions, to require the Company to register shares of the Company's Common
Stock held by them under the Securities Act. Under the Registration Agreement,
except in limited circumstances, the Company is obligated to pay all expenses in
connection with such registration.
ACQUISITION OF INDUSTRIAL HOIST SERVICES
On January 6, 1997, a wholly owned subsidiary of the Company acquired
certain of the assets of the Industrial Hoist Businesses in exchange for (i) a
$5.0 million cash payment (subject to a customary purchase price adjustment
mechanism) and (ii) the assumption of certain liabilities and obligations (the
"Industrial Hoist Acquisition"). James Kowalik, the current Vice President of
Industrial Hoist Services, was a stockholder of the Industrial Hoist Businesses.
In connection with the Industrial Hoist Acquisition, Industrial Crane
Maintenance Systems, Inc. ("ICMS"), an entity 50% of which is owned by Mr.
Kowalik, entered into a Stock Purchase Agreement (the "Industrial Hoist Stock
Purchase Agreement"), pursuant to which ICMS acquired from the Company 97 shares
of Class A Common Stock at a purchase price of $1,000 per share and 300 shares
of Class B Common Stock at a purchase price of $10 per share. On January 10,
1997, Insect, Inc. (formerly known as ICMS) entered into a Stock Transfer
Agreement (the "Industrial Hoist Stock Transfer Agreement") with Mr. Kowalik and
its other stockholder pursuant to which Insect, Inc. transferred 48.5 shares of
Class A Common Stock and 150 shares of Class B Common Stock to each of Mr.
Kowalik and such other stockholder. The Industrial Hoist Stock Purchase
Agreement and the Industrial Hoist Stock Transfer Agreement
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(i) impose certain restrictions on the transfer of, and entitle the Company to
certain rights of refusal with respect to, the shares acquired by Mr. Kowalik
under the Industrial Hoist Stock Purchase Agreement and the Industrial Hoist
Stock Transfer Agreement and (ii) entitle the Company and GTCR Fund V to
repurchase the shares acquired by Mr. Kowalik under the Industrial Hoist Stock
Transfer Agreement upon termination of Mr. Kowalik's employment.
Mr. Kowalik is party to an Employment Agreement with a subsidiary of the
Company dated as of January 6, 1997. Under the agreement, Mr. Kowalik will
receive an annual base salary of $100,000, which amount shall be subject to
review by the Board on an annual basis. Mr. Kowalik will also be entitled to
participate in all employee benefit programs for which senior executive
employees are generally eligible. Mr. Kowalik will also be entitled to earn an
annual bonus based on satisfaction of certain financial performance criteria.
Mr. Kowalik's employment will continue until January 6, 1999 unless earlier
terminated with or without cause or by the resignation, death or disability of
Mr. Kowalik. In the event Mr. Kowalik's employment is terminated without cause,
Mr. Kowalik will be entitled to receive his base salary through January 6, 1999.
In the event Mr. Kowalik's employment is terminated with cause or because of Mr.
Kowalik's resignation, death or disability, Mr. Kowalik will be entitled to
receive his base salary through the date of termination. All of Mr. Kowalik's
rights to fringe benefits and bonuses under the agreement which accrue or become
payable after the termination of his employment shall cease upon such
termination. Mr. Kowalik has agreed that, during the term of his employment and
for two years thereafter, he will not compete with such subsidiary of the
Company anywhere in North America. Mr. Kowalik has also agreed that, during the
term of his employment and for two years thereafter, he will not solicit any
employees, suppliers or customers.
In connection with the Industrial Hoist Acquisition, such subsidiary of the
Company entered into a lease dated January 6, 1997 with ES&L Service pursuant to
which ES&L Service will lease to the Company its facilities in Brazoria, Texas
for $5,000 per month. The lease has an initial term of two years and the Company
has the option to extend the term of the lease for an additional three years at
the same monthly rental rate. Mr. Kowalik is a partner of ES&L Service.
Management believes that the monthly rentals under such lease represent the fair
rental value of the property.
ACQUISITION OF AERIAL PLATFORMS
On February 18, 1997, the Company acquired all of the outstanding common
stock of Aerial pursuant to a Stock Purchase Agreement (the "Aerial Stock
Purchase Agreement") in exchange for (i) a $3.8 million cash payment (subject to
a customary purchase price adjustment mechanism), (ii) a promissory note in the
principal amount of $500,000 ($350,000 of which is in partial consideration for
the common stock) (the "Aerial Platforms Note") and (iii) the assumption of
certain liabilities and obligations (the "Aerial Platforms Acquisition"). Carter
Wilson, the current Vice President of Aerial Platforms, was an officer and the
sole stockholder of Aerial prior to its acquisition by the Company. The Aerial
Platforms Note held by Mr. Wilson bears interest at a rate of 10% per annum. The
principal amount of the Aerial Platforms Note and all interest accrued thereon
mature on February 18, 2002. The Aerial Platforms Note may be prepaid in whole
or in part at any time. A portion of the proceeds of the Offering will be used
to repay the Aerial Platforms Note in full.
In addition, the Aerial Stock Purchase Agreement provides that until
February 18, 2002 Mr. Wilson will not engage directly or indirectly in any
business that Aerial conducts or proposes to conduct as of the date of the
Aerial Platforms Acquisition. In consideration for such noncompete covenants,
the Company issued the remaining $150,000 principal amount of the Aerial
Platforms Note. In addition, the Aerial Stock Purchase Agreement provides that
until February 18, 2002 Mr. Wilson will not solicit any employees or customers.
In connection with the Aerial Platforms Acquisition, Mr. Wilson entered
into a Stock Transfer Agreement (the "Aerial Platforms Stock Transfer
Agreement") pursuant to which Mr. Wilson acquired from the Company 97 shares of
Class A Common Stock at a purchase price of $1,000 per share and 300 shares of
Class B Common Stock at a purchase price of $10 per share. The Aerial Platforms
Stock Transfer Agreement (i) imposes certain restrictions on the transfer of,
and entitles the Company to certain rights of refusal with respect to, the
shares acquired by Mr. Wilson under the Aerial Platforms Stock Transfer
Agreement and (ii) entitles the Company and GTCR Fund V to repurchase the shares
acquired by Mr. Wilson under the
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Aerial Platforms Stock Transfer Agreement upon termination of Mr. Wilson's
employment with Aerial Platforms.
Mr. Wilson is party to an Employment Agreement with a subsidiary of the
Company dated as of February 18, 1997. Under the agreement, Mr. Wilson will
receive an annual base salary of $100,000, which amount shall be subject to
review by the Board on an annual basis. Mr. Wilson will also be entitled to
participate in all employee benefit programs for which senior executive
employees are generally eligible. Mr. Wilson will also be entitled to earn an
annual bonus based on satisfaction of certain financial performance criteria.
Mr. Wilson's employment will continue until February 18, 2000 unless earlier
terminated with or without cause or by the resignation, death or disability of
Mr. Wilson. In the event Mr. Wilson's employment is terminated without cause,
Mr. Wilson will be entitled to receive his base salary through the first to
occur of (i) the six-month anniversary of the date of termination and (ii)
February 18, 2000. All of Mr. Wilson's rights to fringe benefits and bonuses
under the agreement which accrue or become payable after the termination of his
employment shall cease upon such termination. Mr. Wilson has agreed that, during
the term of his employment and for five years thereafter, he will not compete
with such subsidiary anywhere within the State of Georgia or any other
geographic area in which such subsidiary conducted business on the date of the
Aerial Platforms Acquisition. Mr. Wilson has also agreed that, during the term
of his employment and for five years thereafter, he will not solicit any
employees or customers.
In connection with the Aerial Platforms Acquisition, the Company and Mr.
Wilson entered into a Finder's Fee Agreement pursuant to which the Company
agreed to pay, subject to certain conditions, Mr. Wilson a one-time $150,000 fee
if the Company consummates certain target acquisitions by August 18, 1998.
Payments of $0 have been made to date under the Finder's Fee Agreement.
ACQUISITION OF LONE STAR RENTALS
On March 17, 1997, a subsidiary of the Company acquired substantially all
of the assets of Lone Star pursuant to an Asset Purchase Agreement (the "Lone
Star Asset Purchase Agreement") in exchange for (i) a $10.6 million cash payment
(subject to a customary purchase price adjustment mechanism), (ii) a promissory
note in the principal amount of $500,000 (the "Lone Star Note") ($350,000 of
which is in partial consideration for such assets) and (iii) the assumption of
certain liabilities and obligations (the "Lone Star Acquisition"). James
Horsley, the current Vice President of Lone Star Rentals, was the sole
stockholder of Lone Star. The Lone Star Note held by Mr. Horsley bears interest
at a rate of 10% per annum. The principal amount of the Lone Star Note and all
interest accrued thereon mature on March 17, 2002. The Lone Star Note may be
prepaid in whole or in part at any time. A portion of the proceeds of the
Offering will be used to repay the Lone Star Note in full.
In addition, the Lone Star Asset Purchase Agreement provides that until
March 17, 2002 Mr. Horsley will not engage directly or indirectly in any
business competing with the business of the Company and its affiliates as such
businesses exist or are contemplated to exist on the date of the Lone Star
Acquisition within 150 miles of any store location where the Company or any of
its affiliates at any time conducts such business (excluding any such store
location opened within 150 miles of any store location of a competing enterprise
with respect to which Mr. Horsley has previously incurred significant financial
obligations or in which Mr. Horsley has previously made a significant financial
investment not in violation of any noncompete covenants in the Lone Star Asset
Purchase Agreement). In consideration for such noncompete covenants, the Company
issued the remaining $150,000 principal amount of the Lone Star Note. In
addition, the Lone Star Asset Purchase Agreement provides that until March 17,
2002 Mr. Horsley will not solicit any employees or customers.
In connection with the Lone Star Acquisition, Mr. Horsley entered into a
Stock Purchase Agreement (the "Lone Star Stock Purchase Agreement") pursuant to
which Mr. Horsley acquired from the Company 97 shares of Class A Common at a
purchase price of $1,000 per share and 300 shares of Class B Common at a
purchase price of $10 per share. In addition, the Company granted Mr. Horsley an
option to acquire, within 120 days of March 17, 1997, up to an additional 388
shares of Class A Common at a purchase price of $1,000 per share and 1,200
shares of Class B Common at a purchase price of $10 per share. On July 15, 1997,
Mr. Horsley exercised this option in part and acquired an additional 194 shares
of Class A Common and 600 shares of Class B Common. The remaining options
expired unexercised. In addition, the Lone Star Stock
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Purchase Agreement (i) imposes certain restrictions on the transfer of, and
entitles the Company to certain rights of refusal with respect to, the shares
acquired by Mr. Horsley under the Lone Star Stock Purchase Agreement and (ii)
entitles the Company and GTCR Fund V to repurchase the shares acquired by Mr.
Horsley under the Lone Star Stock Purchase Agreement upon termination of his
employment with the Company or its subsidiaries.
Mr. Horsley is party to an Employment Agreement with a subsidiary of the
Company dated as of March 17, 1997. Under the agreement, Mr. Horsley will
receive an annual base salary of $100,000, which amount shall be subject to
review by the Board on an annual basis. Mr. Horsley will also be entitled to
participate in all employee benefit programs for which senior executive
employees are generally eligible. Mr. Horsley will also be entitled to earn an
annual bonus based on satisfaction of certain financial performance criteria and
to receive a $575 monthly allowance for expenses incurred in connection with his
use of his personal vehicle in performing his duties. Mr. Horsley's employment
will continue until March 17, 1999 unless earlier terminated with or without
cause or by the resignation, death or disability of Mr. Horsley. In the event
Mr. Horsley's employment is terminated without cause, Mr. Horsley will be
entitled to receive his base salary through the first to occur of (i) the
six-month anniversary of the date of termination and (ii) March 17, 1999. All of
Mr. Horsley's rights to fringe benefits and bonuses under the agreement which
accrue or become payable after the termination of his employment shall cease
upon such termination. Mr. Horsley has agreed that, during the term of his
employment and for two years thereafter, he will not compete with such
subsidiary (i) prior to termination of his employment, anywhere in the United
States, and (ii) after termination of his employment, within 150 miles of any
store location of the Company or any of its affiliates (excluding any such store
location opened within 150 miles of any store location of a competing enterprise
with respect to which Mr. Horsley has previously incurred significant financial
obligations or in which Mr. Horsley has previously made a significant financial
investment not in violation of any noncompete covenants in his employment
agreement). Mr. Horsley has also agreed that, during the term of his employment
and for two years thereafter, he will not solicit any employees or customers.
In connection with the Lone Star Acquisition, a subsidiary of the Company
entered into five separate leases with Mr. Horsley, each dated March 17, 1997,
pursuant to which Mr. Horsley leases to that subsidiary, the Company's
facilities in (i) Humble, Texas, (ii) Pasadena, Texas, (iii) Corpus Christi,
Texas, (iv) Houston, Texas (State Hwy.) and (v) Houston, Texas (North Shepard)
for monthly rentals in the amount of (i) $3,800, (ii) $5,200, (iii) $4,000, (iv)
$3,200, and (v) $4,000, respectively. Each lease has an initial term of five
years and the Company has the option to extend the term of each lease for four
additional periods of five years each at monthly rental rates specified in each
lease. Management believes that the monthly rentals under such leases represent
the fair rental value of the properties.
ACQUISITION OF SPRINTANK
On July 1, 1997, a subsidiary of the Company acquired substantially all of
the assets relating to the SPRINTANK division of Sprint Industrial Services,
Inc. ("Sprint Industrial") pursuant to an Asset Purchase Agreement (the
"Sprintank Asset Purchase Agreement") in exchange for (i) a $25.3 million cash
payment (subject to a customary purchase price adjustment mechanism) and (ii)
the assumption of certain liabilities and obligations (the "Sprintank
Acquisition"). Joseph Swinbank, the current Vice President of Sprintank, was an
officer and a stockholder of Sprint Industrial. The Sprintank Asset Purchase
Agreement provides that until July 1, 2002 Mr. Swinbank will not directly or
indirectly own, manage, control, participate in, consult with, render services
for, or in any manner engage in any business competing with the businesses of
such subsidiary or its affiliates which are substantially the same as the
business of the SPRINTANK division immediately prior to the Sprintank
Acquisition within Alabama, Louisiana, Mississippi and Texas. In addition, the
Sprintank Asset Purchase Agreement provides that until July 1, 2002 Mr. Swinbank
will not solicit any employees or customers.
In connection with the Sprintank Acquisition, Mr. Swinbank entered into a
Stock Purchase Agreement (the "Sprintank Stock Purchase Agreement"), pursuant to
which Mr. Swinbank acquired from the Company 194 shares of Class A Common at a
purchase price of $1,000 per share and 600 shares of Class B Common at a
purchase price of $10 per share. In addition, the Sprintank Stock Purchase
Agreement (i) imposes certain restrictions on the transfer of, and entitles the
Company to certain rights of refusal with respect to, the shares
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acquired by Mr. Swinbank under the Sprintank Stock Purchase Agreement and (ii)
entitles the Company and GTCR Fund V to repurchase the shares acquired by Mr.
Swinbank under the Sprintank Stock Purchase Agreement after material breach of
the terms and conditions of his noncompetition agreement.
Mr. Swinbank is party to a Consulting Agreement with a subsidiary of the
Company dated as of July 1, 1997. Under the agreement, Mr. Swinbank will render
consulting services from time to time as reasonably requested consistent with
Mr. Swinbank's past services for Sprint Industrial; provided that Mr. Swinbank
shall not be required to perform such services for more than ten working days
out of every month. In return for rendering such services, Mr. Swinbank will
receive $10,000 per month and reimbursement for reasonable expenses incurred in
the course of performing his consulting services, but will not be entitled to
any fringe benefits or perquisites.
Mr. Swinbank is party to a Noncompetition Agreement with such subsidiary
dated as of July 1, 1997. Pursuant to this agreement, Mr. Swinbank has agreed
that, during the two-year period commencing on the date of termination of his
consulting arrangement, he will not own any interest in, manage, control,
participate in, consult with or render services for any industrial tank or
mobile storage box rental business in any state or country in which such
subsidiary conducts such business on the date of termination. In addition, Mr.
Swinbank has agreed not to solicit any employees or customers during the two
years following the date of termination of the consulting arrangement. In
consideration for such noncompetition and nonsolicitation covenants, Mr.
Swinbank was paid $250,000.
In connection with the Sprintank Acquisition, a subsidiary of the Company
entered into two separate leases with Sprint Industrial, each dated as of July
1, 1997, pursuant to which Sprint Industrial leases to such subsidiary its
facilities in Robstown, Texas and St. Gabriel, Louisiana for monthly rentals in
the amount of $2,000 and $4,166, respectively. Each lease has an initial term of
ten years and the subsidiary has the option to extend the term of each lease for
two additional terms of five years each at monthly rental rates equal to market
rent as determined in accordance with appraisal procedures contained in each
lease. Management believes that the monthly rentals under such leases represent
the fair rental value of the properties.
In addition, in connection with the Sprintank Acquisition, a subsidiary of
the Company entered into a lease with Conrad Sauer, Ltd. ("Conrad") dated as of
July 1, 1997, pursuant to which Conrad will lease to such subsidiary its
facilities on Conrad Sauer Road in Houston, Texas for monthly rentals in the
amount of $6,000. The lease will continue on a month to month basis and may be
terminated by (i) such subsidiary upon thirty days prior notice and (ii) Conrad
upon six months prior notice. Mr. Swinbank, Vice President of Sprintank
Division, is a partner of Conrad. Management believes that the monthly rentals
under such lease represent the fair rental value of the property.
ACQUISITION OF EQUIPCO RENTALS & SALES
On July 18, 1997, the Company acquired all of the outstanding common stock
of MST in exchange for a $6.0 million cash payment (subject to a customary
purchase price adjustment mechanism) (the "Equipco Acquisition"). Marc Trubitz,
Vice President of Equipco Rentals & Sales, and his wife Suellen Trubitz
previously owned in the aggregate all of the common stock of MST.
Marc Trubitz is party to an Employment Agreement with a subsidiary of the
Company dated July 18, 1997. Under the agreement, Mr. Trubitz will receive an
annual base salary of $100,000. Mr. Trubitz will also be entitled to participate
in all employee benefit programs for which senior executive employees are
generally eligible; provided that the health and hospitalization benefits
provided to Mr. Trubitz shall be no less favorable, and the expense to Mr.
Trubitz shall be no greater, than were available to Mr. Trubitz immediately
prior to the Equipco Acquisition. Mr. Trubitz will also be entitled to earn an
annual bonus equal to an amount up to 45% of his base salary based on
satisfaction of certain financial performance criteria. Mr. Trubitz's employment
will continue until July 18, 1998 unless earlier terminated with or without
cause by the resignation, death or disability of Mr. Trubitz. In the event Mr.
Trubitz's employment is terminated as a result of the death or disability of Mr.
Trubitz, Mr. Trubitz will be entitled to receive his base salary through the
date of termination plus any bonus which accrues or becomes payable or which
would have been earned prior to July 18, 1998 but for such termination, prorated
to the date of termination. In the event Mr. Trubitz's employment is terminated
for cause or as a result of his resignation in the absence of a constructive
termination event, Mr. Trubitz shall be entitled to receive his base salary
through the date of termination and
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all of his rights to fringe benefits and bonuses shall cease upon such
termination. In the event Mr. Trubitz's employment is terminated other than for
cause or by the resignation of Mr. Trubitz as a result of a constructive
termination event, Mr. Trubitz shall be entitled to receive his base salary
through July 18, 1998 plus any bonus which accrues or becomes payable or which
would have been earned prior to July 18, 1998 but for such termination.
Each of Mr. and Mrs. Trubitz are parties to a Noncompetition Agreement (the
"Noncompetition Agreement") pursuant to which each has agreed that, during the
five-year period commencing July 18, 1997, they will not own any interest in,
manage, control, participate in, consult with or render services for any
equipment rental or maintenance business within a 100-mile radius of the
business premises of Equipco Rentals & Sales in Harrisonburg, Virginia. In
addition, each has agreed not to solicit any employees or customers of Equipco
Rentals & Sales during such five-year period. In consideration for such
covenants, the Company issued to each of Mr. and Mrs. Trubitz 48.5 shares of
Class A Common and 150 shares of Class B Common. In addition, Mr. and Mrs.
Trubitz entered into a Stock Transfer Agreement which (i) imposes certain
restrictions on the transfer of, and entitles the Company to certain rights of
refusal with respect to, the shares acquired by each of Mr. and Mrs. Trubitz
under the Noncompetition Agreement and (ii) entitles the Company of GTCR Fund V
to repurchase the shares acquired by each of Mr. and Mrs. Trubitz under the
Noncompetition Agreement after material breach of the terms and conditions of
the Noncompetition Agreement.
In connection with the Equipco Acquisition, a certain subsidiary of the
Company entered into a lease agreement with Mr. and Mrs. Trubitz dated as of
July 18, 1997, pursuant to which Mr. and Mrs. Trubitz will lease to the Company
its facilities in Harrisonburg, Virginia for monthly rentals in the amount of
$10,000, which amount shall be increased each year (including during any
extension periods) by 3% of the prior year's base rent. The lease agreement has
an initial term of five years and a certain subsidiary of the Company has the
option to extend the term for an additional period of five years. The Company
has guaranteed the performance of such subsidiary's obligations under the lease
agreement. Management believes that the monthly rentals under such leases
represent the fair rental value of the property.
DESCRIPTION OF CREDIT FACILITY
On July 1, 1997 (the "Borrowing Date"), the Company, NES Acquisition, BAT
and Aerial (collectively, the "Borrowers") entered into a credit agreement (the
"Credit Facility") with First Union Commercial Corporation, as agent, and
certain other financial institutions (the "Banks"). MST joined as an additional
borrower under the Credit Facility on July 18, 1997.
The Credit Facility provides for a revolving credit facility (with a letter
of credit subfacility not to exceed $500,000) and a term loan facility to the
Borrowers for up to $100.0 million of revolving loans (based on calculation of a
borrowing base which is based on a percentage of eligible receivables, eligible
parts and supplies inventory, eligible rental equipment and eligible new
equipment) and $15.0 million of term loans. Subject to certain restrictions, the
Credit Facility may be used to finance future acquisitions and capital
expenditures and for ongoing working capital and general corporate purposes of
the Company.
Repayment. Outstanding revolving loans under the Credit Facility must be
repaid on the fifth anniversary of the Borrowing Date. Revolving loans made
pursuant to the Credit Facility may be borrowed, repaid and reborrowed, without
premium or penalty, from time to time until the fifth anniversary of the
Borrowing Date, subject to the satisfaction of certain conditions on the date of
any such borrowing. Term loans made pursuant to the Credit Facility must be
repaid in sixteen quarterly installments as follows: $625,000 for all quarters
occurring from the Borrowing Date to June 1, 1998; $875,000 for all quarters
beginning September 1, 1998 through and including June 1, 1999; and $1,125,000
for all quarters through and including June 1, 2001. In addition, the Credit
Facility provides for mandatory prepayment of the term loan (or if the term loan
is no longer outstanding, the revolving loans) (i) within 90 days after the end
of each fiscal year in an amount equal to the lesser of 25% of the excess cash
flow earned during such fiscal year and $1,000,000 and (ii) out of any net cash
proceeds received from certain sales of assets. The term loan was reduced to $0
and terminated and borrowings under the revolving credit facility were
temporarily reduced to $0 with the proceeds of the Initial Offering.
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Security; Guaranty. The obligations of the Borrowers under the Credit
Facility are jointly and severally secured by all of the Borrowers' existing and
future property, subject to certain exceptions. In addition, the Company has
pledged the stock of each of its subsidiaries as further security for the
obligations under the Credit Facility.
Interest. At the Borrowers' option, the interest rate per annum applicable
to the loans under the Credit Facility will be a fluctuating rate of interest
measured by reference to one or a combination (at the Company's election) of the
following: (i) the Base Rate (as defined in the Credit Facility), plus the
applicable borrowing margin, or (ii) the relevant Eurodollar Rate (as defined in
the Credit Facility), plus the applicable borrowing margin. The applicable
borrowing margin under the Credit Facility will range from 0.50% to 1.25% for
Base Rate-based borrowings and 2.00% to 2.75% for Eurodollar Rate-based
borrowings. Both Base Rate and Eurodollar Rate interest on the Credit Facility
are determined quarterly based on the ratio of Consolidated Funded Indebtedness
(as defined in the Credit Facility) to Consolidated EBITDA (as defined in the
Credit Facility).
Fees. The Borrowers have agreed to pay certain fees in connection with the
Credit Facility, including (i) letter of credit fees, (ii) agency and lender's
fees and (iii) unused line fees. Unused line fees are payable monthly at a rate
per annum ranging from 0.375% to 0.50% on the undrawn amounts of the revolving
loan commitment under the Credit Facility based on the Leverage Ratio (as
defined in the Credit Facility) of the Company and its subsidiaries.
Covenants. The Credit Facility requires the Company to meet certain
financial tests, including a maximum leverage ratio, a minimum interest/rental
expense coverage ratio, a minimum fixed charge coverage ratio and a minimum
consolidated net worth. The Credit Facility also contains covenants which, among
other things, restrict the ability of the Borrowers (subject to certain
exceptions) to incur liens, incur indebtedness, sell assets, engage in mergers,
amend its certificate of incorporation or bylaws, guarantee debt, declare
dividends or redeem or repurchase capital stock, make loans and investments,
transact with affiliates, issue additional securities, modify material
contracts, grant liens, engage in sale-leaseback transactions and make capital
expenditures. The Credit Facility also requires the Borrowers to satisfy certain
customary affirmative covenants and to make certain customary indemnifications
to the Banks and the agents under the Credit Facility.
Events of Default. The Credit Facility contains customary events of
default, including payment defaults, breach of representations or warranties,
covenant defaults, certain events of bankruptcy and insolvency, ERISA
violations, judgment defaults, cross-defaults to certain other indebtedness and
a change in control of the Company.
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DESCRIPTION OF EXCHANGE NOTES
GENERAL
The Exchange Notes offered hereby will be issued as a separate series
pursuant to the Indenture (the "Indenture") dated November 25, 1995 among the
Company, the Subsidiary Guarantors and Harris Trust and Savings Bank, as trustee
(the "Trustee"). The form and terms of the Exchange Notes are the same as the
form and terms of the Old Notes (which they replace) except that (i) the
Exchange Notes bear a Series B designation and a different CUSIP number from the
Old Notes, (ii) the Exchange Notes have been registered under the Securities Act
and, therefore, will not bear legends restricting the transfer thereof, and
(iii) the holders of Exchange Notes will not be entitled to certain rights under
the Registration Rights Agreement, including the provisions providing for an
increase in the interest rate on the Old Notes in certain circumstances relating
to the timing of the Exchange Offer, which rights will terminate when the
Exchange Offer is consummated. The terms of the Exchange Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (the "Trust Indenture Act"). The Exchange Notes are
subject to all such terms, and Holders of Exchange Notes are referred to the
Indenture and the Trust Indenture Act for a statement thereof. Any Old Notes
that remain outstanding after completion of the Exchange Offer, together with
the Exchange Notes issued in connection with the Exchange Offer, will be treated
as a single class of securities under the Indenture. The following summary of
the material provisions of the Indenture does not purport to be complete and is
qualified in its entirety by reference to the Indenture, including the
definitions therein of certain terms used below. Copies of the proposed form of
Indenture and Registration Rights Agreement are available as set forth below
under "-- Additional Information". The definitions of certain terms used in the
following summary are set forth below under "-- Certain Definitions." For
purposes of this summary, the term "Company" refers only to National Equipment
Services, Inc. and not to any of its Subsidiaries.
The Notes will be general unsecured obligations of the Company and will be
subordinated in right of payment to all current and future Senior Debt. As of
September 30, 1997, after giving effect to the Initial Offering and the
application of the net proceeds therefrom, there would have been $0 of Senior
Debt of the Company and the Subsidiary Guarantors outstanding. Through its
Subsidiaries, the Company would have had liabilities (including trade payables)
aggregating approximately $8.0 million. The Indenture permits the incurrence of
additional Senior Debt in the future.
All of the Company's current Subsidiaries are Restricted Subsidiaries.
However, under certain circumstances, the Company is able to designate current
or future Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries
are not subject to many of the restrictive covenants set forth in the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $100.0 million and
will mature on November 30, 2004. Interest on the Notes will accrue at the rate
of 10% per annum and will be payable semi-annually in arrears on May 30 and
November 30, commencing on May 30, 1998, to Holders of record on the immediately
preceding May 15 and November 15. Interest on the Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of original issuance. Interest will be computed on the basis
of a 360-day year comprised of twelve 30-day months. Principal, premium, if any,
and interest and Liquidated Damages on the Notes will be payable at the office
or agency of the Company maintained for such purpose within the City and State
of New York or, at the option of the Company, payment of interest and Liquidated
Damages may be made by check mailed to the Holders of the Notes at their
respective addresses set forth in the register of Holders of Notes; provided
that all payments of principal, premium, interest and Liquidated Damages with
respect to Notes the Holders of which have given wire transfer instructions to
the Company will be required to be made by wire transfer of immediately
available funds to the accounts specified by the Holders thereof. Until
otherwise designated by the Company, the Company's office or agency in New York
will be the office of the Trustee maintained for such purpose. The Notes will be
issued in denominations of $1,000 and integral multiples thereof.
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<PAGE> 57
SUBORDINATION
The payment of principal of, premium, if any, and interest on the Notes
will be subordinated in right of payment, as set forth in the Indenture, to the
prior payment in full of all Senior Debt, whether outstanding on the date of the
Indenture or thereafter incurred.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior Debt will be entitled to receive
payment in full of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any such proceeding at the rate specified in
the applicable Senior Debt) before the Holders of Notes will be entitled to
receive any payment with respect to the Notes, and until all Obligations with
respect to Senior Debt are paid in full, any distribution to which the Holders
of Notes would be entitled shall be made to the holders of Senior Debt (except
that Holders of Notes may receive and retain Permitted Junior Securities and
payments made from the trust described under "--Legal Defeasance and Covenant
Defeasance").
The Company also may not make any payment upon or in respect of the Notes
(except in Permitted Junior Securities or from the trust described under
"-- Legal Defeasance and Covenant Defeasance") if (i) a default in the payment
of the principal of, premium, if any, or interest on Designated Senior Debt
occurs and is continuing beyond any applicable period of grace or (ii) any other
default occurs and is continuing with respect to Designated Senior Debt that
permits holders of the Designated Senior Debt as to which such default relates
to accelerate its maturity and the Trustee receives a notice of such default (a
"Payment Blockage Notice") from the Company or the holders of any Designated
Senior Debt. Payments on the Notes may and shall be resumed (a) in the case of a
payment default, upon the date on which such default is cured or waived and (b)
in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on which the
applicable Payment Blockage Notice is received, unless the maturity of any
Designated Senior Debt has been accelerated. No new period of payment blockage
may be commenced unless and until (i) 360 days have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice and (ii) all
scheduled payments of principal, premium, if any, and interest on the Notes that
have come due have been paid in full in cash. No nonpayment default that existed
or was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice
unless such default shall have been cured or waived for a period of not less
than 90 consecutive days.
The Indenture requires that the Company promptly notify holders of Senior
Debt if payment of the Notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, Holders of Notes may recover less ratably than
creditors of the Company who are holders of Senior Debt. After giving effect to
the Initial Offering and the application of the proceeds therefrom, no Senior
Debt would have been outstanding at September 30, 1997. The Indenture will
limit, subject to certain financial tests, the amount of additional
Indebtedness, including Senior Debt, that the Company and its Subsidiaries can
incur. See "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock."
SUBSIDIARY GUARANTEES
The Company's payment obligations under the Notes will be jointly and
severally guaranteed (the "Subsidiary Guarantees") by the Subsidiary Guarantors.
The Subsidiary Guarantee of each Subsidiary Guarantor will be subordinated to
the prior payment in full of all Senior Debt of such Subsidiary Guarantor. The
obligations of each Subsidiary Guarantor under its Subsidiary Guarantee will be
limited so as not to constitute a fraudulent conveyance under applicable law.
See, however, "Risk Factors -- Fraudulent Conveyance."
The Indenture provides that no Subsidiary Guarantor may consolidate with or
merge with or into (whether or not such Subsidiary Guarantor is the surviving
Person), another corporation, Person or entity
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<PAGE> 58
whether or not affiliated with such Subsidiary Guarantor unless (i) except in
the case of a merger of such Subsidiary Guarantor with or into the Company or
another Subsidiary Guarantor and subject to the provisions of the following
paragraph, the Person formed by or surviving any such consolidation or merger
(if other than such Subsidiary Guarantor) assumes all the obligations of such
Subsidiary Guarantor pursuant to a supplemental indenture in form and substance
reasonably satisfactory to the Trustee, under the Notes, the Indenture and the
Registration Rights Agreement, (ii) immediately after giving effect to such
transaction, no Event of Default exists and (iii) except in the case of a merger
of such Subsidiary Guarantor with or into the Company or another Subsidiary
Guarantor, the Company would be permitted by virtue of the Company's pro forma
Fixed Charge Coverage Ratio, immediately after giving effect to such
transaction, to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the covenant described below under
the caption "-- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock."
The Indenture provides that in the event of a sale or other disposition of
all of the assets of any Subsidiary Guarantor, by way of merger, consolidation
or otherwise, or a sale or other disposition of all of the capital stock of any
Subsidiary Guarantor, then such Subsidiary Guarantor (in the event of a sale or
other disposition, by way of such a merger, consolidation or otherwise, of all
of the capital stock of such Subsidiary Guarantor) or the corporation acquiring
the property (in the event of a sale or other disposition of all of the assets
of such Subsidiary Guarantor) will be released and relieved of any obligations
under its Subsidiary Guarantee; provided that the Net Proceeds of such sale or
other disposition are applied in accordance with the applicable provisions of
the Indenture. See "-- Repurchase at Option of Holders -- Asset Sales."
OPTIONAL REDEMPTION
Except as described in the following paragraphs, the Notes will not be
redeemable at the Company's option prior to November 30, 2001. Thereafter, the
Notes will be subject to redemption at any time at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' notice, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on November 30 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2001.............................................. 105.000%
2002.............................................. 102.500%
2003 and thereafter............................... 100.000%
</TABLE>
Notwithstanding the foregoing, during the first 36 months after the date of
the Indenture, the Company may on any one or more occasions redeem up to 33% of
the aggregate principal amount of Notes originally issued under the Indenture at
a redemption price of 110% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of a public offering of common stock of the Company;
provided that at least 67% of the aggregate principal amount of Notes remain
outstanding immediately after the occurrence of such redemption (excluding Notes
held by the Company and its Subsidiaries); and provided, further, that such
redemption shall occur within 45 days of the date of the closing of such public
offering.
In addition, at any time on or prior to November 30, 2001, the Notes may be
redeemed as a whole but not in part at the option of the Company upon the
occurrence of or in connection with a Change of Control, upon not less than 30
nor more than 60 days' notice (but in no event may any such redemption occur
prior to or more than 90 days after the occurrence of such Change of Control),
at a redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, subject to the right of Holders on the
relevant record date to receive interest due on the relevant interest payment
date.
"Applicable Premium" means, with respect to a Note at any redemption date,
the greater of (i) 1.0% of the principal amount of such Note or (ii) the excess
of (A) the present value at such time of (1) the
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<PAGE> 59
redemption price of such Note at November 30, 2001 (such redemption price being
set forth in the table above) plus (2) all required interest payments due on
such Note through November 30, 2001 (excluding accrued but unpaid interest),
computed using a discount rate equal to the Treasury Rate plus 75 basis points,
over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H. 15(519)
which has become publicly available at least two Business Days prior to the
redemption date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the redemption date to November 30, 2001, provided, however, that if
the period from the redemption date to November 30, 2001 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the redemption date to November 30, 2001
is less than one year, the weekly average yield on actually traded United States
Treasury securities adjusted to a constant maturity of one year shall be used.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, on a pro rata basis, by
lot or by such method as the Trustee shall deem fair and appropriate; provided
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on Notes or portions of them called for redemption.
MANDATORY REDEMPTION
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
Upon the occurrence of a Change of Control, each Holder of Notes will have
the right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at an offer price in cash equal
to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of Control,
the Company will mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to repurchase
Notes on the date specified in such notice, which date shall be no earlier than
30 days and no later than 60 days from the date such notice is mailed (the
"Change of Control Payment Date"), pursuant to the procedures required by the
Indenture and described in such notice. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so
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<PAGE> 60
tendered and (3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate principal
amount of Notes or portions thereof being purchased by the Company. The Paying
Agent will promptly mail to each Holder of Notes so tendered the Change of
Control Payment for such Notes, and the Trustee will promptly authenticate and
mail (or cause to be transferred by book entry) to each Holder a new Note equal
in principal amount to any unpurchased portion of the Notes surrendered, if any;
provided that each such new Note will be in a principal amount of $1,000 or an
integral multiple thereof. The Company will issue a press release announcing the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control, the Indenture does not contain
provisions that permit the Holders of the Notes to require that the Company
repurchase or redeem the Notes in the event of a takeover, recapitalization or
similar transaction.
The Credit Facility currently prohibits the Company from purchasing any
Notes prior to maturity, and also provides that certain change of control events
with respect to the Company would constitute a default thereunder. Any future
credit agreements or other agreements relating to Senior Debt to which the
Company becomes a party may contain similar restrictions and provisions. In the
event a Change of Control occurs at a time when the Company is prohibited from
purchasing Notes, the Company could seek the consent of its lenders to the
purchase of Notes or could attempt to refinance the borrowings that contain such
prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will remain prohibited from purchasing Notes. In such
case, the Company's failure to purchase tendered Notes would constitute an Event
of Default under the Indenture which would, in turn, constitute as default under
the Credit Facility. In such circumstances, the subordination provisions in the
Indenture would restrict payments to the Holders of Notes.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than a Principal or a Related Party of a Principal (as
defined below); (ii) the adoption by the Company of a plan relating to its
liquidation or dissolution; (iii) the consummation of any transaction
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above), other than the Principals and their
Related Parties, becomes the "beneficial owner" (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is currently exercisable or is exercisable
only upon the occurrence of a subsequent condition), directly or indirectly, of
more than 50% of the Voting Stock of the Company (measured by voting power
rather than number of shares); or (iv) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Restricted Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Notes to require
the Company to repurchase such Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of the Company
and its Restricted Subsidiaries taken as a whole to another Person or group may
be uncertain.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture, (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing
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Directors who were members of such Board at the time of such nomination or
election or (iii) was nominated for election or elected to such Board of
Directors pursuant to GTCR Fund V's rights under the Stockholders Agreement.
"Principals" means GTCR Fund V and its affiliates and Messrs. Kevin
Rodgers, Dennis O'Connor and Paul Ingersoll, members of their immediate families
and trusts of which such persons are the beneficiaries.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
Asset Sales
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) at least 75% of the
consideration therefor received by the Company or such Restricted Subsidiary is
in the form of cash; provided that the amount of (x) any liabilities (as shown
on the Company's or such Restricted Subsidiary's most recent balance sheet), of
the Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets and as to which
the Company or such Restricted Subsidiary is released from further liability and
(y) any securities, notes or other obligations received by the Company or any
such Restricted Subsidiary from such transferee that are contemporaneously
(subject to ordinary settlement periods) converted by the Company or such
Restricted Subsidiary into cash (to the extent of the cash received), shall be
deemed to be cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds , at its option, (a) to repay Senior
Debt, or (b) to the acquisition of a majority of the assets of, or a majority of
the Voting Stock of, another Permitted Business, the making of a capital
expenditure or the acquisition of other long-term assets or properties
(including, without limitation, equipment) that are used or useful in a
Permitted Business. Pending the final application of any such Net Proceeds, the
Company may temporarily reduce revolving credit borrowings or otherwise invest
such Net Proceeds in any manner that is not prohibited by the Indenture. Any Net
Proceeds from Asset Sales that are not applied or invested as provided in the
first sentence of this paragraph will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $7.0 million, the Company
will be required to make an offer to all Holders of Notes and all holders of
pari passu Indebtedness containing provisions similar to those set forth in the
Indenture with respect to offers to purchase or redeem with the proceeds of
sales of assets (an "Asset Sale Offer") to purchase the maximum principal amount
of Notes and such other Indebtedness that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the date of purchase, in accordance with the procedures set forth in
the Indenture and such other Indebtedness. To the extent that any Excess
Proceeds remain after consummation of an Asset Sale Offer, the Company may use
such Excess Proceeds for any purpose not otherwise prohibited by the Indenture.
If the aggregate principal amount of Notes and such other Indebtedness tendered
into such Asset Sale Offer surrendered by Holders thereof exceeds the amount of
Excess Proceeds, the Trustee shall select the Notes and such other Indebtedness
to be purchased on a pro rata basis. Upon completion of such offer to purchase,
the amount of Excess Proceeds shall be reset at zero.
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<PAGE> 62
CERTAIN COVENANTS
Restricted Payments
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay
any dividend or make any other payment or distribution on account of the
Company's or any of its Restricted Subsidiaries' Equity Interests (including,
without limitation, any payment in connection with any merger or consolidation
involving the Company or any of its Restricted Subsidiaries) or to the direct or
indirect holders of the Company's or any of its Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or to
the Company or a Restricted Subsidiary of the Company); (ii) purchase, redeem or
otherwise acquire or retire for value (including, without limitation, in
connection with any merger or consolidation involving the Company) any Equity
Interests of the Company or any direct or indirect parent of the Company; (iii)
make any payment on or with respect to, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is pari passu with
or subordinated to the Notes, except a payment of interest or principal at
Stated Maturity; or (iv) make any Restricted Investment (all such payments and
other actions set forth in clauses (i) through (iv) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
the covenant described below under caption "-- Incurrence of Indebtedness
and Issuance of Preferred Stock"; and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of the Indenture (excluding Restricted Payments
permitted by clauses (ii), (iii), (iv), (vi) and (viii) of the next
succeeding paragraph), is less than the sum, without duplication, of (i)
50% of the Consolidated Net Income of the Company for the period (taken as
one accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Indenture to the end of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), plus
(ii) 100% of the aggregate net cash proceeds received by the Company since
the date of the Indenture as a contribution to its common equity capital or
from the issue or sale of Equity Interests of the Company (other than
Disqualified Stock) or from the issue or sale of Disqualified Stock or debt
securities of the Company that have been converted into such Equity
Interests (other than Equity Interests (or Disqualified Stock or
convertible debt securities) sold to a Subsidiary of the Company), plus
(iii) to the extent that any Restricted Investment that was made after the
date of the Indenture is sold for cash or otherwise liquidated or repaid
for cash, the lesser of (A) the cash return of capital with respect to such
Restricted Investment (less the cost of disposition, if any) and (B) the
initial amount of such Restricted Investment, plus (iv) in the event the
Company or any Restricted Subsidiary makes any Investment in a Person that,
as a result of or in connection with such Investment, becomes a Restricted
Subsidiary, an amount equal to the Company's or any Restricted Subsidiary's
existing Restricted Investment in such Person that was previously treated
as a Restricted Payment.
The foregoing provisions do not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of the
Indenture, (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness or Equity Interests
of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be
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excluded from clause (c)(ii) of the preceding paragraph, (iii) the defeasance,
redemption, repurchase or other acquisition of pari passu or subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness, (iv) the payment of any dividend by a Restricted
Subsidiary of the Company to the holders of any class of its common Equity
Interests on a pro rata basis, (v) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Restricted Subsidiary of the Company held by any member of the Company's (or
any of its Restricted Subsidiaries') management pursuant to any management
equity subscription agreement or stock option agreement; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $1.0 million in any twelve-month period and no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction, (vi) the making and consummation of an Asset Sale Offer
to holders of Indebtedness pari passu with or subordinate to the Notes in
accordance with the provisions described above under "Asset Sales," (vii) the
making of loans to officers and directors of the Company or any Restricted
Subsidiary, the proceeds of which are contemporaneously used to purchase common
stock of the Company, in an amount not to exceed $5.0 million at any one time
outstanding, (viii) the repurchase, redemption, defeasance, retirement,
refinancing or acquisition for value or payment of principal of subordinated or
pari passu Indebtedness at a purchase price not greater than 101% of the
principal amount of such subordinated or pari passu Indebtedness in the event of
a Change of Control pursuant to a provision similar to the "-- Repurchase at the
Option of the Holders -- Change of Control" provisions above; provided, however,
that prior to the repurchase of any subordinated Indebtedness and concurrently
with the repurchase of any pari passu Indebtedness, the Company has made an
offer to purchase as provided in "Repurchase at the Option of the
Holders -- Change of Control" above with respect to the Notes and has
repurchased all Notes validly tendered for payment in connection with such offer
to purchase and (ix) the making of additional Restricted Payments in an amount
not to exceed $5.0 million.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any non-cash Restricted Payment shall be determined by the Board
of Directors whose resolution with respect thereto shall be delivered to the
Trustee, such determination to be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing
selected by the Board of Directors if such fair market value exceeds $5.0
million. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the covenant "Restricted Payments" were computed,
together with a copy of any fairness opinion or appraisal required by the
Indenture.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation. Such
designation will only be permitted if such Restricted Payment would be permitted
at such time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness (including
Acquired Debt) and that the Company will not issue any Disqualified Stock and
will not permit any of its Restricted Subsidiaries to issue any shares of
preferred stock; provided, however, that the Company may incur Indebtedness
(including Acquired Debt) or issue shares of Disqualified Stock and the
Subsidiary Guarantors may incur Indebtedness or issue preferred stock if the
Fixed Charge Coverage Ratio for the Company's most
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recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock or preferred stock is issued
would have been at least 2.0 to 1, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock or preferred stock had
been issued, as the case may be, at the beginning of such four-quarter period.
The provisions of the first paragraph of this covenant will not apply to
the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Company and the Subsidiary Guarantors of
Indebtedness under the Credit Facility; provided that the aggregate
principal amount of all Indebtedness (with letters of credit being deemed
to have a principal amount equal to the maximum potential liability of the
Company and the Subsidiary Guarantors thereunder) outstanding under the
Credit Facility after giving effect to such incurrence does not exceed the
greater of (a) $115.0 million or (b) the Borrowing Base;
(ii) the incurrence by the Company and its Restricted Subsidiaries of
the Existing Indebtedness;
(iii) the incurrence by the Company and the Subsidiary Guarantors of
Indebtedness represented by the Notes and the Subsidiary Guarantees;
(iv) the incurrence by the Company or any of the Subsidiary Guarantors
of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the
business of the Company or such Subsidiary Guarantor, in an aggregate
principal amount not to exceed $10.0 million at any time outstanding;
(v) the incurrence by the Company or any of the Subsidiary Guarantors
of Indebtedness in connection with the acquisition of assets or a new
Subsidiary; provided that such Indebtedness was incurred by the prior owner
of such assets or such Subsidiary prior to such acquisition by the Company
or one of the Subsidiary Guarantors and was not incurred in connection
with, or in contemplation of, such acquisition by the Company or one of the
Subsidiary Guarantors; and provided further that the principal amount (or
accreted value, as applicable) of such Indebtedness, together with any
other outstanding Indebtedness incurred pursuant to this clause (v) and any
Permitted Refinancing Indebtedness incurred to refund, refinance or replace
any Indebtedness incurred pursuant to this clause (v), does not exceed
$10.0 million at any time outstanding;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace Indebtedness
(other than intercompany Indebtedness) that was permitted by the Indenture
to be incurred under the first paragraph hereof or clauses (i), (ii) or
(iii) of this paragraph or this clause (vi);
(vii) the incurrence by the Company or any of the Subsidiary
Guarantors of intercompany Indebtedness or preferred stock between or among
the Company and any of the Subsidiary Guarantors; provided, however, that
(A) any subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness or preferred stock being held by a Person other than
the Company or a Subsidiary Guarantor and (B) any sale or other transfer of
any such Indebtedness or preferred stock to a Person that is not either the
Company or a Subsidiary Guarantor shall be deemed, in each case, to
constitute an incurrence of such Indebtedness or an issuance of such
preferred stock by the Company or such Subsidiary Guarantor, as the case
may be, that was not permitted by this clause (vii);
(viii) the incurrence by the Company or any of the Subsidiary
Guarantors of Hedging Obligations;
(ix) the guarantee by the Company or any of the Subsidiary Guarantors
of Indebtedness of the Company or a Subsidiary Guarantor that was permitted
to be incurred by another provision of this covenant;
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(x) the incurrence by the Company or any of the Subsidiary Guarantors
of additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (x), not to exceed $10.0
million; and
(xi) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company that was not permitted by this clause (xi).
For purposes of determining compliance with this covenant, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xi) above or is
entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify such item of Indebtedness in any
manner that complies with this covenant. Accrual of interest, accretion or
amortization of original issue discount, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Stock in the form of additional shares of
the same class of Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of this covenant;
provided, in each such case, that the amount thereof is included in Fixed
Charges of the Company as accrued.
Liens
The Indenture provides that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or suffer
to exist any Lien securing Indebtedness or trade payables on any asset now owned
or hereafter acquired, or any income or profits therefrom or assign or convey
any right to receive income therefrom, except Permitted Liens.
Dividend and Other Payment Restrictions Affecting Subsidiaries
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries (1) on
its Capital Stock or (2) with respect to any other interest or participation in,
or measured by, its profits, or (b) pay any Indebtedness owed to the Company or
any of its Restricted Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) transfer any of its properties or
assets to the Company or any of its Restricted Subsidiaries. However, the
foregoing restrictions do not apply to encumbrances or restrictions existing
under or by reason of (a) Existing Indebtedness as in effect on the date of the
Indenture, (b) the Credit Facility as in effect as of the date of the Indenture,
and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided that
such amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are not materially more restrictive,
taken as a whole, with respect to such dividend and other payment restrictions
than those contained in the Credit Facility as in effect on the date of the
Indenture, (c) the Indenture and the Notes, (d) applicable law, (e) any
instrument or contract of a Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such instrument or contract was entered into in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, (f) customary
non-assignment provisions in leases and other agreements entered into in the
ordinary course of business and consistent with past practices, (g) purchase
money obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iii) above on the
property so acquired, (h) any agreement for the sale of a Restricted Subsidiary
that restricts distributions by that Restricted Subsidiary pending its sale, (i)
Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive, taken as a whole, than those contained in the agreements governing
the Indebtedness being refinanced (as determined in good faith by the Board of
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Directors), (j) secured Indebtedness otherwise permitted to be incurred pursuant
to the provisions of the covenant described above under the caption "-- Liens"
that limits the right of the debtor to dispose of the assets securing such
Indebtedness, (k) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar agreements
entered into in the ordinary course of business and (l) restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into in
the ordinary course of business.
Additional Subsidiary Guarantees
The Indenture provides that if the Company or any of its Restricted
Subsidiaries shall acquire or create another Subsidiary after the date of the
Indenture (other than an Unrestricted Subsidiary), then such newly acquired or
created Subsidiary shall become a Subsidiary Guarantor and execute a
Supplemental Indenture in accordance with the terms of the Indenture.
Merger, Consolidation, or Sale of Assets
The Indenture provides that the Company may not consolidate or merge with
or into (whether or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia, (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of the
Company under the Registration Rights Agreement, the Notes and the Indenture
pursuant to a supplemental indenture in a form reasonably satisfactory to the
Trustee, (iii) immediately after such transaction no Event of Default exists and
(iv) except in the case of a merger of the Company with or into a Subsidiary
Guarantor, the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described above under the caption "-- Incurrence
of Indebtedness and Issuance of Preferred Stock."
Transactions with Affiliates
The Indenture provides that the Company will not, and will not permit any
of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing selected by the Board of Directors. Notwithstanding the foregoing, the
following items shall not be deemed to be Affiliate Transactions: (i) any
employment agreement entered into by the Company or
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any of its Restricted Subsidiaries in the ordinary course of business; (ii)
transactions between or among the Company and/or its Restricted Subsidiaries;
(iii) payment of reasonable directors fees to Persons who are not otherwise
Affiliates of the Company; (iv) Restricted Payments that are permitted by the
provisions of the Indenture described above under the caption "-- Restricted
Payments" as well as transactions that do not constitute Restricted Payments by
virtue of exceptions set forth in the definitions of "Investments" and
"Permitted Investments" set forth below under the caption "Certain Definitions;"
(v) reasonable indemnity provided on behalf of officers, directors, employees,
consultants or agents of the Company or any of its Restricted Subsidiaries as
determined in good faith by the Company's Board of Directors; and (vi) any
transactions undertaken pursuant to any contractual obligations or rights in
existence on the date of the Indenture (as in effect on such date) as described
herein under the caption "Certain Relationships and Related Transactions."
Anti-Layering
The Indenture provides that (i) the Company will not incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt and senior in any
respect in right of payment to the Notes, and (ii) no Subsidiary Guarantor will
incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to the Senior
Debt of such Subsidiary Guarantor and senior in any respect in right of payment
to the Subsidiary Guarantees.
Business Activities
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses, except to such extent as
would not be material to the Company and its Restricted Subsidiaries taken as a
whole.
Payments for Consent
The Indenture provides that neither the Company nor any of its Subsidiaries
will, directly or indirectly, pay or cause to be paid any consideration, whether
by way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or the Notes unless such consideration is offered to be paid or
is paid to all Holders of the Notes that consent, waive or agree to amend in the
time frame, on the terms and subject to the conditions set forth in the
solicitation documents relating to such consent, waiver or agreement.
Reports
The Indenture provides that, whether or not required by the rules and
regulations of the Securities and Exchange Commission (the "Commission"), so
long as any Notes are outstanding, the Company will furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K if the
Company were required to file such Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" that describes
the financial condition and results of operations of the Company and its
consolidated Subsidiaries and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports, in each case within the
time periods specified in the Commission's rules and regulations. In addition,
whether or not required by the rules and regulations of the Commission, the
Company will file a copy of all such information and reports with the Commission
for public availability within the time periods specified in the Commission's
rules and regulations (unless the Commission will not accept such a filing) and
make such information available to securities analysts and prospective investors
upon request. In addition, the Company has agreed that, for so long as is
required for an offer or sale of the Notes to qualify for an exemption under
Rule 144A, it will furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act.
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EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes (whether or not prohibited by the
subordination provisions of the Indenture); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indenture); (iii) failure by the Company or
any of its Subsidiaries to comply with the provisions described under the
captions "-- Repurchase at the Option of Holders -- Change of Control,"
"-- Asset Sales," "-- Certain Covenants -- Restricted Payments" or
"-- Incurrence of Indebtedness and Issuance of Preferred Stock," and such
default continues for ten days; (iv) failure by the Company or any of its
Subsidiaries for 60 days after notice to comply with any of its other agreements
in the Indenture or the Notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Subsidiaries) whether such Indebtedness or guarantee now exists, or
is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such Indebtedness on the
date of such default (a "Payment Default") or (b) results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $10 million or more; (vi) failure
by the Company or any of its Subsidiaries to pay final judgments aggregating in
excess of $10 million, not covered by insurance, which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) certain events of bankruptcy
or insolvency with respect to the Company or any of its Significant
Subsidiaries; and (viii) except as permitted by the Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Subsidiary Guarantor, or any Person acing on behalf of any Subsidiary Guarantor,
shall deny or disaffirm its obligations under its Subsidiary Guarantee (other
than by reason of release pursuant to the Indenture).
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Restricted Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
the Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of the Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Notes, the Indenture or for any claim based on, in respect of, or by reason of,
such obligations or their creation. Each Holder of Notes by accepting a Note
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waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all of its
obligations and the obligations of the Subsidiary Guarantors discharged with
respect to the outstanding Notes ("Legal Defeasance") except for (i) the rights
of Holders of outstanding Notes to receive payments in respect of the principal
of, premium, if any, and interest and Liquidated Damages on such Notes when such
payments are due from the trust referred to below, (ii) the Company's
obligations with respect to the Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payment and money for security payments
held in trust, (iii) the rights, powers, trusts, duties and immunities of the
Trustee, and the Company's obligations in connection therewith and (iv) the
Legal Defeasance provisions of the Indenture. In addition, the Company may, at
its option and at any time, elect to have the obligations of the Company
released with respect to certain covenants that are described in the Indenture
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, rehabilitation and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest and Liquidated Damages on
the outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be, and the Company must specify whether the Notes are
being defeased to maturity or to a particular redemption date, (ii) in the case
of Legal Defeasance, the Company shall have delivered to the Trustee an opinion
of counsel in the United States reasonably acceptable to the Trustee confirming
that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of the Indenture, there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion of counsel shall confirm that,
the Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred, (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that the Holders of the outstanding Notes
will not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred, (iv) no Default or Event
of Default shall have occurred and be continuing on the date of such deposit
(other than a Default or Event of Default resulting from the borrowing of funds
to be applied to such deposit) or insofar as Events of Default from bankruptcy
or insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit, (v) such Legal Defeasance or Covenant Defeasance
will not result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than the Indenture) to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound, including, without limitation, the Credit Facility, (vi)
the Company must have delivered to the Trustee an opinion of counsel to the
effect that after the 91st day following the deposit, the trust funds will not
be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally, (vii) the
Company must deliver to the Trustee an Officers' Certificate stating that the
deposit was not made by the Company with the intent of preferring the Holders of
Notes over the other creditors of the Company with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or others and (viii)
the Company must deliver to the Trustee an Officers' Certificate and an opinion
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of counsel, each stating that all conditions precedent provided for relating to
the Legal Defeasance or the Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any Note selected
for redemption. Also, the Company is not required to transfer or exchange any
Note for a period of 15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture,
the Notes or the Subsidiary Guarantees may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, Notes), and any
existing default or compliance with any provision of the Indenture, the Notes or
the Subsidiary Guarantees may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including, without
limitation, consents obtained in connection with a purchase of, or tender offer
or exchange offer for, Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver; (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption
"-- Repurchase at the Option of Holders"); (iii) reduce the rate of or change
the time for payment of interest on any Note; (iv) waive a Default or Event of
Default in the payment of principal of or premium, if any, or interest on the
Notes (except a rescission of acceleration of the Notes by the Holders of at
least a majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration); (v) make any Note payable
in money other than that stated in the Notes; (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or the rights
of Holders of Notes to receive payments of principal of or premium, if any, or
interest on the Notes; (vii) waive a redemption payment with respect to any Note
(other than a payment required by one of the covenants described above under the
caption "-- Repurchase at the Option of Holders"); or (viii) make any change in
the foregoing amendment and waiver provisions. In addition, any amendment to the
provisions of Article 10 or Article 12 of the Indenture (which relate to
subordination) will require the consent of the Holders of at least 75% in
aggregate principal amount of the Notes then outstanding if such amendment would
adversely affect the rights of Holders of Notes.
Notwithstanding the foregoing, without the consent of any Holder of Notes,
the Company, the Subsidiary Guarantors and the Trustee may amend or supplement
the Indenture, the Notes or the Subsidiary Guarantees to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the Company's
obligations to Holders of Notes in the case of a merger or consolidation or sale
of all or substantially all of the Company's assets, to make any change that
would provide any additional rights or benefits to the Holders of Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, to comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act or to
provide for additional Subsidiary Guarantors in accordance with the terms of the
Indenture.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of
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any such claim as security or otherwise. The Trustee will be permitted to engage
in other transactions; however, if it acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.
The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request of any Holder of Notes, unless such Holder shall have offered to the
Trustee security and indemnity satisfactory to it against any loss, liability or
expense.
ADDITIONAL INFORMATION
Anyone who receives this Offering Memorandum may obtain a copy of the
Indenture and Registration Rights Agreement without charge by writing to
National Equipment Services, Inc., 1800 Sherman Avenue, Evanston, Illinois
60201; Attention: Secretary.
BOOK-ENTRY, DELIVERY AND FORM
Except as set forth in the next paragraph, the Notes to be resold as set
forth herein will initially be issued in the form of one or more Global Notes
(the "Global Notes"). The Global Notes will be deposited on the date of the
closing of the sale of the Notes offered hereby (the "Closing Date") with, or on
behalf of, The Depository Trust Company (the "Depositary") and registered in the
name of Cede & Co., as nominee of the Depositary (such nominee being referred to
herein as the "Global Note Holder").
Notes that are issued as described below under "-- Certificated Securities"
will be issued in the form of registered definitive certificates (the
"Certificated Securities"). Upon the transfer of Certificated Securities, such
Certificated Securities may, unless all Global Notes have previously been
exchanged for Certificated Securities, be exchanged for an interest in the
Global Note representing the principal amount of Notes being transferred,
subject to the transfer restrictions set forth in the Indenture.
The Depositary is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depositary's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depositary's
Participants include securities brokers and dealers (including the Initial
Purchasers), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depositary's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depositary's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depositary only thorough the Depositary's
Participants or the Depositary's Indirect Participants.
The Company expects that pursuant to procedures established by the
Depositary (i) upon deposit of the Global Notes, the Depositary will credit the
accounts of Participants with portions of the principal amount of the Global
Notes and (ii) ownership of the Notes evidenced by the Global Notes will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by the Depositary (with respect to the interests of the
Depositary's Participants), the Depositary's Participants and the Depositary's
Indirect Participants. Prospective purchasers are advised that the laws of some
states require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer Notes evidenced
by the Global Note will be limited to such extent. For certain other
restrictions on the transferability of the Notes, see "Notice to Investors."
So long as the Global Note Holder is the registered owner of any Notes, the
Global Note Holder will be considered the sole Holder under the Indenture of any
Notes evidenced by the Global Notes. Beneficial
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owners of Notes evidenced by the Global Notes will not be considered the owners
or Holders thereof under the Indenture for any purpose, including with respect
to the giving of any directions, instructions or approvals to the Trustee
thereunder. Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records of the Depositary or for maintaining,
supervising or reviewing any records of the Depositary relating to the Notes.
Payments in respect of the principal of, premium, if any, interest and
Liquidated Damages, if any, on any Notes registered in the name of the Global
Note Holder on the applicable record date will be payable by the Trustee to or
at the direction of the Global Note Holder in its capacity as the registered
Holder under the Indenture. Under the terms of the Indenture, the Company and
the Trustee may treat the persons in whose names Notes, including the Global
Notes, are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither the Company nor the Trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of Notes. The Company believes, however, that it is currently the policy of the
Depositary to immediately credit the accounts of the relevant Participants with
such payments, in amounts proportionate to their respective holdings of
beneficial interests in the relevant security as shown on the records of the
Depositary. Payments by the Depositary's Participants and the Depositary's
Indirect Participants to the beneficial owners of Notes will be governed by
standing instructions and customary practice and will be the responsibility of
the Depositary's Participants or the Depositary's Indirect Participants.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in a
Global Note may, upon request to the Trustee, exchange such beneficial interest
for Notes in the form of Certificated Securities. Upon any such issuance, the
Trustee is required to register such Certificated Securities in the name of, and
cause the same to be delivered to, such person or persons (or the nominee of any
thereof). In addition, if (i) the Company notifies the Trustee in writing that
the Depositary is no longer willing or able to act as a depositary and the
Company is unable to locate a qualified successor within 90 days or (ii) the
Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of Notes in the form of Certificated Securities under the
Indenture, then, upon surrender by the Global Note Holder of its Global Note,
Notes in such form will be issued to each person that the Global Note Holder and
the Depositary identify as being the beneficial owner of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or the Depositary in identifying the beneficial owners of
Notes and the Company and the Trustee may conclusively rely on, and will be
protected in relying on, instructions from the Global Note Holder or the
Depositary for all purposes.
SAME DAY SETTLEMENT AND PAYMENT
The Indenture requires that payments in respect of the Notes represented by
the Global Note (including principal, premium, if any, interest and Liquidated
Damages, if any) be made by wire transfer of immediately available funds to the
accounts specified by the Global Note Holder. With respect to Certificated
Securities, the Company will make all payments of principal, premium, if any,
interest and Liquidated Damages, if any, by wire transfer of immediately
available funds to the accounts specified by the Holders thereof or, if no such
account is specified, by mailing a check to each such Holder's registered
address. The Company expects that secondary trading in the Certificated
Securities will also be settled in immediately available funds.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
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including, without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person, in each case to the
extent not repaid within five days after the date of the acquisition.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales and leases of inventory and equipment in the
ordinary course of business consistent with past practices (provided that the
sale, lease, conveyance or other disposition of all or substantially all of the
assets of the Company and its Restricted Subsidiaries taken as a whole will be
governed by the provisions of the Indenture described above under the caption
"-- Repurchase at the Option of Holders -- Change of Control" and/or the
provisions described above under the caption "-- Certain Covenants -- Merger,
Consolidation or Sale of Assets" and not by the provisions of the Asset Sale
covenant) and (ii) the issue or sale by the Company or any of its Restricted
Subsidiaries of Equity Interests of any of the Company's Restricted
Subsidiaries, in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $2.0 million or (b) for net proceeds in excess of $2.0
million. Notwithstanding the foregoing, the following items shall not be deemed
to be Asset Sales: (i) a transfer of assets by the Company to a Wholly Owned
Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to the Company
or to another Wholly Owned Restricted Subsidiary; (ii) an issuance of Equity
Interests by a Wholly Owned Restricted Subsidiary to the Company or to another
Wholly Owned Restricted Subsidiary; (iii) a Restricted Payment that is permitted
by the covenant described above under the caption "-- Certain
Covenants -- Restricted Payments;"(iv) the creation of any Lien not prohibited
by the covenant described above under the caption "Certain Covenants Liens;" and
(v) the conversion of Cash Equivalents into cash.
"Borrowing Base" means, as of any date, an amount equal to the sum of (a)
85% of the face amount of all accounts receivable owned by the Company and its
Restricted Subsidiaries as of such date that are not more than 90 days past due,
plus (b) 50% of the book value of the parts and supplies inventory owned by the
Company and its Restricted Subsidiaries as of such date, plus (c) 80% of the
orderly liquidation value of the rental equipment owned by the Company and its
Restricted Subsidiaries as of such date, plus (d) 80% of the cost of the new
equipment owned by the Company and its Restricted Subsidiaries as of such date,
all calculated on a consolidated basis and in accordance with GAAP. To the
extent that information is not available as to the amount of accounts receivable
or inventory or equipment as of a specific date, the Company may utilize the
most recent available information for purposes of calculating the Borrowing
Base.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of, the
issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition, (iii) certificates of deposit
and eurodollar time deposits with maturities of one year or less from the date
of acquisition, bankers' acceptances with maturities not exceeding
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one year and overnight bank deposits, in each case with any domestic commercial
bank having capital and surplus in excess of $500 million and a Thompson Bank
Watch Rating of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above, (v) commercial paper having a
rating of at least A-2 by Standard & Poor's Corporation or at least P-2 by
Moody's Investors Service, Inc. or at least an equivalent rating category of
another nationally recognized securities rating agency and in each case maturing
within one year after the date of acquisition and (vi) money market funds at
least 95% of the assets of which constitute Cash Equivalents of the kinds
described in clauses (i) - (v) of this definition.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net Income,
plus (iii) consolidated interest expense of such Person and its Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including,
without limitation, amortization of debt issuance costs and original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligation, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash expenses (including non-cash write-ups and
non-cash charges relating to inventory and fixed assets) of such Person and its
Subsidiaries for such period to the extent that such depreciation, amortization
and other non-cash expenses were deducted in computing such Consolidated Net
Income plus (v) an amount equal to 1/3 of the Consolidated Lease Expense of such
person and its Subsidiaries for such period, to the extent that any such expense
was deducted in computing such Consolidated Net Income, minus (vi) non-cash
items increasing such Consolidated Net Income for such period, in each case, on
a consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Subsidiary of a
Person shall be added to Consolidated Net Income to compute Consolidated Cash
Flow only to the extent (and in the same proportion) that the Net Income of such
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without prior
approval (that has not been obtained), pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Lease Expense" means, with respect to any Person for any
period, the aggregate rental obligations of such Person and its consolidated
Restricted Subsidiaries determined on a consolidated basis in accordance with
GAAP payable in respect of such period under leases of real and/or personal
property (net of income from subleases thereof, but including taxes, insurance,
maintenance and similar expenses that the lessee is obligated to pay under the
terms of such leases), whether or not such obligations are reflected as
liabilities or commitments on a consolidated balance sheet of such Person and
its Restricted Subsidiaries or in the notes thereto.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of
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that Net Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement (other than the Credit
Facility as in effect as of the date of the Indenture, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are not materially more restrictive, taken as a
whole, with respect to such restrictions on dividends and similar distributions
than those contained in the Credit Facility as in effect on the date of the
Indenture), instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded, (iv) the
cumulative effect of a change in accounting principles shall be excluded and (v)
the Net Income (but not loss) of any Unrestricted Subsidiary shall be excluded,
whether or not distributed to the Company or one of its Restricted Subsidiaries,
for purposes of the covenant described under the caption "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," and
shall be included for purposes of the covenant described under the caption
"-- Certain Covenants -- Restricted Payments" but only to the extent of the
amount of dividends or distributions paid in cash to the Company or one of its
Restricted Subsidiaries.
"Credit Facility" means that certain Credit Agreement, dated as of July 1,
1997, by and among the Company, NES Acquisition Corp., BAT Acquisition Corp.,
Aerial Platforms, Inc. and MST Enterprises, Inc. (pursuant to a Borrower Joinder
Agreement dated as of July 18, 1997), as Borrowers, First Union Commercial
Corporation, as Agent and Lender, and BankBoston, N.A., American National Bank
and Trust Company of Chicago, Comerica Bank, The CIT Group/Business Credit,
Inc., Bankers Trust Company, Harris Trust and Savings Bank, Heller Financial,
Inc. and Mercantile Business Credit Inc., as Lenders, providing for revolving
credit borrowings, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, in each
case as such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including, without limitation, increasing the amount of available
borrowings thereunder or adding Subsidiaries of the Company as additional
borrowers or guarantors thereunder) all or any portion of the Indebtedness under
such agreement or any successor or replacement agreement, whether by the same or
any other agent, lender or group of lenders, whether contained in one or more
agreements.
"Default" means any event that is or with the passage of time or the giving
of notice or both would be an Event of Default.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
Credit Facility and (ii) any other Senior Debt permitted under the Indenture the
principal amount of which is $25.0 million or more and that has been designated
by the Company as "Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
Change of Control or an Asset Sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with the covenant described above under the caption
"-- Certain Covenants -- Restricted Payments."
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means up to $2.0 million in aggregate principal
amount of Indebtedness of the Company and its Restricted Subsidiaries (other
than Indebtedness under the Credit Facility) in existence on the date of the
Indenture, until such amounts are repaid.
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"Fixed Charges" means, with respect to any Person and its Restricted
Subsidiaries for any period, the sum, without duplication, of (i) the
consolidated interest expense of such Person and its Restricted Subsidiaries for
such period, whether paid or accrued (including, without limitation,
amortization of debt issuance costs (other than debt issuance costs incurred in
connection with the Offering and the original Credit Facility) and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments associated
with Capital Lease Obligations, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations) and (ii)
the consolidated interest of such Person and its Restricted Subsidiaries that
was capitalized during such period, and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon), (iv) the product of (a) all dividend payments, whether or not in cash, on
any series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests payable solely in
Equity Interests of the Company (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in accordance
with GAAP and (v) an amount equal to 1/3 of the Consolidated Lease Expense of
such Person and its Restricted Subsidiaries for such period, whether paid or
accrued.
"Fixed Charge Coverage Ratio" means with respect to any Person and its
Restricted Subsidiaries for any period, the ratio of the Consolidated Cash Flow
of such Person and its Restricted Subsidiaries for such period to the Fixed
Charges of such Person and its Restricted Subsidiaries for such period. In the
event that the referent Person or any of its Restricted Subsidiaries incurs,
assumes, Guarantees or redeems any Indebtedness (other than revolving credit
borrowings) or issues or redeems preferred stock subsequent to the commencement
of the period for which the Fixed Charge Coverage Ratio is being calculated but
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred stock, as if the same had occurred at the beginning of
the applicable four-quarter reference period. In addition, for purposes of
making the computation referred to above, (i) acquisitions that have been made
by the Company or any of its Restricted Subsidiaries, including through mergers
or consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated (A) without giving effect to clause (iii)
of the proviso set forth in the definition of Consolidated Net Income and (B)
after giving pro forma effect to net cost savings that the Company reasonably
believes in good faith could have been achieved during the four-quarter
reference period as a result of such acquisition, which cost savings could then
be reflected in pro forma financial statements under GAAP, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, but
only to the extent that the obligations giving rise to such Fixed Charges will
not be obligations of the referent Person or any of its Restricted Subsidiaries
following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a
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pledge of assets or through letters of credit or reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of the
purchase price of any property or representing any Hedging Obligations, except
any such balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, as well as all Indebtedness of others secured
by a Lien on any asset of such Person (whether or not such Indebtedness is
assumed by such Person) and, to the extent not otherwise included, the Guarantee
by such Person of any indebtedness of any other Person. The amount of any
Indebtedness outstanding as of any date shall be (i) the accreted value thereof,
in the case of any Indebtedness issued with original issue discount and (ii) the
principal amount thereof, together with any interest thereon that is more than
30 days past due, in the case of any other Indebtedness.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted Subsidiary
of the Company such that, after giving effect to any such sale or disposition,
such Person is no longer a Subsidiary of the Company, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Subsidiary not
sold or disposed of in an amount determined as provided in the final paragraph
of the covenant described above under the caption "-- Certain
Covenants -- Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain or
loss, together with any related provision for taxes on such extraordinary or
nonrecurring gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts
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required to be applied to the repayment of Indebtedness secured by a Lien on the
asset or assets that were the subject of such Asset Sale, any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP and any reserve established in accordance with GAAP for
liabilities associated with such assets that are the subject of such Asset Sale
(including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale), all as
determined in good faith and reflected in an Officers' Certificate delivered to
the Trustee, provided, that the amount of any such reserve shall be deemed to
constitute Net Cash Proceeds at the time such reserve shall have been reversed
or is not otherwise required to be retained as a reserve.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes) of the Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the Credit Facility, whether or not such interest is an allowed
claim under applicable law), penalties, fees, indemnifications, reimbursements,
damages and other liabilities payable under the documentation governing any
Indebtedness.
"Permitted Business" means any business or activities conducted by the
Company on the date of the Indenture, any business or activities related,
ancillary or complementary to such business or activities, and any business or
activities reasonably developed, derived or extended from such business or
activities.
"Permitted Investments" means (a) any Investment in the Company or in a
Subsidiary Guarantor, (b) any Investment in Cash Equivalents, (c) any Investment
by the Company or any Restricted Subsidiary of the Company in a Person, if as a
result of such Investment (i) such Person becomes a Wholly Owned Restricted
Subsidiary of the Company or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Restricted
Subsidiary of the Company, (d) any Investment made as a result of the receipt of
non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "-- Repurchase at
the Option of Holders -- Asset Sales", (e) any acquisition of assets solely in
exchange for the issuance of Equity Interests (other than Disqualified Stock) of
the Company and (f) other Investments in any Person having an aggregate fair
market value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (e) that are at the time
outstanding, not to exceed $5.0 million.
"Permitted Junior Securities" means Equity Interests in the Company or any
Subsidiary Guarantor or debt securities that are subordinated to all Senior Debt
(and any debt securities issued in exchange for Senior Debt) to substantially
the same extent as, or to a greater extent than, the Notes are subordinated to
Senior Debt pursuant to Article 10 of the Indenture.
"Permitted Liens" means the following Liens securing Indebtedness or trade
payables: (i) Liens to secure the Notes or the Subsidiary Guarantees; (ii) Liens
in favor of the Company or a Subsidiary Guarantor; (iii) Liens on property of a
Person existing at the time such Person is merged into or consolidated with the
Company or any Subsidiary of the Company; provided that such Liens were in
existence prior to the contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or consolidated
with the Company; (iv) Liens on property existing at the time of acquisition
thereof by the Company or any Subsidiary of the Company, provided that such
Liens were in existence prior
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to the contemplation of such acquisition; (v) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (vi)
Liens to secure Indebtedness (including Capital Lease Obligations) permitted by
clause (iv) of the second paragraph of the covenant entitled "Incurrence of
Indebtedness" covering only the assets acquired with such Indebtedness; (vii)
Liens existing on the date of the Indenture; (viii) Liens incurred in the
ordinary course of business of the Company or any Subsidiary of the Company with
respect to obligations that do not exceed $5.0 million at any one time
outstanding and that (a) are not incurred in connection with the borrowing of
money or the obtaining of advances or credit (other than trade credit in the
ordinary course of business) and (b) do not in the aggregate materially detract
from the value of the property or materially impair the use thereof in the
operation of business by the Company or such Subsidiary; (ix) Liens on stock or
assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of
Unrestricted Subsidiaries; (x) Liens on assets of the Company or any Subsidiary
Guarantor to secure Senior Debt of the Company or such Subsidiary Guarantor that
was permitted by the Indenture to be incurred; and (xi) Liens to secure any
refinancings, renewals, extensions, modifications or replacements (collectively,
"refinancings") (or successive refinancings), in whole or in part, of any
Indebtedness secured by Liens referred to in clauses (iii), (iv), (vii) and (x)
above so long as such Lien does not extend to any other property (other than
improvements thereto).
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal amount
(or accreted value, if applicable) of such Permitted Refinancing Indebtedness
does not exceed the principal amount of (or accreted value, if applicable), plus
accrued interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of premiums and reasonable
expenses incurred in connection therewith); (ii) such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Senior Debt" means (i) all Indebtedness under the Credit Facility and all
Hedging Obligations with respect thereto, whether outstanding on the date of the
Indenture or thereafter created, (ii) any other Indebtedness permitted to be
incurred by the Company or a Subsidiary Guarantor under the terms of the
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes or the Subsidiary Guarantees and (iii) all Obligations with
respect to the foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (w) any liability for federal, state,
local or other taxes owed or owing by the Company or a Subsidiary Guarantor, (x)
any Indebtedness between or among the Company, any of its Subsidiaries or any of
its other Affiliates, (y) any trade payables or (z) that portion of any
Indebtedness that is incurred in violation of the Indenture.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
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"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantors" means each of (i) Aerial Platforms, Inc., NES
Acquisition Corp., BAT Acquisition Corp. and MST Enterprises, Inc. and (ii) any
other Subsidiary that executes a Subsidiary Guarantee in accordance with the
provisions of the Indenture, and their respective successors and assigns.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no Indebtedness
other than Non-Recourse Debt; (b) is not party to any agreement, contract,
arrangement or understanding with the Company or any Restricted Subsidiary of
the Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted Subsidiary
than those that might be obtained at the time from Persons who are not
Affiliates of the Company; (c) is a Person with respect to which neither the
Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; (d) has not guaranteed or otherwise
directly or indirectly provided credit support for any Indebtedness of the
Company or any of its Restricted Subsidiaries; and (e) has at least one
executive officer that is not a director or executive officer of the Company or
any of its Restricted Subsidiaries. Any such designation by the Board of
Directors shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions and was permitted by the covenant described above under the
caption "-- Certain Covenants -- Restricted Payments." If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date (and, if such Indebtedness is not permitted to be incurred as of such
date under the covenant described under the caption "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock," the
Company shall be in default of such covenant). The Board of Directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under the covenant described
under the caption "-- Certain Covenants -- Incurrence of Indebtedness and
Issuance of Preferred Stock," calculated on a pro forma basis as if such
designation had occurred at the beginning of the four-quarter reference period,
and (ii) no Default or Event of Default would be in existence following such
designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest
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one-twelfth) that will elapse between such date and the making of such payment,
by (ii) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person or such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were originally sold by the Company on November 25, 1997 to
the Initial Purchasers pursuant to the Purchase Agreement. The Initial
Purchasers subsequently resold the Old Notes to qualified institutional buyers
in reliance on Rule 144A under the Securities Act. As a condition to the
Purchase Agreement, the Company, the Subsidiary Guarantors and the Initial
Purchasers entered into the Registration Rights Agreement on the date of the
Initial Offering (the "Issue Date"). Pursuant to the Registration Rights
Agreement, the Company agreed to file with the Commission the Exchange Offer
Registration Statement on the appropriate form under the Securities Act with
respect to the Exchange Notes. Upon the effectiveness of the Exchange Offer
Registration Statement, the Company will offer to the holders of Transfer
Restricted Securities pursuant to the Exchange Offer who are able to make
certain representations the opportunity to exchange their Securities for
Exchange Notes. If (i) the Company is not required to file the Exchange Offer
Registration Statement or permitted to consummate the Exchange Offer because the
Exchange Offer is not permitted by applicable law or Commission policy or (ii)
any holder of Transfer Restricted Securities notifies the Company prior to the
20th day following consummation of the Exchange Offer that (A) it is prohibited
by law or Commission policy from participating in the Exchange Offer or (B) that
it may not resell the Exchange Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and the prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales or (C) that it is a broker-dealer and owns Old Notes acquired directly
from the Company or an affiliate of the Company, the Company will file with the
Commission a Shelf Registration Statement to cover resales of the Old Notes by
the Holders thereof who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement. For purposes of
the foregoing, "Transfer Restricted Securities" means each Old Note until (i)
the date on which such Note has been exchanged by a person other than a
broker-dealer for an Exchange Note in the Exchange Offer, (ii) following the
exchange by a broker-dealer in the Exchange Offer of an Old Note for an Exchange
Note, the date on which such Exchange Note is sold to a purchaser who receives
from such broker-dealer on or prior to the date of such sale a copy of the
prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Old Note has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or (iv)
the date on which such Old Note is distributed to the public pursuant to Rule
144 under the Act.
The Registration Rights Agreement provides that (i) the Company will file
an Exchange Offer Registration Statement with the Commission on or prior to 90
days after the Closing Date, (ii) the Company will use its best efforts to have
the Exchange Offer Registration Statement declared effective by the Commission
on or prior to 150 days after the Closing Date, (iii) unless the Exchange Offer
would not be permitted by applicable law or Commission policy, the Company will
commence the Exchange Offer and use its best efforts to issue on or prior to 30
business days after the date on which the Exchange Offer Registration Statement
was declared effective by the Commission, Exchange Notes in exchange for all Old
Notes tendered prior thereto in the Exchange Offer and (iv) if obligated to file
the Shelf Registration Statement, the Company will use its best efforts to file
the Shelf Registration Statement with the Commission on or prior to 90 days
after such filing obligation arises and to cause the Shelf Registration to be
declared effective by the Commission on or prior to 150 days after such
obligation arises. If (a) the Company fails to file any of the Registration
Statements required by the Registration Rights Agreement on or before the date
specified for such filing, (b) any of such Registration Statements is not
declared effective by the Commission on or prior to
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the date specified for such effectiveness (the "Effectiveness Target Date"), or
(c) the Company fails to consummate the Exchange Offer within 30 business days
of the Effectiveness Target Date with respect to the Exchange Offer Registration
Statement, or (d) the Shelf Registration Statement or the Exchange Offer
Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted Securities
during the periods specified in the Registration Rights Agreement (each such
event referred to in clauses (a) through (d) above a "Registration Default"),
then the Company will pay Liquidated Damages to each Holder of Old Notes, with
respect to the first 90-day period immediately following the occurrence of the
first Registration Default in an amount equal to $.05 per week per $1,000
principal amount of Old Notes held by such Holder. The amount of the Liquidated
Damages will increase by an additional $.05 per week per $1,000 principal amount
of Old Notes with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of Liquidated
Damages for all Registration Defaults of $.50 per week per $1,000 principal
amount of Old Notes. All accrued Liquidated Damages will be paid by the Company
on each Damages Payment Date to the Global Old Note Holder by wire transfer of
immediately available funds or by federal funds check and to Holders of
Certificated Securities by wire transfer to the accounts specified by them or by
mailing checks to their registered addresses if no such accounts have been
specified. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
Holders of Old Notes will be required to make certain representations to
the Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver certain
information to be used in connection with the Shelf Registration Statement and
to provide comments on the Shelf Registration Statement within the time periods
set forth in the Registration Rights Agreement in order to have their Old Notes
included in the Shelf Registration Statement and benefit from the provisions
regarding Liquidated Damages set forth above.
Following the consummation of the Exchange Offer, holders of the Old Notes
who were eligible to participate in the Exchange Offer but who did not tender
their Old Notes will not have any further registration rights and such Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for such Old Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of Exchange
Notes in exchange for each $1,000 principal amount of outstanding Old Notes
accepted in the Exchange Offer. Holders may tender some or all of their Old
Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Old Notes except that (i) the Exchange Notes bear a Series B designation
and a different CUSIP number from the Old Notes, (ii) the Exchange Notes have
been registered under the Securities Act and hence will not bear legends
restricting the transfer thereof and (iii) the holders of the Exchange Notes
will not be entitled to certain rights under the Registration Rights Agreement,
including the provisions providing for an increase in the interest rate on the
Old Notes in certain circumstances relating to the timing of the Exchange Offer,
all of which rights will terminate when the Exchange Offer is terminated. The
Exchange Notes will evidence the same debt as the Old Notes and will be entitled
to the benefits of the Indenture.
As of the date of the Prospectus, $100,000,000 aggregate principal amount
of Old Notes were outstanding. The Company has fixed the close of business on
, 1998 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware or the Indenture in connection with the
Exchange Offer. The Company intends to conduct the
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Exchange Offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the Exchange Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than transfer taxes in certain circumstances, in connection with the
Exchange Offer. See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
1998, unless the Company, in its sole discretion, extends the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date and
time to which the Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will notify the holders by
issuing a press release regarding such extension, each prior to 9:00 a.m., New
York City time, on the next business day after the previously scheduled
expiration date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "-- Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of the
Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered holders.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest from their date of original issuance.
Holders of Old Notes that are accepted for exchange will receive, in cash,
accrued interest thereon to, but not including, the date of issuance of the
Exchange Notes. Such interest will be paid with the first interest payment on
the Exchange Notes on May 30, 1998. Interest on the Old Notes accepted for
exchange will cease to accrue upon issuance of the Exchange Notes.
Interest on the Exchange Notes is payable semi-annually on each May 30 and
November 30, commencing on May 30, 1998.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
For a holder to tender Old Notes validly pursuant to the Exchange Offer, a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantee, or (in the case of a book-entry
transfer) an Agent's Message in lieu of the Letter of Transmittal, and any other
required documents must be received by the Exchange Agent at the address set
forth under "Exchange Agent" prior to 5:00 p.m., New York City time, on the
Expiration Date. In addition, prior to 5:00 p.m., New York City time, on the
Expiration Date, either (A) certificates for tendered Old Notes must be received
by the Exchange Agent at such address or (B) such Old Notes must be transferred
pursuant to the procedures for book-entry transfer described below (and a
confirmation of such tender received by the Exchange Agent, including an Agent's
Message if the tendering holder has not delivered a Letter of Transmittal). The
term "Agent's Message" means a message, transmitted
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by the book-entry transfer facility, The Depository Trust Company (the
"Book-Entry Transfer Facility"), to and received by the Exchange Agent and
forming a part of a book-entry confirmation, which states that the Book-Entry
Transfer Facility has received an express acknowledgment from the tendering
participant that such participant has received and agrees to be bound by the
Letter of Transmittal and that the Company may enforce such Letter of
Transmittal against such participant.
By executing the Letter of Transmittal, (or, in the case of a book-entry
transfer, an Agent's Message in lieu thereof) each holder will make to the
Company the representations set forth above in the third paragraph under the
heading "-- Purpose and Effect of the Exchange Offer."
The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL,
INCLUDING DELIVERY THROUGH DTC AND ANY ACCEPTANCE OF AN AGENT'S MESSAGE
TRANSMITTED THROUGH THE DTC AUTOMATED TENDER OFFER PROGRAM, AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK OF THE
HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO CONSIDER
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Old Notes
with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Old Notes at the Book-Entry Transfer Facility for the purpose of
facilitating the Exchange Offer, and, subject to the establishment thereof, any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Old Notes by causing such
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account with respect to the Old Notes in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. Although delivery of the Old
Notes may be effected through book-entry transfer into the Exchange
79
<PAGE> 85
Agent's account at the Book-Entry Transfer Facility, an appropriate Letter of
Transmittal properly completed and duly executed with any required signature
guarantee, or (in the case of a book-entry transfer) an Agent's Message in lieu
of the Letter of Transmittal, and all other required documents must in each case
be transmitted to and received or confirmed by the Exchange Agent at its address
set forth below on or prior to the Expiration Date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under such procedures. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right in its sole discretion to waive
any defects, irregularities or conditions of tender as to particular Old Notes.
The Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Old Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Old Notes will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Old Notes received by the Exchange Agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal (or in the case of a book-entry transfer) an Agent's Message in lieu
thereof) or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer (including delivery of an
Agent's Message), prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution (i) an Agent's Message with respect to guaranteed
delivery that is accepted by the Company or (ii) a properly completed and
duly executed Notice of Guaranteed Delivery (by facsimile transmission,
mail or hand delivery) setting forth the name and address of the holder,
the certificate number(s) of such Old Notes and the principal amount of Old
Notes tendered, stating that the tender is being made thereby and
guaranteeing that, within three New York Stock Exchange trading days after
the Expiration Date, the Letter of Transmittal (or facsimile thereof) (or,
in the case of a book-entry transfer, an Agent's Message in lieu thereof)
together with the certificate(s) representing the Old Notes (or a
confirmation of book-entry transfer of such Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility), and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (of
facsimile thereof) (or, in the case of a book-entry transfer, an Agent's
Message in lieu thereof), as well as the certificate(s) representing all
tendered Old Notes in proper form for transfer (or a confirmation of
book-entry transfer of such Old Notes into the Exchange Agent's account at
the Book-Entry Transfer Facility), and all other documents required by the
Letter of Transmittal are received by the Exchange Agent within three New
York Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
80
<PAGE> 86
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex,
letter or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Old Notes to be withdrawn (the
"Depositor"), (ii) identify the Old Notes to be withdrawn (including the
certificate number(s) and principal amount of such Old Notes, or, in the case of
Old Notes transferred by book-entry transfer, the name and number of the account
at the Book-Entry Transfer Facility to be credited), (iii) be signed by the
holder in the same manner as the original signature on the Letter of Transmittal
by which such Old Notes were tendered (including any required signature
guarantees) or be accompanied by documents of transfer sufficient to have the
Trustee with respect to the Old Notes register the transfer of such Old Notes
into the name of the person withdrawing the tender and (iv) specify the name in
which any such Old Notes are to be registered, if different from that of the
Depositor. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Old Notes so withdrawn are validly retendered. Any Old Notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn Old
Notes may be retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Exchange Notes for, any Old
Notes, and may terminate or amend the Exchange Offer as provided herein before
the acceptance of such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding with
respect to the Company or any of its subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff
of the Commission is proposed, adopted or enacted, which, in the sole
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(c) any governmental approval has not been obtained, which approval
the Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Old Notes and return
all tendered Old Notes to the tendering holders, (ii) extend the Exchange Offer
and retain all Old Notes tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of holders to withdraw such Old Notes (see "--
Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with respect
to the Exchange Offer and accept all properly tendered Old Notes which have not
been withdrawn.
81
<PAGE> 87
EXCHANGE AGENT
Harris Trust and Savings Bank has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notice of Guaranteed Delivery should be directed to the Exchange Agent addressed
as follows:
HARRIS TRUST AND SAVINGS BANK, DEPOSITARY
c/o Harris Trust Company of New York
<TABLE>
<C> <C>
By Mail: Overnight Courier:
Wall Street Station 77 Water Street, 4th Floor
P.O. Box 1023 New York, NY 10005
New York, NY 10268-1023 Attention: Reorganization Dept.
Attention: Reorganization Dept.
By Hand: Facsimile Transmission:
Receive Window (for Eligible Institutions Only)
77 Water Street, 5th Floor (212) 701-7636 or 7637
New York, NY 10005
Attention: Reorganization Dept.
Confirm by Telephone:
(212) 701-7649
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Old
Notes, which is face value, as reflected in the Company's accounting records on
the date of exchange. Accordingly, no gain or loss for accounting purposes will
be recognized by the Company. The expenses of the Exchange Offer will be
expensed over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Old Notes
may be resold only (i) to the Company (upon redemption thereof or otherwise),
(ii) so long as the Old Notes are eligible for resale pursuant to Rule 144A, to
a person inside the United States whom the seller reasonably believes is a
qualified institutional buyer within the meaning of Rule 144A under the
Securities Act in a transaction meeting the requirements of Rule 144A, in
accordance with Rule 144 under the Securities Act, or pursuant to another
exemption from the registration requirements of the Securities Act (and based
upon an opinion of counsel reasonably acceptable to the
82
<PAGE> 88
Company), (iii) outside the United States to a foreign person in a transaction
meeting the requirements of Rule 904 under the Securities Act, or (iv) pursuant
to an effective registration statement under the Securities Act, in each case in
accordance with any applicable securities laws of any state of the United
States.
RESALE OF THE EXCHANGE NOTES
With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties,
the Company believes that a holder or other person who receives Exchange Notes,
whether or not such person is the holder (other than a person that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) who receives Exchange Notes in exchange for Old Notes in the ordinary
course of business and who is not participating, does not intend to participate,
and has no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes, will be allowed to resell the Exchange Notes
to the public without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any holder
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in a distribution of the Exchange Notes, such holder cannot rely
on the position of the staff of the Commission enunciated in such no-action
letters or any similar interpretive letters, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration is
otherwise available. Further, each Participating Broker-Dealer that receives
Exchange Notes for its own account in exchange for Old Notes, where such Old
Notes were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
As contemplated by these no-action letters and the Registration Rights
Agreement, each holder accepting the Exchange Offer is required to represent to
the Company in the Letter of Transmittal that (i) the Exchange Notes are to be
acquired by the holder or the person receiving such Exchange Notes, whether or
not such person is the holder, in the ordinary course of business, (ii) the
holder or any such other person (other than a broker-dealer referred to in the
next sentence) is not engaging and does not intend to engage, in the
distribution of the Exchange Notes, (iii) the holder or any such other person
has no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes, (iv) neither the holder nor any such other
person is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act, and (v) the holder or any such other person acknowledges that if
such holder or other person participates in the Exchange Offer for the purpose
of distributing the Exchange Notes it must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale of the Exchange Notes and cannot rely on those no-action letters. As
indicated above, each Participating Broker-Dealer that receives an Exchange Note
for its own account in exchange for Old Notes must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes. For a
description of the procedures for such resales by Participating Broker-Dealers,
see "Plan of Distribution."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is based on the current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), applicable Treasury regulations,
judicial authority and administrative rulings and practice. There can be no
assurance that the Internal Revenue Service (the "Service") will not take a
contrary view, and no ruling from the Service has been or will be sought.
Legislative, judicial or administrative changes or interpretations may be
forthcoming that could alter or modify the statements and conditions set forth
herein. Any such changes or interpretations may or may not be retroactive and
could affect the tax consequences to holders. Certain holders (including
insurance companies, tax-exempt organizations, financial institutions,
broker-dealers, foreign corporations and persons who are not citizens or
residents of the United States) may be subject to special rules not discussed
below. The Company recommends that each holder consult such holder's own tax
advisor as to the particular tax consequences of exchanging such holder's Old
Notes for Exchange Notes, including the applicability and effect of any state,
local or foreign tax laws.
83
<PAGE> 89
The Company believes that the exchange of Old Notes for Exchange Notes
pursuant to the Exchange Offer will not be treated as an "exchange" for federal
income tax purposes because the Exchange Notes will not be considered to differ
materially in kind or extent from the Old Notes. Rather, the Exchange Notes
received by a holder will be treated as a continuation of the Old Notes in the
hands of such holder. As a result, there will be no federal income tax
consequences to holders exchanging Old Notes for Exchange Notes pursuant to the
Exchange Offer.
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Prospectus,
as it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of Exchange Notes
received in exchange for Old Notes where such Old Notes were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that for a period of 180 days after the Expiration Date, it will make the
Prospectus, as amended or supplemented, available to any Participating
Broker-Dealer for use in connection with any such resale. In addition, until
, 1998 (90 days after the commencement of the Exchange Offer), all
dealers effecting transactions in the Exchange Notes may be required to deliver
a prospectus.
The Company will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker Dealers. Exchange Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such Exchange Notes. Any Participating Broker-Dealer that resells the
Exchange Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of Exchange Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker-Dealer that requests
such documents in the Letter of Transmittal.
INDEPENDENT ACCOUNTANTS
The Company's consolidated balance sheets as of September 30, 1997 and
December 31, 1996, and the statements of operations, of cash flows, and of
changes in stockholders' equity for the nine months ended September 30, 1997 and
the period from inception (June 4, 1996) through December 31, 1996 included in
the Prospectus have been audited by Price Waterhouse LLP, independent
accountants, as stated in their report appearing herein and have been so
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
LEGAL MATTERS
The validity of the issuance of the Exchange Notes offered hereby will be
passed upon for the Company by Kirkland & Ellis, Chicago, Illinois.
84
<PAGE> 90
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
Financial Statements -- September 30, 1997 and December
31, 1996
Report of Independent Accountants......................... F-2
Consolidated Balance Sheets............................... F-3
Consolidated Statements of Operations..................... F-4
Consolidated Statements of Cash Flows..................... F-5
Consolidated Statements of Changes in Stockholders'
Equity................................................. F-6
Notes to Consolidated Financial Statements................ F-7
AERIAL PLATFORMS, INC.
Financial Statements -- February 17, 1997 and January 31,
1997
Report of Independent Accountants......................... F-15
Balance Sheets............................................ F-16
Statements of Operations.................................. F-17
Statements of Cash Flows.................................. F-18
Statements of Changes in Stockholder's Equity............. F-19
Notes to Financial Statements............................. F-20
LONE STAR RENTALS, INC.
Financial Statements -- March 16, 1997 and December 31,
1996 and 1995
Report of Independent Accountants......................... F-25
Balance Sheets............................................ F-26
Statements of Operations.................................. F-27
Statements of Cash Flows.................................. F-28
Statements of Changes in Stockholder's Equity............. F-29
Notes to Financial Statements............................. F-30
BAT RENTALS, INC.
Financial Statements -- March 31, 1997, December 31, 1996
and 1995
Report of Independent Accountants......................... F-36
Balance Sheets............................................ F-37
Statements of Operations.................................. F-38
Statements of Cash Flows.................................. F-39
Statements of Changes in Stockholder's Equity............. F-40
Notes to Financial Statements............................. F-41
SPRINTANK AND SPRINTANK MOBILE STORAGE (DIVISIONS OF SPRINT
INDUSTRIAL SERVICES, INC.)
Financial Statements -- June 30, 1997 and December 31,
1996 and 1995
Report of Independent Accountants......................... F-46
Balance Sheets............................................ F-47
Statements of Operations.................................. F-48
Statements of Cash Flows.................................. F-49
Statements of Changes in Divisional Equity................ F-50
Notes to Financial Statements............................. F-51
MST ENTERPRISES, INC. D/B/A EQUIPCO RENTALS AND SALES
Financial Statements -- July 17, 1997, October 31, 1996
and 1995
Report of Independent Accountants......................... F-56
Balance Sheets............................................ F-57
Statements of Operations.................................. F-58
Statements of Cash Flows.................................. F-59
Statements of Changes in Stockholder's Equity............. F-60
Notes to Financial Statements............................. F-61
</TABLE>
F-1
<PAGE> 91
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of National Equipment Services, Inc.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of cash flows and of changes in
stockholders' equity, present fairly, in all material respects, the financial
position of National Equipment Services, Inc. and subsidiaries at September 30,
1997 and December 31, 1996, and the results of its operations and its cash flows
for the nine months ended September 30, 1997, and the period from inception
(June 4, 1996) through December 31, 1996 in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PRICE WATERHOUSE LLP
Chicago, Illinois
November 4, 1997
F-2
<PAGE> 92
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents................................. $ 1,604 $ 12
Accounts receivable, net of allowance for doubtful
accounts of $277 and $0, respectively.................. 7,644 --
Inventory................................................. 2,675 --
Rental equipment, net..................................... 45,490 --
Property and equipment, net............................... 2,524 17
Intangible assets, net.................................... 24,764 --
Prepaid and other assets, net............................. 7,518 187
------- -----
Total assets......................................... $92,219 $ 216
======= =====
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable.......................................... $ 3,086 $ --
Accrued interest.......................................... 749 --
Accrued expenses and other liabilities.................... 4,209 110
Debt...................................................... 58,144 --
------- -----
Total liabilities.................................... 66,188 110
Commitments and contingencies (Note 10)
STOCKHOLDERS' EQUITY:
Class A Common stock, $0.01 par, 25,000 shares authorized,
24,866 and 0, respectively, shares issued and
outstanding............................................... 1 --
Class B Common stock, $0.01 par, 150,000 shares authorized,
89,450 and 30,132, respectively, shares issued and
outstanding............................................... 1 1
Additional paid-in capital.................................. 25,513 301
Retained earnings (accumulated deficit)..................... 616 (195)
Stock subscriptions receivable.............................. (100) (1)
------- -----
Total stockholders' equity........................... 26,031 106
------- -----
Total liabilities and stockholders' equity........... $92,219 $ 216
======= =====
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE> 93
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE NINE FROM INCEPTION
MONTHS (JUNE 4, 1996)
ENDED THROUGH
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- --------------
<S> <C> <C>
REVENUES:
Rental revenues........................................... $16,168 $ --
Rental equipment sales.................................... 2,111 --
New equipment sales....................................... 5,403 --
Other..................................................... 1,893 --
------- -----
Total revenues....................................... 25,575 --
------- -----
COST OF REVENUES:
Rental equipment expenses................................. 1,369 --
Rental equipment depreciation............................. 3,143 --
Cost of rental equipment sales............................ 1,416 --
Cost of new equipment sales............................... 4,116 --
Direct operating expenses................................. 5,946 --
------- -----
Total cost of revenues............................... 15,990 --
------- -----
Gross profit................................................ 9,585 --
Selling, general and administrative expenses................ 5,039 333
Non-rental depreciation and amortization.................... 758 3
------- -----
Operating income (loss)..................................... 3,788 (336)
Other income (expense), net................................. (19) --
Interest income (expense), net.............................. (2,439) 4
------- -----
Income (loss) before income taxes........................... 1,330 (332)
Income tax expense (benefit)................................ 519 (137)
------- -----
Net income (loss)........................................... $ 811 $(195)
======= =====
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 94
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM INCEPTION
FOR THE NINE (JUNE 4, 1996)
MONTHS ENDED THROUGH
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)........................................... $ 811 $(195)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization............................. 4,086 3
Gain on sale of equipment................................. (720) --
Changes in operating assets and liabilities:
Accounts receivable.................................... (623) --
Inventory.............................................. (234) --
Prepaid and other assets............................... (1,313) (187)
Accounts payable....................................... 2,217 --
Accrued expenses and other liabilities................. 1,766 110
-------- -----
Net cash provided by (used in) operating activities......... 5,990 (269)
-------- -----
INVESTING ACTIVITIES:
Net cash paid for acquisitions.............................. (67,703) --
Purchases of rental equipment............................... (10,781) --
Proceeds from sale of rental equipment...................... 2,118 --
Purchases of property and equipment......................... (656) (20)
Proceeds from sale of property and equipment................ 25 --
Funding of stock subscriptions receivable................... (99) (1)
-------- -----
Net cash used in investing activities....................... (77,096) (21)
-------- -----
FINANCING ACTIVITIES:
Proceeds from long-term debt................................ 121,493 --
Payments on long-term debt.................................. (70,928) --
Net proceeds from sales of common stock..................... 25,213 302
Payments of loan origination costs.......................... (3,080) --
-------- -----
Net cash provided by financing activities................... 72,698 302
-------- -----
Net increase in cash and cash equivalents................... 1,592 12
Cash and cash equivalents at beginning of period............ 12 --
-------- -----
Cash and cash equivalents at end of period.................. $ 1,604 $ 12
======== =====
SUPPLEMENTAL NON-CASH FLOW INFORMATION:
Cash paid for interest...................................... $ 557 $ --
======== =====
Cash paid for income taxes.................................. $ 397 $ --
======== =====
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-5
<PAGE> 95
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK RETAINED
----------------- ADDITIONAL EARNINGS STOCK TOTAL
CLASS A CLASS B PAID-IN (ACCUMULATED SUBSCRIPTIONS STOCKHOLDERS'
SHARES SHARES CAPITAL DEFICIT) RECEIVABLE EQUITY
------- ------- ---------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares issued at inception (June 4, 1996)........ $ -- $ 1 $ 301 $ -- $ (1) $ 301
Net income (loss)................................ -- -- -- (195) -- (195)
------- ------- ------- ------- ------- -------
Balance at December 31, 1996..................... -- 1 301 (195) (1) 106
Sale of shares................................... 1 -- 25,212 -- (99) 25,114
Net income....................................... -- -- -- 811 -- 811
------- ------- ------- ------- ------- -------
Balance at September 30, 1997.................... $ 1 $ 1 $25,513 $ 616 $ (100) $26,031
======= ======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 96
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
National Equipment Services, Inc. ("NES") was organized on June 4, 1996
under the laws of Delaware for the purpose of owning and operating equipment
rental facilities by means of acquiring existing businesses. NES is primarily
involved in the rental of equipment to construction and industrial users. NES
operates from locations in Alabama, Georgia, Louisiana, Nevada, Texas and
Virginia.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include accounts of NES and its
subsidiaries. All intercompany transactions and balances have been eliminated.
FINANCIAL STATEMENT PRESENTATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are highly liquid investments with original
maturities of three months or less.
INVENTORY
NES's inventories primarily consist of parts and new equipment held for
sale. Inventories are stated at the lower of cost, determined by the first-in,
first-out method, or market.
RENTAL EQUIPMENT
Rental equipment is recorded at invoice cost. Depreciation for rental
equipment acquired is computed using the straight-line method over 5 to 15 year
useful lives with no salvage value. Accumulated depreciation on rental equipment
was $3,038,000 at September 30, 1997.
Ordinary repairs and maintenance costs are charged to operations as
incurred. When rental equipment is disposed of, the related cost and accumulated
depreciation are removed from the respective accounts. Proceeds from the
disposal and the related net book value of the equipment are recognized in the
period of disposal and reported as revenue from rental equipment sales and cost
of equipment sales in the statement of operations.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets.
The estimated useful lives for property and equipment range from 5 to 7
years for machinery and equipment, 5 to 7 years for furniture and fixtures and 3
to 5 years for vehicles.
Ordinary repairs and maintenance costs are charged to operations as
incurred. When property and equipment is disposed of, the related cost and
accumulated depreciation are removed from the respective accounts, and any gains
or losses are included in results of operations.
F-7
<PAGE> 97
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT
Since inception, NES adopted Statement of Financial Accounting Standards
(SFAS) No. 121, Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of, which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the assets' carrying amounts and related goodwill exceed the
undiscounted cash flows estimated to be generated by those assets. SFAS No. 121
also requires impairment losses to be recorded when the carrying amount of
long-lived assets that are expected to be disposed of exceeds their fair values,
net of disposal costs. SFAS No. 121 did not have a material impact on NES's
financial position or results of operations for the nine months ended September
30, 1997 or the period from inception (June 4, 1996) through December 31, 1996.
INTANGIBLE ASSETS
Intangible assets consist of the excess cost over acquired net assets
("goodwill") which has been capitalized and is being amortized on a straight
line basis over 40 years. Whenever events or changes in circumstances indicate
that the carrying amount of goodwill may not be recoverable, NES reviews the
carrying value of goodwill for impairment based on the undiscounted operating
cash flows of the related business unit. Accumulated amortization on goodwill
was $246,000, at September 30, 1997.
OTHER ASSETS
Loan origination costs are stated at cost and amortized to interest expense
on a straight line basis over the life of the loan. Noncompete agreements are
stated at cost and amortized over the lives of the agreements.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the consolidated balance sheets for cash,
trade accounts receivable, accounts payable and other liabilities approximate
fair value due to the immediate to short-term maturity of these financial
instruments. The interest on NES's bank debt is reset every 30 to 90 days to
reflect current market rates. Consequently, the carrying value of bank debt
approximates fair value.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject NES to significant
concentrations of credit risk consist primarily of trade accounts receivable
from construction and industrial customers. Concentrations of credit risk with
respect to trade accounts receivable are limited due to the large number of
customers and NES's geographic dispersion. NES performs credit evaluations of
its customers' financial condition and generally does not require collateral on
accounts receivable. NES maintains an allowance for doubtful accounts on its
receivables based upon expected collectibility. Allowance for doubtful accounts
was $277,000 and $0 at September 30, 1997 and December 31, 1996, respectively.
RENTAL REVENUES
Rental revenues are recognized ratably over the lease term. Sales revenues
are recognized at the point of delivery.
INCOME TAXES
Provisions are made to record deferred income taxes in recognition of items
reported differently for financial reporting purposes than for federal and state
income tax purposes. NES records deferred income taxes using the liability
method in accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." The Company and its subsidiaries will file a
consolidated tax return for the year ending December 31, 1997.
F-8
<PAGE> 98
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
RELATED PARTY TRANSACTIONS
As disclosed in these financial statements, NES has participated in certain
transactions with related parties.
2. ACQUISITIONS
In 1997, NES purchased the following rental equipment companies:
<TABLE>
<CAPTION>
PURCHASE
ACQUISITION DATE COMPANY LOCATION PRICE
---------------- ----------------------------------- ---------------- --------------
<S> <C> <C> <C>
July 18, 1997.................. MST Enterprises, Inc. Harrisonburg, VA $ 6,000,000
July 1, 1997................... Sprintank Houston, TX $25,300,000
April 1, 1997.................. BAT Rentals, Inc. Las Vegas, NV $15,900,000
March 17, 1997................. Lone Star Rentals, Inc. Houston, TX $10,950,000
February 18, 1997.............. Aerial Platforms, Inc. Atlanta, GA $ 4,150,000
January 6, 1997................ Brazos Rental & Tool, Inc.,
Industrial Crane Maintenance
Systems, Inc., and Safe Load Work
Products, Inc. Brazoria, TX $ 5,000,000
</TABLE>
The purchase prices above are subject to a customary purchase price
adjustment mechanism and assumption of certain seller liabilities.
The following pro forma financial information represents the unaudited pro
forma results of operations as if the aforementioned acquisitions had been
completed on January 1, 1997 and January 1, 1996, after giving effect to certain
adjustments including increased depreciation and amortization of property and
equipment and other assets and interest expense for acquisition debt. These pro
forma results have been prepared for comparative purposes only and do not
purport to be indicative of the results of operations which would have been
achieved had these acquisitions been completed as of these dates, nor are the
results indicative of NES's future results of operations.
<TABLE>
<CAPTION>
FOR THE NINE FOR THE YEAR
MONTHS ENDED ENDED
SEPTEMBER 30, DECEMBER 31,
1997 1996
(UNAUDITED) (UNAUDITED)
------------- ------------
(IN THOUSANDS)
<S> <C> <C>
Revenues............................................. $41,145 $33,353
Operating income..................................... 8,240 9,241
Net income........................................... 849 158
</TABLE>
F-9
<PAGE> 99
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. INVENTORY
Inventory consists of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
-------------
<S> <C>
New equipment............................................... $1,040
Parts....................................................... 2,158
Contractor supplies......................................... 84
Other....................................................... 23
------
Less: reserve............................................... (630)
------
$2,675
======
</TABLE>
4. PROPERTY AND EQUIPMENT
Property and equipment, net, consists of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Leasehold improvements............................... $ 63 $--
Machinery and equipment.............................. 297 20
Furniture and fixtures............................... 361 --
Vehicles............................................. 2,108 --
------ ---
Less: accumulated depreciation....................... (305) (3)
------ ---
$2,524 $17
====== ===
</TABLE>
Property and equipment depreciation expense aggregated $302,000 and $3,000
for the nine months ended September 30, 1997 and the period from inception (June
4, 1996) through December 31, 1996, respectively.
5. PREPAID AND OTHER ASSETS
Prepaid and other assets consists of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Non-compete agreements............................... $2,540 $ --
Prepaid expenses..................................... 727 10
Loan origination costs............................... 3,510 --
Other................................................ 1,136 177
------ ----
Less: accumulated amortization....................... (395) --
------ ----
$7,518 $187
====== ====
</TABLE>
Amortization expense aggregated $210,000 for the nine months ended
September 30, 1997. Amortization expense related to loan origination costs
aggregated $185,000 for the nine months ended September 30, 1997.
F-10
<PAGE> 100
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consists of the following (in
thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Accrued management fee............................... $ 150 $ --
Accrued salaries and benefits........................ 428 110
Sales tax payable.................................... 304 --
Accrued income taxes................................. 229 --
Accrued holdback payable............................. 1,018 --
Other................................................ 2,080 --
------ ----
$4,209 $110
====== ====
</TABLE>
7. DEBT
Debt consists of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
1997
-------------
<S> <C>
Related party notes payable, interest at 10% payable
quarterly, $500 principal due March 17, 2002 and $500
principal due February 18, 2002........................... $ 1,000
Revolving credit facility loans, interest at the federal
funds rate plus 0.5% or prime rate both plus 1.0%, or the
eurodollar rate plus 2.5%, due no later than July 1,
2002...................................................... 42,769
Term loan, interest at the federal funds rate plus 0.5% or
prime rate both plus 1.0%, or the eurodollar rate plus
2.5%, principal payments due quarterly of $625 through
June 1, 1998, $875 through June 1, 1999 and $1,125 through
June 1, 2001.............................................. 14,375
-------
$58,144
=======
</TABLE>
On July 1, 1997, NES entered into a credit facility agreement with First
Union Commercial Corporation (the "Credit Agreement"). The Credit Agreement
provides for a secured revolving line of credit of $100 million and a term loan
of $15 million. Interest accrues at rates of the greater of the annual Federal
Funds Rate plus 0.5% or the prime rate both plus 0.5% to 1.25% based on NES's
leverage ratio or at a rate of LIBOR/(1-eurodollar reserve percentage) plus 2.0%
to 2.75% based on NES's leverage ratio. The average interest rate for the nine
months ended September 30, 1997 was 8.94%. Principal payments for credit
facility loans (to be applied first to the term loan and if necessary to
revolving loans) are due annually at the lesser of 25% of excess cash flow or $1
million. Principal payments for the term loan are due quarterly at $625,000 for
the first four quarters, $875,000 for the next four quarters and $1,125,000 for
the next eight quarters.
The Credit Agreement contains a number of covenants that, among other
things, require NES to maintain certain financial ratios and set certain
limitations on the granting of liens, assets sales, additional indebtedness,
transactions with affiliates, restricted payments, investments and issuances of
stock. NES is in compliance with covenants in the Credit Agreement.
Substantially all assets and stock of NES are pledged as collateral for the
credit facility. NES pays commitment fees of 0.5% to 0.375% on the unused
portion of the outstanding line of credit balance based on NES's leverage ratio.
NES incurred interest expense of $51,000 on borrowings from related parties
for the nine months ended September 30, 1997.
F-11
<PAGE> 101
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. INCOME TAXES
The income tax provision is comprised of current federal and state income
tax expense (benefit) of $518,900 and $(137,100) for the nine months ended
September 30, 1997 and the period from inception (June 4, 1996) through December
31, 1996, respectively. Deferred tax expense (benefit) for such periods has been
immaterial.
The provision for income taxes differs from the amount of income tax
determined by applying the U.S. statutory federal income tax rate of 34% to
income before income taxes as a result of the following (in thousands):
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
INCEPTION
FOR THE NINE (JUNE 4,
MONTHS 1996)
ENDED THROUGH
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- -------------
<S> <C> <C>
Federal income taxes................................. $ 452 $(113)
State income taxes, net of federal benefit........... 17 (16)
Other................................................ 50 (8)
----- -----
$ 519 $(137)
===== =====
</TABLE>
Deferred income tax assets and liabilities are computed based on temporary
differences between the financial statement and income tax bases of assets and
liabilities using the enacted marginal income tax rate in effect for the year in
which the differences are expected to reverse. Deferred income tax expenses or
credits are based on the changes in the deferred income tax assets or
liabilities from period to period.
Deferred taxes have been provided for the temporary differences between the
financial reporting bases and the tax bases of NES's assets and liabilities as
follows (in thousands):
<TABLE>
<S> <C>
Allowances for doubtful accounts............................ $ 49
Installment sale income..................................... (23)
Property, plant and equipment............................... (377)
-----
$(351)
=====
</TABLE>
9. COMMON STOCK
On June 4, 1996, in connection with the formation of NES, NES authorized
25,000 shares of Class A Common stock (24,250 of which were reserved for
issuance to NES's majority stockholder), par value $0.01, and 150,000 shares of
Class B Common stock (75,000 of which were reserved for issuance to NES's
majority stockholder), par value $0.01.
Each calendar quarter, each share of Class A Common is entitled to a yield
in the amount of 10% per year of the sum of such share's unreturned original
cost plus the unpaid yield for all prior quarters. As of September 30, 1997, the
unpaid yield on the Class A Common aggregated $959,000. Class A Common
stockholders, as a class, are entitled to a number of votes equal to 10% of the
number of votes allocable to all Common Stock. Upon any distribution, Class A
Common stockholders are entitled to (i) the unpaid yield, (ii) any unreturned
original cost of the shares and (iii) 10% of any remaining distribution. Class B
Common stockholders are entitled to 90% of any remaining distribution after
payment to the Class A Common stockholders of all payments under clause (i) and
(ii) set forth in the preceding sentence.
F-12
<PAGE> 102
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NES may not declare additional distributions or dividends other than the
amounts described above for Class A Common shares, issue any debt securities
containing equity features, sell or dispose of more than 5% of the consolidated
assets of the Company in any transaction or series of related transactions,
acquire an interest in a business, acquire a business outside of the rental
equipment industry, or enter into certain related party transactions, without
the consent of a majority of the Class A Common and Class B Common stockholders.
Class B Common stock sold to executives of NES vests over a 5 year period.
Unpaid notes receivable of $100,000 and $1,000 as of September 30, 1997 and
December 31, 1996, respectively, from executives of NES for shares of Class B
Common stock are classified as stock subscriptions receivable.
10. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
NES leases certain facilities, office equipment and vehicles under
operating leases some of which contain renewal options. Rental expense was
$505,000 for the nine months ended September 30, 1997.
Future minimum rental commitments as of September 30, 1997 under
noncancelable operating leases are (in thousands):
<TABLE>
<S> <C>
1997........................................................ $ 235
1998........................................................ 842
1999........................................................ 567
2000........................................................ 507
2001........................................................ 483
Thereafter.................................................. 394
------
$3,028
======
</TABLE>
LEGAL MATTERS
NES is party to legal proceedings and potential claims arising in the
ordinary course of its business. In the opinion of management, the ultimate
resolution of these matters will have no material adverse effect on NES's
financial position, results of operations or cash flows.
11. EMPLOYEE BENEFIT PLANS
The Company sponsors a profit sharing and 401(k) plan (the "Plan") in which
employees over 21 years of age with greater than one-half year of service are
eligible. Under the Plan, NES contributes a discretionary percentage (2.5% for
the nine months ended September 30, 1997) of each eligible employee's base
annual wages to a trust out of its net profits. In addition, eligible employees
can defer up to 15% of their salary with a partially matching contribution by
NES of 50% of the first 5% of the employee contribution. The employer
contributions vest over a five year period. Contributions by NES to the Plan
were $61,000 for the nine months ended September 30, 1997.
12. SUBSEQUENT EVENTS
Subsequent to year end, NES entered into five letters of intent to purchase
the assets of rental equipment companies. These pending acquisitions are
expected to close in the first quarter of 1998. Two of these businesses are
located in the Midwest, one is located in the Southwest and two are located in
the West. Three are renters of specialty equipment and two are renters of aerial
work platforms.
F-13
<PAGE> 103
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. RELATED PARTY TRANSACTIONS
Pursuant to a Professional Services Agreement dated January 6, 1997, NES
pays management fees of $200,000 per year and investment fees of 1% of all debt
and equity financings of NES to an affiliate of NES's majority stockholder, who
owns 95.0% of the Class A Common stock and 83.4% of the Class B Common stock.
Total fees paid during the nine months ended September 30, 1997 were $463,000
and fees owed at September 30, 1997 were $430,000.
In connection with the acquisitions of Lone Star Rentals, Inc. and Aerial
Platforms, Inc., NES issued promissory notes to two former shareholders of the
acquired businesses who continue to be current employees of the Company. See
terms of these notes under Note 7 above.
In connection with several of the acquisitions, NES entered into lease
agreements for certain facilities with employees of NES who were prior owners of
the acquired companies. Amounts due under these leases are included in the
future minimum rental commitments under noncancelable operating leases schedule
in Note 10 above.
Stock subscriptions receivable of $100,000 and $1,000 relate to notes due
from officers of NES related to purchases of Class B Common Stock and are
secured by the purchased Class B Common shares. Interest on the notes accrues at
the federal funds rate and is payable in full at maturity on June 4, 2006 or
upon termination of employment. Accrued interest on these notes was $6,000 and
$0 for the nine months ended September 30, 1997 and the period from inception
(June 4, 1996) through December 31, 1996, respectively.
F-14
<PAGE> 104
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholder of Aerial
Platforms, Inc. and the Board of Directors
of National Equipment Services, Inc.
In our opinion, the accompanying balance sheets and the related statements
of operations, of cash flows and of changes in stockholder's equity, present
fairly, in all material respects, the financial position of Aerial Platforms,
Inc. at February 17, 1997 and January 31, 1997, and the results of its
operations and its cash flows for the seventeen days ended February 17, 1997 and
the year ended January 31, 1997 in conformity with generally accepted accounting
principles. These financial statements are the responsibility of management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PRICE WATERHOUSE LLP
Chicago, Illinois
November 4, 1997
F-15
<PAGE> 105
AERIAL PLATFORMS, INC.
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FEBRUARY 17, JANUARY 31,
1997 1997
------------ -----------
<S> <C> <C>
ASSETS:
Cash...................................................... $ 265 $ 213
Accounts receivable, net.................................. 654 666
Inventory................................................. 71 72
Prepaid and other assets.................................. 57 31
Rental equipment, net..................................... 1,752 1,758
Property and equipment, net............................... 134 149
------ ------
Total assets......................................... $2,933 $2,889
====== ======
LIABILITIES AND STOCKHOLDER'S EQUITY:
Accounts payable.......................................... $ 137 $ 75
Accrued expenses and other liabilities.................... 133 108
Income taxes.............................................. 142 148
Debt...................................................... 1,214 1,243
------ ------
Total liabilities.................................... 1,626 1,574
Commitments and contingencies (Note 7)......................
Common stock, $0.01 par, 10,000 shares authorized, 500
shares issued and outstanding............................. 1 1
Paid-in capital............................................. -- --
Retained earnings........................................... 1,306 1,314
------ ------
Total stockholder's equity........................... 1,307 1,315
------ ------
Total liabilities and stockholder's equity........... $2,933 $2,889
====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-16
<PAGE> 106
AERIAL PLATFORMS, INC.
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEVENTEEN YEAR
DAYS ENDED ENDED
FEBRUARY 17, JANUARY 31,
1997 1997
------------ -----------
<S> <C> <C>
REVENUES:
Rental revenues........................................... $127 $3,385
Rental equipment sales.................................... 24 496
New equipment sales....................................... 66 693
Other..................................................... 16 172
---- ------
Total revenues....................................... 233 4,746
---- ------
COST OF REVENUES:
Rental equipment expenses................................. 41 697
Rental equipment depreciation............................. 15 257
Cost of rental equipment sales............................ 19 184
Cost of new equipment sales............................... 59 569
Direct operating expenses................................. 35 665
---- ------
Total cost of revenues............................... 169 2,372
---- ------
Gross profit................................................ 64 2,374
Selling, general and administrative expenses................ 64 1,302
Non-rental depreciation and amortization.................... 8 74
---- ------
Operating (loss) income..................................... (8) 998
Interest income (expense), net.............................. (6) (124)
---- ------
Income (loss) before income taxes........................... (14) 874
Income tax expense (benefit)................................ (6) 353
---- ------
Net (loss) income........................................... $ (8) $ 521
==== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-17
<PAGE> 107
AERIAL PLATFORMS, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEVENTEEN
DAYS ENDED YEAR ENDED
FEBRUARY 17, JANUARY 31,
1997 1997
------------ -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)........................................... $ (8) $ 521
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 23 331
Loss (gain) on sale of equipment.......................... 2 (304)
Deferred income taxes..................................... -- (118)
Changes in operating assets and liabilities:
Accounts receivable.................................... 12 (231)
Inventories............................................ 1 (17)
Prepaid and other assets............................... (26) (21)
Accounts payable....................................... 62 22
Accrued expenses and other liabilities................. 19 (18)
---- -----
Net cash provided by operating activities................... 85 165
---- -----
INVESTING ACTIVITIES:
Purchases of rental equipment............................... (28) (803)
Proceeds from sale of rental equipment...................... 24 496
Purchases of property and equipment......................... -- (12)
Proceeds from sale of property and equipment................ -- --
---- -----
Net cash used in investing activities....................... (4) (319)
---- -----
FINANCING ACTIVITIES:
Proceeds from long-term debt................................ -- 468
Payments on long-term debt.................................. (29) (441)
---- -----
Net cash provided by (used in) financing activities......... (29) 27
---- -----
Net increase (decrease) in cash............................. 52 (127)
Cash at beginning of period................................. 213 340
---- -----
Cash at end of period....................................... $265 $ 213
==== =====
SUPPLEMENTAL NON-CASH FLOW INFORMATION:
Cash paid for interest...................................... $ 12 $ 122
==== =====
Cash paid for income taxes.................................. $ -- $ 398
==== =====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE> 108
AERIAL PLATFORMS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------- TOTAL
STATED PAID-IN RETAINED STOCKHOLDER'S
SHARES VALUE CAPITAL EARNINGS EQUITY
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at January 31, 1996......... 500 $ 1 $ -- $ 793 $ 794
Net income.......................... -- -- 521 521
------ ------ ------ ------ ------
Balance at January 31, 1997......... 500 1 -- 1,314 1,315
Net income (loss)................... -- -- (8) (8)
------ ------ ------ ------ ------
Balance at February 17, 1997........ 500 $ 1 $ -- $1,306 $1,307
====== ====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE> 109
AERIAL PLATFORMS, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Aerial Platforms, Inc. ("Aerial") is a C corporation primarily involved in
the short-term rental of platform aerial lifts, and to a lesser extent, selling
related new and used equipment. Aerial's principal customers are construction
contractors located in the Atlanta, Georgia area. Aerial operates from one
leased facility located in Norcross (Atlanta), Georgia.
FINANCIAL STATEMENT PRESENTATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
periods. Actual results could differ from those estimates.
RENTAL REVENUE
Rental revenue is recognized ratably over the expected lease term.
RENTAL EQUIPMENT
Rental equipment consists of platform aerial lifts and is recorded at cost.
Depreciation for rental equipment acquired is computed using the straight-line
method over an estimated five to seven year useful life with no salvage value.
Accumulated depreciation on rental equipment was approximately $1,947,000 and
$1,960,000 at February 17, 1997 and January 31, 1997, respectively.
Ordinary repairs and maintenance costs are charged to operations as
incurred. When rental equipment is disposed of, the related cost and accumulated
depreciation are removed from the respective accounts. Proceeds from the
disposal and the related net book value of the equipment are recognized in the
period of disposal and reported as revenue from rental equipment sales and cost
of equipment sales in the statement of operations.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets. The
estimated useful lives for property and equipment range from three to five years
for vehicles and delivery equipment, and five to seven years for tools, yard
equipment and furniture and fixtures.
Ordinary repairs and maintenance costs are charged to operations as
incurred. When property and equipment are disposed of, the related cost and
accumulated depreciation are removed from the respective accounts, and any gains
or losses are included in the statement of operations.
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT
On February 1, 1996, Aerial adopted Statement of Financial Accounting
Standards (SFAS) No. 121, Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of, which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the assets' carrying amounts exceed the undiscounted cash flows
estimated to be generated by those assets. SFAS No. 121 also requires impairment
losses to be recorded when the carrying amount of long-lived assets that are
expected to be disposed of exceed their fair values, net of disposal costs.
Adoption of
F-20
<PAGE> 110
AERIAL PLATFORMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SFAS No. 121 did not have a material impact on Aerial's financial position at
January 31, 1997 or results of operations for the year then ended.
INVENTORIES
Aerial's inventories of $71,000 and $72,000 at February 17, 1997 and
January 31, 1997, respectively, consist primarily of spare parts held for use in
servicing and repairing platform aerial lifts. Inventories are stated at the
lower of cost, determined by the first-in, first-out method, or market.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the balance sheets for trade accounts
receivable, accounts payable and accrued expenses and other liabilities
approximate fair value due to the short-term nature of these financial
instruments. The fair value of notes receivable and notes payable is determined
using current interest rates for similar instruments as of February 17, 1997 and
approximates the carrying value of these notes.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject Aerial to significant
concentrations of credit risk consist primarily of trade accounts receivable
from construction customers located in one geographical location. Aerial
generally does not require collateral on accounts receivable. Aerial maintains
an allowance for doubtful accounts on its receivables based upon expected
collectibility. Allowance for doubtful accounts was $24,250 and $24,000 at
February 17, 1997 and January 31, 1997, respectively.
ADVERTISING COSTS
Aerial advertises primarily through trade journals and the media.
Advertising costs are expensed as incurred.
INCOME TAXES
Deferred income tax assets and liabilities are computed based on temporary
differences between the financial statement and income tax bases of assets and
liabilities using the enacted marginal income tax rate in effect for the year in
which the differences are expected to reverse. Deferred income tax expenses or
benefits are based on the changes in the deferred income tax assets or
liabilities from period to period.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
FEBRUARY 17, JANUARY 31,
1997 1997
------------ -----------
<S> <C> <C>
Vehicles and delivery equipment......................... $122 $122
Tools and yard equipment................................ 196 212
Furniture and fixtures.................................. 33 33
---- ----
351 367
Less: accumulated depreciation.......................... (217) (218)
---- ----
$134 $149
==== ====
</TABLE>
F-21
<PAGE> 111
AERIAL PLATFORMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. PREPAID AND OTHER ASSETS
Prepaid and other assets consists of the following (in thousands):
<TABLE>
<CAPTION>
FEBRUARY 17, JANUARY 31,
1997 1997
------------ -----------
<S> <C> <C>
Officer and employee advances........................... $36 $22
Other................................................... 21 9
--- ---
$57 $31
=== ===
</TABLE>
4. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consists of the following (in
thousands):
<TABLE>
<CAPTION>
FEBRUARY 17, JANUARY 31,
1997 1997
------------ -----------
<S> <C> <C>
Sales taxes payable..................................... $ 56 $ 48
Accrued benefit plan contributions...................... 52 53
Accrued salaries........................................ 12 --
Other................................................... 13 7
---- ----
$133 $108
==== ====
</TABLE>
5. DEBT
<TABLE>
<CAPTION>
FEBRUARY 17, JANUARY 31,
1997 1997
------------ -----------
(IN THOUSANDS)
<S> <C> <C>
Note payable in monthly installments of $16,850 plus
interest at the prime rate plus 1.5% (prime rate at
February 17, 1997 and January 31, 1997 was 8.25%) with the
final payment due in February 1999. (See Note 9).......... $ 404 $ 421
Notes payable in monthly installments of approximately
$12,062 including interest at the prime rate plus 1.5%
with the final payments due at varying dates through
November 2000. (See Note 9)............................... 214 219
Note payable in monthly installments of approximately $6,828
including interest at the prime rate plus 1.5% with final
payment due July 1999. (See Note 9)....................... 190 190
Note payable in monthly installments of approximately $7,780
including interest at the prime rate plus 1.5% with final
payment due in September 1999. (See Note 9)............... 213 219
Note payable in monthly installments of approximately $1,993
including interest at the prime rate plus 1.5% with final
payment due in September 2001. (See Note 9)............... 58 59
Note payable in monthly installments of approximately $4,420
including interest at the prime rate plus 2% with the
final payment due in May 1998. (See Note 9)............... 65 65
Notes payable in monthly installments of $4,994 including
interest of 10%, 9% and 11%, with the final payments due
in February 1997, July 1999 and February 1999,
respectively. (See Note 9)................................ 70 70
------ ------
Total debt............................................. $1,214 $1,243
====== ======
</TABLE>
F-22
<PAGE> 112
AERIAL PLATFORMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES
The components of the provision for income taxes are as follows (in
thousands):
<TABLE>
<CAPTION>
SEVENTEEN YEAR
DAYS ENDED ENDED
FEBRUARY 17, JANUARY 31,
1997 1997
------------ -----------
<S> <C> <C>
CURRENT:
Federal............................................... $(5) $191
State................................................. (1) 34
DEFERRED:
Federal............................................... -- 109
State................................................. -- 19
--- ----
$(6) $353
=== ====
</TABLE>
The provision for income taxes differs from the amount of income tax
determined by applying the U.S. statutory federal income tax rate of 34% to
income before income taxes as a result of the following (in thousands):
<TABLE>
<CAPTION>
SEVENTEEN YEAR
DAYS ENDED ENDED
FEBRUARY 17, JANUARY 31,
1997 1997
------------ -----------
<S> <C> <C>
(Loss) income at statutory rate......................... $(5) $297
Effect of state taxes, net.............................. (1) 51
Other................................................... -- 5
--- ----
$(6) $353
=== ====
</TABLE>
Deferred tax assets (liabilities) are as follows (in thousands):
<TABLE>
<CAPTION>
FEBRUARY 17, JANUARY 31,
1997 1997
------------ -----------
<S> <C> <C>
Depreciation............................................ $(153) $(153)
Allowance for doubtful accounts......................... 10 10
----- -----
Net deferred tax liability.............................. $(143) $(143)
===== =====
</TABLE>
7. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
Aerial conducts its operations in leased facilities under an operating
lease which expires in May 1998. Aerial also leases vehicles and certain rental
equipment under cancelable and noncancelable lease agreements which expire at
varying dates through July 2000. Rental expense was $45,000 and $658,000 for the
seventeen days ended February 17, 1997 and year ended January 31, 1997,
respectively.
F-23
<PAGE> 113
AERIAL PLATFORMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Future minimum rental commitments as of February 17, 1997 under
noncancelable operating leases are (in thousands):
<TABLE>
<S> <S> <C>
1998 ............................................................ $118
1999 ............................................................ 95
2000 ............................................................ 77
2001 ............................................................ 20
2002 ............................................................ --
----
$310
====
</TABLE>
LEGAL MATTERS
Aerial is party to legal proceedings and claims arising in the ordinary
course of its business. In the opinion of management, the ultimate resolution of
these matters will have no material adverse effect on Aerial's financial
position, results of operations or cash flows.
8. EMPLOYEE BENEFIT PLAN
During the year ended January 31, 1995, Aerial established a simplified
employee pension plan covering substantially all employees. Employees meeting
certain age and length of service requirements are eligible to participate.
Employee contributions are permitted up to a maximum of 10% of covered
compensation. There are no required matching contributions by Aerial since
Aerial's contributions are at the discretion of the Board of Directors. Aerial's
contributions were $0 and $43,000 for the seventeen days ended February 17, 1997
and the year ended January 31, 1997, respectively.
9. SUBSEQUENT EVENTS
On February 17, 1997, Aerial's sole shareholder sold all of the outstanding
common stock of Aerial to National Equipment Services, Inc. ("NES") in exchange
for a $3,750,000 cash payment (subject to a customary purchase price adjustment
mechanism), a $500,000 promissory note ($350,000 of which is in consideration
for the common stock of Aerial and $150,000 of which is in consideration for
certain non-compete covenants given by the sole shareholder of Aerial's common
stock) and the assumption of certain liabilities and obligations. Aerial's
results of operations are included with NES subsequent to February 17, 1997.
At such closing, NES paid the remaining principal and accrued interest on
the notes payable to Fidelity National Bank in the amount of $1,219,600.
Additionally, NES purchased all of the leased rental equipment at February 17,
1997 for approximately $1,889,000.
F-24
<PAGE> 114
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholder of Lone Star
Rentals, Inc. and the Board of Directors of
National Equipment Services, Inc.
In our opinion, the accompanying balance sheets and the related statements
of operations, of cash flows and of changes in stockholder's equity, present
fairly, in all material respects, the financial position of Lone Star Rentals,
Inc. at March 16, 1997, December 31, 1996 and 1995, and the results of its
operations and its cash flows for the period ended March 16, 1997 and for each
of the two years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
Houston, Texas
November 4, 1997
F-25
<PAGE> 115
LONE STAR RENTALS, INC.
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 16, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Cash.................................................. $ -- $ 89 $ 88
Accounts receivable, net.............................. 1,193 1,187 1,338
Inventory............................................. 708 622 338
Rental equipment, net................................. 6,688 6,952 7,622
Property and equipment, net........................... 165 178 262
Prepaid and other assets.............................. 382 377 446
------- ------- -------
Total assets..................................... $ 9,136 $ 9,405 $10,094
======= ======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY:
Accounts payable...................................... $ 660 $ 408 $ 236
Accrued expenses and other liabilities................ 274 293 257
Debt.................................................. 4,348 4,529 5,481
Obligations under capital leases...................... 410 454 640
------- ------- -------
Total liabilities................................ 5,692 5,684 6,614
------- ------- -------
Commitments and contingencies (Note 9)
Stockholder's equity.................................... 3,444 3,721 3,480
------- ------- -------
Total liabilities and stockholder's equity....... $ 9,136 $ 9,405 $10,094
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
\
F-26
<PAGE> 116
LONE STAR RENTALS, INC.
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD YEAR ENDED
ENDED DECEMBER 31,
MARCH 16, ----------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
REVENUES:
Rental revenue............................................ $1,455 $8,168 $8,324
Sales of equipment and supplies........................... 188 1,181 1,379
------ ------ ------
Total revenues....................................... 1,643 9,349 9,703
------ ------ ------
COST OF REVENUES:
Rental equipment depreciation............................. 242 1,440 1,356
Cost of equipment and supplies............................ 119 888 1,079
Direct operating expenses................................. 1,308 5,395 5,130
------ ------ ------
Total cost of revenues............................... 1,669 7,723 7,565
------ ------ ------
Gross profit (loss)......................................... (26) 1,626 2,138
Selling, general and administrative expense................. 177 817 865
Non-rental depreciation and amortization.................... 26 169 170
------ ------ ------
Operating (loss) income..................................... (229) 640 1,103
Other income................................................ 139 271 231
Interest income (expense) net............................... (164) (530) (608)
------ ------ ------
Net income (loss)........................................... $ (254) $ 381 $ 726
====== ====== ======
Pro forma tax provision (benefit) (unaudited):
Income (loss) before income taxes......................... $ (254) $ 381 $ 726
Pro forma provision (benefit) for income taxes............ (89) 133 254
------ ------ ------
Pro forma net income (loss)............................... $ (165) $ 248 $ 472
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-27
<PAGE> 117
LONE STAR RENTALS, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD YEAR ENDED
ENDED DECEMBER 31,
MARCH 16, -----------------
1997 1996 1995
--------- ------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.................................................. $ (254) $ 381 $ 726
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 268 1,609 1,526
Gain on sale of equipment................................. -- (175) (184)
Changes in operating assets and liabilities:
Accounts receivable.................................... (6) 151 (192)
Inventory.............................................. (86) (284) 318
Prepaid and other assets............................... (5) 69 20
Accounts payable....................................... 252 172 (71)
Accrued expenses and other liabilities................. (19) 36 30
------- ------- -------
Net cash provided by operating activities................... 150 1,959 2,173
------- ------- -------
INVESTING ACTIVITIES:
Purchases of rental equipment............................... 9 (1,595) (3,019)
Proceeds from sale of rental equipment...................... -- 733 1,013
Purchases of property and equipment......................... -- (6) (51)
Proceeds from sale of property and equipment................ -- 2 76
------- ------- -------
Net cash provided by (used in) investing activities......... 9 (866) (1,981)
------- ------- -------
FINANCING ACTIVITIES:
Proceeds from debt.......................................... -- 1,640 2,871
Payments on debt............................................ (225) (2,592) (2,881)
Dividends paid.............................................. (23) (140) (231)
------- ------- -------
Net cash used in financing activities....................... (248) (1,092) (241)
------- ------- -------
Net increase (decrease) in cash............................. (89) 1 (49)
Cash at beginning of period................................. 89 88 137
------- ------- -------
Cash at end of period....................................... $ -- $ 89 $ 88
======= ======= =======
SUPPLEMENTAL NON-CASH FLOW INFORMATION:
Cash paid for interest...................................... $ 164 $ 529 $ 607
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-28
<PAGE> 118
LONE STAR RENTALS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
STOCKHOLDER'S
EQUITY
-------------
<S> <C>
Balance at December 31, 1994................................ $2,985
Net income.................................................. 726
Dividends................................................... (231)
------
Balance at December 31, 1995................................ 3,480
Net income.................................................. 381
Dividends................................................... (140)
------
Balance at December 31, 1996................................ 3,721
Net income.................................................. (254)
Dividends................................................... (23)
------
Balance at March 16, 1997................................... $3,444
======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-29
<PAGE> 119
LONE STAR RENTALS, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Lone Star Rentals, Inc. ("Lone Star") is an S Corporation primarily
involved in the short-term rental of general purpose construction equipment, and
to a lesser extent, selling complementary parts, merchandise and new and used
equipment to commercial and residential construction companies, industrial
enterprises, homeowners and other customers. Lone Star operates from five
separate locations, four of which are in the Houston, Texas metropolitan area
and one of which is in Corpus Christi, Texas. Lone Star's executive offices are
located in Houston, Texas.
RENTAL REVENUES
Rental revenues are recognized upon the earliest occurrence of either the
return of the equipment or the end of one month's rental term. For rental
contracts greater than one month, rental revenues are recognized notably over
the contract period.
INVENTORY
Lone Star's inventories primarily consist of items such as equipment, hand
tools and accessories held for resale. Inventories are stated at the lower of
cost, determined by the first-in, first-out method and replacement value, or
market.
RENTAL EQUIPMENT
Rental equipment is recorded at cost. Depreciation for rental equipment
acquired is computed using the straight line method over an estimated average
7-year useful life with no salvage value.
Ordinary maintenance and repairs costs are charged to operations as
incurred. When rental equipment is disposed of, the related cost and accumulated
depreciation are removed from the respective accounts. Proceeds from the
disposal and the related net book value of the equipment are recognized in the
period of disposal and reported as revenue from rental equipment sales and cost
of equipment sales in the statement of operations.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation is computed using
the straight line method over the estimated useful lives of the assets.
The estimated useful lives for property and equipment range from 7 to 25
years for buildings, 3 to 7 years for vehicles, delivery and yard equipment, and
1 to 7 years for fixtures and leasehold improvements.
Ordinary maintenance and repairs costs are charged to operations as
incurred. When property and equipment is disposed of, the related cost and
accumulated depreciation are removed from the respective accounts, and any gains
or losses are included in results of operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the balance sheets for trade accounts
receivable, accounts payable and other liabilities approximate fair value due to
the immediate to short-term maturity of these financial instruments. The fair
value of notes receivable and notes payable using current interest rates for
similar instruments as of March 16, 1997, and December 31, 1996 and 1995
approximates their carrying value as the underlying instruments include
provisions to adjust interest rates to approximate fair market value.
F-30
<PAGE> 120
LONE STAR RENTALS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject Lone Star to significant
concentrations of credit risk consist primarily of trade accounts receivable
from construction and industrial customers. Concentrations of credit risk with
respect to trade accounts receivable are limited due to the large number of
customers and Lone Star's geographic dispersion. Lone Star performs credit
evaluations of its customers' financial condition and generally does not require
collateral on accounts receivable.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of certain assets and liabilities,
and disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the related reported amounts of revenue
and expenses during the reporting period. Actual results could differ from those
estimates.
ADVERTISING COSTS
Lone Star advertises primarily through trade journals and the media.
Advertising costs are expensed as incurred.
INCOME TAXES
Lone Star's parent is a subchapter S corporation, taxes are the
responsibility of the individual shareholders of the parent. The pro forma
provision for income taxes approximate what Lone Star's tax provision would be
if subject to income taxes as a C corporation.
RELATED PARTY TRANSACTIONS
As disclosed in these financial statements, Lone Star has participated in
certain transactions with related parties.
2. INVENTORY
Inventory consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 16, -------------
1997 1996 1995
--------- ----- -----
<S> <C> <C> <C>
Equipment.............................................. $490 $411 $142
Parts and supplies..................................... 218 211 196
---- ---- ----
$708 $622 $338
==== ==== ====
</TABLE>
F-31
<PAGE> 121
LONE STAR RENTALS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. RENTAL EQUIPMENT
Rental equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 16, ---------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Air compressors and tools........................ $ 1,584 $ 1,590 $ 1,479
Compaction and concrete.......................... 866 919 985
Earth moving equipment........................... 3,954 4,023 3,913
Forklifts, highreach and scaffolding............. 1,365 1,574 1,581
Generators and lighting.......................... 607 620 693
Plumbing and painting............................ 276 273 287
Trenchers and trailers........................... 455 457 232
Pumps............................................ 510 507 527
Welders.......................................... 569 570 644
Other............................................ 719 717 731
------- ------- -------
10,905 11,250 11,072
Less: accumulated depreciation................... (4,217) (4,298) (3,450)
------- ------- -------
$ 6,688 $ 6,952 $ 7,622
======= ======= =======
</TABLE>
4. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 16, ---------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Vehicles and delivery equipment.................... $300 $300 $303
Furniture and fixtures............................. 268 268 254
Leasehold improvements............................. 43 43 43
Building improvements.............................. 127 127 127
---- ---- ----
738 738 727
Less: accumulated depreciation..................... (573) (560) (465)
---- ---- ----
$165 $178 $262
==== ==== ====
</TABLE>
5. PREPAID AND OTHER ASSETS
Prepaid and other assets consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 16, ---------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Non-compete agreement.............................. $350 $363 $438
Other.............................................. 32 14 8
---- ---- ----
$382 $377 $446
==== ==== ====
</TABLE>
Lone Star has entered into a non-compete agreement with a former owner
which expires on December 1, 2002. The original cost of $750,000 is being
amortized over a ten year life using the straight line method.
F-32
<PAGE> 122
LONE STAR RENTALS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consists of the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 16, -------------------
1997 1996 1995
--------- ------ ------
<S> <C> <C> <C>
Customer deposits.............................. $ 30 $ 25 $ 21
Sales tax payable.............................. 24 44 49
Payroll tax payable............................ -- 7 1
Accrued property tax payable................... 203 173 172
Other.......................................... 17 44 14
------ ------ ------
$ 274 $ 293 $ 257
====== ====== ======
</TABLE>
7. DEBT
Debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 16, -------------------
1997 1996 1995
--------- ------ ------
<S> <C> <C> <C>
CURRENT PORTION OF DEBT:
Floor plan payable Homelite.................. $ -- $ 14 $ 78
Floor plan payable Kubota.................... 245 171 11
Floor plan payable Nations................... 123 131 --
Floor plan payable Mitsui.................... -- -- 19
Current notes payable Pinemont............... 649 649 400
Current notes payable Texas Commerce......... -- -- --
Current portion of long-term debt............ 1,517 1,725 2,290
------ ------ ------
Total current debt...................... 2,534 2,690 2,798
------ ------ ------
LONG-TERM PORTION OF DEBT:
Notes payable Pinemont Bank.................. 133 133 267
Merchants Park Bank vehicles................. 11 11 22
Merchants Park Bank building and land........ 1 1 6
Notes payable Case Credit.................... 685 685 515
Notes payable Chicago Pneumatic.............. 18 18 56
Notes payable Ingersoll Rand................. 14 25 115
Notes payable John Deere..................... 252 252 374
Notes payable Kubota Credit.................. 46 46 203
Notes payable Mitsui......................... 163 177 254
Notes payable Miller Services................ 19 19 121
Notes payable Orix........................... 28 28 214
Notes payable Jack Fulton.................... 444 444 532
Notes payable Navistar....................... -- -- 4
------ ------ ------
Total long-term debt.................... 1,814 1,839 2,683
------ ------ ------
Total debt.............................. $4,348 $4,529 $5,481
====== ====== ======
</TABLE>
Interest and principal is payable monthly or quarterly at rates ranging
from 5.7% to 12%. The note agreements include restrictions as to limitations
upon certain ratios of liabilities to net worth and upon the minimum net worth
of Lone Star. Lone Star is in compliance with covenants in all agreements.
Substantially
F-33
<PAGE> 123
LONE STAR RENTALS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
all rental equipment, property and equipment, and accounts receivable of Lone
Star are pledged as collateral for the bank line of credit demand notes, and
notes related to purchases of certain businesses.
On bank notes payable, Lone Star incurred interest expense of $66,000,
$778,000 and $605,000 for the periods ended March 16, 1997, December 31, 1996
and December 31, 1995, respectively.
Maturities of debt are as follows at March 16, 1997 (in thousands):
<TABLE>
<S> <C>
1997........................................................ $2,534
1998........................................................ 878
1999........................................................ 523
2000........................................................ 287
2001........................................................ 126
------
$4,348
======
</TABLE>
8. OBLIGATIONS UNDER CAPITAL LEASES
Capitalized leases recorded as assets consist of the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 16, ----------------------------
1997 1996 1995
--------- ------------ ------------
<S> <C> <C> <C>
Compaction and concrete...................... $180 $180 $180
Forklifts, highreach and scaffolding......... 81 81 81
Trenchers and trailers....................... 254 254 254
Pumps........................................ 245 245 245
Other........................................ 46 46 46
---- ---- ----
806 806 806
Less: accumulated depreciation............... (270) (249) (127)
---- ---- ----
$536 $557 $679
==== ==== ====
</TABLE>
Obligations under capital leases consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 16, ----------------------------
1997 1996 1995
--------- ------------ ------------
<S> <C> <C> <C>
Leases payable AEL/Reli.................... $ 55 $244 $466
Leases payable Associated.................. 338 156 73
Leases payable Bankers Leasing............. -- 6 28
Leases payable Clark Financials............ 14 34 50
Leases payable Manifest Group.............. 3 14 23
---- ---- ----
410 454 640
==== ==== ====
Current portion.............................. 223 284 267
---- ---- ----
Long-term portion............................ $187 $170 $373
==== ==== ====
</TABLE>
Future minimum lease payments as of March 16, 1997 are (in thousands):
<TABLE>
<S> <C>
1997........................................................ $267
1998........................................................ 117
1999........................................................ 51
2000........................................................ 18
Thereafter.................................................. --
----
$453
====
</TABLE>
F-34
<PAGE> 124
LONE STAR RENTALS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
Lone Star leases certain facilities under operating leases which contain
renewal options and provide for periodic cost of living adjustments. Rental
expense was $241,000 and $236,000 for the years ended December 31, 1995 and 1996
respectively, and $49,000 for the period ended March 16, 1997.
Future minimum rental commitments as of March 16, 1997 under non-cancelable
operating leases are (in thousands):
<TABLE>
<S> <C>
1997........................................................ $ 192
1998........................................................ 242
1999........................................................ 242
2000........................................................ 242
2001........................................................ 242
Thereafter.................................................. 51
------
$1,211
======
</TABLE>
LEGAL MATTERS
Lone Star is party to legal proceedings and potential claims arising in the
ordinary course of its business. Management believes that the ultimate
resolution of these matters will have no material adverse effect on Lone Star's
financial position, results of operations or cash flows.
10. SUBSEQUENT EVENTS
On March 17, 1997, Lone Star's owner sold substantially all of Lone Star's
assets to NES Acquisition Corp., a wholly owned subsidiary of National Equipment
Services, Inc. for a $10,579,711 cash payment (subject to a customary purchase
price adjustment mechanism), a promissory note in the principal amount of
$500,000 ($350,000 of which is in partial consideration for such assets and
$150,000 of which is in consideration for certain non-compete covenants by Lone
Star's former owner) and the assumption of certain liabilities and obligations.
F-35
<PAGE> 125
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholder of
of BAT Rentals, Inc. and the Board of Directors
of National Equipment Services, Inc.
In our opinion, the accompanying balance sheets and the related statements
of operations, of changes in stockholder's equity and of cash flows, present
fairly, in all material respects, the financial position of BAT Rentals, Inc. at
March 31, 1997, December 31, 1996 and 1995, and the results of its operations
and its cash flows for the three months ended March 31, 1997, and for each of
the two years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
Chicago, Illinois
November 4, 1997
F-36
<PAGE> 126
BAT RENTALS, INC.
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents............................. $ 1,609 $ 1,750 $ 1,879
Accounts receivable, net.............................. 1,574 1,322 1,107
Inventory, net........................................ 530 645 672
Rental equipment, net................................. 5,945 5,779 4,434
Property and equipment, net........................... 1,808 1,855 1,976
Prepaid and other assets.............................. 30 153 43
------- ------- -------
Total assets..................................... $11,496 $11,504 $10,111
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable...................................... $ 84 $ 36 $ 126
Accrued expenses and other liabilities................ 216 121 200
Debt.................................................. 2,891 3,302 3,191
------- ------- -------
Total liabilities................................ 3,191 3,459 3,517
Common stock, $10 par, 1,000 shares authorized, 700
shares issued and outstanding...................... 7 7 7
Other paid-in capital................................. 2 2 2
Retained earnings..................................... 9,225 8,965 7,514
Treasury stock........................................ (929) (929) (929)
------- ------- -------
Total stockholders' equity....................... 8,305 8,045 6,594
------- ------- -------
Total liabilities and stockholders' equity....... $11,496 $11,504 $10,111
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-37
<PAGE> 127
BAT RENTALS, INC.
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
THREE
MONTHS FOR THE YEARS ENDED
ENDED ----------------------------
MARCH 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Rental revenues....................................... $ 1,457 $ 6,328 $ 4,856
Rental equipment sales................................ 995 2,879 2,486
New equipment sales................................... 1,250 3,547 4,733
Other................................................. 100 386 378
------- ------- -------
Total revenues................................... 3,802 13,140 12,453
------- ------- -------
COST OF REVENUES:
Rental equipment expenses............................. 12 184 80
Rental equipment depreciation......................... 707 2,576 2,059
Cost of rental equipment sales........................ 352 1,411 968
Cost of new equipment sales........................... 1,010 2,961 4,052
Direct operating expense.............................. 450 1,623 1,653
------- ------- -------
Total cost of revenues........................... 2,531 8,755 8,812
------- ------- -------
Gross profit............................................ 1,271 4,385 3,641
Selling, general and administrative expenses............ 489 1,399 1,552
Non-rental depreciation and amortization................ 25 109 116
------- ------- -------
Operating income........................................ 757 2,877 1,973
Other income (expense), net............................. (1) 120 29
Interest income (expense), net.......................... (46) (196) (103)
------- ------- -------
Net income.............................................. $ 710 $ 2,801 $ 1,899
======= ======= =======
PRO FORMA TAX PROVISION (UNAUDITED):
Income before income taxes.............................. $ 710 $ 2,801 $ 1,899
Pro forma provision for income taxes.................... 241 952 646
------- ------- -------
Pro forma net income.................................... $ 469 $ 1,849 $ 1,253
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-38
<PAGE> 128
BAT RENTALS, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS FOR THE YEARS ENDED
ENDED ---------------------------
MARCH 31, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income............................................ $ 710 $ 2,801 $ 1,899
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation....................................... 732 2,685 2,175
Gain on sale of equipment.......................... (657) (1,468) (1,527)
Changes in operating assets and liabilities:
Accounts receivable.............................. (252) (215) (27)
Inventories...................................... 115 26 (42)
Prepaid and other assets......................... 123 (110) 45
Accounts payable................................. 48 (90) 76
Accrued expenses and other liabilities........... 95 (79) 110
------- ------- -------
Net cash provided by operating activities............... 914 3,550 2,709
------- ------- -------
INVESTING ACTIVITIES:
Purchases of rental equipment......................... (1,211) (5,332) (3,953)
Proceeds from sale of rental equipment................ 995 2,879 2,486
Purchases of property and equipment................... -- (2) (52)
Proceeds from sale of property and equipment.......... 23 14 --
------- ------- -------
Net cash used in investing activities................... (193) (2,441) (1,519)
------- ------- -------
FINANCING ACTIVITIES:
Proceeds from long-term debt.......................... -- 1,465 1,303
Payments on long-term debt............................ (412) (1,353) (771)
Dividends paid........................................ (450) (1,350) (1,500)
------- ------- -------
Net cash used in financing activities................... (862) (1,238) (968)
------- ------- -------
Net increase (decrease) in cash and cash equivalents.... (141) (129) 222
Cash and cash equivalents at beginning of period........ 1,750 1,879 1,657
------- ------- -------
Cash and cash equivalents at end of period.............. $ 1,609 $ 1,750 $ 1,879
======= ======= =======
SUPPLEMENTAL NON-CASH FLOW INFORMATION:
Cash paid for interest................................ $ 56 $ 244 $ 227
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-39
<PAGE> 129
BAT RENTALS, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------- TOTAL
STATED PAID-IN TREASURY RETAINED STOCKHOLDERS'
SHARES VALUE CAPITAL STOCK EARNINGS EQUITY
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1994...................... 700 $ 7 $ 2 $ (929) $ 7,115 $ 6,195
Net income.................. -- -- -- -- 1,899 1,899
Dividends................... -- -- -- -- (1,500) (1,500)
------- ------- ------- ------- ------- -------
Balance at December 31,
1995...................... 700 7 2 (929) 7,514 6,594
Net income.................. -- -- -- -- 2,801 2,801
Dividends................... -- -- -- -- (1,350) (1,350)
------- ------- ------- ------- ------- -------
Balance at December 31,
1996...................... 700 7 2 (929) 8,965 8,045
Net income.................. -- -- -- -- 710 710
Dividends................... -- -- -- -- (450) (450)
------- ------- ------- ------- ------- -------
Balance at March 31, 1997... 700 $ 7 $ 2 $ (929) $ 9,225 $ 8,305
======= ======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-40
<PAGE> 130
BAT RENTALS, INC.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
BAT Rentals, Inc. ("BAT") is an S corporation primarily involved in the
sale, financing and rental of construction equipment to construction contractors
and industrial companies. BAT operates from one facility in Las Vegas, Nevada.
FINANCIAL STATEMENT PRESENTATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
RENTAL REVENUES
Rental revenues are recognized ratably over the lease term. Sales revenues
are recognized at the point of delivery.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are short-term highly liquid investments with
original maturities of three months or less.
INVENTORY
BAT's inventories primarily consist of parts and new equipment held for
sale. Inventories are stated at the lower of cost, determined by the first-in,
first-out method, or market.
RENTAL EQUIPMENT
Rental equipment is recorded at cost. Depreciation for rental equipment
acquired is computed using the straight-line and accelerated methods over an
estimated 5 to 7 year useful life with no salvage value.
Ordinary repairs and maintenance costs are charged to operations as
incurred. When rental equipment is disposed of, the related cost and accumulated
depreciation are removed from the respective accounts. Proceeds from the
disposal and the related net book value of the equipment are recognized in the
period of disposal and reported as revenue from rental equipment sales and cost
of equipment sales in the statement of operations.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation is computed using
the straight-line and accelerated methods over the estimated useful lives of the
assets.
The estimated useful lives for property and equipment range from 31.5 years
for buildings, 5 to 7 years for machinery and equipment, 5 to 7 years for
furniture and fixtures and 3 to 5 years for vehicles.
Ordinary repairs and maintenance costs are charged to operations as
incurred. When property and equipment is disposed of, the related cost and
accumulated depreciation are removed from the respective accounts, and any gains
or losses are included in results of operations.
F-41
<PAGE> 131
BAT RENTALS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT
On January 1, 1996, BAT adopted Statement of Financial Accounting Standards
(SFAS) No. 121, Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of, which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the assets' carrying amounts exceed the undiscounted cash flows
estimated to be generated by those assets. SFAS No. 121 also requires impairment
losses to be recorded when the carrying amount of long-lived assets that are
expected to be disposed of, exceed their fair values, net of disposal costs.
Adoption of SFAS No. 121 did not have a material impact on BAT's financial
position at March 31, 1997 or results of operations for the period then ended.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the balance sheets for trade accounts
receivable, accounts payable and accrued expenses and other liabilities
approximate fair value due to the immediate to short-term maturity of these
financial instruments. The fair value of long-term debt is determined using
current interest rates for similar instruments as of March 31, 1997 and
approximates the carrying value of the debt due to the fact that the underlying
instruments include provisions to adjust note balances and interest rates to
approximate fair market value.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject BAT to significant
concentrations of credit risk consist primarily of trade accounts receivable
from construction and industrial customers. Concentrations of credit risk with
respect to trade accounts receivable are limited due to the large number of
customers and BAT's geographic dispersion. BAT performs credit evaluations of
its customers' financial condition and generally does not require collateral on
accounts receivable. BAT maintains an allowance for doubtful accounts on its
receivables based upon expected collectibility. Allowance for doubtful accounts
was $116,200, $116,200 and $96,300 at March 31, 1997, December 31, 1996 and
1995, respectively.
INCOME TAXES
BAT has elected S corporation status under the U.S. Internal Revenue Code.
Pursuant to this election, BAT's income, deductions and credits are reported on
the income tax returns of BAT's stockholders for federal purposes and,
accordingly, no provision for federal income taxes has been made. Pro forma
income taxes are calculated at a statutory tax rate of 34%.
RELATED PARTY TRANSACTIONS
As disclosed in these financial statements, BAT has participated in certain
transactions with related parties.
F-42
<PAGE> 132
BAT RENTALS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. INVENTORY
Inventory consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ------------------
1997 1996 1995
--------- ------- -------
<S> <C> <C> <C>
New equipment...................................... $ 300 $ 365 $ 342
Parts.............................................. 381 438 418
Contractor supplies................................ 76 75 77
Other.............................................. 14 8 7
------- ------- -------
771 886 844
Less: reserve...................................... (241) (241) (172)
------- ------- -------
Total inventory, net............................... $ 530 $ 645 $ 672
======= ======= =======
</TABLE>
3. RENTAL EQUIPMENT
Rental equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ------------------
1997 1996 1995
--------- ------- -------
<S> <C> <C> <C>
Rental equipment................................... $11,545 $11,397 $ 9,387
Less: accumulated depreciation..................... (5,600) (5,618) (4,953)
------- ------- -------
Rental equipment, net.............................. $ 5,945 $ 5,779 $ 4,434
======= ======= =======
</TABLE>
4. PROPERTY AND EQUIPMENT
Property and equipment, net, consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ------------------
1997 1996 1995
--------- ------- -------
<S> <C> <C> <C>
Land and land improvements......................... $ 807 $ 807 $ 807
Building........................................... 1,336 1,336 1,336
Machinery and shop equipment....................... 68 63 60
Furniture and fixtures............................. 442 440 424
Vehicles........................................... 838 889 910
------- ------- -------
Total property and equipment, at cost.............. 3,491 3,535 3,537
Less: accumulated depreciation..................... (1,683) (1,680) (1,561)
------- ------- -------
Property and equipment, net........................ $ 1,808 $ 1,855 $ 1,976
======= ======= =======
</TABLE>
F-43
<PAGE> 133
BAT RENTALS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. PREPAID AND OTHER ASSETS
Prepaid and other assets consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ----------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Receivable from EPA.............................. $ -- $108 $ --
Prepaid insurance................................ 5 31 29
Prepaid advertising.............................. 3 7 7
Other............................................ 22 7 7
---- ---- ----
$ 30 $153 $ 43
==== ==== ====
</TABLE>
6. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ----------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Accrued expenses................................. $ 68 $ 21 $ 72
Sales tax payable................................ 78 54 52
Accrued profit sharing........................... 70 46 --
Accrued equipment sales payable.................. -- -- 76
---- ---- ----
$216 $121 $200
==== ==== ====
</TABLE>
7. DEBT
Debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, ---------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Notes payable, secured by rental equipment,
payable through various dates ending February
2000, interest rates ranging from 7.9% to prime
plus 1%........................................ $1,428 $1,630 $1,295
Notes payable, related party, secured by rental
equipment, with interest ranging from 7.5% to
prime plus 1%.................................. 188 223 177
Notes payable, secured by trust deed on property
and buildings, with interest at prime plus 1%
maturing May 1997.............................. -- -- 167
Notes payable, shareholder, secured by rental
equipment with interest at prime plus 1%,
minimum rate of 9.75%.......................... 245 288 328
Revolving credit line, secured by rental
equipment and inventory, with a limit of
$1,250,000. Interest payable monthly at Bank of
America's reference rate plus 0.65%............ 871 814 1,009
Other contracts payable, secured by rental
equipment and inventory, due upon sale of
collateral or within one year of the date of
purchase if not sold........................... 159 347 215
------ ------ ------
Total debt....................................... $2,891 $3,302 $3,191
====== ====== ======
</TABLE>
F-44
<PAGE> 134
BAT RENTALS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
BAT's agreement with the bank provides for a secured revolving line of
credit of $1,250,000 maturing no later than May 31, 1997. The bank and senior
note agreements include restrictions as to limitations upon certain ratios of
liabilities to net worth and upon the minimum net worth of BAT. BAT is in
compliance with covenants in all agreements. Substantially all of BAT's assets
are pledged as collateral for the long-term debt.
Maturities of debt are as follows at March 31, 1997 (in thousands):
<TABLE>
<S> <C>
1997........................................................ $1,685
1998........................................................ 800
1999........................................................ 397
2000........................................................ 9
2001........................................................ --
Thereafter.................................................. --
------
$2,891
======
</TABLE>
LEGAL MATTERS
BAT is party to legal proceedings and claims arising in the ordinary course
of its business. Management believes that the ultimate resolution of these
matters will have no material adverse effect on BAT's financial position,
results of operations or cash flows.
8. EMPLOYEE BENEFIT PLANS
BAT sponsors a profit sharing plan (the "Plan") in which employees with
greater than one year of service are eligible. Under the Plan, BAT contributes
15% of each eligible employee's base annual wages to a trust out of its net
profits. Effective January 1, 1997, five percent of the eligible employee's
wages are deposited into a 401(k) plan and the remaining 10% portion is
contributed to a separate profit sharing plan. In addition, eligible employees
can defer up to 10% of their salary with a partially matching contribution by
BAT. The employer contributions vest over a seven year period. Contributions by
BAT to the Plan were $0, $198,500 and $195,100 for the period ended March 31,
1997 and years ended December 31, 1996 and 1995, respectively.
9. RELATED PARTY TRANSACTIONS
Paul Bronken, President and beneficial owner of a majority of the shares of
BAT, and H. L. Butler, an employee and officer of BAT, loaned the Company
approximately $325,200 and $110,700 during the years ended December 31, 1996 and
1995, respectively, to finance rental equipment purchases. Interest expense
related to these loans was $11,200, $48,200 and $46,000 for the three months
ended March 31, 1997 and the years ended December 31, 1996 and 1995,
respectively.
10. SUBSEQUENT EVENTS
On April 1, 1997, BAT's owner sold substantially all of BAT's assets to BAT
Acquisition Corp., a wholly owned subsidiary of National Equipment Services,
Inc., for a $15.4 million cash payment.
F-45
<PAGE> 135
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of
Sprint Industrial Services, Inc. and
the Board of Directors of
National Equipment Services, Inc.
In our opinion, the accompanying balance sheets and the related statements
of operations, of changes in divisional equity and of cash flows, present
fairly, in all material respects, the financial position of Sprintank and
Sprintank Mobile Storage (divisions of Sprint Industrial Services, Inc.) at June
30, 1997, December 31, 1996 and December 31, 1995, and the results of its
operations and its cash flows for the six months ended June 30, 1997 and the
years ended December 31, 1996 and 1995 in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PRICE WATERHOUSE LLP
Houston, Texas
November 4, 1997
F-46
<PAGE> 136
SPRINTANK AND SPRINTANK MOBILE STORAGE
(DIVISIONS OF SPRINT INDUSTRIAL SERVICES, INC.)
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS:
Cash.................................................. $ 373 $ 238 $ 14
Accounts receivable, net.............................. 2,089 1,829 1,922
Inventory............................................. 261 -- --
Rental equipment, net................................. 10,477 9,741 8,118
Property and equipment, net........................... 757 607 584
Prepaid expenses and other assets..................... 105 131 89
------- ------- -------
Total assets..................................... $14,062 $12,546 $10,727
======= ======= =======
LIABILITIES AND DIVISIONAL EQUITY:
Accounts payable...................................... $ 282 $ 24 $ 201
Accrued expenses and other liabilities................ 381 263 182
Debt.................................................. 8,624 8,987 7,370
------- ------- -------
Total liabilities................................ 9,287 9,274 7,753
------- ------- -------
Intercompany............................................ 837 1,054 1,382
Commitments and contingencies (Note 7)
Divisional equity....................................... 3,938 2,218 1,592
------- ------- -------
Total liabilities and divisional equity.......... $14,062 $12,546 $10,727
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-47
<PAGE> 137
SPRINTANK AND SPRINTANK MOBILE STORAGE
(DIVISIONS OF SPRINT INDUSTRIAL SERVICES, INC.)
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED ---------------------------
JUNE 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Rental revenues....................................... $5,715 $9,172 $7,475
Other income.......................................... 327 426 404
------ ------ ------
Total revenues................................... 6,042 9,598 7,879
------ ------ ------
COST OF REVENUES:
Rental equipment expenses............................. 470 1,395 1,648
Rental equipment depreciation......................... 1,109 2,025 1,376
Direct operating expenses............................. 173 197 257
------ ------ ------
Total cost of revenues........................... 1,752 3,617 3,281
------ ------ ------
Gross profit............................................ 4,290 5,981 4,598
Selling, general and administrative expenses............ 2,028 4,333 2,977
Non-rental depreciation and amortization................ 83 145 99
------ ------ ------
Operating income........................................ 2,179 1,503 1,522
Other income (expense), net............................. (10) 14 1
Interest income (expense), net.......................... (439) (891) (707)
------ ------ ------
Net income.............................................. $1,730 $ 626 $ 816
====== ====== ======
PRO FORMA TAX PROVISION (UNAUDITED):
Income before income taxes............................ $1,730 $ 626 $ 816
Pro forma provision for income taxes.................. 605 219 286
------ ------ ------
Pro forma net income.................................. $1,125 $ 407 $ 530
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-48
<PAGE> 138
SPRINTANK AND SPRINTANK MOBILE STORAGE
(DIVISIONS OF SPRINT INDUSTRIAL SERVICES, INC.)
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED ---------------------------
JUNE 30, DECEMBER 31, DECEMBER 31,
1997 1996 1995
---------------- ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income........................................... $ 1,730 $ 626 $ 816
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation...................................... 1,192 2,170 1,475
Changes in operating assets and liabilities:
Accounts receivable............................. (260) 93 (779)
Inventory....................................... (261) -- --
Prepaid expenses and other assets............... 26 (42) 206
Accounts payable................................ 258 (177) 166
Accrued expenses and other liabilities.......... (99) (247) 335
------- ------- -------
Net cash provided by operating activities.............. 2,586 2,423 2,219
------- ------- -------
INVESTING ACTIVITIES:
Purchases of rental equipment........................ (1,879) (3,716) (4,725)
Purchases of property and equipment.................. (198) (100) (100)
------- ------- -------
Net cash used in investing activities.................. (2,077) (3,816) (4,825)
------- ------- -------
FINANCING ACTIVITIES:
Proceeds from long-term debt......................... 19 2,768 2,682
Payments on long-term debt........................... (883) (631) --
Net proceeds from (payments on) line of credit....... 500 (520) (80)
Dividends paid....................................... (10) -- --
------- ------- -------
Net cash provided by (used in) financing activities.... (374) 1,617 2,602
------- ------- -------
Net increase (decrease) in cash........................ 135 224 (4)
Cash at beginning of period............................ 238 14 18
------- ------- -------
Cash at end of period.................................. $ 373 $ 238 $ 14
======= ======= =======
SUPPLEMENTAL NON-CASH FLOW INFORMATION:
Cash paid for interest............................... $ 460 $ 901 $ 658
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-49
<PAGE> 139
SPRINTANK AND SPRINTANK MOBILE STORAGE
(DIVISIONS OF SPRINT INDUSTRIAL SERVICES, INC.)
STATEMENTS OF CHANGES IN DIVISIONAL EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL
DIVISIONAL
EQUITY
----------
<S> <C>
Balance at December 31, 1994................................ $ 776
Net income.................................................. 816
------
Balance at December 31, 1995................................ 1,592
Net income.................................................. 626
------
Balance at December 31, 1996................................ 2,218
Net Income.................................................. 1,730
Dividends................................................... (10)
------
Balance at June 30, 1997.................................... $3,938
======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-50
<PAGE> 140
SPRINTANK AND SPRINTANK MOBILE STORAGE
(DIVISIONS OF SPRINT INDUSTRIAL SERVICES, INC.)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Sprintank and Sprintank Mobile Storage (divisions of Sprint Industrial
Services, Inc.) ("Sprintank") are primarily involved in the short-term rental of
industrial storage equipment to chemical manufacturing, and refining industries.
At June 30, 1997, Sprintank had seven equipment rental locations in Texas,
Louisiana, and Alabama.
FINANCIAL STATEMENT PRESENTATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
RENTAL REVENUES
Rental revenues are recognized upon the earliest occurrence of either the
return of the equipment or the end of one month's rental term. For rental
contracts greater than one month, rental revenues are recognized ratably over
the contract period.
RENTAL EQUIPMENT
Rental equipment is recorded at cost. Depreciation for rental equipment
acquired is computed using the straight-line method over an estimated useful
life with no salvage value. Estimated useful lives of rental equipment ranged
from three to ten years. Accumulated depreciation on rental equipment was
$5,901,000, $4,963,000 and $3,209,000 at June 30, 1997 and December 31, 1996 and
1995, respectively.
Ordinary repairs and maintenance costs are charged to operations as
incurred. When rental equipment is disposed of, the related cost and accumulated
depreciation are removed from the respective accounts. Proceeds from the
disposal and the related net book value of the equipment are recognized in the
period of disposal.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation is computed using
the straight line method over the estimated useful lives of the assets.
The estimated useful lives for property and equipment range from five to
seven years for vehicles, delivery and shop equipment, and three to ten years
for office furniture and leasehold improvements.
Ordinary repairs and maintenance costs are charged to operations as
incurred. When property and equipment is disposed of, the related cost and
accumulated depreciation are removed from the respective accounts, and any gains
or losses are included in results of operations.
INVENTORY
Sprintank's inventories primarily consist of items such as tires for
replacement on delivery vehicles and are not for sale or rental. Inventories are
stated at the lower of average cost or market.
F-51
<PAGE> 141
SPRINTANK AND SPRINTANK MOBILE STORAGE
(DIVISIONS OF SPRINT INDUSTRIAL SERVICES, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the balance sheets for trade accounts
receivable, accounts payable and other liabilities approximate fair value due to
the immediate to short-term maturity of these financial instruments. The fair
value of notes payable and is determined using current interest rates for
similar instruments as of the years ended December 31, 1995 and 1996 and the
period ended June 30, 1997 and approximates the carrying value of these notes
due to the fact that the underlying instruments include provisions to adjust
note balances and interest rates to approximate fair market value.
ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of certain assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the related reported amounts of
revenue and expenses during the reporting period. Such estimates and assumptions
include those made regarding the estimated useful lives of depreciable assets.
Actual results could differ from those estimates. Management believes that its
estimates are reasonable.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject Sprintank to significant
concentrations of credit risk consist primarily of trade accounts receivable
from industrial customers. Concentrations of credit risk with respect to trade
accounts receivable are limited due to the number of large customers with
recurring rentals. Sprintank performs credit evaluations of its customers'
financial condition and does not require collateral on accounts receivable.
Sprintank maintains an allowance for doubtful accounts on its receivables based
upon expected collectibility. Allowance for doubtful accounts was $0, $20,000
and $0 at June 30, 1997, December 31, 1996 and 1995, respectively.
RELATED PARTY TRANSACTIONS
As disclosed in these financial statements, Sprintank has participated in
certain transactions with related parties during the current and previous years
until acquisition of substantially all of the assets of Sprintank by a wholly
owned subsidiary of National Equipment Services, Inc. (see Note 8). In the
opinion of management, all transactions with related parties have been conducted
at arm's-length.
INCOME TAXES
Sprintank's parent is a subchapter S corporation. Taxes are the
responsibility of the individual shareholders of the parent. The pro forma
provision for divisional income taxes approximates Sprintank's tax provision on
a stand alone basis.
F-52
<PAGE> 142
SPRINTANK AND SPRINTANK MOBILE STORAGE
(DIVISIONS OF SPRINT INDUSTRIAL SERVICES, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. RENTAL EQUIPMENT
Rental equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Trailers........................................... $ 6,890 $ 5,921 $ 4,774
Frac tanks......................................... 6,068 5,669 4,420
Tanks.............................................. 1,373 1,332 1,097
Dewatering boxes................................... 452 448 261
Vacuum boxes....................................... 550 442 210
Phase separator.................................... 276 274 273
Rolloff boxes...................................... 253 201 208
Other.............................................. 516 417 84
------- ------- -------
16,378 14,704 11,327
Less: accumulated depreciation..................... (5,901) (4,963) (3,209)
------- ------- -------
$10,477 $ 9,741 $ 8,118
======= ======= =======
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment, net, consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Vehicles and delivery equipment...................... $1,057 $ 881 $ 732
Shop equipment....................................... 156 135 55
Office equipment..................................... 47 46 175
------ ------ -----
1,260 1,062 962
Less: accumulated depreciation....................... (503) (455) (378)
------ ------ -----
$ 757 $ 607 $ 584
====== ====== =====
</TABLE>
4. PREPAID EXPENSES AND OTHER ASSETS
Prepaid expenses and other assets consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Prepaid insurance.................................... $ 73 $118 $ 56
Other................................................ 32 13 33
---- ---- ----
$105 $131 $ 89
==== ==== ====
</TABLE>
F-53
<PAGE> 143
SPRINTANK AND SPRINTANK MOBILE STORAGE
(DIVISIONS OF SPRINT INDUSTRIAL SERVICES, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Payroll accruals..................................... $ 79 $ 85 $ 10
Deferred franchise taxes............................. 187 75 52
Taxes payable........................................ 59 47 43
Accrued interest..................................... 21 42 49
Other................................................ 35 14 28
---- ---- ----
$381 $263 $182
==== ==== ====
</TABLE>
6. DEBT
Debt consists of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, --------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Intercompany note payable to a related party,
interest 12% for the year ended December 31,
1995............................................. $ -- $ -- $ 100
Notes payable to stockholders, interest at various
rates ranging from 9% to 12%..................... 3,250 3,230 462
Revolving line of credit of $1,000,000, $1,000,000
and $700,000 for June 30, 1997, December 31, 1996
and December 31, 1995, respectively. For the
periods ending June 30, 1997 and December 31,
1996, interest is payable quarterly at the bank's
prime rate. In 1995, interest is payable monthly
at prime plus 2%................................. 500 -- 520
Notes payable to a bank, interest and principal
payable monthly or quarterly at rates ranging
from 5.7% to 12% for the periods ending June 30,
1997, December 31, 1996 and December 31, 1995.... 4,840 5,682 6,192
Notes payable -- insurance, interest and principal
payable monthly at rates ranging from 7.43% to
8.50% for the periods ending June 30, 1997,
December 31, 1996 and December 31, 1995,
respectively..................................... 34 75 96
------- ------- -------
$ 8,624 $ 8,987 $ 7,370
======= ======= =======
</TABLE>
Sprintank's agreement with the bank provided for a secured line of credit
of $700 in 1995, maturing no later than April 30, 1996. At December 31, 1995,
$520 was borrowed against the line of credit. At December 31, 1996, Sprintank
had a secured line of credit for $1,000, maturing no later than April 30, 1997.
At December 31, 1996, nothing was borrowed against the line. During 1997, the
$1,000 line of credit was amended, extending the maturity date to no later than
April 30, 1998. At June 30, 1997, $500 was borrowed against the line of credit.
F-54
<PAGE> 144
SPRINTANK AND SPRINTANK MOBILE STORAGE
(DIVISIONS OF SPRINT INDUSTRIAL SERVICES, INC.)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The bank note agreements include restrictions as to limitations upon
certain ratios of liabilities to net worth and upon the minimum net worth of
Sprintank. Sprintank is in compliance with covenants in all agreements.
Substantially all rental equipment, property and equipment, and accounts
receivable of Sprintank are pledged as collateral for the bank line of credit,
demand notes, and notes related to purchases of certain businesses.
Sprintank incurred interest expense of $192, $357 and $64 on borrowings
from related parties in the periods ended June 30, 1997, December 31, 1996 and
December 31, 1995, respectively.
On bank notes payable, Sprintank incurred interest expense of $247, $536
and $643 for the periods ended June 30, 1997, December 31, 1996 and December 31,
1995, respectively.
7. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
Sprintank leases certain facilities under operating leases which contain
renewal options and provide for periodic cost of living adjustments. Rental
expense was $53, $87, and $96, for the period ended June 30, 1997 and years
ended December 31, 1996 and 1995, respectively.
Future minimum rental commitments as of June 30, 1997 under noncancelable
operating leases are (in thousands):
<TABLE>
<S> <C>
1997........................................................ $ 29
1998........................................................ 96
1999........................................................ 82
2000........................................................ 77
2001........................................................ 74
Thereafter.................................................. 287
----
$645
====
</TABLE>
LEGAL MATTERS
Sprintank is not a party to any legal proceedings or claims as of June 30,
1997.
8. SUBSEQUENT EVENTS
On June 30, 1997, Sprintank's owner sold substantially all of Sprintank's
assets to NES Acquisition Corp., a wholly owned subsidiary of National Equipment
Services, Inc., for a $25,256,431 cash payment (subject to a customary purchase
price adjustment mechanism) and the assumption of certain liabilities and
obligations.
F-55
<PAGE> 145
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders
of MST Enterprises, Inc. (d/b/a
Equipco Rentals & Sales) and the Board of Directors
of National Equipment Services, Inc.
In our opinion, the accompanying balance sheets and the related statements
of operations, of cash flows and of changes in stockholder's equity, present
fairly, in all material respects, the financial position of MST Enterprises,
Inc.(d/b/a Equipco Rentals & Sales) at July 17, 1997, October 31, 1996 and 1995,
and the results of its operations and its cash flows for the period from
November 1, 1996 through July 17, 1997, and for each of the two years in the
period ended October 31, 1996, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PRICE WATERHOUSE LLP
Chicago, Illinois
November 4, 1997
F-56
<PAGE> 146
MST ENTERPRISES, INC.
D/B/A EQUIPCO RENTALS & SALES
BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
JULY 17, OCTOBER 31, OCTOBER 31,
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS:
Cash...................................................... $ 84 $ 207 $ 95
Accounts receivable, net.................................. 642 580 523
Inventory................................................. 352 206 186
Rental equipment net...................................... 3,007 2,553 2,047
Property and equipment, net............................... 221 337 333
Prepaid and other assets.................................. 276 219 153
------ ------ ------
Total assets......................................... $4,582 $4,102 $3,337
====== ====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable.......................................... $ 384 $ 513 $ 470
Accrued expenses and other liabilities.................... 387 281 241
Debt...................................................... 2,396 2,393 1,846
------ ------ ------
Total liabilities.................................... 3,167 3,187 2,557
------ ------ ------
Commitments and contingencies (Note 9)
Common stock, $10 par, 2,500 shares authorized, 1,000
shares issued and outstanding.......................... 10 10 10
Retained earnings......................................... 1,405 905 770
------ ------ ------
Total stockholders' equity........................... 1,415 915 780
------ ------ ------
Total liabilities and stockholders' equity........... $4,582 $4,102 $3,337
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-57
<PAGE> 147
MST ENTERPRISES, INC.
D/B/A EQUIPCO RENTALS & SALES
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD YEAR ENDED
ENDED --------------------------
JULY 17, OCTOBER 31, OCTOBER 31,
1997 1996 1995
------------ ----------- -----------
<S> <C> <C> <C>
REVENUES:
Rental revenues............................. $2,835 $3,605 $3,213
Rental equipment sales...................... 447 391 552
New equipment sales......................... 1,055 1,805 1,581
Other....................................... 32 31 44
------ ------ ------
Total revenues......................... 4,369 5,832 5,390
------ ------ ------
COST OF REVENUES:
Rental equipment expenses................... 141 355 264
Rental equipment depreciation............... 890 1,163 934
Cost of rental equipment sales.............. 125 181 118
Cost of new equipment sales................. 691 1,232 1,461
Other direct operating expenses............. 712 852 885
------ ------ ------
Total cost of revenues................. 2,559 3,783 3,662
------ ------ ------
Gross profit.................................. 1,810 2,049 1,728
Selling, general and administrative
expenses.................................... 823 1,519 1,339
Non-rental depreciation and amortization...... 76 123 84
------ ------ ------
Operating income.............................. 911 407 305
Other income (expense), net................... 20 (37) --
Interest income (expense), net................ (94) (143) (160)
------ ------ ------
Income before income taxes.................... 837 227 145
Income tax expense............................ 337 92 63
------ ------ ------
Net income.................................... $ 500 $ 135 $ 82
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-58
<PAGE> 148
MST ENTERPRISES, INC.
D/B/A EQUIPCO RENTALS & SALES
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD YEAR ENDED
ENDED -------------------------
JULY 17, OCTOBER 31, OCTOBER 31,
1997 1996 1995
-------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income.................................................. $ 500 $ 135 $ 82
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.............................................. 967 1,294 1,034
Gain on sale of equipment................................. (325) (144) (434)
Changes in operating assets and liabilities:
Accounts receivable.................................... (62) (57) (84)
Inventory.............................................. (146) (20) 7
Prepaid and other assets............................... (57) (66) 6
Accounts payable....................................... (129) 43 13
Accrued expenses and other liabilities................. 106 40 116
------- ------- -------
Net cash provided by operating activities................... 854 1,225 740
------- ------- -------
INVESTING ACTIVITIES:
Purchases of rental equipment............................... (1,443) (1,820) (1,568)
Proceeds from sale of rental equipment...................... 424 295 609
Purchases of property and equipment......................... -- (239) (203)
Proceeds from sale of property and equipment................ 39 105 --
------- ------- -------
Net cash used in investing activities....................... (980) (1,659) (1,162)
------- ------- -------
FINANCING ACTIVITIES:
Proceeds from long-term debt................................ 700 1,465 875
Payments on long-term debt.................................. (697) (919) (499)
------- ------- -------
Net cash provided by financing activities................... 3 546 376
------- ------- -------
Net increase (decrease) in cash............................. (123) 112 (46)
Cash at beginning of period................................. 207 95 141
------- ------- -------
Cash at end of period....................................... $ 84 $ 207 $ 95
======= ======= =======
SUPPLEMENTAL NON-CASH FLOW INFORMATION:
Cash paid for interest...................................... $ 108 $ 152 $ 172
======= ======= =======
Cash paid for income taxes.................................. $ 300 $ 215 $ 23
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-59
<PAGE> 149
MST ENTERPRISES, INC.
D/B/A EQUIPCO RENTALS & SALES
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
--------------- TOTAL
STATED PAID-IN RETAINED STOCKHOLDERS'
SHARES VALUE CAPITAL EARNINGS EQUITY
------ ------ ------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance at October 31, 1994.................... 1,000 $ 10 $ -- $ 688 $ 698
Net income..................................... -- -- -- 82 82
------ ------ ------ ------ ------
Balance at October 31, 1995.................... 1,000 10 -- 770 780
Net income..................................... -- -- -- 135 135
------ ------ ------ ------ ------
Balance at October 31, 1996.................... 1,000 10 -- 905 915
Net income..................................... -- -- -- 500 500
------ ------ ------ ------ ------
Balance at July 17, 1997....................... 1,000 $ 10 $ -- $1,405 $1,415
====== ====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-60
<PAGE> 150
MST ENTERPRISES, INC.
D/B/A EQUIPCO RENTALS & SALES
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
MST Enterprises, Inc. (d/b/a Equipco Rentals & Sales) ("Equipco") is a C
corporation primarily involved in the short-term rental and sales of general
purpose construction equipment to industrial and construction companies. The
Company operates from one facility in Harrisonburg, Virginia.
FINANCIAL STATEMENT PRESENTATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
RENTAL REVENUES
Rental revenues are recognized as earned over the lease term. Sales
revenues are recognized at the point of delivery.
RENTAL EQUIPMENT
Rental equipment is recorded at cost. Depreciation for rental equipment
acquired is computed using accelerated methods over periods approximating five
years.
Ordinary repairs and maintenance costs are charged to operations as
incurred. When rental equipment is disposed of, the related cost and accumulated
depreciation are removed from the respective accounts. Proceeds from the
disposal and the related net book value of the equipment are recognized in the
period of disposal and reported as revenue from rental equipment sales and cost
of equipment sales in the statement of operations.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation is computed using
accelerated methods ranging from three to five years.
Ordinary repairs and maintenance costs are charged to operations as
incurred. When property and equipment is disposed of, the related cost and
accumulated depreciation are removed from the respective accounts, and any gains
or losses are included in results of operations.
ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT
On January 1, 1996, Equipco adopted Statement of Financial Accounting
Standards (SFAS) No. 121, Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of, which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the assets' carrying amounts exceed the undiscounted cash flows
estimated to be generated by those assets. SFAS No. 121 also requires impairment
losses to be recorded when the carrying amount of long-lived assets that are
expected to be disposed of, exceed their fair values, net of disposal costs.
Adoption of SFAS No. 121 did not have a material impact on Equipco's financial
position at July 17, 1997 or results of operations for the period then ended.
F-61
<PAGE> 151
MST ENTERPRISES, INC.
D/B/A EQUIPCO RENTALS & SALES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INVENTORY
Equipco's inventories are valued at average costs and consist primarily of
items such as hand tools and accessories held for resale.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the balance sheets for trade accounts
receivable, accounts payable and other liabilities approximate fair value due to
the immediate to short-term maturity of these financial instruments. The fair
value of notes receivable and notes payable is determined using current interest
rates for similar instruments as of July 17, 1997 and approximates the carrying
value of these notes due to the fact that the underlying instruments include
provisions to adjust note balances and interest rates to approximate fair market
value.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject Equipco to significant
concentrations of credit risk consist primarily of trade accounts receivable
from construction and industrial customers. Concentrations of credit risk with
respect to trade accounts receivable are limited due to the large number of
customers and Equipco's geographic dispersion. Equipco performs credit
evaluations of its customers' financial condition and generally does not require
collateral on accounts receivable. Equipco maintains an allowance for doubtful
accounts on its receivables based upon expected collectibility. Allowance for
doubtful accounts was $30,000, $20,000 and $40,000 at July 17, 1997, October 31,
1996 and 1995, respectively.
INCOME TAXES
Deferred income tax assets and liabilities are computed based on temporary
differences between the financial statement and income tax bases of assets and
liabilities using the enacted marginal income tax rate in effect for the year in
which the differences are expected to reverse. Deferred income tax expenses or
benefits are based on the changes in the deferred income tax assets or
liabilities from period to period.
RELATED PARTY TRANSACTIONS
As disclosed in these financial statements, Equipco has participated in
certain transactions with related parties.
\ 2. INVENTORY
Inventory consists of the following (in thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
JULY 17, -------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Merchandise........................................... $382 $224 $199
Less: reserve......................................... (30) (18) (13)
---- ---- ----
Total inventory, net............................. $352 $206 $186
==== ==== ====
</TABLE>
F-62
<PAGE> 152
MST ENTERPRISES, INC.
D/B/A EQUIPCO RENTALS & SALES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. RENTAL EQUIPMENT
Rental equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
JULY 17, -----------------
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Gross rental equipment............................. $ 6,992 $ 6,098 $ 4,669
Less: accumulated depreciation..................... (3,985) (3,545) (2,622)
------- ------- -------
$ 3,007 $ 2,553 $ 2,047
======= ======= =======
</TABLE>
4. PROPERTY AND EQUIPMENT
Property and equipment, net, consists of the following (in thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
JULY 17, -------------
1997 1996 1995
-------- ----- -----
<S> <C> <C> <C>
Vehicles............................................... $ 509 $ 625 $ 474
Computer hardware...................................... 53 52 80
Furniture and fixtures................................. 28 30 49
Leaseholds............................................. 27 34 35
Farm assets............................................ -- 13 241
----- ----- -----
617 754 879
Less: accumulated depreciation......................... (396) (417) (546)
----- ----- -----
$ 221 $ 337 $ 333
===== ===== =====
</TABLE>
5. PREPAID AND OTHER ASSETS
Prepaid and other assets consists of the following (in thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
JULY 17, -------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Notes receivable...................................... $246 $155 $ 71
Investments........................................... -- 44 44
Prepaid expenses...................................... 30 20 38
---- ---- ----
$276 $219 $153
==== ==== ====
</TABLE>
Notes receivable consists of $95,000 at July 17, 1997 due from a third
party for the sale of non-business assets. Interest on the note accrues at 8%
annually and payment of principal and interest is due quarterly through
September 2003.
Also included in notes receivable is a related party receivable of $55,700
at July 17, 1997. Interest on the note receivable accrues at the IRS blended
rate (5.85% at July 17, 1997). Annual principal installments of $1,899 plus
accrued interest are due through March 1999.
F-63
<PAGE> 153
MST ENTERPRISES, INC.
D/B/A EQUIPCO RENTALS & SALES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consists of the following (in
thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
JULY 17, -------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Accrued salaries and wages............................ $ 55 $ 85 $168
Other accrued expenses and liabilities................ 332 196 73
---- ---- ----
$387 $281 $241
==== ==== ====
</TABLE>
7. DEBT
Debt consists of the following (in thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
JULY 17, --------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Notes payable to related parties, due
12/01/96, interest payable monthly at the
Crestar Bank rate plus 2.0%................. $ -- $ -- $ 490
Revolving line of credit, interest payable
monthly at the lessor of prime or 30 day
libor plus 1.5%............................. 2,396 2,393 1,356
------ ------ ------
$2,396 $2,393 $1,846
====== ====== ======
</TABLE>
Equipco's line of credit provides $2,500,000 of available credit at July
17, 1997, October 31, 1996 and October 31, 1995. The line of credit is secured
by substantially all of Equipco's assets.
Maturities of debt are as follows at July 17, 1997 (in thousands):
<TABLE>
<S> <C>
1997........................................................ $ 147
1998........................................................ 502
1999........................................................ 390
2000........................................................ 303
2001........................................................ 235
Thereafter.................................................. 819
------
$2,396
======
</TABLE>
F-64
<PAGE> 154
MST ENTERPRISES, INC.
D/B/A EQUIPCO RENTALS & SALES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. INCOME TAXES
The components of the provision for income taxes are as follows (in
thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
JULY 17, -----------
1997 1996 1995
-------- ---- ----
<S> <C> <C> <C>
CURRENT:
Federal................................................ $294 $73 $ 71
State.................................................. 52 13 13
DEFERRED:
Federal................................................ (7) 5 (18)
State.................................................. (2) 1 (3)
---- --- ----
$337 $92 $ 63
==== === ====
</TABLE>
The provision for income taxes differs from the amount of income tax
determined by applying the U.S. statutory federal income tax rate of 34% to
income before income taxes as a result of the following (in thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
JULY 17, -----------
1997 1996 1995
-------- ---- ----
<S> <C> <C> <C>
(Loss) income at statutory rate.......................... $285 $ 77 $ 49
Effect of state taxes, net............................... 51 14 9
Other.................................................... 1 1 5
---- ---- ----
$337 $ 92 $ 63
==== ==== ====
</TABLE>
Deferred tax liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
JULY 17, -----------
1997 1996 1995
-------- ---- ----
<S> <C> <C> <C>
Inventory reserves....................................... $ 12 $ 7 $ 5
Allowance for doubtful accounts.......................... 12 8 16
---- ---- ----
Net deferred tax liability............................... $ 24 $ 15 $ 21
==== ==== ====
</TABLE>
9. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
Equipco leases certain facilities under operating leases on a
month-to-month basis. Rent expense totaled $118,500, $189,600 and $189,600 for
the period ended July 17, 1997 and years ended October 31, 1996 and 1995,
respectively.
LEGAL MATTERS
Equipco is party to legal proceedings and claims arising in the ordinary
course of its business. Management believes that the ultimate resolution of
these matters will have no material adverse effect on Equipco's financial
position, results of operations or cash flows.
F-65
<PAGE> 155
MST ENTERPRISES, INC.
D/B/A EQUIPCO RENTALS & SALES
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. EMPLOYEE BENEFIT PLANS
The Company sponsors a defined contribution pension plan (the "Plan").
Employees meeting eligibility requirements are automatically enrolled in the
Plan. The Plan does not permit employee contributions and Equipco's
contributions are discretionary as determined by the Board of Directors.
Equipco's contributions to the plan totaled $0, $20,000 and $10,000 for the
period ended July 17, 1997 and each of the years ended October 31, 1996 and
1995, respectively.
11. SUBSEQUENT EVENTS
On July 18, 1997 Equipco's owner sold all of the outstanding common stock
of Equipco to National Equipment Services, Inc. in exchange for a $5,980,000
cash payment (subject to a customary purchase price adjustment mechanism).
F-66
<PAGE> 156
======================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER CONTAINED HEREIN OTHER THAN THOSE
CONTAINED IN THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
THE PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCE IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. i
Prospectus Summary.................... 1
Risk Factors.......................... 11
Use of Proceeds....................... 17
Capitalization........................ 18
Selected Pro Forma Combined
Financial Data...................... 19
Selected Historical Financial Data.... 25
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 26
Business.............................. 30
Management............................ 37
Security Ownership of Certain
Beneficial Owners and Management.... 43
Certain Relationships and Related
Transactions........................ 44
Description of Credit Facility........ 49
Description of Exchange Notes......... 51
The Exchange Offer.................... 76
Certain Federal Income Tax
Consequences........................ 83
Plan of Distribution.................. 84
Independent Accountants............... 84
Legal Matters......................... 84
Index to Financial Statements......... F-1
</TABLE>
======================================================
======================================================
$100,000,000
[NATIONAL EQUIPMENT SERVICES LOGO]
NATIONAL EQUIPMENT
SERVICES, INC.
OFFER TO EXCHANGE ITS
10% SENIOR SUBORDINATED
NOTES DUE 2004,
SERIES B FOR ANY AND ALL
OF ITS OUTSTANDING
10% SENIOR SUBORDINATED NOTES
DUE 2004
------------
PROSPECTUS
, 1998
------------
======================================================
<PAGE> 157
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company and each of NES Acquisition and BAT are incorporated under the
laws of the State of Delaware. Section 145 of the General Corporation Law of the
State of Delaware ("Section 145") provides that a Delaware corporation may
indemnify any persons who are, or are threatened to be made, parties to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person is or was an
officer, director, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interests
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe that his conduct was illegal. A Delaware corporation may indemnify
any persons who are, or are threatened to be made, a party to any threatened,
pending or completed action or suit by or in the right of the corporation by
reason of the fact that such person was a director, officer, employee or agent
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorney's fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit, provided such person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the corporation's best
interests except that no indemnification is permitted without judicial approval
if the officer or director is adjudged to be liable to the corporation. Where an
officer or director is successful on the merits or otherwise in the defense of
any action referred to above, the corporation must indemnify him against the
expenses which such officer or director has actually and reasonably incurred.
Section 145 further provides that the indemnification provisions of Section
145 shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office. The certificates of incorporation, as amended (if applicable), of each
of the Company, NES Acquisition and BAT provide that, to the fullest extent
permitted by the General Corporation Law of the State of Delaware, no director
of the corporation shall be liable to the corporation or its stockholders for
monetary damages arising from a breach of fiduciary duty owed to the corporation
of its stockholders.
Article V of the by-laws of each of the Company, NES Acquisition and BAT
provides that any person who was or is a party or is threatened to be made a
party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that he, or a
person of whom he is the legal representative, is or was a director or officer
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee, fiduciary or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the corporation to the fullest extent to which it is empowered
to do so unless prohibited from doing so by the General Corporation Law of the
State of Delaware, as may be amended (but only to the extent such amendment
permits the corporation to provide broader indemnification rights than were
permitted prior to such amendment) against expense, liability and loss
(including attorneys' fees actually and reasonably incurred by such person in
connection with such proceeding) and such indemnification shall continue as to
an indemnitee who has ceased to a be a director, officer, employee or agent and
shall inure to the benefit of the indemnitee's heirs, executors and
administrators, provided that, such person shall be indemnified only (subject to
certain limited exceptions) in connection with a proceeding initiated by such
person only if such proceeding was authorized by the board of directors of the
corporation. The right to indemnification of such person shall be a contract
right and shall include the right to be paid expenses incurred in defending any
proceeding in advance of its final disposition.
II-1
<PAGE> 158
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
Article V of the by-laws of each of the Company, NES Acquisition and BAT
further provides that such corporation may purchase and maintain insurance on
its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of such corporation or was serving at the request
of such corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the corporation would have the power to indemnify such
person against such liability under Article V of its by-laws. All of the
directors and officers of each of the Company and NES Acquisition and BAT are
covered by insurance policies maintained and held in effect by such corporation
against certain liabilities for actions taken in such capacities, including
liabilities under the Securities Act of 1933.
Aerial is incorporated under the laws of the State of Georgia. Section
14-2-851 of the Georgia Business Corporations Code ("Section 14-2-851") provides
that a Georgia corporation may indemnify an individual who is party to any
threatened, pending or completed action, suit, or proceeding whether civil,
criminal, administrative, arbitrative or investigative, and whether formal or
informal, because he or she is a director of the corporation or who, while
serving as a director of the corporation, is or was serving at the corporation's
request as a director, officer, partner, trustee, employee or agent of another
domestic or foreign corporation, partnership, joint venture, trust, employee
benefit plan or other entity against any liability incurred in such proceeding
if (i) such individual conducted himself or herself in good faith and (ii) such
individual reasonably believed: (A) in the case of conduct in his or her
official capacity, that such conduct was in the best interests of the
corporation, (B) in all other cases, that such conduct was at least not opposed
to the best interests of the corporation, and (C) in the case of any criminal
proceeding, that the individual had no reasonable cause to believe such conduct
was unlawful. Section 14-2-851 however does not allow indemnification of
directors (i) in connection with a proceeding by or in the right of the
corporation, except for reasonable expenses incurred in connection with the
proceeding if it is determined that the director has met the relevant standard
of conduct set forth in Section 14-2-851 or (ii) in connection with any
proceeding with respect to conduct for which he or she was adjudged liable on
the basis that personal benefit was improperly received by him or her, whether
or not involving action in his or her official capacity. Section 14-2-852 of the
Georgia Business Corporations Code provides for mandatory indemnification of
directors who were wholly successful, on the merits or otherwise, in the defense
of any proceeding to which such director was a party because he or she was a
director of the corporation against reasonable expenses incurred by the director
in connection with the proceeding. In addition, Section 14-2-854 of the Georgia
Business Corporations Code provides that a director who is party to a proceeding
because he or she is a director may apply for indemnification or advance for
expenses to the court conducting the proceeding or to another court of competent
jurisdiction. Such court may, if it deems necessary and appropriate and subject
to certain limitations, order indemnification, even if the director has not met
the relevant standard of conduct under Section 14-2-851.
Section 14-2-856 of the Georgia Business Corporations Code provides that,
if authorized by the articles of incorporation, bylaws, contract, or resolution
approved or ratified by the shareholders by a majority of the votes entitled to
be cast (excluding shares owned or controlled by a director who does not qualify
as a disinterested director), a corporation may indemnify or obligate itself to
indemnify a director made a party to a proceeding, including a proceeding
brought by or in the right of the corporation, except with respect to any
liability incurred in a proceeding in which a director is adjudged liable to the
corporation (1) for any appropriation, in violation of the director's duties, of
any business opportunity of the corporation, (2) for acts or omissions which
involve intentional misconduct or a knowing violation of law, (3) for liability
associated with a director's approval of or assent to an unlawful distribution,
and (4) for any transaction from which he or she received an improper benefit.
Section 14-2-857 of the Georgia Business Corporations Code provides that a
Georgia corporation may indemnify and advance expenses to an officer of a
corporation who is a party to a proceeding because he or she is an officer of
the corporation to extent a director is entitled to indemnification
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<PAGE> 159
under the Georgia Business Corporation Code or to the extent set forth in the
corporation's articles of incorporation, bylaws, a resolution of the board of
directors, or by contract except for liability arising out of conduct that
constitutes: (1) appropriation, in violation of his or her duties, of any
business opportunity of the corporation, (2) acts or omissions that involve
intentional misconduct or a knowing violation of law, (3) liability in
connection with an unlawful distribution by the corporation, and (4) receipt of
an improper personal benefit. Article XII of Aerial's By-laws provides that, in
addition to all rights to indemnification granted under the Georgia Business
Corporation Code, Aerial shall indemnify each of its officers and directors,
whether or not then in office (and his personal representative and heirs),
against all reasonable expenses actually and necessarily incurred by him,
including, but not limited to, counsel fees, court costs and judgments in
connection with the defense of any litigation to which he may have been made a
party because he is or was a director or officer of the corporation. Such
officer or director shall have no right to reimbursement, however, in relation
to matters as to which he has been adjudged liable to the corporation for
negligence or misconduct in the performance of his duties as a director or
officer of the corporation.
Section 14-2-858 of the Georgia Business Corporation Code authorizes a
corporation to purchase and maintain insurance on behalf of an individual who is
a director, officer, employee, or agent of the corporation or who, while a
director, officer, employee, or agent of the corporation, serves at the
corporation's request as a director, officer, partner, trustee, employee, or
agent of another domestic or foreign corporation, partnership, joint venture,
trust, employee benefit plan, or other entity against liability asserted or
incurred by him or her in that capacity or arising from his or her status as a
director, officer, employee, or agent, whether or not the corporation would have
the power to indemnify or advance expenses to him or her against the same
liability under the Georgia Business Corporation Code.
All of the directors and officers of Aerial are covered by insurance
policies maintained and held in effect by such corporation against certain
liabilities for actions taken in such capacities, including liabilities under
the Securities Act of 1933.
MST is incorporated under the laws of the Commonwealth of Virginia. Section
13.1-697 of the Virginia Stock Corporation Act ("Section 13.1-697") provides
that a Virginia corporation may indemnify an individual made party to any
threatened, pending, or completed action, suit, or proceeding whether civil,
criminal, administrative or investigative and whether formal or informal because
he is or was a director of a corporation or who, while a director of a
corporation, is or was serving at the corporation's request as a director,
officer, partner, trustee, employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise against any obligation to pay a judgement, settlement, penalty, fine
or reasonable expenses (including attorney's fees) incurred in such proceeding
if (1) he conducted himself in good faith and (2) he believed (a) in the case of
conduct in his official capacity with the corporation, that his conduct was in
its best interests and (b) in all other cases, that his conduct was a least not
opposed to its best interests and (3) in the case of any criminal proceeding, he
had no reasonable case to believe his conduct was unlawful. Section 13.1-697,
however, does not allow indemnification of directors (i) in connection with a
proceeding by or in the right of the corporation in which the director was
adjudged liable to the corporation, or (ii) in connection with any proceeding
charging improper personal benefit to him, whether or not involving action in
his official capacity, in which he is adjudged liable on the basis that personal
benefit was improperly received by him. Section 13.1-697 limits all
indemnification with respect to a proceeding by or in right of the corporation
to reasonable expenses incurred in connection with such proceeding. Section
13.1-698 of the Virginia Stock Corporation Act provides for mandatory
indemnification of a director who entirely prevails in the defense of any
proceeding to which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in connection with the
proceeding. In addition, Section 13.1-700.1 of the Virginia Stock Corporation
Act provides for court-ordered indemnification of directors in the court's
discretion.
Section 13.01-702 of the Virginia Stock Corporation Act provides that an
officer, employee, or agent of a Virginia corporation is entitled to
indemnification and advance for expenses to the same extent a director is under
the Virginia Stock Corporation Act.
II-3
<PAGE> 160
In addition to statutory indemnification, Section 13.1-704 of the Virginia
Stock Corporation Act provides that a corporation shall have the power to make
any further indemnity, including indemnity with respect to a proceeding by or in
the right of the corporation, to make additional provision for advances and
reimbursement of expenses, to any director, officer, employee, agent that may be
authorized by such corporation's articles of incorporation or any bylaw made by
the shareholders or any resolution adopted, before or after the event, by the
shareholders, except an indemnity against (i) his willful misconduct, or (ii) a
knowing violation of the criminal law. Neither MST's Articles of Incorporation
of Bylaws provide for such additional indemnification.
Section 13.1-703 of the Virginia Stock Corporation Act provides that a
Virginia corporation may purchase and maintain insurance on behalf of
individuals who are directors, officers, employees or agents of the corporation,
or who, while directors, officers, employees or agents of the corporation, are
or were serving at the request of the corporation as a director, officer,
partner, trustee, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust employee benefit plan, or other enterprise,
against liability asserted against or incurred by him in that capacity or
arising from his status as a director, officer, employee, or agent, whether or
not the corporation would have the power to indemnify him against liability
under the Virginia Stock Corporation Act.
All of the directors and officers of MST are covered by insurance policies
maintained and held in effect by MST against certain liabilities for actions
taken in such capacities, including liabilities under the Securities Act of
1933.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
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3.1(i) Certificate of Incorporation of the Company
3.1(ii) Certificate of Amendment dated January 3, 1997 to
Certificate of Incorporation of the Company
3.1(iii) Certificate of Amendment dated October 28, 1997 to
Certificate of Incorporation of the Company
3.2 By-laws of the Company
3.3 Articles of Incorporation of Aerial Platforms, Inc.
3.4 By-laws of Aerial Platforms, Inc.
3.5 Certificate of Incorporation of NES Acquisition Corp.
3.6 By-laws of NES Acquisition Corp.
3.7 Certificate of Incorporation of BAT Acquisition Corp.
3.8 By-laws of BAT Acquisition Corp.
3.9 Articles of Incorporation of MST Enterprises, Inc.
3.10 By-laws of MST Enterprises, Inc.
4.1 Indenture dated November 25, 1997 by and among the Company,
the Subsidiary Guarantors and Harris Savings and Trust
Company, as trustee.
4.2 Forms of Series A and Series B 10% Senior Subordinated Notes
(contained in Exhibit 4.1 as Exhibit A thereto)
4.3 Form of Subsidiary Guarantee (contained in Exhibit 4.1 as
Exhibit D thereto).
</TABLE>
II-4
<PAGE> 161
<TABLE>
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4.4 Registration Rights Agreement dated as of November 25, 1997
among the Company, Aerial Platforms, Inc., NES Acquisition
Corp., BAT Acquisition Corp., MST Enterprises, Inc. and the
Initial Purchasers.
4.5 Purchase Agreement dated as of November 20, 1997 among the
Company, Aerial Platforms, Inc., NES Acquisition Corp., BAT
Acquisition Corp., MST Enterprises, Inc. and the Initial
Purchasers.
4.6(i) Credit Agreement dated July 1, 1997 by and among the
Company, Aerial Platforms, Inc., NES Acquisition Corp., BAT
Acquisition Corp., certain financial institutions and First
Union Commercial Corporation, as Agent.
4.6(ii) First Amendment to Credit Agreement dated as of July 18,
1997 by and among the Company, Aerial Platforms, Inc., NES
Acquisition Corp., BAT Acquisition Corp., MST Enterprises,
Inc., certain financial institutions and First Union
Commercial Corporation, as Agent.
4.6(iii) Second Amendment to Credit Agreement and Consent dated as of
October 29, 1997 by and among the Company, Aerial Platforms,
Inc., NES Acquisition Corp., BAT Acquisition Corp., MST
Enterprises, Inc., certain financial institutions and First
Union Commercial Corporation, as Agent.
4.6(iv) Borrower Joinder Agreement dated as of July 18, 1997 by and
among the Company, MST Enterprises, Inc. and First Union
Commercial Corporation, as Agent.
4.7 Pledge Agreement dated as of July 18, 1997 by and among the
Company, Aerial Platforms, Inc., NES Acquisition Corp., BAT
Acquisition Corp., MST Enterprises, Inc. and First Union
Commercial Corporation, as Agent for certain Lenders
referred to therein.
4.8 Security Agreement dated as of July 18, 1997 by and among
the Company, Aerial Platforms, Inc., NES Acquisition Corp.,
BAT Acquisition Corp., MST Enterprises, Inc. and First Union
Commercial Corporation, as Agent for certain Lenders
referred to therein.
5.1 Opinion and consent of Kirkland & Ellis.
10.1(i) Professional Services Agreement dated as of June 4, 1996 by
and between the Company and Golder, Thoma, Cressey, Rauner
Fund IV, L.P.
10.1(ii) Amendment No. 1 to Professional Services Agreement dated as
of December 31, 1996 between the Company and Golder, Thoma,
Cressey, Rauner Fund IV, L.P.
10.2 Purchase Agreement dated as of June 4, 1996 between the
Company and Golder, Thoma, Cressey, Rauner Fund IV, L.P.
10.3(i) Stockholders Agreement dated as of June 4, 1996 by and
between the Company, Golder, Thoma, Cressey, Rauner Fund IV,
L.P. and certain Executives named therein.
10.3(ii) Amendment No. 1 to Stockholders Agreement dated December 31,
1996 by and among the Company, Golder, Thoma, Cressey,
Rauner Fund IV, L.P. and certain Executives named therein.
10.4(i) Registration Agreement dated as of June 4, 1996 between
dated as of June 4, 1996 between the Company and Golder,
Thoma, Cressey, Rauner Fund IV, L.P. and certain Executives
named therein.
</TABLE>
II-5
<PAGE> 162
<TABLE>
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10.4(ii) Amendment No. 1 to Registration Agreement dated as of December 31, 1996 by
and among the Company, Golder, Thoma, Cressey, Rauner Fund IV, L.P. and
certain Executives named therein.
10.5(i) Senior Management Agreement dated as of June 4, 1996 between the Company and
Kevin Rodgers.**
10.5(ii) Amendment No. 1 to Senior Management Agreement dated December 31, 1996
between the Company and Kevin Rodgers.**
10.6(i) Senior Management Agreement dated as of June 4, 1996 between the Company and
Paul Ingersoll.**
10.6(ii) Amendment No. 1 to Senior Management Agreement dated December 31, 1996
between the Company and Paul Ingersoll.**
10.7 Senior Management Agreement dated as of December 31, 1996 between the Company
and Dennis O'Connor.**
10.8 Executive Stock Pledge Agreement dated as of June 4, 1996 between the Company
and Kevin Rodgers.
10.9 Executive Stock Pledge Agreement dated as of June 4, 1996 between the Company
and Paul Ingersoll.
10.10 Executive Stock Pledge Agreement dated as of December 31, 1996 between the
Company and Dennis O'Connor.
10.11 Promissory Note dated as of January 6, 1997 by Kevin Rodgers in favor of the
Company in the principal amount of $63,232.
10.12 Promissory Note dated as of January 6, 1997 by Paul Ingersoll in favor of the
Company in the principal amount of $9,880.
10.13 Promissory Note dated as of January 6, 1997 by Dennis O'Connor in favor of
the Company in the principal amount of $19,760.
10.14 Securities Transfer Agreement dated as of December 31, 1996 by and among the
Company, Golder, Thoma, Cressey, Rauner Fund IV, L.P., Golder, Thoma,
Cressey, Rauner Fund V, L.P., Kevin Rodgers, Paul Ingersoll and Dennis
O'Connor.
10.15 Stock Purchase Agreement dated as of January 6, 1997 by and among the
Company, Industrial Crane Maintenance Systems, Inc., Golder, Thoma, Cressey,
Rauner Fund V, L.P., Kevin Rodgers, Paul Ingersoll and Dennis O'Connor.
10.16 Asset Purchase Agreement dated as of January 6, 1997 by and among NES
Acquisition Corp., Industrial Crane Maintenance Systems, Inc., Brazos Rental
& Tool, Inc., Safe Work Load Products, Inc. and certain stockholders of the
Sellers referred to therein.*
10.17 Lease dated January 6, 1997 by and between the ES&L Service and NES
Acquisition Corp.
10.18 Employment Agreement dated as of January 6, 1997 between NES Acquisition
Corp. and James G. Kowalik.**
10.19 Stock Purchase Agreement dated as of February 18, 1997 by and among Aerial
Platforms, Inc., Carter B. Wilson and the Company.*
</TABLE>
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10.20 Junior Subordinated Promissory Note dated as of February 18, 1997 by the
Company in favor of Carter Wilson in the principal amount of $500,000.
10.21 Employment Agreement dated as of February 18, 1997 between Aerial Platforms,
Inc. and Carter Wilson.**
10.22 Lease Agreement dated as of May 30, 1990 by and between Weeks Super
Partnership, LTD and Aerial Platforms, Inc.
10.23 Stock Transfer Agreement dated as of February 18, 1997 by and among the
Company, Carter Wilson, Golder, Thoma, Cressey, Rauner Fund V, L.P., Kevin
Rodgers, Dennis O'Connor and Paul Ingersoll.
10.24 Asset Purchase Agreement dated as March 17, 1997 by among NES Acquisition
Corp., Lone Star Rentals, Inc. and James Horsley.*
10.25 Employment Agreement dated as of March 17, 1997 by and between NES
Acquisition Corp. and James Horsley.**
10.26 Stock Purchase Agreement dated as of March 17, 1997 by and among the Company,
James Horsley, Golder, Thoma, Cressey, Rauner Fund V, L.P., Kevin Rodgers,
Dennis O'Connor and Paul Ingersoll.
10.27 Lease Agreement dated as of March 17, 1997 by and between James Horsley and
NES Acquisition Corp. relating to 6093 North Shepherd, Houston, Texas.
10.28 Lease Agreement dated as of March 17, 1997 by and between James Horsley and
NES Acquisition Corp. relating to 18918 F.M. 249, Houston, Texas.
10.29 Lease Agreement dated as of March 17, 1997 by and between James Horsley and
NES Acquisition Corp. relating to 1731 First Street, Humble, Texas.
10.30 Lease Agreement dated as of March 17, 1997 by and between James Horsley and
NES Acquisition Corp. relating to 3440 Red Bluff Road, Pasadena, Texas.
10.31 Lease Agreement dated as of March 17, 1997 by and between James Horsley and
NES Acquisition Corp. relating to 1745 N. Padre Island Drive, Corpus Christi,
Texas.
10.32 Junior Subordinated Promissory Note dated as of March 17, 1997 by the Company
in favor of Lone Star Rentals, Inc.
10.33 Asset Purchase Agreement dated as of April 1, 1997 by and among, BAT
Acquisition Corp., BAT Rentals, Inc. and Paul B. Bronken.*
10.34 Lease dated as of April 1, 1997 by and between BAT Rentals, Inc. and BAT
Acquisition Corp.
10.35 Asset Purchase Agreement dated as of July 1, 1997 by and among NES
Acquisition Corp., Sprint Industrial Services, Inc., Joseph B. Swinbank and
Donald Poarch.*
10.36 Consulting Agreement dated as of July 1, 1997 by and between Joseph B.
Swinbank and NES Acquisition Corp.**
10.37 Employment Agreement dated as of July 1, 1997 by and between NES Acquisition
Corp. and James O'Neil.**
</TABLE>
II-7
<PAGE> 164
<TABLE>
<S> <C> <C>
10.38 Employment Agreement dated as of July 1, 1997 by and between NES Acquisition
Corp. and Sammy Sorsby.**
10.39 Employment Agreement dated as of July 1, 1997 by and between NES Acquisition
Corp. and J.D. Cox.**
10.40 Noncompetition Agreement dated as of July 1, 1997 by and between J.D. Cox and
NES Acquisition Corp.
10.41 Noncompetition Agreement dated as of July 1, 1997 by and between Melissa
Henry and NES Acquisition Corp.
10.42 Noncompetition Agreement dated as of July 1, 1997 by and between Jake Davis
and NES Acquisition Corp.
10.43 Noncompetition Agreement dated as of July 1, 1997 by and between Chris
Swinbank and NES Acquisition Corp.
10.44 Noncompetition Agreement dated as of July 1, 1997 by and between Donald
Treichel and NES Acquisition Corp.
10.45 Noncompetition Agreement dated as of July 1, 1997 by and between Greg
Gabriele and NES Acquisition Corp.
10.46 Noncompetition Agreement dated as of July 1, 1997 by and between Brian
Speight and NES Acquisition Corp.
10.47 Noncompetition Agreement dated as of July 1, 1997 by and between Jill Harris
and NES Acquisition Corp.
10.48 Noncompetition Agreement dated as of July 1, 1997 by and between Jim Heath
and NES Acquisition Corp.
10.49 Lease dated as of July 1, 1997 by and between Sprint Industrial Services,
Inc. and NES Acquisition Corp. relating to 77 North, Robstown, Texas.
10.50 Lease dated as of July 1, 1997 by and between Sprint Industrial Services,
Inc. and NES Acquisition Corp. relating to 3915 Highway, St. Gabriel,
Louisiana.
10.51 Lease dated as of July 1, 1997 by and between Conrad Sauer, Ltd. and NES
Acquisition Corp. relating to 1041 Conrad Sauer, Houston, Texas 77043.
10.52 Lease dated August 14, 1994 by and between Dwaine Allen Ellender and
Sprintank relating to 3205 Metric Drive, Sulphur, LA 70663.
10.53 Lease Agreement dated as of October 31, 1991 by and between J.R. Plake, Inc.
and Sprint Industrial Ser. Tank Leasing relating to 2170 W. Cardinal Drive.
10.54 Lease dated April 30, 1997 between Augustine Meaher, Jr., Robert H. Meaher,
individually and as Executor of the Estate of R. Lloyd Hill, Joseph L. Meaher
and Augustine Meaher III and Sprint Industrial Services, Inc. relating to
1142 Telegraph Road, Mobile, AL 36610.
10.55 Lease dated as of August 1, 1995 by and between the Moller Family,
specifically, C.A. Moller, individually, Mary Clive Munson, individually and
Elizabeth Frances Moller Brewer, individually, and Sprint Industrial
Services, Inc. relating to 8311 Country Road 226, Clute, Texas 77541.
</TABLE>
II-8
<PAGE> 165
<TABLE>
<CAPTION>
LOCATION OF DOCUMENT
IN SEQUENTIAL
NUMBERING SYSTEM+
--------------------
<S> <C> <C>
10.56 Lease dated as of the 1st day of December, 1997, between Sprint Industrial
Services, Inc. and NES Acquisition Corp. relating to 2101 Lee Drive, Baytown,
Texas.
10.57 Stock Purchase Agreement dated as of July 1, 1997 by and among the Company,
Golder, Thoma, Cressey, Rauner Fund V, L.P., Kevin Rodgers, Dennis O'Connor,
Paul Ingersoll, Joseph Swinbank, Donald Poarch, James O'Neil, Sammy Sorsby
and J.D. Cox.
10.58 Stock Purchase Agreement dated as of July 18, 1997 by and among MST
Enterprises, Inc., the stockholders of MST Enterprises, Inc. and National
Equipment Services, Inc.*
10.59 Employment Agreement dated as of July 18, 1997 by and between MST
Enterprises, Inc. and Marc S. Trubitz.**
10.60 Stock Transfer Agreement dated as of July 18, 1997 by and among National
Equipment Services, Inc.,Golder, Thoma, Cressey, Rauner Fund V, L.P., Kevin
Rodgers, Dennis O'Connor, Paul Ingersoll, Marc S. Trubitz, Suellen Trubitz,
Douglas Randall Brevard, Linda Sue Hughes and Donald Stewart.
10.61 Noncompetition Agreement dated as of July 18, 1997 by and among Marc S.
Trubitz, Suellen Trubitz, Douglas Randall Brevard, Linda Sue Hughes and
Donald Stewart.
10.62 Lease Agreement dated as of July 18, 1997 by and between Marc S. Trubitz &
Suellen Trubitz and MST Enterprises, Inc.
12.1 Statement Regarding Computation of Ratios of Earnings to Fixed Charges.
21.1 Subsidiaries of the Company.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Kirkland & Ellis (included in Exhibit 5.1).
24.1 Powers of Attorney of Directors and Officers of the Company and each
Subsidiary Guarantor.
25.1 Statement of Eligibility of Trustee on Form T-1.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Tender Instructions.
</TABLE>
- -------------------------
+ This information appears only in the manually signed original copies of this
report.
* To be filed by amendment.
** Management contract or compensatory plan or arrangement.
(B) FINANCIAL STATEMENT SCHEDULES.
Schedule II -- National Equipment Services, Inc. and Subsidiaries --
Valuation and Qualifying Accounts and Reserves.
II-9
<PAGE> 166
ITEM 22. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a directors, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
II-10
<PAGE> 167
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, National
Equipment Services, Inc. has duly caused this Registration Statement on Form S-4
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Evanston, State of Illinois, on December 31, 1997.
NATIONAL EQUIPMENT SERVICES, INC.
BY: /s/ PAUL R. INGERSOLL
-----------------------------------
Paul R. Ingersoll
Vice President and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed on December 31, 1997 by the
following persons in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
* President, Chief Executive Officer and
- -------------------------------------------- Director
Kevin P. Rodgers (Principal Executive Officer)
* Chief Financial Officer
- -------------------------------------------- (Principal Financial Officer and Principal
Dennis J. O'Connor Accounting Officer)
* Director
- --------------------------------------------
Carl D. Thoma
* Director
- --------------------------------------------
William C. Kessinger
* Director
- --------------------------------------------
Ronald St. Clair
</TABLE>
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on Form S-4 on behalf of the above named officers and
directors of National Equipment Services, Inc. pursuant to the Power of
Attorney executed by such officers and directors and filed with the Securities
and Exchange Commission.
/s/ PAUL R. INGERSOLL
- --------------------------------------
Paul R. Ingersoll
Attorney-in-fact
II-11
<PAGE> 168
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, NES Acquisition
Corp., has duly caused this Registration Statement on Form S-4 to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Evanston, State of Illinois, on December 31, 1997.
NES ACQUISITION CORP.
BY: /s/ PAUL R. INGERSOLL
-----------------------------------
Paul R. Ingersoll
Vice President, Treasury and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed on December 31, 1997 by the
following persons in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
* Chief Executive Officer and Director
- -------------------------------------------- (Principal Executive Officer)
Kevin P. Rodgers
* Chief Financial Officer
- -------------------------------------------- (Principal Financial Officer and Principal
Dennis J. O'Connor Accounting Officer)
* Director
- --------------------------------------------
Carl D. Thoma
* Director
- --------------------------------------------
William C. Kessinger
</TABLE>
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on Form S-4 on behalf of the above named officers and
directors of NES Acquisition Corp. pursuant to the Power of Attorney executed
by such officers and directors and filed with the Securities and Exchange
Commission.
/s/ PAUL R. INGERSOLL
- --------------------------------------
Paul R. Ingersoll
Attorney-in-fact
II-12
<PAGE> 169
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Aerial
Platforms, Inc., has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Evanston, State of Illinois, on December 31, 1997.
AERIAL PLATFORMS, INC.
BY: /s/ PAUL R. INGERSOLL
-----------------------------------
Paul R. Ingersoll
Vice President, Treasury and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed on December 31, 1997 by the
following persons in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
* President, Chief Executive Officer and
- -------------------------------------------- Director
Kevin P. Rodgers (Principal Executive Officer)
* Chief Financial Officer
- -------------------------------------------- (Principal Financial Officer and Principal
Dennis J. O'Connor Accounting Officer)
* Director
- --------------------------------------------
Carl D. Thoma
* Director
- --------------------------------------------
William C. Kessinger
</TABLE>
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on Form S-4 on behalf of the above named officers and
directors of Aerial Platforms, Inc. pursuant to the Power of Attorney executed
by such officers and directors and filed with the Securities and Exchange
Commission.
/s/ PAUL R. INGERSOLL
- --------------------------------------
Paul R. Ingersoll
Attorney-in-fact
II-13
<PAGE> 170
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, MST
Enterprises, Inc., has duly caused this Registration Statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Evanston, State of Illinois, on December 31, 1997.
MST ENTERPRISES, INC.
BY: /s/ PAUL R. INGERSOLL
-----------------------------------
Paul R. Ingersoll
Vice President, Treasury and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed on December 31, 1997 by the
following persons in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
* Chief Executive Officer and Director
- -------------------------------------------- (Principal Executive Officer)
Kevin P. Rodgers
* Chief Financial Officer
- -------------------------------------------- (Principal Financial Officer and Principal
Dennis J. O'Connor Accounting Officer)
* Director
- --------------------------------------------
Carl D. Thoma
* Director
- --------------------------------------------
William C. Kessinger
</TABLE>
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on Form S-4 on behalf of the above named officers and
directors of MST Enterprises, Inc. pursuant to the Power of Attorney executed
by such officers and directors and filed with the Securities and Exchange
Commission.
/s/ PAUL R. INGERSOLL
- --------------------------------------
Paul R. Ingersoll
Attorney-in-fact
II-14
<PAGE> 171
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, BAT Acquisition
Corp., has duly caused this Registration Statement on Form S-4 to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Evanston, State of Illinois, on December 31, 1997.
BAT ACQUISITION CORP.
BY: /s/ PAUL R. INGERSOLL
-----------------------------------
Paul R. Ingersoll
Vice President, Treasury and
Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-4 has been signed on December 31, 1997 by the
following persons in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
--------- --------
<C> <S>
* Chief Executive Officer and Director
- -------------------------------------------- (Principal Executive Officer)
Kevin P. Rodgers
* Chief Financial Officer
- -------------------------------------------- (Principal Financial Officer and Principal
Dennis J. O'Connor Accounting Officer)
* Director
- --------------------------------------------
Carl D. Thoma
* Director
- --------------------------------------------
William C. Kessinger
</TABLE>
* The undersigned, by signing his name hereto, does sign and execute this
Registration Statement on Form S-4 on behalf of the above named officers and
directors of BAT Acquisition Corp. pursuant to the Power of Attorney executed
by such officers and directors and filed with the Securities and Exchange
Commission.
/s/ PAUL R. INGERSOLL
- --------------------------------------
Paul R. Ingersoll
Attorney-in-fact
II-15
<PAGE> 172
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(AMOUNTS IN THOUSANDS OF DOLLARS)*
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
ADDITIONS
---------------------------------------
(1) (2)
BALANCE AT CHARGED TO COSTS CHARGED TO OTHER BALANCE AT
DESCRIPTION JANUARY 1, 1997 AND EXPENSES ACCOUNTS -- DESCRIBE WRITE-OFFS SEPTEMBER 30, 1997
- -------------------------- --------------- ---------------- -------------------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts................ 0 323 0 46 277
Reserve for obsolete
inventory............... 0 630 0 0 630
</TABLE>
- -------------------------
* There were no valuation and qualifying accounts and reserves as of December
31, 1996 or during the period then ended.
S-1
<PAGE> 1
Exhibit 3.1(i)
CERTIFICATE OF INCORPORATION
OF
NATIONAL EQUIPMENT SERVICES, INC.
ARTICLE ONE
The name of the corporation is National Equipment Services, Inc.
ARTICLE TWO
The address of the corporation's registered office in the State of
Delaware is The Prentice-Hall Corporation System, Inc., 1013 Centre Road, in
the City of Wilmington, County of New Castle 19805. The name of its registered
agent at such address is The Corporation Trust Company.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
Part A. Authorized Shares
The total number of shares of capital stock which the Corporation has
authority to issue is 175,000 shares, consisting of:
(1) 25,000 shares of Class A Common Stock, par value $.01 per share
("Class A Common"); and
(2) 150,000 shares of Class B Common Stock, par value $.01 per
share ("Class B Common").
The Class A Common and Class B Common and any other common stock issued
hereafter are referred to collectively as the "Common Stock." The shares of
Common Stock shall
- 1 -
<PAGE> 2
have the rights, preferences and limitations set forth below. Capitalized
terms used but not otherwise defined in Part A or Part B of this Article FOUR
are defined in Part C.
Part B. Common Stock
Except as otherwise provided in this Part B or as otherwise required by
applicable law, all shares of Class A Common and Class B Common shall be
identical in all respects and shall entitle the holders thereof to the same
rights and privileges, subject to the same qualifications, limitations and
restrictions.
Section 1. Voting Rights. Except as otherwise provided in this Part B or
as otherwise required by applicable law, (i) all holders of Class B Common
shall be entitled to one vote per share on all matters to be voted on by the
Corporation's stockholders, (ii) the holders of Class A Common, as a class,
shall at all times be entitled to a number of votes equal to 10% of the number
of votes allocable to all of the Common Stock, with each share of Class A
Common to be entitled to its pro rata portion of such allocated number of
votes, and (iii) the holders of Class A Common and Class B Common shall vote
together as a single class.
Section 2. Distributions. At the time of each Distribution, such
Distribution shall be made to the holders of Class A Common and Class B Common
outstanding as of the time of such Distribution in the following priority:
(i) The holders of Class A Common, as a separate class, shall be entitled
to receive all or a portion of such Distribution (ratably among such holders
based upon the number of shares of Class A Common held by each such holder as
of the time of such Distribution) equal to the aggregate Unpaid Yield on the
outstanding shares of Class A Common as of the time of such Distribution, and
no Distribution or any portion thereof shall be made under paragraph 2(ii) or
2(iii) below until the entire amount of the Unpaid Yield on the outstanding
shares of Class A Common as of the time of such Distribution has been paid in
full. The Distributions made pursuant to this paragraph 2(i) to holders of
Class A Common shall constitute a payment of Yield on Class A Common.
(ii) After the required amount of a Distribution has been made in full
pursuant to paragraph 2(i) above, the holders of Class A Common, as a separate
class, shall be entitled to receive all or a portion of such Distribution
(ratably among such holders based upon the number of shares of Class A Common
held by each such holder as of the time of such Distribution) equal to the
aggregate Unreturned Original Cost of the outstanding shares of Class A Common
as of the time of such Distribution, and no Distribution or any portion thereof
shall be made under paragraph 2(iii) below until the entire amount of the
Unreturned Original Cost of the outstanding shares of Class A Common as of the
time of such Distribution has been paid in full pursuant to this paragraph
2(ii). The Distributions made pursuant to this paragraph 2(ii) to holders of
Class A Common shall constitute a return of Original Cost of Class A Common.
- 2 -
<PAGE> 3
(iii) After the required amount of a Distribution has been made pursuant to
paragraphs 2(i) and 2(ii) above, (A) the holders of Class A Common shall be
entitled to receive 10% of the remaining portion of such Distribution (ratably
among such holders based upon the number of shares of Class A Common held by
each such holder as of the time of such Distribution), and (B) the holders of
Class B Common shall be entitled to receive 90% of the remaining portion of such
Distribution (ratably among such holders based upon the number of shares of
Class B Common held by each such holder as of the time of such Distribution).
Section 3. Stock Splits and Stock Dividends. The Corporation shall not in
any manner subdivide (by stock split, stock dividend or otherwise) or combine
(by reverse stock split or otherwise) the outstanding Common Stock of one class
unless the outstanding Common Stock of all the other classes shall be
proportionately subdivided or combined. All such subdivisions and combinations
shall be payable only in Class A Common to the holders of Class A Common and in
Class B Common to the holders of Class B Common. In no event shall a stock
split or stock dividend constitute a payment of Yield or a return of Original
Cost.
Section 4. Registration of Transfer. The Corporation shall keep at its
principal office (or such other place as the Corporation reasonably designates)
a register for the registration of shares of Common Stock. Upon the surrender
of any certificate representing shares of any class of Common Stock at such
place, the Corporation shall, at the request of the registered holder of such
certificate, execute and deliver a new certificate or certificates in exchange
therefor representing in the aggregate the number of shares of such class
represented by the surrendered certificate, and the Corporation forthwith shall
cancel such surrendered certificate. Each such new certificate will be
registered in such name and will represent such number of shares of such class
as is requested by the holder of the surrendered certificate and shall be
substantially identical in form to the surrendered certificate. The issuance
of new certificates shall be made without charge to the holders of the
surrendered certificates for any issuance tax in respect thereof or other cost
incurred by the Corporation in connection with such issuance.
Section 5. Replacement. Upon receipt of evidence reasonably satisfactory
to the Corporation (an affidavit of the registered holder will be satisfactory)
of the ownership and the loss, theft, destruction or mutilation of any
certificate evidencing one or more shares of any class of Common Stock, and in
the case of any such loss, theft or destruction, upon receipt of indemnity
reasonably satisfactory to the Corporation (provided that if the holder is a
financial institution or other institutional investor its own agreement will be
satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Corporation shall (at its expense) execute and deliver in lieu
of such certificate a new certificate of like kind representing the number of
shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 6. Amendment and Waiver. No amendment or waiver of any provision
of this Article FOUR shall be effective without the prior written consent of
the holders of a majority of the then outstanding shares of Common Stock voting
as a single class; provided that no amendment directly to any terms or
provisions of any class of Common Stock that adversely affects
- 3 -
<PAGE> 4
such class of Common Stock shall be effective without the prior consent of the
holders of a majority of the then outstanding shares of such class of Common
Stock.
Section 7. Redemption. The Corporation shall apply 100% of the net cash
proceeds (or such lesser amount as is necessary to redeem all of the shares of
Class A Common as provided in this sentence) from an initial Public Offering
remaining after deduction of all discounts, underwriters' commissions and other
reasonable expenses to redeem shares of Class A Common at a price per share
equal to the Unpaid Yield plus the Unreturned Original Cost with respect to
such share. Such redemption shall take place on a date fixed by the
Corporation, which date shall be not more than five days after the
Corporation's receipt of such proceeds. The Corporation shall mail written
notice of such redemption of Class A Common to each record holder thereof not
more than 60 nor less than 30 days prior to the date on which such redemption
is to be made. In case fewer than the total number of shares represented by any
certificate are redeemed, a new certificate representing the number of
unredeemed shares shall be issued to the holder thereof without cost to such
holder within three business days after surrender of the certificate
representing the redeemed shares. The number of shares of Class A Common to be
redeemed from each holder thereof in such a redemption shall be the number of
shares determined by multiplying the total number of shares to be redeemed
times a fraction, the numerator of which shall be the total number of shares of
Class A Common then held by such holder and the denominator of which shall be
the total number of shares of Class A Common then outstanding. Any shares
which are redeemed or otherwise acquired by the Corporation shall be cancelled
and shall not be reissued, sold or transferred.
Part D. Definitions
"Distribution" means each distribution made by the Corporation to holders
of Common Stock, whether in cash, property, or securities of the Corporation
and whether by dividend, liquidating distributions or otherwise; provided that
neither of the following shall be a Distribution: (a) any redemption or
repurchase by the Corporation of any shares of Common Stock for any reason
(after which such shares shall cease to be outstanding shares) or (b) any
recapitalization or exchange of any shares of Common Stock, or any subdivision
(by stock split, stock dividend or otherwise) or any combination (by reverse
stock split or otherwise) of any outstanding shares of Common Stock.
"Original Cost" of each share of Class A Common shall be equal to $1,000
per share, and the "Original Cost" of each share of Class B Common shall be
equal to $10 (in each case, as proportionally adjusted for all stock splits,
stock dividends and other recapitalizations affecting the Common Stock).
"Unpaid Yield" of any share of Common Stock means an amount equal to the
excess, if any, of (a) the aggregate Yield accrued on such share, over (b) the
aggregate amount of Distributions made by the Corporation that constitute
payment of Yield on such share.
"Unreturned Original Cost" of any share of Common Stock means an amount
equal to the excess, if any, of (a) the Original Cost of such share, over (b)
the aggregate amount of Distributions made by the Corporation that constitute a
return of Original Cost of such share.
- 4 -
<PAGE> 5
"Yield" means, with respect to each share of Class A Common for each
calendar quarter, the amount accruing on such share each day during such
quarter at the rate of 10% per annum of the sum of (a) such share's Unreturned
Original Cost, plus (b) Unpaid Yield thereon for all prior quarters. In
calculating the amount of any Distribution to be made during a calendar
quarter, the portion of a Class A Common share's Yield for such portion of such
quarter elapsing before such Distribution is made shall be taken into account.
ARTICLE FIVE
The name and mailing address of the sole incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
Sanford E. Perl 200 E. Randolph Drive
56th Floor
Chicago, IL 60601
ARTICLE SIX
The corporation is to have perpetual existence.
ARTICLE SEVEN
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the corporation is expressly authorized to make,
alter or repeal the bylaws of the corporation.
ARTICLE EIGHT
Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places
as may be designated from time to time by the board of directors or in the
bylaws of the corporation. Election of directors need not be by written ballot
unless the bylaws of the corporation so provide.
- 5 -
<PAGE> 6
ARTICLE NINE
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this Article NINE shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE TEN
The corporation expressly elects not to be governed by Section 203 of the
General Corporation Law of the State of Delaware.
ARTICLE ELEVEN
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation in the manner now or
hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts stated herein are true,
and accordingly have hereunto set my hand on the 30th day of May, 1996.
/S/ SANFORD E. PERL
-------------------
Sanford E. Perl
Sole Incorporator
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<PAGE> 1
Exhibit 3.1(ii)
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
NATIONAL EQUIPMENT SERVICES, INC.
* * * *
Adopted in accordance with the provisions
of Section 242 of the General Corporation Law
of the State of Delaware
* * * *
Kevin Rodgers, being the President of National Equipment Services, Inc., a
corporation duly organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "Corporation"), DOES HEREBY
CERTIFY as follows:
FIRST: That the Certificate of Incorporation of the Corporation be, and
hereby is, amended by deleting Section 7 of Part B of Article Four in its
entirety and substituting in lieu thereof a new Section 7 of Part B of Article
Four to read as follows:
Section 7. Redemption. Subject to the provisions of this
Section 7, the Corporation shall apply 100% of the net cash proceeds
from an initial Public Offering remaining after deduction of all
discounts, underwriters' commissions and other reasonable expenses
to redeem shares of Class A Common at a price per share equal to the
Unpaid Yield plus the Unreturned Original Cost with respect to such
share (the "Redemption Price"). Such redemption shall take place on
a date fixed by the Corporation, which date shall be the date of the
consummation of such Public Offering or a specified number of days
(not to exceed five) thereafter (the "Redemption Date"). The
Corporation shall mail written notice of such redemption of Class A
Common (the "Redemption Notice") to each record holder thereof not
more than 60 nor less than 30 days prior to the date on which such
redemption is expected to be made. The Redemption Notice shall set
forth the number of shares of Class A Common which are eligible for
redemption (the "Eligible Shares"). The holders of a majority of
the outstanding shares of Class A Common shall mail written notice
to the Corporation within 20 days of receipt of the Redemption
Notice setting forth the number of Eligible Shares elected to be
redeemed. On the Redemption Date the Corporation shall redeem those
Eligible Shares elected to be redeemed (i.e., including shares of
Class A
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<PAGE> 2
Common held by persons other than those persons holding a majority
of the outstanding shares of Class A Common), on a pro rata basis
from holders of the then outstanding shares of Class A Common based
on the number of shares of Class A Common held by each holder of
shares of Class A Common, at a price per share equal to the
Redemption Price. In case fewer than the total number of shares
represented by any certificate are redeemed, a new certificate
representing the number of unredeemed shares shall be issued to the
holder thereof without cost to such holder within three business
days after surrender of the certificate representing the redeemed
shares. Any shares which are redeemed or otherwise acquired by the
Corporation shall be cancelled and shall not be reissued, sold or
transferred.
SECOND: That the Board of Directors of the Corporation approved the
foregoing amendment by unanimous written consent pursuant to the provisions of
Section 141(f) and 242 of the General Corporation Law of the State of Delaware
and directed that such amendment be submitted to the stockholders of the
Corporation entitled to vote thereon for their consideration, approval and
adoption thereof.
THIRD: That the stockholders entitled to vote thereon approved the
foregoing amendment by unanimous written consent in accordance with Section 228
and 242 of the General Corporation Law of the State of Delaware.
* * * * * *
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<PAGE> 3
IN WITNESS WHEREOF, the undersigned does hereby certify under penalties of
perjury that this Certificate of Amendment to the Certificate of Incorporation
of the Corporation is the act and deed of the undersigned and the facts stated
herein are true and accordingly has hereunto set his hand this 3rd day of
January, 1997.
NATIONAL EQUIPMENT SERVICES, INC.,
a Delaware corporation
By: /S/ KEVIN RODGERS
-----------------
Kevin Rodgers
President
<PAGE> 1
Exhibit 3.1(iii)
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
NATIONAL EQUIPMENT SERVICES, INC.
* * * * *
Adopted in accordance with the provisions
of Section 242 of the General Corporation Law
of the State of Delaware
* * * * *
Kevin Rodgers, being the President and Chief Executive Officer of National
Equipment Services, Inc., a corporation duly organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify as follows:
FIRST: That the Certificate of Incorporation of the Corporation be, and
hereby is, amended by deleting Part A of Article Four in its entirety and
substituting in lieu thereof a new Part A of Article Four to read as follows:
ARTICLE FOUR
Part A. Authorized Shares
The total number of shares of capital stock which the Corporation has
authority to issue is 200,000 shares, consisting of:
(1) 50,000 shares of Class A Common Stock, par value $.01 per share
("Class A Common"); and
(2) 150,000 shares of Class B Common Stock, par value $.01 per share
("Class B Common").
The Class A Common and Class B Common and any other common stock issued
hereafter are referred to collectively as the "Common Stock." The shares of
Common Stock shall have the rights, preferences and limitation set forth below.
Capitalized terms used but not otherwise defined in Part A or Part B of this
Article FOUR are defined in Part C.
<PAGE> 2
SECOND: That the Board of Directors of the Corporation approved the
foregoing
amendment by unanimous written consent pursuant to the provisions of Section
141(f) and 242 of the General Corporation Law of the State of Delaware and
directed that such amendment be submitted to the stockholders of the
Corporation entitled to vote thereon for their consideration, approval and
adoption thereof.
THIRD: That the stockholders entitled to vote thereon approved the
foregoing amendment by written consent in accordance with Section 228 and 242
of the General Corporation Law of the State of Delaware.
* * * * *
<PAGE> 3
IN WITNESS WHEREOF, the undersigned does hereby certify under penalties of
perjury that this Certificate of Amendment to the Certificate of Incorporation
of the Corporation is the act and deed of the undersigned and the facts stated
herein are true and accordingly has hereunto set his hand this 28th day of
October, 1997.
NATIONAL EQUIPMENT SERVICES, INC.,
a Delaware corporation
By: /S/ KEVIN RODGERS
-----------------
Kevin Rodgers
President and Chief Executive Officer
<PAGE> 1
Exhibit 3.2
BY-LAWS
OF
NATIONAL EQUIPMENT SERVICES, INC.
A Delaware corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation
in the State of Delaware shall be located at 1013 Centre Road, in the City of
Wilmington, County of New Castle 19805. The name of the corporation's
registered agent at such address shall be The Prentice-Hall Corporation System,
Inc. The registered office and/or registered agent of the corporation may be
changed from time to time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year within one hundred twenty (120) days after
the close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the president of the corporation; provided, that if the
president does not act, the board of directors shall determine the date, time
and place of such meeting. In addition, board shall hold such meetings as
specified in that certain Stockholders Agreement dated as of June 4, 1996, by
and among the corporation and the stockholders named therein, as amended from
time to time (as amended, the "Stockholders Agreement").
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or
without the State of Delaware, as shall be stated in a notice of meeting or in
a duly executed waiver of notice thereof.
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special
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<PAGE> 2
meeting called by the board of directors. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be the
principal executive office of the corporation.
Section 4. Notice. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting
not less than ten (10) nor more than sixty (60) days before the date of the
meeting. All such notices shall be delivered, either personally or by mail, by
or at the direction of the board of directors, the president or the secretary,
and if mailed, such notice shall be deemed to be delivered when deposited in
the United States mail, postage prepaid, addressed to the stockholder at his,
her or its address as the same appears on the records of the corporation.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting, except when the person attends for the express purpose of objecting at
the beginning of the meeting to the transaction of any business because the
meeting is not lawfully called or convened.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares
of capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present,
the holders of a majority of the shares present in person or represented by
proxy at the meeting, and entitled to vote at the meeting, may adjourn the
meeting to another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than thirty (30) days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express
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<PAGE> 3
provisions of an applicable law or of the certificate of incorporation a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of
Article VI hereof, every stockholder shall at every meeting of the stockholders
be entitled to one (1) vote in person or by proxy for each share of common
stock held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy. At each meeting of the
stockholders, and before any voting commences, all proxies filed at or before
the meeting shall be submitted to and examined by the secretary or a person
designated by the secretary, and no shares may be represented or voted under a
proxy that has been found to be invalid or irregular.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in
which proceedings of meetings of the stockholders are recorded. Delivery made
to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested provided, however, that no consent or
consents delivered by certified or registered mail shall be deemed delivered
until such consent or consents are actually received at the registered office.
All consents properly delivered in accordance with this section shall be deemed
to be recorded when so delivered. No written consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days of
the earliest dated consent delivered to the corporation as required by this
section, written consents signed by the holders of a sufficient number of
shares to take such corporate action are so recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not
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<PAGE> 4
consented in writing. Any action taken pursuant to such written consent or
consents of the stockholders shall have the same force and effect as if taken
by the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
Section 1. General Powers. Except as set forth in the Stockholders
Agreement, the business and affairs of the corporation shall be managed by or
under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the initial board shall be three (3). Thereafter, the
number of directors shall be established from time to time in accordance with
the terms and conditions set forth in the Stockholders Agreement. The
directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the annual meeting of the stockholders and
entitled to vote in the election of directors. The directors shall be elected
in this manner at the annual meeting of the stockholders, except as provided in
Section 4 of this Article III or in the Stockholders Agreement. Each director
elected shall hold office until a successor is duly elected and qualified or
until his or her earlier death, resignation or removal as hereinafter provided
or as provided in the Stockholders Agreement.
Section 3. Removal and Resignation. Any director or the entire board of
directors may be removed at any time, with or without cause, as set forth in
the Stockholders Agreement. Whenever the holders of any class or series of
security are entitled to elect one or more directors by the provisions of the
corporation's certificate of incorporation, the provisions of this section
shall apply, in respect to the removal without cause of a director or directors
so elected, to the vote of the holders of the outstanding shares of that class
or series and not to the vote of the outstanding shares as a whole. Any
director may resign at any time upon written notice to the corporation.
Section 4. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors shall be
filled in accordance with the provisions of the Stockholders Agreement. Each
director so chosen shall hold office until a successor is duly elected and
qualified or until his or her earlier death, resignation or removal as herein
provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of
stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution
of the board. Special meetings of the board of directors may be called by or
at the request of the president or the holders of not less than 30% of the
outstanding shares of common stock on at least twenty-four (24) hours notice to
each director, either personally, by telephone, by mail, or by telegraph.
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<PAGE> 5
Section 7. Quorum, Required Vote and Adjournment. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the board of directors. If a quorum
shall not be present at any meeting of the board of directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors. Each
committee shall keep regular minutes of its meetings and report the same to the
board of directors when required.
Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent
or disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such
board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of
the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except
when such member attends for the express purpose of objecting at the beginning
of the meeting to the transaction of any business because the meeting is not
lawfully called or convened. Such member shall be conclusively presumed to
have assented to any action taken unless his or her dissent shall be entered in
the minutes of the meeting or unless his or her written dissent to such action
shall be filed with the person acting as the secretary of the meeting before
the adjournment thereof or shall be forwarded by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to any member who voted in favor of such
action.
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<PAGE> 6
Section 12. Action by Written Consent. Unless otherwise restricted by
the certificate of incorporation, any action required or permitted to be taken
at any meeting of the board of directors, or of any committee thereof, may be
taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be elected by
the board of directors and shall consist of a chairman of the board, president,
one or more vice-presidents, secretary, a treasurer, and such other officers
and assistant officers as may be deemed necessary or desirable by the board of
directors. Any number of offices may be held by the same person. In its
discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable, except that the offices of president and
secretary shall be filled as expeditiously as possible.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. The officers shall be elected annually by the board of directors at
the first meeting of the board of directors held after each annual meeting of
stockholders or as soon thereafter as conveniently may be. The president shall
appoint other officers to serve for such terms as he or she deems desirable.
Vacancies may be filled or new offices created and filled at any meeting of the
board of directors. Each officer shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by
the board of directors for the unexpired portion of the term by the board of
directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. The President. The president shall be the chief executive
officer of the corporation; shall preside at all meetings of the stockholders
and board of directors at which he is present; subject to the powers of the
board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall
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<PAGE> 7
execute bonds, mortgages and other contracts requiring a seal, under the seal
of the corporation, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent of
the corporation. The president shall have such other powers and perform such
other duties as may be prescribed by the board of directors or as may be
provided in these by-laws.
Section 7. Vice-presidents. The vice-president, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors or by the president, shall, in the absence or disability of the
president, act with all of the powers and be subject to all the restrictions of
the president. The vice-presidents shall also perform such other duties and
have such other powers as the board of directors, the chairman of the board,
the president or these by-laws may, from time to time, prescribe.
Section 8. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the board of directors, the president or these
by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his signature or by the signature of
such assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of
directors, shall, in the absence or disability of the secretary, perform the
duties and exercise the powers of the secretary and shall perform such other
duties and have such other powers as the board of directors, the chairman of
the board, the president, or secretary may, from time to time, prescribe.
Section 9. The Treasurer and Assistant Treasurer. The treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name
and to the credit of the corporation as may be ordered by the board of
directors; shall cause the funds of the corporation to be disbursed when such
disbursements have been duly authorized, taking proper vouchers for such
disbursements; and shall render to the president and the board of directors, at
its regular meeting or when the board of directors so requires, an account of
the corporation; shall have such powers and perform such duties as the board of
directors, the president or these by-laws may, from time to time, prescribe.
If required by the board of directors, the treasurer shall give the corporation
a bond (which shall be rendered every six (6) years) in such sums and with such
surety or sureties as shall be satisfactory to the board of directors for the
faithful performance of the duties of the office of treasurer and for the
restoration to the corporation, in case of death, resignation, retirement, or
removal from office, of all books, papers, vouchers, money, and other property
of whatever kind in the possession or under the control of the treasurer
belonging to the corporation. The assistant treasurer, or if there shall be
more than one, the assistant treasurers
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<PAGE> 8
in the order determined by the board of directors, shall in the absence or
disability of the treasurer, perform the duties and exercise the powers of the
treasurer. The assistant treasurers shall perform such other duties and have
such other powers as the board of directors, the chairman of the board, the
president or treasurer may, from time to time, prescribe.
Section 10. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such
duties as may from time to time be prescribed by resolution of the board of
directors.
Section 11. Absence or Disability of Officers. In the case of the
absence or disability of any officer of the corporation and of any person
hereby authorized to act in such officer's place during such officer's absence
or disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Nature of Indemnity. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he, or a person of
whom he is the legal representative, is or was a director or officer, of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, shall be indemnified and
held harmless by the corporation to the fullest extent which it is empowered to
do so unless prohibited from doing so by the General Corporation Law of the
State of Delaware, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said law permitted
the corporation to provide prior to such amendment) against all expense,
liability and loss (including attorneys' fees actually and reasonably incurred
by such person in connection with such proceeding) and such indemnification
shall inure to the benefit of his heirs, executors and administrators;
provided, however, that, except as provided in Section 2 hereof, the
corporation shall indemnify any such person seeking indemnification in
connection with a proceeding initiated by such person only if such proceeding
was authorized by the board of directors of the corporation. The right to
indemnification conferred in this Article V shall be a contract right and,
subject to Sections 2 and 5 hereof, shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance
of its final disposition. The corporation may, by action of its board of
directors, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors
and officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the corporation under Section 1 of
this Article V or advance of expenses
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under Section 5 of this Article V shall be made promptly, and in any event
within thirty (30) days, upon the written request of the director or officer.
If a determination by the corporation that the director or officer is entitled
to indemnification pursuant to this Article V is required, and the corporation
fails to respond within sixty (60) days to a written request for indemnity, the
corporation shall be deemed to have approved the request. If the corporation
denies a written request for indemnification or advancing of expenses, in whole
or in part, or if payment in full pursuant to such request is not made within
thirty (30) days, the right to indemnification or advances as granted by this
Article V shall be enforceable by the director or officer in any court of
competent jurisdiction. Such person's costs and expenses incurred in
connection with successfully establishing his right to indemnification, in
whole or in part, in any such action shall also be indemnified by the
corporation. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required undertaking, if any, has
been tendered to the corporation) that the claimant has not met the standards
of conduct which make it permissible under the General Corporation Law of the
State of Delaware for the corporation to indemnify the claimant for the amount
claimed, but the burden of such defense shall be on the corporation. Neither
the failure of the corporation (including its board of directors, independent
legal counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the corporation (including its board of directors, independent
legal counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or create a
presumption that the claimant has not met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by
him or her in any such capacity, whether or not the corporation would have the
power to indemnify such person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in
Section 1 of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition unless otherwise
determined by the board of directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
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Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the
corporation as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent authorized
at any time or from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and
the relevant provisions of the General Corporation Law of the State of Delaware
or other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was
a director, officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article
V with respect to the resulting or surviving corporation as he or she would
have with respect to such constituent corporation if its separate existence had
continued.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the president or a vice-president and the secretary or an assistant secretary
of the corporation, certifying the number of shares of a specific class or
series owned by such holder in the corporation. If such a certificate is
countersigned (1) by a transfer agent or an assistant transfer agent other than
the corporation or its employee or (2) by a registrar, other than the
corporation or its employee, the signature of any such president,
vice-president, secretary, or assistant secretary may be facsimiles. In case
any officer or officers who have signed, or whose facsimile signature or
signatures have been used on, any such certificate or certificates shall cease
to be such officer or officers of the corporation whether because of death,
resignation or otherwise before such certificate or certificates have been
delivered by the corporation, such certificate or certificates may nevertheless
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures have
been used thereon had not ceased to be such officer or officers of the
corporation. All certificates for shares shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the books of the corporation. Shares of stock of the corporation
shall only be transferred
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on the books of the corporation by the holder of record thereof or by such
holder's attorney duly authorized in writing, upon surrender to the corporation
of the certificate or certificates for such shares endorsed by the appropriate
person or persons, with such evidence of the authenticity of such endorsement,
transfer, authorization, and other matters as the corporation may reasonably
require, and accompanied by all necessary stock transfer stamps. In that
event, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate or certificates, and
record the transaction on its books. The board of directors may appoint a bank
or trust company organized under the laws of the United States or any state
thereof to act as its transfer agent or registrar, or both in connection with
the transfer of any class or series of securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a
bond sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any
such certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty (60) nor less
than ten (10) days before the date of such meeting. If no record date is fixed
by the board of directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be the
close of business on the next day preceding the day on which notice is given,
or if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the board of directors
may fix a new record date for the adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required
by statute, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the corporation
by delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the corporation having custody of
the book in which proceedings
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of meetings of stockholders are recorded. Delivery made to the corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. If no record date has been fixed by the board of directors
and prior action by the board of directors is required by statute, the record
date for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the day on which
the board of directors adopts the resolution taking such prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purposes of any other lawful action, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted, and which record
date shall be not more than sixty (60) days prior to such action. If no record
date is fixed, the record date for determining stockholders for any such
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
Section 7. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any
installment or call when such payment is due, the corporation may proceed to
collect the amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any
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<PAGE> 13
property of the corporation, or any other purpose and the directors may modify
or abolish any such reserve in the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a
duly authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer
or officers, or any agent or agents, of the corporation to enter into any
contract or to execute and deliver any instrument in the name of and on behalf
of the corporation, and such authority may be general or confined to specific
instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares
of stock of the corporation. Nothing in this section contained shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the
corporation at common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
any other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of record,
in person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other
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writing which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
Section 9. Section Headings. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or repeal the by-laws has been conferred upon the
board of directors shall not divest the stockholders of the same powers.
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Exhibit 3.3
ARTICLES OF INCORPORATION
OF
AERIAL PLATFORMS, INC.
The undersigned, being a natural person of the age of at least 18 years
and acting as sole incorporator to organize a corporation (the "Corporation")
under the provisions of the Georgia Business Corporation Code, does hereby
adopt and sign the following Articles of Incorporation:
I.
The name of the Corporation is: Aerial Platforms, Inc.
II.
The Corporation is organized pursuant to the provisions of the Georgia
Business Corporation Code.
III.
The period of duration of the Corporation is perpetual.
IV.
The nature of the business and the purpose to be conducted and promoted
are as follows:
To engage in renting, leasing, brokerage, buying, and selling
of construction equipment and accessories; and
To engage in any lawful act or activity for which
corporations may be incorporated under the Georgia Business
Corporation Code, and to exercise all the rights, privileges,
immunities, and authority granted to or exercised by business
corporations under the laws of the State of Georgia now in effect
or that will become effective during the existence of this
Corporation.
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<PAGE> 2
V.
The aggregate number of shares of stock which the Corporation shall have
authority to issue is Ten Thousand (10,000), all of the par value of One Cent
($.01) each. All such shares are of one class and are designated as Common
Stock.
VI.
The Corporation will not commence business until consideration of at least
Five Hundred Dollars ($500.00) has been received by the Corporation for the
issuance of shares.
VII.
None of the holders of shares of Common Stock of the Corporation shall be
entitled as a matter of right to purchase, subscribe for or otherwise acquire
any new or additional shares of stock of the Corporation of any class, or any
options or warrants to purchase, subscribe for or otherwise acquire any other
securities convertible into or carrying options or warrants to purchase,
subscribe for or otherwise acquire any such new or additional shares.
VIII.
The Corporation may from time to time make distributions to its
Shareholders out of its capital surplus, and may purchase its own shares out of
its unreserved and unrestricted capital surplus, upon such terms as the Board
of Directors shall deem appropriate.
IX.
The address of the initial registered office of the Corporation shall be:
55 Park Place, Suite 400, Atlanta, Georgia
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<PAGE> 3
30335, and the name of the initial registered agent at such address is:
Joel R. Buckberg.
X.
The initial Board of Directors shall consist of one (1) director, and the
name and address of the person is to serve as the director of the initial Board
of Directors is as follows:
Carter B. Wilson
3731 Northcrest Road
Suite 23
Atlanta, Georgia 30340
XI.
The name and address of the incorporator are as follows:
Carter B. Wilson
3731 Northcrest Road
Suite 23
Atlanta, Georgia 30340
IN WITNESS WHEREOF, the undersigned executes these Articles of
Incorporation this 27th day of February, 1984.
/S/ CARTER B. WILSON
--------------------
Carter B. Wilson, Incorporator
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<PAGE> 4
CONSENT TO APPOINTMENT AS REGISTERED AGENT
Joel R. Buckberg does hereby consent to serve as registered agent for the
corporation Aerial Platforms, Inc.
This 27th day of February, 1984.
/S/ JOEL R. BUCKBERG
--------------------
Joel R. Buckberg
Address of Registered Agent:
55 Park Place
Suite 400
Atlanta, Georgia 30335
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BYLAWS Exhibit 3.4
OF
AERIAL PLATFORMS, INC.
(A Georgia Corporation)
ARTICLE I
OFFICES
Section I.1. Principal Office. The principal office for the business of
the corporation shall be located at such place as may be fixed from time to
time by the Board of Directors.
Section I.2. Other Offices. Branch offices and places of business may be
established at any time by the Board of Directors at any place or places where
the corporation is either qualified or not required by local law to be
qualified to do business, whether within or without the State of Georgia or the
United States of America.
Section I.3. Registered Office. The registered office of the corporation
established pursuant to Section 14-2-60 of the Georgia Business Corporation
Code shall be the office named in the Articles of Incorporation and may be
changed at any time by the Board of Directors by resolution and upon the filing
of appropriate documents in the office of the Secretary of State
of Georgia.
ARTICLE II
SHAREHOLDERS
Section II.1. Certificates Representing Capital Stock. Certificates
representing shares of capital stock of the corporation shall be in such form
as shall be determined by the Board of Directors, and set forth thereon shall
be the statements prescribed by Section 14-2-87 of the Georgia Business
Corporation Code and by any other applicable provisions of law. They shall be
numbered consecutively and entered into the stock transfer books of the
corporation as they are issued. A certificate representing shares of capital
stock of the corporation shall not be issued and delivered until the full
consideration determined by the Board of Directors for the share or shares
represented by such certificate shall be fully paid to and received by the
corporation.
Section II.2. Signatures; Transfer Agent; Registrar. Each Certificate
shall be signed by the President or other chief
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executive officer or a Vice-President and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer and may be sealed with the
corporate seal or a facsimile thereof. The signature of any one or more of
such officers upon a certificate may be a facsimile if the certificate is
manually countersigned by a transfer agent or registered by a registrar other
than the corporation itself or any employee of the corporation. In case any
officer who has signed or whose facsimile signature has been placed upon a
share certificate shall have ceased for any reason to be such officer before
such certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer at the date of its issue.
The Board of Directors may from time to time appoint transfer agents and
registrars for the shares of capital stock of the corporation or any class
thereof, upon such terms and conditions as the Board of Directors deems
appropriate.
Section II.3. Stock Transfer Books. The corporation shall keep at its
registered office or its principal office or at the principal office of its
transfer agent or registrar, wherever located, with a copy at the principal
office of the corporation, a book or set of books, to be known as the stock
transfer books of the corporation, containing in alphabetical order the name of
each shareholder of record, together with his address, the number of shares of
each kind, class or series of capital stock held by him and his social security
number. The stock transfer books shall be maintained in current condition.
The stock transfer books, or the duplicate copy thereof maintained at the
principal office of the corporation, shall be available for inspection and
copying by any shareholder authorized to make such inspection pursuant to
Section 14-2-122 of the Georgia Business Corporation Code, at the sole cost of
the person desiring to make such copy. The stock transfer books may be
inspected or copied either by such shareholder or by his duly authorized
attorney or agent. The information contained in the stock transfer books and
share register may be stored on punch cards, magnetic tape, magnetic discs or
other information storage devices relating to electronic data processing
equipment, provided, that any such method, device or system employed shall be
approved by the Board of Directors, and provided further that the same is
capable of reproducing all information contained therein, in legible and
understandable form, for inspection by any shareholder or for any of the other
proper corporate purpose.
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Section II.4. Replacement Certificate. The corporation may issue a new
certificate for its shares in place of any certificate theretofore issued
alleged by its owner of record or his authorized representative to have been
lost, stolen or destroyed if the corporation, transfer agent or registrar is
not on notice that such certificate has been acquired by a bona fide purchaser.
There may be issued a replacement certificate upon such owner's or
representative's compliance with all of the following conditions: (a) he shall
file with the Secretary of the corporation and the transfer agent or the
registrar, if any, his request for the issuance of a new certificate, together
with an affidavit in form satisfactory to the Secretary and transfer agent or
registrar, if any, setting forth the time, place, and circumstances of the
loss; (b) he shall also file with the Secretary and the transfer agent or the
registrar, if any, a bond with good and sufficient security acceptable to the
Secretary and the transfer agent or the registrar, if any, conditioned to
indemnify and save harmless the corporation and the transfer agent or the
registrar, if any, from any and all damage, liability and expense of every
nature whatsoever resulting from the corporation's or the transfer agent's or
the registrar's issuing a new certificate in place of the one alleged to have
been lost, stolen or destroyed; and (c) he shall comply with such other
reasonable requirements as the Chairman of the Board, the President, the
Secretary or the Board of the Directors of the corporation, and the transfer
agent or the registrar shall deem appropriate under the circumstances. A new
certificate may be issued in lieu of any certificate previously issued that may
be defaced or mutilated upon surrender for cancellation of a part of the old
certificate sufficient in the opinion of the Secretary and the transfer agent
or the registrar to identify the owner of the defaced or mutilated certificate,
the number of shares represented thereby, the number of the certificate and its
authenticity, and to protect the corporation and the transfer agent or the
registrar against loss or liability. Where sufficient identification for such
defaced or mutilated certificate is lacking, a new certificate may be issued
upon compliance with all of the conditions set forth in this Section in
connection with the replacement of lost, stolen or destroyed certificates.
Section II.5. Fractional Share Interests. The corporation may, but shall
not be obliged to, issue certificates for fractional shares in order to effect
share transfers, share distributions or reclassifications, mergers,
consolidations or reorganizations which shall entitle the holder, in proportion
to his fractional holdings, to exercise voting rights, receive dividends
thereon, and to
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participate in distribution of any of the assets of the corporation in the
event of liquidation; or it may pay in cash the fair value of fractional shares
as determined by the Board of Directors as of a time fixed by the Board of
Directors; or it may issue scrip in registered or bearer form over the manual
or facsimile signature of an officer of the corporation or of its transfer
agent or registrar, exchangeable as therein provided for full shares, but such
scrip shall not entitle the holder to any rights of a shareholder except as
therein provided.
Section II.6. Share Transfers and Registration. Upon compliance with
provisions restricting the transferability of shares, if any, transfers of
capital stock of the corporation by the registered holder thereof shall be
recorded on the stock transfer books of the corporation only upon the request
of such registered holder, or by his attorney authorized to effect such
transfers by power of attorney duly executed and filed with the Secretary of
the corporation or with a transfer agent or registrar, if any, and upon
surrender of the certificate or certificates for such shares properly endorsed
for transfer, accompanied by such assurances as the corporation, or such
transfer agent or registrar, may require as to the genuineness and
effectiveness of each necessary endorsement and satisfactory evidence of
compliance with all applicable laws relating to securities transfers and the
collection of taxes. It shall be the duty of the corporation, or such transfer
agent or registrar to issue a new certificate, cancel the old certificate and
record the transactions upon the stock transfer books of the corporation.
Section II.7. Registered Shareholders. Except as otherwise required by
law, the corporation shall be entitled to treat the person registered in the
stock transfer books as the owner of shares of capital stock of the corporation
as the person exclusively entitled to receive notification, dividends and
distributions, to vote and to otherwise exercise the rights, powers and
privileges of ownership of such capital stock, and shall not be required to
recognize any adverse claim.
Section II.8. Record Date. For the purposes of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend or
distribution or to express consent to or dissent from any proposal without a
meeting, or in order to make a determination of shareholders for any other
proper purpose, the Board of Directors may provide that the stock transfer
books shall
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<PAGE> 5
be closed for a stated period but not to exceed, in any case, fifty days. If
the stock transfer books shall be closed for the purpose of determining
shareholders entitled to notice or to vote at a meeting of shareholders or to
express consent to or dissent from any proposal without a meeting, such books
shall be closed for at least ten days immediately preceding such meeting or
action. In lieu of closing the stock transfer books the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than fifty days and, in case
of a meeting of shareholders, not less than ten days prior to the date on which
the particular action requiring such determination of shareholders is to be
taken. If the stock transfer books are not closed, and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting, or to express consent to or dissent from any proposal without a
meeting, or shareholders entitled to receive payment of a distribution, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such distribution is adopted, as
the case may be, shall be the record date for such determination of
shareholders. When a
determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided herein, such determination shall apply to any
adjournment thereof, unless the Board of Directors shall fix a new record date
for the adjourned meeting.
ARTICLE III
SHAREHOLDERS MEETINGS
Section III.1. Definitions. As used in these Bylaws in respect of the
right to notice of a meeting of shareholders or a waiver thereof or to
participate or vote thereat or to consent or dissent in writing in lieu of a
meeting, as the case may be, the term "share" or "shares" or "shareholder" or
"shareholders" refers to an outstanding share or shares of capital stock of the
corporation and to a holder or holders of record of outstanding shares of
capital stock of the corporation when the corporation is authorized to issue
only one class of shares, and said reference is also intended to include any
outstanding share or shares and any holder or holders of record of outstanding
shares of any class upon which or upon whom the Articles of Incorporation
confer such governance rights where there are two or more classes or series of
shares or upon which or upon whom the Georgia Business Corporation Code confers
such governance rights notwithstanding that the Articles of Incorporation may
provide for more than one class or
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series of shares, one or more of which are limited or denied such rights
thereunder.
Section III.2. Meetings.
(a) Time. The Annual Meeting shall be held each fiscal year on the date
designated, from time to time, by the Board of Directors. If at any time the
Board of Directors shall fail to otherwise designate the date of an Annual
Meeting, then, and in that event, such Annual Meeting shall be held at 10:00
A.M., local time, on the second Tuesday of the fourth month following the end
of the fiscal year of the corporation, or, if such day is a legal holiday, the
next following business day. A special meeting shall be held on the date and
at the time designated by the person or persons calling such special meeting.
(b) Place. Annual Meetings and special meetings, including any special
meeting in lieu of an Annual Meeting, shall be held at such place, within or
without the State of Georgia, as the Board of Directors may, from time to time,
designate. Whenever the Board of Directors shall fail to designate such place,
the meeting shall be held at the registered office of the corporation in the
State of Georgia.
(c) Call. Annual Meetings may be called by the Board of Directors, by the
Chairman of the Board, if any, the President, the Secretary, or by any officer
instructed by the directors to call the meeting. Special meetings, including
any special meeting in lieu of an annual meeting, may be called in like manner,
except that any such meeting shall be called by the corporation upon the
written request of the holders of not less than twenty-five percent of the
outstanding shares entitled to vote in an election of directors.
Section III.3. Notice or Waiver of Notice. Written notice stating the
place, day, and hour of each meeting, and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be delivered not
less than ten days (or not less than any other such minimum period of days as
may be prescribed by the Georgia Business Corporation Code) nor more than fifty
days before the date of the meeting, either personally or by first class mail
by or at the direction of the President, the Secretary or the officer or
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States
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mail with first class postage thereon prepaid, addressed to the shareholder at
his address as it appears on the stock transfer books of the corporation. At
an Annual Meeting of shareholders, any matter relating to the affairs of the
corporation, whether or not stated in the notice of the meeting, may be brought
up for action except matters which the Georgia Business Corporation Code
requires to be stated in the notice of the meeting. The notice of any annual
or special meeting shall also include, or be accompanied by, any additional
statements, information, or documents prescribed by the Georgia Business
Corporation Code. When a meeting is adjourned to another time or place, it
shall not be necessary to give any notice of the adjourned meeting if the date,
time and place of the adjourned meeting are announced at the meeting at which
the adjournment is taken, and at the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
If, however, after the adjournment the Board of Directors fixes a new record
date for the adjourned meeting, a notice of the adjourned meeting shall be
given to each shareholder on the new record date. Notice of a meeting of
shareholders may be waived by any shareholder who signs a waiver of notice
either before or after the meeting except as provided in Section 14-2-113 of
the Georgia Business Corporation Code. Neither the business transacted nor the
purpose of the meeting need be specified in the waiver. Attendance of a
shareholder at a meeting in person or by proxy shall of itself constitute
waiver of notice and waiver of any and all objections to the place of the
meeting, the time of the meeting, or the manner in which it has been called or
convened, except when a shareholder attends a meeting solely for the purpose of
stating, at the beginning of the meeting, any objection or objections to the
transaction of business at such meeting. Any shareholder may participate in a
meeting or any adjournment of a meeting of shareholders by means of conference
telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other; such participation shall
constitute presence in person at such meeting.
Section III.4. Voting List. The officer or agent having charge of the
stock transfer books for shares of the capital stock of the corporation shall
make a complete list of the shareholders entitled to vote at the meeting of
shareholders or any adjournment thereof, arranged in alphabetical order, with
the address of and the number and class and series, if any, of shares held by
each. Such list shall be produced and kept open at the time and place of the
meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting for the purposes
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thereof. Such list shall be prima facie evidence of who is a shareholder of
record, but, in the event of challenge, the stock transfer books and record of
shareholders shall control. Notwithstanding the foregoing, it shall not be
necessary to prepare or produce a list of shareholders in any case where the
record of shareholders of the stock transfer books is presented and readily
shows, in alphabetical order or by alphabetical index, and by classes or
series, if any, the names and addresses of the shareholders entitled to vote,
and the number of shares held by each.
Section III.5. Conduct of Meeting. Meetings of the shareholders shall be
presided over by one of the following officers in the order of seniority and if
present and acting -the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, the President, a Vice-President, or, if none of the foregoing is
in office and present and acting, by a chairman of the meeting to be chosen by
the shareholders. The Secretary of the Corporation, or in his absence, an
Assistant Secretary, shall act as secretary of every meeting, but, if neither
the Secretary nor an Assistant Secretary is present, the chairman of the
meeting shall appoint a secretary of the meeting.
Section III.6. Proxy Representation. Any shareholder who is entitled to
attend a shareholders' meeting, to vote thereat, or to execute consents,
dissents, waivers, or releases, may be represented at such meeting or vote
thereat, and execute consents, dissents, waivers, and releases, and exercise
any of his other rights, by one or more agents, who may be either an individual
or individuals or any domestic or foreign corporation, authorized by a written
proxy executed by such person or by his attorney-in-fact. A telegram, telex or
cablegram transmitted by a shareholder shall be deemed a written proxy. No
proxy shall be valid after the expiration of eleven months from the date
thereof unless otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the person executing it, except as otherwise provided by the
Georgia Business Corporation Code. If a proxy expressly provides, any proxy
holder may appoint in writing a substitute to act in his place.
Section III.7. Inspectors. The Board of Directors, in advance of any
meeting, may, but need not, appoint one or more election inspectors to act at
the meeting or any adjournment thereof. If an inspector or inspectors are not
appointed, the person presiding at the meeting may, but need not appoint one or
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more election inspectors. An inspector shall be appointed at the request of
the holders of more than twenty-five percent of outstanding shares of capital
stock of the corporation entitled to vote at the meeting if such request is
made prior to the time the meeting commences. In case any person who may be
appointed as an inspector fails to appear or act, the vacancy may be filled by
appointment made by the Board of Directors in advance of the meeting or at the
meeting by the person presiding thereat. Each inspector, if any, before
entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a quorum, the validity
and effect of proxies, and shall receive votes, ballots, or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all shareholders. On request of the person presiding at the meeting or any
shareholder, the inspector or inspectors, if any, shall make a report in
writing of any challenge, question or matter determined by him or them and
execute a certificate of any fact found by him or them.
Section III.8. Quorum; Voting. A majority of the outstanding shares
entitled to vote shall constitute a quorum at a meeting of shareholders for the
transaction of any business. When a quorum is once present to organize a
meeting, the shareholders present may continue to do business at the meeting or
at any adjournment thereof notwithstanding the withdrawal of enough
shareholders to leave less than a quorum. The holders of a majority of the
shares represented at a meeting, whether or not a quorum is present, may
adjourn such meeting from time to time. Each share shall entitle the holder
thereof to one vote. The affirmative vote of the majority of the shares
represented at the meeting entitled to act on the subject matter, a quorum
being present, shall be the act of the shareholders, unless the vote of a
greater number or voting by classes or series is required by the Georgia
Business Corporation Code, the Articles of Incorporation or these Bylaws.
Section III.9. Shareholder Action Without Meetings. Subject to the
provisions of Section 14-2-112 of the Georgia Business Corporation Code,
whenever shareholders are required to or may take any action by vote at a
meeting of shareholders, such action may be
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taken without a meeting by unanimous written consent, setting forth the action
so taken, signed by the holders of all shares entitled to vote with respect to
the subject matter thereof. Such consent shall have the same force and effect
as a unanimous vote of the shareholders and shall be filed with the Secretary
and recorded in the proceedings of the Corporation.
ARTICLE IV
BOARD OF DIRECTORS
Section IV.1. Functions and Definitions. The business and affairs of the
corporation shall be managed by a board of directors, which is herein referred
to as the "Board of Directors," "Board" or "directors" notwithstanding that
only one director may legally constitute the Board. The use of the phrase
"entire Board" or "full Board" in these Bylaws refers to the total number of
directors which the corporation would have if there were no vacancies.
Section IV.2. Qualifications and Number. Each director shall be at least
eighteen (18) years of age. A director need not be a shareholder, a citizen of
the United States, or a resident of the State of Georgia. The initial Board of
Directors shall consist of the number of directors stated in the Articles of
Incorporation. Thereafter, the number of directors constituting the entire
Board shall be one, so long as at least fifty-one percent (51%) of the
outstanding shares are owned beneficially and of record by one shareholder.
otherwise, the number of directors shall be the minimum required by law.
Subject to the foregoing limitation, such number may be fixed from time to time
and new directorships may be created from time to time, by amendments to these
Bylaws or by resolution duly adopted by the shareholders, or, if the number is
not so fixed, the number shall be the number of directors stated in the
Articles of Incorporation. No decrease in the number of directors shall have
the effect of shortening the term of any incumbent director.
Section IV.3. Election and Term. The initial Board of Directors shall consist
of the persons named in the Articles of Incorporation to constitute said
initial Board of Directors and shall hold office until the first Annual Meeting
of shareholders and until their successors have been elected and qualified, or
until their earlier resignation, removal from office, or death. Thereafter,
directors who are elected at an Annual Meeting
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Exhibit 3.5
CERTIFICATE OF INCORPORATION
OF
NES ACQUISITION CORP.
ARTICLE ONE
The name of the corporation is NES Acquisition Corp.
ARTICLE TWO
The address of the corporation's registered office in the State of
Delaware is 1013 Centre Road, in the City of Wilmington, County of
New Castle, 19805. The name of its registered agent at such address is
Corporation Service Company.
ARTICLE THREE
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
The total number of shares of stock which the corporation has authority
to issue is 1,000 shares of Common Stock, with a par value of $.01 per share.
ARTICLE FIVE
The name and mailing address of the sole incorporator are as follows:
NAME MAILING ADDRESS
--------------- -----------------------
Joan D. Donovan 200 East Randolph Drive
Suite 5700
Chicago, Illinois 60601
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ARTICLE SIX
The corporation is to have perpetual existence.
ARTICLE SEVEN
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the corporation is expressly authorized to make,
alter or repeal the by-laws of the corporation.
ARTICLE EIGHT
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places
as may be designated from time to time by the board of directors or in the
by-laws of the corporation. Election of directors need not be by written
ballot unless the by-laws of the corporation so provide.
ARTICLE NINE
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE TEN
The corporation expressly elects not to be governed by Section 203 of the
General Corporation Law of the State of Delaware.
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<PAGE> 3
ARTICLE ELEVEN
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation in the manner now or
hereafter prescribed herein and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts stated herein are true,
and accordingly have hereunto set my hand on the 27th day of September, 1996.
/S/ JOAN D. DONOVAN
-----------------------------------
Joan D. Donovan, Sole Incorporator
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<PAGE> 1
Exhibit 3.6
BY-LAWS
OF
NES ACQUISITION CORP.
A Delaware Corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
in the State of Delaware shall be located at 1013 Centre Road, in the City of
Wilmington, Delaware, County of New Castle. The name of the Corporation's
registered agent at such address shall be Corporation Service Company. The
registered office and/or registered agent of the Corporation may be changed
from time to time by action of the board of directors.
Section 2. Other Offices. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year within one hundred eighty (180) days after
the close of the immediately preceding fiscal year of the Corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting. The date, time and place of the annual meeting shall
be determined by the Chief Executive Officer of the Corporation; provided, that
if the Chief Executive Officer does not act, the board of directors shall
determine the date, time and place of such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose and may be held at such time and place, within or
without the State of Delaware, as shall be stated in a notice of meeting or in
a duly executed waiver of notice thereof. Such meetings may be called at any
time by the board of directors or the Chief Executive Officer and shall be
called by the Chief Executive Officer upon the written request of holders of
shares entitled to cast not less than fifty percent of the votes at the
meeting. Such written request shall state the purpose or purposes of the
meeting and shall be delivered to the Chief Executive Officer. On such written
request, the Chief Executive Officer shall fix a date and time for such meeting
within two days of the date requested for such meeting in such written request.
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<PAGE> 2
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
Corporation.
Section 4. Notice. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting
not less than ten (10) nor more than sixty (60) days before the date of the
meeting. All such notices shall be delivered, either personally or by mail, by
or at the direction of the board of directors, the Chief Executive Officer, the
President or the Secretary, and if mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, postage prepaid, addressed
to the stockholder at his, her or its address as the same appears on the
records of the Corporation. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends
for the express purpose of objecting at the beginning of the meeting to the
transaction of any business because the meeting is not lawfully called or
convened.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the Corporation shall make, at least ten (10) days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten (10) days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting or, if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares
of capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present,
the holders of a majority of the shares present in person or represented by
proxy at the meeting, and entitled to vote at the meeting, may adjourn the
meeting to another time and/or place. When a quorum is once present to
commence a meeting of stockholders, it is not broken by the subsequent
withdrawal of any stockholders or their proxies. When a quorum is once present
to commence a meeting of stockholders, it is not broken by the subsequent
withdrawal of any stockholder or their proxies.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the Corporation may transact any business
which might have been transacted at the
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<PAGE> 3
original meeting. If the adjournment is for more than thirty (30) days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the Corporation or any amendments thereto and subject to Section 3 of
Article VI hereof, every stockholder shall at every meeting of the stockholders
be entitled to one vote in person or by proxy for each share of common stock
held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. At each meeting
of the stockholders, and before any voting commences, all proxies filed at or
before the meeting shall be submitted to and examined by the Secretary or a
person designated by the Secretary, and no shares may be represented or voted
under a proxy that has been found to be invalid or irregular. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally. Any proxy is suspended when the person
executing the proxy is present at a meeting of stockholders and elects to vote,
except that when such proxy is coupled with an interest and the fact of the
interest appears on the face of the proxy, the agent named in the proxy shall
have all voting and other rights referred to in the proxy, notwithstanding the
presence of the person executing the proxy.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the Corporation or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the Corporation by delivery to its registered office in
the state of Delaware, or the Corporation's principal place of business, or an
officer or agent of the Corporation having custody of the book or books in
which proceedings of meetings of the stockholders are
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<PAGE> 4
recorded. Delivery made to the Corporation's registered office shall be
by hand or by certified or registered mail, return receipt requested. All
consents properly delivered in accordance with this section shall be deemed to
be recorded when so delivered. No written consent shall be effective to take
the corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered to the Corporation as required by this
section, written consents signed by the holders of a sufficient number of
shares to take such corporate action are so recorded. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
Any action taken pursuant to such written consent or consents of the
stockholders shall have the same force and effect as if taken by the
stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the Corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the first board shall be three (3). Thereafter, the
number of directors shall be established from time to time by resolution of the
board. The directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote in the election of directors. The directors shall be elected in this
manner at the annual meeting of the stockholders, except as provided in Section
4 of this Article III. Each director elected shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of
a majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the Corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole.
Section 4. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the shares then entitled to vote at an election of directors.
Each director so chosen shall hold office until a successor is duly elected and
qualified or until his or her earlier death, resignation or removal as herein
provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of
stockholders.
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Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution
of the board. Special meetings of the board of directors may be called by or
at the request of the Chief Executive Officer on at least twenty-four (24)
hours notice to each director, either personally, by telephone, by mail, or by
telegraph; in like manner and on like notice the Chief Executive Officer must
call a special meeting on the written request of at least one of the directors.
Section 7. Quorum, Required Vote and Adjournment. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the board of directors. If a quorum
shall not be present at any meeting of the board of directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed
by a majority of the whole board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation, which
to the extent provided in such resolution or these By-laws shall have and may
exercise the powers of the board of directors in the management and affairs of
the Corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors. Each
committee shall keep regular minutes of its meetings and report the same to the
board of directors when required.
Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent
or disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such
board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of
the board of directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except
when such member attends for the express purpose of objecting at the beginning
of the meeting to the
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transaction of any business because the meeting is not lawfully called or
convened. Such member shall be conclusively presumed to have assented to any
action taken unless his or her dissent shall be entered in the minutes of the
meeting or unless his or her written dissent to such action shall be filed with
the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by
the certificate of incorporation, any action required or permitted to be taken
at any meeting of the board of directors, or of any committee thereof, may be
taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be elected by
the board of directors and shall consist of a Chief Executive Officer, a
President, a Chief Financial Officer, one or more Vice-Presidents, a
Treasurers, a Secretary, and such other officers and assistant officers as may
be deemed necessary or desirable by the board of directors. Any number of
offices may be held by the same person. In its discretion, the board of
directors may choose not to fill any office for any period as it may deem
advisable, except that the offices of Chief Executive Officer and President
shall be filled as expeditiously as possible.
Section 2. Election and Term of Office. The officers of the Corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. Vacancies may be filled or new offices created and filled at any
meeting of the board of directors. Each officer shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the Corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by
the board of directors for the unexpired portion of the term by the board of
directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
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Section 6. Chief Executive Officer. The Chief Executive Officer shall,
subject to the powers of the board of directors, be in the general and active
charge of the entire business and affairs of the corporation, and shall be its
chief policy making officer. He or she shall preside at all meetings of the
board of directors and stockholders and shall have such other powers and
perform such other duties as may be prescribed by the board of directors or
provided in these By-laws. Whenever the President is unable to serve, by
reason of sickness, absence or otherwise, the Chief Executive Officer shall
perform all the duties and responsibilities and exercise all the powers of the
President.
Section 7. President. The President of the Corporation, subject to the
powers of the board of directors and the Chief Executive Officer, shall have
general charge of the business affairs and property of the Corporation, and
control over its officers, agents and employees, and shall see that all orders
and resolutions of the board of directors are carried into effect. The
President shall execute bonds, mortgages and other contracts requiring a seal,
under the seal of the Corporation, except where required or permitted by law to
be otherwise signed and executed or except where the signing and execution
thereof shall be expressly delegated by the board of directors to some other
officer or agent of the Corporation. The President shall have such other
powers and perform such other duties as may be prescribed by the Chief
Executive Officer, the board of directors or as may be provided in these
By-laws.
Section 8. Chief Financial Officer. The Chief Financial Officer of the
Corporation shall, under the direction of the Chief Executive Officer, be
responsible for all financial and accounting matters of the Corporation. The
Chief Financial Officer shall have such other powers and perform such other
duties as may be prescribed by the Chief Executive Officer or the board of
directors or as may be provided in these By-laws.
Section 9. Vice-Presidents. The Vice-President, or if there shall be
more than one, the Vice-Presidents in the order determined by the board of
directors, shall, in the absence or disability of the President, act with all
of the powers and be subject to all the restrictions of the President. The
Vice-Presidents shall also perform such other duties and have such other powers
as the board of directors, the Chief Executive Officer or these By-laws may,
from time to time, prescribe.
Section 10. The Secretary and Assistant Secretaries. The Secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the Chief
Executive Officer's supervision, the Secretary shall give, or cause to be
given, all notices required to be given by these By-laws or by law; shall have
such powers and perform such duties as the board of directors, the Chief
Executive Officer or these By-laws may, from time to time, prescribe; and shall
have custody of the corporate seal of the Corporation. The Secretary, or an
Assistant Secretary, shall have authority to affix the corporate seal to any
instrument requiring it and when so affixed, it may be attested by his or her
signature or by the signature of such Assistant Secretary. The board of
directors may give general authority to any other officer to affix the seal of
the Corporation and to attest the affixing by his or her signature. The
Assistant Secretary, or if there be more than one, the Assistant Secretaries
in the order determined
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by the board of directors, shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary and
shall perform such other duties and have such other powers as the board of
directors, the Chief Executive Officer or the Secretary may, from time to time,
prescribe.
Section 11. The Treasurer and Assistant Treasurer. The Treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation; shall deposit all monies and other valuable effects in the name
and to the credit of the Corporation as may be ordered by the board of
directors; shall cause the funds of the Corporation to be disbursed when such
disbursements have been duly authorized, taking proper vouchers for such
disbursements; and shall render to the Chief Executive Officer and the board of
directors, at its regular meeting or when the board of directors so requires,
an account of the Corporation; shall have such powers and perform such duties
as the board of directors, the Chief Executive Officer or these By-laws may,
from time to time, prescribe. If required by the board of directors, the
Treasurer shall give the Corporation a bond (which shall be rendered every six
(6) years) in such sums and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of the office of Treasurer and for the restoration to the Corporation,
in case of death, resignation, retirement, or removal from office, of all
books, papers, vouchers, money, and other property of whatever kind in the
possession or under the control of the Treasurer belonging to the Corporation.
The Assistant Treasurer, or if there shall be more than one, the Assistant
Treasurers in the order determined by the board of directors, shall in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer. The Assistant Treasurers shall perform such other
duties and have such other powers as the board of directors, the and Chief
Executive Officer or Treasurer may, from time to time, prescribe.
Section 12. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these By-laws, shall have such authority and perform such
duties as may from time to time be prescribed by resolution of the board of
directors.
Section 12. Absence or Disability of Officers. In the case of the
absence or disability of any officer of the Corporation and of any person
hereby authorized to act in such officer's place during such officer's absence
or disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Nature of Indemnity. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the
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fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer, of the Corporation or is or
was serving at the request of the Corporation as a director, officer, employee,
fiduciary, or agent of another Corporation or of a partnership, joint venture,
trust or other enterprise, shall be indemnified and held harmless by the
Corporation to the fullest extent which it is empowered to do so unless
prohibited from doing so by the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended (but, in the case of
any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment) against all expense,
liability and loss (including attorneys' fees actually and reasonably incurred
by such person in connection with such proceeding) and such indemnification
shall inure to the benefit of his or her heirs, executors and administrators;
provided, however, that, except as provided in Section 2 hereof, the
Corporation shall indemnify any such person seeking indemnification in
connection with a proceeding initiated by such person only if such proceeding
was authorized by the board of directors of the Corporation. The right to
indemnification conferred in this Article V shall be a contract right and,
subject to Sections 2 and 5 hereof, shall include the right to be paid by the
Corporation the expenses incurred in defending any such proceeding in advance
of its final disposition. The Corporation may, by action of its board of
directors, provide indemnification to employees and agents of the Corporation
with the same scope and effect as the foregoing indemnification of directors
and officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the Corporation under Section 1 of
this Article V or advance of expenses under Section 5 of this Article V shall
be made promptly, and in any event within thirty (30) days, upon the written
request of the director or officer. If a determination by the Corporation that
the director or officer is entitled to indemnification pursuant to this Article
V is required, and the Corporation fails to respond within sixty (60) days to a
written request for indemnity, the Corporation shall be deemed to have approved
the request. If the Corporation denies a written request for indemnification
or advancing of expenses, in whole or in part, or if payment in full pursuant
to such request is not made within thirty (30) days, the right to
indemnification or advances as granted by this Article V shall be enforceable
by the director or officer in any court of competent jurisdiction. Such
person's costs and expenses incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in any
such action shall also be indemnified by the Corporation. It shall be a
defense to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the
burden of such defense shall be on the Corporation. Neither the failure of the
Corporation (including its board of directors, independent legal counsel, or
its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination
by the Corporation (including its board of directors, independent legal
counsel, or its stockholders)
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<PAGE> 10
that the claimant has not met such applicable standard of conduct, shall
be a defense to the action or create a presumption that the claimant has not
met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the Corporation or was
serving at the request of the Corporation as a director, officer, employee or
agent of another Corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by
him or her in any such capacity, whether or not the Corporation would have the
power to indemnify such person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in
Section 1 of this Article V in defending a proceeding shall be paid by the
Corporation in advance of such proceeding's final disposition unless otherwise
determined by the board of directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the Corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the Corporation, or who are or were serving at the request of the
Corporation as employees or agents of another Corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent authorized
at any time or from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the Corporation and each director or
officer who serves in any such capacity at any time while this Article V and
the relevant provisions of the General Corporation Law of the State of Delaware
or other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the Corporation" shall include, in addition to the resulting
Corporation, any constituent Corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was
a director, officer, employee or agent of such constituent Corporation, or is
or was
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<PAGE> 11
serving at the request of such constituent Corporation as a director,
officer, employee or agent of another Corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article
V with respect to the resulting or surviving Corporation as he or she would
have with respect to such constituent Corporation if its separate existence had
continued.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the Corporation shall be
entitled to have a certificate, signed by, or in the name of the Corporation by
the Chief Executive Officer, the President, the Chief Financial Officer or a
Vice-President and the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by such holder in the Corporation. If
such a certificate is countersigned (1) by a transfer agent or an assistant
transfer agent other than the Corporation or its employee or (2) by a
registrar, other than the Corporation or its employee, the signature of any
such Chief Executive Officer, President, Chief Financial Officer,
Vice-President, Secretary, or Assistant Secretary may be facsimiles. In case
any officer or officers who have signed, or whose facsimile signature or
signatures have been used on, any such certificate or certificates shall cease
to be such officer or officers of the Corporation whether because of death,
resignation or otherwise before such certificate or certificates have been
delivered by the Corporation, such certificate or certificates may nevertheless
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures have
been used thereon had not ceased to be such officer or officers of the
Corporation. All certificates for shares shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the books of the Corporation. Shares of stock of the Corporation
shall only be transferred on the books of the Corporation by the holder of
record thereof or by such holder's attorney duly authorized in writing, upon
surrender to the Corporation of the certificate or certificates for such shares
endorsed by the appropriate person or persons, with such evidence of the
authenticity of such endorsement, transfer, authorization, and other matters as
the Corporation may reasonably require, and accompanied by all necessary stock
transfer stamps. In that event, it shall be the duty of the Corporation to
issue a new certificate to the person entitled thereto, cancel the old
certificate or certificates, and record the transaction on its books. The
board of directors may appoint a bank or trust company organized under the laws
of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the Corporation.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the Corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of
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such lost, stolen, or destroyed certificate or certificates, or his or her
legal representative, to give the Corporation a bond sufficient to indemnify
the Corporation against any claim that may be made against the Corporation on
account of the loss, theft or destruction of any such certificate or the
issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the Corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty (60) nor less
than ten (10) days before the date of such meeting. If no record date is fixed
by the board of directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be the
close of business on the next day preceding the day on which notice is given,
or if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the board of directors
may fix a new record date for the adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
that the Corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten (10) days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required
by statute, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the Corporation
by delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the Corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the Corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of directors
is required by statute, the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting shall be at the
close of business on the day on which the board of directors adopts the
resolution taking such prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
Corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purposes of any other lawful action, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted, and which record
date shall be not more than sixty (60) days prior to such action. If no record
date is fixed, the record date for determining stockholders for any such
purpose shall be at the
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close of business on the day on which the board of directors adopts the
resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
Corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the Corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The Corporation shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof.
Section 7. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any
installment or call when such payment is due, the Corporation may proceed to
collect the amount due in the same manner as any debt due the Corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
Corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of
any funds of the Corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the Corporation and all notes and other
evidences of indebtedness issued in the name of the Corporation shall be signed
by such officer or officers, agent or agents of the Corporation, and in such
manner, as shall be determined by resolution of the board of directors or a
duly authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer
or officers, or any agent or agents, of the Corporation to enter into any
contract or to execute and deliver any instrument in the name of and on behalf
of the Corporation, and such authority may be general or confined to specific
instances.
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Section 4. Loans. The Corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
Corporation or of its subsidiary, including any officer or employee who is a
director of the Corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the Corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares
of stock of the Corporation. Nothing in this section contained shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the
Corporation at common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the Corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
any other corporation held by the Corporation shall be voted by the Chief
Executive Officer, unless the board of directors specifically confers authority
to vote with respect thereto, which authority may be general or confined to
specific instances, upon some other person or officer. Any person authorized
to vote securities shall have the power to appoint proxies, with general power
of substitution.
Section 8. Inspection of Books and Records. Any stockholder of record,
in person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the Corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the Corporation at its
registered office in the State of Delaware or at its principal place of
business.
Section 9. Section Headings. Section headings in these By-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these By-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these By-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
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ARTICLE VIII
AMENDMENTS
These By-laws may be amended, altered, or repealed and new By-laws adopted
at any meeting of the stockholders by a majority vote.
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Exhibit 3.7
CERTIFICATE OF INCORPORATION
OF
BAT ACQUISITION CORP.
ARTICLE ONE
The name of the corporation is BAT Acquisition Corp.
ARTICLE TWO
The address of the corporation's registered office in the State of
Delaware is 1013 Centre Road, in the City of Wilmington, County of New Castle
19805. The name of its registered agent at such address is Corporation Service
Company.
ARTICLE THREE
The nature of the business or the purpose to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
The total number of shares of stock which the corporation has authority to
issue is 1,000 shares of Common Stock, with a par value of $.01 per share.
ARTICLE FIVE
The name and mailing address of the sole incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
Joan D. Donovan 200 East Randolph Drive
Suite 5700
Chicago, Illinois 60601
<PAGE> 2
ARTICLE SIX
The corporation is to have perpetual existence.
ARTICLE SEVEN
In furtherance and not in limitation of the powers conferred by statute,
the board of directors of the corporation is expressly authorized to make,
alter or repeal the by-laws of the corporation.
ARTICLE EIGHT
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws of the corporation may provide. The books of the
corporation may be kept outside the State of Delaware at such place or places
as may be designated from time to time by the board of directors or in the
by-laws of the corporation. Election of directors need not be by written
ballot unless the by-laws of the corporation so provide.
ARTICLE NINE
To the fullest extent permitted by the General Corporation Law of the
State of Delaware as the same exists or may hereafter be amended, a director of
this corporation shall not be liable to the corporation or its stockholders for
monetary damages for a breach of fiduciary duty as a director. Any repeal or
modification of this ARTICLE NINE shall not adversely affect any right or
protection of a director of the corporation existing at the time of such repeal
or modification.
ARTICLE TEN
The corporation expressly elects not to be governed by Section 203 of the
General Corporation Law of the State of Delaware.
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<PAGE> 3
ARTICLE ELEVEN
The corporation reserves the right to amend, alter, change or repeal any
provision contained in this certificate of incorporation in the manner now or
hereafter prescribed herein, by the unanimous written consent of the board of
directors of the corporation and by the laws of the State of Delaware, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore named, for
the purpose of forming a corporation pursuant to the General Corporation Law of
the State of Delaware, do make this certificate, hereby declaring and
certifying that this is my act and deed and the facts stated herein are true,
and accordingly have hereunto set my hand on the 31st day of January, 1997.
/S/ JOAN D. DONOVAN
----------------------------------
Joan D. Donovan, Sole Incorporator
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<PAGE> 1
Exhibit 3.8
BY-LAWS
OF
BAT ACQUISITION CORP.
A Delaware Corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be located at 1013 Centre Road, in the city of
Wilmington, County of New Castle. The name of the corporation's registered
agent at such address shall be Corporation Service Company.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. The date, time and place of the
annual meeting shall be determined by the president and chief executive officer
of the corporation; provided, that if the president and chief executive officer
does not act, the board of directors shall determine the date, time and place
of such meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
called for any purpose (including, without limitation, the filling of board
vacancies and newly created directorships) and may be held at such time and
place, within or without the State of Delaware, as shall be stated in a notice
of meeting or in a duly executed waiver of notice thereof. Such meetings may
be called at any time by the board of directors or the president and chief
executive officer and shall be called by the president and chief executive
officer upon the written request of holders of shares entitled to cast not less
than 51% percent of the votes at the meeting, or by the written request of the
holders of not less than 51% of the outstanding shares of any series or class
of the Corporation's stock. Such written request shall state the purpose or
purposes of the meeting and shall be delivered to the president and chief
executive officer. On such written request, the president and chief executive
officer shall fix a date and time for such meeting within two (2) days of the
date requested for such meeting in such written request. A special meeting
shall in any event be held within (10) days of the creation of a board vacancy
or new directorship.
<PAGE> 2
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
Section 4. Notice. Whenever stockholders are required or permitted to
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special meetings, the purpose or purposes, of such
meeting, shall be given to each stockholder entitled to vote at such meeting
not less than 10 nor more than 60 days before the date of the meeting. All
such notices shall be delivered, either personally or by mail, by or at the
direction of the board of directors, the president and chief executive officer
or the secretary, and if mailed, such notice shall be deemed to be delivered
when deposited in the United States mail, postage prepaid, addressed to the
stockholder at his, her or its address as the same appears on the records of
the corporation. Attendance of a person at a meeting shall constitute a waiver
of notice of such meeting, except when the person attends for the express
purpose of objecting at the beginning of the meeting to the transaction of any
business because the meeting is not lawfully called or convened.
Section 5. Stockholders List. The officer having charge of the stock
ledger of the corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares of
capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the certificate of incorporation. If a quorum is not present,
the holders of a majority of the shares present in person or represented by
proxy at the meeting, and entitled to vote at the meeting, may adjourn the
meeting to another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business
which might have been transacted at the original meeting. If the adjournment
is for more than thirty days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
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Section 8. Vote Required. When a quorum is present, the affirmative vote
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of
Article VI hereof, every stockholder shall at every meeting of the stockholders
be entitled to one vote in person or by proxy for each share of common stock
held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation by delivery to its registered office in
the state of Delaware, or the corporation's principal place of business, or an
officer or agent of the corporation having custody of the book or books in
which proceedings of meetings of the stockholders are recorded. Delivery made
to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. All consents properly delivered in
accordance with this section shall be deemed to be recorded when so delivered.
No written consent shall be effective to take the corporate action referred to
therein unless, within sixty days of the earliest dated consent delivered to
the corporation as required by this section, written consents signed by the
holders of a sufficient number of shares to take such corporate action are so
recorded. Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. Any action taken pursuant to
such written consent or consents of the stockholders shall have the same force
and effect as if taken by the stockholders at a meeting thereof.
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ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the first board shall be three (3). Thereafter, the
number of directors shall be established from time to time by resolution of the
board. The directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote in the election of directors. The directors shall be elected in this
manner at the annual meeting of the stockholders, except as provided in Section
4 of this Article III. Each director elected shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of
a majority of the shares then entitled to vote at an election of directors.
Whenever the holders of any class or series are entitled to elect one or more
directors by the provisions of the corporation's certificate of incorporation,
the provisions of this section shall apply, in respect to the removal without
cause of a director or directors so elected, to the vote of the holders of the
outstanding shares of that class or series and not to the vote of the
outstanding shares as a whole.
Section 4. Vacancies. Except as otherwise provided by the Certificate of
Incorporation of the corporation or any amendments thereto, board vacancies and
newly created directorships resulting from any increase in the authorized
number of directors shall be filled by a majority vote of the holders of the
corporation's outstanding stock entitled to vote thereon, and each director so
chosen shall hold office until the next annual meeting of the stockholders and
until a successor is duly elected and qualified or until his or her earlier
death, resignation or removal as provided.
Section 5. Annual Meetings. The annual meeting of each newly elected
board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of
stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution
of the board. Special meetings of the board of directors may be called by or
at the request of the president and chief executive officer on at least 24
hours notice to each director, either personally, by telephone, by mail, or by
telegraph; in like manner and on like notice the president and chief executive
officer must call a special meeting on the written request of at least one of
the directors.
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Section 7. Quorum, Required Vote and Adjournment. A majority of the total
number of directors then in office shall constitute a quorum for the
transaction of business, provided that in no event shall a quorum consist of
less than one-third of the total number of directors established by the
stockholders pursuant to Section 2 or this Article III. The vote of a majority
of directors present at a meeting at which a quorum is present shall be the act
of the board of directors. If a quorum shall not be present at any meeting of
the board of directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
Section 8. Committee. The board of directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation, which to the
extent provided in such resolution or these by-laws shall have and may exercise
the powers of the board of directors in the management and affairs of the
corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors. Each
committee shall keep regular minutes of its meetings and report the same to the
board of directors when required.
Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. In the event that a member and that
member's alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent
or disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors
or any committee thereof may participate in and act at any meeting of such
board or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of the
board of directors or any committee thereof who is present at a meeting shall
be conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have
assented to any action taken unless his or her dissent shall be entered in the
minutes of the meeting or unless his or her written dissent to such action
shall be filed with the person acting as the secretary of the meeting
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before the adjournment thereof or shall be forwarded by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to any member who voted in favor of such
action.
Section 12. Action by Written Consent. Unless otherwise restricted by the
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be
taken without a meeting if all members of the board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be elected by
the board of directors and shall consist of a chairman of the board, a
president and chief executive officer, one or more vice-presidents, a
secretary, a treasurer, and such other officers and assistant officers as may
be deemed necessary or desirable by the board of directors. Any number of
offices may be held by the same person. In its discretion, the board of
directors may choose not to fill any office for any period as it may deem
advisable, except that the offices of president and chief executive officer and
secretary shall be filled as expeditiously as possible.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. Vacancies may be filled or new offices created and filled at any
meeting of the board of directors. Each officer shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of
directors may be removed by the board of directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by
the board of directors for the unexpired portion of the term by the board of
directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by
the board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. Chairman of the Board. The chairman of the board shall be the
chief executive officer of the corporation, and shall have the powers and
perform the duties
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incident to that position. Subject to the powers of the board of directors, he
or she shall be in the general and active charge of the entire business and
affairs of the corporation, and shall be its chief policy making officer. He
or she shall preside at all meetings of the board of directors and stockholders
and shall have such other powers and perform such other duties as may be
prescribed by the board of directors or provided in these by-laws. Whenever
the president and chief executive officer is unable to serve, by reason of
sickness, absence or otherwise, the chairman of the board shall perform all the
duties and responsibilities and exercise all the powers of the president and
chief executive officer.
Section 7. The President and Chief Executive Officer. The president and
chief executive officer shall subject to the powers of the board of directors,
and the chairman of the board, shall have general charge of the business,
affairs and property of the corporation, and control over its officers, agents
and employees; and shall see that all orders and resolutions other board of
directors are carried into effect. The president and chief executive officer
shall execute bonds, mortgages and other contracts requiring a seal, under the
seal other corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the board of directors to some other
officer or agent of the corporation. The president and chief executive officer
shall have such other powers and perform such other duties as may be prescribed
by the chairman of the board or the board of directors or as may be provided in
these by-laws.
Section 8. Vice-Presidents. The vice-president, or if there shall be more
than one, the vice-presidents in the order determined by the board of
directors or by the president and chief executive officer, shall, in the
absence or disability of the president and chief executive officer, act with
all of the powers and be subject to all the restrictions of the president and
chief executive officer. The vice-presidents shall also perform such other
duties and have such other powers as the board of directors the chairman of the
board, the president and chief executive officer or these by-laws may, from
time to time, prescribe.
Section 9. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president and chief executive officer's supervision, the secretary shall give,
or cause to be given, all notices required to be given by these by-laws or by
law; shall have such powers and perform such duties as the board of directors,
the chairman of the board, the president and chief executive officer or these
by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his or her signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by
the board of directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board
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of directors, the chairman of the board, the president and chief executive
officer, or secretary may, from time to time, prescribe.
Section 10. The Treasurer and Assistant Treasurer. The treasurer shall
have the custody of the corporate funds and securities; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; shall deposit all monies and other valuable effects in the name
and to the credit of the corporation as may be ordered by the board of
directors; shall cause the funds of the corporation to be disbursed when such
disbursements have been duly authorized, taking proper vouchers for such
disbursements; and shall render to the president and chief executive officer
and the board of directors, at its regular meeting or when the board of
directors so requires, an account of the corporation; shall have such powers
and perform such duties as the board of directors, the chairman of the board,
the president and chief executive officer or these by-laws may, from time to
time, prescribe. If required by the board of directors, the treasurer shall
give the corporation a bond (which shall be rendered every six years) in such
sums and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of the office of treasurer
and for the restoration to the corporation, in case of death, resignation,
retirement, or removal from office, of all books, papers, vouchers, money, and
other property of whatever kind in the possession or under the control of the
treasurer belonging to the corporation. The assistant treasurer, or if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, shall in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer. The assistant
treasurers shall perform such other duties and have such other powers as the
board of directors, the chairman of the board, the president and chief
executive officer or treasurer may, from time to time, prescribe.
Section 11. Other Officers, Assistant Officers and Agents. officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such
duties as may from time to time be prescribed by resolution of the board of
directors.
Section 12. Absence or Disability of Officers. In the case of the absence
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Nature of Indemnity. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a
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director or officer, of the corporation or is or was serving at the request of
the corporation as a director, officer, employee, fiduciary, or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, shall be indemnified and held harmless by the corporation to the
fullest extent which it is empowered to do so unless prohibited from doing so
by the General Corporation Law of the State of Delaware, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than said law permitted the corporation to provide prior
to such amendment) against all expense, liability and loss (including
attorneys' fees actually and reasonably incurred by such person in connection
with such proceeding) and such indemnification shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that, except
as provided in Section 2 hereof, the corporation shall indemnify any such
person seeking indemnification in connection with a proceeding initiated by
such person only if such proceeding was authorized by the board of directors of
the corporation. The right to indemnification conferred in this Article V
shall be a contract right and, subject to Sections 2 and 5 hereof, shall
include the right to be paid by the corporation the expenses incurred in
defending any such proceeding in advance of its final disposition. The
corporation may, by action of its board of directors, provide indemnification
to employees and agents of the corporation with the same scope and effect as
the foregoing indemnification of directors and officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the corporation under Section 1 of
this Article V or advance of expenses under Section 5 of this Article V shall
be made promptly, and in any event within 30 days, upon the written request of
the director or officer. If a determination by the corporation that the
director or officer is entitled to indemnification pursuant to this Article V
is required, and the corporation fails to respond within sixty days to a
written request for indemnity, the corporation shall be deemed to have approved
the request. If the corporation denies a written request for indemnification
or advancing of expenses, in whole or in part, or if payment in full pursuant
to such request is not made within 30 days, the right to indemnification or
advances as granted by this Article V shall be enforceable by the director or
officer in any court of competent jurisdiction. Such person's costs and
expenses incurred in connection with successfully establishing his or her right
to indemnification, in whole or in part, in any such action shall also be
indemnified by the corporation. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any, has been tendered to the corporation) that the claimant
has not met the standards of conduct which make it permissible under the
General Corporation Law of the State of Delaware for the corporation to
indemnify the claimant for the amount claimed, but the burden of such defense
shall be on the corporation. Neither the failure of the corporation (including
its board of directors, independent legal counsel or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or
she has met the applicable standard of conduct set forth in the General
Corporation Law of the State of Delaware, nor an actual determination by the
corporation (including its board of directors, independent legal counsel, or
its stockholders)
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that the claimant has not met such applicable standard of conduct, shall be a
defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Article V shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and maintain insurance
on its own behalf and on behalf of any person who is or was a director,
officer, employee, fiduciary, or agent of the corporation or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the corporation would have the power to indemnify such
person against such liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described in Section
1 of this Article V in defending a proceeding shall be paid by the corporation
in advance of such proceeding's final disposition unless otherwise determined
by the board of directors in the specific case upon receipt of an undertaking
by or on behalf of the director or officer to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by
the corporation. Such expenses incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the board of directors deems
appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article V and who are or were employees or agents
of the corporation, or who are or were serving at the request of the
corporation as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent authorized
at any time or from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V shall be
deemed to be a contract right between the corporation and each director or
officer who serves in any such capacity at any time while this Article V and
the relevant provisions of the General Corporation Law of the State of Delaware
or other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article V,
references to "the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or
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was a director, officer, employee or agent of such constituent corporation, or
is or was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article
V with respect to the resulting or surviving corporation as he or she would
have with respect to such constituent corporation if its separate existence had
continued.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation by
the chairman, president and chief executive officer or a vice-president and the
secretary or an assistant secretary of the corporation, certifying the number
of shares owned by such holder in the corporation. If such a certificate is
countersigned (1) by a transfer agent or an assistant transfer agent other than
the corporation or its employee or (2) by a registrar, other than the
corporation or its employee, the signature of any such chairman, president and
chief executive officer, vice-president, secretary, or assistant secretary may
be facsimiles. In case any officer or officers who have signed, or whose
facsimile signature or signatures have been used on, any such certificate or
certificates shall cease to be such officer or officers of the corporation
whether because of death, resignation or otherwise before such certificate or
certificates have been delivered by the corporation, such certificate or
certificates may nevertheless be issued and delivered as though the person or
persons who signed such certificate or certificates or whose facsimile
signature or signatures have been used thereon had not ceased to be such
officer or officers of the corporation. All certificates for shares shall be
consecutively numbered or otherwise identified. The name of the person to whom
the shares represented thereby are issued, with the number of shares and date
of issue, shall be entered on the books of the corporation. Shares of stock of
the corporation shall only be transferred on the books of the corporation by
the holder of record thereof or by such holder's attorney duly authorized in
writing, upon surrender to the corporation of the certificate or certificates
for such shares endorsed by the appropriate person or persons, with such
evidence of the authenticity of such endorsement, transfer, authorization, and
other matters as the corporation may reasonably require, and accompanied by all
necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust Company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost, stolen, or destroyed.
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When authorizing such issue of a new certificate or certificates, the
board of directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen, or destroyed
certificate or certificates, or his or her legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against the corporation on account of the loss, theft or
destruction of any such certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the board of
directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the board
of directors, the record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be the close of business on
the next day preceding the day on which notice is given, or if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the board of directors may fix a new
record date for the adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required
by statute, shall be the first date on which a signed written consent setting
forth the action taken or proposed to be taken is delivered to the corporation
by delivery to its registered office in the State of Delaware, its principal
place of business, or an officer or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded.
Delivery made to the corporation's registered office shall be by hand or by
certified or registered mail, return receipt requested. If no record date has
been fixed by the board of directors and prior action by the board of directors
is required by statute, the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting shall be at the
close of business on the day on which the board of directors adopts the
resolution taking such prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or
exchange of stock, or for the purposes of any other lawful action, the board of
directors may fix a record date, which record date shall not
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precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action.
If no record date is fixed, the record date for determining stockholders for
any such purpose shall be at the close of business on the day on which the
board of directors adopts the resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner.
Section 7. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the certificate of
incorporation. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a
duly authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer or
officers, or any agent or agents, of the corporation to enter into any contract
or to execute and
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deliver any instrument in the name of and on behalf of the corporation, and
such authority may be general or confined to specific instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares
of stock of the corporation. Nothing in this section contained shall be deemed
to deny, limit or restrict the powers of guaranty or warranty of the
corporation at common law or under any statute. No loans shall be made or
contracted on behalf of the corporation and no evidences of indebtedness shall
be issued in its name unless authorized by resolution of the board of
directors. Such authority may be general or confined to specific instances.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
any other corporation held by the corporation shall be voted by the president
and chief executive officer, unless the board of directors specifically confers
authority to vote with respect thereto, which authority may be general or
confined to specific instances, upon some other person or officer. Any person
authorized to vote securities shall have the power to appoint proxies, with
general power of substitution.
Section 8. Inspection of Books and Records. Any stockholder of record, in
person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection, the demand
under oath shall be accompanied by a power of attorney or such other writing
which authorizes the attorney or other agent to So act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
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Section 9. Section Headings. Section headings in these bylaws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new bylaws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or repeal the by-laws has been conferred upon the
board of directors shall not divest the stockholders of the same powers.
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<PAGE> 1
Exhibit 3.9
ARTICLES OF INCORPORATION
OF
MST ENTERPRISES, INC.
I do hereby form a stock corporation under and by virtue of the provisions
of Chapter I of Title 13.1 of the Code of Virginia, 1950, and acts amendatory
thereto, and to that end, set forth the following:
I - NAME
The name of the corporation is: MST Enterprises, Inc.
II - PURPOSES
The purposes for which the corporation is organized
are:
To carry on and conduct a general wholesale and retail rental and leasing
business.
To generally deal in the sale, purchase and resale of machinery of every
type and description, including the repair and maintenance thereof.
To do any other act or acts as may be necessary or desired in furtherance
of the aforesaid purposes.
III - CAPITAL STOCK
The aggregate number of shares which the corporation shall have authority
to issue, and the class and par value of
each such share are as follows:
<PAGE> 2
TWENTY-FIVE HUNDRED (2,500) shares of common capital stock, the par value
of Ten Dollars ($10.00) per share, or an aggregate of Twenty-Five Thousand
Dollars ($25,000.00) of common capital stock.
IV - REGISTERED OFFICE AND AGENT
The address of the initial registered office of the corporation is 1550
East Market Street, in the City of Harrisonburg, Virginia; and the name of the
initial registered agent at such address is Suellen G. Trubitz, who is a
resident of the State of Virginia and a director of the corporation.
V - INITIAL BOARD OF DIRECTORS
The number of directors constituting the initial board of directors of the
corporation is two (2), whose names and addresses are as follows:
Marc S. Trubitz 1194 Nelson Drive
Harrisonburg, VA 22801
Suellen G. Trubitz 1194 Nelson Drive
Harrisonburg, VA 22801
VI - DURATION
The duration of the corporation shall be perpetual.
WITNESS my signature and seal this 18th day of September, 1981.
/s/ William A. Julias
-------------------------------------
William A. Julias
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<PAGE> 3
STATE OF VIRGINIA,
COUNTY OF ROCKINGHAM, to-wit:
The foregoing instrument was acknowledged before me this 18th day of
September, 1981, by WILLIAM A. JULIAS.
My commission expires: March 12, 1983
-------------------------------------
/S/ Sandi E. Bunt, N.P.
-------------------------------------
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<PAGE> 1
Exhibit 3.10
BY-LAWS OF
MST ENTERPRISES, INC.
Articles I - Stockholders
Section 1. Place of Meetings. All meetings of the stockholders shall be
held at the registered office of the corporation at 1550 East Market Street,
Harrisonburg,
Virginia.
Section 2. Voting. Stockholders shall be entitled to vote at meetings,
in person or by proxy, appointed by instrument in writing and subscribed by the
stockholder or by his duly authorized attorney, and shall be entitled to vote
for each share of stock registered in his name on the books of the corporation.
Section 3. Quorum. Any number of stockholders holding together a
majority of the stock issued and outstanding, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business.
Section 4. Adjournment of Meetings. If less than a quorum shall be in
attendance, the meeting shall be adjourned from time to time by a majority vote
of the stockholders present or represented until a quorum shall attend. Any
meeting, at which a quorum is present, may also be adjourned in like manner for
such time or upon such call as may be determined by vote. At any adjourned
meeting, at which a quorum shall attend, any business may be transacted which
might have been transacted if the meeting had been held as originally called.
<PAGE> 2
Section 5. Annual Election of Directors. The annual meeting of the
stockholders for the election of directors and the transaction of other
business, shall be held at the registered office of the corporation at 1550
East Market Street, Harrisonburg, Virginia, on the second Wednesday in March of
each year. At each annual meeting the stock-holders shall elect a board of not
less than two (2) or more than five (5) directors and they may transact such
other business as shall be stated in the notice of the meeting.
Section 6. Special Meetings - How Called. Special meetings of the
stockholders may be called by the President, and shall be called upon a request
in writing stating the purpose thereof delivered to the President and signed by
a majority of the directors or by twenty-five percent (25%) in interest of the
stockholders, or by resolution and call of the directors.
Section 7. Notice of Stockholder's Meetings. Written notice stating the
place and time of the meeting, and the general nature of the business to be
transacted shall be given by the Secretary to each stockholder at his last
known post office address at least ten (10) days before the meeting in the case
of an annual meeting, and ten (10) days before the meeting in the case of a
special meeting. At any annual or other meeting of the stockholders, action
may be taken upon any subject which may be acted upon at a special meeting
called for the purpose, when, in the last mentioned case, in the notice of such
annual or other
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meeting, the purpose to consider and act upon a special object is stated.
Article II - Directors
Section 1. First Meeting. The newly elected directors may hold their
first meeting for the purpose of organization and the transaction of business,
if a quorum be present, immediately after the annual meeting of stockholders,
at such time and place as may be fixed by consent in writing of a quorum of all
the directors.
Section 2. Election of Officers. At such meeting the directors shall
elect a President, and at their option one or more Vice-Presidents from their
number, and shall also elect a Secretary and a Treasurer with such assistants
as may be desirable, who need not be directors. Unless sooner removed, such
officers shall hold office until the next annual meeting and election of
officers and until such successors are elected and shall qualify. In case such
officers shall not be elected at such first meeting, they may be chosen at any
subsequent meeting called for the purpose.
Section 3. Regular Meetings. Regular meetings of the directors may be
held without notice monthly on the second Wednesday of each month at the
registered office of the corporation at 1550 East Market Street, Harrisonburg,
Virginia.
Section 4. Special Meetings - How Called - Notice. Special meetings of
directors may be called by the President and shall be called by the Secretary
on the written request of any one (1) director; ten (10) days notice to each
director shall be
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<PAGE> 4
required. This notice may be waived by written consent of all the
directors.
Section 5. Quorum. A majority of the directors shall constitute a quorum
for the transaction of business.
Section 6. Place of Meeting. The directors may hold their meetings at
any office or offices of the corporation, or at any other place as they may
from time to time by resolution determine.
Section 7. General Powers of Directors. The board of directors shall
have the management of the business of the corporation and subject to the
restrictions imposed by law, by the Articles of Incorporation, or by the
By-Laws, may exercise all the powers of the corporation.
Article III - Officers
Section 1. Officers. The officers of the corporation shall be a
President, at the option of the directors one or more Vice-Presidents, a
Secretary and a Treasurer. One person may hold the office of Secretary and
Treasurer.
Section 2. President. The President shall preside at all meetings of the
directors and stockholders when present, and shall have power to call said
meetings of stockholders and directors for any purpose or purposes, make and
sign contracts in the name and on behalf of the corporation, subject to the
approval of the directors, and shall have general management and control of the
business and affairs of the corporation.
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<PAGE> 5
Section 3. Vice-President. The first Vice-President, if one be elected
by the board of directors, shall be vested with all the powers and shall
perform all the duties of the President in the absence or disability of the
latter, unless and until the directors shall otherwise determine. He shall
have such power to perform such other duties as shall be prescribed by the
directors. There may be additional Vice-Presidents without the executive
power.
Section 4. Secretary. The secretary shall give or cause to be given
notice of all meetings of stockholders and directors and all other notice
required by law or by these By-Laws. He shall record the proceedings of the
meetings of the stockholders and of the directors in a book to be kept for the
purpose and shall perform such other duties as may be assigned to him by the
directors or the President. He shall sign the stock certificates of the
corporation along with the President, and he shall keep a register of the
address of each stockholder as furnished to him from time to time over the
signature of the stockholder as required by law, and shall make the proper
changes in such register, retaining and filing his authority for all such
entries.
Section 5. Treasurer. The Treasurer shall have the custody of all funds,
securities and evidences of indebtedness. He shall receive and give or cause
to be given all acquittances for monies paid in on account of the corporation.
He shall pay out of the funds of the corporation and keep full and accurate
books of account; whenever required by the President or the directors, shall
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<PAGE> 6
render a financial statement; and shall perform such other duties as may be
prescribed by the President or directors.
Article IV - Resignations, Filling of Vacancies
and Removal of Directors
Section 1. Resignations. Any director, member of a committee, or other
officer, may resign at any time. Such resignation shall be made in writing and
the acceptance of the resignation shall not be necessary to make it effective.
Section 2. Filling of Vacancies. If the office of any directors, member
of a committee, or other officer becomes vacant, the directors in office,
except as otherwise provided by law, may appoint any qualified person to fill
such vacancy, who shall hold office for the unexpired term and until the
successor shall be duly chosen.
Section 3. Removal. The holders of fifty-one percent (51%) of the
outstanding capital stock shall have the power at any regular or special
meeting to remove any or all of the board of directors and may elect their
successors.
Article V - Capital Stock
Section 1. Issue of Certificates of Stock. The President shall cause to
be issued to each stockholder, one or more certificates under the seal of the
corporation, signed by the President and Secretary, certifying the number of
shares owned by the stockholders.
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Section 2. Transfer of Shares. The shares of stock of the corporation
shall be transferrable only upon its books by the holders thereof in person or
by their duly authorized attorneys.
Section 3. Dividends. The directors may declare dividends from the
surplus or net profits as and when they deem expedient. Before declaring any
dividends there may be retained out of the accumulated profits such sum or sums
as the directors in their discretion think proper for their working capital or
as a reserve fund to meet contingencies, or for equalizing dividends or for
such other purposes as the directors shall think conducive to the interests of
the corporation.
Article VI - Amendments
Section 1. By-Laws. The stockholders, by the affirmative vote of the
holders of a majority of the stock issued and outstanding or of directors by
the affirmative vote of a majority thereof may at any meeting, provided the
substance of the proposed amendment shall have been stated in the notice of the
meeting, amend or alter the By-Laws. By-Laws made by the directors may be
altered or repealed by the stockholders.
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<PAGE> 1
Exhibit 4.1
EXECUTION COPY
================================================================================
NATIONAL EQUIPMENT SERVICES, INC.
AERIAL PLATFORMS, INC.
NES ACQUISITION CORP.
BAT ACQUISITION CORP.
MST ENTERPRISES, INC.
________________________________________
$100,000,000
10% SENIOR SUBORDINATED NOTES DUE 2004
________________________________________
___________________
INDENTURE
DATED AS OF NOVEMBER 25, 1997
___________________
HARRIS TRUST AND SAVINGS BANK
Trustee
================================================================================
<PAGE> 2
Indenture, dated as of November 25, 1997, among National Equipment
Services, Inc., a Delaware corporation, (the "Company"), Aerial Platforms,
Inc., a Georgia corporation ("Aerial"), NES Acquisition Corp., a Delaware
corporation ("NES Acquisition"), BAT Acquisition Corp., a Delaware corporation
("BAT") and MST Enterprises, Inc. d/b/a Equipco Rentals & Sales, a Virginia
corporation ("Equipco") (each of Aerial, NES Acquisition, BAT and Equipco, a
"Subsidiary Guarantor" and together with any Subsidiary of the Company that
executes a Subsidiary Guarantee substantially in the form of EXHIBIT D attached
hereto, the "Subsidiary Guarantors") and Harris Trust and Savings Bank, as
trustee (the "Trustee").
The Company, the Subsidiary Guarantors and the Trustee agree as follows
for the benefit of each other and for the equal and ratable benefit of the
holders of the Company's 10% Senior Subordinated Notes due 2004 (the "Senior
Subordinated Notes") and the new 10% Senior Subordinated Notes due 2004, Series
B (the "New Senior Subordinated Notes" and, together with the Senior
Subordinated Notes, the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person, in each case to the
extent not repaid within five days after the date of the acquisition.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Premium" means, with respect to a Note at any redemption date,
the greater of (i) 1.0% of the principal amount of such Note or (ii) the excess
of (A) the present value at such time of (1) the redemption price of such Note
at November 30, 2001 (such redemption price being set forth in Section 3.07
hereof) plus (2) all required interest payments due on such Note through
November 30, 2001 (excluding accrued but unpaid interest), computed using a
discount rate equal to the Treasury Rate plus 75 basis points, over (B) the
principal amount of such Note.
"Applicable Procedures" means applicable procedures of the Depositary.
"Asset Sale" means (i) the sale, lease, conveyance or other disposition of
any assets or rights (including, without limitation, by way of a sale and
leaseback) other than sales and leases of inventory and equipment in the
ordinary course of business consistent with past practices (provided that the
sale, lease, conveyance or other disposition of all or substantially all of the
assets of the Company and its Restricted Subsidiaries taken as a whole will be
governed by Section 4.13 and/or Article 5 hereof and not by Section 4.10
hereof) and (ii) the issue or sale by the Company or any of its Restricted
Subsidiaries of Equity Interests
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of any of the Company's Restricted Subsidiaries, in the case of either clause
(i) or (ii), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $2.0 million or (b)
for net proceeds in excess of $2.0 million. Notwithstanding the foregoing, the
following items shall not be deemed to be Asset Sales: (i) a transfer of assets
by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned
Restricted Subsidiary to the Company or to another Wholly Owned Restricted
Subsidiary; (ii) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary;
(iii) a Restricted Payment that is permitted by Section 4.07 hereof; (iv) the
creation of any Lien not prohibited by Section 4.12 hereof; and (v) the
conversion of Cash Equivalents into cash.
"Bankruptcy Law" means title 11, U.S. Code or any similar Federal or state
law for the relief of debtors.
"Board of Directors" means, unless otherwise specified, the Board of
Directors of the Company or any authorized committee thereof.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification.
"Borrowing Base" means, as of any date, an amount equal to the sum of (a)
85% of the face amount of all accounts receivable owned by the Company and its
Restricted Subsidiaries as of such date that are not more than 90 days past
due, plus (b) 50% of the book value of the parts and supplies inventory owned
by the Company and its Restricted Subsidiaries as of such date, plus (c) 80% of
the orderly liquidation value of the rental equipment owned by the Company and
its Restricted Subsidiaries as of such date, plus (d) 80% of the cost of the
new equipment owned by the Company and its Restricted Subsidiaries as of such
date, all calculated on a consolidated basis and in accordance with GAAP. To
the extent that information is not available as to the amount of accounts
receivable or inventory or equipment as of a specific date, the Company may
utilize the most recent available information for purposes of calculating the
Borrowing Base.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or limited) and
(iv) any other interest or participation that confers on a Person the right to
receive a share of the profits and losses of, or distributions of assets of,
the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of one year or less from
the date of acquisition, bankers' acceptances with maturities not exceeding one
year and overnight bank deposits, in each case with any domestic commercial
bank having capital and surplus in excess of $500 million and a Thompson Bank
Watch Rating of "B" or better,
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(iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having a rating of at
least A-2 by Standard & Poor's Corporation or at least P-2 by Moody's Investors
Service, Inc. or at least an equivalent rating category of another nationally
recognized securities rating agency and in each case maturing within one year
after the date of acquisition and (vi) money market funds at least 95% of the
assets of which constitute Cash Equivalents of the kinds described in clauses
(i) - (v) of this definition.
"Change of Control" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than a Principal or a Related Party of a Principal;
(ii) the adoption by the Company of a plan relating to its liquidation or
dissolution; (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related
Parties, becomes the "beneficial owner" (as such term is defined in Rule 13d-3
and Rule 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is currently exercisable or is exercisable only
upon the occurrence of a subsequent condition), directly or indirectly, of more
than 50% of the Voting Stock of the Company (measured by voting power rather
than number of shares); or (iv) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
"Company" means National Equipment Services, Inc., a Delaware corporation,
unless and until a successor replaces the Company in accordance with Article 5
hereof, and thereafter includes such successor.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with
an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Subsidiaries for such period, to the extent that
such provision for taxes was included in computing such Consolidated Net
Income, plus (iii) consolidated interest expense of such Person and its
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance costs
and original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligation, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income, plus (iv) depreciation, amortization (including amortization of
goodwill and other intangibles but excluding amortization of prepaid cash
expenses that were paid in a prior period) and other non-cash expenses
(including non-cash write-ups and non-cash charges relating to inventory and
fixed assets) of such Person and its Subsidiaries for such period to the extent
that such depreciation, amortization and other non-cash expenses were deducted
in computing such Consolidated Net Income plus (v) an amount equal to 1/3 of
the Consolidated Lease Expense of such person and its Subsidiaries for such
period, to the extent that any such expense was deducted in computing such
Consolidated Net Income, minus (vi) non-cash items increasing such Consolidated
Net Income for such period, in each case, on a consolidated basis and
determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes based on the income or profits of, and the depreciation and
amortization and other non-cash charges of, a Subsidiary of a Person shall be
added to Consolidated Net Income to compute Consolidated Cash Flow only to the
extent (and in the same proportion) that the Net Income of such Subsidiary was
included in calculating the Consolidated Net Income of such Person and only if
a corresponding amount would be permitted at the date of determination to be
dividended to the Company
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<PAGE> 5
by such Subsidiary without prior approval (that has not been obtained),
pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to that Subsidiary or its stockholders.
"Consolidated Lease Expense" means, with respect to any Person for any
period, the aggregate rental obligations of such Person and its consolidated
Restricted Subsidiaries determined on a consolidated basis in accordance with
GAAP payable in respect of such period under leases of real and/or personal
property (net of income from subleases thereof, but including taxes, insurance,
maintenance and similar expenses that the lessee is obligated to pay under the
terms of such leases), whether or not such obligations are reflected as
liabilities or commitments on a consolidated balance sheet of such Person and
its Restricted Subsidiaries or in the notes thereto.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that
is not a Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Wholly Owned Restricted
Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement (other than the Credit Facility as in effect as of
the date hereof, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof,
provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are not
materially more restrictive, taken as a whole, with respect to such
restrictions or dividends and similar distributions than those contained in the
Credit Facility as in effect on the date hereof), instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in
a pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) the Net Income (but not loss)
of any Unrestricted Subsidiary shall be excluded, whether or not distributed to
the Company or one of its Restricted Subsidiaries, for purposes of Section 4.09
hereof, and shall be included for purposes of Section 4.07 hereof, but only to
the extent of the amount of dividends or distributions paid in cash to the
Company or one of its Restricted Subsidiaries.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date hereof, (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election or (iii) was nominated for election or elected to such Board of
Directors pursuant to GTCR Fund V's rights under the Stockholders Agreement
dated as of June 4, 1996 among the Company and its stockholders.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 13.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Facility" means that certain Credit Agreement, dated as of July 1,
1997, as amended, by and among the Company, NES Acquisition Corp., BAT
Acquisition Corp., Aerial Platforms, Inc. and MST Enterprises, Inc. (pursuant
to a Borrower Joinder Agreement dated as of July 18, 1997), as Borrowers, First
Union Commercial Corporation, as Agent and Lender, and BankBoston, N.A.,
American National Bank and
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<PAGE> 6
Trust Company of Chicago, Comerica Bank, The CIT Group/Business Credit, Inc.,
Bankers Trust Company, Harris Trust and Savings Bank, Heller Financial, Inc.
and Mercantile Business Credit Inc., as Lenders, providing for revolving credit
borrowings, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including, without limitation, increasing the amount of
available borrowings thereunder or adding Subsidiaries of the Company as
additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement,
whether by the same or any other agent, lender or group of lenders, whether
contained in one or more agreements.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Notes" means Notes that are in the form of EXHIBIT A attached
hereto (but without including the text referred to in footnotes 1 and 3
thereto).
"Depositary" means, with respect to the Global Note, the Person specified
in Section 2.03 hereof as the Depositary with respect to such Note, until a
successor shall have been appointed and become such pursuant to the applicable
provision of this Indenture, and thereafter, "Depositary" shall mean or include
such successor.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
Credit Facility and (ii) any other Senior Debt permitted under this Indenture
the principal amount of which is $25.0 million or more and that has been
designated by the Company as "Designated Senior Debt."
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, at the option of the holder thereof), or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or redeemable at the option of the Holder thereof, in
whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature; provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of
a Change of Control or an Asset Sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such
repurchase or redemption complies with Section 4.07 hereof.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer by the Company to Holders to exchange
Senior Subordinated Notes for New Senior Subordinated Notes.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
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<PAGE> 7
"Existing Indebtedness" means up to $2.0 million in aggregate principal
amount of Indebtedness of the Company and its Restricted Subsidiaries (other
than Indebtedness under the Credit Facility) in existence on the date hereof,
until such amounts are repaid.
"Fixed Charges" means, with respect to any Person and its Restricted
Subsidiaries for any period, the sum, without duplication, of (i) the
consolidated interest expense of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued (including, without limitation,
amortization of debt issuance costs (other than debt issuance costs incurred in
connection with the Offering and the original Credit Facility) and original
issue discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments associated
with Capital Lease Obligations, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net payments (if any) pursuant to Hedging Obligations) and (ii)
the consolidated interest of such Person and its Restricted Subsidiaries that
was capitalized during such period, and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon), (iv) the product of (a) all dividend payments, whether or not in cash,
on any series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests payable solely
in Equity Interests of the Company (other than Disqualified Stock) or to the
Company or a Restricted Subsidiary of the Company, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person,
expressed as a decimal, in each case, on a consolidated basis and in accordance
with GAAP and (v) an amount equal to 1/3 of the Consolidated Lease Expense of
such Person and its Restricted Subsidiaries for such period, whether paid or
accrued.
"Fixed Charge Coverage Ratio" means with respect to any Person and its
Restricted Subsidiaries for any period, the ratio of the Consolidated Cash Flow
of such Person and its Restricted Subsidiaries for such period to the Fixed
Charges of such Person and its Restricted Subsidiaries for such period. In the
event that the referent Person or any of its Restricted Subsidiaries incurs,
assumes, Guarantees or redeems any Indebtedness (other than revolving credit
borrowings) or issues or redeems preferred stock subsequent to the commencement
of the period for which the Fixed Charge Coverage Ratio is being calculated but
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee or redemption of Indebtedness, or such issuance or
redemption of preferred stock, as if the same had occurred at the beginning of
the applicable four-quarter reference period. In addition, for purposes of
making the computation referred to above, (i) acquisitions that have been made
by the Company or any of its Restricted Subsidiaries, including through mergers
or consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated (A) without giving effect to clause (iii)
of the proviso set forth in the definition of Consolidated Net Income and (B)
after giving pro forma effect to net cost savings that the Company reasonably
believes in good faith could have been achieved during the four-quarter
reference period as a result of such acquisition, which cost savings could then
be reflected in pro forma financial statements under GAAP, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, and (iii) the Fixed Charges attributable
to discontinued operations, as determined in accordance with GAAP, and
operations or businesses disposed of prior to the Calculation Date, shall be
excluded, but only to the extent that the obligations giving rise to such Fixed
Charges will not be obligations of the referent Person or any of its Restricted
Subsidiaries following the Calculation Date.
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<PAGE> 8
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect from time to time.
"Global Note" means the permanent global note that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 3
to the form of the Note attached hereto as EXHIBIT A, and that is deposited
with and registered in the name of the Depositary or its nominee, representing
Notes initially sold in reliance on Rule 144A.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"GTCR Fund V" means Golder, Thoma, Cressey, Rauner Fund V, L.P., an
affiliate of Golder, Thoma, Cressey, Rauner, Inc.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof), of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, any indebtedness of such
Person, whether or not contingent, in respect of borrowed money or evidenced by
bonds, notes, debentures or similar instruments or letters of credit (or
reimbursement agreements in respect thereof) or banker's acceptances or
representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing (other than letters of credit and
Hedging Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all Indebtedness of others
secured by a Lien on any asset of such Person (whether or not such Indebtedness
is assumed by such Person) and, to the extent not otherwise included, the
Guarantee by such Person of any indebtedness of any other Person. The amount
of any Indebtedness outstanding as of any date shall be (i) the accreted value
thereof, in the case of any Indebtedness issued with original issue discount
and (ii) the principal amount thereof, together with any interest thereon that
is more than 30 days past due, in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof.
"Indirect Participant" means a Person who holds an interest through a
Participant.
"Initial Purchasers" means Smith Barney Inc., First Union Capital Markets
Corp. and Salomon Brothers Inc.
7
<PAGE> 9
"Insolvency or Liquidation Proceedings" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding, relative to the Company or to the
creditors of the Company, as such, or to the assets of the Company, or (ii) any
liquidation, dissolution, reorganization or winding up of the Company, whether
voluntary or involuntary and involving insolvency or bankruptcy, or (iii) any
assignment for the benefit of creditors or any other marshalling of assets and
liabilities of the Company.
"Institutional Accredited Investor" means an "accredited investor" as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
If the Company or any Restricted Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Restricted
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, such Person is no longer a Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to the fair market value of the Equity Interests of such
Subsidiary not sold or disposed of in an amount determined as provided in the
final paragraph of Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no additional interest
shall accrue for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" means, at any time of determination, all liquidated
damages then owing pursuant to the terms of the Registration Rights Agreement.
"Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii) any extraordinary or nonrecurring gain or
loss, together with any related provision for taxes on such extraordinary or
nonrecurring gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the Company
or any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating
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<PAGE> 10
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale, any reserve for adjustment in respect of the sale price of such asset or
assets established in accordance with GAAP and any reserve established in
accordance with GAAP for liabilities associated with such assets that are the
subject of such Asset Sale (including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale), all as determined in good faith and reflected in an
Officers' Certificate delivered to the Trustee, provided, that the amount of
any such reserve shall be deemed to constitute Net Cash Proceeds at the time
such reserve shall have been reversed or is not otherwise required to be
retained as a reserve.
"Non-Recourse Debt" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes) of the Company or any of its Restricted Subsidiaries to declare a
default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.
"Note Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto, as provided in Section 2.01.
"Obligations" means any principal, interest (including any interest
accruing subsequent to the filing of a petition of bankruptcy at the rate
provided for in the Credit Facility, whether or not such interest is an allowed
claim under applicable law), penalties, fees, indemnifications, reimbursements,
damages and other liabilities payable under the documentation governing any
Indebtedness.
"Offering" means the offering of Senior Subordinated Notes pursuant to the
Offering Memorandum.
"Offering Memorandum" means the offering memorandum, dated November 20,
1997, relating to the offering of the Senior Subordinated Notes.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, the Chief Operating Officer, the
Chief Financial Officer, the Treasurer, any Assistant Treasurer, the
Controller, the Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer or the principal accounting
officer of the Company, that meets the requirements of Section 13.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 13.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
"Participant" means a Person who has an account with the Depositary.
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<PAGE> 11
"payment in full" (together with any correlative phrases e.g. "paid in
full" and "pay in full") means (i) with respect to any Senior Debt other than
Senior Debt under or in respect of the Credit Facility, payment in full thereof
or due provision for payment thereof (x) in accordance with the terms of the
agreement or instrument pursuant to which such Senior Debt was issued or is
governed or (y) otherwise to the reasonable satisfaction of the holders of such
Senior Debt, which shall include, in any Insolvency or Liquidation Proceeding,
approval by such holders, individually or as a class, of the provision for
payment thereof, and (ii) with respect to Senior Debt under or in respect of
the Credit Facility, payment in full thereof in cash or Cash Equivalents.
"Permitted Business" means any business or activities conducted by the
Company on the date hereof, any business or activities related, ancillary or
complementary to such business or activities, and any business or activities
reasonably developed, derived or extended from such business or activities.
"Permitted Investments" means (a) any Investment in the Company or in a
Subsidiary Guarantor, (b) any Investment in Cash Equivalents, (c) any
Investment by the Company or any Restricted Subsidiary of the Company in a
Person, if as a result of such Investment (i) such Person becomes a Wholly
Owned Restricted Subsidiary of the Company or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Wholly Owned
Restricted Subsidiary of the Company, (d) any Investment made as a result of
the receipt of non-cash consideration from an Asset Sale that was made pursuant
to and in compliance with Section 4.10 hereof, (e) any acquisition of assets
solely in exchange for the issuance of Equity Interests (other than
Disqualified Stock) of the Company and (f) other Investments in any Person
having an aggregate fair market value (measured on the date each such
Investment was made and without giving effect to subsequent changes in value),
when taken together with all other Investments made pursuant to this clause (e)
that are at the time outstanding, not to exceed $5.0 million.
"Permitted Junior Securities" means Equity Interests in the Company or any
Subsidiary Guarantor or debt securities that are subordinated to all Senior
Debt (and any debt securities issued in exchange for Senior Debt) to
substantially the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Debt pursuant to Article 10 hereof.
"Permitted Liens" means the following Liens securing Indebtedness or trade
payables: (i) Liens to secure the Notes or the Subsidiary Guarantees; (ii)
Liens in favor of the Company or a Subsidiary Guarantor; (iii) Liens on
property of a Person existing at the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company; provided that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company; (iv) Liens on property existing
at the time of acquisition thereof by the Company or any Subsidiary of the
Company, provided that such Liens were in existence prior to the contemplation
of such acquisition; (v) Liens to secure the performance of statutory
obligations, surety or appeal bonds, performance bonds or other obligations of
a like nature incurred in the ordinary course of business; (vi) Liens to secure
Indebtedness (including Capital Lease Obligations) permitted by clause (iv) of
the second paragraph of Section 4.09 hereof covering only the assets acquired
with such Indebtedness; (vii) Liens existing on the date hereof; (viii) Liens
incurred in the ordinary course of business of the Company or any Subsidiary of
the Company with respect to obligations that do not exceed $5.0 million at any
one time outstanding and that (a) are not incurred in connection with the
borrowing of money or the obtaining of advances or credit (other than trade
credit in the ordinary course of business) and (b) do not in the aggregate
materially detract from the value of the property or materially impair the use
thereof in the operation of business by the Company or such Subsidiary; (ix)
Liens on stock or assets of Unrestricted Subsidiaries that secure Non-Recourse
Debt of Unrestricted Subsidiaries; (x) Liens on assets of the Company or any
Subsidiary Guarantor to secure Senior Debt of the Company or such Subsidiary
Guarantor that was
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<PAGE> 12
permitted by this Indenture to be incurred; and (xii) Liens to secure any
refinancings, renewals, extensions, modifications or replacements
(collectively, "refinancings") (or successive refinancings), in whole or in
part, of any Indebtedness secured by Liens referred to in clauses (iii), (iv),
(vii) and (x) above so long as such Lien does not extend to any other property
(other than improvements thereto).
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that: (i) the principal
amount (or accreted value, if applicable) of such Permitted Refinancing
Indebtedness does not exceed the principal amount of (or accreted value, if
applicable), plus accrued interest on, the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus the amount of
premiums and reasonable expenses incurred in connection therewith); (ii) such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final
maturity date of, and is subordinated in right of payment to, the Notes on
terms at least as favorable to the Holders of Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either
by the Company or by the Restricted Subsidiary who is the obligor on the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded.
"Person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Principals" means GTCR Fund V and its Affiliates and Messrs. Kevin
Rodgers, Dennis O'Connor and Paul Ingersoll, members of their immediate
families and trusts of which such persons are the beneficiaries.
"Private Placement Legend" means the legend initially set forth on the
Senior Subordinated Notes in the form set forth in Section 2.06(g) hereof.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A
under the Securities Act.
"Redemption Date" with respect to any Notes, means the date on which such
Notes are redeemed by the Company pursuant to Section 3.07 of this Indenture.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of November 25, 1997, by and among the Company, the Subsidiary
Guarantors and the Initial Purchasers, as such agreement may be amended,
modified or supplemented from time to time.
"Related Party" with respect to any Principal means (A) any controlling
stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family
member (in the case of an individual) of such Principal or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 80% or more controlling
interest of which consist of such Principal and/or such other Persons referred
to in the immediately preceding clause (A).
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<PAGE> 13
"Representative" means the agent with respect to the Credit Facility, or
any Person performing a similar function with respect to other Senior Debt.
"Responsible Officer" means any officer within the Corporate Trust
Department of the Trustee (or any successor group of the Trustee) with direct
responsibility for the administration of this Indenture and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Restricted Beneficial Interest" means any beneficial interest of a
Participant or Indirect Participant in the Global Note.
"Restricted Broker Dealer" has the meaning set forth in the Registration
Rights Agreement.
"Restricted Global Note" means the Global Note, which shall bear the
Private Placement Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means (i) all Indebtedness under the Credit Facility and all
Hedging Obligations with respect thereto, whether outstanding on the date
hereof or thereafter created, (ii) any other Indebtedness permitted to be
incurred by the Company or a Subsidiary Guarantor under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes or the Subsidiary Guarantees and (iii) all Obligations
with respect to the foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt will not include (w) any liability for federal, state,
local or other taxes owed or owing by the Company or a Subsidiary Guarantor,
(x) any Indebtedness between or among the Company, any of its Subsidiaries or
any of its other Affiliates, (y) any trade payables or (z) that portion of any
Indebtedness that is incurred in violation of this Indenture.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Act, as such Regulation is in effect on the date hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
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<PAGE> 14
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or of one or
more Subsidiaries of such Person (or any combination thereof).
" Subsidiary Guarantors" means each of (i) Aerial Platforms, Inc., NES
Acquisition Corp., BAT Acquisition Corp. and MST Enterprises, Inc. and (ii) any
other Subsidiary that executes a Subsidiary Guarantee in accordance with the
provisions of this Indenture, and their respective successors and assigns.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section Section
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the Trust Indenture Act of 1939; provided, however, that in the event
that the Trust Indenture Act of 1939 is amended after such date, "TIA" means,
to the extent required by such amendment, the Trust Indenture Act of 1939 as so
amended.
"Transfer Restricted Securities" means Notes or beneficial interests
therein that bear or are required to bear the Private Placement Legend.
"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H. 15(519)
which has become publicly available at least two Business Days prior to the
redemption date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the redemption date to November 30, 2001, provided, however, that
if the period from the redemption date to November 30, 2001 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities for which such yields are
given, except that if the period from the redemption date to November 30, 2001
is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.
"Trustee" means the party named as such above until a successor replaces
it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Global Note" means the Global Note that does not and is not
required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means (i) any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company; (c) is a Person with respect to
which neither the Company nor any of its Restricted Subsidiaries has any direct
or indirect obligation (x) to subscribe for additional Equity Interests or (y)
to maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results; (d) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Restricted Subsidiaries; and (e) has
at least one executive officer that is not a director or executive officer of
the Company or any of its Restricted Subsidiaries. Any such
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<PAGE> 15
designation by the Board of Directors shall be evidenced to the Trustee by
filing with the Trustee a certified copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by Section
4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet
the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter
cease to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such Indebtedness is not
permitted to be incurred as of such date under Section 4.09 hereof, the Company
shall be in default of such covenant). The Board of Directors of the Company
may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.09 hereof,
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period, and (ii) no Default or Event of
Default would be in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board
of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (ii) the then outstanding
principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person or such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Affiliate Transaction" 4.11
"Asset Sale Offer" 3.09
"Change of Control Offer" 4.13
"Change of Control Payment" 4.13
"Change of Control Payment Date" 4.13
"Covenant Defeasance" 8.03
"DTC" 2.03
"Event of Default" 6.01
"Excess Proceeds" 4.10
"incur" 4.09
"Legal Defeasance" 8.02
"Offer Amount" 3.09
"Offer Period" 3.09
"Paying Agent" 2.03
"Payment Default" 6.01
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Permitted Debt" 4.09
"Purchase Date" 3.09
"Registrar" 2.03
"Restricted Payments" 4.07
"Subsidiary Guarantees" 11.01
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company, each Subsidiary Guarantor and
any successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by the Commission rule
under the TIA have the meanings so assigned to them therein.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein;
(2) an accounting term not otherwise defined herein has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement or successor
sections or rules adopted by the Commission from time to time.
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<PAGE> 17
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of EXHIBIT A attached hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes
initially shall be issued in denominations of $1,000 and integral multiples
thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company, the Subsidiary
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
(a) Global Note. Notes offered and sold to QIBs in reliance on Rule 144A
shall be issued initially in the form of the Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with a
custodian of the Depositary, and registered in the name of the Depositary or a
nominee of the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of the
Global Note may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depositary or its nominee as hereinafter
provided.
The Global Note shall represent such of the outstanding Notes as shall be
specified therein and shall provide that it shall represent the aggregate
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate amount of outstanding Notes represented thereby may from time to time
be reduced or increased, as appropriate, to reflect exchanges, redemptions and
transfers of interests. Any endorsement of the Global Note to reflect the
amount of any increase or decrease in the amount of outstanding Notes
represented thereby shall be made by the Trustee or the Note Custodian, at the
direction of the Trustee, in accordance with instructions given by the Holder
thereof as required by Section 2.06 hereof.
Except as set forth in Section 2.06 hereof, the Global Note may be
transferred, in whole and not in part, only to another nominee of the
Depositary or to a successor of the Depositary or its nominee.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply only to the
Global Note deposited with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with this
Section 2.01(b), authenticate and deliver the Global Note that (i) shall be
registered in the name of the Depositary or the nominee of the Depositary and
(ii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instructions or held by the Trustee as custodian for the
Depositary.
Participants shall have no rights either under this Indenture with respect
to the Global Note held on their behalf by the Depositary or by the Note
Custodian as custodian for the Depositary or under the Global Note, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of the Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee
from giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its
Participants, the operation of customary practices of such Depositary governing
the exercise of the rights of an owner of a beneficial interest in the Global
Note.
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<PAGE> 18
(c) Definitive Notes. Notes issued in certificated form shall be
substantially in the form of EXHIBIT A attached hereto (but without including
the text referred to in footnotes 1 and 3 thereto).
SECTION 2.02. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture. The form of Trustee's certificate of
authentication to be borne by the Notes shall be substantially as set forth in
EXHIBIT A hereto.
The Trustee shall, upon a written order of the Company signed by an
Officer directing the Trustee to authenticate the Notes, authenticate Notes for
original issue up to the aggregate principal amount stated in paragraph 4 of
the Notes. The Trustee shall, upon written order of the Company signed by an
Officer, authenticate New Senior Subordinated Notes for original issuance in
exchange for a like principal amount of Senior Subordinated Notes exchanged in
the Exchange Offer or otherwise exchanged for New Senior Subordinated Notes
pursuant to the terms of the Registration Rights Agreement. The aggregate
principal amount of Notes outstanding at any time may not exceed the aggregate
principal amount stated in paragraph 4 of the Notes, except as provided in
Section 2.07 hereof.
The Trustee may (at the Company's expense) appoint an authenticating agent
acceptable to the Company to authenticate Notes. An authenticating agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
the Company or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and (ii)
an office or agency where Notes may be presented for payment ("Paying Agent").
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may appoint one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
shall notify the Trustee in writing of the name and address of any Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Note.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Note. The
Company initially appoints the Trustee to act as the Registrar and Paying Agent
with respect to the Definitive Notes.
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<PAGE> 19
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages, if any, or interest on the Notes, and
shall notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon
payment over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate
trust fund for the benefit of the Holders all money held by it as Paying Agent.
Upon any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company and/or the Subsidiary Guarantors
shall furnish to the Trustee at least seven (7) Business Days before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Holders of Notes and the Company and
the Subsidiary Guarantors shall otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Beneficial Interests in the Global Note. The
transfer and exchange of beneficial interests in the Global Note shall be
effected through the Depositary, in accordance with this Indenture and the
procedures of the Depositary therefor, which shall include restrictions on
transfer comparable to those set forth herein to the extent required by the
Securities Act. Beneficial interests in the Global Note may be transferred to
Persons who take delivery thereof in the form of a beneficial interest in the
Global Note in accordance with the transfer restrictions set forth in
subsection (g) of this Section 2.06 or in the Unrestricted Global Note in
accordance with subsection (g)(iv).
(b) Transfer and Exchange of Definitive Notes. When Definitive Notes are
presented by a Holder to the Registrar with a request to register the transfer
of the Definitive Notes or to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized denominations, the
Registrar shall register the transfer or make the exchange as requested only
if:
(i) the Definitive Notes are presented or surrendered
for registration of transfer or exchange, endorsed and
containing a signature guarantee or accompanied by a written
instrument of transfer in form satisfactory to the Registrar
duly executed by such Holder or by his attorney and contains a
signature guarantee, duly authorized in writing; and
(ii) in the case of Definitive Notes that are Transfer
Restricted Securities, the Registrar has received the
following documentation, as applicable (all of which may be
submitted by facsimile):
(A) if such Transfer Restricted Security is being delivered
to the Registrar by
18
<PAGE> 20
a Holder for registration in the name of such Holder,
without transfer, or such Transfer Restricted Security
is being transferred to the Company or any of its
Subsidiaries, a certification to that effect from such
Holder (in substantially the form of EXHIBIT B-1
hereto); or
(B) if such Transfer Restricted Security is being
transferred to a QIB in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from such Holder (in substantially the form
of EXHIBIT B-1 hereto); or
(C) if such Transfer Restricted Security is being
transferred to a Non-U.S. Person in an offshore
transaction in accordance with Rule 903 or Rule 904
under the Securities Act, a certification to that
effect from such Holder (in substantially the form of
EXHIBIT B-1 hereto); or
(D) if such Transfer Restricted Security is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration
requirements of the Securities Act other than those
listed in subparagraphs (B) and (C) above, a
certification to that effect from such Holder (in
substantially the form of EXHIBIT B-1 hereto), a
certification substantially in the form of EXHIBIT C
hereto, and, if such transfer is in respect of an
aggregate principal amount of Notes of less than
$100,000, an Opinion of Counsel reasonably acceptable
to the Company that such transfer is in compliance with
the Securities Act; or
(E) if such Transfer Restricted Security is being
transferred in reliance on any other exemption from the
registration requirements of the Securities Act, a
certification to that effect from such Holder (in
substantially the form of EXHIBIT B-1 hereto) and an
Opinion of Counsel from such Holder or the transferee
to the effect that such transfer is in compliance with
the Securities Act.
(c) Transfer of a Beneficial Interest in the Global Note for a
Definitive Note.
(i) Any Person having a beneficial interest in the Global Note may
upon request, subject to the Applicable Procedures, exchange
such beneficial interest for a Definitive Note. Upon receipt
by the Trustee of written instructions or such other form of
instructions as is customary for the Depositary, from the
Depositary or its nominee on behalf of any Person having a
beneficial interest in the Global Note, and, in the case of a
Transfer Restricted Security, the following additional
information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the
beneficial owner, a certification to that effect from
such Person (in substantially the form of EXHIBIT B-2
hereto);
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities
Act or pursuant to an exemption from
19
<PAGE> 21
registration in accordance with Rule 144 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from the transferor (in substantially the
form of EXHIBIT B-2 hereto);
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance
with Rule 903 or Rule 904 under the Securities Act, a
certification to that effect from the transferor (in
substantially the form of EXHIBIT B-2 hereto);
(D) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the
Securities Act other than those listed in subparagraphs
(B) and (C) above, a certification to that effect from
such Holder (in substantially the form of EXHIBIT B-2
hereto), a certification substantially in the form of
EXHIBIT C hereto, and, if such transfer is in respect of
an aggregate principal amount of Notes of less than
$100,000, an Opinion of Counsel reasonably acceptable to
the Company that such transfer is in compliance with the
Securities Act; or
(E) if such beneficial interest is being transferred in
reliance on any other exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferor (in substantially the
form of EXHIBIT B-2 hereto) and an Opinion of Counsel
from the transferee or the transferor reasonably
acceptable to the Company and to the Registrar to the
effect that such transfer is in compliance with the
Securities Act,
in which case the Trustee or the Note Custodian, at the
direction of the Trustee, shall, in accordance with the
standing instructions and procedures existing between the
Depositary and the Note Custodian, cause the aggregate
principal amount of the Global Note to be reduced accordingly
and, following such reduction, the Company shall execute and,
the Trustee shall authenticate and deliver to the transferee
a Definitive Note in the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial interest
in the Global Note pursuant to this Section 2.06(c) shall be
registered in such names and in such authorized denominations
as the Depositary, pursuant to instructions from its direct or
Indirect Participants or otherwise, shall instruct the Trustee.
The Trustee shall deliver such Definitive Notes to the Persons
in whose names such Notes are so registered. Following any
such issuance of Definitive Notes, the Trustee, as Registrar,
shall instruct the Depositary to reduce or cause to be reduced
the aggregate principal amount of the Global Note to reflect
the transfer.
(d) Restrictions on Transfer and Exchange of the Global Note.
Notwithstanding any other provision of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), the Global Note
may not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(e) Transfer and Exchange of a Definitive Note for a Beneficial Interest
in the Global Note.
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<PAGE> 22
When a Definitive Note is presented by a Holder to the Registrar with a request
to register the transfer of the Definitive Note to a Person who is required or
permitted to take delivery thereof in the form of an interest in the Global
Note, or to exchange such Definitive Note for an equal interest in the Global
Note, the Registrar shall register the transfer or make the exchange as
requested only if (i) the Definitive Note is presented or surrendered for
registration of transfer or exchange, endorsed and containing a signature
guarantee or accompanied by a written instrument of transfer in form
satisfactory to the Registrar duly executed by such Holder or by his
attorney-in-fact and containing a signature guarantee, duly authorized in
writing and (ii) in the case of Definitive Notes that are Transfer Restricted
Securities (other than Transfer Restricted Securities that are being exchanged
or transferred in accordance with the transfer restrictions set forth in
subsection (g)(iv) of this Section 2.06), the Registrar has received the
following documentation, as applicable (all of which may be submitted by
facsimile):
(A) if such Transfer Restricted Security is being delivered
to the Registrar by a Holder for registration in the
name of such Holder, without transfer, or such Transfer
Restricted Security is being transferred to the Company
or any of its Subsidiaries, a certification to that
effect from such Holder (in substantially the form of
EXHIBIT B-1 hereto); or
(B) if such Transfer Restricted Security is being
transferred to a QIB in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from such Holder (in substantially the form
of EXHIBIT B-1 hereto); or
(C) if such Transfer Restricted Security is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration
requirements of the Securities Act other than those
listed in subparagraph (B) above, a certification to
that effect from such Holder (in substantially the form
of EXHIBIT B-1 hereto), a certification substantially in
the form of EXHIBIT C hereto, and, if such transfer is
in respect of an aggregate principal amount of Notes of
less than $100,000, an Opinion of Counsel reasonably
acceptable to the Company that such transfer is in
compliance with the Securities Act; or
(D) if such Transfer Restricted Security is being
transferred in reliance on any other exemption from the
registration requirements of the Securities Act, a
certification to that effect from such Holder (in
substantially the form of EXHIBIT B-1 hereto) and an
Opinion of Counsel from such Holder or the transferee
reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act.
The Trustee shall (or, if at any time the Trustee ceases to be the
Registrar, shall upon receipt from the Registrar of written notification that
the foregoing documentation has been received by the Registrar) cancel the
Definitive Note and increase or cause to be increased the aggregate principal
amount of the Global Note accordingly. If no part of the Global Note is then
outstanding, the Company shall execute and the Trustee shall authenticate a new
Global Note in the appropriate principal amount.
(f) Authentication of Definitive Notes in Absence of Depositary.
If at any time:
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<PAGE> 23
(i) the Depositary for the Notes notifies the Company that
the Depositary is unwilling or unable to continue as
Depositary for the Global Note and a successor Depositary
for the Global Note is not appointed by the Company
within 90 days after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance
of Definitive Notes under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Note in exchange for such Global Note. Neither
the Company nor the Trustee will be liable for any delay by the Depositary in
indentifying the beneficial owners of Notes and the Company and the Trustee may
conclusively rely on, and will be protected in relying on, instructions from
the Depositary for all purposes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each Note certificate evidencing the
Global Note and Definitive Notes (and all Notes issued
in exchange therefor or substitution thereof) shall bear
the legend in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION
FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT
PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1)(a) TO A PERSON WHO THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144
UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES
TO A FOREIGN PERSON IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, (d) TO
AN INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF THE SECURITIES ACT (AN
"INSTITUTIONAL ACCREDITED INVESTOR") IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL, AND EACH
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<PAGE> 24
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by the
Global Note) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act:
(A) in the case of any Transfer Restricted Security that is
a Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security
for a Definitive Note that does not bear the legend set
forth in (i) above and rescind any restriction on the
transfer of such Transfer Restricted Security upon
receipt of a certification from the transferring holder
substantially in the form of EXHIBIT B-1 hereto; and
(B) in the case of any Transfer Restricted Security
represented by the Global Note, such Transfer Restricted
Security shall not be required to bear the legend set
forth in (i) above, but shall continue to be subject to
the provisions of Section 2.06(a) and (b) hereof;
provided, however, that with respect to any request for
an exchange of a Transfer Restricted Security that is
represented by the Global Note for a Definitive Note
that does not bear the legend set forth in (i) above,
which request is made in reliance upon Rule 144, the
Holder thereof shall certify in writing to the Registrar
that such request is being made pursuant to Rule 144
(such certification to be substantially in the form of
EXHIBIT B-2 hereto).
(iii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by the
Global Note) in reliance on any exemption from the
registration requirements of the Securities Act (other than
exemptions pursuant to Rule 144A or Rule 144 under the
Securities Act) in which the Holder or the transferee provides
an Opinion of Counsel to the Company and the Registrar in form
and substance reasonably acceptable to the Company and the
Registrar (which Opinion of Counsel shall also state that the
transfer restrictions contained in the legend are no longer
applicable):
(A) in the case of any Transfer Restricted Security that is
a Definitive Note, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted
Security for a Definitive Note that does not bear the
legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted
Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted
Security shall not be required to bear the legend set
forth in (i) above, but shall continue to be subject to
the provisions of Section 2.06(a) and (b) hereof.
(iv) Notwithstanding the foregoing, upon the consummation of the
Exchange Offer in accordance with the Registration Rights
Agreement, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof,
the
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<PAGE> 25
Trustee shall authenticate (i) an Unrestricted Global Note in
aggregate principal amount equal to the principal amount of
the Restricted Beneficial Interests tendered for acceptance
by Persons that certify in the applicable letter of
transmittal that they (x) are acquiring the Notes in the
ordinary course of business, (y) are not participating in the
distribution of the Notes and (z) are not affiliates (as
defined in Rule 144) of the Company and accepted for exchange
in the Exchange Offer and (ii) Definitive Notes that do not
bear the Private Placement Legend in an aggregate principal
amount equal to the principal amount of the Definitive Notes
accepted for exchange in the Exchange Offer, subject to
delivery by such Person of the certification described in
clause (i). Concurrently with the issuance of such Notes,
the Trustee shall cause the aggregate principal amount of the
Restricted Global Note to be reduced accordingly and the
Company shall execute and the Trustee shall authenticate and
deliver to the Persons designated by the Holders of
Definitive Notes so accepted Definitive Notes in the
appropriate principal amount.
(h) Cancellation and/or Adjustment of the Global Note. At such time as all
beneficial interests in the Global Note have been exchanged for Definitive
Notes, redeemed, repurchased or cancelled, the Global Note shall be
returned to or retained and cancelled by the Trustee in accordance with
Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in the Global Note is exchanged for Definitive Notes,
redeemed, repurchased or cancelled, the principal amount of Notes
represented by the Global Note shall be reduced accordingly and an
endorsement shall be made on the Global Note, by the Trustee or the Notes
Custodian, at the direction of the Trustee, to reflect such reduction.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall
authenticate the Global Note and Definitive Notes
at the Registrar's request.
(ii) No service charge shall be made to a Holder for
any registration of transfer or exchange, but the
Company may require payment of a sum sufficient
to cover any stamp or transfer tax or similar
governmental charge payable in connection therewith
(other than any such stamp or transfer taxes or
similar governmental charge payable upon exchange
or transfer pursuant to Sections 2.10, 3.06, 4.10,
4.13 and 9.05 hereto).
(iii)All Definitive Notes and the Global Note issued
upon any registration of transfer or exchange of
the Global Note or Definitive Notes shall be the
valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under
this Indenture, as the Global Note or Definitive
Notes surrendered upon such registration of
transfer or exchange.
(iv) The Registrar shall not be required:(A) to issue,
to register the transfer of or to exchange Notes
during a period beginning at the opening of fifteen
(15) Business Days before the day of any selection
of Notes for redemption under Section 3.02 hereof
and ending at the close of business on the day of
selection, (B) to
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<PAGE> 26
register the transfer of or to exchange any Note
so selected for redemption in whole or in part,
except the unredeemed portion of any Note being
redeemed in part, or (C) to register the transfer
of or to exchange a Note between a record date
and the next succeeding interest payment date.
(v) Prior to due presentment
for the registration of a transfer of any Note,
the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is
registered as the absolute owner of such Note for
the purpose of receiving payment of principal of
and interest on such Notes and for all other
purposes, and neither the Trustee, any Agent nor
the Company shall be affected by notice to the
contrary.
(vi) The Trustee shall
authenticate the Global Note and Definitive Notes
in accordance with the provisions of Section 2.02
hereof.
Notwithstanding anything herein to the contrary, as to any certifications and
certificates delivered to the Registrar pursuant to this Section 2.06, the
Registrar's duties shall be limited to confirming that any such certifications
and certificates delivered to it are in the form of Exhibits B-1, B-2 and C
attached hereto. The Registrar shall not be responsible for confirming the
truth or accuracy of representations made in any such certifications or
certificates.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receives evidence to their satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by an Officer of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that
is sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company and the Trustee may
charge for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section 2.08 as not outstanding.
Except as set forth in Section 2.09 hereof, a Note does not cease to be
outstanding because the Company or any Subsidiary Guarantor or an Affiliate of
the Company or any Subsidiary Guarantor holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
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<PAGE> 27
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding for all purposes of this Indenture and,
among other things, shall cease to accrue interest.
If, pursuant to Section 8.01 hereof, the Company elects to have Section
8.02 or 8.03 hereof be applied to all outstanding Notes, the Notes shall be
deemed "outstanding" only for the purposes set forth in Section 8.02 or 8.03,
as applicable.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or any Subsidiary Guarantor, or by any Affiliate of the Company or any
Subsidiary Guarantor, shall be considered as though not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes a Responsible
Officer of the Trustee knows are so owned shall be so disregarded.
Notwithstanding the foregoing, Notes that are to be acquired by the Company or
any Subsidiary Guarantor or an Affiliate of the Company or any Subsidiary
Guarantor pursuant to an exchange offer, tender offer or other agreement shall
not be deemed to be owned by such entity until legal title to such Notes passes
to such entity.
SECTION 2.10. TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by an Officer of the Company. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee shall upon receipt of a written order
of the Company signed by an Officer authenticate Definitive Notes in exchange
for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder or which the Company may
have acquired in any manner whatsoever, and all Notes so delivered shall be
promptly cancelled by the Trustee. All Notes surrendered for registration of
transfer, exchange or payment, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee. The Trustee and no one else shall
cancel all Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation. Subject to Section 2.07 hereof, the Company may
not issue new Notes to replace Notes that it has redeemed or paid or that have
been delivered to the Trustee for cancellation. All cancelled Notes held by
the Trustee shall be destroyed and certification of their destruction delivered
to the Company, unless by a written order, signed by an Officer of the Company,
the Company shall direct that cancelled Notes be returned to it.
SECTION 2.12. DEFAULTED INTEREST.
If the Company or any Subsidiary Guarantor defaults in a payment of
interest on the Notes, it shall pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date, which date shall
be at the
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<PAGE> 28
earliest practicable date but in all events at least five (5) Business Days
prior to the payment date, in each case at the rate provided in the Notes and
in Section 4.01 hereof. The Company shall fix or cause to be fixed each such
special record date and payment date, and shall promptly thereafter, notify the
Trustee of any such date. At least fifteen (15) days before the special record
date, the Company (or the Trustee, in the name and at the expense of the
Company) shall mail or cause to be mailed to Holders a notice that states the
special record date, the related payment date and the amount of such interest
to be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of Holders of the
Notes entitled to vote or consent to any action by vote or consent authorized
or permitted under this Indenture shall be determined as provided for in TIA
Section 316 (c).
SECTION 2.14. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
SECTION 2.15. CUSIP NUMBER.
The Company in issuing the Notes may use a "CUSIP" number, and if it does
so, the Trustee shall use the CUSIP number in notices of redemption or exchange
as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 45
days but not more than 60 days before a redemption date (unless a shorter
period is acceptable to the Trustee) an Officers' Certificate setting forth (i)
the Section of this Indenture pursuant to which the redemption shall occur,
(ii) the redemption date, (iii) the principal amount of Notes to be redeemed
and (iv) the redemption price.
If the Company is required to make an offer to purchase Notes pursuant to
Section 4.10 or 4.13 hereof, it shall furnish to the Trustee, at least 45 days
before the scheduled purchase date, an Officers' Certificate setting forth (i)
the section of this Indenture pursuant to which the offer to purchase shall
occur, (ii) the terms of the offer, (iii) the principal amount of Notes to be
purchased, (iv) the purchase price, (v) the purchase date and (vi) and further
setting forth a statement to the effect that (a) the Company or one its
Subsidiaries has affected an Asset Sale and there are Excess Proceeds
aggregating more than $7.0 million or (b) a Change of Control has occurred, as
applicable.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange,
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<PAGE> 29
if any, on which the Notes are listed, or, if the Notes are not so listed, on a
pro rata basis, by lot or by such method as the Trustee shall deem fair and
appropriate; provided that no Notes of $1,000 or less shall be redeemed in
part. Notices of redemption shall be mailed by first class mail at least 30
but not more than 60 days before the redemption date to each Holder of Notes to
be redeemed at its registered address. If any Note is to be redeemed in part
only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note. Notes
called for redemption become due on the date fixed for redemption. On and
after the redemption date, interest ceases to accrue on Notes or portions of
them called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date, the
Company shall mail or cause to be mailed by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price for the Notes and accrued
interest, and Liquidated Damages, if any;
(3) if any Note is being redeemed in part, the portion of the
principal amount of such Notes to be redeemed and that, after
the redemption date, upon surrender of such Note, a new Note
or Notes in principal amount equal to the unredeemed portion
shall be issued upon surrender of the original Note;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption
payment, interest and Liquidated Damages, if any, on Notes
called for redemption ceases to accrue on and after the
redemption date;
(7) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being
redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or
printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date (or such shorter period as shall be acceptable to the Trustee),
an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in the notice as provided in the
preceding paragraph. The notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the Holder
receives such notice. In any case, failure to give such notice by mail or any
defect in the notice to the Holder of any Note shall not affect
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<PAGE> 30
the validity of the proceeding for the redemption of any other Note.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price plus accrued and unpaid interest and
Liquidated Damages, if any, to such date. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION OR PURCHASE PRICE.
On or before 10:00 a.m. (New York City time) on each redemption date or
the date on which Notes must be accepted for purchase pursuant to Section 4.10
or 4.13, the Company shall deposit with the Trustee or with the Paying Agent
money sufficient to pay the redemption price of and accrued and unpaid interest
and Liquidated Damages, if any, on all Notes to be redeemed or purchased on
that date. The Trustee or the Paying Agent shall promptly return to the
Company upon its written request any money deposited with the Trustee or the
Paying Agent by the Company in excess of the amounts necessary to pay the
redemption price of (including any applicable premium), accrued interest and
Liquidated Damages, if any, on all Notes to be redeemed or purchased.
If Notes called for redemption or tendered in an Asset Sale Offer or
Change of Control Offer are paid or if the Company has deposited with the
Trustee or Paying Agent money sufficient to pay the redemption or purchase
price of, unpaid and accrued interest and Liquidated Damages, if any, on all
Notes to be redeemed or purchased, on and after the redemption or purchase date
interest and Liquidated Damages, if any, shall cease to accrue on the Notes or
the portions of Notes called for redemption or tendered and not withdrawn in an
Asset Sale Offer or Change of Control Offer (regardless of whether certificates
for such securities are actually surrendered). If a Note is redeemed or
purchased on or after an interest record date but on or prior to the related
interest payment date, then any accrued and unpaid interest and Liquidated
Damages, if any, shall be paid to the Person in whose name such Note was
registered at the close of business on such record date. If any Note called
for redemption shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph, interest
shall be paid on the unpaid principal and Liquidated Damages, if any, from the
redemption or purchase date until such principal and Liquidated Damages, if
any, is paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case, at the rate provided in the Notes and in Section 4.01
hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as described in the following paragraphs, the Notes will not be
redeemable at the Company's option prior to November 30, 2001. Thereafter, the
Notes will be subject to redemption at any time at the option of the Company,
in whole or in part, upon not less than 30 nor more than 60 days' notice, at
the redemption prices (expressed as percentages of principal amount) set forth
below plus accrued and unpaid interest and Liquidated Damages, if any, thereon
to the applicable redemption date, if redeemed during the twelve-month period
beginning on November 30 of the years indicated below:
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<PAGE> 31
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2001........................................... 105.000%
2002........................................... 102.500%
2003 and thereafter............................ 100.000%
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to November 20, 2000,
the Company may on any one or more occasions redeem up to 33% of the aggregate
principal amount of Notes originally issued under this Indenture at a
redemption price of 110% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of a public offering of common stock of the Company;
provided that at least 67% of the aggregate principal amount of Notes remain
outstanding immediately after the occurrence of such redemption (excluding
Notes held by the Company and its Subsidiaries); and provided, further, that
such redemption shall occur within 45 days of the date of the closing of such
public offering.
(c) In addition, at any time on or prior to November 30, 2001, the Notes
may be redeemed as a whole but not in part at the option of the Company upon
the occurrence of or in connection with a Change of Control, upon not less than
30 nor more than 60 days' notice (but in no event may any such redemption occur
prior to or more than 90 days after the occurrence of such Change of Control),
at a redemption price equal to 100% of the principal amount thereof plus the
Applicable Premium as of, and plus accrued and unpaid interest and Liquidated
Damages, if any, to the redemption date, subject to the right of Holders on the
relevant record date to receive interest due on the relevant interest payment
date.
SECTION 3.08. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption or sinking
fund payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to all Holders to purchase Notes (an "Asset Sale
Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall commence no earlier than 30 days and no later
than 60 days after an Asset Sale Offer shall be required to be made pursuant to
Section 4.10 and remain open for a period of 20 Business Days following its
commencement and no longer, except to the extent that a longer period is
required by applicable law (the "Offer Period"). No later than five Business
Days after the termination of the Offer Period (the "Purchase Date"), the
Company shall purchase the principal amount of Notes required to be purchased
pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than the Offer
Amount has been tendered, all Notes tendered in response to the Asset Sale
Offer. Payment for any Notes so purchased shall be made in the same manner as
interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest and
Liquidated Damages, if any, shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest or Liquidated Damages, if any, shall be payable to Holders who tender
Notes pursuant to the Asset Sale Offer.
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<PAGE> 32
Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders. The notice
shall contain all instructions and materials necessary to enable such Holders
to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall
be made to all Holders. The notice, which shall govern the terms of the Asset
Sale Offer, shall describe in a summary fashion the transaction or transactions
that constitute the Asset Sale Offer, and shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrue interest and Liquidated Damages, if any, after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer their interest in such Note by book-entry
transfer, to the Company, the Depositary, if appointed by the Company, or
a Paying Agent at the address specified in the notice not later than the
close of business on the last day of the Offer Period;
(f) that Holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Note the Holder delivered for
purchase and a statement that such Holder is withdrawing his election to
have such Note purchased;
(g) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to
be purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(h) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered (or transferred by book-entry transfer).
On or before 10:00 a.m. (New York City time) on each Purchase Date, the
Company shall irrevocably deposit with the Trustee or Paying Agent in
immediately available funds the aggregate purchase price with respect to a
principal amount of Notes equal to the aggregate principal amount of Notes
tendered in response to the Asset Sale Offer or, if less, the Offer Amount,
together with accrued and unpaid interest and Liquidated Damages, if any,
thereon, to be held for payment in accordance with the terms of this Section
3.09. On the Purchase Date, the Company shall, to the extent lawful, (i)
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, (ii)
deliver or cause the Paying Agent or Depositary, as the case may be, to deliver
to the Trustee Notes so accepted and (iii) deliver to the Trustee an Officers'
Certificate stating that such Notes or portions thereof were accepted for
payment by the Company in accordance with the terms of this Section 3.09. The
Company, the Depositary or the Paying Agent, as the case may be, shall promptly
(but in any case not later than three (3) Business Days after
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the Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Notes tendered by such Holder and accepted by the
Company for purchase, plus any accrued and unpaid interest and Liquidated
Damages, if any, thereon, and the Company shall promptly issue a new Note, and
the Trustee, shall authenticate and mail or deliver such new Note, to such
Holder, equal in principal amount to any unpurchased portion of such Holder's
Notes surrendered. Any Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce in a newspaper of general circulation or in a press release provided
to a nationally recognized financial wire service the results of the Asset Sale
Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01, 3.02, 3.05 and 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. The Company shall pay all Liquidated Damages, if any, in the same
manner on the dates and in the amounts set forth in the Registration Rights
Agreement. Principal, premium and Liquidated Damages, if any, and interest,
shall be considered paid for all purposes hereunder on the date the Paying
Agent (if other than the Company or a Subsidiary thereof) holds, as of 10:00
a.m. (New York City time) money deposited by the Company in immediately
available funds and designated for and sufficient to pay all such principal,
premium and Liquidated Damages, if any, and interest, then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New
York an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee or Registrar) where Notes may be surrendered for registration of
transfer or for exchange and where notices and demands to or upon the Company
in respect of the Notes and this Indenture may be served. The Company shall
give prompt written notice to the Trustee of the location, and any change in
the location, of such office or agency. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give
prompt written notice to the Trustee of any such designation or rescission and
of any change in the location of any such other office or agency.
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The Company hereby designates the Corporate Trust Office of the Trustee,
or its affiliate, as one such office or agency of the Company in accordance
with Section 2.03 hereof.
SECTION 4.03. COMMISSION REPORTS.
Whether or not required by the rules and regulations of the Commission, so
long as any Notes are outstanding, the Company shall furnish to the Holders of
Notes (i) all quarterly and annual financial information that would be required
to be contained in a filing with the Commission on Forms 10-Q and 10-K if the
Company were required to file such Forms, including a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" that describes
the financial condition and results of operations of the Company and its
consolidated Subsidiaries and, with respect to the annual information only, a
report thereon by the Company's certified independent accountants and (ii) all
current reports that would be required to be filed with the Commission on Form
8-K if the Company were required to file such reports, in each case within the
time periods specified in the Commission's rules and regulations. In addition,
following the consummation of the Exchange Offer, whether or not required by
the rules and regulations of the Commission, the Company will file a copy of
all such information and reports with the Commission for public availability
within the time periods specified in the Commission's rules and regulations
(unless the Commission will not accept such a filing) and make such information
available to securities analysts and prospective investors upon request. In
addition, the Company has agreed that, for so long as is required for an offer
or sale of the Notes to qualify for an exemption under Rule 144A, it will
furnish to the Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act. The Company and each Subsidiary Guarantor
shall at all times comply with TIA Section 314(a).
The financial information to be distributed to Holders of Notes shall be
filed with the Trustee and mailed to the Holders at their addresses appearing
in the register of Notes maintained by the Registrar, within 120 days after the
end of the Company's fiscal years and within 60 days after the end of each of
the first three quarters of each such fiscal year.
The Company shall provide the Trustee with a sufficient number of copies
of all reports and other documents and information and, if requested by the
Company, the Trustee will deliver such reports to the Holders under this
Section 4.03.
SECTION 4.04. COMPLIANCE CERTIFICATE.
The Company shall deliver to the Trustee, within 90 days after the end of
each fiscal year of the Company, an Officers' Certificate stating (i)(A) that,
in the course of the performance by the signatories thereto of their duties as
Officers of the Company, they would normally have knowledge of any Default or
Event of Default, (B) whether or not such signatories know of any Default or
Event of Default that occurred during such period and (C) if any Default or
Event of Default has occurred during such period, the nature of such Default or
Event of Default, its status and what action the Company is taking or proposes
to take in respect thereto and (ii) that to the best of his or her knowledge no
event has occurred and remains in existence by reason of which payments on
account of the principal of or interest, if any, on the Notes are prohibited or
if such event has occurred, a description of the event and what action the
Company is taking or proposes to take with respect thereto.
So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 hereof shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial
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statements, nothing has come to their attention that would lead them to believe
that the Company has violated any provisions of Article 4 or Article 5 hereof
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be
liable directly or indirectly to any Person for any failure to obtain knowledge
of any such violation.
The Company shall, so long as any of the Notes are outstanding, deliver to
the Trustee, forthwith upon any Officer becoming aware of any Default or Event
of Default, an Officers' Certificate specifying such Default or Event of
Default and what action the Company is taking or proposes to take with respect
thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency all material taxes, assessments and governmental levies,
except such as are contested in good faith and by appropriate proceedings and
with respect to which appropriate reserves have been taken in accordance with
GAAP.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each Subsidiary Guarantor covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each Subsidiary Guarantor (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it shall not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been
enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any other payment or distribution on account of the Company's or any of
its Restricted Subsidiaries' Equity Interests (including, without limitation,
any payment in connection with any merger or consolidation involving the
Company or any of its Restricted Subsidiaries) or to the direct or indirect
holders of the Company's or any of its Restricted Subsidiaries' Equity
Interests in their capacity as such (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or
to the Company or a Restricted Subsidiary of the Company); (ii) purchase,
redeem or otherwise acquire or retire for value (including, without limitation,
in connection with any merger or consolidation involving the Company) any
Equity Interests of the Company or any direct or indirect parent of the
Company; (iii) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is pari
passu with or subordinated to the Notes, except a payment of interest or
principal at Stated Maturity; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the time of and
after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have
been permitted to incur at least $1.00 of additional Indebtedness
pursuant
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to the Fixed Charge Coverage Ratio test set forth in the first paragraph
of Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date hereof (excluding Restricted Payments
permitted by clauses (ii), (iii), (iv), (vi) and (viii) of the next
succeeding paragraph), is less than the sum, without duplication, of (i)
50% of the Consolidated Net Income of the Company for the period (taken
as one accounting period) from the beginning of the first fiscal quarter
commencing after the date hereof to the end of the Company's most
recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, less 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds received by
the Company since the date hereof as a contribution to its common equity
capital or from the issue or sale of Equity Interests of the Company
(other than Disqualified Stock) or from the issue or sale of
Disqualified Stock or debt securities of the Company that have been
converted into such Equity Interests (other than Equity Interests (or
Disqualified Stock or convertible debt securities) sold to a Subsidiary
of the Company), plus (iii) to the extent that any Restricted Investment
that was made after the date hereof is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (B) the initial amount of such Restricted
Investment, plus (iv) in the event the Company or any Restricted
Subsidiary makes any Investment in a Person that, as a result of or in
connection with such Investment, becomes a Restricted Subsidiary, an
amount equal to the Company's or any Restricted Subsidiary's existing
Restricted Investment in such Person that was previously treated as a
Restricted Payment.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of this
Indenture, (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any pari passu or subordinated Indebtedness or Equity Interests
of the Company in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (c)(ii) of the preceding paragraph, (iii) the
defeasance, redemption, repurchase or other acquisition of pari passu or
subordinated Indebtedness with the net cash proceeds from an incurrence of
Permitted Refinancing Indebtedness, (iv) the payment of any dividend by a
Restricted Subsidiary of the Company to the holders of any class of its common
Equity Interests on a pro rata basis, (v) the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of the Company or
any Restricted Subsidiary of the Company held by any member of the Company's
(or any of its Restricted Subsidiaries') management pursuant to any management
equity subscription agreement or stock option agreement; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $1.0 million in any twelve-month period and
no Default or Event of Default shall have occurred and be continuing
immediately after such transaction, (vi) the making and consummation of an
Asset Sale Offer to holders of Indebtedness pari passu with or subordinate to
the Notes in accordance with Section 4.10 hereof, (vii) the making of loans to
officers and directors of the Company or any Restricted Subsidiary, the
proceeds of which are contemporaneously used to purchase common stock of the
Company in an amount not to exceed $5.0 million at any one time outstanding,
(viii) the repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value or payment of principal of subordinated or pari passu
Indebtedness at a purchase price not greater than 101% of the principal amount
of such subordinated or pari passu Indebtedness in the event of a Change of
Control pursuant to a provision similar to Section 4.13 hereof; provided,
however, that prior to the repurchase of any subordinated Indebtedness and
concurrently with the repurchase of any pari passu Indebtedness, the Company
has made an offer to purchase as provided in Section 4.13 hereof with respect
to the Notes and has repurchased all
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Notes validly tendered for payment in connection with such offer to purchase
and (ix) the making of additional Restricted Payments in an amount not to
exceed $5.0 million.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined by
the Board of Directors whose resolution with respect thereto shall be delivered
to the Trustee, such determination to be based upon an opinion or appraisal
issued by an accounting, appraisal or investment banking firm of national
standing selected by the Board of Directors if such fair market value exceeds
$5.0 million. Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, together with a copy
of any fairness opinion or appraisal required by the Indenture.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid in cash)
in the Subsidiary so designated will be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this Section 4.07. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
fair market value of such Investments at the time of such designation. Such
designation will only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
SECTION 4.08. DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(i)(a) pay dividends or make any other distributions to the Company
or any of its Restricted Subsidiaries (1) on its Capital Stock or (2)
with respect to any other interest or participation in, or measured by,
its profits, or (b) pay any Indebtedness owed to the Company or any of
its Restricted Subsidiaries;
(ii) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(iii) transfer any of its properties or assets to the Company or
any of its Restricted Subsidiaries.
However, the foregoing restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(a) Existing Indebtedness as in effect on the date hereof;
(b) the Credit Facility as in effect as of the date hereof, and any
amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are not materially
more restrictive, taken as a whole, with respect to such dividend and
other payment restrictions than those contained in the Credit Facility
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as in effect on the date hereof;
(c) this Indenture and the Notes;
(d) applicable law;
(e) any instrument or contract of a Person acquired by the Company
or any of its Restricted Subsidiaries as in effect at the time of such
acquisition (except to the extent such instrument or contract was entered
into in connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired;
(f) customary non-assignment provisions in leases and other
agreements entered into in the ordinary course of business and
consistent with past practices;
(g) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature
described in clause (iii) above on the property so acquired;
(h) any agreement for the sale of a Restricted Subsidiary that
restricts distributions by that Restricted Subsidiary pending its sale;
(i) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, taken as a whole, than
those contained in the agreements governing the Indebtedness being
refinanced (as determined in good faith by the Board of Directors);
(j) secured Indebtedness otherwise permitted to be incurred
pursuant to the provisions of this Indenture that limit the right of the
debtor to dispose of the assets securing such Indebtedness;
(k) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements and other similar
agreements entered into in the ordinary course of business; and
(l) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect
to (collectively, "incur") any Indebtedness (including Acquired Debt) and the
Company will not issue any Disqualified Stock and will not permit any of its
Restricted Subsidiaries to issue any shares of preferred stock; provided,
however, that the Company may incur Indebtedness (including Acquired Debt) or
issue shares of Disqualified Stock and the Subsidiary Guarantors may incur
Indebtedness or issue preferred stock if the Fixed Charge Coverage Ratio for
the Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock or preferred
stock is issued would have been at least 2.0 to 1, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred, or the Disqualified Stock or
preferred stock had been issued, as the case may be, at the beginning of such
four-quarter period.
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The provisions of the first paragraph of this Section 4.09 will not apply
to the incurrence of any of the following items of Indebtedness (collectively,
"Permitted Debt"):
(i) the incurrence by the Company and the Subsidiary Guarantors of
Indebtedness under the Credit Facility; provided that the aggregate
principal amount of all Indebtedness (with letters of credit being
deemed to have a principal amount equal to the maximum potential
liability of the Company and the Subsidiary Guarantors thereunder)
outstanding under the Credit Facility after giving effect to such
incurrence does not exceed the greater of (a) $115.0 million or (b) the
Borrowing Base;
(ii) the incurrence by the Company and its Restricted Subsidiaries
of the Existing Indebtedness;
(iii) the incurrence by the Company and the Subsidiary Guarantors
of Indebtedness represented by the Notes and the Subsidiary Guarantees;
(iv) the incurrence by the Company or any of the Subsidiary
Guarantors of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or
cost of construction or improvement of property, plant or equipment used
in the business of the Company or such Subsidiary Guarantor, in an
aggregate principal amount not to exceed $10.0 million at any time
outstanding;
(v) the incurrence by the Company or any of the Subsidiary
Guarantors of Indebtedness in connection with the acquisition of assets
or a new Subsidiary; provided that such Indebtedness was incurred by the
prior owner of such assets or such Subsidiary prior to such acquisition
by the Company or one of the Subsidiary Guarantors and was not incurred
in connection with, or in contemplation of, such acquisition by the
Company or one of the Subsidiary Guarantors; and provided further that
the principal amount (or accreted value, as applicable) of such
Indebtedness, together with any other outstanding Indebtedness incurred
pursuant to this clause (v) and any Permitted Refinancing Indebtedness
incurred to refund, refinance or replace any Indebtedness incurred
pursuant to this clause (v), does not exceed $10.0 million at any time
outstanding;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness) that was permitted
by this Indenture to be incurred under the first paragraph hereof or
clauses (i), (ii) or (iii) of this paragraph or this clause (vi);
(vii) the incurrence by the Company or any of the Subsidiary
Guarantors of intercompany Indebtedness or preferred stock between or
among the Company and any of the Subsidiary Guarantors; provided,
however, that (A) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness or preferred stock being
held by a Person other than the Company or a Subsidiary Guarantor and
(B) any sale or other transfer of any such Indebtedness or preferred
stock to a Person that is not either the Company or a Subsidiary
Guarantor shall be deemed, in each case, to constitute an incurrence of
such Indebtedness or an issuance of such preferred stock by the Company
or such Subsidiary Guarantor, as the case may be, that was not permitted
by this clause (vii);
(viii) the incurrence by the Company or any of the Subsidiary
Guarantors of Hedging
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Obligations;
(ix) the guarantee by the Company or any of the Subsidiary
Guarantors of Indebtedness of the Company or a Subsidiary Guarantor that
was permitted to be incurred by another provision of this Section 4.09;
(x) the incurrence by the Company or any of the Subsidiary
Guarantors of additional Indebtedness in an aggregate principal amount
(or accreted value, as applicable) at any time outstanding, including
all Permitted Refinancing Indebtedness incurred to refund, refinance or
replace any Indebtedness incurred pursuant to this clause (x), not to
exceed $10.0 million; and
(xi) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness
ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event
shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company that was not permitted by this
clause (xi).
For purposes of determining compliance with this Section 4.09, in the
event that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xi) above or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company shall, in its sole discretion, classify such item of Indebtedness
in any manner that complies with this Section 4.09. Accrual of interest,
accretion or amortization of original issue discount, the payment of interest
on any Indebtedness in the form of additional Indebtedness with the same terms,
and the payment of dividends on Disqualified Stock in the form of additional
shares of the same class of Disqualified Stock will not be deemed to be an
incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of
this Section 4.09; provided, in each such case, that the amount thereof is
included in Fixed Charges of the Company as accrued.
SECTION 4.10. ASSETS SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time
of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash;
provided that the amount of (x) any liabilities (as shown on the Company's or
such Restricted Subsidiary's most recent balance sheet), of the Company or any
Restricted Subsidiary (other than contingent liabilities and liabilities that
are by their terms subordinated to the Notes or any guarantee thereof) that are
assumed by the transferee of any such assets and as to which the Company or
such Restricted Subsidiary is released from further liability and (y) any
securities, notes or other obligations received by the Company or any such
Restricted Subsidiary from such transferee that are contemporaneously (subject
to ordinary settlement periods) converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received), shall be deemed to
be cash for purposes of this provision.
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds, at its option, (a) to repay Senior
Debt, or (b) to the acquisition of a majority of the assets of, or a majority
of the Voting Stock of, another Permitted Business, the making of a capital
expenditure or the acquisition of other long-term assets or properties
(including, without limitation, equipment) that are used or useful in a
Permitted Business. Pending the final application of any such Net Proceeds,
the Company may temporarily reduce revolving credit borrowings or otherwise
invest such Net Proceeds in any manner that
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is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that
are not applied or invested as provided in the first sentence of this paragraph
will be deemed to constitute "Excess Proceeds." When the aggregate amount of
Excess Proceeds exceeds $7.0 million, the Company will be required to make an
offer to all Holders of Notes and all holders of pari passu Indebtedness
containing provisions similar to those set forth in Section 3.09 hereof to
purchase the maximum principal amount of Notes and such other Indebtedness that
may be purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of the principal amount thereof plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the date of purchase, in
accordance with the procedures set forth in Section 3.09 hereof and such other
Indebtedness. To the extent that any Excess Proceeds remain after consummation
of an Asset Sale Offer, the Company may use such Excess Proceeds for any
purpose not otherwise prohibited by this Indenture. If the aggregate principal
amount of Notes and such other Indebtedness tendered into such Asset Sale Offer
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Notes and such other Indebtedness to be purchased on a
pro rata basis. Upon completion of such offer to purchase, the amount of
Excess Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless
(i) such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the
Trustee (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $1.0
million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction complies with clause (i)
above and that such Affiliate Transaction has been approved by a majority of
the disinterested members of the Board of Directors and (b) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, an opinion as to the
fairness to the Holders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national
standing selected by the Board of Directors. Notwithstanding the foregoing,
the following items shall not be deemed to be Affiliate Transactions: (i) any
employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business; (ii) transactions between or
among the Company and/or its Restricted Subsidiaries; (iii) payment of
reasonable directors fees to Persons who are not otherwise Affiliates of the
Company; (iv) Restricted Payments that are permitted by the provisions of
Section 4.07 hereof as well as transactions that do not constitute Restricted
Payments by virtue of exceptions set forth in the definitions of "Investments"
and "Permitted Investments" set forth in Section 1.01 hereof; (v) reasonable
indemnity provided on behalf of officers, directors, employees, consultants or
agents of the Company or any of its Restricted Subsidiaries as determined in
good faith by the Company's Board of Directors; and (vi) any transactions
undertaken pursuant to any contractual obligations or rights in existence on
the date hereof (as in effect on such date) as described in the Offering
Memorandum under the caption "Certain Relationships and Related Transactions."
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien
securing Indebtedness or trade payables on any asset now owned or hereafter
acquired, or any income or profits therefrom or assign or convey any right to
receive income therefrom, except Permitted Liens.
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SECTION 4.13. OFFER TO PURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, unless the Company has
exercised its right to redeem the Notes pursuant to Section 3.07(c) hereof,
each Holder of Notes shall have the right to require the Company to repurchase
all or any part (equal to $1,000 or an integral multiple thereof) of such
Holder's Notes pursuant to the offer described below (the "Change of Control
Offer") at an offer price in cash equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest and Liquidated Damages thereon,
if any, to the date of purchase (the "Change of Control Payment"). Within 30
days following any Change of Control, the Company will mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and offering to repurchase Notes on the date specified in such notice,
which date shall be no earlier than 30 days and no later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date"), pursuant to
the procedures required by this Indenture and described in such notice. The
Company shall comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such
laws and regulations are applicable in connection with the repurchase of the
Notes as a result of a Change of Control.
On the Change of Control Payment Date, the Company shall, to the extent
lawful, (1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating
the aggregate principal amount of Notes or portions thereof being purchased by
the Company. The Paying Agent shall promptly mail to each Holder of Notes so
tendered the Change of Control Payment for such Notes, and the Trustee shall
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Note equal in principal amount to any unpurchased portion of
the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
issue a press release announcing the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Payment Date.
The Change of Control provisions described above shall be applicable
whether or not any other provisions of this Indenture are applicable.
Notwithstanding anything to the contrary in this Section 4.13, the Company
shall not be required to make a Change of Control Offer upon a Change of
Control if a third party makes the Change of Control Offer in the manner, at
the times and otherwise in compliance with the requirements set forth in this
Section 4.13 and purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, and the corporate, partnership or other existence of each of its
Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary; provided that the Company shall not be required to
preserve the corporate, partnership or other existence of any of its Restricted
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company
and its Restricted Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders.
SECTION 4.15. BUSINESS ACTIVITIES.
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The Company shall not, and shall not permit any Restricted Subsidiary to,
engage in any business other than Permitted Businesses, except to such extent
as would not be material to the Company and its Restricted Subsidiaries taken
as a whole.
SECTION 4.16. ADDITIONAL SUBSIDIARY GUARANTEES.
If the Company or any of its Restricted Subsidiaries shall acquire or
create another Subsidiary after the date hereof (other than an Unrestricted
Subsidiary), then such newly acquired or created Subsidiary shall (a) execute a
Guarantee in substantially the form of EXHIBIT D hereto and (b) execute and
deliver to the Trustee a supplemental indenture in the form of EXHIBIT E hereto
pursuant to which such newly acquired or created Subsidiary shall
unconditionally guarantee all of the Company's obligations under the Notes and
this Indenture on the terms set forth in such supplemental indenture.
SECTION 4.17. PAYMENT FOR CONSENTS.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions hereof or
the Notes unless such consideration is offered to be paid or is paid to all
Holders of the Notes that consent, waive or agree to amend in the time frame,
on the terms and subject to the conditions set forth in the solicitation
documents relating to such consent, waiver or agreement.
SECTION 4.18. ANTI-LAYERING.
The Company shall not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt and senior in any respect in right of payment to the
Notes. No Subsidiary Guarantor shall incur, create, issue, assume, guarantee
or otherwise become liable for any Indebtedness that is subordinate or junior
in right of payment to the Senior Debt of such Subsidiary Guarantor and senior
in any respect in right of payment to the Subsidiary Guarantees.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.
The Company may not consolidate or merge with or into (whether or not the
Company is the surviving corporation), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another corporation, Person or entity
unless (i) the Company is the surviving corporation or the entity or the Person
formed by or surviving any such consolidation or merger (if other than the
Company) or to which such sale, assignment, transfer, lease, conveyance or
other disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia, (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the
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obligations of the Company under the Registration Rights Agreement, the Notes
and this Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, (iii) immediately after such transaction no Event
of Default exists and (iv) except in the case of a merger of the Company with
or into a Subsidiary Guarantor, the Company or the entity or Person formed by
or surviving any such consolidation or merger (if other than the Company), or
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at
the beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the
assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and shall
exercise every right and power of the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
provided, that, (i) solely for the purposes of computing Consolidated Net
Income for purposes of clause (b) of the first paragraph of Section 4.07
hereof, the Consolidated Net Income of any Person other than the Company and
its Subsidiaries shall be included only for periods subsequent to the effective
time of such merger, consolidation, combination or transfer of assets; and (ii)
in the case of any sale, assignment, transfer, lease, conveyance, or other
disposition of less than all of the assets of the predecessor Company, the
predecessor Company shall not be released or discharged from the obligation to
pay the principal of or interest and Liquidated Damages, if any, on the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an Event of Default:
(a) default for 30 days in the payment when due of interest on
, or Liquidated Damages with respect to, the Notes (whether or not
prohibited by the subordination provisions of this Indenture);
(b) default in payment when due of the principal of or premium,
if any, on the Notes (whether or not prohibited by the
subordination provisions of this Indenture);
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(c) failure by the Company or any of its Subsidiaries to comply
with Sections 4.07, 4.09, 4.10 or 4.13 hereof, and such default
continues for ten days;
(d) failure by the Company or any of its Subsidiaries for 60
days after notice to comply with any of its other agreements in
this Indenture or the Notes;
(e) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date
hereof, which default (a) is caused by a failure to pay principal
of or premium, if any, or interest on such Indebtedness prior to
the expiration of the grace period provided in such Indebtedness on
the date of such default (a "Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its express maturity
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $10 million or more;
(f) failure by the Company or any of its Subsidiaries to pay
final judgments aggregating in excess of $10 million, not covered
by insurance, which judgments are not paid, discharged or stayed
for a period of 60 days;
(g) the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against it in
an involuntary case;
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property;
(iv) makes a general assignment for the benefit of its creditors;
or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary in an
involuntary case;
(ii) appoints a Custodian of the Company or any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or
substantially all of the property of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that,
taken as a whole, would constitute a Significant Subsidiary;
or
(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries
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or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days; or
(i) except as permitted by this Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in
full force and effect or any Subsidiary Guarantor, or any Person
acing on behalf of any Subsidiary Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee (other
than by reason of release pursuant to this Indenture).
A Default under clause (d) is not an Event of Default until the Trustee
notifies the Company, or the Holders of at least 25% in principal amount of the
then outstanding Notes notify the Company and the Trustee, of the Default and
the Company does not cure the Default within 60 days after receipt of the
notice. The notice must specify the Default, demand that it be remedied and
state that the notice is a "Notice of Default."
SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately. Notwithstanding the
foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the Company, any Significant
Subsidiary or any group of Restricted Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding Notes will become due and
payable without further action or notice. Holders of the Notes may not enforce
this Indenture or the Notes except as provided herein. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of the Notes notice of any continuing Default
or Event of Default (except a Default or Event of Default relating to the
payment of principal or interest) if it determines that withholding notice is
in their interest.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of principal, premium, if any,
interest and Liquidated Damages, if any, on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All
remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default
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and its consequences hereunder except a continuing Default or Event of Default
in the payment of interest on, or the principal of, any Note held by a
non-consenting Holder (including in connection with an offer to purchase);
provided that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes
may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it. However, the Trustee may refuse to follow any direction that
conflicts with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Holders (it being understood that (subject
to Section 7.01) the Trustee shall have no duty to ascertain whether or not
such actions or forbearances are unduly prejudicial to such Holders) or that
may involve the Trustee in personal liability. The Trustee may take any other
action which it deems proper which is not inconsistent with any such direction.
Notwithstanding any provision to the contrary in this Indenture, the Trustee
shall not be obligated to take any action with respect to the provisions of
Section 6.02 hereof unless directed to do so pursuant to this Section 6.05.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture, the
Subsidiary Guarantees or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of
a continuing Event of Default or the Trustee receives such notice
from the Company;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue
the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the
Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the
Trustee a direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, interest,
and Liquidated Damages, if any, on the Note, on or after the respective due
dates expressed in the Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or
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affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) hereof occurs
and is continuing, the Trustee is authorized to recover judgment in its own
name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and interest
remaining unpaid on the Notes and interest on overdue principal and, to the
extent lawful, interest and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), its creditors or its property
and shall be entitled and empowered to collect, receive and distribute any
money or other securities or property payable or deliverable upon the
conversion or exchange of the Notes or on any such claims and any Custodian in
any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof
out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of,
any and all distributions, dividends, money, securities and other properties
that the Holders may be entitled to receive in such proceeding whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys, for amounts due under
Section 7.07 hereof, including payment of all reasonable compensation, expenses
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium, if any, interest, and Liquidated Damages, if any, ratably,
without preference or priority of any kind, according to the amounts due and
payable on the Notes for principal, premium, if any, interest, and Liquidated
Damages, if any, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes
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pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than
10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture,
and use the same degree of care and skill in its exercise, as a prudent man
would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture or the TIA and the Trustee need
perform only those duties that are specifically set forth in this
Indenture or the TIA and no others, and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon Officers' Certificates or
Opinions of Counsel furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, its own bad faith, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b) and (c) of this Section 7.01.
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(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, including, without limitation, the provisions of
Section 6.05 hereof, unless such Holders shall have offered to the Trustee
security and indemnity reasonably satisfactory to it against any loss,
liability or expense that might be incurred by it in complying with such
request.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may rely upon any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need
not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture; provided that the Trustee's conduct
does not constitute willful misconduct or negligence.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company. A permissive right granted to the Trustee hereunder
shall not be deemed an obligation to act.
(f) The Trustee shall not be charged with knowledge of any Default or
Event of Default unless either (i) a Responsible Officer of the Trustee shall
have actual knowledge of such Default or Event of Default or (ii) written
notice of such Default or Event of Default shall have been given to the Trustee
by the Company or any Holder.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Company or any Affiliate of
the Company with the same rights it would have if it were not Trustee.
However, in the event that the Trustee acquires any conflicting interest (as
defined in the TIA) it must eliminate such conflict within 90 days, apply to
the SEC for permission to continue as trustee or resign. Any Agent may do the
same with like rights and duties. The Trustee is also subject to Sections 7.10
and 7.11 hereof.
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SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture, the Notes or any Subsidiary
Guarantee, shall not be accountable for the Company's use of the proceeds from
the Notes or any money paid to the Company or upon the Company's direction
under any provision of this Indenture, shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to all
Holders a notice of the Default or Event of Default within 90 days after it
occurs. Except in the case of a Default in payment of principal of, premium,
if any, or interest on any Note, the Trustee may withhold the notice if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders. The Trustee shall
not be deemed to have actual knowledge of a Default or an Event of Default
hereunder, except in the case of a Default or an Event of Default under Section
6.01(a) (other than with respect to the payment of Liquidated Damages) or
6.01(b) at such time as the Trustee is also the Paying Agent, until a
Responsible Officer of the Trustee receives written notice thereof from the
Company or any Holders that such a Default or an Event of Default has occurred.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 1 beginning with the May 1 first following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders a brief report dated as of such reporting
date that complies with TIA Section 313(a) (but if no event described in TIA
Section 313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports as
required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders shall be
mailed to the Company and filed with the SEC and each stock exchange on which
the Notes are listed in accordance with TIA Section 313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time, and the Trustee
shall be entitled to reasonable compensation for its acceptance of this
Indenture and services hereunder as the Trustee and the Company may agree in
writing. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against, and hold it harmless
from, any and all losses, liabilities or expenses incurred by it arising out of
or in connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company (including this Section 7.07) and defending itself against or
investigating any claim (whether asserted by the Company or any Holder or any
other Person) or liability in connection with the exercise or
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performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its negligence, willful
misconduct or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The
Company shall defend the claim and the Trustee shall cooperate in the defense.
The Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel not to exceed one law firm. The Company need
not pay for any settlement made without its consent, which consent shall not be
unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
resignation or removal of the Trustee and the satisfaction and discharge of
this Indenture.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the resignation or
removal of the Trustee and the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or 6.01(h) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
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If the Trustee fails to comply with Section 7.10 hereof, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to all
Holders. The retiring Trustee shall promptly transfer all property held by it
as Trustee to the successor Trustee, provided, that all sums owing to the
Trustee hereunder have been paid and subject to the Lien provided for in
Section 7.07. Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Notes so authenticated; and in case
at that time any of the Notes shall not have been authenticated, any successor
to the Trustee may authenticate such Notes either in the name of the
predecessor trustee or in the name of the successor to the Trustee; and in all
such cases such certificates shall have the full force which it is anywhere in
the Notes or in this Indenture provided that the certificate of the Trustee
shall have.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or
state authorities and that has a combined capital and surplus of at least $50
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section
310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
Board Resolution, at any
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time, elect to have either Section 8.02 or 8.03 hereof be applied to all
outstanding Notes upon compliance with the conditions set forth below in this
Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and its Subsidiaries shall,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be deemed to have been discharged from their respective obligations with
respect to all outstanding Notes on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Notes, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section 8.05
hereof and the other Sections of this Indenture referred to in (a) and (b)
below, and to have satisfied all its other obligations under such Notes and
this Indenture (and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging the same), except for
the following provisions which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of outstanding Notes to
receive solely from the trust fund described in Section 8.04 hereof, and as
more fully set forth in such Section, payments in respect of the principal of,
premium, if any, and interest on such Notes when such payments are due, (b) the
Company's obligations with respect to such outstanding Notes under Sections
2.06, 2.07, 2.10 and 4.02 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (d) this Article 8. Subject to compliance with this Article 8,
the Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under Sections 4.03, 4.04, 4.05, 4.07, 4.08, 4.09 4.10, 4.11, 4.12,
4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 11.03 and Article 5 hereof with respect to
the outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company and
its Subsidiaries may omit to comply with and shall have no liability in respect
of any term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any such
covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 6.01 hereof, but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject to
the satisfaction of the conditions set forth in Section 8.04 hereof, Sections
6.01(e) and 6.01(f) hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
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(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of the Notes, cash in U.S.
dollars, non-callable Government Securities, or a combination thereof,
in such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal
of, premium, if any, and interest and Liquidated Damages on the
outstanding Notes on the stated maturity or on the applicable redemption
date, as the case may be, and the Company must specify whether the Notes
are being defeased to maturity or to a particular redemption date;
(b) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that (1) the Company has
received from, or there has been published by, the Internal Revenue
Service a ruling or (2) since the date hereof, there has been a change
in the applicable federal income tax law, in either case to the effect
that, and based thereon such opinion of counsel shall confirm that, the
Holders of the outstanding Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be
subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Covenant
Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such
deposit) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day
after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under any material
agreement or instrument (other than this Indenture) to which the Company
or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound including, without limitation, the Credit
Facility;
(f) the Company must have delivered to the Trustee an Opinion of
Counsel to the effect that after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(g) the Company must deliver to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders of Notes over the other creditors
of the Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and
(h) the Company must deliver to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
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SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent
required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
SECTION 8.06. REPAYMENT TO COMPANY.
(a) Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
(b) The Trustee shall promptly pay to the Company, after written request
therefor, any money held at such time in excess of the amounts required to pay
any of the Company's Obligations then owing with respect to the Notes.
(c) Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal, or premium, if any, or interest that remains
unclaimed for two years after such principal or premium, if any, or interest
became due and payable and any such money held by the Company in trust shall be
discharged from such trust, and, thereafter, Holders entitled to the money must
look to the Company for payment of such money as secured creditors and all
liability of the Trustee and the Paying Agent with respect to such money shall
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may, at the expense of the Company, cause
to be published once, in The New York Times and The Wall Street Journal
(national edition), notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such notification or publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02
or 8.03 hereof, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's obligations under this Indenture and the
Notes shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof,
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as the case may be; provided that, if the Company makes any payment of
principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture,
the Subsidiary Guarantees or the Notes without notice to or the consent of any
Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders in the case of a merger, consolidation or sale of all or
substantially all of the Company's assets;
(d) to make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the legal
rights hereunder of any Holder;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA; or
(f) to provide for additional Subsidiary Guarantors in accordance with
Section 4.16 hereof.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture, and
upon receipt by the Trustee of the documents described in Section 9.06 hereof,
the Trustee shall join with the Company and the Subsidiary Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company, the Subsidiary
Guarantors and the Trustee may amend or supplement this Indenture, the
Subsidiary Guarantees and the Notes with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding (including
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any
existing Default or Event of Default (other than a Default or Event of Default
in the payment of the principal of, premium, if any, or interest on the Notes,
except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture, the Subsidiary
Guarantees or the Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including, without
limitation, consents obtained in
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connection with a purchase of, or tender offer or exchange offer for, the
Notes).
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture, and
upon the filing with the Trustee of evidence reasonably satisfactory to the
Trustee of the consent of the Holders as aforesaid, and upon receipt by the
Trustee of the documents described in Section 9.06 hereof, the Trustee shall
join with the Company and the Subsidiary Guarantors in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amended or supplemental
Indenture, Note, Subsidiary Guarantee or waiver. Subject to Sections 6.04 and
6.07 hereof, the Holders of a majority in aggregate principal amount of the
Notes then outstanding may waive any existing Default or compliance in a
particular instance by the Company or any Subsidiary with any provision of this
Indenture, the Subsidiary Guarantees or the Notes. However, without the
consent of each Holder affected, an amendment or waiver may not (with respect
to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent
to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Note or alter the provisions with respect to the redemption of the Notes
(other than provisions relating to Sections 4.10 and 4.13 hereof);
(c) reduce the rate of or change the time for payment of interest
on any Note;
(d) waive a Default or Event of Default in the payment of principal
of or premium, if any, or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the Notes and a waiver of the payment
default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders to receive payments of
principal of or premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than
a payment required by Section 4.10 and/or 4.13 hereof); or
(h) make any change in Section 6.04 or 6.07 hereof or in this
Section 9.02 or in Section 9.01 hereof.
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SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture, the Notes or the
Subsidiary Guarantees shall be set forth in an amended or supplemental
Indenture that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent
Holder or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note.
However, any such Holder or subsequent Holder may revoke the consent as to its
Note if the Trustee receives written notice of revocation before the date the
waiver, supplement or amendment becomes effective. An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds
every Holder.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to give their consent to any
amendment, supplement or waiver or take any other action described above or
required or permitted to be taken pursuant to this Indenture. If a record date
is fixed, then notwithstanding the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated
proxies), and only those Persons, shall be entitled to give such consent to
such amendment, supplement or waiver or to revoke any consent previously given
or to take any such action, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 90 days after such record date.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. Alternatively, if
the Company or the Trustee so determines, the Company in exchange for all Notes
may issue and the Trustee shall authenticate new Notes that reflect the
amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Company may not sign an amendment or supplemental Indenture until the Board of
Directors approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive (but is not required to receive) and
(subject to Section 7.01) shall be fully protected in relying upon, in addition
to the documents required by Section 13.04 hereof, an Officers' Certificate and
an Opinion of Counsel stating that the execution of such amended or
supplemental Indenture is authorized or permitted by this Indenture.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
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The Company agrees, and each Holder of Notes by accepting a Note agrees,
that the Indebtedness evidenced by the Note (including the rights of Holders
under Section 4.13 hereof) is subordinated in right of payment, to the extent
and in the manner provided in this Article 10, to the prior payment in full of
all Senior Debt of the Company, whether outstanding on the date hereof or
hereafter incurred, that the subordination is for the benefit of, and shall be
enforceable directly by, the holders of the Senior Debt and that each holder of
Senior Debt, whether now outstanding or hereafter created, incurred assumed or
guaranteed shall be deemed to have acquired Senior Debt in reliance upon the
covenants and provisions contained in this Indenture and the Notes.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior Debt of the Company will be
entitled to receive payment in full of all Obligations due in respect of such
Senior Debt (including interest after the commencement of any such proceeding
at the rate specified in the applicable Senior Debt) before the Holders will be
entitled to receive any payment with respect to the Notes, and until all
Obligations with respect to Senior Debt are paid in full, any distribution to
which the Holders would be entitled shall be made to the holders of Senior Debt
(except that Holders may receive and retain Permitted Junior Securities and
payments made from the trust described under Article 8 hereof).
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company shall not make any payment upon or in respect of the Notes
(except in Permitted Junior Securities or from the trust described under
Article 8 hereof) if (i) a default in the payment of the principal of, premium,
if any, or interest on Designated Senior Debt occurs and is continuing beyond
any applicable period of grace or (ii) any other default occurs and is
continuing with respect to Designated Senior Debt that permits holders of the
Designated Senior Debt as to which such default relates to accelerate its
maturity and the Trustee receives a notice of such default (a "Payment Blockage
Notice") from the Company or the holders of any Designated Senior Debt.
Payments on the Notes may and shall be resumed (a) in the case of a payment
default, upon the date on which such default is cured or waived and (b) in case
of a nonpayment default, the earlier of the date on which such nonpayment
default is cured or waived or 179 days after the date on which the applicable
Payment Blockage Notice is received, unless the maturity of any Designated
Senior Debt has been accelerated. No new period of payment blockage may be
commenced unless and until (i) 360 days have elapsed since the effectiveness of
the immediately prior Payment Blockage Notice and (ii) all scheduled payments
of principal, premium, if any, and interest on the Notes that have come due
have been paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default shall have been cured or waived for a period of not
less than 90 consecutive days.
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder of a Note receives any payment
of any Obligations with
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respect to the Notes at a time when such payment is prohibited by Section 10.03
hereof, such payment shall be held by the Trustee or such Holder, in trust for
the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Debt as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to
which Senior Debt may have been issued, as their respective interests may
appear, for application to the payment of all Obligations with respect to
Senior Debt of the Company remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt of the
Company.
With respect to the holders of Senior Debt of the Company, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt of the Company.
SECTION 10.06. NOTICE BY THE COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to violate this Article, which notice shall specifically
refer to this Article 10, but failure to give such notice shall not affect the
subordination of the Notes to the Senior Debt of the Company as provided in
this Article.
SECTION 10.07. SUBROGATION.
After all Senior Debt of the Company is paid in full and until the Notes
are paid in full, Holders of the Notes shall be subrogated (equally and ratably
with all other pari passu indebtedness) to the rights of holders of Senior Debt
of the Company to receive distributions applicable to Senior Debt of the
Company to the extent that distributions otherwise payable to the Holders of
the Notes have been applied to the payment of Senior Debt of the Company. A
distribution made under this Article to holders of Senior Debt of the Company
that otherwise would have been made to Holders of the Notes is not, as between
the Company and Holders of the Notes, a payment by the Company on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of the Notes and
holders of Senior Debt of the Company. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of the Notes, the
obligations of the Company, which are absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of the Notes and
creditors of the Company other than their rights in relation to holders
of Senior Debt; or
(3) prevent the Trustee or any Holder of the Notes from exercising
its available remedies upon a Default or Event of Default, subject to
the rights of holders and owners of Senior Debt to receive distributions
and payments otherwise payable to Holders of the Notes.
If the Company fails because of this Article to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
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SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY THE COMPANY.
No right of any holder of Senior Debt of the Company to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt of the Company, or any of them, may, at any time and
from time to time, without the consent of or notice to the Holders of the
Notes, without incurring any liabilities to any Holder of any Notes and without
impairing or releasing the subordination and other benefits provided in this
Indenture or the obligations of the Holders of the Notes to the holders of the
Senior Debt of the Company, even if any right of reimbursement or subrogation
or other right or remedy of any Holder of Notes is affected, impaired or
extinguished thereby, do any one or more of the following:
(1) change the manner, place or terms of payment or change or
extend the time of payment of, or renew, exchange, amend, increase or
alter, the terms of any Senior Debt, any security therefor or guaranty
thereof or any liability of any obligor thereon (including any
guarantor) to such holder, or any liability incurred directly or
indirectly in respect thereof or otherwise amend, renew, exchange,
extend, modify, increase or supplement in any manner any Senior Debt or
any instrument evidencing or guaranteeing or securing the same or any
agreement under which Senior Debt is outstanding;
(2) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing Senior Debt or any liability of any
obligor thereon to such holder, or any liability incurred directly or
indirectly in respect thereof;
(3) settle or compromise any Senior Debt or any other liability of
any obligor of the Senior Debt to such holder or any security therefor
or any liability incurred directly or indirectly in respect thereof and
apply any sums by whomsoever paid and however realized to any liability
(including, without limitation, Senior Debt) in any manner or order; and
(4) fail to take or to record or to otherwise perfect, for any
reason or for no reason, any lien or security interest securing Senior
Debt by whomsoever granted, exercise or delay in or refrain from
exercising any right or remedy against any obligor or any guarantor or
any other person, elect any remedy and otherwise deal freely with any
obligor and any security for the Senior Debt or any liability of any
obligor to such holder or any liability incurred directly or indirectly
in respect thereof.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt of the Company, the distribution may be made and the notice given
to their Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of the Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction so
long as such order or decree recognizes the provisions of this Article 10 or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of the Notes for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Debt and other
Indebtedness of the Company,
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the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes, unless the Trustee shall have received at its
Corporate Trust Office at least three Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Notes to violate this Article, which notice shall
specifically refer to this Article 10 (provided that, notwithstanding the
foregoing, the making of any such payments shall otherwise be subject to the
provisions of Sections 10.02, 10.03 and 10.05 hereof). Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair
the claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact
for any and all such purposes, including without limitation the timely filing
of a claim for the unpaid balance of the Notes held by such Holder in the form
required in any Insolvency or Liquidation Proceeding and causing such claim to
be approved. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 6.09 hereof
at least 30 days before the expiration of the time of such claim, the
Representatives of the Designated Senior Debt, including debt under the Credit
Facility, are hereby authorized to file an appropriate claim for and on behalf
of the Holders of the Notes.
SECTION 10.13. AMENDMENTS.
Any amendment to the provisions of this Article 10 shall require the
consent of the Holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the legal rights of
Holders.
ARTICLE 11
GUARANTEE OF NOTES
SECTION 11.01. SUBSIDIARY GUARANTEE.
Subject to Section 11.05 hereof, each of the Subsidiary Guarantors hereby,
on a full, unconditional, joint and several, unsecured basis guarantees (the
"Subsidiary Guarantees") to each Holder of a Note authenticated and delivered
by the Trustee and to the Trustee and its successors and assigns, irrespective
of the validity and enforceability of this Indenture, the Notes and the
Obligations of the Company hereunder and thereunder, that: (a) the principal
of, premium, if any, interest and Liquidated Damages, if any, on the Notes will
be promptly paid in full when due, subject to any applicable grace period,
whether at maturity,
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by acceleration, redemption or otherwise, and interest on the overdue
principal, premium, if any, (to the extent permitted by law) interest on any
interest, if any, and Liquidated Damages, if any, on the Notes, and all other
payment Obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full and performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other Obligations, the same will
be promptly paid in full when due in accordance with the terms of the extension
or renewal, subject to any applicable grace period, whether at stated maturity,
by acceleration, redemption or otherwise. Failing payment when so due of any
amount so guaranteed for whatever reason the Subsidiary Guarantors will be
jointly and severally obligated to pay the same immediately. An Event of
Default under this Indenture or the Notes shall constitute an event of default
under the Subsidiary Guarantees, and shall entitle the Holders to accelerate
the Obligations of the Subsidiary Guarantors hereunder in the same manner and
to the same extent as the Obligations of the Company. The Subsidiary
Guarantors hereby agree that their Obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder with respect to any provisions hereof or
thereof, the recovery of any judgment against the Company, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Subsidiary Guarantor. Each
Subsidiary Guarantor hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy of the
Company, any right to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that this Subsidiary Guarantee
will not be discharged except by complete performance of the Obligations
contained in the Notes and this Indenture. If any Holder or the Trustee is
required by any court or otherwise to return to the Company, the Subsidiary
Guarantors, or any Custodian, trustee, liquidator or other similar official
acting in relation to either the Company or the Subsidiary Guarantors, any
amount paid by either to the Trustee or such Holder, this Subsidiary Guarantee,
to the extent theretofore discharged, shall be reinstated in full force and
effect. Each Subsidiary Guarantor agrees that it shall not be entitled to, and
hereby waives, any right of subrogation in relation to the Holders in respect
of any Obligations guaranteed hereby. Each Subsidiary Guarantor further agrees
that, as between the Subsidiary Guarantors, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the Obligations
guaranteed hereby may be accelerated as provided in Article 6 for the purposes
of the Subsidiary Guarantees, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such Obligations as provided in Article 6 hereof, such Obligations (whether or
not due and payable) shall forthwith become due and payable by the Subsidiary
Guarantors for the purpose of the Subsidiary Guarantees. The Subsidiary
Guarantors shall have the right to seek contribution from any non-paying
Subsidiary Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Subsidiary Guarantees.
SECTION 11.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 11.01, each
Subsidiary Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form of EXHIBIT D shall be endorsed by an Officer of such
Subsidiary Guarantor on each Note authenticated and delivered by the Trustee
and that this Indenture shall be executed on behalf of such Subsidiary
Guarantor, by manual or facsimile signature, by an Officer of such Subsidiary
Guarantor.
Each Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee set
forth in Section 11.01 shall remain in full force and effect notwithstanding
any failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Subsidiary Guarantee is endorsed, the
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Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth
in this Indenture on behalf of the Subsidiary Guarantors.
SECTION 11.03. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS
(a) Except as set forth in Articles 4 and 5, nothing contained in this
Indenture shall prohibit a merger between a Subsidiary Guarantor and another
Subsidiary Guarantor or a merger between a Subsidiary Guarantor and the
Company.
(b) Subject to Section 11.04 hereof, no Subsidiary Guarantor may
consolidate with or merge with or into (whether or not such Subsidiary
Guarantor is the surviving Person), another corporation, Person or entity
whether or not affiliated with such Subsidiary Guarantor unless (i) except in
the case of a merger of such Subsidiary Guarantor with or into the Company or
another Subsidiary Guarantor and subject to the provisions of the following
paragraph, the Person formed by or surviving any such consolidation or merger
(if other than such Subsidiary Guarantor) assumes all the obligations of such
Subsidiary Guarantor pursuant to a supplemental indenture in form and substance
reasonably satisfactory to the Trustee, under the Notes, this Indenture and the
Registration Rights Agreement, (ii) immediately after giving effect to such
transaction, no Event of Default exists and (iii) except in the case of a
merger of such Subsidiary Guarantor with or into the Company or another
Subsidiary Guarantor, the Company would be permitted by virtue of the Company's
pro forma Fixed Charge Coverage Ratio, immediately after giving effect to such
transaction, to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in Section 4.09 hereof.
(c) In the case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and substantially in the form of EXHIBIT
E hereto, of the Subsidiary Guarantee endorsed upon the Notes and the due and
punctual performance of all of the covenants and conditions of this Indenture
to be performed by the Subsidiary Guarantor, such successor Person shall
succeed to and be substituted for the Subsidiary Guarantor with the same effect
as if it had been named herein as a Subsidiary Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Subsidiary Guarantees
to be endorsed upon all of the Notes issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the Trustee. All of the
Subsidiary Guarantees so issued shall in all respects have the same legal rank
and benefit under this Indenture as the Subsidiary Guarantees theretofore and
thereafter issued in accordance with the terms of this Indenture as though all
of such guarantees had been issued at the date of the execution hereof.
SECTION 11.04. RELEASES FOLLOWING SALE OF ASSETS, MERGER, SALE OF CAPITAL STOCK
ETC..
In the event of a sale or other disposition of all of the assets of any
Subsidiary Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all of the capital stock of any Subsidiary Guarantor,
then such Subsidiary Guarantor (in the event of a sale or other disposition, by
way of such a merger, consolidation or otherwise, of all of the capital stock
of such Subsidiary Guarantor) or the corporation acquiring the property (in the
event of a sale or other disposition of all of the assets of such Subsidiary
Guarantor) will be released and relieved of any obligations under its
Subsidiary Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with the provisions of Section 4.10 and,
if applicable, Section 4.13 hereof.
SECTION 11.05. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY.
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For purposes hereof, the obligations of each Subsidiary Guarantor under
its Subsidiary Guarantee shall be limited to the lesser of (i) the aggregate
amount of the Obligations of the Company under the Notes and this Indenture and
(ii) the amount, if any, which would not have (A) rendered such Subsidiary
Guarantor "insolvent" (as such term is defined in the United States Bankruptcy
Code and in the Debtor and Creditor Law of the State of New York) or (B) left
such Subsidiary Guarantor with unreasonably small capital at the time its
Subsidiary Guarantee of the Notes was entered into; provided that it will be a
presumption in any lawsuit or other proceeding in which a Subsidiary Guarantor
is a party that the amount guaranteed pursuant to the Subsidiary Guarantee is
the amount set forth in clause (i) above unless any creditor, or representative
of creditors of such Subsidiary Guarantor, or debtor in possession or trustee
in bankruptcy of the Subsidiary Guarantor, otherwise proves in such a lawsuit
that the aggregate liability of the Subsidiary Guarantor is the amount set
forth in clause (ii) above. In making any determination as to solvency or
sufficiency of capital of a Subsidiary Guarantor in accordance with the
previous sentence, the right of such Subsidiary Guarantor to contribution from
other Subsidiary Guarantors, and any other rights such Subsidiary Guarantor may
have, shall be taken into account.
SECTION 11.06. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article 11 shall in each case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully and for all intents and purposes as if such Paying
Agent were named in this Article 11 in place of the Trustee.
ARTICLE 12
SUBORDINATION OF SUBSIDIARY GUARANTEE
SECTION 12.01. AGREEMENT TO SUBORDINATE.
Each Subsidiary Guarantor agrees, and each Holder by accepting a Note
agrees, that all Obligations under the Subsidiary Guarantees shall be
subordinated in right of payment, to the extent and in the manner provided in
this Article 12, to the prior payment in full of all Senior Debt of such
Subsidiary Guarantor, whether outstanding on the date hereof or thereafter
incurred, that the subordination is for the benefit of, and shall be
enforceable directly by, the holders of the Senior Debt of such Subsidiary
Guarantor and that each holder of Senior Debt of such Subsidiary Guarantor,
whether now outstanding or hereafter created, incurred assumed or guaranteed
shall be deemed to have acquired Senior Debt in reliance upon the covenants and
provisions contained in this Indenture and the Subsidiary Guarantees.
SECTION 12.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of any Subsidiary Guarantor in a
liquidation or dissolution of such Subsidiary Guarantor or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to such
Subsidiary Guarantor or its property, an assignment for the benefit of
creditors or any marshalling of such Subsidiary Guarantor's assets and
liabilities, the holders of Senior Debt of such Subsidiary Guarantor will be
entitled to receive payment in full of all Obligations due in respect of such
Senior Debt (including interest after the commencement of any such proceeding
at the rate specified in the applicable Senior Debt) before the Holders will be
entitled to receive any payment with respect to the respective Subsidiary
Guarantees, and until all Obligations with respect to Senior Debt are paid in
full, any distribution to which the Holders would be entitled shall be made to
the holders of Senior Debt of such
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Subsidiary Guarantor (except that Holders may receive and retain Permitted
Junior Securities and payments made from the trust described under Article 8
hereof).
SECTION 12.03. DEFAULT ON DESIGNATED SENIOR DEBT.
No Subsidiary Guarantor shall make any payment upon or in respect of the
Subsidiary Guarantees (except in Permitted Junior Securities or from the trust
described under Article 8 hereof) if (i) a default in the payment of the
principal of, premium, if any, or interest on Designated Senior Debt of such
Subsidiary Guarantor occurs and is continuing beyond any applicable period of
grace or (ii) any other default occurs and is continuing with respect to
Designated Senior Debt of such Subsidiary Guarantor that permits holders of the
Designated Senior Debt as to which such default relates to accelerate its
maturity and the Trustee receives a notice of such default (a "Payment Blockage
Notice") from such Subsidiary Guarantor or the holders of any Designated Senior
Debt. Payments on the Subsidiary Guarantees may and shall be resumed (a) in
the case of a payment default, upon the date on which such default is cured or
waived and (b) in case of a nonpayment default, the earlier of the date on
which such nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the maturity
of any Designated Senior Debt of such Subsidiary Guarantor has been
accelerated. No new period of payment blockage may be commenced unless and
until (i) 360 days have elapsed since the effectiveness of the immediately
prior Payment Blockage Notice and (ii) all scheduled payments of principal,
premium, if any, and interest on the Notes that have come due have been paid in
full in cash. No nonpayment default that existed or was continuing on the date
of delivery of any Payment Blockage Notice to the Trustee shall be, or be made,
the basis for a subsequent Payment Blockage Notice unless such default shall
have been cured or waived for a period of not less than 90 consecutive days.
SECTION 12.04. ACCELERATION OF SUBSIDIARY GUARANTEES.
If payment of any Subsidiary Guarantee is accelerated because of an Event
of Default, the Subsidiary Guarantor shall promptly notify the Representatives
of Senior Debt of the acceleration.
SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder of a Subsidiary Guarantee
receives any payment of any Obligations with respect to a Subsidiary Guarantee
at a time when such payment is prohibited by Section 12.03 hereof, such payment
shall be held by the Trustee or such Holder, in trust for the benefit of, and
shall be paid forthwith over and delivered, upon written request, to, the
holders of Senior Debt of such Subsidiary Guarantor as their interests may
appear or their Representative under the indenture or other agreement (if any)
pursuant to which Senior Debt may have been issued, as their respective
interests may appear, for application to the payment of all Obligations with
respect to Senior Debt of such Subsidiary Guarantor remaining unpaid to the
extent necessary to pay such Obligations in full in accordance with their
terms, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt of such Subsidiary Guarantor.
With respect to the holders of Senior Debt of any Subsidiary Guarantor,
the Trustee undertakes to perform only such obligations on the part of the
Trustee as are specifically set forth in this Article 12, and no implied
covenants or obligations with respect to the holders of Senior Debt of such
Subsidiary Guarantor shall be read into this Indenture against the Trustee.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Debt of any Subsidiary Guarantor.
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SECTION 12.06. NOTICE BY SUBSIDIARY GUARANTOR.
Each Subsidiary Guarantor shall promptly notify the Trustee and the Paying
Agent of any facts known to such Subsidiary Guarantor that would cause a
payment of any Obligations with respect to its Subsidiary Guarantee to violate
this Article, which notice shall specifically refer to this Article 12, but
failure to give such notice shall not affect the subordination of any
Subsidiary Guarantee to the Senior Debt of such Subsidiary Guarantor as
provided in this Article.
SECTION 12.07. SUBROGATION.
After all Senior Debt of the Subsidiary Guarantors is paid in full and
until the Notes are paid in full, Holders of the Subsidiary Guarantees shall be
subrogated (equally and ratably with all pari passu indebtedness) to the rights
of holders of Senior Debt of the Subsidiary Guarantors to receive distributions
applicable to Senior Debt of the Subsidiary Guarantors to the extent that
distributions otherwise payable to the Holders of the Subsidiary Guarantees
have been applied to the payment of Senior Debt of the Subsidiary Guarantors.
A distribution made under this Article to holders of Senior Debt of the
Subsidiary Guarantors that otherwise would have been made to Holders of the
Subsidiary Guarantees is not, as between the Subsidiary Guarantors and Holders
of the Subsidiary Guarantees, a payment by the Subsidiary Guarantors on the
Subsidiary Guarantees.
SECTION 12.08. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of the Subsidiary
Guarantees and holders of Senior Debt of the Subsidiary Guarantors. Nothing in
this Indenture shall:
(1) impair, as between the Subsidiary Guarantors and Holders of the
Subsidiary Guarantees, the obligations of the Subsidiary Guarantors,
which are absolute and unconditional, to pay principal of and interest
on the Notes in accordance with the terms of the Subsidiary Guarantees;
(2) affect the relative rights of Holders of the Subsidiary
Guarantees and creditors of any Subsidiary Guarantor other than their
rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder of the Subsidiary Guarantees
from exercising its available remedies upon a Default or Event of
Default, subject to the rights of holders and owners of Senior Debt to
receive distributions and payments otherwise payable to Holders of the
Subsidiary Guarantees.
If any Subsidiary Guarantor fails because of this Article to pay principal
of or interest on a Note on the due date in accordance with the terms of the
Subsidiary Guarantees, the failure is still a Default or Event of Default.
SECTION 12.09. SUBORDINATION MAY NOT BE IMPAIRED BY SUBSIDIARY GUARANTOR.
No right of any holder of Senior Debt of any Subsidiary Guarantor to
enforce the subordination of the Indebtedness evidenced by the Subsidiary
Guarantees shall be impaired by any act or failure to act by such Subsidiary
Guarantor or any Holder or by the failure of such Subsidiary Guarantor or any
Holder to comply with this Indenture.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt of any Subsidiary Guarantor, or any of them, may, at any
time and from time to time, without the consent
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of or notice to the Holders of the Subsidiary Guarantees, without incurring any
liabilities to any Holder of any Subsidiary Guarantees and without impairing or
releasing the subordination and other benefits provided in this Indenture or
the obligations of the Holders of the Subsidiary Guarantees to the holders of
the Senior Debt of such Subsidiary Guarantor, even if any right of
reimbursement or subrogation or other right or remedy of any Holder of
Subsidiary Guarantees is affected, impaired or extinguished thereby, do any one
or more of the following:
(1) change the manner, place or terms of payment or change or
extend the time of payment of, or renew, exchange, amend, increase or
alter, the terms of any Senior Debt, any security therefor or guaranty
thereof or any liability of any obligor thereon (including any
guarantor) to such holder, or any liability incurred directly or
indirectly in respect thereof or otherwise amend, renew, exchange,
extend, modify, increase or supplement in any manner any Senior Debt or
any instrument evidencing or guaranteeing or securing the same or any
agreement under which Senior Debt is outstanding;
(2) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing Senior Debt or any liability of any
obligor thereon, to such holder, or any liability incurred directly or
indirectly in respect thereof;
(3) settle or compromise any Senior Debt or any other liability of
any obligor of the Senior Debt to such holder or any security therefor
or any liability incurred directly or indirectly in respect thereof and
apply any sums by whomsoever paid and however realized to any liability
(including, without limitation, Senior Debt) in any manner or order; and
(4) fail to take or to record or to otherwise perfect, for any
reason or for no reason, any lien or security interest securing Senior
Debt by whomsoever granted, exercise or delay in or refrain from
exercising any right or remedy against any obligor or any guarantor or
any other person, elect any remedy and otherwise deal freely with any
obligor and any security for the Senior Debt or any liability of any
obligor to such holder or any liability incurred directly or indirectly
in respect thereof.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt of any Subsidiary Guarantor, the distribution may be made and the
notice given to their Representative.
Upon any payment or distribution of assets of any Subsidiary Guarantor
referred to in this Article 12, the Trustee and the Holders of the Subsidiary
Guarantees shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction so long as such order or decree recognizes the
provisions of this Article 12 or upon any certificate of such Representative or
of the liquidating trustee or agent or other Person making any distribution to
the Trustee or to the Holders of the Subsidiary Guarantees for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Debt of any Subsidiary Guarantor and other Indebtedness
of the Company or any Subsidiary Guarantor, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article 12.
68
<PAGE> 70
SECTION 12.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 12 or any other provision
of this Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Trustee, and the Trustee and the Paying Agent may continue
to make payments on the Notes or the Subsidiary Guarantees, unless the Trustee
shall have received at its Corporate Trust Office at least three Business Days
prior to the date of such payment written notice of facts that would cause the
payment of any Obligations with respect to the Notes or the Subsidiary
Guarantees to violate this Article, which notice shall specifically refer to
this Article 12 (provided that, notwithstanding the foregoing, the making of
any such payments shall otherwise be subject to the provisions of Sections
12.02, 12.03 and 12.05 hereof). Only the Company, the Subsidiary Guarantors or
a Representative may give the notice. Nothing in this Article 12 shall impair
the claims of, or payments to, the Trustee under or pursuant to Section 7.07
hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
of any Subsidiary Guarantor with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights.
SECTION 12.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 12, and appoints the Trustee to act as the Holder's attorney-in-fact
for any and all such purposes, including without limitation the timely filing
of a claim for the unpaid balance of the Notes held by such Holder in the form
required in any Insolvency or Liquidation Proceeding and causing such claim to
be approved. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 6.09 hereof
at least 30 days before the expiration of the time of such claim, the
Representatives of the Designated Senior Debt, including debt under the Credit
Facility, are hereby authorized to file an appropriate claim for and on behalf
of the Holders of the Notes.
SECTION 12.13. AMENDMENTS.
Any amendment to the provisions of this Article 12 shall require the
consent of the Holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the rights of the Holders
of Subsidiary Guarantees.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), the imposed duties shall control. If any
provision of this Indenture modifies or excludes any provision of the TIA that
may be so modified or excluded, such provision of the TIA shall be deemed to
apply to this Indenture as so modified or excluded, as the case may be.
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<PAGE> 71
SECTION 13.02. NOTICES.
Any notice or communication by the Company, the Subsidiary Guarantors or
the Trustee to the others is duly given if in writing and delivered in person
or mailed by first class mail (registered or certified, return receipt
requested), telecopier or overnight air courier guaranteeing next day delivery,
to the others' address:
If to the Company or any Subsidiary Guarantor:
National Equipment Services, Inc.
1800 Sherman Avenue
Evanston, Illinois 60201
Telecopier No.: (847) 733-1078
Attention: Secretary
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Telecopier No.: (312) 861-2200
Attention: H. Kurt von Moltke
If to the Trustee:
Harris Trust and Savings Bank
311 West Monroe, 12th Floor
Chicago, Illinois 60606
Telecopier No.: (312) 461-3525
Attention: Indenture Trust Division
The Company, the Subsidiary Guarantors or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices
or communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier promising next Business Day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail or by overnight air courier promising next Business Day delivery to its
address shown on the register kept by the Registrar. Any notice or
communication shall also be so mailed to any Person described in TIA Section
313(c), to the extent required by the TIA. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives
it; provided that notice to the Trustee shall not be deemed to have been given
until receipt by the Trustee of such notice.
70
<PAGE> 72
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or the Subsidiary
Guarantors to the Trustee to take any action under this Indenture (other than
the initial issuance of the Senior Subordinated Notes), the Company or
Subsidiary Guarantor shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been satisfied; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officer's Certificate or certificates of public officials.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE.
Each certificate with respect to compliance with a condition or covenant
provided for in this Indenture (other than a certificate provided pursuant to
TIA Section 314(a)(4)) shall comply with the provisions of TIA Section 314(e)
and shall include:
(a) a statement that the Person making such certificate has read
such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements contained in such certificate
are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him or
her to express an informed opinion as to whether or not such covenant or
condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 13.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
71
<PAGE> 73
SECTION 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Notes, this Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the Notes. Such waiver
may not be effective to waive liabilities under the federal securities laws and
it is the view of the Commission that such a waiver is against public policy.
SECTION 13.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF
LAW RULES THEREOF, SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE
NOTES AND THE SUBSIDIARY GUARANTEES.
SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 13.10. SUCCESSORS.
All agreements of the Company and the Subsidiary Guarantors in this
Indenture, the Notes and the Subsidiary Guarantees shall bind their respective
successors and assigns. All agreements of the Trustee in this Indenture shall
bind its successors and assigns.
SECTION 13.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 13.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
72
<PAGE> 74
SIGNATURES
Dated as of November 25, 1997 NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Paul R. Ingersoll
----------------------------------
Name: Paul R. Ingersoll
Title: Vice President and Secretary
AERIAL PLATFORMS, INC.
By: /s/ Paul R. Ingersoll
----------------------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
NES ACQUISITION CORP.
By: /s/ Paul R. Ingersoll
----------------------------------
Name: Paul R. Ingersoll Title: Vice
President, Secretary and Treasurer
BAT ACQUISITION CORP.
By: /s/ Paul R. Ingersoll
----------------------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
MST ENTERPRISES, INC.
D/B/A EQUIPCO RENTALS & SALES
By: /s/ Paul R. Ingersoll
----------------------------------
Name: Paul R. Ingersoll
Title: Vice President, Treasurer and Secretary
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By: /s/ C. Potter
- -----------------------------------
Name: C. Potter
Title: Assistant Vice President
<PAGE> 75
Exhibit 4.2
EXHIBIT A
(Face of Note)
10% Senior Subordinated Notes due 2004
No. ___ $_______________
CUSIP NO.
NATIONAL EQUIPMENT SERVICES, INC.
promises to pay to _____________ or registered assigns, the principal sum of
___________ Dollars on November 30, 2004.
Interest Payment Dates: May 30 and November 30
Record Dates: May 15 and November 15
NATIONAL EQUIPMENT SERVICES, INC.
By:______________________________
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
Dated: ___________
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By:__________________________________
Name:
Title:
<PAGE> 76
(Back of Note)
10% Senior Subordinated Notes due 2004
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC") to the issuer or its agent for registration of transfer, exchange
or payment, and unless any certificate issued is registered in the name of Cede
& Co. or such other name as may be requested by an authorized representative of
DTC (and any payment is made to Cede & Co. or such other entity as may be
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as
much as the registered owner hereof, Cede & Co., has an interest herein.]1
[THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER
SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE SECURITY EVIDENCED HEREBY MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THE SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1)(a) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF THE SECURITIES ACT (AN
"INSTITUTIONAL ACCREDITED INVESTOR") IN A TRANSACTION EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR (e) IN ACCORDANCE
WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE
SECURITY EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE.]2
_____________________
1 This paragraph should be included only if the Senior Subordinated Note is
issued in global form.
2 This paragraph should be removed upon the exchange of Senior Subordinated
Notes for New Senior Subordinated Notes in the Exchange Offer or upon the
registration of the Senior Subordinated Notes pursuant to the terms of the
Registration Rights Agreement.
A-2
<PAGE> 77
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. National Equipment Services, Inc., a Delaware
corporation, or its successor (the "Company"), promises to pay
interest on the principal amount of this Note at the rate of 10% per
annum and shall pay the Liquidated Damages, if any, payable pursuant
to Section 5 of the Registration Rights Agreement referred to below.
The Company will pay interest and Liquidated Damages, if any, in
United States dollars (except as otherwise provided herein)
semi-annually in arrears on May 30 and November 30, commencing on May
30, 1998, (each an "Interest Payment Date") or if any such day is not
a Business Day, on the next succeeding Business Day. Interest on the
Notes shall accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from the date of original
issuance; provided that if there is no existing Default or Event of
Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date, except in the case of the original
issuance of Notes, in which case interest shall accrue from the date
of authentication. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on
overdue principal at the rate equal to 1% per annum in excess of the
then applicable interest rate on the Notes to the extent lawful; it
shall pay interest (including post-petition interest in any proceeding
under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at
the same rate to the extent lawful. Interest shall be computed on the
basis of a 360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes
(except defaulted interest) and Liquidated Damages, if any, on the
applicable Interest Payment Date to the Persons who are registered
Holders of Notes at the close of business on May 15 or November 15
next preceding the Interest Payment Date, even if such Notes are
cancelled after such record date and on or before such Interest
Payment Date, except as provided in Section 2.12 of the Indenture with
respect to defaulted interest. The Notes shall be payable as to
principal, premium and Liquidated Damages, if any, and interest at the
office or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages, if any, may be
made by check mailed to the Holders at their addresses set forth in
the register of Holders; provided that payment by wire transfer of
immediately available funds shall be required with respect to
principal of, premium and Liquidated Damages, if any, and interest on,
the Global Note and all other Notes the Holders of which shall have
provided written wire transfer instructions to the Company and the
Paying Agent. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Harris Trust and Savings
Bank, the Trustee under the Indenture, shall act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar
without notice to any Holder. The Company or any of its Subsidiaries
may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated
as of November 25, 1997 ("Indenture") among the Company, the
Subsidiary Guarantors and the Trustee. The terms of the Notes include
those stated in the Indenture and those made a part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S.
Code Section Section 77aaa-77bbbb) (the "TIA"). The Notes are
subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms. The Notes are general
unsecured Obligations of the Company limited to
A-3
<PAGE> 78
$100,000,000 in aggregate principal amount.
5. OPTIONAL REDEMPTION.
(a) Except as described in the following paragraphs, the Notes
will not be redeemable at the Company's option prior to November 30,
2001. Thereafter, the Notes will be subject to redemption at any time
at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period
beginning on November 30 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2001..................................... 105.000%
2002..................................... 102.500%
2003 and thereafter...................... 100.000%
</TABLE>
(b) Notwithstanding the foregoing, at any time prior to November
20, 2000, the Company may on any one or more occasions redeem up to 33%
of the aggregate principal amount of Notes originally issued under the
Indenture at a redemption price of 110% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the redemption date, with the net cash proceeds of
a public offering of common stock of the Company; provided that at
least 67% of the aggregate principal amount of Notes remain outstanding
immediately after the occurrence of such redemption (excluding Notes
held by the Company and its Subsidiaries); and provided, further, that
such redemption shall occur within 45 days of the date of the closing
of such public offering.
(c) In addition, at any time on or prior to November 30, 2001, the
Notes may be redeemed as a whole but not in part at the option of the
Company upon the occurrence of or in connection with a Change of
Control, upon not less than 30 nor more than 60 days' notice (but in no
event may any such redemption occur prior to or more than 90 days after
the occurrence of such Change of Control), at a redemption price equal
to 100% of the principal amount thereof plus the Applicable Premium as
of, and plus accrued and unpaid interest and Liquidated Damages, if
any, to the redemption date, subject to the right of Holders on the
relevant record date to receive interest due on the relevant interest
payment date.
6. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, unless the Company has
exercised its right to redeem the Notes pursuant to paragraph 5(c) of
this Note, each Holder of Notes shall have the right to require the
Company to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control
A-4
<PAGE> 79
Offer") at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest and
Liquidated Damages thereon, if any, to the date of purchase (the
"Change of Control Payment"). Within 30 days following any Change of
Control, the Company will mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and
offering to repurchase Notes on the date specified in such notice,
which date shall be no earlier than 30 days and no later than 60 days
from the date such notice is mailed (the "Change of Control Payment
Date"), pursuant to the procedures required by the Indenture and
described in such notice. The Company shall comply with the
requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the
Notes as a result of a Change of Control.
(b) When the aggregate amount of Excess Proceeds exceeds $7.0 million,
the Company will be required to make an offer to all Holders of Notes
and all holders of pari passu Indebtedness containing provisions
similar to those set forth in the Indenture with respect to offers to
purchase or redeem with the proceeds of sales of assets (an "Asset Sale
Offer") to purchase the maximum principal amount of Notes and such
other Indebtedness that may be purchased out of the Excess Proceeds, at
an offer price in cash in an amount equal to 100% of the principal
amount thereof plus accrued and unpaid interest and Liquidated Damages
thereon, if any, to the date of purchase, in accordance with the
procedures set forth in the Indenture and such other Indebtedness. To
the extent that any Excess Proceeds remain after consummation of an
Asset Sale Offer, the Company may use such Excess Proceeds for any
purpose not otherwise prohibited by the Indenture. If the aggregate
principal amount of Notes and such other Indebtedness tendered into
such Asset Sale Offer surrendered by Holders thereof exceeds the amount
of Excess Proceeds, the Trustee shall select the Notes and such other
Indebtedness to be purchased on a pro rata basis. Upon completion of
such offer to purchase, the amount of Excess Proceeds shall be reset at
zero.
(c) Holders of the Notes that are the subject of an offer to purchase
will receive a Change of Control Offer or Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such
Notes purchased by completing the form titled "Option of Holder to
Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed by
first class mail at least 30 days but not more than 60 days before the
redemption date to each Holder whose Notes are to be redeemed at its
registered address. Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000, unless all of
the Notes held by a Holder are to be redeemed. On and after the
redemption date, interest and Liquidated Damages, if any, ceases to
accrue on the Notes or portions thereof called for redemption.
9. SUBORDINATION. The payment of principal, premium, if any, and
interest and Liquidated Damages on the Notes is subordinated in right
of payment, as set forth in the Indenture, to the prior payment in
full of all Senior Debt, which is (i) all Indebtedness under the
Credit Facility and all Hedging Obligations with respect thereto,
whether outstanding on the date of the Indenture or thereafter
created, (ii) any other Indebtedness permitted to be incurred by the
Company or a Subsidiary Guarantor under the terms of the Indenture,
unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in
right of payment to the Notes or the Subsidiary Guarantees and (iii)
all Obligations with respect to the foregoing. Notwithstanding
anything to the contrary in the foregoing, Senior Debt will not
include (w) any liability for federal, state, local or other taxes
owed or owing by the Company or a Subsidiary Guarantor, (x) any
Indebtedness between or among the Company, any of its Subsidiaries or
any
A-5
<PAGE> 80
of its other Affiliates, (y) any trade payables or (z) that
portion of any Indebtedness that is incurred in violation of the
Indenture. To the extent provided in the Indenture, Senior Debt must
be paid before the Notes may be paid. The Company agrees and each
Holder of Notes by accepting a Note consents and agrees to the
subordination provided in the Indenture and authorizes the Trustee to
give it effect.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered
form without coupons in initial denominations of $1,000 and integral
multiples of $1,000. The transfer of the Notes may be registered and
the Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Company is not required to
transfer or exchange any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, it need not exchange or register the transfer
of any Notes for a period of 15 days before a selection of Notes to be
redeemed or during the period between a record date and the
corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be
treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following
paragraphs, the Indenture, the Subsidiary Guarantees or the Notes may
be amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes), and any
existing default or compliance with any provision of the Indenture or
the Notes may be waived with the consent of the Holders of a majority
in principal amount of the then outstanding Notes (including, without
limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, Notes).
Without the consent of each Holder affected, an amendment or
waiver may not (with respect to any Notes held by a non-consenting
Holder): (i) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver; (ii) reduce the
principal of or change the fixed maturity of any Note or alter the
provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants set forth in Sections 4.10 and
4.13 of the Indenture); (iii) reduce the rate of or change the time for
payment of interest on any Note; (iv) waive a Default or Event of
Default in the payment of principal of or premium, if any, or interest
on the Notes (except a rescission of acceleration of the Notes by the
Holders of at least a majority in aggregate principal amount of the
Notes and a waiver of the payment default that resulted from such
acceleration); (v) make any Note payable in money other than that
stated in the Notes; (vi) make any change in the provisions of the
Indenture relating to waivers of past Defaults or the rights of Holders
of Notes to receive payments of principal of or premium, if any, or
interest on the Notes; (vii) waive a redemption payment with respect to
any Note (other than a payment required by one of the covenants set
forth in Sections 4.10 or 4.13 of the Indenture); or (viii) make any
change in the foregoing amendment and waiver provisions. In addition,
any amendment to the provisions of Article 10 or Article 12 of the
Indenture (which relate to subordination) will require the consent of
the Holders of at least 75% in aggregate principal amount of the Notes
then outstanding if such amendment would adversely affect the rights of
Holders of Notes.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default
for 30 days in the payment when due of interest on, or Liquidated
Damages with respect to, the Notes (whether or not prohibited by
A-6
<PAGE> 81
the subordination provisions of the Indenture); (ii) default in
payment when due of the principal of or premium, if any, on the Notes
(whether or not prohibited by the subordination provisions of the
Indenture); (iii) failure by the Company or any of its Subsidiaries to
comply with Sections 4.07, 4.09, 4.10 or 4.13 of the Indenture, and
such default continues for ten days; (iv) failure by the Company or any
of its Subsidiaries for 60 days after notice to comply with any of its
other agreements in the Indenture or the Notes; (v) default under any
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is guaranteed by the Company or any of its
Subsidiaries) whether such Indebtedness or guarantee now exists, or is
created after the date of the Indenture, which default (a) is caused by
a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the grace period provided in
such Indebtedness on the date of such default (a "Payment Default") or
(b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $10 million or
more; (vi) failure by the Company or any of its Subsidiaries to pay
final judgments aggregating in excess of $10 million, not covered by
insurance, which judgments are not paid, discharged or stayed for a
period of 60 days; (vii) certain events of bankruptcy or insolvency
with respect to the Company or any of its Significant Subsidiaries; and
(viii) except as permitted by the Indenture, any Subsidiary Guarantee
shall be held in any judicial proceeding to be unenforceable or invalid
or shall cease for any reason to be in full force and effect or any
Subsidiary Guarantor, or any Person acing on behalf of any Subsidiary
Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee (other than by reason of release pursuant to the Indenture).
If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding
Notes may declare all the Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect
to the Company, any Significant Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant
Subsidiary, all outstanding Notes will become due and payable without
further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders of the Notes
notice of any continuing Default or Event of Default (except a Default
or Event of Default relating to the payment of principal or interest)
if it determines that withholding notice is in their interest.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and
perform services for the Company, the Subsidiary Guarantors or their
respective Affiliates, and may otherwise deal with the Company, the
Subsidiary Guarantors or their respective Affiliates, as if it were
not the Trustee.
15. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder of the Company or any Subsidiary
Guarantor, as such, shall have any liability for any obligations of
the Company under the Notes, any Subsidiary Guarantee or the Indenture
or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a
Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes and the
Subsidiary Guarantees. Such waiver may not be effective to waive
liabilities under the federal securities laws and it is the view of
the Commission
A-7
<PAGE> 82
that such a waiver is against public policy.
16. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the name
of a Holder or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES.
In addition to the rights provided to Holders of the Notes under the
Indenture, Holders of Transferred Restricted Securities (as defined in
the Registration Rights Agreement) shall have all the rights set forth
in the Registration Rights Agreement, dated as of the date hereof,
among the Company, the Subsidiary Guarantors and the Initial
Purchasers (the "Registration Rights Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company
has caused CUSIP numbers to be printed on the Notes and the Trustee
may use CUSIP numbers in notices of redemption as a convenience to the
Holders. No representation is made as to the accuracy of such numbers
either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification
numbers placed thereon.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
National Equipment Services, Inc.
1800 Sherman Avenue
Evanston, Illinois 60201
Telecopier No.: (847) 733-1078
Attention: Secretary
A-8
<PAGE> 83
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- ------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- ------------------------------------------------------------------------------
Date: ____________________
Your Signature: __________________________
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee:_______________________
A-9
<PAGE> 84
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant
to Section 4.10 or 4.13 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.13
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.13 of the Indenture, state the
amount you elect to have purchased: $___________
Date: Your Signature: _______________________________
(Sign exactly as your name appears on the Note)
Tax Identification No.:________________________
Signature Guarantee:___________________________
A-10
<PAGE> 85
SCHEDULE OF EXCHANGES OF NOTES(3)
THE FOLLOWING EXCHANGES OF A PART OF THIS GLOBAL NOTE FOR OTHER NOTES HAVE BEEN
MADE:
<TABLE>
<S> <C> <C> <C> <C>
Principal Amount of
this Global Note Signature of
Amount of decrease Amount of increase following such authorized officer
in Principal Amount in Principal Amount decrease (or of Trustee or Note
Date of Exchange of this Global Note of this Global Note increase) Custodian
</TABLE>
- ------------------------------
3 This should be included only if the Senior Subordinated Note is issued
in global form.
A-11
<PAGE> 86
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF DEFINITIVE NOTES FOR OTHER DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN THE
GLOBAL NOTE
(Pursuant to Section 2.06(b) or (e) of the Indenture)
Harris Trust and Savings Bank
111 West Monroe, 6W
Chicago, Illinois 60603
Re: 10% Senior Subordinated Notes due 2004 of National Equipment
Services, Inc.
Reference is hereby made to the Indenture, dated as of November 25, 1997
(the "Indenture"), among National Equipment Services, Inc., a Delaware
corporation (the "Company"), Aerial Platforms, Inc., a Georgia corporation
("Aerial"), NES Acquisition Corp., a Delaware corporation ("NES Acquisition"),
BAT Acquisition Corp., a Delaware corporation ("BAT") and MST Enterprises, Inc.
d/b/a Equipco Rentals & Sales, a Virginia corporation ("Equipco") (each of
Aerial, NES Acquisition, BAT and Equipco, a "Subsidiary Guarantor" and together
with any Subsidiary of the Company that executes a Subsidiary Guarantee
substantially in the form of EXHIBIT D to the Indenture, the "Subsidiary
Guarantors") and Harris Trust and Savings Bank, as trustee (the "Trustee").
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This relates to $ principal amount of Senior Subordinated
Notes which are evidenced by one or more Definitive Notes in the name of
(the "Transferor"). The Transferor has requested an exchange or
transfer of such Definitive Note(s) in the form of an equal principal amount of
Senior Subordinated Notes evidenced by (a) one or more Definitive Notes, to be
delivered to the Transferor or, in the case of a transfer of such Senior
Subordinated Notes, to such Person as the Transferor instructs the Trustee or
(b) a beneficial interest in the Global Note.
In connection with such request and in respect of the Senior Subordinated
Notes surrendered to the Trustee herewith for exchange (the "Surrendered Senior
Subordinated Notes"), the Holder of such Surrendered Senior Subordinated Notes
hereby certifies that:
[CHECK ONE]
<TABLE>
<S> <C> <C>
[ ] 1. the Surrendered Senior Subordinated Notes are being acquired for the
Transferor's own account, without transfer;
or
[ ] 2. the Surrendered Senior Subordinated Notes are being transferred to
the Company or any of its Subsidiaries;
or
</TABLE>
B-1-1
<PAGE> 87
<TABLE>
<S> <C> <C>
[ ] 3. the Surrendered Senior Subordinated Notes are being transferred
pursuant to and in accordance with Rule 144A under the United States
Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the
Surrendered Senior Subordinated Notes are being transferred to a
Person that the Transferor reasonably believes is purchasing the
Surrendered Senior Subordinated Notes for its own account, or for one
or more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in
each case in a transaction meeting the requirements of Rule 144A;
or
[ ] 4. the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
[ ] 5. the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 903 or Rule 904 under the Securities
Act;
or
[ ] 6. the Surrendered Senior Subordinated Notes are being transferred to an
Institutional Accredited Investor pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A,
Rule 144 or Rule 904 and the Transferor further certifies that the
transfer complies with the transfer restrictions applicable to
beneficial interests in the Global Note and Definitive Notes bearing
the Private Placement Legend and the requirements of the exemption
claimed, which certification is supported by (x) if such transfer is
in respect of a principal amount of Senior Subordinated Notes at the
time of transfer of $100,000 or more, a certificate executed by the
transferee in the form of EXHIBIT C to the Indenture, or (y) if such
transfer is in respect of a principal amount of Senior Subordinated
Notes at the time of transfer of less than $100,000, (1) a certificate
executed in the form of EXHIBIT C to the Indenture and (2) an Opinion
of Counsel provided by the Transferor or the transferee (a copy of
which the Transferor has attached to this certification), to the
effect that such transfer is in compliance with the Securities Act;
or
[ ] 7. the Surrendered Senior Subordinated Notes are being transferred
pursuant to an effective registration statement under the Securities
Act;
or
[ ] 8. such transfer is being effected pursuant to and in compliance with an
exemption from the registration requirements of the Securities Act
other than Rule 144A, Rule 144, Rule 903, Rule 904 or transfer to an
Institutional Accredited Investor pursuant to paragraph 6 above, and
the Transferor hereby further certifies that the transfer complies
with the transfer restrictions applicable to beneficial interests in
the Global Note and Definitive Notes bearing the Private Placement
Legend and the requirements of the exemption claimed, which
certification is supported by an Opinion of Counsel, provided by the
Transferor or the
</TABLE>
B-1-2
<PAGE> 88
<TABLE>
<S> <C> <C>
transferee (a copy of which the Transferor has attached to this
certification), to the effect that such transfer is in compliance with
the Securities Act;
</TABLE>
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Subsidiary Guarantors and Smith
Barney Inc., First Union Capital Markets Corp. and Salomon Brothers Inc, the
initial purchasers of such Senior Subordinated Notes being transferred.
[Insert Name of Transferor]
By: ___________________
Name:
Title:
Dated:
cc: National Equipment Services, Inc.
Smith Barney Inc.
First Union Capital Markets Corp.
Salomon Brothers Inc
B-1-3
<PAGE> 89
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM GLOBAL NOTE TO DEFINITIVE NOTE
(Pursuant to Section 2.06(c) of the Indenture)
Harris Trust and Savings Bank
111 West Monroe, 6W
Chicago, Illinois 60603
Re: 10% Senior Subordinated Notes due 2004 of National Equipment
Services, Inc.
Reference is hereby made to the Indenture, dated as of November 25, 1997
(the "Indenture"), among National Equipment Services, Inc., a Delaware
corporation (the "Company"), Aerial Platforms, Inc., a Georgia corporation
("Aerial"), NES Acquisition Corp., a Delaware corporation ("NES Acquisition"),
BAT Acquisition Corp., a Delaware corporation ("BAT") and MST Enterprises, Inc.
d/b/a Equipco Rentals & Sales, a Virginia corporation ("Equipco") (each of
Aerial, NES Acquisition, BAT and Equipco, a "Subsidiary Guarantor" and together
with any Subsidiary of the Company that executes a Subsidiary Guarantee
substantially in the form of EXHIBIT D to the Indenture, the "Subsidiary
Guarantors") and Harris Trust and Savings Bank, as trustee (the "Trustee").
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to $__________ principal amount of Senior Subordinated
Notes which are evidenced by a beneficial interest in the Global Note in the
name of _________________ (the "Transferor"). The Transferor has requested
an exchange or transfer of such beneficial interest in the form of an equal
principal amount of Senior Subordinated Notes evidenced by one or more
Definitive Notes, to be delivered to the Transferor or, in the case of a
transfer of such Senior Subordinated Notes, to such Person as the Transferor
instructs the Trustee.
In connection with such request and in respect of the Senior Subordinated
Notes surrendered to the Trustee herewith for exchange (the "Surrendered Senior
Subordinated Notes"), the Holder of such Surrendered Senior Subordinated Notes
hereby certifies that:
[CHECK ONE]
<TABLE>
<S> <C> <C>
[ ] 1. the Surrendered Senior Subordinated Notes are being transferred to
the beneficial owner of such Senior Subordinated Notes;
or
[ ] 2. the Surrendered Senior Subordinated Notes are being transferred
pursuant to and in accordance with Rule 144A under the United States
Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the
Surrendered Senior Subordinated Notes are being transferred to a
Person that the Transferor reasonably believes is purchasing the
Surrendered Senior Subordinated Notes for its own account, or for one
or more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in
each case in a transaction meeting they
</TABLE>
B-2-1
<PAGE> 90
<TABLE>
<S> <C> <C>
requirements of Rule 144A;
or
[ ] 3. the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
[ ] 4. the Surrendered Senior Subordinated Notes are being transferred
pursuant to an effective registration statement under the Securities
Act;
or
[ ] 5. the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 903 or Rule 904 under the Securities
Act;
or
[ ] 6. the Surrendered Senior Subordinated Notes are being transferred to an
Institutional Accredited Investor pursuant to an exemption under the
Securities Act other than Rule 144A, Rule 144 or Rule 904 and the
Transferor further certifies that the transfer complies with the
transfer restrictions applicable to beneficial interests in the
Global Note and Definitive Notes bearing the Private Placement Legend
and the requirements of the exemption claimed, which certification is
supported by (x) if such transfer is in respect of a principal amount
of Senior Subordinated Notes at the time of transfer of $100,000 or
more, a certificate executed by the transferee in the form of EXHIBIT
C to the Indenture, or (y) if such transfer is in respect of a
principal amount of Senior Subordinated Notes at the time of transfer
of less than $100,000, (1) a certificate executed in the form of
EXHIBIT C to the Indenture and (2) an Opinion of Counsel provided by
the Transferor or the transferee (a copy of which the Transferor has
attached to this certification), to the effect that such transfer is
in compliance with the Securities Act;
or
[ ] 7. such transfer is being effected pursuant and in compliance with an
exemption from the registration requirements of the Securities Act
other than Rule 144A, Rule 144, Rule 903, Rule 904 or transfer to an
Institutional Accredited Investor pursuant to paragraph 6 above, and
the Transferor hereby further certifies that the transfer complies
with the transfer restrictions applicable to beneficial interests in
the Global Note and Definitive Notes bearing the Private Placement
Legend and the requirements of the exemption claimed, which
certification is supported by an Opinion of Counsel, provided by the
Transferor or the transferee (a copy of which the Transferor has
attached to this certification), to the effect that such transfer is
in compliance with the Securities Act;
</TABLE>
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
B-2-2
<PAGE> 91
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Subsidiary Guarantors and Smith
Barney Inc., First Union Capital Markets Corp. and Salomon Brothers Inc, the
initial purchasers of such Senior Subordinated Notes being transferred.
[Insert Name of Transferor]
By: ____________________
Name:
Title:
Dated:
cc: National Equipment Services, Inc.
Smith Barney Inc.
First Union Capital Markets Corp.
Salomon Brothers Inc
B-2-3
<PAGE> 92
EXHIBIT C
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Harris Trust and Savings Bank
111 West Monroe, 6W
Chicago, Illinois 60603
Re: 10% Senior Subordinated Notes due 2004 of National Equipment
Services, Inc.
Reference is hereby made to the Indenture, dated as of November 25, 1997
(the "Indenture"), among National Equipment Services, Inc., a Delaware
corporation (the "Company"), Aerial Platforms, Inc., a Georgia corporation
("Aerial"), NES Acquisition Corp., a Delaware corporation ("NES Acquisition"),
BAT Acquisition Corp., a Delaware corporation ("BAT") and MST Enterprises, Inc.
d/b/a Equipco Rentals & Sales, a Virginia corporation ("Equipco") (each of
Aerial, NES Acquisition, BAT and Equipco, a "Subsidiary Guarantor" and together
with any Subsidiary of the Company that executes a Subsidiary Guarantee
substantially in the form of EXHIBIT D to the Indenture, the "Subsidiary
Guarantors") and Harris Trust and Savings Bank, as trustee (the "Trustee").
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
In connection with our proposed purchase of $__________ aggregate
principal amount of:
(a) [ ] Beneficial interests, or
(b) [ ] Definitive Notes,
we confirm that:
1. We understand that any subsequent transfer of the Senior Subordinated
Notes or any interest therein is subject to certain restrictions and conditions
set forth in the Indenture and the undersigned agrees to be bound by, and not
to resell, pledge or otherwise transfer the Senior Subordinated Notes or any
interest therein except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Senior Subordinated Notes
have not been registered under the Securities Act, and that the Senior
Subordinated Notes and any interest therein may not be offered or sold except
as permitted in the following sentence. We agree, on our own behalf and on
behalf of any accounts for which we are acting as hereinafter stated, that if
we should sell the Senior Subordinated Notes or any interest therein, (A) we
will do so only (1)(a) to a person who we reasonably believe is a qualified
institutional buyer (as defined in Rule 144A under the Securities Act) in a
transaction meeting the requirements of 144A, (b) in a transaction meeting the
requirements of Rule 144 under the Securities Act, (c) outside the United
States to a foreign person in a transaction meeting the requirements of Rule
904 of the Securities Act, (d) to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act who prior to the consummation of such sale furnishes you with a signed
certificate substantially in the form hereof or (e) in accordance with another
exemption from the registration requirements of the Securities Act (and based
upon an opinion of counsel), (2) to the Company or any of its subsidiaries or
(3) pursuant to an effective registration statement and, in each case,
C-1
<PAGE> 93
in accordance with any applicable securities laws of any State of the United
States or any other applicable jurisdiction and (B) we will, and each
subsequent holder will be required to, notify any purchaser from it of the
security evidenced hereby of the resale restrictions set forth in (A) above.
3. We understand that, on any proposed resale of the Senior Subordinated
Notes or beneficial interests, we will be required to furnish to you and the
Company such certifications, legal opinions and other information as you and
the Company may reasonably require to confirm that the proposed sale complies
with the foregoing restrictions. We further understand that the Senior
Subordinated Notes purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Senior
Subordinated Notes, and we and any accounts for which we are acting are each
able to bear the economic risk of our or its investment.
5. We are acquiring the Senior Subordinated Notes or beneficial interests
therein purchased by us for our own account or for one or more accounts (each
of which is an institutional "accredited investor") as to each of which we
exercise sole investment discretion.
6. We are not acquiring the Senior Subordinated Notes with a view to any
distribution thereof that would violate the Securities Act or the securities
laws of any State of the United States.
C-2
<PAGE> 94
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
______________________________
[Insert Name of Accredited
Investor]
By:___________________________
Name:
Title:
Dated: ______________, ____
C-3
<PAGE> 95
Exhibit 4.3
EXHIBIT D
SUBSIDIARY GUARANTEE
Subject to Section 11.05 of the Indenture, each Subsidiary Guarantor
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of the
Indenture, the Notes and the Obligations of the Company under the Notes or
under the Indenture, that: (a) the principal of, premium, if any, interest and
Liquidated Damages, if any, on the Notes will be promptly paid in full when
due, subject to any applicable grace period, whether at maturity, by
acceleration, redemption or otherwise, and interest on overdue principal,
premium, if any, and, to the extent permitted by law, interest on any interest,
if any, and Liquidated Damages, if any, on the Notes and all other payment
Obligations of the Company to the Holders or the Trustee under the Indenture or
under the Notes will be promptly paid in full, all in accordance with the terms
thereof; and (b) in case of any extension of time of payment or renewal of any
Notes or any of such other payment Obligations, the same will be promptly paid
in full when due in accordance with the terms of the extension or renewal,
subject to any applicable grace period, whether at stated maturity, by
acceleration, redemption or otherwise. Failing payment when so due of any
amount so guaranteed for whatever reason, the Subsidiary Guarantors will be
jointly and severally obligated to pay the same immediately.
The obligations of each Subsidiary Guarantor to the Holders and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are (a)
expressly set forth in Article 11 of the Indenture and (b) subordinated to
Senior Debt as set forth in Article 12 of the Indenture, and reference is
hereby made to such Indenture for the precise terms of this Subsidiary
Guarantee. The terms of Article 11 of the Indenture are incorporated herein by
reference. This Subsidiary Guarantee is subject to release as and to the
extent provided in Section 11.04 of the Indenture.
This is a continuing Guarantee and shall remain in full force and effect
and shall be binding upon each Subsidiary Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full and
final payment of all of the Company's Obligations under the Notes and the
Indenture and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. This is a
Subsidiary Guarantee of payment and not a guarantee of collection.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Subsidiary
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
For purposes hereof, each Subsidiary Guarantor's liability shall be
limited to the lesser of (i) the aggregate amount of the Obligations of the
Company under the Notes and the Indenture and (ii) the amount, if any, which
would not have (A) rendered such Subsidiary Guarantor "insolvent" (as such term
is defined in the Bankruptcy Law and in the Debtor and Creditor Law of the
State of New York) or (B) left such Subsidiary Guarantor with unreasonably
small capital at the time its Subsidiary Guarantee of the Notes was entered
into; provided that, it will be a presumption in any lawsuit or other
proceeding in which a Subsidiary Guarantor is a party that the amount
guaranteed pursuant to the Subsidiary Guarantee is the amount set forth in
clause (i) above unless any creditor, or representative of creditors of such
Subsidiary Guarantor, or debtor in possession or trustee in bankruptcy of such
Subsidiary Guarantor, otherwise proves in such a lawsuit that the aggregate
liability of the Subsidiary Guarantor is limited to the amount set forth in
clause (ii) above. The Indenture provides that, in making any determination as
to the solvency or sufficiency of capital of a
D-1
<PAGE> 96
Subsidiary Guarantor in accordance with the previous sentence, the right of
such Subsidiary Guarantors to contribution from other Subsidiary Guarantors and
any other rights such Subsidiary Guarantors may have, contractual or otherwise,
shall be taken into account.
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Dated as of ___________________ [NAME OF GUARANTOR]
By: ______________________________________
Name:
Title:
D-2
<PAGE> 97
Exhibit E
---------
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
___________, between Subsidiary Guarantor (the "New Subsidiary Guarantor"), a
subsidiary of National Equipment Services, Inc., a Delaware corporation (the
"Company"), and Harris Trust and Savings Bank, as trustee under the indenture
referred to below (the "Trustee"). Capitalized terms used herein and not
defined herein shall have the meaning ascribed to them in the Indenture (as
defined below).
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of November 25, 1997, providing for
the issuance of an aggregate principal amount of $100,000,000 of 10% Senior
Subordinated Notes due 2004 (the "Senior Subordinated Notes");
WHEREAS, Sections 4.16 and 11.03 of the Indenture provide that under
certain circumstances the Company is required to cause certain of its
Subsidiaries to execute and deliver to the Trustee a supplemental indenture
pursuant to which such Subsidiaries shall unconditionally guarantee all of the
Company's Obligations under the Senior Subordinated Notes pursuant to a
Subsidiary Guarantee on the terms and conditions set forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal
and ratable benefit of the Holders of the Senior Subordinated Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO SUBSIDIARY GUARANTEE. The New Subsidiary Guarantor hereby
agrees, jointly and severally with all other Subsidiary Guarantors, to
guarantee the Company's Obligations under the Senior Subordinated Notes and the
Indenture on the terms and subject to the conditions set forth in Article 11 of
the Indenture and to be bound by all other applicable provisions of the
Indenture.
E-1
<PAGE> 98
3. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, shareholder or agent of any Subsidiary
Guarantor, as such, shall have any liability for any obligations of the Company
or any Subsidiary Guarantor under the Senior Subordinated Notes, any Subsidiary
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Senior Subordinated Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance
of the Senior Subordinated Notes.
4. NEW YORK LAW TO GOVERN. The internal law of the State of New York
shall govern and be used to construe this Supplemental Indenture.
5. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
7. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the correctness of the recitals
of fact contained herein, all of which recitals are made solely by the New
Subsidiary Guarantor.
E-2
<PAGE> 99
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture
to be duly executed, all as of the date first above written.
Dated: ________________ [NAME OF NEW SUBSIDIARY GUARANTOR]
By: ____________________________
Name:
Title:
Dated: ________________ HARRIS TRUST AND SAVINGS BANK,
as Trustee
By: ____________________________
Name:
Title:
E-3
<PAGE> 100
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1) ........................................ 7.10
(a)(2) ........................................ 7.10
(a)(3) ........................................ N.A.
(a)(4) ........................................ N.A.
(a)(5) ........................................ 7.10
(b) .......................................... 7.03; 7.10
(c) .......................................... N.A.
311 (a) .......................................... 7.11
(b) .......................................... 7.11
(c) .......................................... N.A.
312 (a) .......................................... 2.05
(b) .......................................... 13.03
(c) .......................................... 13.03
313 (a) .......................................... 7.06
(b)(1) ........................................ 7.06
(b)(2) ........................................ 7.06; 7.07
(c) .......................................... 7.06;13.02
(d) .......................................... 7.06
314 (a) .......................................... 4.03;13.05
(b) .......................................... N.A.
(c)(1) ........................................ 13.04
(c)(2) ........................................ 13.04
(c)(3) ........................................ N.A.
(d) .......................................... N.A.
(e) .......................................... 13.05
(f) .......................................... N.A.
315 (a) .......................................... 7.01
(b) .......................................... 7.05,13.02
(c) .......................................... 7.01
(d) .......................................... 7.01
(e) .......................................... 6.11
316 (a)(last sentence) ............................ 2.09
(a)(1)(A) ..................................... 6.05
(a)(1)(B) ..................................... 6.04
(a)(2) ........................................ N.A.
(b) .......................................... 6.07
(c) .......................................... 2.13
317 (a)(1) ........................................ 6.08
(a)(2) ........................................ 6.09
(b) .......................................... 2.04
318 (a) .......................................... 13.01
(b) .......................................... N.A.
(c) .......................................... 13.01
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 101
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions................................................. 1
Section 1.02. Other Definitions........................................... 15
Section 1.03. Incorporation by Reference of Trust Indenture Act........... 15
Section 1.04. Rules of Construction....................................... 16
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating............................................. 16
Section 2.02. Execution and Authentication................................ 17
Section 2.03. Registrar and Paying Agent.................................. 18
Section 2.04. Paying Agent to Hold Money in Trust......................... 18
Section 2.05. Holder Lists................................................ 18
Section 2.06. Transfer and Exchange....................................... 19
Section 2.07. Replacement Notes........................................... 26
Section 2.08. Outstanding Notes........................................... 26
Section 2.09. Treasury Notes.............................................. 26
Section 2.10. Temporary Notes............................................. 27
Section 2.11. Cancellation................................................ 27
Section 2.12. Defaulted Interest.......................................... 27
Section 2.13. Record Date................................................. 27
Section 2.14. Computation of Interest..................................... 28
Section 2.15. CUSIP Number................................................ 28
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.......................................... 28
Section 3.02. Selection of Notes to be Redeemed........................... 28
Section 3.03. Notice of Redemption........................................ 29
Section 3.04. Effect of Notice of Redemption.............................. 29
Section 3.05. Deposit of Redemption or Purchase Price..................... 30
Section 3.06. Notes Redeemed in Part...................................... 30
Section 3.07. Optional Redemption......................................... 30
Section 3.08. Mandatory Redemption........................................ 31
Section 3.09. Offer to Purchase by Application of Excess Proceeds......... 31
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes............................................ 33
Section 4.02. Maintenance of Office or Agency............................. 33
</TABLE>
i
<PAGE> 102
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 4.03. Commission Reports........................................... 34
Section 4.04. Compliance Certificate....................................... 34
Section 4.05. Taxes........................................................ 35
Section 4.06. Stay, Extension and Usury Laws............................... 35
Section 4.07. Restricted Payments.......................................... 35
Section 4.08. Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries...................................... 37
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock... 38
Section 4.10. Assets Sales................................................. 40
Section 4.11. Transactions With Affiliates................................. 41
Section 4.12. Liens........................................................ 42
Section 4.13. Offer to Purchase Upon Change of Control..................... 42
Section 4.14. Corporate Existence.......................................... 43
Section 4.15. Business Activities.......................................... 43
Section 4.16. Additional Subsidiary Guarantees............................. 43
Section 4.17. Payment for Consents......................................... 43
Section 4.18. Anti-Layering................................................ 43
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets...................... 44
Section 5.02. Successor Corporation Substituted............................ 44
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default............................................ 45
Section 6.02. Acceleration................................................. 46
Section 6.03. Other Remedies............................................... 47
Section 6.04. Waiver of Past Defaults...................................... 47
Section 6.05. Control by Majority.......................................... 47
Section 6.06. Limitation on Suits.......................................... 47
Section 6.07. Rights of Holders of Notes to Receive Payment................ 48
Section 6.08. Collection Suit by Trustee................................... 48
Section 6.09. Trustee May File Proofs of Claim............................. 48
Section 6.10. Priorities................................................... 49
Section 6.11. Undertaking for Costs........................................ 49
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee............................................ 49
Section 7.02. Rights of Trustee............................................ 50
Section 7.03. Individual Rights of Trustee................................. 51
Section 7.04. Trustee's Disclaimer......................................... 51
Section 7.05. Notice of Defaults........................................... 51
Section 7.06. Reports by Trustee to Holders of the Notes................... 51
Section 7.07. Compensation and Indemnity................................... 52
</TABLE>
ii
<PAGE> 103
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 7.08. Replacement of Trustee...................................... 52
Section 7.09. Successor Trustee by Merger, etc............................ 53
Section 7.10. Eligibility; Disqualification............................... 54
Section 7.11. Preferential Collection of Claims Against Company........... 54
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.... 54
Section 8.02. Legal Defeasance and Discharge.............................. 54
Section 8.03. Covenant Defeasance......................................... 55
Section 8.04. Conditions to Legal or Covenant Defeasance.................. 55
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions............... 56
Section 8.06. Repayment to Company........................................ 56
Section 8.07. Reinstatement............................................... 57
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes......................... 57
Section 9.02. With Consent of Holders of Notes............................ 58
Section 9.03. Compliance with Trust Indenture Act......................... 59
Section 9.04. Revocation and Effect of Consents........................... 59
Section 9.05. Notation on or Exchange of Notes............................ 60
Section 9.06. Trustee to Sign Amendments, etc............................. 60
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.................................... 60
Section 10.02. Liquidation; Dissolution; Bankruptcy........................ 61
Section 10.03. Default on Designated Senior Debt........................... 61
Section 10.04. Acceleration of Notes....................................... 61
Section 10.05. When Distribution Must Be Paid Over......................... 61
Section 10.06. Notice by the Company....................................... 62
Section 10.07. Subrogation................................................. 62
Section 10.08. Relative Rights............................................. 62
Section 10.09. Subordination May Not Be Impaired by the Company............ 62
Section 10.10. Distribution or Notice to Representative.................... 63
Section 10.11. Rights of Trustee and Paying Agent.......................... 63
Section 10.12. Authorization to Effect Subordination....................... 64
Section 10.13. Amendments.................................................. 64
ARTICLE 11
GUARANTEE OF NOTES
Section 11.01. Subsidiary Guarantee........................................ 64
Section 11.02. Execution and Delivery of Subsidiary Guarantee.............. 65
</TABLE>
iii
<PAGE> 104
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 11.03. Subsidiary Guarantors May Consolidate, etc., on
Certain Terms 66
Section 11.04. Releases Following Sale of Assets, Merger, Sale
of Capital Stock Etc. 66
Section 11.05. Limitation on Subsidiary Guarantor Liability 66
Section 11.06. "Trustee" to Include Paying Agent 67
ARTICLE 12
SUBORDINATION OF SUBSIDIARY GUARANTEE
Section 12.01. Agreement to Subordinate. 67
Section 12.02. Liquidation; Dissolution; Bankruptcy 67
Section 12.03. Default on Designated Senior Debt 68
Section 12.04. Acceleration of Subsidiary Guarantees 68
Section 12.05. When Distribution Must Be Paid Over 68
Section 12.06. Notice by Subsidiary Guarantor 68
Section 12.07. Subrogation 69
Section 12.08. Relative Rights 69
Section 12.09. Subordination May Not Be Impaired by Subsidiary Guarantor 69
Section 12.10. Distribution or Notice to Representative 70
Section 12.11. Rights of Trustee and Paying Agent 70
Section 12.12. Authorization to Effect Subordination 71
Section 12.13. Amendments 71
ARTICLE 13
MISCELLANEOUS
Section 13.01. Trust Indenture Act Controls 71
Section 13.02. Notices 71
Section 13.03. Communication by Holders of Notes with Other
Holders of Notes 73
Section 13.04. Certificate and Opinion as to Conditions Precedent 73
Section 13.05. Statements Required in Certificate 73
Section 13.06. Rules by Trustee and Agents 73
Section 13.07. No Personal Liability of Directors, Officers,
Employees and Stockholders 73
Section 13.08. Governing Law 74
Section 13.09. No Adverse Interpretation of Other Agreements 74
Section 13.10. Successors 74
Section 13.11. Severability 74
Section 13.12. Counterpart Originals 74
Section 13.13. Table of Contents, Headings, etc 74
</TABLE>
iv
<PAGE> 105
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFEROR
Exhibit C FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
Exhibit D FORM OF SUBSIDIARY GUARANTEE
Exhibit E FORM OF SUPPLEMENTAL INDENTURE
v
<PAGE> 1
Exhibit 4.4
EXECUTION COPY
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of November 25, 1997
by and among
National Equipment Services, Inc.
Aerial Platforms, Inc.
NES Acquisition Corp.
BAT Acquisition Corp.
MST Enterprises, Inc.
and
Smith Barney Inc.
First Union Capital Markets Corp.
Salomon Brothers Inc
================================================================================
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and entered
into as of November 25, 1997, by and among National Equipment Services, Inc., a
Delaware corporation (the "Company"), Aerial Platforms, Inc., a Georgia
corporation ("Aerial"), BAT Acquisition Corp., a Delaware corporation ("BAT"),
NES Acquisition Corp., a Delaware corporation ("NES"), MST Enterprises, Inc.
d/b/a Equipco Rentals & Sales, a Virginia corporation ("Equipco" and, together
with Aerial, BAT and NES, the "Subsidiary Guarantors") and Smith Barney Inc.
("Smith Barney"), First Union Capital Markets Corp. ("First Union") and Salomon
Brothers Inc ("Salomon" and, together with Smith Barney and First Union, the
"Initial Purchasers"), each of whom has agreed to purchase the Company's 10%
Senior Subordinated Notes due 2004 (the "Senior Subordinated Notes") pursuant
to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated November
20, 1997, (the "Purchase Agreement"), by and among the Company, the Subsidiary
Guarantors and the Initial Purchasers. In order to induce the Initial
Purchasers to purchase the Senior Subordinated Notes, the Company has agreed to
provide the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the obligations of the Initial
Purchasers set forth in Section 2 of the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
Business Day: Any day except a Saturday, Sunday or other day in the City
of New York, or in the city of the corporate trust office of the Trustee, on
which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: New Senior Subordinated
Notes that are acquired by a Broker-Dealer in the Exchange Offer in exchange
for Senior Subordinated Notes that such Broker-Dealer acquired for its own
account as a result of market making activities or other trading activities
(other than Senior Subordinated Notes acquired directly from the Company or any
of its affiliates).
Certificated Securities: As defined in the Indenture.
Closing Date: The date hereof.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the New Senior
Subordinated Notes to be issued in the Exchange Offer, (b) the maintenance of
such Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the minimum period required
pursuant to Section 3(b) hereof and (c) the delivery by the Company to the
Registrar under the Indenture of New Senior Subordinated Notes in the same
1
<PAGE> 3
aggregate principal amount as the aggregate principal amount of Senior
Subordinated Notes tendered by Holders thereof pursuant to the Exchange Offer.
Damages Payment Date: With respect to the Senior Subordinated Notes, each
Interest Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of the New
Senior Subordinated Notes pursuant to the Exchange Offer Registration Statement
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities for New Senior Subordinated Notes in an
aggregate principal amount equal to the aggregate principal amount of the
Transfer Restricted Securities tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose
to sell the Senior Subordinated Notes to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act.
Global Noteholder: As defined in the Indenture.
Holders: As defined in Section 2 hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: The Indenture, dated the Closing Date, among the Company, the
Subsidiary Guarantors and Harris Trust and Savings Bank, as trustee (the
"Trustee"), pursuant to which the Notes are to be issued, as such Indenture is
amended or supplemented from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
NASD: National Association of Securities Dealers, Inc.
New Senior Subordinated Notes: The Company's 10% Senior Subordinated
Notes due 2004, Series B, to be issued pursuant to the Indenture (i) in the
Exchange Offer or (ii) upon the request of any Holder of Senior Subordinated
Notes covered by a Shelf Registration Statement, in exchange for such Senior
Subordinated Notes.
Notes: The Senior Subordinated Notes and the New Senior Subordinated
Notes.
Person: An individual, partnership, corporation, trust, unincorporated
organization, or a government or agency or political subdivision thereof.
2
<PAGE> 4
Prospectus: The prospectus prepared pursuant to this Agreement and
included in a Registration Statement at the time such Registration Statement is
declared effective, as amended or supplemented by any prospectus supplement and
by all other amendments thereto, including post-effective amendments, and all
material incorporated by reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date, each Person who
is a Holder of Notes on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company and the
Subsidiary Guarantors relating to (a) an offering of New Senior Subordinated
Notes pursuant to an Exchange Offer or (b) the registration for resale of
Transfer Restricted Securities pursuant to the Shelf Registration Statement, in
each case, (i) which is filed pursuant to the provisions of this Agreement and
(ii) including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur of
(a) the date on which such Note is exchanged in the Exchange Offer and entitled
to be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on which such Note
has been disposed of in accordance with a Shelf Registration Statement, (c) the
date on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan
of Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the
Act.
Underwritten Registration or Underwritten Offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to
the public.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
3
<PAGE> 5
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Subsidiary Guarantors shall (i) cause to be filed
with the Commission as soon as practicable after the Closing Date, but in no
event later than 90 days after the Closing Date, the Exchange Offer
Registration Statement, (ii) use its commercially reasonable best efforts to
cause such Exchange Offer Registration Statement to become effective at the
earliest possible time, but in no event later than 150 days after the Closing
Date, (iii) in connection with the foregoing, (A) file all pre-effective
amendments to such Exchange Offer Registration Statement as may be reasonably
necessary in order to cause such Exchange Offer Registration Statement to
become effective, (B) file, if applicable, a post-effective amendment to such
Exchange Offer Registration Statement pursuant to Rule 430A under the Act and
(C) cause all filings which to the knowledge of the Company are necessary, if
any, in connection with the registration and qualification of the New Senior
Subordinated Notes to be made under the Blue Sky laws of such jurisdictions as
are necessary to permit Consummation of the Exchange Offer, and (iv) upon the
effectiveness of such Exchange Offer Registration Statement, commence and
Consummate the Exchange Offer. The Exchange Offer shall be on the appropriate
form permitting registration of the New Senior Subordinated Notes to be offered
in exchange for the Senior Subordinated Notes that are Transfer Restricted
Securities and to permit sales of Broker-Dealer Transfer Restricted Securities
by Restricted Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company and the Subsidiary Guarantors shall use their respective
best efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; provided, however, that in no event
shall such period be less than 20 Business Days. The Company and the
Subsidiary Guarantors shall cause the Exchange Offer to comply with all
applicable federal securities laws and all state securities laws that, to the
knowledge of the Company, are applicable. No securities other than the Notes
shall be included in the Exchange Offer Registration Statement. The Company
and the Subsidiary Guarantors shall use their respective commercially
reasonable best efforts to cause the Exchange Offer to be Consummated on the
earliest practicable date after the Exchange Offer Registration Statement has
become effective, but in no event later than 30 Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted Broker-Dealer who holds Senior Subordinated Notes
that are Transfer Restricted Securities and that were acquired for the account
of such Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Senior Subordinated Notes (other than Transfer
Restricted Securities acquired directly from the Company or any affiliate of
the Company) pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Act and must,
therefore, deliver a prospectus meeting the requirements of the Act in
connection with its initial sale of each New Senior Subordinated Note received
by such Broker-Dealer in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Broker-Dealer of the
Prospectus contained in the Exchange Offer Registration Statement. Such "Plan
of Distribution" section shall also contain all other information with respect
to such sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers that the Commission may require in order to permit such sales
pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer,
except to the extent required by the Commission as a result of a change in
policy after the date of this Agreement.
4
<PAGE> 6
The Company and the Subsidiary Guarantors shall use their respective
commercially reasonable best efforts to keep the Exchange Offer Registration
Statement continuously effective, supplemented and amended as required by the
provisions of Section 6(c) below to the extent necessary to ensure that it is
available for sales of Broker-Dealer Transfer Restricted Securities by
Restricted Broker-Dealers, and to ensure that such Registration Statement
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of 180 days from the date on which the Exchange Offer is Consummated.
The Company and the Subsidiary Guarantors shall promptly provide
sufficient copies of the latest version of such Prospectus to such Restricted
Broker-Dealers promptly upon request, and in no event later than one day after
such request, at any time during such 180-day period in order to facilitate
such sales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
Exchange Offer Registration Statement with respect to the New Senior
Subordinated Notes because the Exchange Offer is not permitted by applicable
law (after the procedures set forth in Section 6(a)(i) below have been complied
with) or (ii) if any Holder of Transfer Restricted Securities shall notify the
Company within 20 Business Days following the Consummation of the Exchange
Offer that (A) such Holder was prohibited by law or Commission policy from
participating in the Exchange Offer or (B) such Holder may not resell the New
Senior Subordinated Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the Prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such resales
by such Holder or (C) such Holder is a Broker-Dealer and holds Senior
Subordinated Notes acquired directly from the Company or one of its affiliates,
then the Company and the Subsidiary Guarantors shall (x) cause to be filed on
or prior to 90 days after the date on which the Company determines that it is
not required to file the Exchange Offer Registration Statement pursuant to
clause (i) above or 90 days after the date on which the Company receives the
notice specified in clause (ii) above a shelf registration statement pursuant
to Rule 415 under the Act (which may be an amendment to the Exchange Offer
Registration Statement (in either event, the "Shelf Registration Statement")),
relating to all Transfer Restricted Securities the Holders of which shall have
provided the information required pursuant to Section 4(b) hereof, and shall
(y) use their respective commercially reasonable best efforts to cause such
Shelf Registration Statement to become effective on or prior to 150 days after
the date on which the Company becomes obligated to file such Shelf Registration
Statement. If, after the Company has filed an Exchange Offer Registration
Statement which satisfies the requirements of Section 3(a) above, the Company
is required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer shall not be permitted under applicable federal law,
then the filing of the Exchange Offer Registration Statement shall be deemed to
satisfy the requirements of clause (x) above. Such an event shall have no
effect on the requirements of clause (y) above. The Company and the Subsidiary
Guarantors shall use their respective best efforts to keep the Shelf
Registration Statement discussed in this Section 4(a) continuously effective,
supplemented and amended as required by and subject to the provisions of
Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a), and to ensure that it conforms
with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of
at least two years (as extended pursuant to Section 6(c)(i)) following the date
on which such Shelf Registration Statement first becomes effective under the
Act.
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(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 10 Business Days after receipt of a request
therefor, such information specified in Item 507 of Regulation S-K under the
Act for use in connection with any Shelf Registration Statement or Prospectus
or preliminary Prospectus included therein. No Holder of Transfer Restricted
Securities shall be entitled to Liquidated Damages pursuant to Section 5 hereof
unless and until such Holder shall have provided all such information. In the
event such information is provided by such Holder more than 10 Business Days
after receipt of a request therefor, such Holder shall not be entitled to
Liquidated Damages until 10 days after such information is provided. Each
Holder as to which any Shelf Registration Statement is being effected agrees to
furnish promptly to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such
Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the date specified for such filing in this
Agreement, (ii) any such Registration Statement has not been declared effective
by the Commission on or prior to the date specified for such effectiveness in
this Agreement, (iii) the Exchange Offer has not been Consummated within 30
Business Days after the Exchange Offer Registration Statement is first declared
effective by the Commission or (iv) any Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being succeeded
immediately by a post-effective amendment to such Registration Statement that
cures such failure and that is itself declared effective immediately (each such
event referred to in clauses (i) through (iv), a "Registration Default"), then
the Company and the Subsidiary Guarantors hereby jointly and severally agree to
pay liquidated damages to each Holder of Transfer Restricted Securities with
respect to the first 90-day period immediately following the occurrence of such
Registration Default, in an amount equal to $.05 per week per $1,000 principal
amount of Transfer Restricted Securities held by such Holder for each week or
portion thereof that the Registration Default continues. The amount of the
liquidated damages shall increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages of $.50 per week per $1,000 principal
amount of Transfer Restricted Securities. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the
case of (i) above, (2) upon the effectiveness of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (ii) above, (3) upon Consummation of the Exchange
Offer, in the case of (iii) above, or (4) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration Statement
that causes the Exchange Offer Registration Statement (and/or, if applicable,
the Shelf Registration Statement) to again be declared effective or made usable
in the case of (iv) above, the liquidated damages payable with respect to the
Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or
(iv), as applicable, shall immediately cease.
All accrued liquidated damages shall be paid to the Global Note Holder by
wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Securities by wire transfer to the accounts specified
by them or by mailing checks to their registered addresses, if no such accounts
have been specified, on each Damages Payment Date. All obligations of the
Company and the
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Subsidiary Guarantors set forth in the preceding paragraph that are outstanding
with respect to any Transfer Restricted Security at the time such security
ceases to be a Transfer Restricted Security shall survive until such time as
all such obligations with respect to such security shall have been satisfied in
full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company and the Subsidiary Guarantors shall comply with all
applicable provisions of Section 6(c) below, shall use their respective
commercially reasonable best efforts to effect such exchange and to permit the
sale of Broker-Dealer Transfer Restricted Securities being sold in accordance
with the intended method or methods of distribution thereof, and shall comply
with all of the following provisions:
(i) If, following the date hereof there has been published a change in
Commission policy with respect to exchange offers such as the Exchange
Offer, such that in the reasonable opinion of counsel to the Company there
is a substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company and the Subsidiary Guarantors hereby
agree to seek a no-action letter or other favorable decision from the
Commission allowing the Company and the Subsidiary Guarantors to Consummate
an Exchange Offer for such Senior Subordinated Notes. The Company and the
Subsidiary Guarantors hereby agree to pursue the issuance of such a decision
to the Commission staff level. In connection with the foregoing, the
Company and the Subsidiary Guarantors hereby agree to take all such other
actions as are requested by the Commission or otherwise required in
connection with the issuance of such decision, including without limitation
(A) participating in telephonic conferences with the Commission, (B)
delivering to the Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C) diligently
pursuing a resolution (which need not be favorable) by the Commission staff
of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
and the Subsidiary Guarantors (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement) to
the effect that (A) it is not an affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the New
Senior Subordinated Notes to be issued in the Exchange Offer and (C) it is
acquiring the New Senior Subordinated Notes in its ordinary course of
business. Each Holder hereby acknowledges and agrees that any Broker-Dealer
and any such Holder using the Exchange Offer to participate in a
distribution of the securities to be acquired in the Exchange Offer (1)
could not under Commission policy as in effect on the date of this Agreement
rely on the position of the Commission enunciated in Morgan Stanley and Co.,
Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation
(available May 13, 1988), as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and similar no-action letters
(including, if applicable, any no-action letter obtained pursuant to clause
(i) above), and (2) must comply with the registration and prospectus
delivery requirements of the Act in connection with a secondary resale
transaction and that such a secondary resale transaction must be covered by
an effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K
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<PAGE> 9
if the resales are of New Senior Subordinated Notes obtained by such Holder
in exchange for Senior Subordinated Notes acquired by such Holder directly
from the Company or an affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Subsidiary Guarantors shall, if requested by
the Commission, provide a supplemental letter to the Commission (A) stating
that the Company and the Subsidiary Guarantors are registering the Exchange
Offer in reliance on the position of the Commission enunciated in Exxon
Capital Holdings Corporation (available May 13, 1988), Morgan Stanley and
Co., Inc. (available June 5, 1991) and, if applicable, any no-action letter
obtained pursuant to clause (i) above, (B) including a representation that
neither the Company nor any Subsidiary Guarantor has entered into any
arrangement or understanding with any Person to distribute the New Senior
Subordinated Notes to be received in the Exchange Offer and that, to the
best of the Company's and each Subsidiary Guarantor's information and
belief, each Holder participating in the Exchange Offer is acquiring the New
Senior Subordinated Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the New Senior Subordinated Notes received in the Exchange
Offer and (C) any other undertaking or representation required by the
Commission as set forth in any no-action letter obtained pursuant to clause
(i) above.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Subsidiary Guarantors shall comply
with all the provisions of Section 6(c) below and shall use their respective
commercially reasonable best efforts to effect such registration to permit the
sale of the Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof (as indicated in the
information furnished to the Company pursuant to Section 4(b) hereof), and
pursuant thereto the Company and the Subsidiary Guarantors will prepare and
file with the Commission a Registration Statement relating to the registration
on any appropriate form under the Act, which form shall be available for the
sale of the Transfer Restricted Securities in accordance with the intended
method or methods of distribution thereof within the time periods and otherwise
in accordance with the provisions hereof.
(c) General Provisions. In connection with any Registration Statement and
any related Prospectus required by this Agreement to permit the sale or resale
of Transfer Restricted Securities (including, without limitation, any Exchange
Offer Registration Statement and the related Prospectus, to the extent that the
same are required to be available to permit sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers), the Company and the
Subsidiary Guarantors shall:
(i) use their respective commercially reasonable best efforts to keep
such Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that would cause
any such Registration Statement or the Prospectus contained therein (A) to
contain a material misstatement or omission or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the period
required by this Agreement, the Company and the Subsidiary Guarantors shall
file promptly an appropriate amendment to such Registration Statement, (1)
in the case of clause (A), correcting any such misstatement or omission, and
(2) in the case of clauses (A) and (B), use their respective commercially
reasonable best efforts to cause such amendment to be declared effective and
such Registration Statement and the related Prospectus to become usable for
their intended purpose(s) as soon as practicable thereafter.
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<PAGE> 10
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration
Statement have been sold; cause the Prospectus to be supplemented by any
required Prospectus supplement, and as so supplemented to be filed pursuant
to Rule 424 under the Act, and to comply fully in all material respects with
Rules 424, 430A and 462, as applicable, under the Act in a timely manner;
and comply with the provisions of the Act with respect to the disposition of
all securities covered by such Registration Statement during the applicable
period in accordance with the intended method or methods of distribution by
the sellers thereof set forth in such Registration Statement or supplement
to the Prospectus;
(iii) advise the underwriter(s), if any, selling Holders named in any
Registration Statement or Prospectus ("Named Holders") and any Restricted
Broker-Dealer (whether or not named in the Registration Statement) who has
requested copies of the Prospectus pursuant to the last paragraph of Section
3 hereof, or has otherwise identified itself as a Restricted Broker-Dealer
to the Company, promptly and, if requested by such Persons, confirm such
advice in writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when the
same has become effective, (B) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements to the
Prospectus or for additional information relating thereto, (C) of the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for any of the preceding purposes, (D) of the existence of
any fact or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes
in the Registration Statement in order to make the statements therein not
misleading, or that requires the making of any additions to or changes in
the Prospectus in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time
the Commission shall issue any stop order suspending the effectiveness of
the Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities under
state securities or Blue Sky laws, the Company and the Subsidiary Guarantors
shall use their respective commercially reasonable best efforts to obtain
the withdrawal or lifting of such order at the earliest possible time;
(iv) furnish to the Initial Purchasers, each Named Holder and each of
the underwriter(s) in connection with such sale, if any, before filing with
the Commission, copies of any Registration Statement or any Prospectus
included therein or any amendments or supplements to any such Registration
Statement or Prospectus (including all documents incorporated by reference
after the initial filing of such Registration Statement), which documents
will be subject to the review and comment of such Named Holders and
underwriter(s) in connection with such sale, if any, for a period of at
least five Business Days, and the Company will not file any such
Registration Statement or Prospectus or any amendment or supplement to any
such Registration Statement or Prospectus (including all such documents
incorporated by reference) to which the Named Holders of the Transfer
Restricted Securities covered by such Registration Statement or the
underwriter(s) in connection with such sale, if any, shall reasonably object
within five Business Days after the receipt thereof. A Named Holder or
underwriter,
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if any, shall be deemed to have reasonably objected to such filing if such
Registration Statement, amendment, Prospectus or supplement, as applicable,
as proposed to be filed, contains a material misstatement or omission or
fails to comply with the applicable requirements of the Act;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the Named Holders and to the
underwriter(s) in connection with such sale, if any, make the Company's and
the Subsidiary Guarantors' representatives available for discussion of such
document and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such Named
Holders or underwriter(s), if any, reasonably may request;
(vi) make available at reasonable times for inspection by the Named
Holders, any managing underwriter participating in any disposition pursuant
to such Registration Statement and any attorney or accountant retained by
such Named Holders or any of such underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Company and the
Subsidiary Guarantors subject to appropriate confidentiality agreements and
cause the Company's and the Subsidiary Guarantors' officers, directors and
employees to supply all information that is (a) reasonably requested by any
Named Holder, underwriter, attorney or accountant in connection with such
Registration Statement or any post-effective amendment thereto subsequent to
the filing thereof and prior to its effectiveness and (b) customarily
furnished in transactions of the type contemplated by such Registration
Statement;
(vii) if requested by any Named Holders or the underwriter(s) in
connection with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such Named Holders and
underwriter(s), if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being sold
to such underwriter(s), the purchase price being paid therefor and any other
terms of the offering of the Transfer Restricted Securities to be sold in
such offering; and make all required filings of such Prospectus supplement
or post-effective amendment as soon as practicable after the Company is
notified of the matters to be included in such Prospectus supplement or
post-effective amendment;
(viii) furnish to each Named Holder and each of the underwriter(s) in
connection with such sale, if any, without charge, at least one copy of the
Registration Statement, as first filed with the Commission, and of each
amendment thereto, including all documents incorporated by reference therein
and all exhibits (including exhibits incorporated therein by reference);
(ix) deliver to each Named Holder and each of the underwriter(s), if
any, without charge, as many copies of the Prospectus (including each
preliminary prospectus) and any amendment or supplement thereto as such
Persons reasonably may request; the Company and the Subsidiary Guarantors
hereby consent to the use (in accordance with law) of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and each of
the underwriter(s), if any, in connection with the offering and the sale of
the Transfer Restricted Securities covered by the Prospectus or any
amendment or supplement thereto;
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<PAGE> 12
(x) enter into such agreements (including an underwriting agreement)
and make such representations and warranties and take all such other actions
in connection therewith in order to expedite or facilitate the disposition
of the Transfer Restricted Securities pursuant to any Registration Statement
contemplated by this Agreement as may be reasonably requested by any Holder
of Transfer Restricted Securities or underwriter in connection with any sale
or resale pursuant to any Registration Statement contemplated by this
Agreement, which agreements must be in customary form, and in such
connection, whether or not an underwriting agreement is entered into and
whether or not the registration is an Underwritten Registration, the Company
and the Subsidiary Guarantors shall:
(A) furnish (or in the case of paragraphs (2) and (3), use its
commercially reasonable best efforts to furnish) to each Named Holder
and each underwriter, if any, upon the effectiveness of the Shelf
Registration Statement:
(1) a certificate, dated the date of effectiveness of the
Shelf Registration Statement, signed on behalf of the Company and
each Subsidiary Guarantor by (x) the President or any Vice President
and (y) a principal financial or accounting officer of the Company
and such Subsidiary Guarantor, confirming, as of the date thereof,
the matters set forth in paragraphs (f) and (g) of Section 7 of the
Purchase Agreement;
(2) an opinion, dated the date of effectiveness of the Shelf
Registration Statement, of counsel for the Company and the
Subsidiary Guarantors covering the matters set forth in paragraph
(c) of Section 7 of the Purchase Agreement, and in any event
including a statement to the effect that such counsel has
participated in the preparation of the applicable Registration
Statement, including review and discussion of the contents thereof,
and no facts came to such counsel's attention that caused such
counsel to believe that the Registration Statement, at the time such
Registration Statement or any post-effective amendment thereto
became effective, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus contained in such Registration Statement as of its date
contained an untrue statement of a material fact or omitted to state
a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. Without limiting the foregoing, such counsel may state
further that such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness of
the financial statements, notes and schedules and other financial
and statistical data included in any Registration Statement
contemplated by this Agreement or the related Prospectus; and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort letters
to underwriters in connection with primary underwritten offerings;
and
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or resale
pursuant to any Shelf Registration Statement the indemnification
provisions and procedures of Section 8 hereof with respect to all
parties to be indemnified pursuant to said Section.
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The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any
time the representations and warranties of the Company and the Subsidiary
Guarantors contemplated in (A)(1) above cease to be true and correct, the
Company and the Subsidiary Guarantors shall so advise the underwriter(s), if
any and the Named Holders promptly and if requested by such Persons, shall
confirm such advice in writing;
(xi) prior to any public offering of Transfer Restricted Securities,
cooperate with the Named Holders, the underwriter(s), if any, and their
respective counsel in connection with the registration and qualification of
the Transfer Restricted Securities under the securities or Blue Sky laws of
such jurisdictions as the Named Holders or underwriter(s), if any, may
request and do any and all other acts or things necessary or advisable to
enable the disposition in such jurisdictions of the Transfer Restricted
Securities covered by the applicable Registration Statement; provided,
however, that neither the Company nor any Subsidiary Guarantor shall be
required to register or qualify as a foreign corporation where it is not now
so qualified or to take any action that would subject it to the service of
process in suits or to taxation, other than as to matters and transactions
relating to the Registration Statement, in any jurisdiction where it is not
now so subject;
(xii) issue, upon the request of any Holder of Senior Subordinated
Notes covered by any Shelf Registration Statement contemplated by this
Agreement, New Senior Subordinated Notes having an aggregate principal
amount equal to the aggregate principal amount of Senior Subordinated Notes
surrendered to the Company by such Holder in exchange therefor or being sold
by such Holder; such New Senior Subordinated Notes to be registered in the
name of such Holder or in the name of the purchaser(s) of such Notes, as the
case may be; in return, the Senior Subordinated Notes held by such Holder
shall be surrendered to the Company for cancellation;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Named Holders and each Restricted
Broker-Dealer and the underwriter(s), if any, to facilitate the timely
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold and not bearing any restrictive legends; and to
register such Transfer Restricted Securities in such denominations and such
names as the Named Holders, Restricted Broker-Dealers or the underwriter(s),
if any, may request at least two Business Days prior to such sale of
Transfer Restricted Securities;
(xiv) use their respective commercially reasonable best efforts to
cause the disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such other
domestic governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof or the underwriter(s), if any, to consummate
the disposition of such Transfer Restricted Securities, subject to the
proviso contained in clause (xi) above;
(xv) subject to Section 6(c)(i), if any fact or event contemplated by
Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
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(xvi) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are
in a form eligible for deposit with the Depository Trust Company;
(xvii) cooperate and assist in any filings required to be made with
the NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use their respective commercially reasonable best efforts to cause
such Registration Statement to become effective and approved by such
governmental agencies or authorities as may be necessary to enable the
Holders selling Transfer Restricted Securities to consummate the disposition
of such Transfer Restricted Securities;
(xviii) otherwise use their respective commercially reasonable best
efforts to make generally available to its security holders with regard to
any applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158 (which
need not be audited) covering a twelve-month period beginning after the
effective date of the Registration Statement (as such term is defined in
paragraph (c) of Rule 158 under the Act);
(xix) cause the Indenture to be qualified under the TIA not later than
the effective date of the first Registration Statement required by this
Agreement and, in connection therewith, cooperate with the Trustee and the
Holders of Notes to effect such changes to the Indenture as may be required
for such Indenture to be so qualified in accordance with the terms of the
TIA; and execute and use its commercially reasonable best efforts to cause
the Trustee to execute, all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely manner;
and
(xx) provide promptly to each Holder upon request each document filed
with the Commission pursuant to the requirements of Section 13 or Section
15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(i) or any notice from the Company of the existence of any fact of
the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof,
or until it is advised in writing by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus (the "Advice").
If so directed by the Company, each Holder 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 covering such Transfer Restricted
Securities that was current at the time of receipt of either such notice. In
the event the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(i) or Section 6(c)(iii)(D) hereof to and including the date when
each selling Holder covered by such Registration Statement shall have received
the copies of the supplemented or amended Prospectus contemplated by Section
6(c)(xv) hereof or shall have received the Advice.
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SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Subsidiary Guarantors'
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses
(including filings made by any Purchaser or Holder with the NASD and its
counsel that may be required by the rules and regulations of the NASD); (ii)
all fees and expenses of compliance with federal securities and state Blue Sky
or securities laws; (iii) all expenses of printing (including printing
certificates for the New Senior Subordinated Notes to be issued in the Exchange
Offer and printing of Prospectuses), messenger and delivery services and
telephone; (iv) all fees and disbursements of counsel for the Company and the
Subsidiary Guarantors; (v) all application and filing fees in connection with
listing the Notes on a national securities exchange or automated quotation
system pursuant to the requirements hereof; and (vi) all fees and disbursements
of independent certified public accountants of the Company and the Subsidiary
Guarantors (including the expenses of any special audit and comfort letters
required by or incident to such performance).
The Company will, in any event, bear its and the Subsidiary Guarantors'
internal expenses (including, without limitation, all salaries and expenses of
its officers and employees performing legal or accounting duties), the expenses
of any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Subsidiary Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Subsidiary
Guarantors will reimburse the Initial Purchasers and the Holders of Transfer
Restricted Securities being tendered in the Exchange Offer and/or resold
pursuant to the "Plan of Distribution" contained in the Exchange Offer
Registration Statement or registered pursuant to the Shelf Registration
Statement, as applicable, for the reasonable fees and disbursements of not more
than one counsel, who shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such
Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Subsidiary Guarantors, jointly and severally,
agree to indemnify and hold harmless (i) each Holder and (ii) each person, if
any, who controls (within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act) any Holder (any of the persons referred to in this clause
(ii) being hereinafter referred to as a "controlling person") and (iii) the
respective officers, directors, partners, employees, representatives and agents
of any Holder or any controlling person (any person referred to in clause (i),
(ii) or (iii) may hereinafter be referred to as an "Indemnified Holder"), to
the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, judgments, actions and expenses (including without
limitation and as incurred, reimbursement of all reasonable costs of
investigating, preparing, pursuing or defending any claim or action, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, including the reasonable fees and expenses of counsel to any
Indemnified Holder) directly or indirectly caused by, related to, based upon,
arising out of or in connection with any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement,
preliminary prospectus prepared pursuant to this Agreement or Prospectus (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 not misleading, except insofar as such losses,
claims, damages,
14
<PAGE> 16
liabilities or expenses are caused by an untrue statement or omission or
alleged untrue statement or omission that is made in reliance upon and in
conformity with information relating to any of the Holders furnished in writing
to the Company by any of the Holders expressly for use therein.
In case any action or proceeding (including any governmental or regulatory
investigation or proceeding) shall be brought or asserted against any of the
Indemnified Holders with respect to which indemnity may be sought against the
Company or the Subsidiary Guarantors, such Indemnified Holder (or the
Indemnified Holder controlled by such controlling person) shall promptly notify
the parties against whom indemnification is being sought (the "indemnifying
parties"), and such indemnifying parties shall assume the defense thereof,
including the employment of counsel and payment of all fees and expenses. Such
Indemnified Holder shall have the right to employ its own counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of the Indemnified
Holder unless (i) the indemnifying parties have agreed in writing to pay such
fees and expenses, (ii) the indemnifying parties have failed to assume the
defense and employ counsel, or (iii) the named parties to any such action, suit
or proceeding (including any impleaded parties) include such Indemnified Holder
and the indemnifying parties and such Indemnified Holder shall have been
advised by its counsel that representation of such indemnified party and any
indemnifying party by the same counsel would be inappropriate under applicable
standards of professional conduct (whether or not such representation by the
same counsel has been proposed) due to actual or potential differing interests
between them (in which case the indemnifying party shall not have the right to
assume the defense of such action, suit or proceeding on behalf of such
Indemnified Holder). It is understood, however, that the indemnifying parties
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for the Indemnified
Holders not having actual or potential differing interests with the Indemnified
Holders or among themselves, which firm shall be designated in writing by the
Indemnified Holders, and that all such fees and expenses shall be reimbursed on
a monthly basis as provided in paragraph (a) hereof. The indemnifying parties
shall not be liable for any settlement of any such action, suit or proceeding
effected without their written consent, but if settled with such written
consent, or if there shall be a final judgment for the plaintiff in any such
action, suit or proceeding, the indemnifying parties agree to indemnify and
hold harmless such Indemnified Holder, to the extent provided in paragraph (a),
and any such controlling person from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and the Subsidiary
Guarantors, and their respective directors, officers, and any person
controlling (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Company or any Subsidiary Guarantor, to the same extent as
the foregoing indemnity from the Company and the Subsidiary Guarantors to each
of the Indemnified Holders, but only with respect to information relating to
such Holder furnished in writing by or on behalf of such Holder expressly for
use in any Registration Statement. In case any action, suit or proceeding
shall be brought against the Company, any Subsidiary Guarantor or its directors
or officers or any such controlling person in respect of which indemnity may be
sought against a Holder of Transfer Restricted Securities pursuant to this
paragraph (b), such Holder shall have the rights and duties given the Company
and the Subsidiary Guarantors (except that if the Company and the Subsidiary
Guarantors shall have assumed the defense thereof the Holders shall not be
required to do so, but may employ separate counsel therein and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
Holders' expense), and the Company, such Subsidiary Guarantor, such
15
<PAGE> 17
directors or officers or such controlling person shall have the rights and
duties given to each Holder by the preceding paragraph. In no event shall any
Holder be liable or responsible for any amount in excess of the amount by which
the total received by such Holder with respect to its sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds (i) the
amount paid by such Holder for such Transfer Restricted Securities and (ii) the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. The foregoing indemnity agreement shall be in addition to any
liability which the Holders may otherwise have.
(c) If the indemnification provided for in this Section 8 is unavailable
to an indemnified party under Section 8(a) or Section 8(b) hereof in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Subsidiary Guarantors, on the one hand, and the Holders, on the
other hand, from their sale of Transfer Restricted Securities or if such
allocation is not permitted by applicable law, the relative fault of the
Company and the Subsidiary Guarantors, on the one hand, and of the Indemnified
Holder, on the other hand, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative fault of the Company
and the Subsidiary Guarantors, on the one hand, and of the Indemnified Holder,
on the other hand, shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or such Subsidiary Guarantor or by the Indemnified
Holder and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company, the Subsidiary Guarantors and each Holder of Transfer
Restricted Securities agree that it would not be just and equitable if
contribution pursuant to this Section 8(c) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which 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, liabilities or expenses referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any claim or defending any such action,
suit or proceeding. Notwithstanding the provisions of this Section 8, no
Holder or its related Indemnified Holders shall be required to contribute, in
the aggregate, any amount in excess of the amount by which the total received
by such Holder with respect to the sale of its Transfer Restricted Securities
pursuant to a Registration Statement exceeds the sum of (A) the amount paid by
such Holder for such Transfer Restricted Securities plus (B) the amount of any
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Holders' obligations to contribute
pursuant to this Section 8(c) are several in proportion to the respective
principal amount of Senior Subordinated Notes held by each of the Holders
hereunder and not joint.
(d) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding in respect of which any indemnified party is a party and
indemnity could have been sought hereunder by such indemnified party, unless
such
16
<PAGE> 18
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such action, suit or
proceeding.
SECTION 9. RULE 144A
The Company and each Subsidiary Guarantor hereby agrees with each Holder,
for so long as any Transfer Restricted Securities remain outstanding and during
any period in which the Company or such Subsidiary Guarantor is not subject to
Section 13 or 15(d) of the Securities Exchange Act, to make available, upon
request of any Holder of Transfer Restricted Securities, to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or investment bankers
and manager or managers for any Underwritten Offering that will administer such
offering will be selected by the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities included in such offering. Such
investment bankers and managers are referred to herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise all
rights provided herein, in the Indenture, the Purchase Agreement or granted by
law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company and the
Subsidiary Guarantors agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by them of the
provisions of this Agreement and hereby agree to waive the defense in any
action for specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Subsidiary
Guarantor will, on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any
way conflict with and are not inconsistent with the rights granted to the
holders of the Company's and the Subsidiary Guarantors' securities under any
agreement in effect on the date hereof.
17
<PAGE> 19
(c) Adjustments Affecting the Notes. Neither the Company nor any
Subsidiary Guarantor will take any action, or voluntarily permit any change to
occur, with respect to the Notes that is designed to and would materially and
adversely affect the ability of the Holders to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose securities are not being tendered pursuant to such Exchange Offer
may be given by the Holders of a majority of the outstanding principal amount
of Transfer Restricted Securities subject to such Exchange Offer.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or the Subsidiary Guarantors:
National Equipment Services, Inc.
1800 Sherman Avenue
Evanston, Illinois 60201
Telecopier No.: (847) 733-1087
Attention: Dennis O'Connor
With a copy, which shall not constitute notice, to:
Kirkland & Ellis
200 East Randolph Street
Chicago, Illinois 60601
Telecopier No.: (312) 861-2200
Attention: H. Kurt von Moltke
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
receipt acknowledged, if telecopied; and on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
18
<PAGE> 20
(f) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, however, that
this Agreement shall not inure to the benefit of or be binding upon a successor
or assign of a Holder unless and to the extent such successor or assign
acquired Transfer Restricted Securities directly from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
19
<PAGE> 21
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Paul R. Ingersoll
-----------------------------------
Name: Paul R. Ingersoll
Title: Vice President and Secretary
AERIAL PLATFORMS, INC.
By: /s/ Paul R. Ingersoll
-----------------------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
NES ACQUISITION CORP.
By: /s/ Paul R. Ingersoll
-----------------------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
BAT ACQUISITION CORP.
By: /s/ Paul R. Ingersoll
-----------------------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
MST ENTERPRISES, INC.
By: /s/ Paul R. Ingersoll
-----------------------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
<PAGE> 22
Confirmed as of the date first
above written.
SMITH BARNEY INC.
FIRST UNION CAPITAL MARKETS CORP.
SALOMON BROTHERS INC
BY SMITH BARNEY INC.
By: /s/ Steven J. Pearlman
-----------------------------------
Name: Steven J. Pearlman
Title: Director
<PAGE> 1
Exhibit 4.5
$100,000,000 EXECUTION COPY
NATIONAL EQUIPMENT SERVICES, INC.
10% SENIOR SUBORDINATED NOTES DUE 2004
PURCHASE AGREEMENT
November 20, 1997
SMITH BARNEY INC.
FIRST UNION CAPITAL MARKETS CORP.
SALOMON BROTHERS INC
c/o Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
National Equipment Services, Inc., a Delaware corporation (the "Company"),
proposes, upon the terms and conditions set forth herein, to issue and sell to
you, as the initial purchasers (the "Initial Purchasers"), $100,000,000 in
aggregate principal amount of its 10% Senior Subordinated Notes due 2004 (the
"Senior Subordinated Notes"). The Senior Subordinated Notes will (i) have the
terms and provisions which are summarized in the Offering Memorandum (as
defined herein), (ii) be in the forms specified by the Initial Purchasers
pursuant to Section 3 hereof, and (iii) be issued pursuant to the provisions of
an Indenture, to be dated as of November 25, 1997 (the "Indenture"), among the
Company, each of the subsidiaries of the Company noted on Schedule I hereto
(the "Subsidiary Guarantors") and Harris Trust and Savings Bank, as trustee
(the "Trustee"). The Senior Subordinated Notes will be guaranteed on a senior
subordinated basis by the Subsidiary Guarantors pursuant to their guarantee
(the "Subsidiary Guarantees").
The Company and the Subsidiary Guarantors wish to confirm as follows their
agreement with the Initial Purchasers in connection with the purchase and
resale of the Senior Subordinated Notes.
1. Preliminary Offering Memorandum and Offering Memorandum. The Senior
Subordinated Notes will be offered and sold to the Initial Purchasers without
registration under the Securities Act of 1933, as amended (the "Act"), in
reliance on an exemption pursuant to Section 4(2) under the Act. The Company
has prepared a preliminary offering memorandum, dated November 7, 1997, (the
"Preliminary Offering Memorandum"), and an offering memorandum, dated November
20, 1997, (the "Offering Memorandum"), setting forth information regarding the
Company, the Senior Subordinated Notes and the Exchange Notes (as defined
herein). Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed to include all amendments and supplements
thereto, if any. The Company hereby confirms that it has authorized the use of
the Preliminary Offering Memorandum and the Offering Memorandum in connection
with the offering and resale of the Senior Subordinated Notes by the Initial
Purchasers.
The Company understands that the Initial Purchasers propose to make offers
and sales (the "Exempt Resales") of the Senior Subordinated Notes purchased by
the Initial Purchasers hereunder only on
<PAGE> 2
the terms and in the manner set forth in the Offering Memorandum, and Section 2
hereof, as soon as the Initial Purchasers deem advisable after this Agreement
has been executed and delivered, solely to persons whom the Initial Purchasers
reasonably believe to be qualified institutional buyers ("Qualified
Institutional Buyers") as defined in Rule 144A under the Act, as such rule may
be amended from time to time ("Rule 144A"), in transactions under Rule 144A.
Such Qualified Institutional Buyers are being referred to herein as "Eligible
Purchasers."
It is understood and acknowledged that upon original issuance thereof, and
until such time as the same is no longer required under the applicable
requirements of the Act, the Senior Subordinated Notes (and all securities
issued in exchange therefor or in substitution thereof) shall bear the
following legend:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY
MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1)(a)
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (c)
OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT, (d) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF
THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED INVESTOR")
IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT OR (e) IN ACCORDANCE WITH ANOTHER
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, (2) TO THE COMPANY OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A)
ABOVE."
It is also understood and acknowledged that holders (including subsequent
transferees) of the Senior Subordinated Notes will have the registration rights
set forth in the registration rights agreement
(the "Registration Rights Agreement"), to be dated the Closing Date (as defined
herein), in substantially the
2
<PAGE> 3
form of Exhibit A hereto, for so long as such Senior Subordinated Notes
constitute "Transfer Restricted Securities" (as defined in the Registration
Rights Agreement) and subject to the other terms of the Registration Rights
Agreement. Pursuant to the Registration Rights Agreement, the Company will
agree to file with the Securities and Exchange Commission (the "Commission")
under the circumstances set forth therein, (i) a registration statement on the
appropriate form under the Act relating to the Company's 10% Senior
Subordinated Notes due 2004, Series B (the "Exchange Notes") to be offered in
exchange for the Senior Subordinated Notes (the "Registered Exchange Offer")
and (ii) under certain limited circumstances, a shelf registration statement
pursuant to Rule 415 under the Act relating to the resale by certain holders of
the Senior Subordinated Notes, and to use its commercially reasonable best
efforts to cause such registration statements to be declared effective. As
used herein, the Senior Subordinated Notes and the Exchange Notes are
hereinafter referred to collectively as the "Notes." This Agreement, the
Indenture and the Registration Rights Agreement are hereinafter referred to
collectively as the "Operative Documents."
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Indenture or the Offering Memorandum.
2. Agreements to Sell, Purchase and Resell. (a) The Company hereby
agrees, subject to all the terms and conditions set forth herein, to issue and
sell to the Initial Purchasers and, upon the basis of the representations,
warranties and agreements of the Company and the Subsidiary Guarantors herein
contained and subject to all the terms and conditions set forth herein, each
Initial Purchaser agrees, severally and not jointly, to purchase from the
Company, at a purchase price of 97% of the principal amount thereof, the
principal amount of Senior Subordinated Notes set forth opposite the name of
such Initial Purchaser in Schedule II hereto.
(b) The Initial Purchasers have advised the Company that they propose to
offer the Senior Subordinated Notes for sale upon the terms and conditions set
forth in this Agreement and in the Offering Memorandum. Each Initial Purchaser
hereby represents and warrants to, and agrees with, the Company that such
Initial Purchaser (i) is purchasing the Senior Subordinated Notes pursuant to a
private sale exempt from registration under the Act, (ii) will not solicit
offers for, or offer or sell, the Senior Subordinated Notes by means of any
form of general solicitation or general advertising or in any manner involving
a public offering within the meaning of Section 4(2) of the Act, and (iii) will
solicit offers for the Senior Subordinated Notes only from, and will offer,
sell or deliver the Senior Subordinated Notes as part of their initial
offering, only to persons whom the Initial Purchasers reasonably believe to be
QIBs, or if any such person is buying for one or more institutional accounts
for which such person is acting as fiduciary or agent, only when such person
has represented to the Initial Purchasers that each such account is a QIB, to
whom notice has been given that such sale or delivery is being made in reliance
on Rule 144A, in each case, in transactions under Rule 144A. The Initial
Purchasers have advised the Company that they will offer the Senior
Subordinated Notes to Eligible Purchasers at a price initially equal to 98.767%
of the principal amount thereof, plus accrued interest, if any, from the date
of issuance of the Senior Subordinated Notes. Such price may be changed by the
Initial Purchasers at any time thereafter without notice.
The Initial Purchasers understand that the Company and, for purposes of
the opinions to be delivered to the Initial Purchasers pursuant to Sections
7(c) and 7(d) hereof, counsel to the Company and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations, warranties and agreements and the Initial Purchasers hereby
consent to such reliance.
3. Delivery of the Senior Subordinated Notes and Payment Therefor.
Delivery to the Initial Purchasers of and payment for the Senior Subordinated
Notes shall be made at the office of Latham & Watkins, 885 Third Avenue, Suite
1000, New York, New York 10022 at 10:00 A.M., New York City time,
3
<PAGE> 4
on November 25, 1997 (the "Closing Date"). The place of closing for the Senior
Subordinated Notes and the Closing Date may be varied by agreement between the
Initial Purchasers and the Company.
The Senior Subordinated Notes will be delivered to the Initial Purchasers
against payment of the purchase price therefor in immediately available funds.
The Senior Subordinated Notes will be evidenced by one or more global
securities in definitive form (the "Global Note"), and will be registered in
the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"). The
Senior Subordinated Notes to be delivered to the Initial Purchasers shall be
made available to the Initial Purchasers in New York City for inspection and
packaging not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date.
4. Agreements of the Company and the Subsidiary Guarantors. The Company
and the Subsidiary Guarantors, jointly and severally, agree with the Initial
Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested by
them, will confirm such advice in writing, within the period of time
referred to in paragraph (e) below, of any material change in the
Company's condition (financial or other), business, properties, net worth
or results of operations, or of the happening of any event which makes
any statement made in the Offering Memorandum (as then amended or
supplemented) untrue in any material respect or which requires the making
of any additions to or changes in the Offering Memorandum (as then
amended or supplemented) in order to make the statements therein not
misleading, or of the necessity to amend or supplement the Offering
Memorandum (as then amended or supplemented) to comply with any law.
(b) To furnish to the Initial Purchasers, without charge, as of the
date of the Offering Memorandum, such number of copies of the Offering
Memorandum as may then be amended or supplemented as they may reasonably
request.
(c) Not to make any amendment or supplement to the Preliminary
Offering Memorandum or to the Offering Memorandum of which the Initial
Purchasers shall not previously have been advised or to which they shall
reasonably object after being so advised.
(d) Prior to the execution and delivery of this Agreement, the
Company has delivered or will deliver to the Initial Purchasers, without
charge, in such quantities as the Initial Purchasers shall have requested
or may hereafter reasonably request, copies of the Preliminary Offering
Memorandum. The Company consents to the use, in accordance with the
securities or Blue Sky laws of the jurisdictions in which the Senior
Subordinated Notes are offered by the Initial Purchasers and by dealers,
prior to the date of the Offering Memorandum, of each Preliminary
Offering Memorandum so furnished by the Company. The Company consents to
the use of the Offering Memorandum (and of any amendment or supplement
thereto) in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Senior Subordinated Notes are offered by the
Initial Purchasers and by all dealers to whom Senior Subordinated Notes
may be sold, in connection with the offering and sale of the Senior
Subordinated Notes.
(e) If, at any time prior to completion of the distribution of the
Senior Subordinated Notes by the Initial Purchasers to Eligible
Purchasers, any event shall occur that in the judgment of the Company or
in the opinion of counsel for the Initial Purchasers should be set forth
in the Offering Memorandum (as then amended or supplemented) in order to
make the statements therein,
4
<PAGE> 5
in the light of the circumstances under which they were made, not
misleading, or if it is necessary
to supplement or amend the Offering Memorandum in order to comply with
any law, the Company will forthwith prepare an appropriate supplement or
amendment thereto or such document, and will expeditiously furnish to the
Initial Purchasers and dealers a reasonable number of copies thereof.
(f) To cooperate with the Initial Purchasers and with their counsel
in connection with the qualification of the Senior Subordinated Notes for
offering and sale by the Initial Purchasers and by dealers under the
securities or Blue Sky laws of such jurisdictions as the Initial
Purchasers may designate and will file such consents to service of
process or other documents necessary or appropriate in order to effect
such qualification; provided that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not
now so qualified or to take any action which would subject it to service
of process in suits, other than those arising out of the offering or sale
of the Senior Subordinated Notes, in any jurisdiction where it is not now
so subject.
(g) So long as any of the Senior Subordinated Notes are outstanding,
the Company will furnish to the Initial Purchasers (i) as soon as
available, a copy of each report of the Company mailed to stockholders or
filed with any stock exchange or regulatory body and (ii) from time to
time such other publicly available information concerning the Company as
the Initial Purchasers may reasonably request.
(h) If this Agreement shall terminate or shall be terminated after
execution and delivery pursuant to any provisions hereof (otherwise than
by the Initial Purchasers terminating this Agreement pursuant to Section
10 hereof) or if this Agreement shall be terminated by the Initial
Purchasers because of any failure or refusal on the part of the Company
or the Subsidiary Guarantors to comply with the terms or fulfill any of
the conditions of this Agreement, the Company and the Subsidiary
Guarantors agree to reimburse the Initial Purchasers for all
out-of-pocket expenses (including reasonable fees and expenses of their
counsel) reasonably incurred by them in connection herewith, but without
any further obligation on the part of the Company or the Subsidiary
Guarantors for loss of profits or otherwise.
(i) To apply the net proceeds from the sale of the Senior
Subordinated Notes to be sold by the Company hereunder substantially in
accordance with the description set forth in the Offering Memorandum.
(j) Without the prior consent of the Initial Purchasers, prior to
the expiration of 180 days after the date of the Offering Memorandum
neither the Company nor the Subsidiary Guarantors will offer, sell,
contract to sell or otherwise dispose of any fixed income obligation
substantially similar to the Senior Subordinated Notes and having a
maturity of more than one year (other than borrowings under the Credit
Facility).
(k) Except as stated in this Agreement and in the Preliminary
Offering Memorandum and Offering Memorandum neither the Company nor the
Subsidiary Guarantors have taken, nor will any of them take, directly or
indirectly, any action designed to or that might reasonably be expected
to cause or result in stabilization or manipulation (within the meaning
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
of the price of the Senior Subordinated Notes to facilitate the sale or
resale of the Senior Subordinated Notes. Neither the Company nor the
Subsidiary Guarantors will distribute any offering material in connection
with the Exempt Resales in violation of the Act.
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<PAGE> 6
(l) To use their respective commercially reasonable best efforts to
cause the Senior Subordinated Notes to be designated Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") Market
securities in accordance with the rules and regulations adopted by the
National Association of Securities Dealers, Inc. relating to trading in
the PORTAL Market and to permit the Senior Subordinated Notes to be
eligible for clearance and settlement through DTC.
(m) From and after the Closing Date, so long as any of the Senior
Subordinated Notes are outstanding and are "Restricted Securities" within
the meaning of the Rule 144(a)(3) under the Act or, if earlier, until two
years after the Closing Date, and during any period in which the Company
is not subject to Section 13 or 15(d) of the Exchange Act, the Company
will furnish to holders of the Senior Subordinated Notes and prospective
purchasers of Senior Subordinated Notes designated by such holders, upon
request of such holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the Act to
permit compliance with Rule 144A in connection with resale of the Senior
Subordinated Notes.
(n) The Company has complied and will comply with all provisions of
Florida Statutes Section 517.075 relating to issuers doing business with
Cuba.
(o) Not to sell, offer for sale or solicit offers to buy any
security (as defined in the Act) that would be integrated with the sale
of the Senior Subordinated Notes in a manner that would require the
registration under the Act of the sale to the Initial Purchasers or the
Eligible Purchasers of the Senior Subordinated Notes.
(p) To comply, in all material respects, to the extent applicable,
with all the terms and conditions of the Registration Rights Agreement
and all agreements set forth in the representation letter of the Company
to DTC relating to the approval of the Senior Subordinated Notes by DTC
for "book entry" transfer.
(q) Concurrently with any registration of the Senior Subordinated
Notes pursuant to the Registration Rights Agreement, or at such earlier
time as may be required, the Indenture shall be qualified under the Trust
Indenture Act of 1939 (the "1939 Act") and any necessary supplemental
indentures will be entered into in connection therewith.
(r) Not to voluntarily claim, and will resist actively all attempts
to claim, the benefit of any usury laws against holders of the Senior
Subordinated Notes.
(s) To do and perform all things reasonably required or necessary to
be done and performed under this Agreement by them prior to the Closing
Date, and to satisfy all conditions precedent to the Initial Purchasers'
obligations hereunder to purchase the Senior Subordinated Notes.
5. Representations and Warranties of the Company and the Subsidiary
Guarantors. The Company and the Subsidiary Guarantors, jointly and severally,
represent and warrant to the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and Offering Memorandum with respect to
the Senior Subordinated Notes have been prepared by the Company for use by the
Initial Purchasers in connection with the Exempt Resales. No order or decree
preventing the use of the Preliminary Offering Memorandum or the
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<PAGE> 7
Offering Memorandum or any amendment or supplement thereto, or any order
asserting that the transactions contemplated by this Agreement are subject to
the registration requirements of the Act has been issued and no proceeding for
that purpose has commenced or is pending or, to the knowledge of the Company or
the Subsidiary Guarantors, is overtly contemplated.
(b) The Preliminary Offering Memorandum and the Offering Memorandum
as of their respective dates and the Offering Memorandum as of the
Closing Date, did not or will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except that this representation and warranty does not apply to statements
in or omissions from the Preliminary Offering Memorandum and Offering
Memorandum made in reliance upon and in conformity with information
relating to the Initial Purchasers furnished to the Company in writing by
or on behalf of the Initial Purchasers expressly for use therein.
(c) The Indenture has been duly and validly authorized by the
Company and the Subsidiary Guarantors and, upon its execution, delivery
and performance by the Company and the Subsidiary Guarantors and assuming
due authorization, execution, delivery and performance by the Trustee,
will be a valid and binding agreement of the Company and the Subsidiary
Guarantors, enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally and subject to the
applicability of general principles of equity and conforms in all
material respects to the description thereof in the Offering Memorandum;
no qualification of the Indenture under the 1939 Act is required in
connection with the offer and sale of the Senior Subordinated Notes
contemplated hereby or in connection with the Exempt Resales.
(d) The Senior Subordinated Notes have been duly authorized by the
Company and, when executed by the Company and authenticated by the
Trustee in accordance with the Indenture and delivered to the Initial
Purchasers against payment therefor in accordance with the terms hereof,
will have been validly issued and delivered, and will constitute valid
and binding obligations of the Company entitled to the benefits of the
Indenture and enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and
subject to the applicability of general principles of equity, and the
description of the Senior Subordinated Notes in the Offering Memorandum
will conform in all material respects to the Senior Subordinated Notes.
(e) The Subsidiary Guarantees to be endorsed on the Senior
Subordinated Notes have been duly authorized by the Subsidiary Guarantors
and, when executed by the Subsidiary Guarantors and when the Senior
Subordinated Notes are issued and authenticated in accordance with the
terms of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms hereof, such Subsidiary
Guarantees will have been validly issued and delivered and will
constitute valid and binding obligations of the Subsidiary Guarantors
entitled to the benefits of the Indenture and enforceable in accordance
with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and subject to the applicability of general
principles of equity, and the description of such Subsidiary Guarantees
in the Offering Memorandum will conform in all material respects to such
Subsidiary Guarantees.
(f) The Exchange Notes have been duly authorized by the Company and,
when executed by the Company and authenticated by the Trustee and
delivered in accordance with the Registered
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<PAGE> 8
Exchange Offer and the Indenture, will have been validly issued and
delivered, and will constitute valid and binding obligations of the
Company entitled to the benefits of the Indenture and enforceable in
accordance with their terms, except as enforcement thereof may be limited
by bankruptcy, insolvency or other similar laws affecting the enforcement
of creditors' rights generally and subject to the applicability of
general principles of equity, and the description of the Exchange Notes
in the Offering Memorandum will conform in all material respects to the
Exchange Notes.
(g) The Subsidiary Guarantees to be endorsed on the Exchange Notes
have been duly authorized by the Subsidiary Guarantors and, when executed
by the Subsidiary Guarantors and when the Exchange Notes are issued and
authenticated in accordance with the terms of the Registered Exchange
Offer and the Indenture, such Subsidiary Guarantees will have been
validly issued and delivered and will constitute valid and binding
obligations of the Subsidiary Guarantors entitled to the benefits of the
Indenture and enforceable in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and
subject to the applicability of general principles of equity, and the
description of such Subsidiary Guarantees in the Offering Memorandum will
conform in all material respects to such Subsidiary Guarantees.
(h) All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and
nonassessable; the authorized capital stock of the Company conforms to
the description thereof in the Offering Memorandum.
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the state of Delaware with full
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Offering Memorandum, and
is duly registered and qualified to conduct its business and is in good
standing in each jurisdiction or place where the nature of its properties
or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify does
not have a material adverse effect on the condition (financial or other),
business, prospects, properties, net worth or results of operations of
the Company and the Subsidiaries (as hereinafter defined) taken as a
whole (a "Material Adverse Effect").
(j) All the Company's subsidiaries (as defined in the Act) are
referred to herein individually as a "Subsidiary" and collectively as the
"Subsidiaries." Each Subsidiary is a corporation duly organized, validly
existing and in good standing in the jurisdiction of its incorporation,
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering
Memorandum, and is duly registered and qualified to conduct its business
and is in good standing in each jurisdiction or place where the nature of
its properties or the conduct of its business requires such registration
or qualification, except where the failure so to register or qualify or
be in good standing does not have a Material Adverse Effect. All the
outstanding shares of capital stock of each of the Subsidiaries have been
duly authorized and validly issued, are fully paid and nonassessable, and
are wholly owned by the Company directly or indirectly through one of the
other Subsidiaries, free and clear of any lien, adverse claim, security
interest, equity or other encumbrance, except pursuant to and otherwise
permitted by the Credit Facility as described in the Offering Memorandum.
(k) Schedule III hereto lists the only jurisdictions or places where
the nature of the properties or the conduct of the businesses of the
Company and the Subsidiary Guarantors requires the Company and the
Subsidiary Guarantors to be duly registered, qualified and in good
standing,
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<PAGE> 9
except where the failure to so register, qualify or be in good standing
would not have a Material Adverse Effect.
(l) There are no legal or governmental proceedings pending or, to
the knowledge of the Company or the Subsidiary Guarantors, overtly
threatened, against the Company or any of the Subsidiaries or to which
the Company or any of the Subsidiaries or to which any of their
respective properties, is subject, that are not disclosed in the Offering
Memorandum and which are reasonably likely to cause a Material Adverse
Effect or to materially affect the issuance of the Senior Subordinated
Notes or the consummation of the transactions contemplated by this
Agreement. There are no material agreements, contracts, indentures or
leases that should be properly described or disclosed in a summary
fashion in the Offering Memorandum that are not so described or
disclosed. Neither the Company nor any Subsidiary is involved in any
strike, job action or labor dispute with any group of employees, and, to
the Company's and the Subsidiary Guarantors' knowledge, no such action or
dispute is overtly threatened.
(m) Neither the Company nor any of the Subsidiaries is (i) in
violation of its certificate or articles of incorporation or by-laws or
other organizational documents, or of any law, ordinance, administrative
or governmental rule or regulation applicable to the Company or any of
the Subsidiaries or of any decree of any court or governmental agency or
body having jurisdiction over the Company or any of the Subsidiaries
except where any such violation or violations in the aggregate would not
have a Material Adverse Effect or (ii) in default in any respect in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
agreement, indenture, lease or other instrument to which the Company or
any of the Subsidiaries is a party or by which any of them or any of
their respective properties may be bound, except as may be disclosed in
the Offering Memorandum or where any such default or defaults in the
aggregate would not have a Material Adverse Effect.
(n) None of the issuance, offer, sale or delivery of the Senior
Subordinated Notes, the execution, delivery or performance of this
Agreement or the Indenture or the Registration Rights Agreement by the
Company or the Subsidiary Guarantors or the consummation by the Company
and the Subsidiary Guarantors of the transactions contemplated hereby or
thereby (i) requires any consent, approval, authorization or other order
of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official
(except such as may be required in connection with the registration under
the Act of the Senior Subordinated Notes in accordance with the
Registration Rights Agreement, qualification of the Indenture under the
1939 Act and compliance with the securities or Blue Sky laws of various
jurisdictions), or conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate or articles
of incorporation or bylaws, or other organizational documents, of the
Company or any of the Subsidiary Guarantors or (ii) conflicts or will
conflict with or constitutes or will constitute a breach of, or a default
under, in any material respect, any material agreement, indenture, lease
or other instrument to which the Company or any of the Subsidiary
Guarantors is a party or by which any of them or any of their respective
properties may be bound, or violates or will violate in any material
respect any statute, law, regulation or filing or judgment, injunction,
order or decree applicable to the Company or any of the Subsidiary
Guarantors or any of their respective properties, or will result in the
creation or imposition of any material lien, charge or encumbrance upon
any property or assets of the Company or any of the Subsidiary Guarantors
pursuant to the terms of any agreement or instrument to which any of them
is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
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<PAGE> 10
(o) The accountants, Price Waterhouse LLP, who have certified or
shall certify the financial statements included as part of the Offering
Memorandum (or any amendment or supplement thereto), are independent
public accountants under Rule 101 of the AICPA's Code of Professional
Conduct, and its interpretation and rulings.
(p) The financial statements (historical and pro forma), together
with related schedules and notes forming part of the Offering Memorandum
(and any amendment or supplement thereto), present fairly in all material
respects the consolidated financial position, results of operations and
changes in stockholders' equity and cash flows of the Company and the
Subsidiaries on the basis stated in the Offering Memorandum at the
respective dates or for the respective periods to which they apply; such
statements and related schedules and notes have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved, except as disclosed therein; the
assumptions used in preparing the pro forma financial information and
related notes and schedules included in the Offering Memorandum are
reasonable; and the other financial and statistical information and data
set forth in the Offering Memorandum (and any amendment or supplement
thereto) is accurately presented and, to the extent such information and
data is derived from the financial books and records of the Company, is
prepared on a basis consistent with such financial statements and the
books and records of the Company.
(q) The Company has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement and the
Registration Rights Agreement; the execution and delivery of, and the
performance by the Company of its obligations under, this Agreement and
the Registration Rights Agreement have been duly and validly authorized
by the Company, and this Agreement and the Registration Rights Agreement
have been duly executed and delivered by the Company and constitute the
valid and legally binding agreements of the Company, enforceable against
the Company in accordance with their terms, except as the enforcement
hereof and thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and
subject to the applicability of general principles of equity, and except
as rights to indemnity and contribution hereunder and thereunder may be
limited by Federal or state securities laws or principles of public
policy.
(r) Each of the Subsidiary Guarantors has all requisite power and
authority to execute, deliver and perform its obligations under this
Agreement and the Registration Rights Agreement; the execution and
delivery of, and the performance by each Subsidiary Guarantor of its
obligations under, this Agreement and the Registration Rights Agreement
have been duly and validly authorized by each Subsidiary Guarantor, and
this Agreement and the Registration Rights Agreement have been duly
executed and delivered by each Subsidiary Guarantor and constitute the
valid and legally binding agreements of each Subsidiary Guarantor,
enforceable against each Subsidiary Guarantor in accordance with their
terms, except as the enforcement hereof and thereof may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and subject to the applicability of general
principles of equity, and except as rights to indemnity and contribution
hereunder and thereunder may be limited by Federal or state securities
laws or principles of public policy.
(s) Except as disclosed in the Offering Memorandum (or any amendment
or supplement thereto), subsequent to the date as of which such
information is given in the Offering Memorandum (or any amendment or
supplement thereto), neither the Company nor any of the Subsidiaries has
incurred any liability or obligation, or entered into any transaction,
not in the ordinary course of business, that is material to the Company
and the Subsidiaries taken as a whole, and there has not
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<PAGE> 11
been any material change in the capital stock, or material increase in
the short-term or long-term debt, of the Company or any of the
Subsidiaries or any material adverse change, or any development involving
or which could reasonably be expected to involve a prospective material
adverse change, in the financial condition, business, properties, net
worth or results of operations of the Company and the Subsidiaries taken
as a whole.
(t) Each of the Company and the Subsidiaries has good and marketable
title to all property (real and personal) described in the Offering
Memorandum as being owned by it, free and clear of all liens, claims,
security interests or other encumbrances except pursuant to and otherwise
permitted by the Credit Facility as described in a summary fashion in the
Offering Memorandum; and all the property described in the Offering
Memorandum as being held under lease by each of the Company and the
Subsidiaries is held by it under valid, subsisting and enforceable
leases, with only such exceptions as in the aggregate are not materially
burdensome and do not interfere in any material respect with the conduct
of the business of the Company and the Subsidiaries taken as a whole.
(u) Neither the Company nor the Subsidiary Guarantors have
distributed and, prior to the later to occur of the Closing Date and
completion of the distribution of the Senior Subordinated Notes, will not
distribute any offering material in violation of the Act in connection
with the offering and sale of the Senior Subordinated Notes.
(v) Each of the Company and the Subsidiaries have such permits,
licenses, franchises, certificates of need and other approvals or
authorizations of governmental or regulatory authorities ("Permits") as
are necessary under applicable law to own their respective properties and
to conduct their respective businesses in the manner described in the
Offering Memorandum, except to the extent that the failure to have such
Permits would not have a Material Adverse Effect; the Company and each of
the Subsidiaries have fulfilled and performed in all material respects,
all their respective material obligations with respect to the Permits,
and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such Permit,
subject in each case to such qualification as may be set forth in the
Offering Memorandum and except to the extent that any such revocation or
termination would not have a Material Adverse Effect; and, except as
described in the Offering Memorandum, none of the Permits contains any
restriction that is materially burdensome to the Company or any of the
Subsidiaries.
(w) The Company and the Subsidiary Guarantors maintain a system of
internal accounting controls sufficient to provide reasonable assurances
that: (i) transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
(x) Neither the Company nor any of the Subsidiaries nor, to the
Company's or the Subsidiary Guarantors' knowledge, any employee or agent
of the Company or any Subsidiary has made any payment of funds of the
Company or any Subsidiary or received or retained any funds in violation
of any law, rule or regulation, which violation would have a Material
Adverse Effect.
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<PAGE> 12
(y) Except as disclosed in the Offering Memorandum, the Company and
each of the Subsidiaries have filed all tax returns required to be filed,
which returns are true and correct in all material respects, and neither
the Company nor any Subsidiary is in default in the payment of any taxes
which were payable pursuant to said returns or any assessments with
respect thereto, except where the failure to file such returns and make
such payments would not have a Material Adverse Effect and except for the
payment of any amounts that are being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance
with GAAP have been established.
(z) No holder of any security of the Company has any right to
request or demand registration of shares of Common Stock or any other
security of the Company because of the consummation of the transactions
contemplated by this Agreement or the Registration Rights Agreement,
except as have been waived.
(aa) The Company and each of the Subsidiaries own or possess all
patents, trademarks, trademark registration, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade
secrets and rights described in the Offering Memorandum as being owned by
any of them or necessary for the conduct of their respective businesses,
and neither the Company nor the Subsidiary Guarantors are aware of any
claim to the contrary or any challenge by any other person to the rights
of the Company and the Subsidiaries with respect to the foregoing, except
for such claims or challenges that would not individually or in the
aggregate be reasonably expected to result in a Material Adverse Effect.
(bb) The Company is not and, upon sale of the Senior Subordinated
Notes to be issued and sold thereby in accordance herewith and the
application of the net proceeds to the Company of such sale as described
in the Offering Memorandum under the caption "Use of Proceeds," will not
be an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
(cc) When the Senior Subordinated Notes are issued and delivered
pursuant to this Agreement, such Senior Subordinated Notes will not be of
the same class (within the meaning of Rule 144A(d)(3) under the Act) as
any security of the Company that is listed on a national securities
exchange registered under Section 6 of the Exchange Act or that is quoted
in a United States automated interdealer quotation system.
(dd) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D ("Regulation D") under the Act) of the Company has
directly, or through any agent (provided that no representation is made
as to the Initial Purchasers or any person acting on their behalf), (i)
sold, offered for sale, solicited offers to buy, any security (as defined
in the Act) which is or properly would be integrated with the offering
and sale of the Senior Subordinated Notes in a manner that would require
the registration of the Senior Subordinated Notes under the Act or (ii)
engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offering of
the Senior Subordinated Notes.
(ee) Assuming (i) that the representations and warranties in Section
2(b) hereof are true, (ii) the Initial Purchasers comply with the
covenants set forth in Section 2(b) hereof and (iii) that each person to
whom the Initial Purchasers offer, sell or deliver the Senior
Subordinated Notes is a QIB, the purchase and sale of the Senior
Subordinated Notes pursuant hereto (including the Initial Purchasers'
proposed offering of the Senior Subordinated Notes on the terms and in
the manner set
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<PAGE> 13
forth in the Offering Memorandum and Section 2 hereof) is exempt from the
registration requirements of the Act.
(ff) The Company and each of its Subsidiaries have fulfilled their
obligations, if any, under the minimum funding standards of Section 302
of the United States Employee Retirement Income Security Act of 1974
("ERISA") and the regulations and published interpretations thereunder
with respect to each "plan" (as defined in ERISA and such regulations and
published interpretations) in which employees of the Company and its
Subsidiaries are eligible to participate and each such plan is in
compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published interpretations,
and has not incurred any unpaid liability to the Pension Benefit Guaranty
Corporation (other than for the payment of premiums in the ordinary
course) or to any such plan under Title IV of ERISA.
(gg) The execution and delivery of this Agreement, the other
Operative Documents and the sale of the Senior Subordinated Notes to the
Initial Purchasers or by the Initial Purchasers to Eligible Purchasers
will not involve any prohibited transaction within the meaning of Section
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code"). The representation made by the Company and the
Subsidiary Guarantors in the preceding sentence is made in reliance upon
and subject to the accuracy of, and compliance with, the representations
and covenants made or deemed made by the Eligible Purchasers as set forth
in the Offering Memorandum under the section entitled "Notice to
Investors."
(hh) (i) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are customary in the businesses in which
they are engaged; (ii) all policies of insurance insuring the Company or
any of its Subsidiaries or their respective businesses, assets,
employees, officers and directors are in full force and effect; (iii) the
Company and its Subsidiaries are in compliance with the terms of such
policies and instruments in all material respects; and (iv) there are no
material claims by the Company or any of its Subsidiaries under any such
policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause.
(ii) The Company and each of its Subsidiaries (i) are and at all
times have been, in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection
of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"),
(ii) have received all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of
any such permit, license or approval, except where such noncompliance
with Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the
aggregate, have a Material Adverse Effect. Neither the Company nor any
of its Subsidiaries has been named as a "potentially responsible party"
under the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended, or any similar state statute.
(jj) In connection with its acquisition of businesses, the Company
typically conducts a review of the effect of Environmental Laws on the
business, operations and properties of the acquired businesses, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws, or any permit, license or approval, any related
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<PAGE> 14
constraints on operating activities and any potential liabilities to
third parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or
in the aggregate, have a Material Adverse Effect.
(kk) Annex I to Exhibit B hereto contains the only material
agreements, contracts, indentures or leases of the Company and the
Subsidiary Guarantors.
6. Indemnification and Contribution. (a) The Company and the Subsidiary
Guarantors agree jointly and severally to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls any Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum or Offering Memorandum or in any amendment
or supplement thereto, or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with the information relating to such Initial Purchaser furnished in writing to
the Company by or on behalf of such Initial Purchaser expressly for use in
connection therewith; provided, however, that the indemnification contained in
this paragraph (a) with respect to the Preliminary Offering Memorandum shall
not inure to the benefit of any Initial Purchaser (or to the benefit of any
person controlling such Initial Purchaser) on account of any such loss, claim,
damage, liability or expense arising from the sale of the Senior Subordinated
Notes by such Initial Purchaser to any person if the untrue statement or
alleged untrue statement or omission or alleged omission of a material fact
contained in the Preliminary Offering Memorandum was corrected in the Offering
Memorandum and such Initial Purchaser sold Senior Subordinated Notes to that
person without sending or giving at or prior to the written confirmation of
such sale, a copy of the Offering Memorandum (as then amended or supplemented)
if the Company or the Subsidiary Guarantors have previously furnished
sufficient copies thereof to the Initial Purchasers on a timely basis to permit
such sending or giving. The foregoing indemnity agreement shall be in addition
to any liability which the Company or the Subsidiary Guarantors may otherwise
have.
(b) If any action, suit or proceeding shall be brought against an Initial
Purchaser or any person controlling such Initial Purchaser in respect of which
indemnity may be sought against the Company or the Subsidiary Guarantors, the
Initial Purchaser or such controlling person shall promptly notify the parties
against whom indemnification is being sought (the "indemnifying parties"), and
such indemnifying parties shall assume the defense thereof, including the
employment of counsel and payment of all fees and expenses. The Initial
Purchaser or any such controlling person shall have the right to employ
separate counsel in any such action, suit or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Initial Purchaser or such controlling person unless (i) the
indemnifying parties have agreed in writing to pay such fees and expenses, (ii)
the indemnifying parties have failed to assume the defense and employ counsel,
or (iii) the named parties to any such action, suit or proceeding (including
any impleaded parties) include both the Initial Purchaser or such controlling
person and the indemnifying parties and the Initial Purchaser or such
controlling person shall have been advised by its counsel that representation
of such indemnified party and any indemnifying party by the same counsel would
be inappropriate under applicable standards of professional conduct (whether or
not such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying
party shall not have the right to assume the defense of such action, suit or
proceeding on behalf of the Initial Purchaser or such controlling person). It
is understood, however, that the indemnifying parties shall, in connection with
any one such action, suit or proceeding or separate but
14
<PAGE> 15
substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to one separate firm of attorneys per jurisdiction
acting as local counsel) at any time for the Initial Purchasers and controlling
persons not having actual or potential differing interests with the Initial
Purchasers or among themselves, which firm shall be designated in writing by
Smith Barney Inc., and that all such fees and expenses shall be reimbursed on a
monthly basis as provided in paragraph (a) hereof. The indemnifying parties
shall not be liable for any settlement of any such action, suit or proceeding
effected without their written consent, but if settled with such written
consent, or if there shall be a final judgment for the plaintiff in any such
action, suit or proceeding, the indemnifying parties agree to indemnify and
hold harmless the Initial Purchasers, to the extent provided in paragraph (a),
and any such controlling person from and against any loss, claim, damage,
liability or expense by reason of such settlement or judgment.
(c) Each Initial Purchaser, severally and not jointly, agrees to indemnify
and hold harmless the Company and the Subsidiary Guarantors, and their
respective directors and officers, and any person who controls the Company or
any Subsidiary Guarantor within the meaning of Section 15 of the Act or Section
20 of the Exchange Act to the same extent as the indemnity from the Company and
the Subsidiary Guarantors to the Initial Purchasers set forth in paragraph (a)
hereof, but only with respect to information relating to such Initial Purchaser
furnished in writing by or on behalf of such Initial Purchaser expressly for
use in the Preliminary Offering Memorandum or Offering Memorandum or any
amendment or supplement thereto. If any action, suit or proceeding shall be
brought against the Company or the Subsidiary Guarantors, any of their
respective directors or officers, or any such controlling person based on the
Preliminary Offering Memorandum or Offering Memorandum, or any amendment or
supplement thereto, and in respect of which indemnity may be sought against the
Initial Purchasers pursuant to this paragraph (c), the Initial Purchasers shall
have the rights and duties given to the Company by paragraph (b) above (except
that if the Company shall have assumed the defense thereof the Initial
Purchasers shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses of
such counsel shall be at the Initial Purchasers' expense), and the Company and
the Subsidiary Guarantors, their respective directors and officers, and any
such controlling person shall have the rights and duties given to the Initial
Purchasers by paragraph (b) above. The foregoing indemnity agreement shall be
in addition to any liability which the Initial Purchasers may otherwise have.
(d) If the indemnification provided for in this Section 6 is unavailable
to an indemnified party under paragraph (a) or (c) hereof in respect of any
losses, claims, damages, liabilities or expenses referred to therein, then an
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company and
the Subsidiary Guarantors on the one hand and the Initial Purchasers on the
other hand from the offering of the Senior Subordinated Notes, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Subsidiary Guarantors on the one hand and the Initial Purchasers on the
other in connection with the statements or omissions that resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
the Subsidiary Guarantors on the one hand and the Initial Purchasers on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total discounts and commissions received by the Initial Purchasers, in each
case as set forth in the table on the cover page of the Offering Memorandum.
The relative fault of the Company and the Subsidiary Guarantors on the one hand
and the Initial Purchasers on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state
15
<PAGE> 16
a material fact relates to information supplied by the Company and the
Subsidiary Guarantors on the one hand or by the Initial Purchasers on the other
hand and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The Company, the Subsidiary Guarantors and the Initial Purchasers
agree that it would not be just and equitable if contribution pursuant to this
Section 6 were determined by a pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in paragraph (d) above. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages, liabilities and expenses referred
to in paragraph (d) above shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating any claim or defending
any such action, suit or proceeding. Notwithstanding the provisions of this
Section 6, no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total price of the Senior Subordinated Notes
underwritten by it and distributed to the public exceeds the amount of any
damages which such Initial Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 6 shall be paid on a monthly basis, by the indemnifying party to the
indemnified party as such losses, claims, damages, liabilities or expenses are
incurred. The indemnity and contribution agreements contained in this Section
6 and the representations and warranties of the Company and the Subsidiary
Guarantors set forth in this Agreement shall remain operative and in full force
and effect, regardless of (i) any investigation made by or on behalf of the
Initial Purchasers or any person controlling the Initial Purchasers, the
Company, any Subsidiary Guarantor, their respective directors or officers or
any person controlling the Company or any Subsidiary Guarantor, (ii) acceptance
of any Senior Subordinated Notes and payment therefor hereunder, and (iii) any
termination of this Agreement. A successor to an Initial Purchaser or any
person controlling such Initial Purchaser, or to the Company, any Subsidiary
Guarantor, their respective directors or officers or any person controlling the
Company or any Subsidiary Guarantor, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
6.
(g) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding in respect of which any indemnified party is a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such action, suit
or proceeding.
7. Conditions of the Initial Purchasers' Obligation. The obligations of
the Initial Purchasers to purchase the Senior Subordinated Notes hereunder are
subject to the following conditions:
(a) At the time of execution of this Agreement and on the Closing Date,
no order or decree preventing the use of the Offering Memorandum or any
amendment or supplement thereto, or any order asserting that the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act shall have been issued and no proceedings for that purpose shall have
been commenced or shall be pending or, to the knowledge of the Company or the
Subsidiary Guarantors, be overtly contemplated. No stop order suspending the
sale of the Senior Subordinated Notes in any jurisdiction designated by the
Initial
<PAGE> 17
Purchasers shall have been issued and no proceedings for that purpose shall
have been commenced or shall be pending or, to the knowledge of the Company or
the Subsidiary Guarantors, shall be contemplated.
(b) Subsequent to the effective date of this Agreement, there shall not
have occurred (i) any change, or any development involving a prospective
change, in or affecting the financial condition, business, properties, net
worth, or results of operations of the Company or the Subsidiaries not
contemplated by the Offering Memorandum, which in the opinion of the Initial
Purchasers, would materially adversely affect the market for the Senior
Subordinated Notes, or (ii) any event or development relating to or involving
the Company or any officer or director of the Company which makes any statement
made in the Offering Memorandum untrue in any material respect or which, in the
opinion of the Company and its counsel or the Initial Purchasers and their
counsel, requires the making of any addition to or change in the Offering
Memorandum in order to state a material fact required by any law to be stated
therein or necessary in order to make the statements therein not misleading, if
amending or supplementing the Offering Memorandum to reflect such event or
development would, in the opinion of the Initial Purchasers, materially
adversely affect the market for the Senior Subordinated Notes.
(c) The Initial Purchasers shall have received on the Closing Date an
opinion of Kirkland & Ellis, counsel for the Company, dated the Closing Date
and addressed to the Initial Purchasers, in substantially the form of Exhibit B
hereto.
(d) The Initial Purchasers shall have received on the Closing Date an
opinion of Latham & Watkins, counsel for the Initial Purchasers, dated the
Closing Date, and addressed to the Initial Purchasers, with respect to the
Offering Memorandum and such other related matters as the Initial Purchasers
may reasonably request, and such counsel shall have received such certificates,
documents and information as they may reasonably request to enable them to pass
upon such matters.
(e) The Initial Purchasers shall have received letters addressed to the
Initial Purchasers, and dated the date hereof and the Closing Date, from Price
Waterhouse LLP, independent certified public accountants, substantially in the
forms heretofore approved by the Initial Purchasers.
(f)(i) There shall not have been any change in the capital stock of the
Company and the Subsidiary Guarantors nor any material increase in the
short-term or long-term debt of the Company and the Subsidiary Guarantors
(other than in the ordinary course of business) from that set forth or
contemplated in the Offering Memorandum (or any amendment or supplement
thereto); (ii) there shall not have been, since the respective dates as of
which information is given in the Offering Memorandum (or any amendment or
supplement thereto), except as may otherwise be stated in the Offering
Memorandum (or any amendment or supplement thereto), any material adverse
change in the condition (financial or other), business, prospects, properties,
net worth or results of operations of the Company and the Subsidiaries taken as
a whole; (iii) the Company and the Subsidiaries shall not have any liabilities
or obligations, direct or contingent (whether or not in the ordinary course of
business), that are material to the Company and the Subsidiaries, taken as a
whole, other than those reflected in the Offering Memorandum (or any amendment
or supplement thereto); and (iv) all the representations and warranties of the
Company and the Subsidiary Guarantors contained in this Agreement shall be true
and correct in all material respects on and as of the date hereof and on and as
of the Closing Date as if made on and as of the Closing Date, and the Initial
Purchasers shall have received a certificate, dated the Closing Date and signed
by the chief executive officer and the chief accounting officer of the Company
and the Subsidiary Guarantors (or such other officers as are acceptable to the
Initial Purchasers), to the effect set forth in this Section 7(f) and in
Section 7(g) hereof.
(g) The Company and the Subsidiary Guarantors shall not have failed at or
prior to the
17
<PAGE> 18
Closing Date to have performed or complied with any of their agreements herein
contained and required to be performed or complied with by them hereunder at or
prior to the Closing Date.
(h) There shall not have been any announcement by any "nationally
recognized statistical rating organization," as defined for purposes of Rule
436(g) under the Act, that (i) it is downgrading its rating assigned to any
class of securities of the Company, or (ii) it is reviewing its ratings
assigned to any class of securities of the Company with a view to possible
downgrading, or with negative implications, or direction not determined.
(i) The Senior Subordinated Notes shall have been approved for trading on
PORTAL.
(k) The Company shall have furnished or caused to be furnished to the
Initial Purchasers such further certificates and documents as the Initial
Purchasers shall have requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to the Initial Purchasers and counsel for the Initial
Purchasers.
8. Expenses. The Company and the Subsidiary Guarantors agree to pay the
following costs and expenses and all other costs and expenses incurred by them
incident to the performance by them of any of their obligations hereunder: (i)
the preparation, printing and reproduction of the Preliminary Offering
Memorandum and the Offering Memorandum (including, without limitation,
financial statements thereto), and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of the
Offering Memorandum, the Preliminary Offering Memorandum, and all amendments or
supplements to any of them as may be reasonably requested for use in connection
with the offering and sale of the Senior Subordinated Notes; (iii) the
preparation, printing, authentication, issuance and delivery of certificates
for the Senior Subordinated Notes, including any stamp taxes in connection with
the original issuance and sale of the Senior Subordinated Notes; (iv) the
printing (or reproduction) and delivery of this Agreement, the preliminary and
supplemental Blue Sky Memoranda; (v) the application for quotation of the
Senior Subordinated Notes on the PORTAL Market; (vi) the qualification of the
Senior Subordinated Notes for offer and sale under the securities or Blue Sky
laws of the several states as provided in Section 4(f) hereof (including the
reasonable fees, expenses and disbursements of counsel for the Initial
Purchasers relating to the preparation, printing or reproduction, and delivery
of the preliminary and supplemental Blue Sky Memoranda and such qualification),
provided that the fees referred to in this clause (vi) shall not exceed
$10,000; (vii) the performance by the Company and the Subsidiary Guarantors of
their obligations under the Registration Rights Agreement; (viii) fees and
expenses of the Trustee and its counsel; (ix) the transportation and other
expenses, if any, incurred by or on behalf of the Company representatives in
connection with presentations to prospective purchasers of the Senior
Subordinated Notes; and (x) the fees and expenses of the Company's accountants
and the fees and expenses of counsel (including local and special counsel, if
any) for the Company. The Company and the Subsidiary Guarantors hereby agree
that they will pay in full on the Closing Date the fees and expenses referred
to in clause (vi) of this Section 8 by delivering to counsel for the Initial
Purchasers on such date a check payable to such counsel in the requisite
amount.
9. Effective Date of Agreement. This Agreement shall become effective
upon the execution and delivery hereof by all the parties hereto.
10. Termination of Agreement. (a) This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, without
liability on the part of the Initial Purchasers to the
18
<PAGE> 19
Company or the Subsidiary Guarantors, by notice to the Company, if prior to the
Closing Date, (i) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq National Market shall have
been suspended or materially limited, (ii) a general moratorium on commercial
banking activities in New York shall have been declared, or (iii) there shall
have occurred any outbreak or escalation of hostilities involving the United
States or other domestic, foreign or international calamity, crisis or change
in political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in the reasonable
judgment of the Initial Purchasers, impracticable or inadvisable to commence or
continue the offering of the Senior Subordinated Notes on the terms set forth
on the cover page of the Offering Memorandum or to enforce contracts for the
resale of the Senior Subordinated Notes by the Initial Purchasers. Notice of
such termination may be given to the Company by telegram, telecopy or telephone
and shall be subsequently confirmed by letter.
(b) If on the Closing Date any one or more of the Initial Purchasers shall
fail or refuse to purchase the Senior Subordinated Notes which it or they have
agreed to purchase hereunder on such date and the amount of Senior Subordinated
Notes which such defaulting Initial Purchaser or Initial Purchasers, as the
case may be, agreed but failed or refused to purchase is not more than
one-tenth of the total amount of Senior Subordinated Notes to be purchased on
such date by all Initial Purchasers, each non-defaulting Initial Purchaser
shall be obligated severally, in the proportion which the aggregate principal
amount of such securities set forth opposite its name in Schedule II bears to
the total amount of such Senior Subordinated Notes which all the non-defaulting
Initial Purchasers, as the case may be, have agreed to purchase, or in such
other proportion as the Initial Purchasers may specify, to purchase the
securities which such defaulting Initial Purchaser or Initial Purchasers, as
the case may be, agreed but failed or refused to purchase on such date;
provided that in no event shall the aggregate principal amount of such
securities which any Initial Purchaser has agreed to purchase pursuant to
Section 2 hereof be increased pursuant to this Section 10 by an amount in
excess of one-ninth of such aggregate amount of such Senior Subordinated Notes
without the written consent of such Initial Purchaser. If on the Closing Date
any Initial Purchaser or Initial Purchasers shall fail or refuse to purchase
such Senior Subordinated Notes and the aggregate amount of Senior Subordinated
Notes with respect to which such default occurs is more than one-tenth of the
total amount of Senior Subordinated Notes to be purchased by all Initial
Purchasers and arrangements satisfactory to the Initial Purchasers and the
Company for the purchase of such securities are not made within 48 hours after
such default, this Agreement will terminate without liability on the part of
any non-defaulting Initial Purchaser and the Company. In any such case which
does not result in termination of this Agreement, either the Initial Purchasers
or the Company shall have the right to postpone the Closing Date, but in no
event for longer than seven days, in order that the required changes, if any,
in the Offering Memorandum or any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any
defaulting Initial Purchaser from liability in respect of any default of any
such Initial Purchaser under this Agreement.
11. Information Furnished by the Initial Purchasers. The statements set
forth in the last paragraph of the cover page of the Preliminary Offering
Memorandum and the Offering Memorandum and the last paragraph on the inside
cover page of the Preliminary Offering Memorandum and the Offering Memorandum
and the first sentence of the third paragraph under the caption "Plan of
Distribution" in the Preliminary Offering Memorandum and the Offering
Memorandum, constitute the only information furnished by or on behalf of the
Initial Purchasers as such information is referred to in Sections 5(b) and 6
hereof.
12. Miscellaneous. Except as otherwise provided in Sections 4 and 10
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company at 1800 Sherman Avenue, Evanston, Illinois 60201, Attention: Chief
Financial Officer with a copy, which shall not constitute notice, to Kirkland &
Ellis, 200 East Randolph Street, Chicago, Illinois 60601, Attention: H. Kurt
von Moltke, or (ii) if to the Initial Purchasers, addressed
19
<PAGE> 20
to Smith Barney Inc., 388 Greenwich Street, New York, NY 10013, Attention:
Manager, Investment Banking Division, with a copy to Latham & Watkins, 885
Third Avenue, New York, NY 10022, Attention: Beth Neckman.
This Agreement has been and is made solely for the benefit of the Initial
Purchasers, the Company, the Subsidiary Guarantors and their respective
directors, officers and controlling persons referred to in Section 6 hereof and
their respective successors and assigns, to the extent provided herein, and no
other person shall acquire or have any right under or by virtue of this
Agreement. Neither the term "successor" nor the term "successors and assigns"
as used in this Agreement shall include a purchaser from the Initial Purchasers
of any of the Senior Subordinated Notes in his status as such purchaser.
13. Applicable Law; Counterparts This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York and without
regard to the conflicts of law principles thereof.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
[signature page follows]
20
<PAGE> 21
Please confirm that the foregoing correctly sets forth the agreement
between the Company, the Subsidiary Guarantors and the Initial Purchasers.
Very truly yours,
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Paul R. Ingersoll
---------------------
Name: Paul R. Ingersoll
Title: Vice President and Secretary
AERIAL PLATFORMS, INC.
By: /s/ Paul R. Ingersoll
---------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
NES ACQUISITION CORP.
By: /s/ Paul R. Ingersoll
---------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
BAT ACQUISITION CORP.
By: /s/ Paul R. Ingersoll
---------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
MST ENTERPRISES, INC.
By: /s/ Paul R. Ingersoll
---------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
<PAGE> 22
Confirmed as of the date first
above mentioned.
SMITH BARNEY INC.
FIRST UNION CAPITAL MARKETS CORP.
SALOMON BROTHERS INC
BY SMITH BARNEY INC.
By: Steven J. Pearlman
--------------------
Name: Steve Pearlman
Title: Director
<PAGE> 23
SCHEDULE I
SUBSIDIARY GUARANTORS
Aerial Platforms, Inc.
NES Acquisition Corp.
BAT Acquisition Corp.
MST Enterprises, Inc.
<PAGE> 24
SCHEDULE II
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
SENIOR SUBORDINATED NOTES
INITIAL PURCHASERS TO BE PURCHASED
<S> <C>
Smith Barney Inc................. $ 60,000,000
First Union Capital Markets Corp. $ 20,000,000
Salomon Brothers Inc............. $ 20,000,000
Total............................ $100,000,000
</TABLE>
<PAGE> 25
SCHEDULE III
Jurisdictions Where Qualified to Do Business
National Equipment Services, Inc.
1. Delaware
2. Illinois
Aerial Platforms, Inc.
1. Georgia
NES Acquisition Corp.
1. Delaware
2. Texas
3. Alabama
4. Louisiana
BAT Acquisition Corp.
1. Delaware
2. Nevada
MST Enterprises, Inc. d/b/a Equipco Rentals & Sales
1. Virginia
<PAGE> 26
Exhibit A
Form of Registration Rights Agreement
<PAGE> 27
Exhibit B
Form of Opinion of Kirkland & Ellis
<PAGE> 1
Exhibit 4.6(i)
[EXECUTION COPY]
U.S. $115,000,000
CREDIT AGREEMENT
Dated as of July 1, 1997
among
NATIONAL EQUIPMENT SERVICES, INC.,
and
Certain of its U.S. Subsidiaries,
as Borrowers,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THOSE ASSIGNEES
PURSUANT TO SECTION 14.6 HEREOF,
as Lenders,
and
FIRST UNION COMMERCIAL CORPORATION,
as Agent
<PAGE> 2
TABLE OF CONTENTS
Page
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS 1
1.1 General Definitions. 1
1.2 Accounting Terms and Determinations 27
1.3 Other Definitional Terms. 28
ARTICLE II LOANS 28
2.1 Revolving Loans. 28
2.2 Term Loans. 34
2.3 Optional and Mandatory Prepayments; Reduction of Commitments 35
2.4 Payments and Computations; Cash Management. 37
2.5 Maintenance of Account. 39
2.6 Statement of Account. 39
2.7 Taxes. 40
2.8 Sharing of Payments. 41
2.9 Pro Rata Treatment. 42
2.10 Extensions and Conversions. 42
ARTICLE III LETTERS OF CREDIT 43
</TABLE>
<PAGE> 3
3.1 Issuance. 43
3.2 Notice and Reports. 43
3.3 Participation. 43
3.4 Reimbursement. 44
3.5 Repayment with Revolving Loans. 45
3.6 Renewal, Extension. 46
3.7 Uniform Customs and Practices. 46
3.8 Indemnification; Nature of Issuing Bank's Duties. 46
3.9 Responsibility of Issuing Bank. 47
3.10 Conflict with Letter of Credit Documents. 47
ARTICLE IV INTEREST AND FEES 48
4.1 Interest on Loans. 48
4.2 Interest After Event of Default. 48
4.3 Unused Line Fee 48
4.4 Lenders' Fees/Agent's Fees. 48
4.5 Letter of Credit Fees. 49
ii
<PAGE> 4
4.6 Authorization to Charge Account. 49
4.7 Indemnification in Certain Events. 49
4.8 Inability To Determine Interest Rate. 50
4.9 Illegality. 50
4.10 Funding Indemnity. 51
<PAGE> 5
ARTICLE V CONDITIONS PRECEDENT 51
5.1 Closing Conditions. 51
5.2 Material Adverse Change. 52
5.3 Fees. 52
5.4 Representations and Warranties; No Default. 52
5.5 Notice of Borrowing. 52
5.6 Borrowing Base Certificate. 52
5.7 Additional Documents. 53
ARTICLE VI REPRESENTATIONS AND WARRANTIES 53
6.1 Organization and Qualification. 53
6.2 Solvency. 53
6.3 Liens; Inventory. 53
6.4 No Conflict. 54
6.5 Enforceability. 54
6.6 Financial Data 54
6.7 Locations of Offices, Records and Inventory. 55
6.8 Fictitious Business Names. 55
6.9 Subsidiaries. 56
iv
<PAGE> 6
6.10 No Judgments or Litigation. 56
6.11 No Defaults. 56
6.12 No Employee Disputes. 56
6.13 Compliance with Law. 56
6.14 ERISA. 57
6.15 Compliance with Environmental Laws. 57
6.16 Use of Proceeds. 58
6.17 Intellectual Property. 58
6.18 Licenses and Permits. 59
6.19 Title to Property. 59
6.20 Labor Matters. 60
6.21 Investment Company. 60
6.22 Margin Security. 60
6.23 No Event of Default. 60
6.24 Taxes and Tax Returns. 60
6.25 No Other Indebtedness. 61
6.26 Status of Accounts. 61
6.27 Representations and Warranties. 62
6.28 Material Contracts. 62
<PAGE> 7
6.29 Survival of Representations. 62
6.30 Affiliate Transactions. 62
6.31 Accuracy and Completeness of Information. 62
ARTICLE VII AFFIRMATIVE COVENANTS 63
7.1 Financial Information. 63
7.2 Inventory. 65
7.3 Corporate Existence. 65
7.4 ERISA. 65
7.5 Proceedings or Adverse Changes. 67
7.6 Environmental Matters. 67
7.7 Books and Records. 68
7.8 Collateral Records. 69
7.9 Security Interests. 69
7.10 Insurance; Casualty Loss. 70
7.11 Taxes. 71
7.12 Compliance With Laws. 71
7.13 Use of Proceeds. 72
7.14 Fiscal Year. 72
vi
<PAGE> 8
7.15 Notification of Certain Events. 72
7.16 Additional Borrowers. 72
7.17 Schedules of Accounts and Purchase Orders. 73
7.18 Collection of Accounts. 73
7.19 Notice; Credit Memoranda; and Returned Goods. 74
7.20 Acknowledgment Agreements. 74
7.21 Trademarks. 74
7.22 Maintenance of Property. 74
7.23 Annual Appraisal of Rental Equipment. 74
7.24 Pledged Real Estate Assets. 75
7.25 Revisions or Updates to Schedules. 75
ARTICLE VIII FINANCIAL COVENANTS 76
8.1 Consolidated Net Worth. 76
8.2 Leverage Ratio. 76
8.3 Fixed Charge Coverage Ratio. 76
8.4 Interest/Rental Expense Coverage Ratio. 76
<PAGE> 9
8.5 Consolidated Capital Expenditures. 76
ARTICLE IX NEGATIVE COVENANTS 77
9.1 Restrictions on Liens. 77
9.2 Restrictions on Additional Indebtedness. 77
9.3 Restrictions on Sale of Assets. 77
9.4 No Corporate Changes. 77
9.5 No Guarantees. 78
9.6 No Restricted Payments. 78
9.7 No Investments. 78
9.8 No Affiliate Transactions. 78
9.9 No Prohibited Transactions Under ERISA. 79
9.10 Restrictions on the Company. 79
9.11 Issuance of Stock. 80
9.12 Material Amendments of Material Contracts. 80
9.13 Additional Negative Pledges. 80
9.14 Subordinated Debt. 80
9.15 Sale and Leaseback. 81
viii
<PAGE> 10
9.16 Licenses, Etc. 81
9.17 Limitations. 81
ARTICLE X POWERS 81
10.1 Appointment as Attorney-in-Fact. 81
10.2 Limitation on Exercise of Power. 82
ARTICLE XI EVENTS OF DEFAULT AND REMEDIES 82
11.1 Events of Default. 82
11.2 Acceleration. 84
ARTICLE XII TERMINATION 85
ARTICLE XIII THE AGENT 85
13.1 Appointment of Agent. 85
13.2 Nature of Duties of Agent. 86
13.3 Lack of Reliance on Agent. 86
13.4 Certain Rights of the Agent. 86
13.5 Reliance by Agent. 87
<PAGE> 11
13.6 Indemnification of Agent. 87
13.7 The Agent in its Individual Capacity. 87
13.8 Holders of Notes. 88
13.9 Successor Agent. 88
13.10 Collateral Matters. 88
13.11 Actions with Respect to Defaults. 90
13.12 Delivery of Information. 90
ARTICLE XIV MISCELLANEOUS 90
14.1 Waivers. 90
14.2 JURY TRIAL. 91
14.3 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE. 91
14.4 Arbitration. 91
14.5 Notices. 93
14.6 Assignability. 93
14.7 Information. 96
14.8 Payment of Expenses; Indemnification. 96
14.9 Entire Agreement, Successors and Assigns. 97
14.10 Amendments, Etc. 97
x
<PAGE> 12
<TABLE>
<S> <C>
14.11 Nonliability of Agent and Lenders. 98
14.12 Independent Nature of Lenders' Rights. 98
14.13 Counterparts. 98
14.14 Effectiveness. 98
14.15 Severability. 99
14.16 Headings Descriptive. 99
14.17 Maximum Rate. 99
14.18 Right of Setoff. 100
14.19 Concerning Joint and Several Liability of the Borrowers. 100
</TABLE>
<PAGE> 13
EXHIBITS AND SCHEDULES
EXHIBITS
<TABLE>
<S> <C>
Exhibit A Form of Acknowledgment Agreement
Exhibit B Form of Assignment and Acceptance
Exhibit C Form of Solvency Certificate
Exhibit D Form of Landlord Agreement
Exhibit E Form of Pledge Agreement
Exhibit F Form of Security Agreement
Exhibit G-1 Form of Revolving Note
Exhibit G-2 Form of Term Loan Note
Exhibit H Form of Notice of Borrowing
Exhibit I Form of Lockbox Agreement
Exhibit J Form of Notice of Extension/Conversion
Exhibit K Form of Compliance Certificate
Exhibit L Form of Borrowing Base Certificate
Exhibit M Form of Joinder Agreement
Exhibit N Form of Subordinated Note
</TABLE>
SCHEDULES
<TABLE>
<S> <C>
Schedule 1.1A Lenders and Commitments
Schedule 1.1B Closing Conditions
Schedule 1.1C Liens
Schedule 1.1D Indebtedness
Schedule 1.1E Investments
Schedule 6.1 Jurisdictions of Organization
Schedule 6.7 Collateral Locations
Schedule 6.8 Fictitious Business Names
Schedule 6.9 Subsidiaries
Schedule 6.10 Litigation
Schedule 6.14 ERISA
Schedule 6.15 Environmental Disclosures
Schedule 6.17 Intellectual Property
Schedule 6.19 Real Estate
Schedule 6.24 Taxes
Schedule 6.28 Material Contracts
Schedule 6.30 Affiliate Transactions
</TABLE>
xii
<PAGE> 14
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of July 1, 1997 by and among
NATIONAL EQUIPMENT SERVICES, INC., a Delaware corporation (the
"Company"), NES ACQUISITION CORP., a Delaware corporation, BAT
ACQUISITION CORP., a Delaware corporation, and AERIAL PLATFORMS,
INC., a Georgia corporation (collectively referred to as the
"Subsidiary Borrowers" or individually referred to as a "Subsidiary
Borrower") (hereinafter, the Company and the Subsidiary Borrowers
collectively referred to as the "Borrowers" or individually referred
to as a "Borrower"), each of those financial institutions identified
as Lenders on Schedule 1.1A hereto (together with each of their
successors and assigns, referred to individually as a "Lender" and,
collectively, as the "Lenders"), and FIRST UNION COMMERCIAL
CORPORATION ("FUCC"), acting in the manner and to the extent
described in Article XIII hereof (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrowers wish to obtain a revolving credit facility and a
term loan facility to provide for the working capital, letter of
credit and general corporate needs of the Borrowers, including
financing for the Closing Date Acquisitions and Future Acquisitions
and to repay the Bridge Loan (as such terms are defined below); and
WHEREAS, upon the terms and subject to the conditions set forth herein,
the Lenders are willing to make loans and advances to the Borrowers;
NOW, THEREFORE, the Borrowers, the Lenders and the Agent hereby agree as
follows:
ARTICLE I
DEFINITIONS
1.1 GENERAL DEFINITIONS.
As used herein, the following terms shall have the meanings herein
specified:
"Accounts" shall mean all of each Borrower's accounts, whether now
existing or existing in the future, including, without limitation, all (i)
accounts receivable (whether or not specifically listed on schedules
furnished to the Agent), including without limitation, all accounts created
by or arising from all of each Borrower's sales or leases of goods or
rendition of services made under any of each Borrower's trade names or
styles, or through any of each Borrower's divisions; (ii) unpaid seller's
or lessor's rights (including rescission, replevin, reclamation and
stopping in transit) relating to the foregoing or arising therefrom; (iii)
rights to any goods represented by any of the foregoing, including returned
or repossessed goods; (iv) reserves and credit balances held by each
Borrower
<PAGE> 15
with respect to any such accounts receivable or account debtors; (v)
guarantees or collateral for any of the foregoing; and (vi) insurance
policies or rights relating to any of the foregoing.
"Acknowledgment Agreements" shall mean (i) the Acknowledgment
Agreements, substantially in the form of Exhibit A hereto, between each
Borrower's warehousemen, fillers, packers and processors and the Agent, in
each case acknowledging and agreeing, among other things, (A) that such
warehousemen, fillers, packers and processors do not have any Liens on any
of the property of any Borrower or any Subsidiary and (B) to the collateral
assignment by each Borrower to the Agent of each such Borrower's interest
in the contracts with each of such warehousemen, fillers, packers and
processors and (ii) Landlord Agreements.
"Acquired Company" shall mean the Person (or the assets thereof) which
is acquired pursuant to an Acquisition.
"Acquisition" shall mean the purchase of a business unit as a going
concern which purchase may be of (i) the Capital Stock of a Person, (ii)
the assets of such Person through merger or consolidation with such Person
or (iii) the plant, property and equipment of such Person, or a portion
thereof, together with the related current assets and intangible assets of
such Person.
"Acquisition Documents" shall mean a purchase agreement pursuant to
which a Future Acquisition is made in accordance with the terms hereof,
including the exhibits and schedules thereto, and all agreements, documents
and instruments executed and delivered pursuant thereto or in connection
therewith.
"Affiliate" shall mean any entity which directly or indirectly
controls, is controlled by, or is under common control with, any Borrower
or any Subsidiary. For purposes of this definition, "control" shall mean
the possession, directly or indirectly, of the power to (i) vote ten
percent (10%) or more of the securities having ordinary voting power for
the election of directors of such Person, or (ii) direct or cause the
direction of management and policies of a business, whether through the
ownership of voting securities, by contract or otherwise and either alone
or in conjunction with others or any group.
"Agency and Custodian Agreement" shall mean the Agency and Custodian
Agreement, of even date herewith, among the Agent, the Company, on behalf
of itself and the other Borrowers, and Paul Ingersoll.
"Agent" shall mean FUCC as provided in the preamble to this Credit
Agreement or any successor to FUCC.
"Agent's Fees" shall mean the fees payable by the Borrowers to the
Agent as described in the Fee Letter.
2
<PAGE> 16
"Applicable Percentage" shall mean for Eurodollar Loans, Base Rate
Loans and Unused Line Fees, the appropriate applicable percentages
corresponding to the Leverage Ratio in effect as of the most recent
Calculation Date as shown below:
<TABLE>
<CAPTION>
Applicable Applicable Applicable
Percentage for Percentage for Base Percentage for
Tier Levels Leverage Ratio Eurodollar Loans Rate Loans Unused Line Fee
<S> <C> <C> <C> <C>
1 > 2.5 to 1.0 2.75% 1.25% .50%
2 > 2.25 to 1.0 but 2.50% 1.00% .50%
< 2.5 to 1.0
3 > 2.0 to 1.0 but 2.25% .75% .375%
< 2.25 to 1.0
4 < 2.0 to 1.0 2.00% .50% .375%
</TABLE>
The Applicable Percentages shall be determined and adjusted quarterly on
the date (each a "Calculation Date") five Business Days after the
date on which the Company provides the quarterly officer's
certificate in accordance with the provisions of Section 7.1(c);
provided, however, that (i) the initial Applicable Percentages shall
be based on Tier Level 1 (as shown above) and shall remain at Tier
Level 1 until the first Calculation Date subsequent to September 30,
1997, and, thereafter, the Tier Level shall be determined by the then
current Leverage Ratio, and (ii) if the Company fails to provide the
officer's certificate to the Agent for any fiscal quarter as required
by and within the time limits set forth in Section 7.1(c), the
Applicable Percentages from the applicable date of such failure shall
be based on Tier Level 1 until five Business Days after an
appropriate officer's certificate is provided, whereupon the Tier
Level shall be determined by the Leverage Ratio set forth in such
certificate. Except as set forth above, each Applicable Percentage
shall be effective from one Calculation Date until the next
Calculation Date. The Applicable Percentages set forth above for all
Eurodollar Loans and Base Rate Loans shall be reduced by .25% at such
time as the outstanding principal balance of the Term Loans has been
reduced to an amount equal to or less than $7,500,000.
"Asset Disposition" shall mean the disposition (other than a
disposition made in the ordinary course of business) of any or all of the
assets (including without limitation the Capital Stock of a Subsidiary) of
any Borrower or any of its Subsidiaries whether by sale, lease, transfer or
otherwise.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by an assigning Lender and an assignee Lender, accepted by the
Agent, in accordance with Section 14.6(f), in the form attached hereto as
Exhibit B.
"Base Rate" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) equal
to the greater of (i) the Federal Funds Rate in effect on such day plus 1/2
of 1% or (ii) the Prime Rate in effect on such day. If for any reason the
Agent
<PAGE> 17
shall have determined in good faith (which determination shall be
conclusive absent manifest error) that it is unable after due inquiry
to ascertain the Federal Funds Rate for any reason, including the
inability or failure of the Agent to obtain sufficient quotations in
accordance with the terms hereof, the Base Rate shall be determined
without regard to clause (i) of the first sentence of this definition
until the circumstances giving rise to such inability no longer
exist. Any change in the Base Rate due to a change in the Prime Rate
or the Federal Funds Rate shall be effective on the effective date of
such change in the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" shall mean any Loan bearing interest at a rate
determined by reference to the Base Rate.
"Benefit Plan" shall mean a defined benefit plan as defined in
Section 3(35) of ERISA (other than a Multiemployer Plan) in respect of
which any Borrower, any Subsidiary or any ERISA Affiliate is, or within
the immediately preceding six (6) years was, an "employer" as defined in
Section 3(5) of ERISA.
"Borrower" and "Borrowers" shall have the meaning given such terms
in the preamble of this Credit Agreement.
"Borrowing Base" shall have the meaning given to such term in
Section 2.1(b)(i) hereof.
"Borrowing Base Certificate" shall have the meaning given to such
term in Section 7.1(d) hereof.
"Bridge Loan" shall mean the loan evidenced by that certain Secured
Promissory Note dated April 28, 1997 issued by the Borrowers in favor
of First Union Commercial Corporation in the amount of $20,000,000.
"Business Day" shall mean any day other than a Saturday, a Sunday,
a legal holiday or a day on which banking institutions are authorized or
required by law or other governmental action to close in Charlotte,
North Carolina or New York, New York; provided, that in the case of
Eurodollar Loans, such day is also a day on which dealings between
banks are carried on in U.S. dollar deposits in the London interbank
market.
"Capital Lease" shall mean, as applied to any Person, any lease of
any property (whether real, personal or mixed) by that Person as lessee
which, in accordance with GAAP, is or should be accounted for as a
capital lease on the balance sheet of that Person.
"Capital Lease Liens" shall mean Liens on fixed assets arising under
Capital Leases entered into after the date of this Credit Agreement,
provided that: (i) each such lien shall attach only to the property
to be acquired and (ii) a description of the property so acquired is
furnished to the Agent.
4
<PAGE> 18
"Capital Stock" shall mean (i) in the case of a corporation, capital
stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents
(however designated) of capital stock, (iii) in the case of a
partnership, partnership interests (whether general or limited), (iv)
in the case of a limited liability company, membership interests and
(v) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or
distributions of assets of, the issuing Person.
"Cash Equivalents" shall mean, as to any Person, (i) securities issued or
directly and fully guaranteed or insured by the United States or any
agency or instrumentality thereof (provided, that the full faith and
credit of the United States is pledged in support thereof) having
maturities of not more than one year from the date of acquisition,
(ii) time deposits or certificates of deposit of any commercial bank
incorporated under the laws of the United States or any state
thereof, of recognized standing having capital and unimpaired surplus
in excess of $1,000,000,000 and whose short-term commercial paper
rating at the time of acquisition is at least A-1 or the equivalent
thereof by Standard & Poor's Corporation or at least P-1 or the
equivalent thereof by Moody's Investors Services, Inc. (any such
bank, an "Approved Bank"), with such deposits or certificates having
maturities of not more than one year from the date of acquisition,
(iii) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (i) and
(ii) above entered into with any Approved Bank, (iv) commercial paper
or finance company paper issued by any Person incorporated under the
laws of the United States or any state thereof and rated at least A-1
or the equivalent thereof by Standard & Poor's Corporation or at
least P-1 or the equivalent thereof by Moody's Investors Service,
Inc., and in each case maturing not more than one year after the date
of acquisition, and (v) investments in money market funds that are
registered under the Investment Company Act of 1940, which have net
assets of at least $1,000,000,000 and at least 85% of whose assets
consist of securities and other obligations of the type described in
clauses (i) through (iv) above. All such Cash Equivalents must be
denominated solely for payment in U.S. Dollars.
"Cash Management Event" shall have the meaning given to such term in
Section 7.18 hereof.
"Casualty Loss" shall have the meaning given to such term in Section 7.10
hereof.
"Change of Control" shall mean the occurrence of either of the following:
(i) the failure of the Company to own 100% of the issued and
outstanding Capital Stock of any of its Subsidiaries or (ii) the
failure of Golder Thoma and/or its Affiliates to own beneficially,
directly or indirectly, an amount of the outstanding Capital Stock of
the Company which is entitled to more than 50% of the voting power of
all, and represents not less than 50% of the value of all,
outstanding Capital Stock of the Company.
"Closing" shall mean the consummation of the making of the initial loan or
advance by the Lenders to the Borrowers under this Credit Agreement.
<PAGE> 19
"Closing Conditions" shall mean the list of Closing Conditions attached
hereto as Schedule 1.1B.
"Closing Date" shall mean the date on which the Closing occurs.
"Closing Date Acquisitions" shall mean the Acquisitions of the Company and
its Subsidiaries occurring on or prior to the Closing Date pursuant
to the Closing Date Acquisition Documents.
"Closing Date Acquisition Documents" shall mean (a) the Stock Purchase
Agreement dated as of February 18, 1997 by and among National
Equipment Services, Inc., Aerial Platforms, Inc. and Carter B.
Wilson; (b) the Asset Purchase Agreement dated as of March 17, 1997
by and among NES Acquisition Corp., Lone Star Rentals, Inc. and James
Horsley; (c) the Asset Purchase Agreement dated as of January 6, 1997
by and among NES Acquisition Corp., Industrial Crane Maintenance
Systems, Inc., Brazos Rental & Tool, Inc., Safe Work Load Products,
Inc. and the Stockholders referred to therein; (d) the Asset Purchase
Agreement dated as of April 1, 1997 by and among BAT Acquisition
Corp., BAT Rentals, Inc. and Paul B. Bronken, and (e) the Sprintank
Purchase Agreement including the exhibits and schedules thereto, and
all agreements, documents and instruments executed and delivered
pursuant thereto or in connection therewith.
"Collateral" shall mean any and all assets and rights and interests in or
to property of the Borrowers pledged from time to time as security
for the Obligations pursuant to the Security Documents whether now
owned or hereafter acquired, including, without limitation, (i) all
of the Accounts, Chattel Paper, Deposit Accounts, Documents,
Equipment, Fixtures, General Intangibles (including all intellectual
property), Inventory, Instruments and Proceeds of each Borrower, as
defined in the Security Agreement and (ii) all Pledged Stock and all
Proceeds thereof pledged pursuant to the Pledge Agreement.
"Collateral Warranties" shall mean the representations and warranties made
herein pursuant to Sections 6.3, 6.7, 6.11, 6.19, 6.26 and 6.31.
"Commitment" of any Lender shall mean the Revolving Credit Commitment and
the Term Loan Commitment of such Lender.
"Consolidated" or "consolidated" with reference to any term defined
herein, shall mean that term as applied to the accounts of the
Company and all Subsidiaries, consolidated in accordance with GAAP.
"Consolidated Capital Expenditures" with respect to any fiscal period,
shall mean an amount equal to the consolidated aggregate expenditures
of the Company and its Subsidiaries during such fiscal period for the
acquisition (including the acquisition by capitalized lease) or
improvement of (i) capital assets, as determined in accordance with
GAAP, or (ii) Rental Equipment.
6
<PAGE> 20
"Consolidated Cash Taxes" shall mean, for any period of computation, the
aggregate of all taxes of the Company and its Subsidiaries on a
consolidated basis, as determined in accordance with GAAP, to the
extent the same are paid in cash during such period (whether such
taxes are due in such period or any other period).
"Consolidated EBITDA" shall mean for any applicable period of computation,
the sum of (i) Consolidated Net Income for such period, but excluding
therefrom all extraordinary non-recurring items of income or loss,
plus (ii) the aggregate amount of depreciation and amortization
charges made in calculating Consolidated Net Income for such period,
plus (iii) aggregate consolidated interest expense for such period,
plus (iv) the aggregate amount of all income taxes reflected on the
consolidated statements of income of the Company and its Subsidiaries
for such period.
"Consolidated EBITDAR" shall mean for any applicable period of
computation, the sum of (i) Consolidated EBITDA for such period plus
(ii) Consolidated Rental Expense for such period.
"Consolidated Fixed Charges" shall mean, for any period of computation,
the sum of (i) Consolidated Interest Expense for the applicable
period plus (ii) Consolidated Funded Debt Payments for the applicable
period.
"Consolidated Funded Debt Payments" shall mean, as of the end of each
fiscal quarter of the Company and its Subsidiaries on a consolidated
basis, the sum of all scheduled payments of principal on Consolidated
Funded Indebtedness (including the principal component of payments
due on Capital Leases during the applicable period ending on such
date); it being understood that Consolidated Funded Debt Payments
shall not include voluntary prepayments or mandatory prepayments of
the Term Loans required pursuant to Section 2.3.
"Consolidated Funded Indebtedness" shall mean, as of the date of
determination, all Funded Indebtedness of the Company and its
Subsidiaries, determined on a consolidated basis in accordance with
GAAP.
"Consolidated Interest Expense" shall mean, for any period of computation,
interest expense on Consolidated Funded Indebtedness of the Company
and its Subsidiaries for such period, as determined in accordance
with GAAP.
"Consolidated Net Income" shall mean the consolidated net income (or net
deficit) of the Company and its Subsidiaries for any period, after
deduction of all expenses, taxes and other proper charges, all as
determined in accordance with GAAP.
"Consolidated Net Worth" shall mean, as of any date, shareholders' equity
or net worth of the Company and its Subsidiaries on a consolidated
basis, as determined in accordance with GAAP.
<PAGE> 21
"Consolidated Rental Expense" shall mean, for any period of computation,
the sum of all real property rental expense of the Company and its
Subsidiaries on a consolidated basis for such period, determined in
accordance with GAAP.
"Contractual Obligations" shall mean, with respect to any Person, any term
or provision of any securities issued by such Person, or any
indenture, mortgage, deed of trust, contract, undertaking, document,
instrument or other agreement to which such Person is a party or by
which it or any of its properties is bound or to which it or any of
its properties is subject.
"Credit Agreement" shall mean this credit agreement, dated as of the date
hereof, as the same may be modified, amended, extended, restated or
supplemented from time to time.
"Credit Documents" shall mean, collectively, this Credit Agreement, the
Revolving Notes, the Term Loan Notes, the Letters of Credit, each of
the Security Documents and all other documents, agreements,
instruments, opinions and certificates executed and delivered in
connection herewith or therewith, as the same may be modified,
amended, extended, restated or supplemented from time to time.
"Default" shall mean an event, condition or default which, with the giving
of notice, the passage of time or both would be an Event of Default.
"Defaulting Lender" shall have the meaning given to such term in Section
2.1(d)(iii) hereof.
"DOL" shall mean the United States Department of Labor and any successor
department or agency.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Eligible Accounts Receivable" shall mean the aggregate face amount of the
Borrowers' Accounts that conform to the warranties contained in this
definition and to the Collateral Warranties. Unless otherwise
approved in writing by the Agent (such approval not to be
unreasonably withheld), no Account shall be deemed to be an Eligible
Account Receivable if:
(i) it arises out of a sale or lease made by any Borrower to an
Affiliate unless such Affiliate is a Portfolio Company and such sale
or lease is made on an arm's length basis; or
(ii) the Account is unpaid 90 days or more from the original
invoice date; or
(iii) such Account is from the same account debtor (or any
affiliate thereof) and fifty percent (50%) or more, in face amount,
of other Accounts from such account debtor (or any affiliate thereof)
are unpaid 90 days or more after the original invoice date; or
8
<PAGE> 22
(iv) the Account, when aggregated with all other Accounts of
such account debtor, exceeds fifteen percent (15%) in face value of
all Accounts of the Borrowers in the aggregate then outstanding, to
the extent of such excess; or
(v) (A) the account debtor is also a creditor of any Borrower,
to the extent of the amount owed by such Borrower to the account
debtor, (B) the account debtor has disputed its liability on, or the
account debtor has made any claim with respect to, such Account or
any other Account due from such account debtor to such Borrower,
which has not been resolved or (C) the Account otherwise is or may
become subject to any right of setoff by the account debtor, to the
extent of the amount of such setoff; or
(vi) the account debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or
made an assignment for the benefit of creditors, or if a decree or
order for relief has been entered by a court having jurisdiction in
the premises in respect to the account debtor in an involuntary case
under the federal bankruptcy laws, as now constituted or hereafter
amended, or if any other petition or other application for relief
under the federal bankruptcy laws has been filed by or against the
account debtor, or if the account debtor has failed, suspended
business, ceased to be solvent, or consented to or suffered a
receiver, trustee, liquidator or custodian to be appointed for it or
for all or a significant portion of its assets or affairs; or
(vii) the sale is to an account debtor outside the continental
United States or Canada, unless the sale is (A) on letter of credit,
guaranty or acceptance terms, in each case acceptable to the Agent in
its sole discretion, or (B) otherwise approved by and acceptable to
the Agent in its reasonable discretion; or
(viii) the sale to the account debtor is on a bill-and-hold,
guaranteed sale, sale-and-return, sale on approval or consignment
basis or made pursuant to any other written agreement providing for
repurchase or return; or
(ix) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless the applicable
Borrower duly and effectively assigns its rights to payment of such Account
to the Agent pursuant to the Assignment of Claims Act of 1940, as amended
(31 U.S.C. Section 3727 et seq.); or
(x) the goods giving rise to such Account have not been shipped
and delivered to and accepted by the account debtor or the services
giving rise to such Account have not been performed by the applicable
Borrower and accepted by the account debtor or the Account otherwise
does not represent a final sale; or
(xi) the Account is not subject to a valid, enforceable and
first priority perfected Lien, subject only to Non-Priority Liens, in
favor of the Agent; or
<PAGE> 23
(xii) the Agent, in the exercise of its reasonable discretion,
determines it to be ineligible.
In addition to the foregoing, Eligible Accounts Receivable shall
include such Accounts as the Borrowers shall request and that the Agent
approves in advance, in writing and in its reasonable judgment.
"Eligible New Equipment" shall mean (A) the gross amount of each
Borrower's New Equipment, valued at the delivered cost of such New
Equipment, which (i) is owned solely by such Borrower and with respect to
which such Borrower has good, valid and marketable title; (ii) is stored
on property that is either owned or leased by such Borrower when not
rented to an account debtor pursuant to an equipment lease (provided,
that, with respect to New Equipment stored on property leased by such
Borrower, such Borrower shall have delivered in favor of the Agent an
Acknowledgment Agreement from the landlord of such leased property); (iii)
is subject to a valid, enforceable and first priority perfected Lien (and
no other Liens other than Non-Priority Liens) in favor of the Agent
(except for any titled equipment, the title to which has not been modified
to name the Agent as lienholder, which equipment may be included as
Eligible New Equipment for a period of sixty (60) days following the
Closing Date, provided such equipment otherwise complies with the
requirements of this definition); (iv) is located in the United States;
and (v) is not obsolete or slow moving, and which otherwise conforms to
the warranties contained in this definition and to the Collateral
Warranties; and (B) less any New Equipment that the Agent determines in
its reasonable judgment to be ineligible. In addition to the foregoing,
Eligible New Equipment shall include such items of such Borrower's New
Equipment as such Borrower shall request and that the Agent approves in
advance, in writing and in its reasonable judgment.
"Eligible Parts and Supplies Inventory" shall mean (A) the gross amount of
each Borrower's Parts and Supplies Inventory, valued at the lower of cost (on a
FIFO basis) or market, which (i) is owned solely by such Borrower and with
respect to which such Borrower has good, valid and marketable title; (ii) is
stored on property that is either owned or leased by such Borrower (provided,
that, with respect to Parts and Supplies Inventory stored on property leased by
such Borrower, such Borrower shall have delivered in favor of the Agent an
Acknowledgment Agreement from the landlord of such leased property); (iii) is
subject to a valid, enforceable and first priority perfected Lien (and no other
Liens other than Non-Priority Liens) in favor of Agent; (iv) is located in the
United States; and (v) is not obsolete or slow moving, and which otherwise
conforms to the warranties contained in this definition and to the Collateral
Warranties; and (B) less any Parts and Supplies Inventory that the Agent
determines in its reasonable judgment to be ineligible. In addition to the
foregoing, Eligible Parts and Supplies Inventory shall include such items of
such Borrower's Parts and Supplies Inventory as such Borrower shall request and
that the Agent approves in advance, in writing and in its reasonable judgment.
"Eligible Rental Equipment" shall mean (A) the Orderly Liquidation
Value of the gross amount of each Borrower's Rental Equipment, which (i)
is owned solely by such Borrower and with
10
<PAGE> 24
respect to which such Borrower has good, valid and marketable title, (ii)
is located on property of a customer of such Borrower or is stored on
property that is either owned or leased by such Borrower (provided, that,
with respect to Rental Equipment stored on property leased by such
Borrower, such Borrower shall have delivered in favor of the Agent an
Acknowledgment Agreement from the landlord of such leased property); (iii)
is subject to a valid, enforceable and first priority perfected Lien (and
no other Liens other than Non-Priority Liens) in favor of the Agent
(except for any titled equipment, the title to which has not been modified
to name the Agent as lienholder, which equipment may be included as
Eligible Rental Equipment for a period of sixty (60) days following the
Closing Date, provided such equipment otherwise complies with the
requirements of this definition); (iv) is located in the United States or
Canada; and (v) is not obsolete or slow moving, and which otherwise
conforms to the warranties contained in this definition and to the
Collateral Warranties; and (B) less any Rental Equipment that the Agent
determines in its reasonable judgment to be ineligible. In addition to
the foregoing, Eligible Rental Equipment shall include such items of such
Borrower's Rental Equipment as such Borrower shall request and that the
Agent approves in advance, in writing and in its reasonable judgment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" shall mean any (i) corporation which is a member of
the same controlled group of corporations (within the meaning of Section
414(b) of the Internal Revenue Code) as the Borrowers or any of their
Subsidiaries; (ii) partnership or other trade or business (whether or not
incorporated) which is under common control (within the meaning of Section
414(c) of the Internal Revenue Code) with the Borrowers or any of their
Subsidiaries; and (iii) member of the same affiliated service group
(within the meaning of Section 414(m) of the Internal Revenue Code) as the
Borrowers or any of their Subsidiaries, any corporation described in
clause (i) above, or any partnership or trade or business described in
clause (ii) above.
"Eurodollar Loan" shall mean a Loan bearing interest based at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" shall mean, for the Interest Period for each
Eurodollar Loan comprising part of the same borrowing (including
conversions, extensions and renewals), a per annum interest rate
determined pursuant to the following formula:
Eurodollar Rate = London Interbank Offered Rate
--------------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" shall mean for any day, that
percentage (expressed as a decimal) which is in effect from time to time
under Regulation D of the Board of Governors of the Federal Reserve System
(or any successor), as such regulation may be amended from time to time or
any successor regulation, as the maximum reserve requirement (including,
without limitation, any basic, supplemental, emergency, special, or
marginal reserves) applicable with respect to
<PAGE> 25
Eurocurrency liabilities as that term is defined in Regulation D (or
against any other category of liabilities that includes deposits by
reference to which the interest rate of Eurodollar Loans is determined),
whether or not any Lender has any Eurocurrency liabilities subject to such
reserve requirement at that time. Eurodollar Loans shall be deemed to
constitute Eurocurrency liabilities and as such shall be deemed subject to
reserve requirements without benefits of credits for proration, exceptions
or offsets that may be available from time to time to a Lender. The
Eurodollar Rate shall be adjusted automatically on and as of the effective
date of any change in the Eurodollar Reserve Percentage.
"Event(s) of Default" shall have the meaning provided for in Article
XI of this Credit Agreement.
"Excess Cash Flow" shall mean, with respect to any fiscal year period
of the Company and its Subsidiaries on a consolidated basis, an amount
equal to (i) Consolidated EBITDA for such period minus (ii) Unfinanced
Consolidated Capital Expenditures for such period minus (iii) Consolidated
Interest Expense for such period minus (iv) Consolidated Cash Taxes
actually paid during such period minus (v) Consolidated Funded Debt
Payments made during such period minus (vi) voluntary prepayments of the
Term Loan made during such period minus (vii) distributions and other
payments made during such period to shareholders of the Company permitted
to be made hereunder to the extent not deducted in determining
Consolidated EBITDA for such period.
"Excluded Taxes" shall have the meaning provided for in Section
2.7(a).
"Existing Subordinated Notes" shall mean the promissory notes
described on Schedule 1.1D attached hereto.
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate per annum equal, for each day during such period, to the
weighted average of the rates on overnight Federal Funds transactions with
members of the Federal Reserve System arranged by Federal Funds brokers,
as published for such day (or, if such day is not a Business Day, for the
next preceding Business Day) by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day that is a Business Day, the
average of the quotations for such day on such transactions received by
the Agent from three Federal Funds brokers of recognized standing selected
by it.
"Fee Letter" shall mean the letter agreement, dated May 12, 1997, by
and between the Agent and the Borrowers regarding the fees to be paid by
the Borrowers to the Agent.
"Fees" shall mean, collectively, the Agent's Fees, the Lenders' Fees,
the Unused Line Fee, the Standby Letter of Credit Fee and the Issuing Bank
Fees payable hereunder.
"Financials" shall have the meaning given to such term in Section
6.6.
12
<PAGE> 26
"First Union" shall mean First Union National Bank, having its
principal offices in Charlotte, North Carolina, and its successors and
permitted assigns.
"Fixed Charge Coverage Ratio" shall mean (i) as of September 30,
1997, the ratio of Consolidated EBITDA minus Consolidated Cash Taxes, cash
dividends and Unfinanced Consolidated Capital Expenditures (each computed
for the fiscal quarter then ending) to Consolidated Fixed Charges
(computed for the fiscal quarter then ending), (ii) as of December 31,
1997, the ratio of Consolidated EBITDA minus Consolidated Cash Taxes, cash
dividends and Unfinanced Consolidated Capital Expenditures (each computed
for the two fiscal quarters then ending) to Consolidated Fixed Charges
(computed for the two fiscal quarters then ending), (iii) as of March 31,
1998, the ratio of Consolidated EBITDA minus Consolidated Cash Taxes, cash
dividends and Unfinanced Consolidated Capital Expenditures (each computed
for the three fiscal quarters then ending) to Consolidated Fixed Charges
(computed for the three fiscal quarters then ending) and (iv) as of June
30, 1998 and as of the last day of each fiscal quarter ending thereafter,
the ratio of Consolidated EBITDA minus Consolidated Cash Taxes, cash
dividends and Unfinanced Consolidated Capital Expenditures (each computed
for the four fiscal quarters then ending) to Consolidated Fixed Charges
(computed for the four fiscal quarters then ending).
"Foreign Lender" shall have the meaning given to such term in Section
2.7(a).
"FUCC Account" shall mean the deposit account, established and
maintained in the name of the Agent at First Union, for the benefit of the
Lenders, in connection with this Agreement and the other Credit Documents.
"Funded Indebtedness" shall mean, with respect to any Person, without
duplication, (a) all Indebtedness of such Person other than Indebtedness of the
types referred to in clause (e), (f), (g), (i), (k), (l) and (m) of the
definition of "Indebtedness" set forth in this Section 1.1, (b) all Indebtedness
of another Person of the type referred to in clause (a) above secured by (or for
which the holder of such Funded Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on, or payable out of the proceeds of
production from, property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (c) all guaranties of such Person
with respect to Indebtedness of the type referred to in clause (a) above of
another Person and (d) Indebtedness of the type referred to in clause (a) above
of any partnership or unincorporated joint venture in which such Person is
legally obligated or has a reasonable expectation of being liable with respect
thereto.
"Funding Bank" shall have the meaning given to such term in Section
4.7 hereof.
"Future Acquisitions" shall mean Permitted Acquisitions occurring
after the Closing Date.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, as in effect on the date hereof and applied on a
consistent basis with the Financials.
<PAGE> 27
"Golder Thoma" shall mean Golder, Thoma, Cressey, Rauner, Inc., and
its successors and permitted assigns.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Harris Note" shall mean the promissory note from the Company in
favor of Harris Trust and Savings Bank dated April 27, 1997 in the
principal amount of $13,000,000.
"Highest Lawful Rate" shall mean, at any given time during which any
Obligations shall be outstanding hereunder, the maximum nonusurious
interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the indebtedness
under this Credit Agreement, under the laws of the State of North Carolina
(or the law of any other jurisdiction whose laws may be mandatorily
applicable notwithstanding other provisions of this Credit Agreement and
the other Credit Documents), or under applicable federal laws which may
presently or hereafter be in effect and which allow a higher maximum
nonusurious interest rate than under North Carolina or such other
jurisdiction's law, in any case after taking into account, to the extent
permitted by applicable law, any and all relevant payments or charges
under this Credit Agreement and any other Credit Documents executed in
connection herewith, and any available exemptions, exceptions and
exclusions.
"Indebtedness" shall mean, with respect to any Person, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments, or
upon which interest payments are customarily made, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person (other than customary reservations or
retentions of title under agreements with suppliers entered into in the ordinary
course of business), (d) all obligations of such Person issued or assumed as the
deferred purchase price of property or services purchased by such Person (other
than trade debt incurred in the ordinary course of business and due within six
months of the incurrence thereof) which would appear as liabilities on a balance
sheet of such Person, (e) all obligations of such Person under take-or-pay or
similar arrangements or under commodities agreements, (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on, or payable out of
the proceeds of production from, property owned or acquired by such Person,
whether or not the obligations secured thereby have been assumed, (g) all
guaranties of such Person with respect to Indebtedness of the type referred in
this definition of another Person, (h) the principal portion of all obligations
of such Person under Capital Leases, (i) all obligations of such Person under
Interest Rate Protection Agreements, (j) the maximum amount of all standby
letters of credit issued or bankers' acceptances facilities created for the
account of such Person and, without duplication, all drafts drawn thereunder (to
the extent unreimbursed), (k) all preferred Capital Stock issued by such Person
and required by the terms thereof to be redeemed, or for which mandatory sinking
fund payments are due, by a fixed date, (l) with respect to the Borrowers or any
of their Subsidiaries, the principal portion of all obligations of such Person
under off-balance sheet financing arrangements in the nature of
14
<PAGE> 28
"synthetic leases," asset securitizations and other similar financings and
(m) the Indebtedness of any partnership or unincorporated joint venture in
which such Person is a general partner or a joint venturer.
"Independent Accountant" shall mean a firm of independent public
accountants of nationally recognized standing selected by the Board of
Directors of the Company, which is "independent" as that term is defined
in Rule 2-01 of Regulation S-X promulgated by the Securities and Exchange
Commission.
"Interest Period" shall mean, as to Eurodollar Loans, a period of one
month, two months, three months or six months, as selected by the
Borrowers, commencing on the date of the borrowing (including
continuations and conversions thereof); provided, however, (i) if any
Interest Period would end on a day which is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
(except that where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding Business Day), (ii)
no Interest Period shall extend beyond the Expiration Date, (iii) any
Interest Period with respect to a Eurodollar Loan that begins on the last
Business Day of a calendar month (or 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 relevant
calendar month at the end of such Interest Period and (iv) if the Loans
and Commitments hereunder have not been fully syndicated by the Closing
Date, during the 60-day period immediately following the Closing Date, the
Borrowers shall only be permitted to select Base Rate Loans.
"Interest Rate Protection Agreement" shall mean any interest rate
protection agreement, foreign currency exchange agreement, commodity
purchase or option agreement or other interest or exchange rate or
commodity price hedging agreements between any Borrower and any Lender, or
any Affiliate of a Lender.
"Interest/Rental Expense Coverage Ratio" shall mean (i) as of September 30,
1997, the ratio of Consolidated EBITDAR (computed for the fiscal quarter then
ending) to Consolidated Interest Expense and Consolidated Rental Expense (each
computed for the fiscal quarter then ending), (ii) as of December 31, 1997, the
ratio of Consolidated EBITDAR (computed for the two fiscal quarters then ending)
to Consolidated Interest Expense and Consolidated Rental Expense (each computed
for the two fiscal quarters then ending), (iii) as of March 31, 1998, the ratio
of Consolidated EBITDAR (computed for the three fiscal quarters then ending) to
Consolidated Interest Expense and Consolidated Rental Expense (each computed for
the three fiscal quarters then ending) and (iv) as of June 30, 1998 and as of
the last day of each fiscal quarter ending thereafter, the ratio of Consolidated
EBITDAR (computed for the four fiscal quarters then ending) to Consolidated
Interest Expense and Consolidated Rental Expense (each computed for the four
fiscal quarters then ending).
"Internal Revenue" shall mean the Internal Revenue Service and any
successor agency.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute thereto and all
rules and regulations promulgated thereunder.
<PAGE> 29
"Inventory" shall mean all of each Borrower's inventory, including
without limitation, (i) all raw materials, work in process, parts,
components, assemblies, supplies and materials used or consumed in the
Borrowers' business; (ii) all goods, wares and merchandise, finished or
unfinished, held for sale or lease or leased or furnished or to be
furnished under contracts of service; and (iii) all goods returned to or
repossessed by the Borrowers.
"Investment" in any Person shall mean (i) the acquisition (whether
for cash, property, services, assumption of Indebtedness, securities or
otherwise, but exclusive of the acquisition of inventory, supplies,
equipment and other assets used or consumed in the ordinary course of
business of the applicable Borrower and Consolidated Capital Expenditures
not otherwise prohibited hereunder) of assets, shares of capital stock,
bonds, notes, debentures, partnership, joint ventures or other ownership
interests or other securities of such Person, (ii) any deposit (other than
deposits made in connection with the purchase of equipment or other assets
in the ordinary course of business) with, or advance, loan or other
extension of credit (other than sales of inventory on credit in the
ordinary course of business and payable or dischargeable in accordance
with customary trade terms) to, such Person or (iii) any other capital
contribution to or investment in such Person, including, without
limitation, any obligation incurred for the benefit of such Person. In
determining the aggregate amount of Investments outstanding at any
particular time, (i) the amount of any Investment represented by a
guaranty shall be taken at not less than the principal amount of the
obligations guaranteed and still outstanding; (ii) there shall be deducted
in respect of each such Investment any amount received as a return of
capital (but only by repurchase, redemption, retirement, repayment,
liquidating dividend or liquidating distribution); (iii) there shall not
be deducted in respect of any Investment any amounts received as earnings
on such Investment, whether as dividends, interest or otherwise; and (iv)
there shall not be deducted from the aggregate amount of Investments any
decrease in the market value thereof.
"Issuing Bank" shall mean First Union or any other Lender that is
acceptable to the Agent which shall issue a Letter of Credit for the
account of the Borrowers.
"Issuing Bank Fees" shall have the meaning given to such term in
Section 4.5(b) hereof.
"Landlord Agreements" shall mean the Landlord Lien Waiver Agreements,
substantially in the form of Exhibit D hereto, between each of the Borrowers'
landlords and the Agent, in each case acknowledging and agreeing, among other
things, (i) that such landlords do not have any Liens on any of the property of
any Borrower or any Subsidiary and (ii) to permit the Agent access to the
property for the purposes of exercising its remedies under the Security
Agreement.
"Leases" shall have the meaning given to such term in Section 6.19
hereof.
"Lender" shall have the meaning given to such term in the preamble of
this Credit Agreement.
16
<PAGE> 30
"Lenders' Fees" shall mean the non-refundable fees payable to each of
the Lenders as set forth in each of the Lender's respective fee letter
with the Agent.
"Letter of Credit Documents" shall mean, with respect to any Letter
of Credit, such Letter of Credit, any amendments thereto, any documents
delivered in connection therewith, any application therefor, and any
agreements, instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or
providing for (i) the rights and obligations of the parties concerned or
at risk or (ii) any collateral security for such obligations.
"Letter of Credit Committed Amount" shall have the meaning given to
such term in Section 3.1 hereof.
"Letter of Credit Obligations" shall mean, at any time, the sum of
(i) the aggregate undrawn amount of all Letters of Credit outstanding at
such time, plus (ii) the aggregate amount of all drawings under Letters of
Credit for which the Issuing Bank has not at such time been reimbursed,
plus (iii) without duplication, the aggregate amount of all payments made
by each Lender to the Issuing Bank with respect to such Lender's
participation in Letters of Credit as provided in Section 3.3 for which
the Borrowers have not at such time reimbursed the Lenders, whether by way
of a Revolving Loan or otherwise.
"Letters of Credit" shall mean all letters of credit (whether
documentary or stand-by and whether for the purchase of inventory,
equipment or otherwise) issued by an Issuing Bank for the account of the
Borrowers, and all amendments, renewals, extensions or replacements
thereof.
"Leverage Ratio" shall mean (i) as of September 30, 1997, the ratio of
Consolidated Funded Indebtedness (computed as of the last day of such fiscal
quarter) to Consolidated EBITDA multiplied by four (4) (computed for the fiscal
quarter then ending), (ii) as of December 31, 1997, the ratio of Consolidated
Funded Indebtedness (computed as of the last day of such fiscal quarter) to
Consolidated EBITDA multiplied by two (2) (computed for the two fiscal quarters
then ending), (iii) as of March 31, 1998, the ratio of Consolidated Funded
Indebtedness (computed as of the last day of such fiscal quarter) to
Consolidated EBITDA multiplied by one and one-third (1-1/3) (computed for the
three fiscal quarters then ending) and (iv) as of June 30, 1998 and as of the
last day of each fiscal quarter ending thereafter, the ratio of Consolidated
Funded Indebtedness (computed as of the last day of each such fiscal quarter) to
Consolidated EBITDA (computed for the four fiscal quarters then ending).
"Lien(s)" shall mean any lien, claim, charge, pledge, security
interest, deed of trust, mortgage, or other encumbrance.
"Loan" or "Loans" shall mean the Revolving Loans and/or the Term
Loans (or a portion of any Revolving Loan or Term Loan), individually or
collectively, as appropriate.
<PAGE> 31
"Lockbox Accounts" shall have the meaning given to such term in
Section 2.4(b) hereof.
"Lockbox Agreement" shall have the meaning given to such term in
Section 2.4(b) hereof.
"Lockbox Bank" shall have the meaning given to such term in Section
2.4(b) hereof.
"Lockboxes" shall have the meaning given to such term in Section
2.4(b) hereof.
"London Interbank Offered Rate" shall mean, with respect to any
Eurodollar Loan for the Interest Period applicable thereto, the rate of
interest per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00 A.M.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period; provided, however,
if more than one rate is specified on Telerate Page 3750, the applicable
rate shall be the arithmetic mean of all such rates. If, for any reason,
such rate is not available, the term "London Interbank Offered Rate" shall
mean, with respect to any Eurodollar Loan for the Interest Period
applicable thereto, the rate of interest per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in Dollars at
approximately 11:00 A.M. (London time) two Business Days prior to the
first day of such Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is specified on Reuters
Screen LIBO Page, the applicable rate shall be the arithmetic mean of all
such rates.
"Material Adverse Change" shall mean a material adverse change in (a)
the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of the Borrowers, taken
as a whole, (b) the Collateral taken as a whole, (c) the Borrowers'
ability to perform their respective obligations under the Credit
Documents, or (d) the rights and remedies of the Lenders hereunder, in
each case as determined by the Agent in its reasonable discretion.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, prospects, operations, results of operations, assets,
liabilities or condition (financial or otherwise) of the Borrowers, taken
as a whole, (b) the Collateral taken as a whole, (c) the Borrowers'
ability to perform their respective obligations under the Credit
Documents, or (d) the rights and remedies of the Lenders hereunder, in
each case as determined by the Agent in its reasonable discretion.
"Material Contract" shall mean any contract or other arrangement
(other than any of the Leases or the Credit Documents), whether written or
oral, to which any Borrower or any Subsidiary is a party as to which the
breach, nonperformance, cancellation or failure to renew by any party
thereto could reasonably be expected to have a Material Adverse Effect.
18
<PAGE> 32
"Maturity Date" shall mean (a) as to the Revolving Loans and Letters
of Credit (and the related Letter of Credit Obligations), the fifth
anniversary of the Closing Date and (b) as to the Term Loan, the date of
the final maturity thereof.
"Merchandise Returns" shall mean any of the products manufactured and
sold by the Borrowers or any of their Subsidiaries that are returned.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA and (i) which is, or within the immediately
preceding six (6) years was, contributed to by any Borrower, any
Subsidiary or any ERISA Affiliate or (ii) with respect to which any
Borrower or any Subsidiary may incur any liability.
"Net Cash Proceeds" shall mean the aggregate cash proceeds received
by the Borrowers in respect of any Asset Disposition, net of (a) direct
costs (including, without limitation, legal, accounting and investment
banking fees, and sales commissions) and (b) taxes paid or payable as a
result thereof; it being understood that "Net Cash Proceeds" shall
include, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received by the Borrowers in any
Asset Disposition net of amounts described in clauses (a) and (b) above.
"New Equipment" shall mean all of each Borrower's Inventory
consisting of equipment less than one year old which is held for resale or
held for lease by such Borrower; provided, however, such equipment held
for lease by such Borrower shall become "Rental Equipment" and no longer
be "New Equipment" upon the leasing of such Equipment by such Borrower.
"Non-Priority Liens" shall mean Permitted Liens described in clauses
(iv), (v), (vi), (ix) and (xi) of the definition of Permitted Liens
herein.
"Note" or "Notes" shall mean the Revolving Notes and/or the Term Loan
Notes, individually or collectively, as appropriate.
"Notice of Borrowing" shall have the meaning given to such term in
Section 2.1(d)(i) hereof.
"Notice of Extension/Conversion" shall have the meaning given to such
term in Section 2.10 hereof.
"Obligations" shall mean the Loans, any other loans and advances or
extensions of credit made or to be made by any Lender to any Borrower, or to
others for any Borrower's account in each case pursuant to the terms and
provisions of this Credit Agreement, together with interest thereon (including
interest which would be payable as post-petition interest in connection with any
bankruptcy or similar proceeding) and, including, without limitation, any
reimbursement obligation or indemnity of the Borrowers on account of Letters of
Credit and all other Letter of Credit Obligations, and all indebtedness, fees,
liabilities and obligations which may at any time be owing by any Borrower to
any Lender in each case pursuant to this Credit Agreement or any other Credit
<PAGE> 33
Document, whether now in existence or incurred by a Borrower from time to
time hereafter, whether unsecured or secured by pledge, Lien upon or
security interest in any of a Borrower's assets or property or the assets
or property of any other Person, whether such indebtedness is absolute or
contingent, joint or several, matured or unmatured, direct or indirect and
whether such Borrower is liable to such Lender for such indebtedness as
principal, surety, endorser, guarantor or otherwise. Obligations shall
also include any other indebtedness owing to any Lender by any Borrower
under this Credit Agreement and the other Credit Documents, any Borrower's
liability to any Lender pursuant to this Credit Agreement as maker or
endorser of any promissory note or other instrument for the payment of
money, any Borrower's liability to any Lender pursuant to this Credit
Agreement or any other Credit Document under any instrument of guaranty or
indemnity, or arising under any guaranty, endorsement or undertaking which
any Lender may make or issue to others for any such Borrower's account
pursuant to this Credit Agreement, including any accommodation extended
with respect to applications for Letters of Credit, and all liabilities
and obligations owing from any Borrower to any Lender, or any Affiliate of
a Lender, arising under Interest Rate Protection Agreements entered into
for the purpose of hedging interest rate risk under this Credit Agreement
and the other Credit Documents.
"Operative Documents" shall mean the Credit Documents, the Security
Documents, the Acquisition Documents, any employment contracts, and any
documents or instruments evidencing Subordinated Debt.
"Orderly Liquidation Value" shall mean with respect to the Rental
Equipment, the orderly liquidation value of the Rental Equipment as set
forth in the most recent appraisal relating thereto delivered to and
accepted by the Agent in accordance with the terms of this Credit
Agreement; provided, however, the orderly liquidation value of each item
of Rental Equipment acquired subsequent to the Closing Date shall be its
delivered cost until such item is appraised in accordance with Section
7.23 hereof.
"Other Taxes" shall have the meaning given to such term in Section
2.7(c) hereof.
"Parts and Supplies Inventory" shall mean all of each Borrower's
Inventory consisting of parts and supplies.
"Payment Direction Notice" shall have the meaning given to such term
in Section 2.4(b) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
Person succeeding to the functions thereof.
"Permitted Acquisition" shall mean an Acquisition by any Borrower of
an Acquired Company which Acquisition complies with the following
requirements (in each case to the reasonable satisfaction of the Agent)
(i) the Acquired Company shall be an operating company that engages in a
line of business
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<PAGE> 34
substantially similar to the business of the Borrowers engaged in on the
Closing Date (or a holding company which owns such an operating company),
(ii) the Purchase Price for the Acquired Company shall not exceed
$20,000,000 or such greater amount approved by the Required Lenders, (iii)
the ratio of the purchase price for the Acquired Company to the net income
of the Acquired Company before interest, taxes, depreciation and
amortization (computed for the most recently ended 12-month period) shall
not exceed 4.5 to 1.0 or such greater ratio as approved by the Required
Lenders, (iv) the Agent shall have received the "Board Paper" for the
Acquired Company (i.e. a short memo prepared by the applicable Borrower
with respect to the Acquired Company), (v) the Agent shall have received a
review of the financial condition of the Acquired Company conducted by a
firm of independent certified public accountants of nationally recognized
standing reasonably acceptable to the Agent, (vi) the Agent shall have
received an appraisal from an appraiser satisfactory to the Agent setting
forth the orderly liquidation value of the Rental Equipment and New
Equipment of the Acquired Company to be included in the Borrowing Base,
(vii) the Agent shall have completed a field examination with respect to
the working capital assets of the Acquired Company to be included in the
Borrowing Base, (viii) the Agent shall have received all items required by
Sections 7.9 and 7.16 in connection with the Acquired Company, (ix) in the
case of an Acquisition of the Capital Stock of another Person, the board
of directors (or other comparable governing body) of such other Person
shall have duly approved such Acquisition, (x) the Company shall have
delivered to the Agent (A) financial projections demonstrating that, after
giving effect to such Acquisition, the Company and its Subsidiaries would
be in compliance with all of the covenants contained herein including,
without limitation, the covenants set forth in Article VIII hereof, during
the four fiscal quarters following such Acquisition and (B) a Pro Forma
Compliance Certificate demonstrating that, upon giving effect to such
Acquisition, the Company and its Subsidiaries shall be in compliance on a
Pro Forma Basis with all of the covenants contained herein including,
without limitation, the covenants set forth in Article VIII hereof, (xi)
no Default or Event of Default shall exist immediately prior to or
immediately after the consummation of the Acquisition, (xii) immediately
after giving effect to the Acquisition, the lesser of (A) the Revolving
Credit Committed Amount or (B) the Borrowing Base shall be at least
$3,000,000 greater than the sum of the Revolving Loans outstanding plus
Letter of Credit Obligations outstanding and (xiii) in the case of the
Company, it may only effect a direct Acquisition of a Person through the
purchase of the Capital Stock of such Person.
"Permitted Indebtedness" shall mean:
(i) Indebtedness to the Lenders with respect to the Revolving
Loans, the Term Loans and the Letters of Credit pursuant to the
Credit Documents;
(ii) trade payables incurred in the ordinary course of the
Borrowers' business;
(iii) Indebtedness secured by Purchase Money Liens or Capital
Lease Liens, provided that (i) the total of all such Indebtedness for
all the Borrowers and their Subsidiaries taken together shall not
exceed an aggregate principal amount of $10,000,000 at any one time
outstanding; (ii) such Indebtedness when incurred shall not exceed
the purchase price of the asset(s) financed; and (iii) no such
Indebtedness shall be refinanced for a principal amount in excess of
the principal balance outstanding thereon at the time of such
refinancing;
<PAGE> 35
(iv) Indebtedness described on Schedule 1.1D attached hereto and
any refinancings of such Indebtedness; provided that the aggregate
principal amount of such Indebtedness is not increased, the scheduled
maturity dates of such Indebtedness are not shortened and such
refinancing is on terms and conditions no more restrictive than the
terms and conditions of the Indebtedness being refinanced;
(v) Subordinated Debt;
(vi) guaranty obligations of any Borrower with respect to any
Permitted Indebtedness of another Borrower;
(vii) indemnity obligations of any Borrower arising in
connection with the representations and warranties made by such
Borrower with respect to the sale or acquisition by such Borrower of
a Person or a business unit of such Person sold or purchased as a
going concern;
(viii) Indebtedness in connection with attachment or judgment
Liens which are Permitted Liens, provided that the total of all such
Indebtedness for all the Borrowers and their Subsidiaries taken
together shall not exceed $250,000 in the aggregate at any one time
outstanding; and
(ix) intercompany loans and advances made by the Company to any
Subsidiary Borrower or by any Subsidiary Borrower to the Company.
"Permitted Investments" shall mean:
(i) Cash Equivalents;
(ii) interest-bearing demand or time deposits (including
certificates of deposit) having maturities of not more than one year
which are insured by the Federal Deposit Insurance Corporation
("FDIC") or a similar federal insurance program; provided, however,
that the Borrowers may, in the ordinary course of their respective
businesses, maintain in their disbursement accounts from time to time
amounts in excess of then applicable FDIC or other program insurance
limits;
(iii) Investments existing on the Closing Date and set forth on
Schedule 1.1E attached hereto;
(iv) (A) advances to officers, directors and employees for
travel, entertainment or other business-related expenses incurred or
anticipated to be incurred in the ordinary course of business and (B)
advances to officers and directors for purchases of Capital Stock of
the Company not exceeding $500,000 in the aggregate at any one time
outstanding;
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<PAGE> 36
(v) intercompany loans and advances described in clause (ix) of
the definition of Permitted Indebtedness;
(vi) promissory notes and other instruments received by a
Borrower as consideration in connection with an Asset Disposition
permitted hereunder; and
(vii) Permitted Acquisitions.
"Permitted Liens" shall mean:
(i) Liens granted to the Agent by the Borrowers pursuant to any
Credit Document;
(ii) Liens listed on Schedule 1.1C attached hereto;
(iii) Purchase Money Liens and Capital Lease Liens, in each case
securing Indebtedness described in clause (iii) of the definition of
Permitted Indebtedness;
(iv) Liens of warehousemen, mechanics, materialmen, workers,
repairmen, fillers, packagers, processors, common carriers, landlords
and other similar Liens arising by operation of law or otherwise, not
waived in connection herewith, for amounts that are not yet due and
payable or which are being diligently contested in good faith by the
Borrowers by appropriate proceedings, provided that in any such case
an adequate reserve is being maintained by such Borrower for the
payment of same;
(v) attachment or judgment Liens securing judgments not
constituting an Event of Default hereunder (exclusive of (a) any
amounts that are duly bonded to the satisfaction of the Agent in its
commercially reasonable judgment or (b) any amount adequately covered
by insurance (i) as to which the insurance company has acknowledged
its obligations for coverage or (ii) as determined by the Agent in
its reasonable discretion);
(vi) Liens for taxes, assessments or other governmental charges
not yet due and payable or which are being contested in good faith by
a Borrower by appropriate proceedings, provided that in any such case
an adequate reserve is being maintained by such Borrower for the
payment of same;
(vii) deposits or pledges to secure obligations under workmen's
compensation, social security or similar laws, or under unemployment
insurance;
(viii) deposits or pledges to secure bids, tenders, contracts
(other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like
nature arising in the ordinary course of business;
<PAGE> 37
(ix) easements, rights-of-way, restrictions (including zoning
restrictions), minor defects or irregularities in title and other
similar charges or encumbrances not, in any material respect,
impairing the use of the encumbered Property for its intended
purposes;
(x) any interest of title of a lessor under, and Liens arising
from UCC financing statements (or equivalent filings, registrations
or agreements in foreign jurisdictions) relating to, leases permitted
by this Credit Agreement; and
(xi) the lien in favor of Koehring Cranes, Inc. on certain
assets of Aerial Platforms, Inc. filed in the State of Georgia for a
period of ninety (90) days following the Closing Date.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, limited liability company, trust, unincorporated
organization, association, corporation, institution, entity, party or
government (including any division, agency or department thereof), and, as
applicable, the successors, heirs and assigns of each.
"Plan" shall mean any employee benefit plan, program or arrangement,
whether oral or written, maintained or contributed to by any Borrower or
any Subsidiary, or with respect to which any Borrower or any such
Subsidiary may incur liability.
"Pledge Agreement" shall mean the Pledge Agreement, of even date
herewith, between the Agent and the Borrowers, in the form attached hereto
as Exhibit E .
"Portfolio Company" shall mean any Affiliate of Golder Thoma which is
not in the chain of ownership between the Company and any of its
Subsidiaries and is not part of the Company's consolidated financial
group.
"Prime Rate" shall mean the rate which First Union announces from
time to time as its prime lending rate, as in effect from time to time.
The Prime Rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer. First Union (and
its affiliates) may make commercial loans or other loans at rates of
interest at, above or below the Prime Rate.
"Principal Amortization Payment" shall mean a principal payment on
the Term Loans as set forth in Section 2.2(d).
"Principal Amortization Payment Date" shall mean the date a Principal
Amortization Payment is due.
"Pro Forma Basis" shall mean, with respect to any Permitted
Acquisition, that such Permitted Acquisition shall be deemed to have
occurred as of the first day of the four fiscal-quarter period ending as
of the most recent fiscal quarter end preceding the date of such Permitted
Acquisition with respect to which the Agent has received the related
required financial information described in the
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<PAGE> 38
definition of "Permitted Acquisition" herein. Any Indebtedness incurred
by the Borrowers or any of their Subsidiaries in order to consummate such
transaction (a) shall be deemed to have been incurred on the first day of
the applicable four fiscal-quarter period and (b) if such Indebtedness has
a floating or formula rate, then the implied rate of interest for such
Indebtedness for the applicable period for purposes of this definition
shall be determined by utilizing the rate which is or would be in effect
with respect to such Indebtedness as at the relevant date of
determination. In connection with any calculation of the financial
covenants set forth in Article VIII, balance sheet and income statement
items (whether positive or negative) attributable to the Acquired Company
acquired in such transaction shall be included to the extent relating to
the relevant period and for purposes of any such calculation, the
principles set forth in the second paragraph of Section 1.2 shall be
applicable.
"Pro Forma Compliance Certificate" shall mean a certificate of the
chief financial officer of the Company delivered to the Agent in
connection with any Permitted Acquisition and containing reasonably
detailed calculations, upon giving effect to such Permitted Acquisition on
a Pro Forma Basis, of the financial covenants set forth in Article VIII as
of the most recent fiscal quarter end preceding the date of such Permitted
Acquisition with respect to which the Agent has received the related
required financial information described in the definition of "Permitted
Acquisition" herein.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Proprietary Rights" shall have the meaning given to such term in
Section 6.17 hereof.
"Purchase Money Liens" shall mean Liens on any item of equipment or
item of New Equipment acquired after the date of this Credit Agreement,
provided that: (i) each such lien shall attach only to the property to be
acquired and (ii) a description of the property so acquired is furnished
to the Agent.
"Purchase Price" shall mean all cash paid, notes issued and/or
Indebtedness assumed by a Borrower as the consideration paid by such
Borrower in connection with the purchase of an Acquired Company.
"Real Estate" shall mean the real property owned or leased by the
Borrowers described in Schedule 6.19 attached hereto, together with all
Structures thereon.
"Rental Equipment" shall mean all of each Borrower's Inventory
consisting of equipment which is rented by such Borrower in the ordinary
course of business or is held for lease by such Borrower.
"Reportable Event" shall mean any of the events described in Section
4043 of ERISA and the regulations thereunder for which notice has not been
waived by regulation.
<PAGE> 39
"Required Lenders" shall mean, at any time, Lenders which are then in
compliance with their obligations hereunder (as determined by the Agent)
and holding in the aggregate at least 51% of (i) the Revolving Credit
Commitments (and participation interests therein) and the outstanding Term
Loans (and participation interests therein) or (ii) if the Commitments
have been terminated, the outstanding Loans and participation interests
(including the participation interests of the Issuing Bank in any Letters
of Credit).
"Responsible Officer" shall mean any Chairman, President, CEO, CFO or
Vice President of a Borrower.
"Restricted Payment" shall mean (i) any cash dividend or other cash
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of any Borrower or any Subsidiary, as the case may be, now
or hereafter outstanding, (ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of Capital Stock of any Borrower or
any Subsidiary now or hereafter outstanding by such Borrower or any
Subsidiary, as the case may be, except for any redemption, retirement,
sinking funds or similar payment payable solely in such shares of that
class of stock or in any class of stock junior to that class, (iii) any
cash payment made to redeem, purchase, repurchase or retire, or to obtain
the surrender of, any outstanding warrants, options or other rights to
acquire any shares of any class of Capital Stock of any Borrower or any
Subsidiary now or hereafter outstanding, or (iv) any payment to any
Affiliate of any Borrower except to the extent expressly permitted in this
Credit Agreement.
"Revolving Credit Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make its portion of the Revolving
Loans in a principal amount up to such Lender's Revolving Credit
Commitment Percentage of the Revolving Credit Committed Amount.
"Revolving Credit Commitment Percentage" shall mean, for any Lender,
the percentage identified as its Revolving Credit Commitment Percentage on
Schedule 1.1A, as such percentage may be modified in connection with any
assignment made in accordance with the provisions of Section 14.6.
"Revolving Credit Committed Amount" shall mean the aggregate revolving
credit line extended by the Lenders to the Borrowers for Revolving Loans and
Letters of Credit pursuant to and in accordance with the terms of this Credit
Agreement, in an amount up to $100,000,000, as such revolving credit line may be
reduced from time to time in accordance with Section 2.3(d).
"Revolving Loans" shall have the meaning given to such term in
Section 2.1(b) and shall include Base Rate Loans and Eurodollar Loans.
"Revolving Notes" shall have the meaning given to such term in
Section 2.1(c) hereof.
"Security Agreement" shall mean the Security Agreement, of even date
herewith, between the Agent and the Borrowers, in the form attached hereto
as Exhibit F.
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<PAGE> 40
"Security Documents" shall mean, collectively, the Pledge Agreement,
the Security Agreement, the Agency and Custodian Agreement, any
Acknowledgment Agreement and any Lockbox Agreement.
"Sellers" shall have the meaning given such term in the first WHEREAS
clause hereof.
"Settlement Period" shall have the meaning given to such term in
Section 2.1(d)(ii) hereof.
"Sprintank Acquisition" shall mean the acquisition by NES Acquisition
Corp. of substantially all of the assets of the Sprintank Division and the
Sprint Mobile Storage Division from Sprint Industrial Services, Inc.
pursuant to the Sprintank Purchase Agreement.
"Sprintank Purchase Agreement" shall mean the Asset Purchase
Agreement, dated as of July 1, 1997 by and among NES Acquisition Corp.,
Sprint Industrial Services, Inc. and certain other persons named therein.
"Standby Letter of Credit Fee" shall have the meaning given to such
term in Section 4.5(a) hereof.
"Structures" shall mean all plants, offices, manufacturing
facilities, warehouses, administration buildings and related facilities of
the Borrowers located in the Real Estate described on Schedule 6.19
attached hereto.
"Subordinated Debt" shall mean (a) the indebtedness evidenced by the
Existing Subordinated Notes and (b) any other unsecured Indebtedness
incurred by any Borrower, which, in each case, is expressly subordinated
and made junior to the payment and performance in full of the Obligations
and contains terms and conditions reasonably satisfactory to the Required
Lenders, provided that the Lenders acknowledge that subordination and
other terms and conditions substantially identical, in the sole judgment
of the Agent, to those contained in the form of Subordinated Note attached
hereto as Exhibit N are satisfactory.
"Subordinated Payments" shall mean any fees, expenses or other
payments incurred or owing by any Borrower or any of its Subsidiaries,
which, in each case, are specifically subordinated in right of payment to
the prior payment of the Obligations on terms and conditions satisfactory
to the Required Lenders.
"Subsidiary" of a Person shall mean (i) any corporation, association,
liability company or other business entity of which in excess of 50% of
the voting stock, or other ownership interests in the case of a Person
that is not a corporation, is owned or controlled directly or indirectly
by such Person, or one or more of the Subsidiaries of such Person, or a
combination thereof and (ii) any partnership in which such Person is a
general partner.
<PAGE> 41
"Subsidiary Borrower" and "Subsidiary Borrowers" shall have the
meaning given such terms in the preamble of this Credit Agreement.
"Taxes" shall mean any federal, state, local or foreign income,
sales, use, transfer, payroll, personal, property, occupancy, franchise or
other tax, levy, impost, fee, imposition, assessment or similar charge,
together with any interest or penalties thereon.
"Termination Event" shall mean (i) a Reportable Event with respect to
any Benefit Plan or Multiemployer Plan; (ii) the withdrawal of any
Borrower, any Subsidiary or any ERISA Affiliate from a Benefit Plan during
a plan year in which such entity was a "substantial employer" as defined
in Section 4001(a)(2) of ERISA; (iii) the providing of notice of intent to
terminate a Benefit Plan pursuant to Section 4041 of ERISA; (iv) the
institution by the PBGC of proceedings to terminate a Benefit Plan or
Multiemployer Plan; (v) any event or condition (a) which might constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer
Plan, or (b) that may result in termination of a Multiemployer Plan
pursuant to Section 4041A of ERISA; or (vi) the partial or complete
withdrawal within the meaning of Sections 4203 and 4205 of ERISA, of any
Borrower, any Subsidiary or any ERISA Affiliate from a Multiemployer Plan.
"Term Loans" shall have the meaning given to such term in Section
2.2(a) and shall include Base Rate Loans and Eurodollar Loans.
"Term Loan Commitment" shall mean, with respect to each Lender, the
commitment of such Lender to make its portion of the Term Loan in a
principal amount equal to such Lender's Term Loan Commitment Percentage of
the Term Loan Committed Amount.
"Term Loan Commitment Percentage" shall mean, for any Lender, the
percentage identified as its Term Loan Commitment Percentage on Schedule
1.1A, as such percentage may be modified in connection with any assignment
made in accordance with the provisions of Section 14.6.
"Term Loan Committed Amount" shall mean the aggregate term loan
facility extended by the Lenders to the Borrowers for Term Loans pursuant
to and in accordance with the terms of this Credit Agreement, in an amount
up to $15,000,000, as such term loan facility shall be reduced in
accordance with Section 2.2(b).
"Term Loan Notes" shall have the meaning given to such term in
Section 2.2(e) hereof.
"Unfinanced Consolidated Capital Expenditures" shall mean, for any
period, the sum of (a) twenty percent (20%) of all Consolidated Capital
Expenditures made for Eligible Rental Equipment and Eligible New Equipment
during such period and (b) one hundred percent (100%) of all other
Consolidated Capital Expenditures made during such period.
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<PAGE> 42
"Unused Line Fee" shall mean the fee required to be paid to the Agent
for the benefit of the Lenders at the end of each calendar month as
partial compensation for extending the Revolving Credit Committed Amount
to the Borrowers, and shall be determined by multiplying (i) the positive
difference, if any, between (A) the Revolving Credit Committed Amount in
effect at such time and (B) the average daily Revolving Loans of the
Borrowers and the Letter of Credit Obligations outstanding during such
calendar month by (ii) the Applicable Percentage then in effect.
"Voting Stock" shall mean, with respect to any Person, Capital Stock
issued by such Person the holders of which are ordinarily, in the absence
of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even though the
right so to vote has been suspended by the happening of such a
contingency.
1.2 ACCOUNTING TERMS AND DETERMINATIONS
-----------------------------------
Unless otherwise defined or specified herein, all accounting terms
shall be construed herein and all accounting determinations for purposes
of determining compliance with Sections 8.1 through 8.5 hereof and
otherwise to be made under this Credit Agreement shall be made in
accordance with GAAP applied on a basis consistent in all material
respects with the Financials. All financial statements required to be
delivered hereunder from and after the Closing Date and all financial
records shall be maintained in accordance with GAAP as in effect as of the
date of the Financials. If GAAP shall change from the basis used in
preparing the Financials, the certificates required to be delivered
pursuant to Section 7.1 demonstrating compliance with the covenants
contained herein shall include calculations setting forth the adjustments
necessary to demonstrate how the Borrowers are in compliance with the
financial covenants based upon GAAP as in effect on the Closing Date. If
the Borrowers shall change their method of inventory accounting, all
calculations necessary to determine compliance with the covenants
contained herein shall be made as if such method of inventory accounting
had not been so changed.
Notwithstanding the above, the parties hereto acknowledge and agree
that, for purposes of all calculations made in determining compliance for
any applicable period with the financial covenants set forth in Sections
8.1 through 8.5 hereof (including without limitation for purposes of the
definitions of "Applicable Percentage" and "Pro Forma Basis" set forth in
Section 1.1), balance sheet and income statement items (whether positive
or negative) attributable to any Acquired Company acquired in any
Permitted Acquisition shall be included in such calculations to the extent
relating to such applicable period (and, notwithstanding the foregoing,
during the first four fiscal quarters ending after the date of such
transaction, income statement items shall be included on an annualized basis).
1.3 OTHER DEFINITIONAL TERMS.
-------------------------
Terms not otherwise defined herein which are defined in the Uniform
Commercial Code as in effect in the State of North Carolina (the "Code")
shall have the meanings given them in the Code. The words "hereof",
"herein" and "hereunder" and words of similar import when used in this
Credit Agreement shall refer to the Credit Agreement as a whole and not to
any particular provision of this Credit Agreement unless otherwise
specifically provided. References
<PAGE> 43
in this Credit Agreement to "Articles", "Sections", "Schedules" or
"Exhibits" shall be to Articles, Sections, Schedules or Exhibits of or to
this Credit Agreement unless otherwise specifically provided. Any of the
terms defined in Section 1.1 may, unless the context otherwise requires,
be used in the singular or plural depending on the reference. "Include",
"includes" and "including" shall be deemed to be followed by "without
limitation" whether or not they are in fact followed by such words or
words of like import. "Writing", "written" and comparable terms refer to
printing, typing and other means of reproducing words in a visible form.
References to any agreement or contract are to such agreement or contract
as amended, modified or supplemented from time to time in accordance with
the terms hereof and thereof. References to any Person include the
successors and permitted assigns of such Person. References "from" or
"through" any date mean, unless otherwise specified, "from and including"
or "through and including", respectively. References to any times herein
shall refer to Eastern Standard time.
ARTICLE II
LOANS
- -----
2.1 REVOLVING LOANS.
----------------
(a) Revolving Credit Commitment. Subject to the terms and
conditions hereof and in reliance upon the representations and
warranties set forth herein each of the Lenders severally agrees to
lend to the Borrowers at any time or from time to time on or after
the Closing Date and before the Maturity Date, such Lender's
Revolving Credit Commitment Percentage of the Revolving Loans as may
be requested or deemed requested by the Borrowers.
<FF>
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<PAGE> 44
(b) Determination of Borrowing Base.
(i) The Lenders agree, subject to the terms and conditions of
this Credit Agreement, from time to time, to make loans and
advances to the Borrowers hereunder on a revolving basis. Such
loans and advances to the Borrowers (each a "Revolving Loan";
collectively the "Revolving Loans") shall not in the aggregate
exceed the lesser of (A) the Revolving Credit Committed Amount
then in effect minus the Letter of Credit Obligations, and (B)
an amount equal to the sum of (1) eighty-five percent (85%) of
the then Eligible Accounts Receivable, plus (2) fifty percent
(50%) of the then Eligible Parts and Supplies Inventory, plus
(3) eighty percent (80%) of the then Eligible Rental Equipment
(provided, however, on the last day of each month (other than
the last day of any month during which an appraisal of the
Rental Equipment was delivered pursuant to Section 7.23 hereof),
the aggregate amount of Eligible Rental Equipment as of such
date shall be reduced by an amount equal to 1/60th of such
amount), plus (4) eighty percent (80%) of the then Eligible New
Equipment, minus (5) the Letter of Credit Obligations, minus (6)
reserves established by the Agent from time to time in its
reasonable discretion; provided, that the Agent shall give the
Borrowers prior written notice describing in reasonable detail
the basis for and calculation of any reserves described above.
The amount calculated in accordance with clauses (B)(1)-(6)
above is hereinafter referred to as the "Borrowing Base."
(ii) No Lender shall be obligated at any time to make available to the
Borrowers its Revolving Credit Commitment Percentage of any requested
Revolving Loan if such amount plus its Revolving Credit Commitment
Percentage of all Revolving Loans and its Revolving Credit Commitment
Percentage of all Letter of Credit Obligations then outstanding would
exceed such Lender's Revolving Credit Commitment at such time. The
aggregate balance of Revolving Loans and the aggregate amount of all
Letter of Credit Obligations outstanding shall not at any time exceed
the Revolving Credit Committed Amount. No Lender shall be obligated
to make available, nor shall the Agent make available, any Revolving
Loans to any of the Borrowers to the extent such Revolving Loan when
added to the then outstanding Revolving Loans and all Letter of Credit
Obligations would cause the aggregate outstanding Revolving Loans and
all Letter of Credit Obligations to exceed the Borrowing Base. The
Borrowers shall promptly repay to the Agent for the account of the
Lenders from time to time the full amount of the excess, if any of (A)
the amount of all Revolving Loans and Letter of Credit Obligations
outstanding over (B) the lesser of (1) the Revolving Credit Committed
Amount and (2) the Borrowing Base.
(c) Revolving Notes. The obligations to repay the Revolving Loans and to
pay interest thereon shall be evidenced by separate promissory notes of the
Borrowers to each Lender in substantially the form of Exhibit G-1 attached
hereto (the "Revolving Notes"),
<PAGE> 45
with appropriate insertions, one Revolving Note being payable to the
order of each Lender in a principal amount equal to such Lender's
Revolving Credit Commitment and representing the obligations of the
Borrowers to pay such Lender the amount of such Lender's Revolving
Credit Commitment or, if less, the aggregate unpaid principal amount
of all Revolving Loans made by such Lender hereunder, plus interest
accrued thereon, as set forth herein. The Borrowers irrevocably
authorize each Lender to make or cause to be made appropriate
notations on its Revolving Note, or on a record pertaining thereon,
reflecting Revolving Loans and repayments thereof. The outstanding
amount of the Revolving Loans set forth on such Lender's Revolving
Note or record shall be prima facie evidence of the principal amount
thereof owing and unpaid to such Lender, but the failure to make such
notation or record, or any error in such notation or record shall not
limit or otherwise affect the obligations of the Borrowers hereunder
or under any Revolving Note to make payments of principal of or
interest on any Revolving Note when due.
32
<PAGE> 46
(d) Borrowings under Revolving Notes.
(i) Each request for borrowings hereunder shall be made by
notice in the form attached hereto as Exhibit H from the
Company, acting on behalf of the Borrowers, to the Agent (the
"Notice of Borrowing"), given not later than 12:00 noon (A) on
the Business Day on which the proposed borrowing is requested to
be made for Revolving Loans that will be Base Rate Loans and (B)
three Business Days prior to the date of the requested borrowing
of Revolving Loans that will be Eurodollar Loans. Each Notice
of Borrowing shall be given by either telephone, telecopy, telex
or cable, and, if requested by the Agent, confirmed in writing
if by telephone, setting forth (1) the requested date of such
borrowing, (2) the aggregate amount of such requested borrowing,
(3) whether such Revolving Loans will be Base Rate Loans or
Eurodollar Rate Loans, and if appropriate, the applicable
Interest Period, (4) certification by the Company, on behalf of
the Borrowers, that they have complied in all respects with
Article V hereof, all of which shall be specified in such manner
as is necessary to comply with all limitations on Revolving
Loans outstanding hereunder (including, without limitation,
availability under the Borrowing Base) and (5) the account at
which such requested funds should be made available. Each
Notice of Borrowing shall be irrevocable by and binding on the
Borrowers. The Company, on behalf of itself and the other
Borrowers shall be entitled to borrow Revolving Loans in a
minimum principal amount of $100,000 and integral multiples of
$50,000 (or the remaining amount of the Revolving Credit
Committed Amount, if less) and shall be entitled to borrow Base
Rate Loans or Eurodollar Loans, or a combination thereof, as the
Borrowers may request; provided, that no more than six (6)
Eurodollar Loans (including Term Loans which are Eurodollar
Loans) shall be outstanding hereunder at any one time; and
provided, further, that Eurodollar Loans shall be in minimum
principal amounts of $1,000,000 and integral multiples of
$1,000,000. Revolving Loans may be repaid and reborrowed in
accordance with the provisions hereof.
The Agent shall give to each Lender prompt notice (but in no event
later than 2:00 p.m. on the date of the Agent's receipt of notice from
the Borrowers) of each Notice of Borrowing by telecopy, telex or cable
(other than any Notice of Borrowing which will be funded by the Agent
in accordance with subsection (d)(ii) below). No later than 3:00 p.m.
on the date on which a borrowing is requested to be made pursuant to
the applicable Notice of Borrowing, each Lender will make available to
the Agent at the address of the Agent set forth on the signature pages
hereto, in immediately available funds, its Revolving Credit
Commitment Percentage of such borrowing requested to be made. Unless
the Agent shall have been notified by any Lender prior to the date of
borrowing that such Lender does not intend to make available to the
Agent its portion of the borrowing to be made on such date, the Agent
may assume that such Lender will make such amount available to the
Agent at the end of the Settlement Period and the Agent may, in
reliance upon such
<PAGE> 47
assumption, make available the amount of the borrowing to be
provided by such Lender. Upon fulfillment of the conditions set
forth in Article V hereof for such borrowing, the Agent will
make such funds available to the Borrowers at the account
specified by the Borrowers in such Notice of Borrowing.
(ii) Because the Borrowers anticipate requesting borrowings of
Revolving Loans on a daily basis and repaying Revolving Loans on a
daily basis through the collection of Accounts and the proceeds of
other Collateral, resulting in the amount of outstanding Revolving
Loans fluctuating from day to day, in order to administer the
Revolving Loans in an efficient manner and to minimize the transfer of
funds between the Agent and the Lenders, the Lenders hereby instruct
the Agent, and the Agent may (but is not obligated to) (A) make
available, on behalf of the Lenders, the full amount of all Revolving
Loans requested by the Borrowers not to exceed $10,000,000 in the
aggregate at any one time outstanding without requiring that the
Borrowers give the Agent a Notice of Borrowing with respect to such
borrowing and without giving each Lender prior notice of the proposed
borrowing, of such Lender's Revolving Credit Commitment Percentage
thereof and the other matters covered by the Notice of Borrowing and
(B) if the Agent has made any such amounts available as provided in
clause (A), upon repayment of Revolving Loans by the Borrowers, apply
such amounts repaid directly to the amounts made available by the
Agent in accordance with clause (A) and not yet settled as described
below; provided, that the Agent shall not advance funds as described
in clause (A) above if the Agent has actually received prior to such
borrowing (1) an officers' certificate from the Company or any other
Borrower pursuant to and in accordance with Section 7.1(h) that a
Default or Event of Default is in existence or (2) a Notice of
Borrowing from any Borrower wherein the certification provided therein
states that the conditions to the making of the requested Revolving
Loans have not been satisfied or (3) a written notice from any Lender
that the conditions to such borrowing have not been satisfied, which
officers' certificate, Notice of Borrowing or notice, in each case,
shall not have been rescinded. If the Agent advances Revolving Loans
on behalf of the Lenders, as provided in the immediately preceding
sentence, the amount of outstanding Revolving Loans and each Lender's
Revolving Credit Commitment Percentage thereof shall be computed
weekly rather than daily and shall be adjusted upward or downward on
the basis of the amount of outstanding Revolving Loans as of 5:00 p.m.
on the Business Day immediately preceding the date of each
computation; provided, however, that the Agent retains the absolute
right at any time or from time to time to make the aforedescribed
adjustments at intervals more frequent than weekly. The Agent shall
deliver to each of the Lenders after the end of each week, or such
lesser period or periods as the Agent shall determine, a summary
statement of the amount of outstanding Revolving Loans for such period
(such week or lesser period or periods being hereafter referred to as
a "Settlement Period"). If the summary statement is sent by the Agent
and received by the Lenders
34
<PAGE> 48
prior to 12:00 Noon on any Business Day each Lender shall make
the transfers described in the next succeeding sentence no later
than 3:00 p.m. on the day such summary statement was sent; and
if such summary statement is sent by the Agent and received by
the Lenders after 12:00 Noon on any Business Day, each Lender
shall make such transfers no later than 3:00 p.m. on the next
succeeding Business Day. If in any Settlement Period, the
amount of a Lender's Revolving Credit Commitment Percentage of
the Revolving Loans is in excess of the amount of Revolving
Loans actually funded by such Lender, such Lender shall
forthwith (but in no event later than the time set forth in the
next preceding sentence) transfer to the Agent by wire transfer
in immediately available funds the amount of such excess; and,
on the other hand, if the amount of a Lender's Revolving Credit
Commitment Percentage of the Revolving Loans in any Settlement
Period is less than the amount of Revolving Loans actually
funded by such Lender, the Agent shall forthwith transfer to
such Lender by wire transfer in immediately available funds the
amount of such difference. The obligation of each of the
Lenders to transfer such funds shall be irrevocable and
unconditional and without recourse to or warranty by the Agent.
Each of the Agent and the Lenders agree to mark their respective
books and records at the end of each Settlement Period to show
at all times the dollar amount of their respective Revolving
Credit Commitment Percentages of the outstanding Revolving
Loans. Because the Agent on behalf of the Lenders may be
advancing and/or may be repaid Revolving Loans prior to the time
when the Lenders will actually advance and/or be repaid
Revolving Loans, interest with respect to Revolving Loans shall
be allocated by the Agent to each Lender (including the Agent)
in accordance with the amount of Revolving Loans actually
advanced by and repaid to each Lender (including the Agent)
during each Settlement Period and shall accrue from and
including the date such Revolving Loans are advanced by the
Agent to but excluding the date such Revolving Loans are repaid
by the Borrowers in accordance with Section 2.4 or actually
settled by the applicable Lender as described in this Section
2.1(d)(ii). All such Revolving Loans shall be made as Base Rate
Loans.
(iii) If the amounts described in subsection (d)(i) or (d)(ii) of this
Section 2.1 are not in fact made available to the Agent by a Lender
(such Lender being hereinafter referred to as a "Defaulting Lender")
and the Agent has made such amount available to the Borrowers, the
Agent shall be entitled to recover such corresponding amount on demand
from such Defaulting Lender. If such Defaulting Lender does not pay
such corresponding amount forthwith upon the Agent's demand therefor,
the Agent shall promptly notify the Borrowers and the Borrowers shall
immediately (but in no event later than five Business Days after such
demand) repay such corresponding amount to the Agent. The Agent shall
also be entitled to recover from such Defaulting Lender and the
Borrowers, (A) interest on such corresponding amount in respect of
each day from the date such corresponding amount was made available by
the Agent to the Borrowers to the date such corresponding amount is
recovered by the Agent, at a rate per annum equal to either (1) if
paid by such
<PAGE> 49
Defaulting Lender, the overnight Federal Funds Rate or (2) if
paid by the Borrowers, the then applicable rate of interest,
calculated in accordance with Section 4.1 hereof, plus (B) in
each case, an amount equal to any costs (including legal
expenses) and losses incurred as a result of the failure of such
Defaulting Lender to provide such amount as provided in this
Credit Agreement. Nothing herein shall be deemed to relieve any
Lender from its obligation to fulfill its commitments hereunder
or to prejudice any rights which the Borrowers may have against
any Lender as a result of any default by such Lender hereunder,
including, without limitation, the right of the Borrowers to
seek reimbursement from any Defaulting Lender for any amounts
paid by the Borrowers under clause (B) above on account of such
Defaulting Lender's default.
(iv) The failure of any Lender to make the Revolving Loan to be
made by it as part of any borrowing shall not relieve any other
Lender of its obligation, if any, hereunder to make its
Revolving Loan on the date of such borrowing, but no Lender
shall be responsible for the failure of any other Lender to make
the Revolving Loan to be made by such other Lender on the date
of any borrowing.
(v) Each Lender shall be entitled to earn interest at the then
applicable rate of interest, calculated in accordance with
Article IV hereof, on outstanding Revolving Loans which it has
funded to the Agent from the date such Lender funded such
Revolving Loan to, but excluding, the date on which such Lender
is repaid with respect to such Revolving Loan.
(vi) Notwithstanding the obligation of the Borrowers to send written
confirmation of a Notice of Borrowing made by telephone if and when
requested by the Agent, in the event that the Agent agrees to accept a
Notice of Borrowing made by telephone, such telephonic Notice of
Borrowing shall be binding on the Borrowers whether or not written
confirmation is sent by the Borrowers or requested by the Agent. The
Agent may act prior to the receipt of any requested written
confirmation, without any liability whatsoever, based upon telephonic
notice believed by the Agent in good faith to be from a Borrower or
its agents. The Agent's records of the terms of any telephonic
Notices of Borrowing shall be conclusive on the Borrowers in the
absence of gross negligence or willful misconduct on the part of the
Agent in connection therewith.
2.2 TERM LOANS.
(a) Term Loan Commitment. Subject to the terms and conditions hereof
and in reliance upon the representations and warranties set forth
herein each Lender severally agrees to make available to the
Borrowers on the Closing Date a term loan in Dollars (each a "Term
36
<PAGE> 50
Loan"; collectively the "Term Loans") equal to such Lender's Term
Loan Commitment Percentage of the Term Loan Committed Amount for the
purposes hereinafter set forth. The Term Loans may consist of Base
Rate Loans or Eurodollar Loans, or a combination thereof, as the
Borrowers may request; provided, however, that no more than six (6)
Eurodollar Loans (including Revolving Loans which are Eurodollar
Loans) shall be outstanding hereunder at any time. For purposes
hereof, Eurodollar Loans with different Interest Periods shall be
considered as separate Eurodollar Loans, even if they begin on the
same date, although borrowings, extensions and conversions may, in
accordance with the provisions hereof, be combined at the end of
existing Interest Periods to constitute a new Eurodollar Loan with a
single Interest Period. Amounts repaid on the Term Loans may not be
reborrowed.
(b) Borrowing Procedures. The full amount of the Term Loans shall be
disbursed on the Closing Date as Base Rate Loans (subject, in all
events, to the closing conditions contained in Article V). Each
Lender shall make its Term Loan Commitment Percentage of the Term
Loan Committed Amount available to the Agent for the account of the
Borrower at the office of the Agent specified in Section 14.5, or at
such other office as the Agent may designate in writing, by 1:00 P.M.
on the Closing Date in Dollars and in funds immediately available to
the Agent. The Term Loan Commitments of the Lenders shall
automatically terminate at the close of business on the Closing Date.
(c) Minimum Amounts. Each Eurodollar Loan or Base Rate Loan that is
part of the Term Loans shall be in an aggregate principal amount that
is not less than $3,000,000 and integral multiples of $1,000,000 (or
the then remaining principal balance of the Term Loans, if less).
(d) Repayment of Term Loans. The principal amount of the Term Loans
shall be repaid in sixteen (16) consecutive quarterly installments as
follows, unless accelerated sooner pursuant to Section 11.2:
<PAGE> 51
<TABLE>
<S> <C>
Principal Amortization Term Loan Principal
Payment Dates Amortization Payment
------------------------- ------------------------
September 1, 1997 $625,000
December 1, 1997 625,000
March 1, 1998 625,000
June 1, 1998 625,000
September 1, 1998 875,000
December 1, 1998 875,000
March 1, 1999 875,000
June 1, 1999 875,000
September 1, 1999 1,125,000
December 1, 1999 1,125,000
March 1, 2000 1,125,000
June 1, 2000 1,125,000
September 1, 2000 1,125,000
December 1, 2000 1,125,000
March 1, 2001 1,125,000
June 1, 2001 1,125,000
========================
TOTAL $15,000,000
</TABLE>
(e) Term Notes. The obligations to repay the Term Loans and to pay
interest thereon shall be evidenced by separate promissory notes of
the Borrowers to each Lender in substantially the form of Exhibit G-2
attached hereto (the "Term Loan Notes"), with appropriate insertions,
one Term Loan Note being payable to the order of each Lender in a
principal amount equal to such Lender's Term Loan Commitment and
representing the obligations of the Borrowers to pay such Lender the
amount of such Lender's Term Loan Commitment or, if less, the
aggregate unpaid principal amount of the Term Loan made by such
Lender hereunder, plus interest accrued thereon, as set forth herein.
The Borrowers irrevocably authorize each Lender to make or cause to
be made appropriate notations on its Term Loan Note, or on a record
pertaining thereon, reflecting Term Loans and repayments thereof.
The outstanding amount of the Term Loan set forth on such Lender's
Term Loan Note or record shall be prima facie evidence of the
principal amount thereof owing and unpaid to such Lender, but the
failure to make such notation or record, or any error in such
notation or record shall not limit or otherwise affect the
obligations of the Borrowers hereunder or under any Term Loan Note to
make payments of principal of or interest on any Term Loan Note when
due.
2.3 OPTIONAL AND MANDATORY PREPAYMENTS; REDUCTION OF COMMITMENTS.
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<PAGE> 52
(a) Voluntary Prepayments. The Borrowers shall have the right to
prepay Loans in whole or in part from time to time, but otherwise without
premium or penalty; provided, however, that (i) Loans that are Eurodollar
Loans may only be prepaid on three Business Days' prior written notice to
the Agent specifying the applicable Loans to be prepaid; (ii) any
prepayment of Loans that are Eurodollar Loans will be subject to Section
4.10; (iii) each such partial prepayment of Loans shall be in a minimum
principal amount of $1,000,000 and integral multiples of $1,000,000.
Subject to the foregoing terms, amounts prepaid under this Section 2.3(a)
shall be applied first to Revolving Loans and then to the Term Loans.
Prepayments on Revolving Loans shall be applied first to Base Rate Loans
and then to Eurodollar Loans in direct order of Interest Period maturities.
Prepayments on Term Loans shall be applied to the remaining Principal
Amortization Payments thereof in the inverse order of maturity thereof.
(b) Mandatory Prepayments.
(i) Revolving Credit Committed Amount. If at any time, the sum
of the aggregate principal amount of outstanding Revolving Loans
plus Letter of Credit Obligations outstanding shall exceed the
lesser of (A) the Revolving Credit Committed Amount and (B) the
Borrowing Base, the Borrowers immediately shall prepay the
Revolving Loans and (after all Revolving Loans have been repaid)
cash collateralize the Letter of Credit Obligations, in an
amount sufficient to eliminate such excess.
(ii) Excess Cash Flow. Within ninety (90) days after the end of
each fiscal year (commencing with the fiscal year ending
December 31, 1997), the Borrowers shall prepay the Loans in an
amount equal to the lesser of (x) 25% of the Excess Cash Flow
earned during such prior fiscal year and (y) $1,000,000. Any
payments of Excess Cash Flow shall be applied as set forth in
clause (iv) below.
(iii) Asset Dispositions. Promptly and in any event within five
(5) days following the occurrence of any Asset Disposition, the
Borrowers shall prepay the Loans in an aggregate amount equal to
the Net Cash Proceeds of the related Asset Disposition. Such
prepayment shall be applied as set forth in clause (iv) below.
(iv) Application of Mandatory Prepayments. All amounts required
to be paid pursuant to this Section 2.3(b) shall be applied as
follows: (A) with respect to all amounts prepaid pursuant to
Section 2.3(b)(i), to Revolving Loans and (after all Revolving
Loans have been repaid) to a cash collateral account in respect
of Letter of Credit Obligations and (B) with respect to all
amounts prepaid pursuant to Section 2.3(b)(ii) or (iii), (1)
first to the Term Loans to be applied pro rata to the remaining
Principal Amortization Payments thereof and (2) second to the
Revolving Loans and (after all Revolving Loans have been repaid)
to a cash collateral account in respect of Letter of Credit
Obligations. Within the parameters of the applications set
forth above for Revolving Loans, prepayments shall be applied
first to Base Rate Loans and then to
<PAGE> 53
Eurodollar Loans in direct order of Interest Period maturities.
All prepayments under this Section 2.3(b) shall be subject to
Section 4.10.
(c) Voluntary Reductions. The Borrowers may from time to time
permanently reduce or terminate the Revolving Credit Committed Amount
in whole or in part (in minimum aggregate amounts of $5,000,000 or in
integral multiples of $5,000,000 in excess thereof (or, if less, the
full remaining amount of the then applicable Revolving Credit
Committed Amount)) upon three Business Days' prior written notice to
the Agent; provided, however, no such termination or reduction shall
be made which would cause the aggregate principal amount of
outstanding Revolving Loans plus Letter of Credit Obligations
outstanding to exceed the lesser of (A) the Revolving Credit
Committed Amount and (B) the Borrowing Base, unless, concurrently
with such termination or reduction, the Revolving Loans are repaid to
the extent necessary to eliminate such excess. The Agent shall
promptly notify each affected Lender of receipt by the Agent of any
notice from the Borrowers pursuant to this Section 2.3(c).
(d) Maturity Date. The Revolving Commitments of the Lenders and the
Letter of Credit Commitment of the Issuing Bank shall automatically
terminate on the Maturity Date.
(e) General. The Borrowers shall pay to the Agent for the account of
the Lenders in accordance with the terms of Section 4.3, on the date
of each termination or reduction of the Revolving Credit Committed
Amount, the Unused Line Fee accrued through the date of such
termination or reduction on the amount of the Revolving Credit
Committed Amount so terminated or reduced.
2.4 PAYMENTS AND COMPUTATIONS; CASH MANAGEMENT.
(a) Payments and Computations. The Borrowers shall make each payment
hereunder and under the Notes not later than 2:00 p.m. on the day
when due. Payments made by the Borrowers shall be in Dollars to the
Agent at its address referred to in Section 14.5 hereof in
immediately available funds. Payments made with respect to the
Revolving Loans shall be applied to repay Revolving Loans consisting
of Base Rate Loans first and then Revolving Loans consisting of
Eurodollar Loans. As soon as practicable after the Agent receives
payment from the Borrowers, but in no event later than one Business
Day after such payment has been made, subject to Section 2.1(d)(ii),
the Agent will cause to be distributed like
funds relating to the payment of principal, interest, or Fees (other
than amounts payable to the Agent to reimburse the Agent and the
Issuing Bank for fees and expenses payable solely to them pursuant to
Article IV hereof) or expenses payable to the Agent and the Lenders
in accordance with Section 14.8 hereof ratably to the Lenders, and
like funds relating to the payment of any other amounts payable to
such Lender, in each case to be distributed and applied in accordance
with the terms of subsection (b) or (c) of this Section 2.4. The
Borrowers' obligations to the Lenders with respect to such payments
shall be discharged by making such payments to the Agent pursuant to
this Section 2.4(a) or if not timely paid or
40
<PAGE> 54
any Event of Default then exists, may be added to the principal
amount of the Revolving Loans outstanding.
(b) Cash Management. Unless a Cash Management Event shall have
occurred, the Borrowers shall be permitted to receive directly for
their own account all payments or other remittances of Accounts of
the Borrowers and other proceeds of the Collateral. Upon the
occurrence of a Cash Management Event, the Agent may in its sole
discretion give to the Borrowers and the Lockbox Banks (as defined
hereinafter) a written payment direction notice (a "Payment Direction
Notice") (which notice in the case of an Event of Default described
in Section 11.1(e) or (f) shall be deemed given to the Borrowers
without any further act by the Agent or any Lender) directing that
(x) the Borrowers, individually or through the Company, each (A)
establish and maintain lockboxes (the "Lockboxes") with financial
institutions, including First Union, selected by the Company and
approved by the Agent (the "Lockbox Banks") and (B) instruct all
account debtors on the Accounts of each Borrower to remit all
payments to its respective Lockboxes and (y) all such payments or
other remittances received in the Lockboxes be deposited by the
Lockbox Banks into the Lockbox Accounts (as defined hereinafter)
pursuant to the terms of the Lockbox Agreements (as defined
hereinafter). Each Borrower, individually or through the Company,
the Agent and each Lockbox Bank shall enter into three party
agreements in the form of Exhibit I hereto (the "Lockbox
Agreements"), providing, among other things, for the following:
(i) The Borrowers, individually or through the Company,
will open and establish for the benefit of the Agent on
behalf of the Lenders an account at each Lockbox Bank (each
a "Lockbox Account"). Notwithstanding the foregoing, in
lieu of establishing a Lockbox Account with First Union,
the FUCC Account will serve as the Borrowers' Lockbox
Account with respect to the Lockboxes opened with First
Union.
(ii) All receipts held in the Lockboxes shall be remitted
daily to the appropriate Lockbox Account or the FUCC
Account, as applicable. Upon the terms and subject to the
conditions set forth in the Lockbox Agreements, all amounts
held in the Lockbox Accounts with Lockbox Banks other than
First Union shall be deposited daily into the FUCC Account.
(iii) All good funds deposited into the FUCC Account on any
Business Day shall be applied by the Agent on such Business
Day to the payment of the Obligations. All amounts
received directly by the Borrowers from any account debtor,
in addition to all other cash received from any other
source including but not limited to proceeds from asset
sales and judgments, shall be held in trust by the
Borrowers and promptly deposited into the applicable
Lockbox Account (as defined below) or, if made by wire
transfer, directly to the FUCC Account.
<PAGE> 55
(iv) All funds deposited into the FUCC Account shall
immediately become the property of the Agent and each of
the Borrowers shall obtain the agreement by the Lockbox
Banks to waive any offset rights against the funds so
deposited. The Agent assumes no responsibility for the
Lockbox arrangements, including without limitation, any
claim of accord and satisfaction or release with respect to
deposits accepted by the Lockbox Banks thereunder.
(v) The Borrowers may close Lockboxes and/or open new
lockboxes with the prior written consent of the Agent and
subject to prior execution and delivery to the Agent of
lockbox agreements consistent with the provisions of this
Section 2.4(b) and in form and substance satisfactory to
the Agent and its counsel.
(c) The Borrowers hereby authorize each Lender to charge from time to
time against any or all of the Borrowers' accounts with such Lender
any of the Obligations which are then due and payable. Each Lender
receiving any payment as a result of charging any such account shall
promptly notify the Agent thereof and make such arrangements as the
Agent shall request to share the benefit thereof in accordance with
Section 2.8 hereof.
(d) Interest shall accrue from and include the date of borrowing, but
exclude the date of payment. Except as expressly provided otherwise
herein with respect to Eurodollar Loans, any payments falling due
under this Credit Agreement on a day other than a Business Day shall
be due and payable on the next succeeding Business Day and shall
accrue interest at the applicable interest rate provided for in this
Credit Agreement to but excluding such Business Day. Except as
expressly provided otherwise herein, all computations of interest and
fees shall be made on the basis of actual number of days elapsed over
a year of 360 days.
2.5 MAINTENANCE OF ACCOUNT.
The Agent shall maintain an account on its books in the name of the
Borrowers in which the Borrowers will be charged with all loans and
advances made by the Lenders to the Borrowers or for the Borrowers'
account, including the Revolving Loans, the Term Loans, the Letter of
Credit Obligations and any other Obligations, including any and all costs,
expenses and reasonable attorney's fees which the Agent may incur,
including, without limitation, in connection with the exercise by or for
the Lenders of any of the rights or powers herein conferred upon the Agent
(other than in connection with any assignments or participations by any
Lender) or in the prosecution or defense of any action or proceeding by or
against the Borrowers or the Lenders concerning any matter arising out of,
connected with, or relating to this Credit Agreement or the Accounts, or
any Obligations owing to the Lenders by the Borrowers. The Borrowers will
be credited in accordance with Section 2.4(b) above, with all amounts
received by the Lenders from the Borrowers or from
42
<PAGE> 56
others for the Borrowers' account, including, as above set forth, all
amounts received by the Agent in payment of Accounts. In no event shall
prior recourse to any Accounts or other Collateral be a prerequisite to
the Agent's right to demand payment of any Obligation upon its maturity.
Further, it is understood that the Agent shall have no obligation
whatsoever to perform in any respect any of the Borrowers' contracts or
obligations relating to the Accounts.
2.6 STATEMENT OF ACCOUNT.
After the end of each month the Agent shall send the Borrowers a statement
showing the accounting for the charges, loans, advances and other
transactions occurring between the Lenders and the Borrowers during that
month. The monthly statements shall be deemed correct and binding upon
the Borrowers and shall constitute an account stated between the Borrowers
and the Lenders unless the Agent receives a written statement of the
Borrowers' exceptions within thirty (30) days after same is mailed to the
Borrowers.
2.7 TAXES.
(a) Any and all payments by the Borrowers hereunder or under the Notes
to or for the benefit of any Lender shall be made, in accordance with
Section 2.4 hereof, free and clear of and without deduction for any and all
present or future Taxes, deductions, charges or withholdings and all
liabilities with respect thereto, excluding, in the case of each such
Lender and the Agent, Taxes imposed on or measured by the Agent's or any
Lender's net income or receipts (any such excluded Taxes, collectively
"Excluded Taxes"). If any Borrower shall be required by law to deduct any
Taxes (other than Excluded Taxes) from or in respect of any sum payable
hereunder or under any Note to or for the benefit of any Lender or the
Agent, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions of Taxes (including deductions of
Taxes applicable to additional sums payable under this Section 2.7) such
Lender or the Agent, as the case may be, receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such
Borrower shall make such deductions and (iii) such Borrower shall pay the
full amount so deducted to the relevant taxation authority or other
authority in accordance with applicable law; provided, however, that such
Borrower shall be under no obligation to increase the sum payable to any
Lender not organized under the laws of the United States or a state thereof
(a "Foreign Lender") by an amount equal to the amount of the United States
Tax required to be withheld under United States law from the sums paid to
such Foreign Lender, if such withholding is caused by the failure of such
Foreign Lender to be engaged in the active conduct of a trade or business
in the United States or all amounts of interest and fees to be paid to such
Foreign Lender hereunder are not effectively connected with such trade or
business within the meaning of United States Treasury Regulation
1.1441-4(a).
(b) Each Foreign Lender agrees that it will deliver to the Borrowers
and the Agent (i) two duly completed copies of United States Internal
Revenue Service Form 1001 or 4224 or successor applicable form, as
the case may be, and (ii) an Internal Revenue Service Form W-8 or W-9
or successor applicable form, together with any other certificate or
statement of
<PAGE> 57
exemption required under the Code or regulations issued thereunder.
Each such Lender also agrees to deliver to the Borrowers and the
Agent two further copies of the said Form 1001 or 4224 and Form W-8
or W-9, or successor applicable forms or other manner of
certification, as the case may be, on or before the date that any
such form expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent form previously delivered
by it to the Borrowers, and such extensions or renewals thereof as
may reasonably be requested by the Borrowers or the Agent, unless in
any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all such
forms inapplicable or which would prevent such Lender from duly
completing and delivering any such form with respect to it and such
Lender so advises the Borrowers and the Agent. Such Lender shall
certify (A) in the case of a Form 1001 or 4224, that it is entitled
to receive payments under this Credit Agreement without deduction or
withholding of any United States federal income taxes and (B) in the
case of a Form W-8 or W-9, that it is entitled to an exemption from
United States backup withholding tax.
(c) The Borrowers agree to pay any present or future stamp,
documentary, privilege, intangible or similar Taxes or any other
excise or property Taxes, charges or similar levies that arise at any
time or from time to time (other than Excluded Taxes) (i) from any
payment made under any and all Credit Documents, (ii) from the
transfer of the rights of any Lender under any Credit Documents to
any other Lender or Lenders or (iii) from the execution or delivery
by any Borrower of, or from the filing or recording or maintenance
of, or otherwise with respect to, any and all Credit Documents
(hereinafter referred to as "Other Taxes").
(d) The Borrowers will indemnify each Lender and the Agent for the full
amount of Taxes described in Section 2.7(a) (including, without limitation
and without duplication, any Taxes imposed by any jurisdiction on amounts
payable under this Section 2.7), subject to (i) the exclusion set out in
the first sentence of Section 2.7(a), (ii) the provisions of Section
2.7(b), and (iii) the provisions of the proviso set forth in Section
2.7(a), and will indemnify each Lender and the Agent for the full amount of
Other Taxes (including, without limitation and without duplication, any
Taxes imposed by any jurisdiction on amounts payable under this Section
2.7), paid by such Lender or the Agent (on its own behalf or on behalf of
any Lender), as the case may be, in respect of payments made or to be made
hereunder, and any liability (including penalties, interest and expenses)
arising solely therefrom or with respect thereto, whether or not such Taxes
described in Section 2.7(a) or Other Taxes were correctly or legally
asserted. Payment of this indemnification shall be made within 30 days
from the date such Lender or the Agent, as the case may be, makes written
demand therefor.
(e) Within 30 days after the date of any payment of Taxes described
in Section 2.7(a) or Other Taxes, the applicable Borrower shall
furnish to the Agent, at its address
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referred to in Section 14.5 hereof, the original or certified copy of
a receipt evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements and obligations of the Borrowers
contained in this Section 2.7 shall survive the payment in full of
all Obligations hereunder and under the Notes.
2.8 SHARING OF PAYMENTS.
If any Lender shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of set-off or otherwise) on account of
the Term Loans or Revolving Loans made by it or its participation in
Letters of Credit in excess of its pro rata share of such payment as
provided for in this Credit Agreement, such Lender shall forthwith
purchase from the other Lenders such participations in the Term Loans and
Revolving Loans made by them or in their participation in Letters of
Credit as shall be necessary to cause such purchasing Lender to share the
excess payment accruing all Lenders in accordance with their respective
ratable shares as provided for in this Credit Agreement; provided,
however, that if all or any portion of such excess is thereafter recovered
from such purchasing Lender, such purchase from each Lender shall be
rescinded and each such Lender shall repay to the purchasing Lender the
purchase price to the extent of such recovery together with an amount
equal to such Lender's ratable share (according to the proportion of (i)
the amount of such Lender's required repayment to (ii) the total amount so
recovered from the purchasing Lender) or any interest or other amount paid
or payable by the purchasing Lender in respect to the total amount so
recovered. The Borrowers agree that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.8 may, to the
fullest extent permitted by law, exercise all of its rights of payment
(including the right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrowers in the
amount of such participation.
2.9 PRO RATA TREATMENT.
Each Loan, each payment or prepayment of principal of any Loan or reimbursement
obligations arising from drawings under Letters of Credit, each payment of
interest on the Loans, each payment of the Unused Line Fee, each payment of the
Standby Letter of Credit Fee, each reduction of the Revolving Credit Commitment
and each conversion or extension of any Loan, shall be allocated pro rata among
the Lenders in accordance with the respective principal amounts of their
outstanding Loans and their participation interests in the Letters of Credit;
provided, however, that the foregoing fees payable hereunder to the Lenders
shall be allocated to each Lender based on such Lender's Revolving Credit
Commitment Percentage.
2.10 EXTENSIONS AND CONVERSIONS.
Subject to the terms of Article V hereof, the Borrowers shall have the
option, on any Business Day, to extend existing Eurodollar Loans into a
subsequent permissible Interest Period, to convert Base Rate Loans into
Eurodollar Loans, or to convert Eurodollar Loans into Base Rate Loans;
provided, however, that (i) except as provided in Section 4.10, Eurodollar
Loans may be converted into Base Rate Loans only on the last day of the
Interest Period applicable thereto, (ii) Eurodollar
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Loans may be extended, and Base Rate Loans may be converted into
Eurodollar Loans, only if no Default or Event of Default is in existence
on the date of extension or conversion, (iii) Revolving Loans extended as,
or converted into, Eurodollar Loans shall be subject to the terms of the
definition of "Interest Period" and shall be in such minimum amounts as
provided in, with respect to Revolving Loans, Section 2.1(d)(i) and with
respect to the Term Loan, Section 2.2(c), and (iv) no more than six (6)
separate Eurodollar Loans shall be outstanding hereunder at any time.
Each such extension or conversion shall be effected by the Borrowers by
giving a written notice in the form of Exhibit J hereto (a "Notice of
Extension/Conversion") (or telephone notice promptly confirmed in writing)
to the Agent prior to 12:00 noon on the Business Day of, in the case of
the conversion of a Eurodollar Loan into a Base Rate Loan, and on the
third Business Day prior to, in the case of the extension of a Eurodollar
Loan as, or conversion of a Base Rate Loan into, a Eurodollar Loan, the
date of the proposed extension or conversion, specifying the date of the
proposed extension or conversion, the Loans to be so extended or
converted, the types of Loans into which such Loans are to be converted
and, if appropriate, the applicable Interest Periods with respect thereto.
Each request for extension or conversion shall constitute a
representation and warranty by the Borrowers of the matters specified in
Article V hereof. In the event the Borrowers fail to request extension or
conversion of any Eurodollar Loan in accordance with this Section, or any
such conversion or extension is not permitted or required by this Section,
then such Loan shall be automatically converted into a Base Rate Loan at
the end of the Interest Period applicable thereto. The Agent shall give
each Lender notice as promptly as practicable of any such proposed
extension or conversion affecting any Loan.
ARTICLE III
LETTERS OF CREDIT
3.1 ISSUANCE.
Subject to the terms and conditions hereof and of the Letter of Credit
Documents, if any, and any other terms and conditions which the Issuing Bank may
reasonably require, the Lenders will participate in the issuance by the Issuing
Bank from time to time of such Letters of Credit in Dollars from the Closing
Date until the Maturity Date as the Borrowers may request, in a form acceptable
to the Issuing Bank; provided, however, that (i) the Letter of Credit
Obligations outstanding shall not at any time exceed FIVE HUNDRED THOUSAND
DOLLARS ($500,000) (the "Letter of Credit Committed Amount") and (ii) the sum of
the aggregate principal amount of outstanding Revolving Loans plus Letter of
Credit Obligations outstanding shall not at any time exceed the lesser of the
Revolving Credit Committed Amount or the Borrowing Base. No Letter of Credit
shall (x) have an original expiry date more than one year from the date of
issuance or renewal thereof or (y) as originally issued or as extended, have an
expiry date extending beyond the Maturity Date. Each Letter of Credit shall
comply with the related Letter of Credit Documents. The issuance and expiry date
of each Letter of Credit shall comply with the related Letter of Credit
Documents. The issuance and expiry date of each Letter of Credit shall be a
Business Day.
<FF>
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3.2 NOTICE AND REPORTS.
The request for the issuance of a Letter of Credit shall be submitted by
the Borrowers to the Issuing Bank at least three (3) Business Days prior
to the requested date of issuance. The Issuing Bank will, upon request,
disseminate to each of the Lenders a detailed report specifying the
Letters of Credit which are then issued and outstanding and any activity
with respect thereto which may have occurred since the date of the prior
report, and including therein, among other things, the beneficiary, the
face amount and the expiry date as well as any payment or expirations
which may have occurred.
3.3 PARTICIPATION.
Each Lender, upon issuance of a Letter of Credit, shall be deemed to have
purchased without recourse a risk participation from the Issuing Bank in such
Letter of Credit and the obligations arising thereunder, in each case in an
amount equal to its Revolving Credit Commitment Percentage of such Letter of
Credit, and shall absolutely, unconditionally and irrevocably assume, as primary
obligor and not as surety, and be obligated to pay to the Issuing Bank therefor
and discharge when due, its Revolving Credit Commitment Percentage of the
obligations arising under such Letter of Credit. Without limiting the scope and
nature of each Lender's participation in any Letter of Credit, to the extent
that the Issuing Bank has not been reimbursed as required hereunder or under any
such Letter of Credit, each such Lender shall pay to the Issuing Bank its
Revolving Credit Commitment Percentage of such unreimbursed drawing in same day
funds on the day of notification by the Issuing Bank of an unreimbursed drawing
pursuant to the provisions of Section 3.4 hereof. The obligation of each Lender
to so reimburse the Issuing Bank shall be absolute and unconditional and shall
not be affected by the occurrence of a Default, an Event of Default or any other
occurrence or event. Any such reimbursement shall not relieve or otherwise
impair the obligation of the Borrowers to reimburse the Issuing Bank under any
Letter of Credit, together with interest as hereinafter provided.
3.4 REIMBURSEMENT.
In the event of any drawing under any Letter of Credit, the Issuing Bank
will promptly notify the Borrowers. Unless the Borrowers shall
immediately notify the Issuing Bank that the Borrowers intend to otherwise
reimburse the Issuing Bank for such drawing, the Borrowers shall be deemed
to have requested that the Lenders make a Revolving Loan in the amount of
the drawing as provided in Section 3.5 hereof on the related Letter of
Credit, the proceeds of which will be used to satisfy the related
reimbursement obligations. The Borrowers promise to reimburse the Issuing
Bank on the day of drawing under any Letter of Credit (either with the
proceeds of a Revolving Loan obtained hereunder or otherwise) in same day
funds. If the Borrowers shall fail to reimburse the Issuing Bank as
provided hereinabove, the unreimbursed amount of such drawing shall bear
interest at a per annum rate equal to the Base Rate plus the sum of (i)
the Applicable Percentage for Base Rate Loans and (ii) two percent (2%).
The Borrowers' reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances irrespective of any rights of
setoff, counterclaim or defense to payment the Borrowers may claim or have
against the Issuing Bank, the Agent, the Lenders, the beneficiary of the
Letter of Credit drawn upon or any other Person, including without
limitation any defense based on any failure of the Borrowers to receive
consideration or the legality, validity, regularity or unenforceability of
the Letter of Credit. The Issuing Bank will promptly notify the other
Lenders of the amount of any unreimbursed drawing and each Lender shall
promptly pay to the Agent for the account of the Issuing Bank in Dollars
and in immediately available funds, the amount of such Lender's Revolving
Credit Commitment Percentage of such unreimbursed drawing. Such payment
shall be made on the
<PAGE> 61
Business Day such notice is received by such Lender from the Issuing Bank
if such notice is received at or before 2:00 P.M.; otherwise such payment
shall be made at or before 12:00 Noon on the Business Day next succeeding
the day such notice is received. If such Lender does not pay such amount
to the Issuing Bank in full upon such request, such Lender shall, on
demand, pay to the Agent for the account of the Issuing Bank interest on
the unpaid amount during the period from the date of such drawing until
such Lender pays such amount to the Issuing Bank in full at a rate per
annum equal to, if paid within two (2) Business Days of the date that such
Lender is required to make payments of such amount pursuant to the
preceding sentence, the Federal Funds Rate and thereafter at a rate equal
to the Base Rate. Each Lender's obligation to make such payment to the
Issuing Bank, and the right of the Issuing Bank to receive the same, shall
be absolute and unconditional, shall not be affected by any circumstance
whatsoever and without regard to the termination of this Credit Agreement
or the Commitments hereunder, the existence of a Default or Event of
Default or the acceleration of the obligations of the Borrowers hereunder
and shall be made without any offset, abatement, withholding or reduction
whatsoever. Simultaneously with the making of each such payment by a
Lender to the Issuing Bank, such Lender shall, automatically and without
any further action on the part of the Issuing Bank or such Lender, acquire
a participation in an amount equal to such payment (excluding the portion
of such payment constituting interest owing to the Issuing Bank) in the
related unreimbursed drawing portion of the Letter of Credit Obligation
and in the interest thereon and in the related Letter of Credit Documents,
and shall have a claim against the Borrowers with respect thereto.
3.5 REPAYMENT WITH REVOLVING LOANS.
On any day on which the Borrowers shall have requested, or been deemed to have
requested, a Revolving Loan advance to reimburse a drawing under a standby
Letter of Credit, the Agent shall give notice to the Lenders that a Revolving
Loan has been requested or deemed requested by the Borrowers to be made in
connection with a drawing under a Letter of Credit, in which case a Revolving
Loan advance comprised of Base Rate Loans (or Eurodollar Loans to the extent the
Borrowers have complied with the procedures of Section 2.1(d)(i) with respect
thereto) shall be immediately made to the Borrowers by all Lenders
(notwithstanding any termination of the Commitments pursuant to Section 11.2)
pro rata based on the respective Revolving Credit Commitment Percentages of the
Lenders (determined before giving effect to any termination of the Commitments
pursuant to Section 11.2) and the proceeds thereof shall be paid directly by the
Agent to the Issuing Bank for application to the respective Letter of Credit
Obligations. Each such Lender hereby irrevocably agrees to make its Revolving
Credit Commitment Percentage of each such Revolving Loan immediately upon any
such request or deemed request in the amount, in the manner and on the date
specified in the preceding sentence notwithstanding (i) the amount of such
borrowing may not comply with the minimum amount for advances of Revolving Loans
otherwise required hereunder, (ii) whether any conditions specified in Article V
are then satisfied, (iii) whether a Default or an Event of Default then exists,
(iv) failure for any such request or deemed request for Revolving Loan to be
made by the time otherwise required hereunder, (v) whether the date of such
borrowing is a date on which Revolving Loans are otherwise permitted to be made
hereunder or (vi) any termination of the Commitments relating thereto
immediately prior to or contemporaneously with such borrowing. In the event
that any Revolving Loan cannot for any reason be made on the date
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otherwise required above (including, without limitation, as a result of
the commencement of a bankruptcy or insolvency proceeding with respect to
any Borrower), then each such Lender hereby agrees that it shall forthwith
purchase (as of the date such borrowing would otherwise have occurred, but
adjusted for any payments received from the Borrowers on or after such
date and prior to such purchase) from the Issuing Bank such participation
in the outstanding Letter of Credit Obligations as shall be necessary to
cause each such Lender to share in such Letter of Credit Obligations
ratably (based upon the respective Revolving Credit Commitment Percentages
of the Lenders (determined before giving effect to any termination of the
Commitments pursuant to Section 11.2)), provided, that at the time any
purchase of participation pursuant to this sentence is actually made, the
purchasing Lender shall be required to pay to the Issuing Bank, to the
extent not paid to the Issuing Bank by the Borrowers in accordance with
the terms of Section 3.4 hereof, interest on the principal amount of
participation purchased for each day from and including the day upon which
such borrowing would otherwise have occurred to but excluding the date of
payment for such participation, at the rate equal to, if paid within two
(2) Business Days of the date of the Revolving Loan advance, the Federal
Funds Rate, and thereafter at a rate equal to the Base Rate.
3.6 RENEWAL, EXTENSION.
The renewal or extension of any Letter of Credit shall, for purposes
hereof, be treated in all respects the same as the issuance of a new
Letter of Credit hereunder.
3.7 UNIFORM CUSTOMS AND PRACTICES.
The Issuing Bank may have the Letters of Credit be subject to The Uniform
Customs and Practice for Documentary Credits, as published as of the date
of issue by the International Chamber of Commerce (the "UCP"), in which
case the UCP may be incorporated therein and deemed in all respects to be
a part thereof.
3.8 INDEMNIFICATION; NATURE OF ISSUING BANK'S DUTIES.
(a) In addition to its other obligations under this Article III, the
Borrowers hereby agree to protect, indemnify, pay and save the Issuing Bank
harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) that the Issuing Bank may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of any Letter of
Credit or (B) the failure of the Issuing Bank to honor a drawing under a
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions, herein called
"Government Acts").
(b) As between the Borrowers and the Issuing Bank, the Borrowers
shall assume all risks of the acts, omissions or misuse of any Letter
of Credit by the beneficiary thereof. The Issuing Bank shall not be
responsible: (i) for the form, validity, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any Letter of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity
<PAGE> 63
or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, that
may prove to be invalid or ineffective for any reason; (iii) for
errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (iv) for any loss or
delay in the transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of the proceeds
thereof; and (v) for any consequences arising from causes beyond the
control of the Issuing Bank, including, without limitation, any
Government Acts. None of the above shall affect, impair, or prevent
the vesting of the Issuing Bank's rights or powers hereunder.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or
omitted by the Issuing Bank, under or in connection with any Letter
of Credit or the related certificates, if taken or omitted in good
faith, shall not put such Issuing Bank under any resulting liability
to any Borrower. It is the intention of the parties that this Credit
Agreement shall be construed and applied to protect and indemnify the
Issuing Bank against any and all risks involved in the issuance of
the Letters of Credit, all of which risks are hereby assumed by the
Borrowers, including, without limitation, any and all Government
Acts. The Issuing Bank shall not, in any way, be liable for any
failure by the Issuing Bank or anyone else to pay any drawing under
any Letter of Credit as a result of any Government Acts or any other
cause beyond the control of the Issuing Bank.
(d) Nothing in this Section 3.8 is intended to limit the
reimbursement obligations of the Borrowers contained in Section 3.4
above. The obligations of the Borrowers under this Section 3.8 shall
survive the termination of this Credit Agreement. No act or omission
of any current or prior beneficiary of a Letter of Credit shall in
any way affect or impair the rights of the Issuing Bank to enforce
any right, power or benefit under this Credit Agreement.
(e) Notwithstanding anything to the contrary contained in this Section 3.8,
the Borrowers shall have no obligation to indemnify the Issuing Bank in
respect of any liability incurred by the Issuing Bank (i) arising solely
out of the gross negligence or willful misconduct of the Issuing Bank, as
determined by a court of competent jurisdiction, or (ii) caused by the
Issuing Bank's failure to pay under any Letter of Credit after presentation
to it of a request strictly complying with the terms and conditions of such
Letter of Credit, as determined by a court of competent jurisdiction,
unless such payment is prohibited by any law, regulation, court order or
decree.
3.9 RESPONSIBILITY OF ISSUING BANK.
It is expressly understood and agreed that the obligations of the Issuing
Bank hereunder to the Lenders are only those expressly set forth in this
Credit Agreement and that the Issuing Bank shall be entitled to assume
that the conditions precedent set forth in Articles III and V have been
satisfied unless it shall have acquired actual
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knowledge that any such condition precedent has not been satisfied;
provided, however, that nothing set forth in this Article III shall be
deemed to prejudice the right of any Lender to recover from the Issuing
Bank any amounts made available by such Lender to the Issuing Bank
pursuant to this Article III in the event that it is determined by a court
of competent jurisdiction that the payment with respect to a Letter of
Credit constituted gross negligence or willful misconduct on the part of
the Issuing Bank.
3.10 CONFLICT WITH LETTER OF CREDIT DOCUMENTS.
In the event of any conflict between this Credit Agreement and any Letter
of Credit Document (including any letter of credit application), this
Credit Agreement shall control.
ARTICLE IV
INTEREST AND FEES
4.1 INTEREST ON LOANS.
Subject to the provisions of Section 4.2 hereof, interest on the Loans
shall be payable (a) for Base Rate Loans, monthly in arrears as of the end
of each calendar month and the interest rate shall be equal to the Base
Rate plus the Applicable Percentage on the outstanding amount of each such
Base Rate Loan (or if a Cash Management Event shall have occurred, with
respect to Base Rate Loans which are Revolving Loans, on the average
balances of the Base Rate Loans owing to the Lenders in the Borrowers'
Revolving Loan accounts at the close of business for each day during each
calendar month) and (b) for Eurodollar Loans, on the last day of the
applicable Interest Period (and with respect to any Eurodollar Loan with
an Interest Period of 6 months, on the date 3 months after the making of
such Eurodollar Loan) and the interest rate shall be equal to the
Eurodollar Rate plus the Applicable Percentage on the outstanding amount
of each such Eurodollar Loan. In the event of any change in the Base
Rate, the rate hereunder shall change, effective as of the day the Base
Rate changes. The interest rates hereunder shall be calculated based on a
360 day year for the actual number of days elapsed.
4.2 INTEREST AFTER EVENT OF DEFAULT.
Interest on any amount of matured principal under the Loans, and interest on the
amount of principal under the Loans outstanding as of the date an Event of
Default occurs, and at all times thereafter until the earlier of the date upon
which (a) all Obligations have been paid and satisfied in full or (b) such Event
of Default shall have been cured or waived, shall accrue at a rate equal to the
rate at which the Loans are then bearing interest pursuant to Section 4.1 above,
plus two percent (2%) and shall be payable on demand. In the event of any change
in said applicable interest rate, the rate hereunder shall change, effective as
of the day the applicable interest rate changes, so as to remain two percent
(2%) above the then applicable interest rate. Interest shall be payable on any
other amount due hereunder and shall accrue at the Base Rate, plus two percent
(2%) from the date due until paid in full. The rates hereunder shall be
calculated based on a 360 day year for the actual number of days elapsed.
<PAGE> 65
4.3 UNUSED LINE FEE.
At the end of each calendar month the Borrowers shall pay to the Agent for
the benefit of the Lenders the Unused Line Fee due in respect of such
calendar month.
4.4 LENDERS' FEES/AGENT'S FEES.
On the Closing Date the Agent shall pay to each Lender its respective
Lender's Fees that are required to be paid on the Closing Date pursuant to
the terms of such Lender's fee letter with the Agent. The Borrowers shall
pay all fees required to be paid to the Agent under the Fee Letter at the
times and in the amounts set forth therein.
4.5 LETTER OF CREDIT FEES.
(a) Standby Letter of Credit Issuance Fee. In consideration of the
issuance of standby Letters of Credit hereunder, the Borrowers
promise to pay to the Agent for the account of each Lender a fee (the
"Standby Letter of Credit Fee") on such Lender's Revolving Credit
Commitment of the average daily maximum amount available to be drawn
under each such standby Letter of Credit computed at a per annum rate
for each day from the date of issuance to the date of expiration
equal to the Applicable Percentage for Eurodollar Loans. The Standby
Letter of Credit Fee will be payable monthly in arrears on the last
day of each calendar month.
(b) Issuing Bank Fees. In addition to the Standby Letter of Credit
Fee payable pursuant to clause (a) above, the Borrowers promise to
pay to the Issuing Bank for its own account without sharing by the
other Lenders the letter of credit fronting and negotiation fees
agreed to by the Borrowers and the Issuing Bank from time to time and
the customary charges from time to time of the Issuing Bank with
respect to the issuance, amendment, transfer, administration,
cancellation and conversion of, and drawings under, such Letters of
Credit (collectively, the "Issuing Bank Fees").
4.6 AUTHORIZATION TO CHARGE ACCOUNT.
The Borrowers hereby authorize the Agent to charge the Borrowers' Revolving Loan
accounts with the amount of all payments and fees due hereunder to the Lenders,
the Agent and the Issuing Bank as and when such payments become due. The
Borrowers confirm that any charges which the Agent may so make to the Borrowers'
Revolving Loan accounts as herein provided will be made as an accommodation to
the Borrowers and solely at the Agent's discretion.
4.7 INDEMNIFICATION IN CERTAIN EVENTS.
If after the Closing Date, either (a) any change in or in the
interpretation of any law or regulation is introduced (other than a change
in the rate of Excluded Taxes), including, without limitation, with
respect to reserve requirements, applicable to FUCC or any other banking
or financial institution from whom any of the Lenders borrow funds or
obtain credit (a "Funding Bank") or any of the Lenders, or (b) a Funding
Bank or any of the Lenders complies with any future guideline or request
from any central bank or other governmental authority or (c) a Funding
Bank or any of the Lenders determines that the adoption of any applicable
law, rule or regulation regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable
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agency charged with the interpretation or administration thereof has or
would have the effect described below, or a Funding Bank or any of the
Lenders complies 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, and in the case of any event set forth in this
clause (iii), such adoption, change or compliance has or would have the
direct or indirect effect of reducing the rate of return on any of the
Lenders' capital as a consequence of its obligations hereunder to a level
below that which such Lender could have achieved but for such adoption,
change or compliance (taking into consideration the Funding Bank's or
Lenders' policies with respect to capital adequacy) by an amount deemed by
such Lender to be material, and the result of any of the foregoing events
described in clauses (a), (b) or (c) is or results in an increase in the
cost to any of the Lenders of funding or maintaining the Revolving Credit
Committed Amount, the Revolving Loans, the Letters of Credit or the Term
Loans then the Borrowers shall from time to time upon demand by the Agent,
pay to the Agent additional amounts sufficient to indemnify the Lenders
against such increased cost. A certificate as to the amount of such
increased cost showing the calculation therefor in reasonable detail shall
be submitted to the Borrowers by the Agent and shall be conclusive and
binding absent manifest error.
4.8 INABILITY TO DETERMINE INTEREST RATE.
If prior to the first day of any Interest Period, (a) the Agent shall have
determined in good faith (which determination shall be conclusive and binding
upon the Borrowers) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, (b) the Agent has received notice from
the Required Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders of making or maintaining their Eurodollar Loans during such Interest
Period, or (c) Dollar deposits in the principal amounts of the Eurodollar Loans
to which such Interest Period is to be applicable are not generally available in
the London interbank market, the Agent shall give telecopy or telephonic notice
thereof to the Borrowers and the Lenders as soon as practicable thereafter, and
will also give prompt written notice to the Borrowers when such conditions no
longer exist. If such notice is given (i) any Eurodollar Loans requested to be
made on the first day of such Interest Period shall be made as Base Rate Loans,
(ii) any Loans that were to have been converted on the first day of such
Interest Period to or continued as Eurodollar Loans shall be converted to or
continued as Base Rate Loans and (iii) each outstanding Eurodollar Loan shall be
converted, on the last day of the then-current Interest Period thereof, to Base
Rate Loans. Until such notice has been withdrawn by the Agent, no further
Eurodollar Loans shall be made or continued as such, nor shall the Borrowers
have the right to convert Base Rate Loans to Eurodollar Loans.
4.9 ILLEGALITY.
Notwithstanding any other provision herein, if the adoption of or any
change in any law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other governmental authority
or in the interpretation or application thereof occurring after the
Closing Date shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Credit Agreement, (a) such Lender
shall promptly give written notice of such circumstances to the Borrowers
and the Agent (which notice shall be withdrawn whenever such circumstances
no longer exist), (b) the commitment of such Lender hereunder to make
Eurodollar Loans, continue Eurodollar Loans as such and convert a Base
Rate Loan to Eurodollar Loans shall forthwith be canceled and, until such
time as it shall no longer be unlawful for such Lender to make or maintain
Eurodollar Loans, such Lender shall then have a commitment only to make a
Base Rate Loan when a Eurodollar Loan is requested and (c) such Lender's
Loans then outstanding as Eurodollar Loans, if any, shall be converted
automatically to Base Rate Loans on the respective last days of the then
current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan
occurs on a day which is not the last day of the then current Interest
Period with respect thereto, the Borrowers shall pay to such Lender such
amounts, if any, as may be required pursuant to Section 4.10 hereof.
4.10 FUNDING INDEMNITY.
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The Borrowers, jointly and severally, promise to indemnify each Lender and
to hold each Lender harmless from any loss or expense which such Lender
may sustain or incur (other than through such Lender's gross negligence or
willful misconduct) as a consequence of (a) default by the Borrowers in
making a borrowing of, conversion into or extension of Eurodollar Loans
after the Borrowers have given a notice requesting the same in accordance
with the provisions of this Credit Agreement, (b) default by the Borrowers
in making any prepayment of a Eurodollar Loan after the Borrowers have
given a notice thereof in accordance with the provisions of this Credit
Agreement, and (c) the making of a prepayment of Eurodollar Loans on a day
which is not the last day of an Interest Period with respect thereto.
With respect to Loans that are Eurodollar Loans, such indemnification may
include an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or extended, for the period from the date of such
prepayment or of such failure to borrow, convert or extend to the last day
of the applicable Interest Period (or, in the case of a failure to borrow,
convert or extend, the Interest Period that would have commenced on the
date of such failure) in each case at the applicable rate of interest for
such Eurodollar Loans provided for herein over (ii) the amount of interest
(as reasonably determined by such Lender) which would have accrued to such
Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank Eurodollar market. This
covenant shall survive the termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder.
ARTICLE V
CONDITIONS PRECEDENT
The obligation of the Lenders to make the Term Loans or any Revolving
Loans or of the Issuing Bank to issue any Letter of Credit hereunder is
subject to the satisfaction of, or waiver of, immediately prior to or
concurrently with the making of such Term Loans, Revolving Loans or
issuance of such Letter of Credit, the following conditions precedent:
5.1 CLOSING CONDITIONS.
On or prior to the Closing Date, the Lenders shall have received each
of the documents, opinions and certificates set forth in the list of
Closing Conditions attached hereto as Schedule 1.1B and the conditions set
forth therein shall have been satisfied or waived.
5.2 MATERIAL ADVERSE CHANGE.
(a) No Material Adverse Change shall have occurred, (b) no occurrence
or event which is reasonably likely to have a Material Adverse Effect
shall have occurred and be continuing and (c) on or prior to the Closing
Date, there shall not have occurred a substantial impairment of the
financial markets generally which, in the opinion of the Lenders, has
materially and adversely affected the transactions contemplated hereby.
5.3 FEES.
On or prior to the Closing Date, the Lenders shall have received
payment in full of the Lenders' Fees.
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5.4 REPRESENTATIONS AND WARRANTIES; NO DEFAULT.
On the date of the making of any Term Loan, any Revolving Loan or the
issuance of any Letter of Credit, both before and after giving effect
thereto and to the application of the proceeds therefrom, the following
statements shall be true to the satisfaction of the Agent (and each
request for a Term Loan, a Revolving Loan and request for a Letter of
Credit, and the acceptance by the Borrowers of the proceeds of such Term
Loan, Revolving Loan or issuance of such Letter of Credit, shall
constitute a representation and warranty by the Borrowers that on the date
of such Term Loan, Revolving Loan or issuance of such Letter of Credit
before and after giving effect thereto and to the application of the
proceeds therefrom, such statements are true): (a) the representations and
warranties contained in this Credit Agreement are true and correct in all
material respects on and as of the date of such Term Loan, Revolving Loan
or issuance of such Letter of Credit as though made on and as of such
date, except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as
of such earlier date); (b) no event has occurred and is continuing, or
would result from such Term Loan, Revolving Loan or issuance of such
Letter of Credit or the application of the proceeds thereof, which would
constitute a Default or an Event of Default under this Credit Agreement;
and (c) no Material Adverse Change, or development reasonably likely to
have a Material Adverse Effect shall have occurred and be continuing.
5.5 NOTICE OF BORROWING.
On the date of the making of any Revolving Loan, the Agent shall have
received a Notice of Borrowing to the extent such Notice of Borrowing is
required to be given with respect to the making of such Revolving Loan.
5.6 BORROWING BASE CERTIFICATE.
No Revolving Loans shall be made following a mandatory prepayment of
the Loans pursuant to Section 2.3(b)(ii) or (iii) unless and until the
Company shall have furnished to the Lenders a new Borrowing Base
Certificate evidencing sufficient availability under the Borrowing Base to
make such Revolving Loans.
5.7 ADDITIONAL DOCUMENTS.
On or prior to the Closing Date, the Borrowers shall have executed
and delivered to the Agent all documents which the Agent determines are
reasonably necessary to consummate the lending arrangements contemplated
hereby.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Credit Agreement
and the Issuing Bank to issue the Letters of Credit, and to make available
the credit facilities contemplated hereby, each Borrower hereby represents
and warrants to the Lenders and the Issuing Bank as of the Closing Date
and on the date of each extension of credit hereunder, as follows:
6.1 ORGANIZATION AND QUALIFICATION.
Such Borrower and each of its Subsidiaries (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, (ii) has the power and authority to own its
properties and assets and to transact the businesses in which it is
presently, or proposes to be, engaged, and (iii) is duly qualified and is
authorized to do business and is in good standing in every jurisdiction in
which the failure to be so qualified could
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reasonably be expected to have a Material Adverse Effect. Schedule 6.1 contains
a true, correct and complete list of all jurisdictions in which such Borrower
and its Subsidiaries are qualified to do business as a foreign corporation or
foreign limited liability company as of the Closing Date.
6.2 SOLVENCY.
The fair saleable value of such Borrower's assets, measured on a
going concern basis, exceeds all probable liabilities, including those to
be incurred pursuant to this Credit Agreement. Such Borrower (i) does not
have unreasonably small capital in relation to the business in which it is
or proposes to be engaged or (ii) has not incurred, and does not believe
that it will incur after giving effect to the transactions contemplated by
this Credit Agreement, debts beyond its ability to pay such debts as they
become due.
6.3 LIENS; INVENTORY.
There are no Liens in favor of third parties with respect to any of
the Collateral, including, without limitation, with respect to the
Inventory, wherever located, other than Permitted Liens. To the best of
such Borrower's knowledge, no lessor, warehouseman, filler, processor or
packer of such Borrower has granted any Lien with respect to the Inventory
maintained by such Borrower at the property of any such lessor,
warehousemen, filler, processor or packer. Upon the proper filing of
financing statements and the proper recordation of other applicable
documents with the appropriate filing or recordation offices in each of
the necessary jurisdictions, the security interests granted pursuant to
the Credit Documents constitute and shall at all times constitute valid
and enforceable first, prior and perfected Liens on the Collateral (other
than Permitted Liens). The Borrowers are or will be at the time
additional Collateral is acquired by them, the absolute owners of the
Collateral with full right to pledge, sell, consign, transfer and create a
Lien therein, free and clear of any and all Liens in favor of third
parties, except Permitted Liens.
6.4 NO CONFLICT.
The execution and delivery by such Borrower of this Credit Agreement and
each of the other Credit Documents executed and delivered in connection herewith
and the performance of the obligations of such Borrower hereunder and thereunder
and the consummation by such Borrower of the transactions contemplated hereby
and thereby: (i) are within the corporate powers of such Borrower; (ii) are duly
authorized by the Board of Directors or members of such Borrower and, if
necessary with respect to the Company, its stockholders; (iii) are not in
contravention of the terms of the articles or certificate of incorporation or
bylaws of such Borrower; (iv) are not in contravention of the terms of any
indenture, contract, lease, agreement instrument or other commitment to which
such Borrower is a party or by which such Borrower or any of its properties are
bound except for any contravention which could not reasonably be expected to
have a Material Adverse Effect; (v) do not require the consent, registration or
approval of any governmental entity or any other Person (except such as have
been duly obtained, made or given, and are in full force and effect); (vi) do
not contravene any statute, law, ordinance regulation, rule, order or other
governmental restriction applicable to or binding upon such Borrower except for
any contravention which could not reasonably be expected to have a Material
Adverse Effect; and (vii) will not, except as contemplated herein for the
benefit of the Agent on behalf of the Lenders, result in the imposition of any
Liens other than Permitted Liens upon any property of such Borrower under any
existing indenture, mortgage, deed of trust, loan or credit agreement or other
material agreement or instrument to which such Borrower is a party or by which
it or any of its property may be bound or affected.
6.5 ENFORCEABILITY.
The Credit Agreement and all of the other Credit Documents executed
and delivered in connection herewith are the legal, valid and binding
obligations of such Borrower, and with respect to those Credit Documents
executed and delivered by any Subsidiary, of each such Subsidiary, and are
enforceable against such Borrower and such Subsidiaries,
as the case may be, in accordance with their terms except as such
enforceability may be limited by (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and (ii) general principles of
equity.
6.6 FINANCIAL DATA.
The Borrowers have furnished to the Agent and the Lenders the
following financial statements (the "Financials"): (a) the consolidated
balance sheets as of, and consolidated statements of income and cash flow
of the Borrowers and their predecessor corporations for, the fiscal year
ended December 31, 1996 prepared by the Company and certified by its chief
financial officer, (b) the consolidated and consolidating balance sheets
as of, and consolidated and consolidating statements of income and cash
flow of the Borrowers for, the four month period ending April 30, 1997
prepared by the Company and certified by its chief financial officer, (c)
the pro forma opening balance sheets for each of the Borrowers dated the
Closing Date giving effect to the Closing Date Acquisitions and the
transactions contemplated by the Closing Date Purchase Agreements and
reflecting estimated purchase price accounting adjustments, prepared by
the Company and certified by its chief financial officer (to be reviewed
by Price Waterhouse following the Closing Date) and (d) such other
information relating to the Borrowers or the Closing Date Acquisitions as
the Agent may reasonably require in connection with the structuring and
syndication of credit facilities of the type described herein. The
Financials are and the historical financial statements to be furnished to
the Lenders in accordance with Section 7.1 below will be in accordance
with the books and records of the Borrowers and their predecessor
corporations and fairly present in all material respects the financial
condition of each of the Borrowers and such predecessor corporations at
the dates thereof and the results of operations for the periods indicated
(subject, in the case of unaudited financial statements, to normal
year-end adjustments and the absence of footnote disclosures), and such
financial statements have been prepared in conformity with GAAP
consistently applied throughout the periods involved. Since the date of
the Financials, there have been no changes in the condition, financial or
otherwise, of any of the Borrowers as shown on the respective balance
sheets of each of the Borrowers described above, except (a) as
contemplated herein and (b) for changes in the ordinary course of business
(none of which individually or in the aggregate is a Material Adverse
Change).
6.7 LOCATIONS OF OFFICES, RECORDS AND INVENTORY.
The Borrowers' principal places of business and chief executive
offices are set forth in Schedule 6.7 hereto, and the books and records of
the Borrowers and all chattel paper and all records of accounts are
located at the principal places of business and chief executive offices of
the Borrowers. There is no jurisdiction in which any Borrower or any of
its Subsidiaries has any assets, equipment or Inventory (except for
vehicles, Rental Equipment under lease, Inventory in transit for
processing, or immaterial items) other than those jurisdictions listed on
Schedule 6.7 attached hereto. Attached hereto as Schedule 6.7 is a true,
correct and complete list of (i) the legal names and addresses of each
warehouseman, filler, processor and packer at which Inventory is stored,
(ii) the address of the chief executive offices of the Borrowers and each
of their Subsidiaries and (iii) the address of all offices where records
and books of account of the Borrowers and each of their Subsidiaries are
kept. None of the receipts received by any of the Borrowers from any
warehouseman, filler, processor or packer
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states that the goods covered thereby are to be delivered to bearer or to
the order of a named person or to a named person and such named person's
assigns.
6.8 FICTITIOUS BUSINESS NAMES.
Neither such Borrower nor any of its Subsidiaries has used any
corporate or fictitious name during the five (5) years preceding the date
hereof, other than the corporate name shown on its or such Subsidiary's
Articles or Certificate of Incorporation and as set forth on Schedule 6.8.
6.9 SUBSIDIARIES.
The only direct or indirect Subsidiaries of the Borrowers are those
listed on Schedule 6.9 attached hereto. The Borrowers are the record and
beneficial owner of all of the shares of Capital Stock of each of the
Subsidiaries listed on Schedule 6.9 as being owned by the Borrowers, there
are no proxies, irrevocable or otherwise, with respect to such shares, and
no equity securities of any of such Subsidiaries are or may become
required to be issued by reason of any options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for, shares
of any Capital Stock of any of such Subsidiaries, and there are no
contracts, commitments, understandings or arrangements by which any of
such Subsidiaries is or may become bound to issue additional shares of its
Capital Stock or securities convertible into or exchangeable for such
shares. All of such shares so owned by the Borrowers are owned by them
free and clear of any Liens other than Permitted Liens.
6.10 NO JUDGMENTS OR LITIGATION.
Except as set forth on Schedule 6.10 hereto, no judgments, orders,
writs or decrees are outstanding against such Borrower or any of its
Subsidiaries nor is there now pending or, to the best of such Borrower's
knowledge after diligent inquiry, threatened any litigation, contested
claim, investigation, arbitration, or governmental proceeding by or
against such Borrower or any of its Subsidiaries except judgments and
pending or threatened litigation, contested claims, investigations,
arbitrations and governmental proceedings which could not reasonably be
expected to have a Material Adverse Effect.
6.11 NO DEFAULTS.
Neither such Borrower nor any of its Subsidiaries is in default under
any material term of any indenture, contract, lease, agreement, instrument
or other commitment to which any of them is a party or by which any of
them is bound. Such Borrower knows of no dispute regarding any indenture,
contract, lease, agreement, instrument or other commitment which could
reasonably be expected to have a Material Adverse Effect.
6.12 NO EMPLOYEE DISPUTES.
There are no controversies pending or, to the best of such Borrower's
knowledge after diligent inquiry, threatened between such Borrower or any
of its Subsidiaries and any of their respective employees, other than
employee grievances arising in the ordinary course of business which would
not, in the aggregate, have a Material Adverse Effect.
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6.13 COMPLIANCE WITH LAW.
Neither such Borrower nor any of its Subsidiaries has violated or
failed to comply with any statute, law, ordinance, regulation, rule or
order of any foreign, federal, state or local government, or any other
governmental department or agency or any self regulatory organization, or
any judgment, decree or order of any court, applicable to its business or
operations except where the aggregate of all such violations or failures
to comply would not have a Material Adverse Effect. The conduct of the
business of such Borrower and each of its Subsidiaries is in conformity
with all securities, commodities, energy, public utility, zoning, building
code, health, OSHA and environmental requirements and all other foreign,
federal, state and local governmental and regulatory requirements and
requirements of any self regulatory organizations, except where such
non-conformities would not have a Material Adverse Effect. Neither such
Borrower nor any of its Subsidiaries has received any notice to the effect
that, or otherwise been advised that, it is not in compliance with, and
neither such Borrower nor any of its Subsidiaries has any reason to
anticipate that any presently existing circumstances are likely to result
in the violation of any such statute, law, ordinance, regulation, rule,
judgment, decree or order which failure or violation could reasonably be
expected to have a Material Adverse Effect.
6.14 ERISA.
Neither such Borrower, any Subsidiary nor any ERISA Affiliate
maintains or contributes to any Benefit Plan other than those listed on
Schedule 6.14 annexed hereto. Each Benefit Plan has been and is being
maintained and funded in accordance with its terms and in compliance in
all material respects with all provisions of ERISA and the Internal
Revenue Code applicable thereto. Such Borrower, each of its Subsidiaries
and each ERISA Affiliate have fulfilled all obligations related to the
minimum funding standards of ERISA and the Internal Revenue Code for each
Benefit Plan, are in compliance in all material respects with the
currently applicable provisions of ERISA and of the Internal Revenue Code
and have not incurred any liability (other than routine liability for
premiums) under Title IV of ERISA. No Termination Event has occurred nor
has any other event occurred that may result in such a Termination Event.
No event or events have occurred in connection with which such Borrower,
any of its Subsidiaries, any ERISA Affiliate, any fiduciary of a Benefit
Plan or any Benefit Plan, directly or indirectly, could be subject to any
material liability, individually or in the aggregate, under ERISA, the
Internal Revenue Code or any other law, regulation or governmental
order or under any agreement, instrument, statute, rule of law or
regulation pursuant to or under which any such entity has agreed to
indemnify or is required to indemnify any person against liability
incurred under, or for a violation or failure to satisfy the requirements
of, any such statute, regulation or order.
6.15 COMPLIANCE WITH ENVIRONMENTAL LAWS.
Except as disclosed on Schedule 6.15 attached hereto or as could not
reasonably be expected to have a Material Adverse Effect, individually or
in the aggregate, (a) the operations of such Borrower and each of its
Subsidiaries comply with all applicable federal, state or local
environmental, health and safety statutes, regulations, ordinances, or
similar provisions having the force and effect of law and (b) none of the
operations of such Borrower or any of its Subsidiaries is the subject of
any judicial or administrative proceeding alleging the violation of any
federal, state or local environmental, health or safety statute,
regulation, ordinance, or similar provisions having the force and effect
of law. Except as disclosed on Schedule 6.15 or as could not reasonably be
expected to
<PAGE> 72
have a Material Adverse Effect, individually or in the aggregate, none of
the operations of such Borrower or any of its Subsidiaries is the subject
of any federal or state investigation evaluating whether such Borrower or
any of its Subsidiaries disposed any hazardous or toxic waste, substance
or constituent or other substance at any site that may require remedial
action, or any federal or state investigation evaluating whether any
remedial action is needed to respond to a release of any hazardous or
toxic waste, substance or constituent, or other substance into the
environment. Except as disclosed on Schedule 6.15 or as could not
reasonably be expected to have a Material Adverse Effect, individually or
in the aggregate, neither such Borrower nor any of its Subsidiaries have
filed any notice under any federal or state law indicating past or present
treatment, storage or disposal of a hazardous waste or reporting a spill
or release of a hazardous or toxic waste, substance or constituent, or
other substance into the environment. Except as disclosed on Schedule
6.15 or as could not reasonably be expected to have a Material Adverse
Effect, individually or in the aggregate, neither such Borrower nor any of
its Subsidiaries have any contingent liability of which such Borrower has
knowledge or reasonably should have knowledge in connection with any
release of any hazardous or toxic waste, substance or constituent, or
other substance into the environment, nor has such Borrower or any of its
Subsidiaries received any notice, letter or other indication of potential
liability arising from the disposal of any hazardous or toxic waste,
substance or constituent or other substance into the environment.
6.16 USE OF PROCEEDS.
All proceeds of the Loans will be used only in accordance with
Section 7.13 hereof.
6.17 INTELLECTUAL PROPERTY.
Such Borrower possesses adequate assets, licenses, patents, patent
applications, copyrights, service marks, trademarks and tradenames to
continue to conduct its business as heretofore conducted by it. Schedule
6.17 attached hereto sets forth (a) all of the federal, state and foreign
registrations of trademarks, service marks and other marks, trade names or
other trade rights of such Borrower and its Subsidiaries, and all pending
applications for any such registrations, (b) all of the patents and
copyrights of such Borrower and its Subsidiaries and all pending
applications therefor and (c) all other trademarks, service marks and
other marks, trade names and other trade rights used by such Borrower or
any of its Subsidiaries in connection with their businesses (collectively,
the "Proprietary Rights"). Such Borrower and its Subsidiaries are
collectively the owners of each of the trademarks listed on Schedule 6.17 as
indicated on such schedule, and no other Person has the right to use any of
such marks in commerce either in the identical form or in such near resemblance
thereto as may be likely to cause confusion or to cause mistake or to deceive.
Each of the trademarks listed on Schedule 6.17 is a federally registered
trademark of such Borrower or its Subsidiaries having the registration number
and issue date set forth on Schedule 6.17. The Proprietary Rights listed on
Schedule 6.17 are all those used in the businesses of such Borrower and its
Subsidiaries. Except as disclosed on Schedule 6.17, no person has a right
to receive any royalty or similar payment in respect of any Proprietary
Rights pursuant to any contractual arrangements entered into by such
Borrower, or any of its Subsidiaries and no person otherwise has a right
to receive any royalty or similar payment in
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respect of any such Proprietary Rights except as disclosed on Schedule
6.17. Neither such Borrower nor any of its Subsidiaries has granted any
license or sold or otherwise transferred any interest in any of the
Proprietary Rights to any other person. The use of each of the
Proprietary Rights by such Borrower and its Subsidiaries is not infringing
upon or otherwise violating the rights of any third party in or to such
Proprietary Rights, and no proceeding has been instituted against or
notice received by such Borrower or any of its Subsidiaries that are
presently outstanding alleging that the use of any of the Proprietary
Rights infringes upon or otherwise violates the rights of any third party
in or to any of the Proprietary Rights. Neither such Borrower nor any of
its Subsidiaries have given notice to any Person that it is infringing on
any of the Proprietary Rights and to the best of such Borrower's
knowledge, no Person is infringing on any of the Proprietary Rights. All
of the Proprietary Rights of such Borrower and its Subsidiaries are valid
and enforceable rights of such Borrower and its Subsidiaries and will not
cease to be valid and in full force and effect by reason of the execution
and delivery of this Credit Agreement or the Credit Documents or the
consummation of the transactions contemplated hereby or thereby.
6.18 LICENSES AND PERMITS.
Such Borrower and each of its Subsidiaries have obtained and hold in
full force and effect, all material franchises, licenses, leases, permits,
certificates, authorizations, qualifications, easements, rights of way and
other rights and approvals which are necessary or appropriate for the
operation of their businesses as presently conducted and as proposed to be
conducted. Neither such Borrower nor any of its Subsidiaries is in
violation of the terms of any such franchise, license, lease, permit,
certificate, authorization, qualification, easement, right of way, right
or approval in any such case which could reasonably be expected to have a
Material Adverse Effect.
6.19 TITLE TO PROPERTY.
Such Borrower has (i) good and marketable fee simple title to or
valid leasehold interests in all of its real property, including, without
limitation, the Real Estate (all such real property and the nature of such
Borrower's or any Subsidiary's interest therein is disclosed on Schedule
6.19) and (ii) good and marketable title to all of its other property
(including without limitation, all real and other property in each case as
reflected in the Financial Statements delivered to the Agent hereunder),
other than, with respect to properties described in clause (ii) above,
properties disposed of in the ordinary course of business or in any manner
otherwise permitted under this Credit Agreement since the date of the most
recent audited consolidated balance sheet of such Borrower, and in each
case subject to no Liens other than Permitted Liens. Such Borrower and its
Subsidiaries enjoy peaceful and undisturbed possession of all its real
property, including, without limitation, the Real Estate, and there is no
pending or, to the best of their knowledge, threatened condemnation proceeding
relating to any such real property. The leases with respect to the leased
property, together with any leases of real property entered into by such
Borrower after the date hereof, are referred to collectively as the
"Leases." All of the Structures and other tangible assets owned, leased
or used by such Borrower or any of its Subsidiaries in the conduct of
their respective businesses are (a) insured to the extent and in a manner
customary in the industry in which such Borrower or such Subsidiaries are
engaged, (b) structurally sound with no known material defects, (c) in
good operating condition and repair, subject to ordinary wear and tear,
(d) not in need of maintenance or repair except for ordinary, routine
maintenance and repair the cost of which would not be material, (e)
sufficient for the operation of the businesses of such Borrower
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and its Subsidiaries as presently conducted thereon and (f) in conformity
with all applicable laws, ordinances, orders, regulations and other
requirements (including applicable zoning, environmental, motor vehicle
safety, occupational safety and health laws and regulations) relating
thereto, except where the failure to conform could not reasonably be
expected to have a Material Adverse Effect.
6.20 LABOR MATTERS.
Neither such Borrower nor any of its Subsidiaries is engaged in any
unfair labor practice. There is (a) no unfair labor practice complaint
pending against such Borrower or any of its Subsidiaries or, to the best
knowledge of such Borrower, threatened against any of them, before the
National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is so pending
against such Borrower or any of its Subsidiaries or, to the best knowledge
of such Borrower, threatened against any of them, (b) no strike, labor
dispute, slowdown or stoppage pending against either of such Borrower or
any of its Subsidiaries or, to the best knowledge of such Borrower,
threatened against any of them, and (c) no union representation questions
with respect to the employees of such Borrower or any Subsidiaries and no
union organizing activities, except for any such complaint, grievance,
arbitration, strike, labor dispute, slowdown or stoppage, union
representation questions or organizing activities which could not
reasonably be expected to have a Material Adverse Effect.
6.21 INVESTMENT COMPANY.
Neither such Borrower nor any of its Subsidiaries is (a) an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, (b)
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, as amended, or (c) subject to any other law which
purports to regulate or restrict its ability to borrow money or to
consummate the transactions contemplated by this Credit Agreement or the
other Credit Documents or to perform its obligations hereunder or
thereunder.
6.22 MARGIN SECURITY.
Such Borrower does not own any margin stock and no portion of the proceeds
of any Loans or Letters of Credit shall be used by the Borrowers for the purpose
of purchasing or carrying any "margin stock" (as defined in Regulation G of the
Board of Governors of the Federal Reserve System) or for any other purpose which
violates the provisions or Regulation G, T, U or X of said Board of Governors or
for any other purpose in violation of any applicable statute or regulation, or
of the terms and conditions of this Credit Agreement.
6.23 NO EVENT OF DEFAULT.
No Default or Event of Default has occurred and is continuing.
6.24 TAXES AND TAX RETURNS.
(a) Except as set forth on Schedule 6.24, such Borrower and its
Subsidiaries (and any affiliated group as defined in Section 1504 of
the Code or any analogous combined, consolidated, or unitary group
defined under state, local or foreign income tax law (an "Affiliated
Group") of which such Borrower or any of its Subsidiaries are now or
have been members) have timely filed (inclusive of any permitted
extensions) with the appropriate
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taxing authorities all material returns (including without
limitation, information returns and other material information, in
respect of Taxes required to be filed through the Closing Date and
will timely file (inclusive of any permitted extensions) any such
material returns required to be filed on and after the Closing Date
and such returns are true and accurate in all material respects. As
of the Closing Date, except as specified in Schedule 6.24 hereto,
neither such Borrower nor any of its Subsidiaries, nor any Affiliated
Group of which such Borrower or any of its Subsidiaries are members,
has requested any extension of time within which to file returns
(including without limitation information returns) in respect of any
Taxes.
(b) All Taxes, in respect of periods beginning prior to the
Closing Date, have been timely paid, or will be timely paid, or an
adequate reserve has been established therefor, as set forth in
Schedule 6.24 or in the Financials.
(c) Except as set forth in Schedule 6.24, no material
deficiencies for Taxes have been claimed, proposed or assessed by any
taxing or other governmental authority against such Borrower or any
of its Subsidiaries and no material tax liens have been filed as of
the Closing Date. Except as set forth in Schedule 6.24, there are no
pending or, to the best of such Borrower's knowledge, threatened
audits, investigations or claims for or relating to any material
liability in respect of Taxes. As of the Closing Date, except as set
forth in Schedule 6.24, no extension of a statute of limitations
relating to Taxes is in effect with respect to such Borrower or any
of its Subsidiaries.
6.25 NO OTHER INDEBTEDNESS.
Such Borrower has no Indebtedness that is senior, pari passu or
subordinated in right of payment to their Indebtedness to the Lenders
hereunder, except for Permitted Indebtedness.
6.26 STATUS OF ACCOUNTS.
Each account receivable of such Borrower is based on an actual and bona
fide sale and delivery of goods or rendition of services to customers, made by
such Borrower in the ordinary course of its business, except for those accounts
receivable made by such Borrower outside the ordinary course of business which,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect; the goods and inventory being sold or leased and the
accounts receivable created are its exclusive property and are not and shall not
be subject to any Lien, consignment arrangement, encumbrance, security interest
or financing statement whatsoever, other than the Permitted Liens; and such
Borrower's customers have accepted the goods or services, owe and are obligated
to pay the full amounts stated in the invoices according to their terms, without
any dispute, offset, defense, counterclaim or contra that could reasonably be
expected to have, when aggregated with any such other disputes, offsets,
defenses, counterclaims or contras, a Material Adverse Effect. Such Borrower
confirms to the Lenders that any and all taxes or fees relating to its business,
its sales, the Accounts or the goods relating thereto, are its sole
responsibility and that same will be paid by such Borrower when due (unless duly
contested and adequately reserved for) and that none of said taxes or fees is or
will become a lien on or claim against the Accounts.
6.27 REPRESENTATIONS AND WARRANTIES.
Each of the representations and warranties made in the Operative
Documents by each of the parties thereto was true and correct in all
material respects when made. As of the Closing Date, each of the
representations and warranties
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made in the Operative Documents by the Borrowers is true and correct in
all material respects and such representations and warranties are hereby
incorporated herein by reference with the same effect as though set forth
in their entirety herein, as qualified therein.
6.28 MATERIAL CONTRACTS.
Attached hereto as Schedule 6.28 is a true, correct and complete list
of all the Material Contracts currently in effect on the date hereof. All
of the Material Contracts are in full force and effect.
6.29 SURVIVAL OF REPRESENTATIONS.
All representations made by such Borrower in this Credit Agreement
and in any other Credit Document executed and delivered in connection
herewith shall survive the execution and delivery hereof and thereof but
shall terminate upon payment in full of the Obligations (other than
contingent indemnity obligations).
6.30 AFFILIATE TRANSACTIONS.
Except as set forth on Schedule 6.30 hereto, neither such Borrower
nor any Subsidiaries is a party to or bound by any agreement or
arrangement (whether oral or written) to which any Affiliate of such
Borrower or any Subsidiary is a party except (i) in the ordinary course of
and pursuant to the reasonable requirements of such Borrower's or such
Subsidiary's business and (ii) upon fair and reasonable terms no less
favorable to such Borrower and such Subsidiary than it could obtain in a
comparable arm's-length transaction with an unaffiliated Person.
6.31 ACCURACY AND COMPLETENESS OF INFORMATION.
All factual information heretofore, contemporaneously or hereafter
furnished by or on behalf of the Borrowers or any of their Subsidiaries to the
Agent, any Lender, or the Independent Accountant for purposes of or in
connection with this Credit Agreement or any Credit Documents, or any
transaction contemplated hereby or thereby is or will be true and accurate in
all material respects on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary to
make such information not misleading at such time. There is no fact now known
to any officer of any Borrower or any of its Subsidiaries which has, or would
have, a Material Adverse Effect which fact has not been set forth herein, in the
Financials, or in any certificate, opinion or other written statement made or
furnished by any Borrower to the Agent.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as this Credit Agreement is in effect or any amounts payable
hereunder or under any other Credit Document shall remain outstanding, and
until all the Commitments hereunder shall have terminated, each Borrower
agrees that, unless the Required Lenders shall have otherwise consented in
writing:
7.1 FINANCIAL INFORMATION.
The Company will furnish to the Lenders the following information
within the following time periods:
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(a) as soon as available, and in any event within 90 days after
the close of each fiscal year of the Company, a consolidated and
consolidating balance sheet and income statement of the Company and
its Subsidiaries, as of the end of such fiscal year, together with
related consolidated and consolidating statements of operations and
retained earnings and of cash flows for such fiscal year, setting
forth in comparative form consolidated and consolidating figures for
the preceding fiscal year to the extent applicable, all such
financial information described above to be in reasonable form and
detail and audited by independent certified public accountants of
recognized national standing reasonably acceptable to the Agent and
whose opinion shall be to the effect that such financial statements
have been prepared in accordance with GAAP (except for changes with
which such accountants concur) and shall not be limited as to the
scope of the audit or qualified as to the status of the Company and
its Subsidiaries as a going concern;
(b) as soon as available, and in any event within 30 days after
the close of each month, a consolidated and consolidating balance
sheet and income statement of the Company and its Subsidiaries
(provided, that financial information for a newly Acquired Company
shall not be required to be included in such financial statements
until the next monthly period following the month in which the
Acquisition of such Acquired Company occurred), as of the end of such
month, together with related consolidated and consolidating
statements of operations and of cash flows for such month in each
case setting forth (i) in comparative form consolidated and
consolidating figures for the corresponding monthly period and
year-to-date period of the preceding fiscal year, (ii) year-to-date
consolidated and consolidating figures and (iii) in comparative form
consolidated and consolidating figures for the corresponding period
set forth in the annual budget and business plan delivered pursuant
to Section 7.1(f), all such financial information described above to
be in reasonable form and detail and reasonably acceptable to the
Agent, and accompanied by a certificate of the chief financial
officer of the Company to the effect that such monthly financial
statements fairly present in all material respects the financial
condition of the Company and its Subsidiaries and have been prepared
in accordance with GAAP, subject to changes resulting from audit and
normal year-end audit adjustments;
(c) at the time of delivery of any annual financial statements
provided for in Section 7.1(a) and any monthly financial statements
provided for in Section 7.1(b) above which coincides with the end of any
fiscal quarter of the Company, a certificate of the chief financial officer
of the Company substantially in the form of Exhibit K, (i) demonstrating
compliance with the financial covenants contained in Article VIII by
calculation thereof as of the end of each such fiscal quarter and (ii)
stating that no Default or Event of Default exists, or if any Default or
Event of Default does exist, specifying the nature and extent thereof and
what action the Borrowers propose to take with respect thereto; in
addition, together with the annual financial statements provided for in
Section 7.1(a), the Company shall provide to the Agent and the Lenders a
certificate of the chief financial officer of the Company as to the amount
of Excess Cash Flow for the immediately preceding fiscal year showing in
reasonable detail the calculation thereof;
(d) a report on the Borrowing Base (a "Borrowing Base
Certificate") substantially in the form of Exhibit L (or in such
other form containing similar information as the Company and the
Agent may agree) (i) on or before the 15th day after the end of each
month
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(as of the last day of such month), together with a monthly summary
of Parts and Supplies Inventory, a monthly summary of Rental
Equipment, a monthly summary of New Equipment, a monthly Rental
Equipment summary roll forward report, a monthly summary of accounts
receivable aging and accounts payable aging, a monthly summary of
existing Purchase Money Liens and Capital Lease Liens and the
Indebtedness secured thereby and monthly sales and cash receipt
reports (each as of the last day of such month), (ii) simultaneously
with the consummation of any Asset Disposition for which a mandatory
prepayment is required hereunder giving effect to such Asset
Disposition and (iii) promptly as of any other date requested by the
Agent, together in each case with such other supporting data as may
reasonably be requested by the Agent;
(e) promptly upon receipt thereof, copies of all management
letters and other material reports which are submitted to any
Borrower by its Independent Accountant in connection with any annual
or interim audit of the books of such Borrower made by such
accountants;
(f) no later than 30 days after the beginning of each fiscal
year, a budget and business plan for such fiscal year of the Company
which includes (i) a projected consolidated and consolidating balance
sheet and statement of income of the Borrowers for such fiscal year
and a projected consolidated and consolidating statement of cash
flows of the Borrowers for such fiscal year, (ii) projected
consolidated and consolidating balance sheets, statements of income
and statements of cash flows of the Borrowers on a monthly basis for
such fiscal year and (iii) projected usage and excess availability of
Revolving Loans on a monthly basis for such fiscal year;
(g) promptly upon receipt thereof, copies of all notices
delivered to the Borrowers or sent by the Borrowers with respect to
Subordinated Debt, including, without limitation, any notice of
default (the Borrowers expressly agreeing to furnish all such notices
by telecopy);
(h) promptly and in any event within two (2) Business Days after
a Responsible Officer becomes aware of the occurrence of a Default or
Event of Default, a certificate of the chief executive officer or
chief financial officer of the Company specifying the nature thereof
and the Borrowers' proposed response thereto, each in reasonable
detail; and
(i) with reasonable promptness, such other data as the Agent or
any of the Lenders may reasonably request.
7.2 INVENTORY.
Within thirty (30) days after the end of each month, upon the request
of the Agent from time to time, the Borrowers will provide to the Agent
written statements listing items of Inventory in reasonable detail as
requested by the Agent. The Borrowers will conduct annually a physical
count of their Inventory and a copy of such count will be
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promptly supplied to the Agent accompanied by a report of the value
(valued at FIFO) of such Inventory; provided that the Borrowers will
conduct such a physical count at such other times and as of such dates as
the Agent shall reasonably request.
7.3 CORPORATE EXISTENCE.
Each Borrower and each of its Subsidiaries (a) will maintain their
corporate existence, will maintain in full force and effect all material
licenses, bonds, franchise, leases, trademarks and qualifications to do
business, (b) will obtain or maintain patents, licenses, contracts and
other rights necessary or desirable to the profitable conduct of their
businesses, (c) will continue in, and limit their operations to, the same
general lines of business as that presently conducted by them and (d) will
comply with all applicable laws and regulations of any federal, state or
local governmental authority, except in each case when noncompliance or
nonmaintenance with each of the foregoing would not, in the aggregate,
have a Material Adverse Effect.
7.4 ERISA.
The Borrowers will deliver to the Agent, at the Borrowers' expense,
the following information at the times specified below:
(a) within ten (10) Business Days after any Borrower, any
Subsidiary or any ERISA Affiliate knows or has reason to know that a
Termination Event has occurred, a written statement of the chief
financial officer of the Company describing such Termination Event
and the action, if any, which the Borrowers or other such entities
have taken, are taking or propose to take with respect thereto, and
when known, any action taken or threatened by the Internal Revenue
Service, DOL or PBGC with respect thereto;
(b) within ten (10) Business Days after any Borrower, any
Subsidiary or any ERISA Affiliate knows or has reason to know that a
prohibited transaction (as defined in Sections 406 of ERISA and 4975
of the Internal Revenue Code) has occurred, a statement of the chief
financial officer of the Company describing such transaction and the
action which the Borrowers or other such entities have taken, are
taking or propose to take with respect thereto;
(c) upon the Agent's request, copies of each annual report (form
5500 series), including all schedules and attachments thereto, filed
with respect to each Benefit Plan;
(d) upon the Agent's request, copies of each actuarial report
for any Benefit Plan or Multiemployer Plan and each annual report for
any Multiemployer Plan;
(e) within three (3) Business Days after the filing thereof
with the Internal Revenue Service, a copy of each funding waiver
request filed with respect to any Benefit Plan and all communications
received by any Borrower, any Subsidiary or any ERISA Affiliate with
respect to such request;
(f) within ten (10) Business Days upon the occurrence thereof,
notification of any increase in the benefits of any existing Benefit
Plan or the establishment of any new Benefit Plan or the commencement
of contributions to any Benefit Plan to which any Borrower, any
Subsidiary or any ERISA Affiliate was not previously contributing;
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(g) within three (3) Business Days after receipt by any
Borrower, any Subsidiary or any ERISA Affiliate of the PBGC's
intention to terminate a Benefit Plan or to have a trustee appointed
to administer a Benefit Plan, copies of each such notice;
(h) within ten (10) Business Days after receipt by any Borrower,
any Subsidiary or any ERISA Affiliate of any unfavorable
determination letter or, upon the Agent's request, any favorable
determination letter, from the Internal Revenue Service regarding the
qualification of a Plan under Section 401(a) of the Internal Revenue
Code, copies of each such letter;
(i) within ten (10) Business Days after receipt by any Borrower,
any Subsidiary or any ERISA Affiliate of a notice regarding the
imposition of withdrawal liability, copies of each such notice;
(j) within ten (10) Business Days after any Borrower, any
Subsidiary or any ERISA Affiliate fails to make a required
installment or any other required payment under Section 412 of the
Internal Revenue Code on or before the due date for such installment
or payment, a notification of such failure; and
(k) within three (3) Business Days after any Borrower, any
Subsidiary or any ERISA Affiliate know (i) a Multiemployer Plan has
been terminated, (ii) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or
(iii) the PBGC has instituted or will institute proceedings under
Section 4042 of ERISA to terminate a Multiemployer Plan, a written
statement setting forth any such event or information.
For purposes of this Section 7.4, any Borrower, any Subsidiary and
any ERISA Affiliate shall be deemed to know all facts known by the
administrator of any Benefit Plan of which such entity is the plan
sponsor.
The Borrowers will establish, maintain and operate all Benefit Plans
to comply in all material respects with the provisions of ERISA, Internal
Revenue Code, and all other applicable laws, and the regulations and
interpretations thereunder other than to the extent that the Borrowers are
in good faith contesting by appropriate proceedings the validity or
implication of any such provision, law, rule, regulation or
interpretation.
7.5 PROCEEDINGS OR ADVERSE CHANGES.
Each Borrower will as soon as possible, and in any event within five
(5) days after any Responsible Officer of such Borrower learns of the
following, give written notice to the Agent of (a) any material
proceeding(s) being instituted or threatened to be instituted by or
against any such Borrower or any of its Subsidiaries in any federal,
state, local or foreign court or before any commission or other regulatory
body (federal, state, local or foreign), and (b) any
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Material Adverse Change. Provision of such notice by such Borrower will
not constitute a waiver or excuse of any Default or Event of Default
occurring as a result of such changes or events.
7.6 ENVIRONMENTAL MATTERS.
Except where the failure to do so could not reasonably be expected to have
a Material Adverse Effect, each Borrower will conduct its business and the
businesses of each of its Subsidiaries so as to comply in all material respects
with all environmental laws, regulations and, ordinances, in all jurisdictions
in which any of them is or may at any time be doing business including, without
limitation, environmental land use, occupational safety or health laws,
regulations, ordinances, requirements or permits in all jurisdictions in which
any of them is or may at any time be doing business, except to the extent that
any Borrower or any of its Subsidiaries are contesting, in good faith by
appropriate legal proceedings, any such law, regulation, direction, ordinance,
criteria, guideline, or interpretation thereof or application thereof; provided,
further, that each Borrower and each of its Subsidiaries will comply with the
order of any court or other governmental body of the applicable jurisdiction
relating to such laws unless such Borrower or its Subsidiaries shall currently
be prosecuting an appeal or proceedings for review and shall have secured a stay
of enforcement or execution or other arrangement postponing enforcement or
execution pending such appeal or proceedings for review. If any Borrower or any
of its Subsidiaries shall (a) receive notice that any violation of any federal,
state or local environmental law, regulation or ordinance, may have been
committed or is about to be committed by such Borrower or any of its
Subsidiaries, (b) receive notice that any administrative or judicial complaint
or order has been filed or is about to be filed against such Borrower or any of
its Subsidiaries alleging violations of any federal, state or local
environmental law, regulation or ordinance, or requiring such Borrower or any of
its Subsidiaries to take any action in connection with the release of toxic or
hazardous substances into the environment or (c) receive any notice from a
federal, state, or local governmental agency or private party alleging that such
Borrower or any of its Subsidiaries may be liable or responsible for costs
associated with a response to or cleanup of a release of a toxic or hazardous
substance into the environment or any damages caused thereby, the Borrowers will
provide the Agent with a copy of such notice within fifteen (15) days after the
receipt thereof by the applicable Borrower or any of its Subsidiaries. Within
fifteen (15) days after any Borrower learns of the enactment or promulgation of
any federal, state or local environmental law, regulation or ordinance, which
could reasonably be expected to have a Material Adverse Effect, such Borrower
will provide the Agent with notice thereof. Each Borrower will promptly take
all actions necessary to prevent the imposition of any Liens on any of its
properties arising out of or related to any environmental matters. At the
request of the Agent based upon Agent's reasonable belief that any Borrower has
violated a provision of this Section 7.6, and at the sole cost and expense of
the Borrowers, the Borrowers will retain an environmental consulting firm,
satisfactory to the Agent in its commercially reasonable judgment, to conduct an
environmental review with respect to such matters and provide to the Agent and
each Lender a copy of any reports delivered in connection therewith.
7.7 BOOKS AND RECORDS.
Each Borrower will, and will cause each of its Subsidiaries to,
maintain books and records pertaining to the Collateral in such detail,
form and scope as is consistent with good business practice. Each
Borrower agrees that the Agent or its agents may enter upon the premises
of each Borrower or any of its Subsidiaries at any time and from time to
time, during normal business hours upon reasonable prior notice, and at
any time at all on and after the occurrence
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of an Event of Default which continues beyond the expiration of any grace
or cure period applicable thereto, and which has not otherwise been waived
by the Agent or cured to the Agent's reasonable satisfaction, for the
purpose of (a) inspecting the Collateral (including field examinations
conducted by the Agent's examination staff at the Borrowers' expense,
which expense shall be reasonable), (b) inspecting and/or copying (at
Borrowers' expense) any and all records pertaining thereto, (c) discussing
the affairs, finances and business of any Borrower or with any officers,
employees and directors of any Borrower with the Independent Accountant
and (d) verifying Eligible Accounts Receivable, Eligible Parts and
Supplies, Eligible Rental Equipment and Eligible New Equipment. Each
Borrower will use its best efforts to make available to the Agent or any
Lender any records handled or maintained for such Borrower by any other
company or entity. The Lenders, in the reasonable discretion of the
Agent, may accompany the Agent at their sole expense in connection with
the foregoing inspections. Each Borrower agrees to afford the Agent
thirty (30) days prior written notice of any change in the location of its
chief executive office or place of business from the locations specified
in Schedule 6.7, and to execute in advance of such change, cause to be
filed and/or delivered to the Agent any financing statements or other
documents required by the Agent, all in form and substance satisfactory to
the Agent. Each Borrower further agrees to afford the Agent prompt
written notice of any change in the location of any Collateral from the
locations specified in Schedule 6.7, and to execute in connection with
such change, cause to be filed and/or delivered to the Agent any financing
statements or other documents required by the Agent, all in form and
substance satisfactory to the Agent. Each Borrower agrees to advise the
Agent promptly, in sufficient detail, of any substantial change relating
to the type, quantity or quality of the Collateral or any event which
could have a material adverse effect on the value of the Collateral or on
the security interests granted to the Lenders therein. In addition, each
Borrower agrees to furnish any Lender with such other information
regarding its business affairs and financial condition as such Lender may
reasonably request from time to time.
7.8 COLLATERAL RECORDS.
Each Borrower will, and will cause each of its Subsidiaries to,
execute and deliver to the Agent, from time to time, solely for the
Agent's convenience in maintaining a record of the Collateral, such
written statements and schedules as the Agent may reasonably require,
including without limitation those described in Section 7.1 of this Credit
Agreement, designating, identifying or describing the Collateral pledged
to the Lenders hereunder. Each Borrower's or any Subsidiary's failure,
however, to promptly give the Agent such statements or schedules shall not
affect, diminish, modify or otherwise limit the Lenders' security interests
in the Collateral. Such Borrower agrees to maintain such books and records
regarding Accounts and the other Collateral as the Agent may reasonably
require, and agrees that such books and records will reflect the Lenders'
interest in the Accounts and such other Collateral.
7.9 SECURITY INTERESTS.
(a) Each Borrower and its Subsidiaries will at their expense, for so
long as the Credit Documents remain effective, warrant and defend the
Collateral against any and all claims, demands and Liens (other than
Permitted Liens) of any third party. The Borrowers will not, and will not
permit any of their Subsidiaries to, grant, create or permit to exist, any
Lien upon the Collateral, or any proceeds thereof, in favor of any third
party (other than Permitted Liens).
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Each Borrower agrees to comply with the requirements of all state and
federal laws in order to grant to the Lenders valid and perfected first
security interest in the Collateral (subject only to Permitted Liens).
The Agent is hereby authorized by each Borrower to file any financing
statements covering the Collateral whether or not any Borrower's signature
appears thereon. Each Borrower agrees to do whatever the Agent may
reasonably request, from time to time, by way of: filing notices of
liens, financing statements, fixture filings and amendments, renewals and
continuations thereof; cooperating with the Agent's custodians; keeping
stock records; obtaining waivers from landlords and mortgagees and from
warehousemen, fillers, processors and packers and their respective
landlords and mortgagees; paying claims, which might if unpaid, become a
Lien (other than a Permitted Lien) on the Collateral; and performing such
further acts as the Agent may reasonably require in order to effect the
purposes of this Credit Agreement and the other Credit Documents. Any and
all fees, costs and expenses of whatever kind and nature (including any
Taxes, reasonable attorneys' fees or costs for insurance of any kind),
which the Agent may incur with respect to the Collateral or the
Obligations: in filing public notices; in preparing or filing documents;
making title examinations or rendering opinions; in protecting,
maintaining, or preserving the Collateral or its interest therein; in
enforcing or foreclosing the Liens hereunder, whether through judicial
procedures or otherwise; or in defending or prosecuting any actions or
proceedings arising out of or relating to its transactions with any
Borrower or any of its Subsidiaries under this Credit Agreement or any
other Credit Document, will be borne and paid by the Borrowers. If same
are not promptly paid by the Borrowers, the Agent may pay same on the
Borrowers' behalf, and the amount thereof shall be an Obligation secured
hereby and due to the Agent on demand.
(b) In accordance with the foregoing clause (a) of this Section 7.9,
each Borrower shall promptly notify the Agent of any delivery of Rental
Equipment to a state or county of a state in which a financing statement
covering the property of such Borrower or any of its Subsidiaries has not
yet been filed and shall promptly prepare such financing statement naming
the Agent as "Secured Party" for the Lenders and cause it to be duly filed
in the appropriate filing office in such state. In addition, each
Borrower shall (i) within sixty (60) days following the Closing Date and
(ii) within thirty (30) days following the acquisition of any equipment or
the consummation of a Permitted Acquisition, cause each document of title
evidencing such Borrower's or any of its Subsidiaries' ownership of an
item of equipment to duly name on the face thereof the Agent as lienholder
of such title for the benefit of the Lenders.
(c) Commencing on the ninetieth (90th) day following the Closing
Date, all equipment leases entered into by the Borrowers with their
respective customers on and after such date, shall contain satisfactory
provisions to the effect that each such lease has been assigned to the
Agent for the benefit of the Lenders as collateral security for the
Obligations.
7.10 INSURANCE; CASUALTY LOSS.
Each Borrower will, and will cause each of its Subsidiaries to,
maintain public liability insurance, third party property damage insurance
and replacement value insurance on the Collateral under such policies of
insurance, with such insurance companies, in such amounts and covering
such risks as are commercially reasonable and customary in the industry in
which such Borrower or such Subsidiaries are engaged. In addition, the
Borrowers will obtain and maintain, within 60 days of the Closing Date,
general liability insurance in the minimum aggregate amount of $10,000,000
for all Borrowers and their Subsidiaries. All policies covering the
Collateral are to name the Borrowers and the Agent, on behalf of the
Lenders, as additional insureds and loss payees in case of loss, as their
interests may appear, and are to contain such other provisions as the
Agent may reasonably require to fully protect the Agent's interest in the
Collateral and to any payments to be made under such policies. True
copies of all original insurance policies are to be delivered to the Agent
on or prior to the Closing Date, premium prepaid, with the loss payable
endorsement in the Agent's favor, and shall provide for not less than
thirty (30) days prior written notice to the Agent, of the exercise of any
right of cancellation. In the event any Borrower or any of its
Subsidiaries fail to respond in a timely and appropriate
<PAGE> 84
manner (as determined by the Agent in its sole discretion) with respect to
collecting under any insurance policies required to be maintained under this
Section 7.10, the Agent shall have the right, in the name of the Agent, any
Borrower or any Subsidiary, to file claims under such insurance policies, to
receive and give acquittance for any payments that may be payable thereunder,
and to execute any and all endorsements, receipts, releases, assignments,
reassignments or other documents that may be necessary to effect the collection,
compromise or settlement of any claims under any such insurance policies. Each
Borrower will provide written notice to the Lenders of the occurrence of any of
the following events within five (5) Business Days after a Responsible Officer
of such Borrower learns of the occurrence of such event: any asset or property
owned or used by any Borrower or any of its Subsidiaries is (a) materially
damaged or destroyed, or suffers any other loss or (b) is condemned, confiscated
or otherwise taken, in whole or in part, or the use thereof is otherwise
diminished so as to render impracticable or unreasonable the use of such asset
or property for the purpose to which such asset or property was used immediately
prior to such condemnation, confiscation or taking, by exercise of the powers of
condemnation or eminent domain or otherwise, and in either case the amount of
the damage, destruction, loss or diminution in value of the Collateral is in
excess of $1,000,000 (each such event or occurrence in excess of $1,000,000
being herein referred to as a "Casualty Loss"). Each Borrower will diligently
file and prosecute its claim or claims for any award or payment in connection
with a Casualty Loss. In the event of a Casualty Loss, the Borrowers will pay
to the Agent, promptly upon receipt thereof, any and all insurance proceeds and
payments received by any Borrower or any of its Subsidiaries on account of
damage, destruction or loss of all or any portion of the Collateral. The Agent
may, at its election and in its sole discretion (and with the approval of the
Required Lenders if such Casualty Loss is in excess of $5,000,000), either (i)
apply the proceeds realized from Casualty Losses to payment of accrued and
unpaid interest on, or outstanding principal of, the Term Loans or the Revolving
Loans, as determined by the Agent, or (ii) pay such proceeds to the Borrowers to
be used to repair, replace or rebuild the asset or property or portion thereof
that was the subject of the Casualty Loss. After the occurrence and during the
continuance of an Event of Default, (A) no settlement on account of any such
Casualty Loss shall be made without the consent of the Required Lenders and (B)
the Agent may participate in any such proceedings and the Borrowers will deliver
to the Agent such documents as may be requested by the Agent to permit such
participation and will consult with the Agent, its attorneys and agents in the
making and prosecution of such claim or claims. Each Borrower hereby
irrevocably authorizes and appoints the Agent its attorney-in-fact, after the
occurrence and continuance of an Event of Default, to collect and receive for
any such award or payment and to file and prosecute such claim or claims, which
power of attorney shall be irrevocable and shall be deemed to be coupled with an
interest, and each Borrower shall, upon demand of the Agent, make, execute and
deliver any and all assignments and other instruments sufficient for the purpose
of assigning any such award or payment to the Agent for the benefit of the
Lenders, free and clear of any encumbrances of any kind or nature whatsoever.
7.11 TAXES.
Each Borrower will, and will cause each of its Subsidiaries to, pay,
when due, all Taxes lawfully levied or assessed against any Borrower, any
Subsidiary or any of the Collateral; provided, however, that no such Tax
need be paid if the same is being contested in good faith by appropriate
proceedings and if an
<PAGE> 85
adequate reserve or other appropriate provision shall have been made
therefor as required in order to be in conformity with GAAP.
7.12 COMPLIANCE WITH LAWS.
Each Borrower will, and will cause each of its Subsidiaries to,
comply with all laws, rules, regulations and orders, and all applicable
restrictions imposed by all Governmental Authorities, applicable to it and
its Property if noncompliance with any such law, rule, regulation, order
or restriction could reasonably be expected to have a Material Adverse
Effect.
7.13 USE OF PROCEEDS.
The proceeds of the Loans made and Letters of Credit issued hereunder
shall be used by the Borrowers solely to provide for the working capital
and general corporate needs of the Borrowers, including financing for
Closing Date Acquisitions and Future Acquisitions and to repay the Bridge
Loan and the Harris Note; provided, however, that in any event, no portion
of the proceeds of any Loans or Letters of Credit shall be used by the
Borrowers for the purpose of purchasing or carrying any "margin stock" (as
defined in Regulation G of the Board of Governors of the Federal Reserve
System) or for any other purpose which violates the provisions or
Regulation G, T, U or X of said Board of Governors or for any other
purpose in violation of any applicable statute or regulation, or of the
terms and conditions of this Credit Agreement.
7.14 FISCAL YEAR.
Each Borrower agrees that it will not change its fiscal year from a
year ending December 31 unless required by law, in which case such
Borrower will give the Agent at least 30 days prior written notice
thereof.
7.15 NOTIFICATION OF CERTAIN EVENTS.
Each Borrower agrees that it will promptly notify the Agent of the
occurrence of any of the following events:
(a) any Material Contract of any Borrower or any of its
Subsidiaries is terminated or amended in any material respect or any
new Material Contract is entered into (in which event each Borrower
shall provide the Agent with a copy of such Material Contract); or
(b) any of the material terms upon which suppliers to any
Borrower or any of its Subsidiaries do business with any Borrower or
any Subsidiary are changed or amended in a manner which could
reasonably be expected to have a Material Adverse Effect; or
(c) any order, judgment or decree in excess of $50,000 shall
have been entered against any Borrower or any of its Subsidiaries or
any of their respective properties or assets; or
(d) any notification of violation of any material law or
regulation or any inquiry shall have been received by any Borrower or
any of its Subsidiaries from any local, state, federal or foreign
governmental authority or agency.
7.16 ADDITIONAL BORROWERS.
<PAGE> 86
As soon as practicable and in any event within 30 days after any
Person becomes a direct or indirect Subsidiary of the Company, the
Borrowers will provide the Agent with written notice thereof setting forth
information in reasonable detail describing all of the assets of such
Person and shall (a) cause such Person to execute a Joinder Agreement in
substantially the same form as Exhibit M hereto, (b) pledge all of its
assets to the Agent pursuant to a security agreement in substantially the
form of the Security Agreement and otherwise in a form acceptable to the
Agent, (c) cause all of its Capital Stock to be delivered to the Agent
(together with undated stock powers signed in blank and pledged to the
Agent pursuant to an appropriate pledge agreement(s) in substantially the
form of the Pledge Agreement and otherwise in form acceptable to the
Agent), (d) cause such Person to execute Term Loan Notes and Revolving
Notes in favor of the Lenders and (e) deliver such other documentation as
the Agent may reasonably request in connection with the foregoing,
including, without limitation, appropriate UCC-1 financing statements,
Acknowledgment Agreements, certified resolutions and other organizational
and authorizing documents of such Person and favorable opinions of counsel
to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred
to above), all in form, content and scope reasonably satisfactory to the
Agent. The Company shall at all times own, directly or indirectly, 100
percent of the Capital Stock of the Subsidiary Borrowers and their
Subsidiaries.
7.17 SCHEDULES OF ACCOUNTS AND PURCHASE ORDERS.
In furtherance of the continuing assignment and security interest in the
Accounts of each Borrower granted pursuant to the Security Agreement, in
connection with the creation of Accounts, upon the reasonable request of the
Agent, each Borrower will execute and deliver to the Agent in such form and
manner as the Agent may reasonably require, solely for its convenience in
maintaining records of collateral, such confirmatory schedules of Accounts,
customer lists and other appropriate reports designating, identifying and
describing the Accounts. In addition, upon the Agent's reasonable request, each
Borrower will provide the Agent with copies of agreements with, or purchase
orders from, the customers of each Borrower and its Subsidiaries, and copies of
invoices to customers, proof of shipment or delivery and such other
documentation and information relating to said Accounts and other collateral as
the Agent may reasonably require. Failure to provide the Agent with any of the
foregoing shall in no way affect, diminish, modify or otherwise limit the
security interests granted herein. Each Borrower hereby authorizes the Agent to
regard such Borrower's or any Subsidiary's printed name or rubber stamp
signature on assignment schedules or invoices as the equivalent of a manual
signature by such Borrower's or such Subsidiary's authorized officers or agents.
7.18 COLLECTION OF ACCOUNTS.
Unless the Agent shall have, in its reasonable discretion, elected to
enforce, collect and receive all amounts owing on the Accounts, or an
Event of Default has occurred which continues beyond the expiration of the
applicable grace or cure period, or has not otherwise been waived by the
Agent (each a "Cash Management Event"), each Borrower may and will
enforce, collect and receive all amounts owing on the Accounts, for the
benefit, and on behalf, of the Lenders, but at the Borrowers' sole expense
in accordance with the provisions of Section 2.4(b) hereof; such privilege
shall terminate automatically, however, upon the occurrence of any Event
of Default which continues beyond the expiration of any applicable grace
or cure period, or which has not otherwise been waived by the Agent. Upon
the occurrence of a Cash Management Event (a) any checks, cash, notes or
other instruments or property received by any Borrower or any of its
Subsidiaries with respect to any Accounts shall be held by such Borrower
or such Subsidiary in trust for the benefit of the Lenders, separate from
such Borrower's or Subsidiary's own property and funds, and
<PAGE> 87
immediately turned over to the Agent in accordance with Section 2.4(b)
with proper assignments or endorsements and (b) no checks, drafts or other
instruments received by the Agent shall constitute final payment unless
and until such instruments have actually been collected.
7.19 NOTICE; CREDIT MEMORANDA; AND RETURNED GOODS.
Each Borrower will notify the Agent promptly of any matters
materially affecting the value, enforceability or collectibility of any
Account, and of all material customer disputes, offsets, defenses,
counterclaims, returns and rejections, and all reclaimed or repossessed
merchandise or goods, provided, however, that such notice shall only be
required as to any such matter that affects Accounts outstanding at any
one time from any account debtor having a value greater than $35,000. The
Borrower will prepare credit memoranda promptly (with duplicates to the
Agent upon its request for same) upon accepting returns or granting
allowances, and may continue to do so until the occurrence of an Event of
Default which continues beyond the expiration of the applicable grace or
cure period, or which has not otherwise been waived by the Agent. After
the occurrence and during the continuance of an Event of Default, each
Borrower agrees that all returned, reclaimed or repossessed merchandise or
goods shall be set aside by such Borrower, marked with the Lenders' name
and held by such Borrower for the Lenders' account as owner and assignee.
7.20 ACKNOWLEDGMENT AGREEMENTS.
Each Borrower will assist the Agent in obtaining executed
Acknowledgment Agreements from each of the warehousemen, processors,
packers, fillers, landlords and mortgagees with whom such Borrower
conducts business from time to time.
7.21 TRADEMARKS.
Each Borrower will do and cause to be done all things necessary to
preserve and keep in full force and effect all registrations of
trademarks, service marks and other marks, trade names or other trade
rights.
7.22 MAINTENANCE OF PROPERTY.
Each Borrower will, and will cause each of its Subsidiaries to, keep all
property useful and necessary to its respective business in good working order
and condition (ordinary wear and tear and damages from casualty and condemnation
excepted) in accordance with their past operating practices and not to commit or
suffer any waste with respect to any of its properties which could reasonably be
expected to have a Material Adverse Effect.
7.23 ANNUAL APPRAISAL OF RENTAL EQUIPMENT.
The Borrowers will, within 60 days after the end of each fiscal year,
deliver to each Lender and the Agent an appraisal of the orderly
liquidation value of the Rental Equipment as of the last day of such
fiscal year from an appraiser reasonably satisfactory to the Agent. Upon
the reasonable request of the Agent, the Borrowers shall deliver to the
Agent and the Lenders additional appraisals of the orderly liquidation
value of the Rental Equipment within 45 days of any such request. All
appraisals conducted pursuant to this Section 7.23 shall be at the
Borrowers' expense.
7.24 PLEDGED REAL ESTATE ASSETS.
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Upon the request of the Agent, each Borrower will, and will cause
each of its Subsidiaries to, cause (a) all of its owned real property and
(b) all of its leased real property, whether owned or leased as of, or
subsequent to, the Closing Date, to be subject at all times to first
priority, perfected and title insured Liens (other than Permitted Liens)
in favor of the Agent pursuant to the terms and conditions of such
security documents and instruments, in form and substance satisfactory to
the Agent, as the Agent shall reasonably request. In connection with any
mortgage in favor of the Agent delivered pursuant to this Section 7.24,
the Agent shall be entitled to receive a title report, title insurance,
such maps, plats or surveys as it may reasonably request, flood insurance
as required by law, evidence that the subject real property is in
compliance with all zoning and environmental laws and such other
information and documents as the Agent shall reasonably request. In
furtherance of the foregoing terms of this Section 7.24, each Borrower
agrees to promptly provide the Agent with written notice of the
acquisition by, or the entering into a leasing by, any Borrower or any of
its Subsidiaries of any real property assets having a market value greater
than $250,000 or annual lease payments in excess of $250,000, setting
forth in reasonable detail the location and a description of the real
property assets so acquired or leased.
7.25 REVISIONS OR UPDATES TO SCHEDULES.
If any of the information or disclosures provided on any of Schedules
6.7, 6.8, 6.9, 6.14, 6.17 or 6.19 or on Schedule 6.24, with respect to the
disclosure referred to in the second sentence of Section 6.24(c),
originally attached hereto become outdated or incorrect in any material
respect, the Borrowers shall deliver to the Agent and the Lenders as part
of the compliance certificate required pursuant to Section 7.1(c) such
revision or updates to such Schedule(s) as may be necessary or appropriate
to update or correct such Schedule(s), provided, that no such revisions or
updates to any such Schedule(s) shall be deemed to have amended, modified
or superseded such Schedule(s) as originally attached hereto, or to have
cured any breach of warranty or representation resulting from the
inaccuracy or incompleteness of any such Schedule(s), unless and until the
Required Lenders, in their sole and absolute discretion, shall have
accepted in writing such revisions or updates to such Schedule(s) or
unless such revision or updates to such Schedule(s) would not have a
Material Adverse Affect or would not result in a Material Adverse Change
and would not cause or result in a breach of a covenant hereunder or
otherwise cause or result in a Default or Event of Default hereunder.
ARTICLE VIII
FINANCIAL COVENANTS
So long as this Credit Agreement is in effect or any amounts payable
hereunder or under any other Credit Document shall remain outstanding, and
until all the Commitments hereunder shall have terminated, each Borrower
agrees that, unless the Required Lenders shall have otherwise consented in
writing:
8.1 CONSOLIDATED NET WORTH.
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The Borrowers shall maintain Consolidated Net Worth of not less than
(a) $20,500,000 at all times during the period commencing on the Closing
Date through and including December 30, 1997, (b) $21,000,000 at all times
during the period commencing on December 31, 1997 through and including
December 30, 1998, (c) $22,500,000 at all times during the period
commencing on December 31, 1998 through and including December 30, 1999,
(d) $25,000,000 at all times during the period commencing on December 31,
1999 through and including December 30, 2000 and (e) $28,000,000 at all
times thereafter.
8.2 LEVERAGE RATIO.
The Borrowers shall maintain a Leverage Ratio of not greater than
3.50 to 1.0 as of the last day of each fiscal quarter.
8.3 FIXED CHARGE COVERAGE RATIO.
The Borrowers shall maintain a Fixed Charge Coverage Ratio of not
less than 1.75 to 1.0 as of the last day of each fiscal quarter.
8.4 INTEREST/RENTAL EXPENSE COVERAGE RATIO.
The Borrowers shall maintain an Interest/Rental Expense Coverage
Ratio of not less than 3.50 to 1.0 as of the last day of each fiscal
quarter.
8.5 CONSOLIDATED CAPITAL EXPENDITURES.
The Borrowers shall not make Consolidated Capital Expenditures in
excess of (a) $15,000,000 during fiscal year 1997, (b) $16,000,000 during
fiscal year 1998, (c) $17,000,000 during fiscal year 1999, and (d)
$18,000,000 during any fiscal year thereafter.
ARTICLE IX
NEGATIVE COVENANTS
So long as this Credit Agreement is in effect or any amounts payable
hereunder or under any other Credit Document shall remain outstanding, and
until all the Commitments hereunder shall have terminated, each Borrower
agrees that, unless the Required Lenders shall have otherwise consented in
writing, it will not, and will not permit any of its Subsidiaries to:
9.1 RESTRICTIONS ON LIENS.
Mortgage, assign, pledge, transfer or otherwise permit any Lien or
judgment (whether as a result of a purchase money or title retention
transaction, or other security interest, or otherwise) to exist on any of
its assets or goods, whether real, personal or mixed, whether now owned or
hereafter acquired, except for Permitted Liens.
9.2 RESTRICTIONS ON ADDITIONAL INDEBTEDNESS.
Incur or create any liability or Indebtedness other than Permitted
Indebtedness.
9.3 RESTRICTIONS ON SALE OF ASSETS.
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Sell, lease, assign, transfer or otherwise dispose of any assets
(including stock of any Subsidiary of the Company) other than (a) sales of
Inventory in the ordinary course of business, (b) sale-leaseback
transactions permitted by Section 9.15 hereof, (c) sales in the ordinary
course of business of assets that are obsolete or that are no longer used
or useful in the conduct of such Borrower's or Subsidiary's business, (d)
sales in the ordinary course of business of assets (other than Inventory)
used in such Borrower's or Subsidiary's business that are worn out or in
need of replacement and that are replaced with assets of reasonably
equivalent value or utility, provided that the proceeds of sales of assets
made pursuant to this clause (d) shall be applied to replace such assets,
or a contract for such replacement shall be entered into, within 60 days
of any such sales, and (e) sales of assets of such Borrower or Subsidiary
approved by the Required Lenders in their reasonable discretion.
9.4 NO CORPORATE CHANGES.
(a) Merge or consolidate with any Person (unless (i) such merger or
consolidation is made in connection with a Permitted Acquisition or such
other transaction as shall be approved by the Required Lenders in their
reasonable discretion, (ii) such Borrower or its Subsidiary is the
survivor of such merger or consolidation and (iii) no Event of Default
would exist prior to or immediately after such merger or consolidation),
(b) alter or modify any Borrower's or any Subsidiary's Articles or
Certificate of Incorporation or any operating agreement in any manner
which is materially adverse to the Lenders, (c) modify or alter any names,
mailing addresses, principal places of business, structure, status or
existence (unless otherwise permitted hereunder) or (d) enter into or
engage in any business, operation or activity materially different from
that presently being conducted by any Borrower or Subsidiary.
9.5 NO GUARANTEES.
Assume, guarantee, endorse, or otherwise become liable upon the
obligations of any other Person, including, without limitation, any
Subsidiary or Affiliate of any Borrower, except (a) by the endorsement of
negotiable instruments in the ordinary course of business, (b) by the
giving of indemnities in connection with the sale of Inventory or other
Asset Dispositions permitted hereunder and (c) for guarantees of Permitted
Indebtedness.
9.6 NO RESTRICTED PAYMENTS.
Make a Restricted Payment other than the following Restricted
Payments so long as no Default or Event of Default shall exist immediately
prior to or immediately after the making of any such permitted Restricted
Payment: (a) the payments of dividends from any Subsidiary to any
Borrower, (b) on and after the Closing Date, the payment from time to time
to Golder Thoma of a one-time fee equal to one percent (1%) of the
aggregate amount of funds loaned or contributed to the Company by Golder
Thoma, payable by the Company at each such time such funds are so loaned
or contributed, (c) the payment of an annual fee of $200,000 to Golder
Thoma pursuant to the Professional Services Agreement dated June 4, 1996
between Golder Thoma and the Company, (d) the payment of annual management
bonuses by the Borrowers and their Subsidiaries in an aggregate amount not
to exceed $1,000,000 per fiscal year, (e) repurchases of stock of any
Borrower held by management of such Borrower, provided that the aggregate
amount of such repurchases shall not exceed $1,000,000 per fiscal year and
(f) customary and reasonable corporate overhead reimbursements payable by
the Subsidiary Borrowers to the Company.
9.7 NO INVESTMENTS.
Make any investment other than (a) Permitted Investments and (b)
investments by the Company in the Subsidiary Borrowers.
78
<PAGE> 91
9.8 NO AFFILIATE TRANSACTIONS.
Enter into any transaction with, including, without limitation, the
purchase, sale or exchange of property or the rendering of any service to,
any Subsidiary or Affiliate of any Borrower except (a) in the ordinary
course of and pursuant to the reasonable requirements of such Borrower's
business and upon fair and reasonable terms no less favorable to such
Borrower than could be obtained in a comparable arm's-length transaction
with an unaffiliated Person, (b) as permitted under Section 9.6 hereof,
(c) for intercompany loans and advances from the Company to any Subsidiary
Borrower or from any Subsidiary Borrower to the Company and (d) for
intercompany transfers of equipment among Subsidiary Borrowers for the
purpose of meeting customer demand for Rental Equipment, provided that the
Subsidiary Borrowers shall keep adequate internal records of all such
transfers .
9.9 NO PROHIBITED TRANSACTIONS UNDER ERISA.
(a) Engage, or permit any ERISA Affiliate to engage, in any
prohibited transaction which could result in a material civil penalty
or excise tax described in Sections 406 of ERISA or 4975 of the
Internal Revenue Code for which a statutory or class exemption is not
available or a private exemption has not been previously obtained
from the DOL;
(b) permit to exist with respect to any Benefit Plan any
accumulated funding (as defined in Sections 302 of ERISA and 412 of
the Internal Revenue Code), whether or not waived;
(c) fail, or permit any ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
(d) terminate, or permit any ERISA Affiliate to terminate, any
Benefit Plan where such event would result in any material liability
of a Borrower or any Subsidiary of such Borrower or any ERISA
Affiliate under Title IV of ERISA;
(e) fail, or permit any ERISA Affiliate to fail to make any
required contribution or payment to any Multiemployer Plan;
(f) fail, or permit any ERISA Affiliate to fail, to pay any required
installment or any other payment required under Section 412 of the Internal
Revenue Code on or before the due date for such installment or other
payment;
(g) amend, or permit any ERISA Affiliate to amend, a Benefit
Plan resulting in an increase in current liability for the plan year
such that either of the Borrowers, any Subsidiary or any ERISA
Affiliate is required to provide security to such Benefit Plan under
Section 401(a)(29) of the Internal Revenue Code;
<PAGE> 92
(h) withdraw, or permit any ERISA Affiliate to withdraw, from
any Multiemployer Plan where such withdrawal may result in any
liability of any such entity under Title IV of ERISA; or
(i) allow any representation made in Section 6.14 to be untrue
at any time during the term of this Credit Agreement, if such an
occurrence would have a Material Adverse Effect.
9.10 RESTRICTIONS ON THE COMPANY.
The Company may not hold any assets other than the stock of the
Subsidiary Borrowers and the Subsidiaries listed on Schedule 6.9 and may
not have any liabilities other than (a) the liabilities under the Credit
Documents and (b) tax and routine administrative liabilities in the
ordinary course of business. The Company may not sell, transfer or
otherwise dispose of any shares of Capital Stock of or other ownership
interests in the Subsidiary Borrowers or such Subsidiaries. The Company
may not engage in any business other than (i) owning the stock of the
Subsidiary Borrowers and such Subsidiaries and the managerial activities
related thereto and (ii) acting as a Borrower hereunder and pledging its
assets (including the Capital Stock of its Subsidiaries) as security
therefor and engaging in activities directly related thereto.
9.11 ISSUANCE OF STOCK.
Issue or distribute any Capital Stock or other securities for
consideration or otherwise other than the issuance of Capital Stock of the
Company or any of its Subsidiaries so long as immediately before and after
giving effect to such issuance no Default or Event of Default exists.
9.12 MATERIAL AMENDMENTS OF MATERIAL CONTRACTS.
Without the prior written consent of the Agent, amend, modify, cancel
or terminate or permit the amendment, modification, cancellation or
termination of any of the Material Contracts, except in the event that
such amendments, modifications, cancellations or terminations could not
reasonably be expected to have a Material Adverse Effect.
9.13 ADDITIONAL NEGATIVE PLEDGES.
Create or otherwise cause or suffer to exist or become effective, or permit
any of its Subsidiaries to create or otherwise cause or suffer to exist or
become effective, directly or indirectly, (i) any prohibition or restriction
(including any agreement to provide equal and ratable security to any other
Person in the event a Lien is granted to or for the benefit of the Agent and the
Lenders) on the creation or existence of any Lien upon the assets of any
Borrower or its Subsidiaries, other than Permitted Liens or (ii) any Contractual
Obligation which may restrict or limit the Agent's rights or ability to sell or
otherwise dispose of the Collateral or any part thereof after the occurrence of
an Event of Default other than standard and customary subordination,
nondisturbance and attornment agreements under or in connection with leases of
Rental Equipment.
9.14 SUBORDINATED DEBT.
<PAGE> 93
Effect or permit any change in or amendment to any document or
instrument pertaining to the subordination, terms of payment or required
prepayments of any Subordinated Debt, effect or permit any change in or
amendment to any document or instrument pertaining to the covenants or
events of default of any Subordinated Debt if the effect of any such
change or amendment is to make such covenants or events of default more
restrictive on the Borrowers, give any notice of optional redemption or
optional prepayment or offer to repurchase under any such document or
instrument, or, directly or indirectly, make any payment of principal of
or interest on or in redemption, retirement or repurchase of any
Subordinated Debt, except for the scheduled payments of interest under the
Existing Subordinated Notes so long as immediately before and after giving
effect to such payment no Default or Event of Default exists.
9.15 SALE AND LEASEBACK.
Enter into any arrangement, directly or indirectly, whereby the
Company or any Subsidiary shall sell or transfer any property owned by it
to a Person (other than the Company or any Subsidiary) in order then or
thereafter to lease such property or lease other property which the
Company or any Subsidiary intends to use for substantially the same
purpose as the property being sold or transferred.
9.16 LICENSES, ETC.
Enter into licenses of, or otherwise restrict the use of, any
patents, trademarks or copyrights which would prevent the Company or any
Subsidiary from selling, transferring, encumbering or otherwise disposing
of any such patent, trademark or copyright.
9.17 LIMITATIONS.
Create, nor will it permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause, incur, assume, suffer or permit to exist
or become effective any consensual encumbrance or restriction of any kind on the
ability of any such Person to (a) in the case of any Subsidiary Borrowers, pay
dividends or make any other distribution on any of such Person's Capital Stock,
(b) pay any Indebtedness owed to the Borrowers, (c) make loans or advances to
any other Borrower or (d) transfer any of its property to any other Borrower,
except for encumbrances or restrictions existing under or by reason of (i)
customary non-assignment provisions in any lease governing a leasehold interest,
(ii) any agreement or other instrument of a Person existing at the time it
becomes a Subsidiary of a Borrower; provided that such encumbrance or
restriction is not applicable to any other Person, or any property of any other
Person, other than such Person becoming a Subsidiary of a Borrower and was not
entered into in contemplation of such Person becoming a Subsidiary of a Borrower
and (iii) this Credit Agreement and the other Credit Documents.
ARTICLE X
POWERS
10.1 APPOINTMENT AS ATTORNEY-IN-FACT.
Each Borrower hereby irrevocably authorizes and appoints the Agent,
or any Person or agent the Agent may designate, as such Borrower's
attorney-in-fact, at the Borrowers' cost and expense, to exercise, subject
to the limitations set forth in Section 10.2 hereof, all of the following
powers, which being coupled with an interest, shall be irrevocable until
all of the Obligations to the Lenders have been paid and satisfied in
full:
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(a) To receive, take, endorse, sign, assign and deliver, all in
the name of the Agent, the Lenders or such Borrower, any and all
checks, notes, drafts, and other documents or instruments relating to
the Collateral;
(b) To receive, open and dispose of all mail addressed to such
Borrower and to notify postal authorities to change the address for
delivery thereof to such address as the Agent may designate;
(c) To request at any time from customers indebted on Accounts,
in the name of such Borrower or a third party designee of the Agent,
information concerning the Accounts and the amounts owing thereon;
(d) To give customers indebted on Accounts notice of the
Lenders' interest therein, and/or to instruct such customers to make
payment directly to the Agent for such Borrower's account; and
(e) To take or bring, in the name of the Agent, the Lenders or
such Borrower, all steps, actions, suits or proceedings deemed by the
Agent necessary or desirable to enforce or effect collection of the
Accounts.
10.2 LIMITATION ON EXERCISE OF POWER.
Notwithstanding anything hereinabove to the contrary, the powers set
forth in subparagraphs (b), (d) and (e) above may only be exercised by the
Agent on and after the occurrence of an Event of Default which continues
beyond the expiration of the applicable grace or cure period, and which
has not otherwise been waived by the Agent. The powers set forth in
subparagraphs (a) and (c) above may be exercised by the Agent at any time.
ARTICLE XI
EVENTS OF DEFAULT AND REMEDIES
11.1 EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute an
Event of Default hereunder:
(a) failure of any Borrower to pay (i) any interest or Fees hereunder
within three (3) Business Days of when due hereunder, in each case whether
at stated maturity, by acceleration, or otherwise, (ii) any Credit
Obligations when due, whether at stated maturity, by acceleration or
otherwise or (iii) any expenses hereunder within five (5) Business Days
after receipt of notice by the Borrowers from the Agent or any applicable
Lender that such expenses are payable;
<PAGE> 95
(b) any representation or warranty, contained in this Credit
Agreement, the other Credit Documents or any other agreement,
document, instrument or certificate among any Borrower, the Agent and
the Lenders or executed by any Borrower in favor of the Agent or the
Lenders shall prove untrue in any material respect on the date as of
which it was made or was deemed to have been made;
(c) failure of any Borrower to perform, comply with or observe
any term, covenant or agreement applicable to it contained in (i) the
second sentence of Section 7.7 and such breach or failure to comply
is not cured within five (5) Business Days of its occurrence or (ii)
Section 7.1(h), Section 7.5, Article VIII or Article IX;
(d) failure to comply with any other covenant, contained in this
Credit Agreement, the other Credit Documents or any other agreement,
document, instrument or certificate among any Borrower, the Agent and
the Lenders or executed by any Borrower in favor of the Agent or the
Lenders, and in the event such breach or failure to comply is capable
of cure, is not cured within thirty (30) days of its occurrence;
(e) dissolution, liquidation, winding up or cessation of any
Borrower's or any Subsidiary's businesses (except in connection with
a transaction permitted hereunder), or the failure of any Borrower or
any Subsidiary to meet its debts as they mature, or the calling of a
meeting of any Borrower's or any Subsidiary's creditors for purposes
of compromising any Borrower's or any Subsidiary's debts;
(f) the commencement by or against any Borrower or any
Subsidiary of any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceedings under any federal
or state law and, in the event any such proceeding is commenced
against any Borrower or any Subsidiary, such proceeding is not
dismissed within sixty (60) days;
(g) the occurrence of a Change of Control;
(h) the occurrence of a default or event of default (in each case
which shall continue beyond the expiration of any applicable grace periods)
under, or the occurrence of any event that would permit the acceleration of
the maturity of any note, agreement or instrument evidencing (i) any
Subordinated Debt or (ii) any other Indebtedness of any Borrower or any of
its Subsidiaries and the aggregate principal amount of all such other
Indebtedness with respect to which a default or an event of default has
occurred, or the maturity of which is permitted to be accelerated, exceeds
$250,000;
(i) any material covenant, agreement or obligation of any party
contained in or evidenced by any of the Credit Documents shall cease
to be enforceable in accordance with its terms, or any party (other
than the Agent or the Lenders) to any Credit Document shall deny or
disaffirm its obligations under any of the Credit Documents, or any
Credit Document shall be canceled, terminated, revoked or rescinded
without the express prior written consent
<PAGE> 96
of the Agent, or any action or proceeding shall have been commenced
by any Person (other than the Agent or any Lender) seeking to cancel,
revoke, rescind or disaffirm the obligations of any party to any
Credit Document, or any court or other governmental authority shall
issue a judgment, order, decree or ruling to the effect that any of
the payment obligations of any party to any Credit Document is
illegal, invalid or unenforceable, or the Liens created under the
Security Documents shall cease to be first priority perfected Liens
(except for Permitted Liens);
(j) (i) any holder of Subordinated Debt alleges (or any
governmental authority with applicable jurisdiction determines) that
the Subordinated Debt is not subordinated to any of the Obligations
or (ii) the subordination provisions in any agreement relating to
Subordinated Debt shall, in whole or in part, terminate, cease to be
effective or cease to be legally valid, binding and enforceable as to
any holder of the Subordinated Debt; or
(k) one or more judgments or decrees shall be entered against
one or more of the Borrowers or any Subsidiary involving a liability
of $250,000 or more in the aggregate (to the extent not paid or
covered by insurance (i) provided by a carrier who has acknowledged
coverage and has the ability to perform or (ii) as determined by the
Agent in its reasonable discretion) and any such judgments or decrees
shall not have been vacated, discharged or stayed or bonded pending
appeal within 30 days from the entry thereof.
11.2 ACCELERATION.
Upon the occurrence of an Event of Default which has not been cured by the
Borrowers or waived by the Agent at the direction of the Required Lenders, the
Agent shall, upon the written, telecopied or telex request of the Required
Lenders, and by delivery of written notice to the Borrowers from the Agent, take
any or all of the following actions, without prejudice to the rights of the
Agent, any Lender or the holder of any Note to enforce its claims against any
Borrower: (a) declare all Obligations to be immediately due and payable (except
with respect to any Event of Default set forth in Section 11.1(e) or (f) hereof
in which case all Obligations shall automatically become immediately due and
payable without the necessity of any notice or other demand) without
presentment, demand, protest or any other action or obligation of the Agent or
any Lender, (b) immediately terminate this Credit Agreement and the Commitments
hereunder; and at all times thereafter, all loans and advances made by any
Lender pursuant to this Credit Agreement shall be at such Lender's sole
discretion and (c) enforce any and all rights and interests created and existing
under the Credit Documents or arising under applicable law, including, without
limitation, all rights and remedies existing under the Security Documents and
all rights of set-off.
In addition, upon demand by the Agent or the Required Lenders after
the occurrence of any Event of Default, the Borrowers shall deposit with
the Agent for the benefit of the Lenders with respect to each Letter of
Credit then outstanding, promptly upon such demand, cash or Cash
Equivalents in an amount equal to the greatest amount for which such
Letter of Credit may be drawn. Such deposit shall be held by the Agent
for the benefit of the Issuing Bank and the other Lenders as security for,
and to provide for the payment of, outstanding Letters of Credit.
<PAGE> 97
The foregoing rights shall be effective only after and during the
continuance of an Event of Default and the enumeration of such rights
herein is not intended to be exhaustive and the exercise of any right
shall not preclude the exercise of any other rights, all of which shall be
cumulative.
ARTICLE XII
TERMINATION
Except as otherwise provided in Article XI of this Credit Agreement,
the Revolving Credit Commitments made hereunder shall terminate on the
Maturity Date and all then outstanding Revolving Loans and Term Loans
shall be immediately due and payable in full. Unless sooner demanded, all
Obligations shall become due and payable as of any termination hereunder
or under Article XI hereof and, pending a final accounting (which the
Agent agrees to complete in a timely manner), the Agent may withhold any
balances in the Borrowers' Revolving Loan accounts, unless supplied with a
satisfactory indemnity to cover all of the Obligations, whether absolute
or contingent. All of the Agent's and the Lenders' rights, liens and
security interests shall continue after any termination until all
Obligations (other than contingent indemnity obligations) have been paid
and satisfied in full.
ARTICLE XIII
THE AGENT
13.1 APPOINTMENT OF AGENT.
(a) Each Lender hereby designates FUCC as Agent to act as herein
specified. Each Lender hereby irrevocably authorizes, and each holder of
any Note or participation in any Letter of Credit by the acceptance of a
Note or participation shall be deemed irrevocably to authorize, the Agent
to take such action on its behalf under the provisions of this Credit
Agreement and the Notes and any other instruments and agreements referred
to herein and to exercise such powers and to perform such duties hereunder
and thereunder as are specifically delegated to or required of the Agent by
the terms hereof and thereof and such other powers as are reasonably
incidental thereto. The Agent shall hold all Collateral and all payments
of principal, interest, Fees, charges and expenses received pursuant to
this Credit Agreement or any other Credit Document for the ratable benefit
of the Lenders. The Agent may perform any of its duties hereunder by or
through its agents or employees.
(b) The provisions of this Article XIII are solely for the
benefit of the Agent and the Lenders, and none of the Borrowers shall
have any rights as a third party beneficiary of any of the provisions
hereof (other than Section 13.9). In performing its functions and
duties under this Credit Agreement, the Agent shall act solely as
agent of the Lenders and does not
<PAGE> 98
assume and shall not be deemed to have assumed any obligation toward
or relationship of agency or trust with or for any Borrower.
(c) Without limiting the generality of this Section 13.1, each
Lender expressly authorizes the Agent to determine, subject to the
terms of this Credit Agreement, on behalf of such Lender whether or
not Inventory or Accounts shall be deemed to constitute Eligible
Accounts Receivable, Eligible New Equipment, Eligible Parts and
Supplies Inventory and Eligible Rental Equipment. Such authorization
may be withdrawn by the Required Lenders; provided, however, that
unless otherwise agreed by the Agent such withdrawal of authorization
shall not become effective until the thirtieth Business Day after
receipt of such notice by the Agent. Thereafter, the Required
Lenders shall jointly instruct the Agent in writing regarding such
matters with such frequency as the Required Lenders shall jointly
determine.
13.2 NATURE OF DUTIES OF AGENT.
The Agent shall have no duties or responsibilities except those
expressly set forth in this Credit Agreement. Neither the Agent nor any
of its officers, directors, employees or agents shall be liable for any
action taken or omitted by it as such hereunder or in connection herewith,
unless caused by its or their gross negligence or willful misconduct. The
duties of the Agent shall be mechanical and administrative in nature; the
Agent shall not have by reason of this Credit Agreement a fiduciary
relationship in respect of any Lender; and nothing in this Credit
Agreement, expressed or implied, is intended to or shall be so construed
as to impose upon the Agent any obligations in respect of this Credit
Agreement except as expressly set forth herein.
13.3 LACK OF RELIANCE ON AGENT.
(a) Independently and without reliance upon the Agent, each Lender, to
the extent it deems appropriate, has made and shall continue to make (i)
its own independent investigation of the financial or other condition and
affairs of each Borrower in connection with the taking or not taking of any
action in connection herewith and (ii) its own appraisal of the
creditworthiness of each Borrower, and, except as expressly provided in
this Credit Agreement, the Agent shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any
credit or other information with respect thereto, whether coming into its
possession before the making of the Revolving Loans or at any time or times
thereafter.
(b) The Agent shall not be responsible to any Lender for any
recitals, statements, information, representations or warranties
herein or in any document, certificate or other writing delivered in
connection herewith or for the execution, effectiveness, genuineness,
validity, enforceability, collectibility, priority or sufficiency of
this Credit Agreement or the Notes or the financial or other
condition of any Borrower. The Agent shall not be required to make
any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of this Credit Agreement or the
Notes, or the financial condition of
<PAGE> 99
any Borrower, or the existence or possible existence of any Default
or Event of Default, unless specifically requested to do so in
writing by any Lender.
13.4 CERTAIN RIGHTS OF THE AGENT.
The Agent shall have the right to request instructions from the
Required Lenders or, as required, each of the Lenders. If the Agent shall
request instructions from the Required Lenders with respect to any act or
action (including the failure to act) in connection with this Credit
Agreement, the Agent shall be entitled to refrain from such act or taking
such action unless and until the Agent shall have received instructions
from the Required Lenders, and the Agent shall not incur liability to any
Person by reason of so refraining. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Agent as a
result of the Agent acting or refraining from acting hereunder in
accordance with the instructions of the Required Lenders.
13.5 RELIANCE BY AGENT.
The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, statement,
certificate, telex teletype or telecopier message, cablegram, radiogram,
order or other documentary, teletransmission or telephone message believed
by it to be genuine and correct and to have been signed, sent or made by
the proper person. The Agent may consult with legal counsel (including
counsel for the Borrowers with respect to matters concerning the
Borrowers), independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken by
it in good faith in accordance with the advice of such counsel,
accountants or experts.
13.6 INDEMNIFICATION OF AGENT.
To the extent the Agent is not reimbursed and indemnified by the Borrowers,
each Lender will reimburse and indemnify the Agent, in proportion to its
respective Commitment, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against the
Agent in performing its duties hereunder, in any way relating to or arising out
of this Credit Agreement, provided, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.
13.7 THE AGENT IN ITS INDIVIDUAL CAPACITY.
With respect to its obligation to lend under this Credit Agreement,
the Loans made by it and the Notes issued to it, its participation in
Letters of Credit issued hereunder, and all of its rights and obligations
as a Lender hereunder and under the other Credit Documents, the Agent
shall have the same rights and powers hereunder as any other Lender or
holder of Notes or participation interests and may exercise the same as
though it was not performing the duties specified herein; and the terms
"Lenders", "Required Lenders", "holders of Notes", or any similar terms
shall, unless the context clearly otherwise indicates, include the Agent
in its individual capacity. The Agent may accept deposits from, lend
money to, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory or other business with the Borrowers or
any Affiliate of the Borrowers as if it were not performing the duties
specified herein, and may accept fees and other consideration from the
Borrowers for services in connection with this Credit Agreement and
otherwise without having to account for the same with the Lenders.
13.8 HOLDERS OF NOTES.
<PAGE> 100
The Agent may deem and treat the payee of any Note as the owner
thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Agent. Any
request, authority or consent of any Person who, at the time of making
such request or giving such authority or consent, is the holder of any
Note, shall be conclusive and binding on any subsequent holder, transferee
or assignee of such Note or of any Note or Notes issued in exchange
therefor.
13.9 SUCCESSOR AGENT.
(a) The Agent may, upon ten (10) Business Days' notice to the
Lenders and the Borrowers, resign at any time (effective upon the
appointment of a successor Agent pursuant to the provisions of this
Section 13.9(a)) by giving written notice thereof to the Lenders and
the Borrowers. Upon any such resignation, the Required Lenders shall
have the right, upon ten (10) days' notice, to appoint a successor
Agent. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within
thirty (30) days after the retiring Agent's giving of notice of
resignation, then, upon ten (10) days' notice, the retiring Agent
may, on behalf of the Lenders, appoint a successor Agent, which shall
be a bank or a trust company or other financial institution which
maintains an office in the United States, or a commercial bank
organized under the laws of the United States of America or of any
State thereof, or any Affiliate of such bank or trust company or
other financial institution which is engaged in the banking business,
having a combined capital and surplus of at least $500,000,000.
Notwithstanding anything herein to the contrary, any successor Agent
(whether appointed by the Required Lenders or the Agent) shall have
been approved in writing by the Borrowers (such approval not to be
unreasonably withheld).
(b) Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Credit Agreement. After
any retiring Agent's resignation hereunder as Agent, the provisions
of this Article XIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this
Credit Agreement.
13.10 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs the Agent to enter into
the Security Documents for the benefit of the Lenders. Each Lender
authorizes and directs the Agent to make such changes to the form
Acknowledgment Agreement attached hereto as Exhibit A as the Agent
deems necessary in order to obtain any Acknowledgment Agreement from
any landlord, warehouseman, filler, packer or processor of any
Borrower. Each Lender hereby agrees, and each holder of any Note by
the acceptance thereof will be deemed to agree, that, except as
otherwise set forth herein, any action taken by the Required Lenders
or each of the Lenders, as applicable, in accordance with the
provisions of this Credit Agreement or the Security Documents, and
the exercise by the Required Lenders or each of the Lenders, as
<PAGE> 101
applicable, of the powers set forth herein or therein, together with
such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders. The Agent is hereby
authorized on behalf of all of the Lenders, without the necessity of
any notice to or further consent from any Lender, from time to time
prior to an Event of Default, to take any action with respect to any
Collateral or Security Document which may be necessary or appropriate
to perfect and maintain perfected the security interest in and liens
upon the Collateral granted pursuant to the Security Documents.
(b) The Lenders hereby authorize the Agent, at its option and in
its discretion, to release any Lien granted to or held by the Agent
upon any Collateral (i) upon termination of the Commitments and
payment in cash and satisfaction of all of the Obligations (including
the Letter of Credit Obligations) at any time arising under or in
respect of this Credit Agreement or the Credit Documents or the
transactions contemplated hereby or thereby or (ii) constituting
property being sold or disposed of upon receipt of the proceeds of
such sale by the Agent if the applicable Borrower certifies to the
Agent that the sale or disposition is made in compliance with Section
9.3 hereof (and the Agent may rely conclusively on any such
certificate, without further inquiry). Upon request by the Agent at
any time, the Lenders will confirm in writing the Agent's authority
to release particular types or items of Collateral pursuant to this
Section 13.10(b).
(c) Upon any sale and transfer of Collateral which is expressly
permitted pursuant to the terms of this Credit Agreement, or consented to
in writing by the Required Lenders or all of the Lenders, as applicable,
and upon at least five (5) Business Days' prior written request by the
applicable Borrower, the Agent shall (and is hereby irrevocably authorized
by the Lenders to) execute such documents as may be necessary to evidence
the release of the Liens granted to the Agent for the benefit of the
Lenders herein or pursuant hereto upon the Collateral that was sold or
transferred; provided, that (i) the Agent shall not be required to execute
any such document on terms which, in the Agent's opinion, would expose the
Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty and (ii) such
release shall not in any manner discharge, affect or impair the Obligations
or any Liens upon (or obligations of such Borrower or any Subsidiary in
respect of) all interests retained by such Borrower or any Subsidiary,
including (without limitation) the proceeds of the sale, all of which shall
continue to constitute part of the Collateral. In the event of any sale or
transfer of Collateral, or any foreclosure with respect to any of the
Collateral, the Agent shall be authorized to deduct all of the expenses
reasonably incurred by the Agent from the proceeds of any such sale,
transfer or foreclosure.
(d) The Agent shall have no obligation whatsoever to the Lenders
or to any other Person to assure that the Collateral exists or is
owned by the Borrowers or any Subsidiary or is cared for, protected
or insured or that the liens granted to the Agent herein or pursuant
hereto have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular
priority, or to exercise or to continue exercising at all or in any
manner or under any duty of care, disclosure or fidelity any of the
rights, authorities and
<PAGE> 102
powers granted or available to the Agent in this Section 13.10 or in any of the
Security Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Agent may act in
any manner it may deem appropriate, in its sole discretion, given the Agent's
own interest in the Collateral as one of the Lenders and that the Agent shall
have no duty or liability whatsoever to the Lenders, except for its gross
negligence or willful misconduct.
13.11 ACTIONS WITH RESPECT TO DEFAULTS.
In addition to the Agent's right to take actions on its own accord as
permitted under this Credit Agreement, the Agent shall take such action
with respect to a Default or Event of Default as shall be directed by the
Required Lenders; provided, that, until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default
or Event of Default as it shall deem advisable and in the best interests
of the Lenders.
13.12 DELIVERY OF INFORMATION.
The Agent shall not be required to deliver to any Lender originals or
copies of any documents, instruments, notices, communications or other
information received by the Agent from the Borrowers, any Subsidiary, the
Required Lenders, any Lender or any other Person under or in connection
with this Credit Agreement or any other Credit Document except (a) as
specifically provided in this Credit Agreement or any other Credit
Document and (b) as specifically requested from time to time in writing by
any Lender with respect to a specific document, instrument notice or other
written communication received by and in the possession of the Agent at
the time of receipt of such request and then only in accordance with such
specific request.
ARTICLE XIV
MISCELLANEOUS
14.1 WAIVERS.
Each Borrower hereby waives due diligence, demand, presentment and protest
and any notices thereof as well as notice of nonpayment. No delay or omission
of the Agent or the Lenders to exercise any right or remedy hereunder, whether
before or after the happening of any Event of Default, shall impair any such
right or shall operate as a waiver thereof or as a waiver of any such Event of
Default. No single or partial exercise by the Agent or the Lenders of any right
or remedy shall preclude any other or further exercise thereof, or preclude any
other right or remedy.
14.2 JURY TRIAL.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH BORROWER, THE AGENT
AND THE LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION OR PROCEEDING ARISING OUT OF THIS CREDIT AGREEMENT, THE CREDIT
DOCUMENTS OR ANY OTHER AGREEMENTS OR TRANSACTIONS RELATED HERETO OR
THERETO.
14.3 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.
<PAGE> 103
(a) THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL
BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. Any legal action or proceeding with
respect to this Credit Agreement or any other Credit Document may be
brought in the courts of the State of North Carolina in Mecklenburg
County or of the United States for the Western District of North
Carolina or of the State of New York or of the United States for the
Southern District of New York, and, by execution and delivery of this
Credit Agreement, each of the Borrowers hereby irrevocably accepts
for itself and in respect of its property, generally and
unconditionally, the nonexclusive jurisdiction of such courts. Each
of the Borrowers further irrevocably consents to the service of
process out of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address set out for
notices pursuant to Section 14.5, such service to become effective
three (3) days after such mailing. Nothing herein shall affect the
right of the Agent or any Lender to serve process in any other manner
permitted by law or to commence legal proceedings or to otherwise
proceed against any Borrower in any other jurisdiction.
(b) Each of the Borrowers hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in
connection with this Credit Agreement or any other Credit Document
brought in the courts referred to in subsection (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum.
14.4 ARBITRATION.
(a) Notwithstanding the provisions of Section 14.3 to the contrary,
upon demand of any party hereto, whether made before or after institution
of any judicial proceeding, any dispute, claim or controversy arising out
of, connected with or relating to this Credit Agreement and other Credit
Documents ("Disputes") between or among parties to this Credit Agreement
shall be resolved by binding arbitration as provided herein. Institution
of a judicial proceeding by a party does not waive the right of that party
to demand arbitration hereunder. Disputes may include, without limitation,
tort claims, counterclaims, disputes as to whether a matter is subject to
arbitration, claims brought as class actions, claims arising from Credit
Documents executed in the future, or claims arising out of or connected
with the transaction reflected by this Credit Agreement.
Arbitration shall be conducted under and governed by the
Commercial Financial Disputes Arbitration Rules (the "Arbitration
Rules") of the American Arbitration Association (the "AAA") and Title
9 of the U.S. Code. All arbitration hearings shall be conducted in
Charlotte, North Carolina. The expedited procedures set forth in
Rule 51 et seq. of the Arbitration Rules shall be applicable to
claims of less than $1,000,000. All applicable statutes of
limitation shall apply to any Dispute. A judgment upon the award may
be entered
<PAGE> 104
in any court having jurisdiction. The panel from which all
arbitrators are selected shall be comprised of licensed attorneys.
The single arbitrator selected for expedited procedure shall be a
retired judge from the highest court of general jurisdiction, state
or federal, of the state where the hearing will be conducted or if
such person is not available to serve, the single arbitrator may be a
licensed attorney. Notwithstanding the foregoing, this arbitration
provision does not apply to disputes under or related to swap
agreements.
(b) Notwithstanding the preceding binding arbitration
provisions, the Agent, the Lenders and the Borrowers agree to
preserve, without diminution, certain remedies that the Agent on
behalf of the Lenders may employ or exercise freely, independently or
in connection with an arbitration proceeding or after an arbitration
action is brought. The Agent on behalf of the Lenders shall have the
right to proceed in any court of proper jurisdiction or by self-help
to exercise or prosecute the following remedies, as applicable (i)
all rights to foreclose against any real or personal property or
other security by exercising a power of sale granted under Credit
Documents or under applicable law or by judicial foreclosure and
sale, including a proceeding to confirm the sale; (ii) all rights of
self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal
property; (iii) obtaining provisional or ancillary remedies including
injunctive relief, sequestration, garnishment, attachment,
appointment of receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of
judgment. Preservation of these remedies does not limit the power of
an arbitrator to grant similar remedies that may be requested by a
party in a Dispute.
(c) The parties hereto agree that they shall not have a remedy
of punitive or exemplary damages against the other in any Dispute and
hereby waive any right or claim to punitive or exemplary damages they
have now or which may arise in the future in connection with any
Dispute whether the Dispute is resolved by arbitration or judicially.
(d) By execution and delivery of this Credit Agreement, each of the
parties hereto accepts, for itself and in connection with its properties,
generally and unconditionally, the non-exclusive jurisdiction relating to
any arbitration proceedings conducted under the Arbitration Rules in
Charlotte, North Carolina and irrevocably agrees to be bound by any final
judgment rendered thereby in connection with this Credit Agreement from
which no appeal has been taken or is available.
14.5 NOTICES.
Except as otherwise provided herein, all notices and correspondences
hereunder shall be in writing and sent by certified or registered mail
return receipt requested, or by overnight delivery service, with all
charges prepaid, if to the Agent, then to First Union Commercial
Corporation, One First Union Center, 301 South College Street, DC-5,
Charlotte, North Carolina 28288-0737, Attention: Eric M. Butler, Senior
Vice President, if to the Borrowers, then to Borrowers at 1800 Sherman
Avenue, Suite 1000, Evanston, Illinois 60201, Attention: Paul R.
Ingersoll, Vice President, Secretary, with a copy to Sandford E. Perl,
Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois 60601, Fax
No. 312-861-2200 and to any Lender, at the address set forth beneath the
signature of such Lender contained herein,
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or by facsimile transmission, promptly confirmed in writing sent by first
class mail, if to the Agent, at 704-374-2703, and if to the Borrowers at
847-733-1078 and if to any Lender at the facsimile number set forth
beneath the signature of such Lender contained herein. All such notices
and correspondence shall be deemed given (i) if sent by certified or
registered mail, three (3) Business Days after being postmarked, (ii) if
sent by overnight delivery service, when received at the above stated
addresses or when delivery is refused and (iii) if sent by facsimile
transmission, when receipt of such transmission is acknowledged; provided,
that notices to the Agent shall not be effective until received.
14.6 ASSIGNABILITY.
(a) No Borrower shall have the right to assign this Credit
Agreement or any interest therein except with the prior written
consent of the Agent.
(b) Notwithstanding subsection (c) of this Section 14.6, nothing
herein shall restrict, prevent or prohibit any Lender from (i)
pledging its Loans hereunder to a Federal Reserve Bank in support of
borrowings made by such Lender from such Federal Reserve Bank or (ii)
granting assignments or participations in such Lender's Loans and/or
Commitments hereunder to its parent company and/or to any Affiliate
of such Lender or to any existing Lender or Affiliate thereof. Any
Lender may make, carry or transfer Loans at, to or for the account
of, any of its branch offices or the office of an Affiliate of such
Lender except to the extent such transfer would result in increased
costs to the Borrowers.
(c) Each Lender may, with the consent of the Agent (such consent not
to be unreasonably withheld or delayed) and with the consent of the
Borrowers prior to the occurrence of a Default or Event of Default
hereunder (such consent not to be unreasonably withheld or delayed), assign
to one or more banks or other financial institutions all or a portion of
its rights and obligations under this Credit Agreement and the Notes;
provided, that (i) for each such assignment, the parties thereto shall
execute and deliver to the Agent, for its acceptance and recording in the
Register (as defined below), an Assignment and Acceptance, together with
any Note or Notes subject to such assignment and a processing and
recordation fee of $2,500 to be paid by the assignee, (ii) no such
assignment shall be for less than $5,000,000 of the Commitments or, if
less, the entire remaining Commitments of such Lender, (iii) if such
assignee is a Foreign Lender, all of the requirements of Section 2.7(b)
shall have been satisfied as a condition to such assignment and (iv) each
such assignment shall be of a uniform, and not a varying, percentage of all
rights and obligations under and in respect of both the Revolving Credit
Commitment and Term Loan Commitment of such Lender and all Loans of such
Lender. Upon such execution and delivery of the Assignment and Acceptance
to the Agent, from and after the date specified as the effective date in
the Assignment and Acceptance (the "Acceptance Date"), (x) the assignee
thereunder shall be a party hereto, and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, such assignee shall have the rights and obligations of a
Lender hereunder and (y) the assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (other than any rights it
may have pursuant to Section 14.8 hereof which will survive) and be
released from its obligations under this
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Credit Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's rights
and obligations under this Credit Agreement, such Lender shall cease
to be a party hereto).
(d) By executing and delivering an Assignment and Acceptance,
the assignee thereunder confirms and agrees as follows: (i) other
than as provided in such Assignment and Acceptance, the assigning
Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement
or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the Notes or any other
instrument or document furnished pursuant hereto, (ii) such assigning
Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the
Borrowers or the performance or observance by the Borrowers of any of
its obligations under this Credit Agreement or any other instrument
or document furnished pursuant hereto, (iii) such assignee confirms
that it has received a copy of this Credit Agreement, together with
copies of the financial statements referred to in Section 7.1 hereof
and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such assignee will, independently and
without reliance upon the Agent, such assigning Lender or any other
Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Credit Agreement, (v) such
assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under this Credit
Agreement as are delegated to the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto and (vi) such
assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Credit Agreement
are required to be performed by it as a Lender.
(e) The Agent shall maintain at its address referred to in Section
14.5 hereof a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and
addresses of the Lenders and the Commitments of, and principal amount of
the Loans owing to, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrowers, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Credit Agreement. The Register and
copies of each Assignment and Acceptance shall be available for inspection
by the Borrowers or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender, together with the Note or Notes subject to such
assignment, the Agent shall, if such Assignment and Acceptance has
been completed and is in substantially the form of Exhibit B hereto,
(i) accept such Assignment and Acceptance, (ii) record the
information contained
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therein in the Register and (iii) give prompt notice thereof to the
Borrowers. Within five (5) Business Days after its receipt of such
notice, the Borrowers shall execute and deliver to the Agent in
exchange for the surrendered Note or Notes (which the assigning
Lender agrees to promptly deliver to the Borrowers) a new Note or
Notes to the order of the assignee in an amount equal to the
Commitment or Commitments assumed by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained a Commitment
or Commitments hereunder, a new Note or Notes to the order of the
assigning Lender in an amount equal to the Commitment or Commitments
retained by it hereunder. Such new Note or Notes shall re-evidence
the indebtedness outstanding under the old Notes or Notes and shall
be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the Closing
Date and shall otherwise be in substantially the form of the Note or
Notes subject to such assignments.
(g) Each Lender may sell participations (without the consent of the
Agent, the Borrowers or any other Lender) to one or more parties in or to
all or a portion of its rights and obligations under this Credit Agreement
(including, without limitation, all or a portion of its Commitments, the
Loans owing to it and the Note or Notes held by it); provided, that (i)
such Lender's obligations under this Credit Agreement (including, without
limitation, its Commitments to the Borrowers hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender
shall remain the holder of any such Note for all purposes of this Credit
Agreement, (iv) the Borrowers, the Agent, and the other Lenders shall
continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Credit Agreement and (v)
such Lender shall not transfer, grant, assign or sell any participation
under which the participant shall have rights to approve any amendment or
waiver of this Credit Agreement except to the extent such amendment or
waiver would (A) extend the final maturity date or the date for the
payments of any installment of fees or principal or interest of any Loans
or Letter of Credit reimbursement obligations in which such participant is
participating, (B) reduce the amount of any installment of principal of the
Loans or Letter of Credit reimbursement obligations in which such
participant is participating, (C) except as otherwise expressly provided in
this Credit Agreement, reduce the interest rate applicable to the Loans or
Letter of Credit reimbursement obligations in which such participant is
participating, or (D) except as otherwise expressly provided in this Credit
Agreement, reduce any Fees payable hereunder.
(h) Each Lender agrees that, without the prior written consent
of the Borrowers and the Agent, it will not make any assignment or
sell a participation hereunder in any manner or under any
circumstances that would require registration or qualification of, or
filings in respect of, any Loan, Note or other Obligation under the
securities laws of the United States of America or of any
jurisdiction.
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(i) In connection with the efforts of any Lender to assign its
rights or obligations or to participate interests, such Lender may
disclose any information in its possession regarding the Borrowers.
14.7 INFORMATION.
The Agent and each Lender (each, a "Lending Party") agrees to keep
confidential any information furnished or made available to it by the
Borrowers pursuant to this Credit Agreement that is marked confidential;
provided that nothing herein shall prevent any Lending Party from
disclosing such information (a) to any other Lending Party or any
Affiliate of any Lending Party, or any officer, director, employee, agent,
or advisor of any Lending Party or Affiliate of any Lending Party, (b) to
any other Person if reasonably incidental to the administration of the
credit facility provided herein, (c) as required by any law, rule, or
regulation, (d) upon the order of any court or administrative agency, (e)
upon the request or demand of any regulatory agency or authority, (f) that
is or becomes available to the public or that is or becomes available to
any Lending Party other than as a result of a disclosure by any Lending
Party prohibited by this Credit Agreement, (g) in connection with any
litigation to which such Lending Party or any of its Affiliates may be a
party, (h) to the extent necessary in connection with the exercise of any
remedy under this Credit Agreement or any other Credit Document, (i)
subject to provisions substantially similar to those contained in this
Section 14.7, to any actual or proposed participant or assignee and (j) to
Gold Sheets and other similar bank trade publications; such information to
consist of deal terms and other information customarily found in such
publications.
14.8 PAYMENT OF EXPENSES; INDEMNIFICATION.
The Borrowers agree to: (a) pay all reasonable out-of-pocket costs and
expenses of (i) the Agent in connection with (A) the negotiation, preparation,
execution and delivery and administration of this Credit Agreement and the other
Credit Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of special
counsel to the Agent and the fees and expenses of counsel for the Agent in
connection with collateral issues), and (B) any amendment, waiver or consent
relating hereto and thereto including, but not limited to, any such amendments,
waivers or consents resulting from or related to any work-out, re-negotiation or
restructure relating to the performance by the Borrowers under this Credit
Agreement and (ii) the Agent and the Lenders in connection with enforcement of
the Credit Documents and the documents and instruments referred to therein,
including, without limitation, in connection with any such enforcement, the
reasonable fees and disbursements of counsel for the Agent and each of the
Lenders (including the allocated costs of internal counsel). The Borrowers
shall and hereby agree to indemnify, defend and hold harmless the Agent, the
Issuing Bank and each of the Lenders and their respective directors, officers,
agents, employees and counsel from and against (x) any and all losses, claims,
damages, liabilities, deficiencies, judgments or expenses incurred by any of
them (except to the extent that it is finally judicially determined to have
resulted from their own gross negligence or willful misconduct and excluding
Excluded Taxes) arising out of or by reason of any litigation, investigation,
claim or proceeding which arises out of or is in any way related to (i) this
Credit Agreement, any Letter of Credit or the transactions contemplated thereby,
(ii) any actual or proposed use by any Borrower of the proceeds of the Loans or
(iii) the Agent's, the Issuing Bank's or the Lenders' entering into this Credit
Agreement, the other Credit Documents or any other agreements and documents
relating hereto, including, without limitation, amounts paid in settlement,
court costs and the fees and disbursements of counsel incurred in connection
with any such litigation, investigation, claim or proceeding or any advice
rendered in connection with any of the foregoing and (y) any such losses,
claims, damages, liabilities, deficiencies, judgments or expenses incurred in
connection with
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any remedial or other action taken by any Borrower or any of the Lenders
in connection with compliance by any Borrower or any of its Subsidiaries,
or any of their respective properties, with any federal, state or local
environmental laws, acts, rules, regulations, orders, directions,
ordinances, criteria or guidelines. If and to the extent that the
obligations of any Borrower hereunder are unenforceable for any reason,
such Borrower hereby agrees to make the maximum contribution to the
payment and satisfaction of such obligations which is permissible under
applicable law. The Borrowers' obligations hereunder shall survive any
termination of this Credit Agreement and the other Credit Documents and
the payment in full of the Obligations, and are in addition to, and not in
substitution of, any other of their obligations set forth in this Credit
Agreement. In addition, the Borrowers shall, upon demand, pay to the
Agent and any Lender all costs and expenses (including the reasonable fees
and disbursements of counsel and other professionals) paid or incurred by
the Agent, the Issuing Bank or such Lender in (1) enforcing or defending
its rights under or in respect of this Credit Agreement, the other Credit
Documents or any other document or instrument now or hereafter executed
and delivered in connection herewith, (2) in collecting the Loans, (3) in
foreclosing or otherwise collecting upon the Collateral or any part
thereof and (4) obtaining any legal, accounting or other advice in
connection with any of the foregoing.
14.9 ENTIRE AGREEMENT, SUCCESSORS AND ASSIGNS.
This Credit Agreement along with the other Credit Documents and the
Fee Letter constitutes the entire agreement among the Borrowers, the Agent
and the Lenders, supersedes any prior agreements among them, and shall
bind and benefit the Borrowers and the Lenders and their respective
successors and permitted assigns.
14.10 AMENDMENTS, ETC.
No amendment or waiver of any provision of this Credit Agreement or any
other Credit Document, nor consent to any departure by any Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Required Lenders, or if the Lenders shall not be parties thereto, by the
parties thereto and consented to by the Required Lenders, and each such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, that no amendment,
waiver or consent shall unless in writing and signed by all the Lenders, do any
of the following: (a) increase the Commitments of the Lenders (or of any
individual Lender) or subject the Lenders (or any individual Lender) to any
additional obligations, (b) except as otherwise expressly provided in this
Credit Agreement, reduce the principal of, or interest on, any Note or any
Letter of Credit reimbursement obligations or any fees hereunder, (c) postpone
any date fixed for any payment in respect of principal of, or interest on, any
Note or any Letter of Credit reimbursement obligations or any fees hereunder,
(d) change the percentage of the Commitments, or any minimum requirement
necessary for the Lenders or the Required Lenders to take any action hereunder,
(e) amend or waive this Section 14.10, or change the definition of Required
Lenders or (f) except as otherwise expressly provided in this Credit Agreement,
and other than in connection with the financing, refinancing, sale or other
disposition of any asset of the Borrowers permitted under this Credit Agreement,
release any Liens in favor of the Lenders on any of the Collateral and,
provided, further, that no amendment, waiver or consent affecting the rights or
duties of the Agent or the Issuing Bank under any Credit Document shall in any
event be effective, unless in writing and signed by the Agent and/or the Issuing
Bank, as applicable, in addition to the Lenders required hereinabove to take
such action. Notwithstanding any of the foregoing to the contrary, the consent
of the Borrowers shall not be required for any amendment, modification or waiver
of the provisions of Article XIII (other than the provisions of Section 13.9).
In addition, the Borrowers and the Lenders hereby authorize the Agent to modify
this
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Credit Agreement by unilaterally amending or supplementing Schedule 1.1A
from time to time in the manner requested by the Borrowers, the Agent or
any Lender in order to reflect any assignments or transfers of the Loans
as provided for hereunder; provided, however, that the Agent shall
promptly deliver a copy of any such modification to the Borrowers and each
Lender.
14.11 NONLIABILITY OF AGENT AND LENDERS.
The relationship between any Borrower on the one hand and the Lenders
and the Agent on the other hand shall be solely that of borrower and
lender. Neither the Agent nor any Lender shall have any fiduciary
responsibilities to any Borrower. Neither the Agent nor any Lender
undertakes any responsibility to any Borrower to review or inform such
Borrower of any matter in connection with any phase of such Borrower's
business or operations.
14.12 INDEPENDENT NATURE OF LENDERS' RIGHTS.
The amounts payable at any time hereunder to each Lender under such
Lender's Note or Notes shall be a separate and independent debt.
14.13 COUNTERPARTS.
This Credit Agreement may be executed in any number of counterparts
and by the different parties hereto in separate counterparts, each of
which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument.
14.14 EFFECTIVENESS.
This Credit Agreement shall become effective on the date on which all
of the parties have signed a copy hereof (whether the same or different
copies) and shall have delivered the same to the Agent pursuant to Section
14.5 or, in the case of the Lenders, shall have given to the Agent
written, telecopied or telex notice (actually received) at such office
that the same has been signed and mailed to it.
14.15 SEVERABILITY.
In case any provision in or obligation under this Credit Agreement or
the Notes or the other Credit Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
14.16 HEADINGS DESCRIPTIVE.
The headings of the several sections and subsections of this Credit
Agreement, and the Table of Contents, are inserted for convenience only
and shall not in any way affect the meaning or construction of any
provision of this Credit Agreement.
14.17 MAXIMUM RATE.
Notwithstanding anything to the contrary contained elsewhere in this
Credit Agreement or in any other Credit Document, the Borrowers, the Agent
and the Lenders hereby agree that all
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agreements among them under this Credit Agreement and the other Credit
Documents, whether now existing or hereafter arising and whether written
or oral, are expressly limited so that in no contingency or event
whatsoever shall the amount paid, or agreed to be paid, to the Agent or
any Lender for the use, forbearance, or detention of the money loaned to
any Borrower and evidenced hereby or thereby or for the performance or
payment of any covenant or obligation contained herein or therein, exceed
the Highest Lawful Rate. If due to any circumstance whatsoever,
fulfillment of any provisions of this Credit Agreement or any of the other
Credit Documents at the time performance of such provision shall be due
shall exceed the Highest Lawful Rate, then, automatically, the obligation
to be fulfilled shall be modified or reduced to the extent necessary to
limit such interest to the Highest Lawful Rate, and if from any such
circumstance any Lender should ever receive anything of value deemed
interest by applicable law which would exceed the Highest Lawful Rate,
such excessive interest shall be applied to the reduction of the principal
amount then outstanding hereunder or on account of any other then
outstanding Obligations and not to the payment of interest, or if such
excessive interest exceeds the principal unpaid balance then outstanding
hereunder and such other then outstanding Obligations, such excess shall
be refunded to the applicable Borrower. All sums paid or agreed to be
paid to the Agent or any Lender for the use, forbearance, or detention of
the Obligations and other indebtedness of the Borrowers to the Agent or
any Lender shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest on
account of all such indebtedness does not exceed the Highest Lawful Rate
throughout the entire term of such indebtedness. The terms and provisions
of this Section shall control every other provision of this Credit
Agreement and all agreements among the Borrowers, the Agent and the
Lenders.
14.18 RIGHT OF SETOFF.
In addition to and not in limitation of all rights of offset that any
Lender or other holder of a Note may have under applicable law, each
Lender or other holder of a Note shall, if any Event of Default has
occurred and is continuing and whether or not such Lender or such holder
has made any demand or the Obligations of any Borrower are matured, have
the right to appropriate and apply to the payment of the Obligations of
such Borrower all deposits (general or special, time or demand,
provisional or final) then or thereafter held by and other indebtedness or
property then or thereafter owing by such Lender or other holder,
including, without limitation, any and all amounts in the FUCC Account.
Any amount received as a result of the exercise of such rights shall be
reallocated among the Lenders as set forth in Section 2.8 hereof.
14.19 CONCERNING JOINT AND SEVERAL LIABILITY OF THE BORROWERS.
(a) Each of the Borrowers is accepting joint and several
liability hereunder in consideration of the financial accommodation
to be provided by the Lenders under this Credit Agreement, for the
mutual benefit, directly and indirectly, of each of the Borrowers and
in consideration of the undertakings of each of the Borrowers to
accept joint and several liability for the obligations of each of
them.
(b) Each of the Borrowers jointly and severally hereby
irrevocably and unconditionally accepts, not merely as a surety but
also as a co-debtor, joint and several
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liability with the other Borrowers with respect to the payment and
performance of all of the Obligations, it being the intention of the
parties hereto that all the Obligations shall be the joint and
several obligations of each of the Borrowers without preferences or
distinction among them.
(c) If and to the extent that any of the Borrowers shall fail to
make any payment with respect to any of the Obligations as and when
due or to perform any of the Obligations in accordance with the terms
thereof, then in each such event, the other Borrowers will make such
payment with respect to, or perform, such Obligation.
(d) The obligations of each Borrower under the provisions of
this Section 14.19 constitute full recourse obligations of such
Borrower, enforceable against it to the full extent of its properties
and assets, irrespective of the validity, regularity or
enforceability of this Credit Agreement or any other circumstances
whatsoever.
(e) Except as otherwise expressly provided herein, each Borrower
hereby waives notice of acceptance of its joint and several liability,
notice of any Loan made under this Credit Agreement, notice of occurrence
of any Event of Default, or of any demand for any payment under this Credit
Agreement, notice of any action at any time taken or omitted by any Lender
under or in respect of any of the Obligations, any requirement of diligence
and, generally, all demands, notices and other formalities of every kind in
connection with this Credit Agreement. Each Borrower hereby assents to,
and waives notice of, any extension or postponement of the time for the
payment of any of the Obligations, the acceptance of any partial payment
thereon, any waiver, consent or other action or acquiescence by any Lender
at any time or times in respect of any default by any Borrower in the
performance or satisfaction of any term, covenant, condition or provision
of this Credit Agreement, any and all other indulgences whatsoever by any
Lender in respect of any of the Obligations, and the taking, addition,
substitution or release, in whole or in part, at any time or times, of any
security for any of the Obligations or in part, at any time or times, of
any security for any of the Obligations or the addition, substitution or
release, in whole or in part, of any Borrower. Without limiting the
generality of the foregoing, each Borrower assents to any other action or
delay in acting or failure to act on the part of any Lender, including,
without limitation, any failure strictly or diligently to assert any right
or to pursue any remedy or to comply fully with the applicable laws or
regulations thereunder which might, but for the provisions of this Section
14.19, afford grounds for terminating, discharging or relieving such
Borrower, in whole or in part, from any of its obligations under this
Section 14.19, it being the intention of each Borrower that, so long as any
of the Obligations remain unsatisfied, the obligations of such Borrower
under this Section 14.19 shall not be discharged except by performance and
then only to the extent of such performance. The Obligations of each
Borrower under this Section 14.19 shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement, liquidation,
reconstruction or similar proceeding with respect to any Borrower or any
Lender. The joint and several liability of the Borrowers hereunder
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shall continue in full force and effect notwithstanding any
absorption, merger, amalgamation or any other change whatsoever in
the name, membership, constitution or place of formation of any
Borrower or any Lender.
(f) The provisions of this Section 14.19 are made for the
benefit of the Lenders and their respective successors and assigns,
and may be enforced by any such Person from time to time against any
of the Borrowers as often as occasion therefor may arise and without
requirement on the part of any Lender first to marshal any of its
claims or to exercise any of its rights against any of the other
Borrowers or to exhaust any remedies available to it against any of
the other Borrowers or to resort to any other source or means of
obtaining payment of any of the Obligations or to elect any other
remedy. The provisions of this Section 14.19 shall remain in effect
until all the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof,
made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Lender upon the insolvency,
bankruptcy or reorganization of any of the Borrowers, or otherwise,
the provisions of this Section 14.19 will forthwith be reinstated in
effect, as though such payment had not been made.
(g) Notwithstanding any provision to the contrary contained
herein or in any other of the Credit Documents, to the extent the
joint obligations of a Borrower shall be adjudicated to be invalid or
unenforceable for any reason (including, without limitation, because
of any applicable state or federal law relating to fraudulent
conveyances or transfers) then the obligations of each Borrower
hereunder shall be limited to the maximum amount that is permissible
under applicable law (whether federal or state and including, without
limitation, the federal Bankruptcy Code).
(h) The Borrowers hereby agree, as among themselves, that if any
Borrower shall become an Excess Funding Borrower (as defined below), each
other Borrower shall, on demand of such Excess Funding Borrower (but
subject to the next sentence hereof and to subsection (B) below), pay to
such Excess Funding Borrower an amount equal to such Borrower's Pro Rata
Share (as defined below and determined, for this purpose, without reference
to the properties, assets, liabilities and debts of such Excess Funding
Borrower) of such Excess Payment (as defined below). The payment
obligation of any Borrower to any Excess Funding Borrower under this
Section 14.19(h) shall be subordinate and subject in right of payment to
the prior payment in full of the obligations of such Borrower under the
other provisions of this Credit Agreement, and such Excess Funding Borrower
shall not exercise any right or remedy with respect to such excess until
payment and satisfaction in full of all of such obligations. For purposes
hereof, (i) "Excess Funding Borrower" shall mean, in respect of any
Obligations arising under the other provisions of this Credit Agreement
(hereafter, the "Joint Obligations"), a Borrower that has paid an amount in
excess of its Pro Rata Share of the Joint Obligations; (ii) "Excess
Payment" shall mean, in respect of any Joint Obligations, the amount paid
by an Excess Funding Borrower in excess of its Pro Rata Share of such Joint
Obligations; and (iii) "Pro Rata Share", for the purposes of this Section
<PAGE> 114
14.19(h), shall mean, for any Borrower, the ratio (expressed as a
percentage) of (A) the amount by which the aggregate present fair
saleable value of all of its assets and properties exceeds the amount
of all debts and liabilities of such Borrower (including contingent,
subordinated, unmatured, and unliquidated liabilities, but excluding
the obligations of such Borrower hereunder) to (B) the amount by
which the aggregate present fair saleable value of all assets and
other properties of such Borrower and all of the other Borrowers
exceeds the amount of all of the debts and liabilities (including
contingent, subordinated, unmatured, and unliquidated liabilities,
but excluding the obligations of such Borrower and the other
Borrowers hereunder) of such Borrower and all of the other Borrowers,
all as of the Closing Date (if any Borrower becomes a party hereto
subsequent to the Closing Date, then for the purposes of this Section
14.19(h) such subsequent Borrower shall be deemed to have been a
Borrower as of the Closing Date and the information pertaining to,
and only pertaining to, such Borrower as of the date such Borrower
became a Borrower shall be deemed true as of the Closing Date).
[Remainder of Page Intentionally Left Blank]
102
<PAGE> 115
IN WITNESS WHEREOF the parties hereto have caused this Credit
Agreement to be executed and delivered by their proper and duly authorized
officers as of the date set forth above.
BORROWERS: NATIONAL EQUIPMENT SERVICES, INC.,
a Delaware corporation
By: /s/ Paul R. Ingersoll
----------------------
Name: Paul R. Ingersoll
Title: Vice President
NES ACQUISITION CORP.,
a Delaware corporation
By: /s/ Paul R. Ingersoll
----------------------
Name: Paul R. Ingersoll
BAT ACQUISITION CORP.,
a Delaware corporation
By: /s/ Paul R. Ingersoll
----------------------
Name: Paul R. Ingersoll
Title: Vice President
AERIAL PLATFORMS, INC.,
a Georgia corporation
By: /s/ Paul R. Ingersoll
----------------------
Name: Paul R. Ingersoll
Title: Vice President
<PAGE> 116
AGENT AND
LENDERS: FIRST UNION COMMERCIAL CORPORATION,
as Agent and a Lender
By: /s/ Todd A.Witmer
-----------------
Name: Todd A. Witmer
Title: Vice President
Lending Office (Base Rate Loans)
Address: One First Union Center, 5th Floor
Charlotte, NC 28288
Attention: Daniel Davidson
Telephone: (704) 383-0175
Facsimile: (704) 374-6537
Lending Office (Eurodollar Loans)
Address: One First Union Center, 5th Floor
301 S. College Street
Charlotte, NC 28288
Attention: Daniel Davidson
Telephone: (704) 383-0175
Facsimile: (704) 374-6537
Notice Address
Address: One First Union Center, 5th Floor
301 S. College Street
Charlotte, NC 28288
Attention: Daniel Davidson
Telephone: (704) 383-0175
Facsimile: (704) 374-6537
104
<PAGE> 117
COMERICA BANK,
as a Lender
By: /s/ Gregory N. Block
---------------------
Name: Gregory N. Block
Title: Vice President
Lending Office (Base Rate Loans)
Address: 500 Woodward Avenue
One Detroit Center
Detroit, MI 48226-3269
Attention: Beverly Jones, CSA
Telephone: (313) 222-3805
Facsimile: (313) 222-3351
Lending Office (Eurodollar Loans)
Address: 500 Woodward Avenue
One Detroit Center
Detroit, MI 48226-3269
Attention: Beverly Jones, CSA
Telephone: (313) 222-3805
Facsimile: (313) 222-3351
Notice Address
Address: Two Mid America Plaza
Suite 616
Oakbrook Terrace, Illinois 60181
Attention: Gregory N. Block
Vice President
Telephone: (630) 645-7374
Facsimile: (630) 575-2164
105
<PAGE> 118
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Mary James
---------------
Name: Mary James
Title: Vice President
Lending Office (Base Rate Loans)
Address: 900 Ashwood Pkwy.
Atlanta, GA 30338
Attention: Cammy McKay, Operations
Telephone: (770) 551-7911
Facsimile: (770) 551-7899
Lending Office (Eurodollar Loans)
Address: 900 Ashwood Pkwy.
Atlanta, GA 30338
Attention: Cammy McKay, Operations
Telephone: (770) 551-7911
Facsimile: (770) 551-7899
Notice Address
Address: 900 Ashwood Pkwy.
Atlanta, GA 30338
Attention: Cammy McKay, Operations
Telephone: (770) 551-7911
Facsimile: (770) 551-7899
106
<PAGE> 119
BANKBOSTON, N.A.,
as a Lender
By: /s/ Peter R. White
------------------
Name: Peter R. White
Title: Managing Director
Lending Office (Base Rate Loans)
Address: Diversified Finance
100 Federal Street, MS 01-08-05
Boston, MA 02110
Attention: Eunice Nwabozor, Administrative Officer
Telephone: (617) 434-0872
Facsimile: (617) 434-4929
Lending Office (Eurodollar Loans)
Address: Diversified Finance
100 Federal Street, MS 01-08-05
Boston, MA 02110
Attention: Eunice Nwabozor, Administrative Officer
Telephone: (617) 434-0872
Facsimile: (617) 434-4929
Notice Address
Address: Commercial Loan Services
100 Federal Street, MS 01-08-04
Boston, MA 02110
Attention: Halise Shrago
Telephone: (617) 434-9621
Facsimile: (617) 434-9820
107
<PAGE> 120
HARRIS TRUST AND SAVINGS BANK,
as a Lender
By: /s/ John M. Dillon
Name: John M. Dillon
Title: Vice President
Lending Office (Base Rate Loans)
Address: 111 West Monroe Street, 10-E
Chicago, IL 60090
Attention: Mary Ann Dillardi, Banking Services Rep.
Telephone: 312-461-2054
Facsimile: 312-461-2591
Lending Office (Eurodollar Loans)
Address: 111 West Monroe Street, 10-E
Chicago, IL 60090
Attention: Mary Ann Dillardi, Banking Services Rep.
Telephone: 312-461-2054
Facsimile: 312-461-2591
Notice Address
Address: 111 West Monroe Street, 10-E
Chicago, IL 60090
Attention: Mary Ann Dillardi, Banking Services Rep.
Telephone: 312-461-2054
Facsimile: 312-461-2591
<PAGE> 121
BANKERS TRUST COMPANY,
as a Lender
By: /s/ Mary Jo Jolly
--------------------------------
Name: Mary Jo Jolly
Title: Assistant Vice President
Lending Office (Base Rate Loans)
Address: 130 Liberty Street, 14th Floor
New York, NY 10006
Attention: Anita Manglani
Telephone: 212-250-7174
Facsimile: 212-250-7351
Lending Office (Eurodollar Loans)
Address: 130 Liberty Street, 14th Floor
New York, NY 10006
Attention: Anita Manglani
Telephone: 212-250-7174
Facsimile: 212-250-7351
Notice Address
Address: 130 Liberty Street, 14th Floor
New York, NY 10006
Attention: Anita Manglani
Telephone: 212-250-7174
Facsimile: 212-250-7351
109
<PAGE> 122
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO,
as a Lender
By: /s/ Elizabeth J. Limpert
--------------------------------
Name: Elizabeth J. Limpert
Title: First Vice President
Lending Office (Base Rate Loans)
Address: 1 N. LaSalle, 8th Floor
Chicago, IL 60690
Attention: Sandra Crawford, Client Technician
Telephone: 312-661-3532
Facsimile: 312-661-5947
Lending Office (Eurodollar Loans)
Address: 1 N. LaSalle, 8th Floor
Chicago, IL 60690
Attention: Sandra Crawford, Client Technician
Telephone: 312-661-3532
Facsimile: 312-661-5947
Notice Address
Address: 1 N. LaSalle, 9th Floor
Chicago, IL 60690
Attention: Elizabeth Limpert, First Vice President
Telephone: 312-661-5655
Facsimile: 312-661-6929
110
<PAGE> 123
HELLER FINANCIAL, INC.,
as a Lender
By: /s/ George Grieco
-----------------------------------
Name: George Grieco
Title: Vice President
Lending Office (Base Rate Loans)
Address: 500 West Monroe Street, 18th Floor
Chicago, IL 60661
Attention: Sandy Lira, Operations Manager
Telephone: 312-441-7527
Facsimile: 312-441-6199
Lending Office (Eurodollar Loans)
Address: 500 West Monroe Street, 18th Floor
Chicago, IL 60661
Attention: Sandy Lira, Operations Manager
Telephone: 312-441-7527
Facsimile: 312-441-6199
Notice Address
Address: 150 East 42nd Street, 7th Floor
New York, NY 10017
Attention: Tara Hopkins, Account Executive
Telephone: 212-880-2014
Facsimile: 212-880-7002
111
<PAGE> 124
MERCANTILE BUSINESS CREDIT INC.,
as a Lender
By: /s/ Marian H. Kammerer
---------------------------------
Name: Marian H. Kammerer
Title: Vice President
Lending Office (Base Rate Loans)
Address: 100 S. Brentwood Blvd., Suite 500
St. Louis, MO 63105
Attention: Denise Foutch, Operations Officer
Telephone: 314-579-8437
Facsimile: 314-579-8502
Lending Office (Eurodollar Loans)
Address: 100 S. Brentwood Blvd., Suite 500
St. Louis, MO 63105
Attention: Denise Foutch, Operations Officer
Telephone: 314-579-8437
Facsimile: 314-579-8502
Notice Address
Address: 100 S. Brentwood Blvd., Suite 500
St. Louis, MO 63105
Attention: Carolyn Rooney, Vice President
Telephone: 314-579-8445
Facsimile: 314-579-8480
112
<PAGE> 125
EXHIBIT 4.6(i)
EXHIBIT A
FORM OF ACKNOWLEDGMENT AGREEMENT
THIS ACKNOWLEDGMENT AGREEMENT is made by ____________________________, a
______________ (together with its successors and assigns, the "Acknowledgor"),
for the benefit of FIRST UNION COMMERCIAL CORPORATION, as Agent (together with
all successors and assigns, the "Agent") for the Lenders (as defined in the
Credit Agreement described below).
WHEREAS, the Acknowledgor holds certain property of [Borrower] (the
"Borrower") at the location described in Exhibit A attached hereto (the
"Premises"); and
WHEREAS, the Lenders have provided a $115,000,000 credit facility (the
"Credit Facility") in favor of the Borrower, as evidenced and secured by, among
other things, (i) a credit agreement, dated as of July 1, 1997 (together with
all modifications, renewals or replacements, the "Credit Agreement"), executed
by Borrower, certain other borrowing entities parties thereto, the Lenders,
and the Agent; and (ii) a security agreement, dated as of July 1, 1997
(together with all modifications, renewals or replacements, the "Security
Agreement"), on all inventory now or hereafter delivered to or located or
installed at the Premises (the "Inventory;" the Credit Agreement, the Security
Agreement, UCC financing statements relating to the Security Agreement (the
"Financing Statements") and all other documents relating to, evidencing or
securing the Credit Facility being referred to herein collectively as the
"Credit Documents"); and
WHEREAS, the Lenders have requested the Acknowledgor to furnish the
Lenders certain assurances and agreements regarding the Inventory, which
assurances and agreements the Acknowledgor is willing to give as set forth
herein;
NOW, THEREFORE, for and in consideration of the sum of One Dollar ($1.00)
paid by each party to the other, receipt of which is hereby acknowledged, and
other good and valuable consideration, the Acknowledgor hereby certifies to and
agrees with the Agent and the Lenders as follows:
1. The Acknowledgor consents to the extensions of credit under the Credit
Facility, the execution of the Credit Documents, the collateral assignment of
any contracts between the Acknowledgor and the Borrower and the recordation of
the Financing Statements.
2. The Acknowledgor agrees that: (a) the Borrower is the owner of the
Inventory; (b) the Agent's lien upon or security interest in the Inventory is
prior and superior to any interest, lien or claim of any nature the
Acknowledgor may now have or hereafter obtain in the Inventory whether by
operation of law, contract or otherwise; and (c) either the Borrower or the
Agent may remove the Inventory from the Premises at any time without hindrance
on the part of the Acknowledgor. The Acknowledgor hereby waives any rights it
may now or hereafter have in the Inventory, including without limitation any
lien rights available under applicable law.
3. The Acknowledgor shall send to the Agent (in the manner provided
herein) a copy of any notice or statement sent to the Borrower by the
Acknowledgor with respect to the Inventory or amounts owed in connection
therewith. Such copy shall be sent to the Agent at the same time such notice or
statement is sent to the Borrower. Notices shall be sent to the Agent by
prepaid, registered or certified mail, addressed to the Agent at the following
address, or such other address as the Agent shall designate to the Acknowledgor
in writing:
<PAGE> 126
FIRST UNION COMMERCIAL CORPORATION
One First Union Center
301 South College Street, 5th Floor
Charlotte, NC 28202
Attention: [___________________]
Telephone: (704) [_____________]
Facsimile: (704) [_____________]
The Acknowledgor shall not pursue any right or remedy against the Borrower
until the Acknowledgor shall have given thirty (30) days' prior written notice
to the Agent as provided above.
EXECUTED under seal this ____ day of _______________, 199_.
ACKNOWLEDGOR:
By:
Name:
Title:
<PAGE> 127
EXHIBIT B
FORM OF ASSIGNMENT AND ACCEPTANCE
THIS ASSIGNMENT AND ACCEPTANCE dated as of ________, 199_ is entered into
between ______________ ("Assignor") and __________________ ("Assignee").
Reference is made to the Credit Agreement, dated as of July 1, 1997
(together with all modifications, renewals or replacements, the "Credit
Agreement"), among National Equipment Services, Inc., certain other borrowing
entities party thereto, the financial institutions party thereto, and First
Union Commercial Corporation, as Agent. Terms defined in the Credit Agreement
are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below, the interests
set forth below (the "Assigned Interest") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
interests set forth below in the Commitments of the Assignor on the effective
date of the assignment designated below (the"Effective Date") and the Loans
and other extensions of credit owing to the Assignor which are outstanding on
the Effective Date, together with unpaid interest accrued on the assigned Loans
and other extensions of credit to the Effective Date and the amount, if any,
set forth below of the Fees accrued to the Effective Date for the account of
the Assignor. Each of the Assignor and the Assignee hereby makes and agrees to
be bound by all the representations, warranties and agreements set forth in
Section 14.6(d) of the Credit Agreement, a copy of which has been received by
each such party. From and after the Effective Date (i) the Assignee, if it is
not already a Lender under the Credit Agreement, shall be a party to and be
bound by the provisions of the Credit Agreement and, to the extent of the
interests assigned by this Assignment and Acceptance, have the rights and
obligations of a lender thereunder and (ii) the Assignor shall, to the extent
of the interests assigned by this Assignment and Acceptance, relinquish its
rights (other than any rights it may have pursuant to Section 14.8 of the
Credit Agreement which will survive) and be released from its obligations under
the Credit Agreement (and, in the case of an assignment of all or the remaining
portion of the Assignor's rights and obligations under the Credit Agreement,
the Assignor shall cease to be a party to the Credit Agreement).
2. The Assignor represents and warrants to the Assignee that (i) it is
the legal and beneficial owner of the interest being assigned hereby free and
clear of any adverse claim and (ii) it is legally authorized to enter into this
Assignment and Acceptance.
3. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of New York.
4. Terms of Assignment
<TABLE>
<S> <C>
(a) Date of Assignment:
(b) Legal Name of Assignor:
(c) Legal Name of Assignee:
(d) Effective Date of Assignment:
</TABLE>
1
<PAGE> 128
<TABLE>
<S> <C>
(e) Revolving Credit Commitment
of Assignee after Assignment $__________
(f) Revolving Credit Commitment Percentage
of Assignee after Assignment __________%
(g) Revolving Loans of Assignee after Assignment $__________
(h) Revolving Credit Commitment
of Assignor after Assignment $__________
(i) Revolving Credit Commitment Percentage
of Assignor after Assignment __________%
(j) Revolving Loans of Assignor after Assignment $__________
(k) Term Loans
of Assignor after Assignment $__________
(l) Term Loans
of Assignee after Assignment $__________
</TABLE>
The terms set forth above
are hereby agreed to:
________________________, as Assignor
By: ________________________________
Title: _____________________________
________________________, as Assignee
By: ________________________________
Title: _____________________________
CONSENTED TO:
FIRST UNION COMMERCIAL CORPORATION,
as Agent
By: ________________________________
Title: _____________________________
2
<PAGE> 129
EXHIBIT C
FORM OF SOLVENCY CERTIFICATE
The undersigned treasurer of [name of Borrower] ("_______"), a
________________ , is familiar with the properties, business, assets and
liabilities of [name of Borrower] and is duly authorized to execute this
certificate on behalf of [name of Borrower].
Reference is made to that Credit Agreement dated as of July 1, 1997 among
National Equipment Services, Inc., NES Acquisition Corp., BAT Acquisition Corp.
and Aerial Platforms, Inc. ("the Borrowers"), First Union Commercial
Corporation, as Agent (the "Agent"), and the lenders from time to time parties
thereto (the "Lenders") (as the same may be amended, modified, extended or
restated from time to time, the "Credit Agreement"). All capitalized terms used
and not defined herein have the meanings stated in the Credit Agreement.
1. The undersigned certifies that he has made such investigation and
inquiries as to the financial condition of [name of Borrower] as he deems
necessary and prudent for the purpose of providing this Certificate. The
undersigned acknowledges that the Agent and the Lenders are relying on the truth
and accuracy of this Certificate in connection with making of the Loans under
the Credit Agreement.
2. The undersigned certifies that the financial information, projections
and assumptions which underlie and form the basis for the representations made
in this Certificate were reasonable when made and were made in good faith and
continue to be reasonable as of the date hereof.
BASED ON THE FOREGOING, the undersigned certifies that, both before and
after giving effect to the Loans:
A. [Name of Borrower] and its Subsidiaries, on a consolidated basis, are
able to pay their debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business.
B. [Name of Borrower] and its Subsidiaries, on a consolidated basis, do not
intend to, and do not believe that they will, incur debts or liabilities beyond
their ability to pay as such debts and liabilities mature in their ordinary
course.
C. [Name of Borrower] and its Subsidiaries, on a consolidated basis, are
not engaged in any business or transaction, and are not about to engage in any
business or transaction, for which the assets of [name of Borrower] and its
Subsidiaries, on a consolidated basis, would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the
industry in which [name of Borrower] and its Subsidiaries are engaged or are to
engage.
D. The present fair saleable value of the consolidated assets of [name of
Borrower] and its Subsidiaries, taken on a going concern basis, is not less than
the amount that will be required to pay the probable liability on the debts of
[name of Borrower] and its Subsidiaries, on a consolidated basis, as they become
absolute and matured.
<PAGE> 130
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of July, 1997, in his capacity as the treasurer of [name of Borrower].
_____________________________________
Name: [name of Treasurer]
Title: Treasurer of [name of Borrower]
<PAGE> 131
STATE OF ____________________ )
)
COUNTY OF ___________________ )
VERIFICATION
The undersigned, being first duly sworn, deposes and says that he is the
treasurer of [name of Borrower], a ______________, that he has read the
foregoing and to his personal knowledge the matters and statements contained
therein are true and accurate.
This the ______ day of July, 1997.
------------------------------
Sworn to and subscribed before me
this ______ day of July, 1997.
- ------------------------------
Notary Public
My Commission Expires:
- ------------------------------
<PAGE> 132
EXHIBIT D
FORM OF LANDLORD LIEN WAIVER AGREEMENT
Drawn by and return to:
Moore & Van Allen, PLLC (_______)
100 North Tryon St., 47th Floor
Charlotte, N.C. 28202-4003
THIS LANDLORD LIEN WAIVER AGREEMENT (the "Agreement") is entered as of this
[DATE] by and between ___________________, a _______________ (the "Landlord"),
the owner of certain real property, buildings and improvements located in
___________________, and First Union Commercial Corporation, in its capacity as
agent (the "Agent") for itself and the other lenders (the "Lenders") providing
revolving credit and letter of credit facilities to National Equipment Services,
Inc. and certain other borrowing entities (collectively, the "Borrowers")
pursuant to that certain Credit Agreement dated as of July 1, 1997 (as it may be
amended from time to time, the "Credit Agreement").
Recitals:
1. The Lenders have agreed to provide the Borrowers with credit facilities
(the "Loans") up to an aggregate amount of $115,000,000 under the terms and
conditions of the Credit Agreement. The Borrowers have secured the repayment of
the Loans inter alia by granting the Agent, for the ratable benefit of the
Lenders, a first priority security interest in all of the Borrowers' accounts
receivable, general intangibles, patents, trademarks and inventory, whether now
owned or hereafter acquired, including without limitation, all raw materials,
work-in-process, finished goods, packaging materials and all other materials and
supplies of any nature related thereto, and all proceeds of any of the foregoing
(collectively, the "Collateral").
2. ___________________ has assumed lease obligations with respect to the
Premises (as hereinafter defined) for the purpose of storing and warehousing the
Collateral.
3. As a condition to extending the Loans, the Lenders and the Agent have
requested the Borrowers to obtain, and cause Landlord to provide, Landord's
waiver and subordination all of its rights as a lessor against any of the
Collateral for so long as the Loans remain outstanding. Landlord has agreed to
execute this Agreement upon request by the Borrowers.
NOW, THEREFORE, in consideration of the foregoing, and the mutual benefits
accruing to the Agent and Landlord as a result of the credit facilities
provided by the Lenders, the sufficiency and receipt of such consideration
being hereby acknowledged, the parties hereto agree as follows:
1. For so long as any of the Loans remain outstanding, Landlord hereby
waives, releases, and quit claims in favor of the Agent and each and every
party now or hereafter participating as a Lender under the credit Agreement all
rights that Landlord, or its successors and assigns, may now or hereafter have
to a lien, claim, charge or encumbrance of any kind or nature, arising by
statute, contract, common law or otherwise, relating to the storage of the
Collateral at any premises owned or controlled by Landlord (the "Premises").
2. For so long as any of the Loans remain outstanding, Landlord hereby
agrees that the liens and security interests existing in favor of the Agent, for
the ratable benefit of each and every party now or hereafter participating as a
Lender under the Credit Agreement, shall be prior and superior to (i) any and
all
<PAGE> 133
rights of distraint, levy, and execution which Landlord may now or hereafter
have against the Collateral, (ii) any and all liens and security interests
which Landlord may now or hereafter have on and in the Collateral, and (iii)
any and all other rights, demands and claims of every nature whatsoever which
Landlord may now or hereafter have on or against the Collateral for any rent,
storage charge, or similar expense, cost or sum due or to become due Landlord
by any of the Borrowers under the provisions of any lease, storage agreement or
otherwise, and Landlord hereby subordinates all of its foregoing rights and
interests in the Collateral to the security interest of the Agent in the
Collateral.
3. Upon notice from the Agent that a default or event of default has
occurred under the Credit Agreement, Landlord agrees that the Agent or its
delegates or assigns may enter upon the Premises at any time or times, during
normal business hours, to inspect or remove the Collateral, or any part thereof,
from the Premises, without charge. The Agent shall repair or pay reasonable
compensation to Landlord for damage, if any, to the Premises caused by the
removal of Collateral.
4. Landlord represents and warrants: (a) that it has not assigned its
claims for payment, if any, nor its right to perfect or assert a lien of any
kind whatsoever against the Inventory; (b) that it has the right, power and
authority to execute this Agreement; and (c) that it holds legal title to the
Premises. Landlord further agrees to provide the Agent with prompt written
notice in the event that Landlord sells the Premises, or any portion thereof
where any of the Borrowers stores any Collateral.
5. This Agreement shall continue in effect during the term of the Credit
Agreement, and any extensions, renewals or modifications thereof and any
substitutions therefor, shall be binding upon the successors, assigns and
transferees of Landlord, and shall inure to the benefit of the transferees of
Landlord, and shall inure to the benefit of the Agent, each Lender, and their
respective successors and assigns. Landlord hereby waives notice of the Agent's
acceptance of and reliance on this Agreement.
<PAGE> 134
IN WITNESS WHEREOF, Landlord and the Agent have each caused this Agreement
to be duly executed by their respective authorized representatives as of the
date first above written.
FIRST UNION COMMERCIAL CORPORATION,
as Agent for the Lenders
By:
Name:
Title:
[LANDLORD]
--------------------------------,
By:
Name:
Title:
Acknowledged and Agreed:
- -----------------------------,as Lessee
By:
Name:
Title:
<PAGE> 135
EXHIBIT E
FORM OF PLEDGE AGREEMENT
<PAGE> 136
EXHIBIT F
FORM OF SECURITY AGREEMENT
<PAGE> 137
EXHIBIT G-1
FORM OF REVOLVING NOTE
$________________ <<DATE>>
FOR VALUE RECEIVED, the undersigned, NATIONAL EQUIPMENT SERVICES, INC., a
Delaware corporation (the "Company"), NES ACQUISITION CORP., BAT ACQUISITION
CORP. and AERIAL PLATFORMS, INC. (the "Subsidiary Borrowers") (hereinafter,
the Company and the Subsidiary Borrowers collectively referred to as the
"Borrowers" or individually referred to as a "Borrower"), jointly and severally
promise to pay to the order of [Payee Lender] (the "Lender") at c/o First Union
Commercial Corporation, as Agent for the Lender, One First Union Center, 301
South College Street, 5th Floor, Charlotte, North Carolina 28202 in lawful
money of the United States of America and in immediately available funds, the
principal amount of __________ Million Dollars ($__________), or such lesser
amounts as may then constitute the unpaid aggregate principal amount of all
Revolving Loans made by the Lender to the Borrowers pursuant to the Credit
Agreement (as defined below), at the times set forth in the Credit Agreement,
but no later than the Maturity Date.
The Borrowers further agree to jointly and severally pay interest at said
office, in like money, on the unpaid principal amount owing hereunder from time
to time outstanding from the date of disbursement on the dates and at the rates
specified in Article 4 of the Credit Agreement.
This promissory note is one of the Revolving Notes referred to in the Credit
Agreement, dated as of July 1, 1997 (together with all modifications, renewals
or replacements, the "Credit Agreement"), among the Borrowers, the Lender,
certain other financial institutions parties thereto, and First Union
Commercial Corporation, as agent ("Agent"), and is subject to, and entitled to,
all provisions and benefits thereof and is subject to optional and mandatory
prepayment in whole or in part as provided therein. Capitalized terms used
herein without definition shall have the meanings given to such terms in the
Credit Agreement. The Credit Agreement, among other things, provides [after
giving effect to the Assignment and Acceptance executed by the Lender and [name
of assigning Lender] as of the date hereof](1) for the making of Revolving Loans
by the Lender to the Borrowers from time to time in an aggregate amount not to
exceed at any time outstanding the U.S. dollar amount first above mentioned.
Upon the occurrence of any one or more of the Events of Default specified in
the Credit Agreement which have not been cured by the Borrowers or waived by
the Agent at the direction of the Required Lenders, the Agent shall, upon the
written, telecopied or telex request of the Required Lenders, and by delivery of
written notice to the Borrowers from the Agent, take any or all of the
following actions, without prejudice to the rights of the Agent, the Lender or
any holder of this promissory note to enforce its claims against the Borrowers:
(a) declare all Obligations due hereunder to be immediately due and payable
(except with respect to any Event of Default set forth in Section 11.1(e) of
the Credit Agreement, in which case all Obligations due hereunder shall
automatically become due and payable without the necessity of any notice or
other demand) without presentment, demand, protest or any other action or
obligation of the Lender, and (b) immediately terminate the Credit Agreement
and the Commitments thereunder.
_____________________________
(1) To be used for replacement Revolving Notes.
<PAGE> 138
This promissory note is secured by security agreements and other collateral
documents dated as of July 1, 1997 [and re-evidences the indebtedness
outstanding on the date hereof with respect to the Revolving Loans which
indebtedness has been assigned to the Lender pursuant to Section 14.6 of the
Credit Agreement].(1)
The Borrowers hereby waive presentment, demand, protest and notice of any kind.
No failure to exercise, and no delay in exercising any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS PROMISSORY NOTE SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
NATIONAL EQUIPMENT SERVICES, INC.
By: ________________________
Title: _____________________
NES ACQUISITION CORP.
By: ________________________
Title: _____________________
BAT ACQUISITION CORP.
By: ________________________
Title: _____________________
AERIAL PLATFORMS, INC.
By: ________________________
Title: _____________________
______________________
(1) To be used for replacement Revolving Notes.
<PAGE> 139
EXHIBIT G-2
FORM OF TERM LOAN NOTE
$__________________ <<DATE>>
FOR VALUE RECEIVED, the undersigned, NATIONAL EQUIPMENT SERVICES, INC., a
Delaware corporation (the "Company"), NES ACQUISITION CORP., BAT ACQUISITION
CORP. and AERIAL PLATFORMS, INC. (the "Subsidiary Borrowers") (hereinafter, the
Company and the Subsidiary Borrowers collectively referred to as the
"Borrowers" or individually referred to as a "Borrower"), jointly and severally
promise to pay to the order of [Payee Lender] (the "Lender") at c/o First Union
Commercial Corporation, as Agent for the Lender, One First Union Center, 301
South College Street, 5th Floor, Charlotte, North Carolina 28202 in lawful
money of the United States of America and in immediately available funds, the
principal amount of ___________ Million Dollars ($___________), or such lesser
amount as may then constitute the unpaid aggregate principal amount of all Term
Loans made by the Lender to the Borrowers pursuant to the Credit Agreement (as
defined below), at the times set forth in the Credit Agreement, but no later
than the Maturity Date.
The Borrowers further agree to jointly and severally pay interest at said
office, in like money, on the unpaid principal amount owing hereunder from time
to time outstanding from the date of disbursement on the dates and at the rates
specified in Article 4 of the Credit Agreement.
This promissory note is one of the Term Notes referred to in the Credit
Agreement, dated as of July 1, 1997 (together with all modifications, renewals
or replacements, the "Credit Agreement"), among the Borrowers, the Lender,
certain other financial institutions parties thereto, and First Union
Commercial Corporation, as agent ("Agent"), and is subject to, and entitled to,
all provisions and benefits thereof and is subject to optional and mandatory
prepayment in whole or in part as provided therein. Capitalized terms used
herein without definition shall have the meanings given to such terms in the
Credit Agreement. The Credit Agreement, among other things, provides [after
giving effect to the Assignment and Acceptance executed by the Lender and [name
of assigning Lender] as of the date hereof](1) for the making of Term Loans by
the lender to the Borrowers on the Closing Date in aggregate amount not to
exceed at any time outstanding the U.S. dollar amount first above mentioned.
Upon the occurrence of any one or more of the Events of Default specified in
the Credit Agreement which have not been cured by the Borrowers or waived by
the Agent at the direction of the Required Lenders, the Agent shall, upon the
written, telecopied or telex request of the Required Lenders, and by delivery
of written notice to the Borrowers from the Agent, take any or all of the
following actions, without prejudice to the rights of the Agent, the Lender or
any holder of this promissory note to enforce its claims against the Borrowers:
(a) declare all Obligations due hereunder to be immediately due and payable
(except with respect to any Event of Default set forth in Section 11.1(e) of
the Credit Agreement, in which case all Obligations due hereunder shall
automatically become immediately due and payable without the necessity of any
notice or other demand) without presentment, demand, protest or any other
action or obligation of the Lender; and (b) immediately terminate the Credit
Agreement and the Commitments thereunder.
This promissory note is secured by security agreements and other collateral
documents dated as of July 1, 1997 [and re-evidences the indebtedness
outstanding on the date hereof with respect to the Term Loans made on the
________________
(1) To be used for replacement Term Loan Notes.
<PAGE> 140
Closing Date which indebtedness has been assigned to the Lender pursuant to
Section 14.6 of the Credit Agreement].(1)
The Borrowers hereby waive presentment, demand, protest and notice of any kind.
No failure to exercise, and no delay in exercising any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.
THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS PROMISSORY NOTE SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
NATIONAL EQUIPMENT SERVICES, INC.
BY:________________________
Title:_____________________
NES ACQUISITION CORP.
BY:________________________
Title:_____________________
BAT ACQUISITION CORP.
BY:________________________
Title:_____________________
AERIAL PLATFORMS, INC.
BY:________________________
Title:_____________________
__________________
(1)To be used for replacement Term Loan Notes.
<PAGE> 141
EXHIBIT H
FORM OF NOTICE OF BORROWING
_______________, 199____
First Union Commercial Corporation
as Agent for the Lenders
One First Union Center
301 South College Street, 5th Floor
Charlotte, North Carolina 28202
Attention: [_______________]
Ladies and Gentlemen:
The undersigned, National Equipment Services, Inc., a Delaware corporation
(the "Company"), on behalf of itself and on behalf of the other borrowing
entities parties to the Credit Agreement, dated as of July 1, 1997, among the
Company, such other Borrowers, certain financial institutions parties thereto,
and First Union Commercial Corporation, as agent (together with all
modifications, renewals or replacements, the "Credit Agreement"; capitalized
terms used herein shall have the meanings given such terms in the Credit
Agreement), hereby gives you notice, irrevocably, pursuant to Section 2.1(d) of
the Credit Agreement that the Company hereby requests, on behalf of the
Borrowers, borrowings under the Credit Agreement, and in that connection sets
forth below the information relating to such borrowings (the "Proposed
Borrowings") as required by Sections 2.1(d) of the Credit Agreement:
<TABLE>
<CAPTION>
Interest Interest
Borrower Date of Borrowing Amount Rate Period
<S> <C> <C> <C> <C>
</TABLE>
The requested funds shall be made available to the following accounts in
the amounts set forth below:
The Company hereby certifies, on behalf of the Borrowers, that the
following statements are true on the date hereof, and will be true on the date
of the Proposed Borrowing:
(A) the representations and warranties contained in the Credit Agreement
and in each other document executed in connection therewith are true and correct
in all material respects before and after giving effect to the Proposed
Borrowings and to the application of the proceeds therefrom, as though made on
and as of such date, except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as of
such earlier date);
(B) no event has occurred and is continuing, or would result from such
Proposed Borrowings or from the application of the proceeds therefrom, which
constitutes a Default or an Event of Default;
(C) all of the other conditions to the Proposed Borrowings set forth in
Article 5 of the Credit Agreement have been fulfilled; and
(D) the Proposed Borrowings satisfy all limitations set forth in the
Credit Agreement (including, without limitation, availability under the
Borrowing Base).
<PAGE> 142
If notice of this Proposed Borrowing has been given previously by
telephone, then this notice should be considered a written confirmation of such
telephone notice as required by Section 2.1(d) of the Credit Agreement.
NATIONAL EQUIPMENT SERVICES, INC.
By:
Name:
Title:
<PAGE> 143
EXHIBIT 1
FORM OF LOCKBOX AGREEMENT
This Lock Box Agreement is made as of the _____ day of ________________,
19___, by and among [Borrower], a ____________________ corporation (the
"Borrower"), First Union Commercial Corporation, as agent (the "Agent"), and
[Lockbox Bank] (the "Bank").
WHEREAS, the Agent and certain financial institutions ("Lenders") have
entered into a Credit Agreement, dated as of July 1, 1997 (together with all
modifications, renewals or replacements, the "Credit Agreement"), with the
Borrower and certain other borrowing entities; and
WHEREAS, to secure its obligations under the Credit Agreement, the
Borrower has granted the Lenders a security interest in, inter alia, its present
and future accounts receivable, and all proceeds thereof and the Borrower has
agreed that all collections and proceeds of such accounts receivable shall be
remitted in kind to the Agent; and
WHEREAS, in order to provide for a more efficient and faster collection
and deposit of said collections and proceeds the Agent and the Borrower desire
to use the lock box service of the Bank; and
WHEREAS, the Bank is willing to provide said service for the Borrower and
the Agent commencing as of ______________.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Post Office Box. The Bank will rent P.O. Box ______ (the "Lock Box") of
the post office located at in the name of the Borrower. Customers
of the Borrower have been, or will be, instructed to mail their remittances to
the Lock Box.
2. Access to Mail. Subject to the provisions contained elsewhere herein,
the Bank will have exclusive and unrestricted access to the Lock Box and will
have complete and exclusive authority to receive, pick up and open all regular,
registered, certified or insured mail addressed to the Lock Box. Prior to the
Bank's receipt of notice from the Agent that an Event of Default has occurred
under the Credit Agreement, the Borrower shall act as the exclusive agent for
the Bank and shall have complete responsibility for receiving, picking up and
opening all regular, registered, certified or insured mail addressed to the Lock
Box. Notwithstanding the foregoing to the contrary, at any time, on written
dema its processing of said mail, and shall release same, in kind, to the
Agent, and the Agent shall thereafter process said mail promptly in accordance
with this Agreement. The Bank shall not inquire into the Agent's right to make
such a demand under any agreement among the agent, the Lenders and the Borrower,
and shall be forever released of all obligations with respect to said
remittances upon release to the Agent. The Borrower shall have no control
whatsoever over any mail, checks, money orders, collections or other forms of
remittances received in the Lock Box except as aforesaid. Appropriate
instructions have been, or will be, given by the Bank to the United States Post
Office where the Lock Box is maintained, and such instructions shall not be
revoked without the prior written consent of the Agent. Any instruction given
to the Bank by the Borrower upon and after the occurrence of an Event of
Default, without the prior or concurrent written agreement of the Agent shall
be void and of no force or effect. All mail addressed to the Lock Box will be
picked up by the Bank according to its regular collection schedule and, at any
time prior to the occurrence of an Event of Default, shall be retrieved promptly
by the Borrower for processing in accordance with the terms of this Agreement.
<PAGE> 144
3. Remittance Collection. On the day received the Bank (or at any time
prior to the occurrence of an Event of Default, the Borrower) will open all mail
addressed to the Lock Box and remove and inspect the enclosures. All checks,
money orders and other forms or orders for the payment of money and other
collection remittances (hereinafter collectively referred to as "checks") shall
be processed by the Bank (or at any time prior to the occurrence of an Event of
Default, the Borrower) as follows:
a. Missing Date. All undated checks will be dated by the Bank (or at
any time prior to the occurrence of an Event of Default, by the
Borrower) as of the postmark date and processed as hereafter provided.
b. Postdated. Checks postdated up to three days from date of receipt
shall be processed on the date indicated on the check. The Bank (or at
any time prior to the occurrence of an Event of Default, the Borrower)
shall not deposit checks postdated more than three days and which are
in excess of $_____________, but shall notify the Agent by telephone
of such checks and follow the Agent's instructions for disposition of
such checks.
c. Stale Date. The Bank (or at any time prior to the occurrence of an
Event of Default, the Borrower) shall notify the Agent of checks dated
six months or more prior to the date of collection and which exceed
$_____________. The agent may, in its reasonable discretion, require
that any such checks be forwarded promptly to the Agent.
d. Different Amount. Where written and numeric amounts differ, a check
will be processed by the Bank (or at any time prior to the occurrence
of an Event of Default, the Borrower) only if the correct amount can
be determined from the accompanying documents, otherwise the check
will not be deposited and, if any such check is for an amount in
excess of $_____________, it shall be sent to the Agent.
e. Signature Missing. Checks which do not bear the drawer's signature
and do not indicate the drawer's identity will not be deposited. If,
as determined by the Bank (or at any time prior to the occurrence of
an Event of Default, the Borrower), the drawer can be identified from
the face of the check, the Bank (or at any time prior to the
occurrence of an Event of Default, the Borrower), the drawer can be
identified from the face of the check, the Bank (or at any time prior
to the occurrence of an Event of Default, the Borrower) will deposit
and process the check by affixing a stamped impression requesting the
drawer bank to contact the drawer for authority to pay. The Bank (or
at any time prior to the occurrence of an Event of Default, by the
Borrower) shall notify the Agent of any checks in excess of
$_____________ which cannot be deposited pursuant to this clause (e).
f. Alterations and Restrictions. Checks with alterations and checks
bearing restrictive notations such as "Payment in Full" will not be
deposited, and the Bank (or at any time prior to the occurrence of an
Event of Default, the Borrower) shall notify the Agent of such checks
which exceed $_____________ by telephone on the day of receipt and
will deposit, hold or forward such checks with accompanying written
matter, if any, as requested by the Agent.
g. Foreign Banks and Currency. Checks drawn in foreign currency will
be processed in accordance with the Bank's normal procedure for such
checks and the Agent will be notified by advice of any such checks
which exceed $_____________ on the date received by the Bank.
h. Other Items. Any items which the Agent has specifically instructed
the Bank (or at any time prior to the occurrence of an Event of
Default, the Borrower) in writing not to process will not be deposited
and shall be sent to the Agent.
Notwithstanding anything to the contrary contained in this Agreement, the
Bank shall have no obligation to perform services on a basis any different than
it performs lockbox services in the normal course of business, except with
respect to receiving instructions from the Agent rather than the Borrower.
<PAGE> 145
4. Processing Acceptable Checks. All checks, except those not acceptable
for deposit under the terms of this Agreement, shall be deposited on the day of
receipt by the Bank to Account No. _____________ (the "Depository Account"),
and all such checks shall be endorsed as follows:
credited to account number _____________: absence of endorsement
hereby supplied and granted by [Lock Box Bank]
Any funds in the Depository Account will be wired on a daily basis
with the following instructions:
First Union Commercial Corporation
One First Union Center
301 South College Street
Charlotte, North Carolina 28202
Attn:
Account No. _____________
For the account of the Borrower;
provided, however, that no funds shall be required to be wired unless and
until the amount of funds in the Depository Account shall be in excess of an
aggregate of $1000, unless the Agent shall, in its sole discretion, otherwise
instruct the Bank.
All remittance advices, envelopes, and written matter (except as expressly
provided herein) received in the Lock Box together with photocopies of all
checks shall be sent to the Borrower and, if requested by the Agent, copies of
same shall be sent to the Agent. The Bank shall mail a statement of account, on
a monthly basis, to both the Agent and the Borrower. If no deposit is made on a
bank business day, a deposit advice, correctly dated, will be sent to the Agent
and the Borrower with the notation "No Deposit" appearing thereon. In addition,
the Bank (or at any time prior to the occurrence of an Event of Default, the
Borrower) shall indicate by telephone to the Agent on each Bank business day by
2:30 P.M. (Eastern time zone) the amount of each day's deposit total. The
Depository Account shall be opened and established by the Borrower for the
benefit of the Agent on behalf of the Lenders and shall be subject to the terms
and provisions of the Credit Agreement and Security Agreement (as such term is
defined in the Credit Agreement). Neither the Bank nor the Borrower shall have
the right to withdraw funds from the Depository Account, except that the Bank
may make such debits therefrom as provided in Section 5 hereof.
5. Returned Checks. Checks deposited in the Depository Account which are
returned unpaid because of "Insufficient Funds," "Uncollected Funds," etc. will
be redeposited by the Bank (or at any time prior to the occurrence of an Event
of Default, the Borrower) only once, except that if a returned check exceeds
$1,000 the Bank (or at any time prior to the occurrence of an Event of Default,
the Borrower) shall not redeposit such check but shall telephone the Agent for
further instructions on the day such check is received. If redeposit is not
warranted for reasons such as "account closed" or "payment stopped" or if a
check is returned a second time, the Bank will charge the Depository Account
and send a debit advice with the item to the Agent with copies of same to the
Borrower.
6. Remittance received by the Borrower. Remittances which are sent
directly to or received by the Borrower shall be forwarded to the Lock Box on
the day received.
7. Record Maintenance. All deposit checks will be microfilmed (on front
and back) by the Bank and retained for five years by the Bank prior to
destruction. Photocopies of filmed items will be provided to the Agent or the
Borrower on request, within the five-year period.
<PAGE> 146
8. Bank Charges. All charges of the Bank for services rendered pursuant to
this agreement shall be billed to and paid directly by the Borrower. Said
charges shall not be charged against remittances nor shall they be debited to
the Depository Account.
9. No Offset. The Bank (or at any time prior to the occurrence of an Event
of Default, the Borrower) hereby agrees that it will treat all remittances
received in the Lock Box in accordance with the terms of this agreement. The
Bank will not offset or assert any claim against the Lock Box or the Depository
Account or divert such remittances on account of any obligations owed to the
Bank by the Borrower or by the party making the remittance, except as provided
in Section 5 hereof.
10. Bank Liability. In acting under this agreement the Bank shall not be
liable to the Agent, the Lenders or the Borrower for any error of judgment, or
for any act done or step taken or omitted by it in good faith, except for gross
negligence or willful misconduct.
11. Term. This Agreement shall continue in full force and effect until
termination by the Bank on 60 days' prior written notice to all other parties.
The Agent may terminate this Agreement at any time which termination shall be
effective on receipt of written notice by the Bank and in the event of such
termination, the Agent shall at its option have the sole right to remove mail
from the Lock Box. The Borrower shall have no right to unilaterally terminate
this Agreement.
12. Modification. This Agreement may only be modified by a writing signed
by all of the parties hereto.
13. Addresses.
a. All notices, including phone notices, any daily deposit advices,
monthly statements of account and copies of all checks and the documents which
are to be given or sent to the Agent shall be sent to the following address,
and, where applicable, given at the following phone number:
First Union Commercial Corporation
One First Union Center
301 South College Street, 5th Floor
Charlotte, North Carolina 28202
Attention:
Telephone:
Telecopier:
b. All notices to the Bank shall be sent to:
[Bank]
________________________________________
________________________________________
________________________________________
Attention:
Telephone:
Telecopier:
<PAGE> 147
c. All notices and items which are to be sent to the Borrowers shall
be sent to:
[Borrower]
____________________________
____________________________
____________________________
Attention:
Telephone:
Telecopier:
14. Agent Agreement.
The Agent agrees that it will indemnify and hold the Bank harmless from
any and all loss, liability, expense or damage that the Bank may incur in
processing lockbox items in accordance with this Agreement, including, without
limitation, any loss that the Bank experiences as a result of returned items
to the extent the balances in the Depository Account referenced in paragraph 4
are insufficient to cover such losses or in the event the balances in such
Depository Account are insufficient to cover the Bank charges referenced in
paragraph 8.
15. Limitation on Liability.
The Agent and the Borrower acknowledge that the Bank undertakes to perform
only such duties as are expressly set forth in this Agreement and those which
are normally undertaken by the Bank in connection with lockbox processing.
Notwithstanding any other provision of this Agreement, it is agreed by the
parties that the Bank shall not be liable for any action taken by the Bank or
any of its directors, officers, agents (including specifically the Borrower and
any of its directors, officers, agents or employees) or employees in accordance
with this Agreement, except for the Bank's or such natural person's gross
negligence or willful misconduct. In no event shall the Bank be liable for
losses or delays resulting from force majeure, computer malfunction,
interruption of communication facilities, labor difficulties or other causes
beyond its reasonable control or for any indirect, special or consequential
damages.
<PAGE> 148
This Agreement shall become effective upon its receipt by the Agent,
properly executed by all the parties hereto.
FIRST UNION COMMERCIAL CORPORATION[C]
BY:__________________________
TITLE:
[LOCKBOX BANK]
BY:__________________________
TITLE:
[BORROWER]
BY:__________________________
TITLE:
<PAGE> 149
EXHIBIT J
FORM OF NOTICE OF EXTENSION/CONVERSION
_______________, 199____
First Union Commercial Corporation,
as Agent for the Lenders
One First Union Center
301 South College Street, 5th Floor
Charlotte, North Carolina 28202
Attention: [_______________]
Ladies and Gentlemen:
The undersigned, National Equipment Services, Inc., a Delaware corporation
(the "Company"), on behalf of itself and the other borrowing entities parties to
the Credit Agreement, dated as of July 1, 1997, among the Company, such other
Borrowers, certain financial institutions parties thereto, and First Union
Commercial Corporation, as agent (together with all modifications, renewals or
replacements, the "Credit Agreement"; capitalized terms used herein shall have
the meanings given such terms in the Credit Agreement). The Company, on behalf
of the Borrowers, hereby gives you notice, irrevocably, pursuant to Section 2.10
of the Credit Agreement that the Borrowers hereby request extensions and/or
conversions under the Credit Agreement, and in that connection set forth below
the information relating to such extensions and/or conversions (the
"Extensions/Conversions") as required by Sections 2.10 of the Credit Agreement:
<TABLE>
<CAPTION>
Interest Interest
Borrower Date of Borrowing Amount Rate Period
<S> <C> <C> <C> <C>
</TABLE>
The Company, on behalf of the Borrowers, hereby certifies that the
following statements are true on the date hereof, and will be true on the date
of the Extension/Conversion:
(A) the representations and warranties contained in the Credit Agreement
and in each other document executed in connection therewith are true and correct
in all material respects before and after giving effect to the
Extensions/Conversions and to the application of the proceeds therefrom, as
though made on and as of such date, except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and accurate
on and as of such earlier date);
(B) no event has occurred and is continuing, or would result from such
Extensions/Conversions or from the application of the proceeds therefrom, which
constitutes a Default or an Event of Default;
(C) all of the other conditions to the Extensions/Conversions set forth in
Article 2 of the Credit Agreement have been fulfilled; and
(D) the Extensions/Conversions satisfy all limitations set forth in the
Credit Agreement (including, without limitation, availability under the
Borrowing Base).
If notice of these Extensions/Conversions has been given previously by
telephone, then this notice should be considered a written confirmation of such
telephone notice as required by Section 2.10 of the Credit Agreement.
<PAGE> 150
NATIONAL EQUIPMENT SERVICES, INC.
By:
Name:
Title:
<PAGE> 151
EXHIBIT K
FORM OF COMPLIANCE CERTIFICATE
[Letterhead of Company]
_________, 199__
First Union Commercial Corporation,
as Agent for the Lenders
One First Union Center
301 South College Street, 5th Floor
Charlotte, North Carolina 28202
Ladies and Gentlemen:
I hereby certify to you as follows:
(a) I am the duly elected [Title] of National Equipment Services, Inc., a
Delaware corporation (the "Company"). Capitalized but undefined terms used in
this Certificate shall have the meanings assigned to them in the Credit
Agreement, dated as of July 1, 1997 (together with all modifications, renewals
or replacements, the "Credit Agreement"), among the Company, certain other
borrowing entities parties thereto (together with the Company, the
"Borrowers"), the financial institutions parties thereto, and you, as Agent.
(b) I have reviewed the terms of the Credit Agreement, and have made, or
have caused to be made under my supervision, a review, in reasonable detail of
the transactions and the condition of the Borrowers during the immediately
preceding [month] [fiscal quarter] [fiscal year].
(c) The review described in paragraph (b) above did not disclose the
existence during or at the end of such period, and I have no knowledge of the
existence as of the date hereof, of any condition or event which constitutes a
Default or an Event of Default, except as hereinafter set forth. Described in a
separate attachment to this Certificate are (i) detailed calculations
demonstrating compliance by the Borrowers with the financial covenants
contained in Section 8 of the Credit Agreement and (ii) the exceptions, if any,
to this paragraph (c) (listing, in detail, the nature of the condition or
event, the period during which it has existed and the action which the Company
or applicable Borrower has taken, is taking, or proposes to take with respect
to such condition or event).
I further certify that, based on the review described in paragraph (b)
above, neither the Company, any other Borrower nor any of the Subsidiaries at
any time during or at the end of such period, except as specifically described
in paragraph (k) below, did any of the following:
(d) Changed its respective corporate name, or transacted business under
any trade name, style, or fictitious name, other than those previously
described to you and set forth in the Credit Agreement.
(e) Changed the location of its chief executive office, or changed the
location of or disposed of any of its assets (other than as permitted under the
Credit Agreement) or established any new inventory locations (other than in
connection with leases of Rental Equipment).
<PAGE> 152
(f) Changed its capital structure (other than as permitted under the
Credit Agreement).
(g) Materially changed the terms upon which it sells goods (including
sales on consignment) or provides services, nor has any vendor or trade supplier
to any of the Borrowers during or at the end of such month decreased the terms
upon which it supplies goods to any of such Borrowers.
(h) Permitted or suffered to exist any Liens or encumbrances on any of its
properties, whether real or personal, other than as specifically permitted in
the Credit Agreement.
(i) Received any notices of any kind from any federal, state or local
agency, tribunal or other authority regulating or having responsibility for any
environmental matters.
(j) Became aware of, obtained knowledge of, or received notification of,
any breach or violation of any material covenant contained in any instrument or
agreement in respect of indebtedness for money borrowed by any of the Borrowers
or any of the Subsidiaries.
(k) [List exceptions, if any, to paragraphs (d) through (j) above].
The foregoing certifications are made and delivered
this____ day of______199__.
Very truly yours,
NATIONAL EQUIPMENT SERVICES, INC.
By:
Name:
Title:
<PAGE> 153
Schedule A
[set forth evidence of compliance with financial covenants showing the
calculations therefor in reasonable detail]
<PAGE> 154
EXHIBIT L
FORM OF BORROWING BASE CERTIFICATE
<PAGE> 155
EXHIBIT L
[NOTE: THIS FORM WAS NOT PART OF THE EXHIBITS ATTACHED TO THE FINAL CREDIT
AGREEMENT]
FORM OF BORROWING BASE CERTIFICATE
For the month ended _____________, 199____.
I, the undersigned, the duly elected [Title] of National Equipment
Services, Inc., a Delaware corporation (the "Company"), do hereby certify the
following:
Accounts Receivables
1. Aggregate face amount of the Borrowers' Accounts ____
2. Ineligibles/Deductions
Discounts, claims, charges and allowances of any nature ____
Excluded Sales to Affiliates ____
Accounts unpaid 90 days or more after invoice date ____
Accounts owing by any debtor which has more than 50%
of other Accounts unpaid 90 days or more after invoice date ____
Excess by which the Accounts of any single account debtor
constitutes more than 15% of aggregate Accounts ____
Creditors of Borrowers/Disputed Accounts/Set-Off ____
Bankruptcy ____
Foreign invoices (unless supported by guaranty or L/C) ____
Bill-and-hold, sale-and-return, etc. ____
Government account debtor ____
Non-delivered or rejected goods ____
Accounts determined ineligible by the Agent ____
Total Ineligibles/Deductions: ____
3. Eligible Accounts Receivable ____
4. Eligible Accounts Receivable Advance Rate 85%
5. Available Accounts Receivable ____
<PAGE> 156
Inventory
A. Parts and Supplies
1. Gross Value of Borrowers' Parts and Supplies Inventory 1 ____
2. Ineligibles/Deductions
Inventory located on leased property and no landlord waiver ____
Inventory subject to other Liens ____
Inventory in foreign location ____
Obsolete or slow moving Inventory ____
Inventory determined ineligible by the Agent ____
Total Ineligibles/Deductions ____
3. Eligible Parts and Supplies Inventory ____
4. Eligible Parts and Supplies Inventory Advance Rate 50%
5. Available Parts and Supplies Inventory ____
B. Rental Equipment
1. Orderly Liquidation Value of Gross Value
of Borrowers' Rental Equipment 2 ____
2. Ineligibles/Deductions
Rental Equipment located on leased property and no landlord waiver ____
Rental Equipment subject to other Liens ____
Rental Equipment in foreign location (other than Canada) ____
Obsolete or slow moving Rental Equipment ____
Rental Equipment determined ineligible by the Agent ____
Total Ineligibles/Deductions ____
3. Eligible Rental Equipment ____
4. Eligible Rental Equipment Advance Rate 80%
(reduced by 1/60th on the last date of each month
unless an Equipment appraisal is delivered in such month)
5. Available Rental Equipment ____
C. New Equipment
__________
1 Valued at the lower of cost (on a FIFO basis) or market. All Parts and
Supplies Inventory must meet the qualifications set forth in subpart (i)
of the definition of Eligible Parts and Supplies Inventory.
2 Valued based on the "Orderly Liquidation Value" as defined in the Credit
Agreement. All Rental Equipment must meet the qualifications set forth
in subpart (i) of the definition of Eligible Rental Equipment.
<PAGE> 157
<TABLE>
<S> <C>
1. Gross Value of Borrowers' New Equipment1 ___
2. Ineligibles/Deductions
New Equipment located on leased property and no landlord waiver ___
New Equipment subject to other Liens ___
New Equipment in foreign location ___
Obsolete or slow moving Equipment ___
New Equipment determined ineligible by the Agent ___
Total Ineligibles/Deductions ___
3. Eligible New Equipment ___
4. Eligible New Equipment Advance Rate 80%
5. Available New Equipment ___
Borrowing Base
1. Borrowing Base Availability (the sum of Available Accounts
Receivable, Available Parts and Supplies Inventory, Available
Rental Equipment and Available New Equipment) ___
2. Revolving Credit Committed Amount ___
3. Outstanding Revolving Loans
and Letter of Credit Obligations ___
4. Reserves ___
5. Net Borrowing Base Availability (the lesser of (1) and (2)
minus (3) and (4)) ___
</TABLE>
The foregoing Borrowing Base certificate is made and delivered
this___ day of_____ 199__ .
Very truly yours,
NATIONAL EQUIPMENT SERVICES, INC.
BY:
---------------------
Title:
1 Valued at the delivered cost of New Equipment. All New Equipment must
meet the qualifications set forth in subpart (i) of the definition of Eligible
New Equipment.
<PAGE> 158
EXHIBIT M
FORM OF BORROWER JOINDER AGREEMENT
THIS BORROWER JOINDER AGREEMENT (the "Agreement", dated as of , 19__,
is by and between , a (the
"Applicant Borrower"), and FIRST UNION COMMERCIAL CORPORATION , in its capacity
as Agent (the "Agent") under that certain Credit Agreement (as amended and
modified, the "Credit Agreement") dated as of July 1, 1997 by and among
National Equipment Services, Inc., a Delaware corporation and certain related
borrowing entities (the "Borrowers"), the Lenders party thereto and the Agent.
All of the defined terms in the Credit Agreement are incorporated herein by
reference.
The Applicant Borrower has indicated its desire to become a Borrower
pursuant to the terms of the Credit Agreement.
Accordingly the Applicant Borrower hereby agrees as follows with the
Agent, for the benefit of the Lenders:
1. The Applicant Borrower hereby acknowledges, agrees and confirms that, by
its execution of this Agreement, the Applicant Borrower will be deemed to be a
party to the Credit Agreement and a "Borrower" for all purposes of the Credit
Agreement and the other Credit Documents, and shall have all of the obligations
of a Borrower thereunder as if it has executed the Credit Agreement and the
other Credit Documents. The Applicant Borrower hereby ratifies, as of the date
hereof, and agrees to be bound by, all of the terms, provisions and conditions
contained in the Credit Agreement and in the Credit Documents, including
without limitation (i) all of the representations and warranties of the Credit
Parties set forth in Section 6 of the Credit Agreement, as supplemented from
time to time in accordance with the term thereof, and (ii) all of the
affirmative and negative covenants set forth in Sections 7, 8, and 9 of the
Credit Agreement.
1. The Applicant Borrower hereby acknowledges, agrees and confirms that,
by its execution of this Agreement, the Applicant Borrower will be deemed to be
a party to the Security Agreement, and shall have all the obligations of an
"Obligor" (as such term is defined in the Security Agreement) thereunder as if
it had executed the Security Agreement. The Applicant Borrower hereby ratifies,
as of the date hereof, and agrees to be bound by, all of the terms, provisions
and conditions contained in the Security Agreement. Without limiting generality
of the foregoing terms of this paragraph 2, the Applicant Borrower hereby
grants to the Agent, for the benefit of the lenders, a continuing security
interest in, and a right of set off against any and all right, title and
interest of the Applicant Borrower in and to the Collateral (as such term is
defined in Section 2 of the Security Agreement) of the Applicant Borrower.
2. The Applicant Borrower hereby acknowledges, agrees and confirms that,
by its execution of this Agreement, the Applicant Borrower will be deemed to be
a party to the Pledge Agreement, and shall have all the obligations of a
"Pledgor" thereunder as if it had executed the Pledge Agreement. The Applicant
Borrower hereby ratifies, as of the date hereof, and agrees to be bound by, all
the terms, provisions and conditions contained in the Pledge Agreement. Without
limiting the generality of the foregoing terms of this paragraph 3, the
Applicant Borrower hereby pledges and assigns to the Agent, for
- -1-
<PAGE> 159
the benefit of the Lenders, and grants to the Agent, for the benefit of the
Lenders, a continuing security interest in any and all right, title and interest
of the Applicant Borrower in and to Pledged Stock (as such term is defined in
Section 1 of the Pledge Agreement) and the other Collateral (as such term is
defined in Section 1 of the Pledge Agreement).
3. The Applicant Borrower acknowledges and confirms that it has received a
copy of the Credit Agreement and the schedules and exhibits thereto, the Pledge
Agreement and the schedules and exhibits thereto and the Security Agreement and
the schedules and exhibits relating thereto. The information on the Schedules
to the Credit Agreement, the Pledge Agreement and the Security Agreement are
amended to provide the information shown on the attached Schedule A.
4. National Equipment Services, Inc. confirms that all of its and its
Subsidiaries' obligations under the Credit Agreement are, and upon the Applicant
Borrower becoming a Borrower shall continue to be, in full force and effect.
National Equipment Services, Inc. further confirms that immediately upon the
Applicant Borrower becoming a Borrower the term "Obligations", as used in the
Credit Agreement, shall include all Obligations of such Applicant Borrower
under the Credit Agreement and under each other Credit Document.
5. The Applicant Borrower hereby agrees that upon becoming a Borrower it
will assume all Obligations of a Borrower as set forth in the Credit Agreement.
By its execution of this Agreement, the Applicant Borrower appoints each of
________________, [title] and ____________________, [title], of National
Equipment Services, Inc., to be its attorneys ("its Attorneys") and in its name
and on its behalf and as its act and deed or otherwise to sign all documents
and carry out all such acts as are necessary or appropriate in connection with
executing any Notice of Borrowing, Notice of Extension/Conversion or any
Borrowing Base Certificate or any security documents (the "Documents") in
connection with the Credit Agreement, provided that such Documents are in
substantially the form provided therefor in the applicable exhibits thereto.
This Power of Attorney shall be valid for the duration of the term of the
Credit Agreement. The Applicant Borrower hereby undertakes to ratify everything
which either of its Attorneys shall do in order to execute the Documents
mentioned herein.
6. Each of National Equipment Services, Inc. and the Applicant Borrower
agrees that at any time and from time to time, upon the written request of the
Agent, it will execute and deliver such further documents and do such further
acts and things as the Agent may reasonably request in order to effect the
purposes of this Agreement.
7. This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but all of which when taken together shall
constitute one contract.
8. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Applicant Borrower has caused this Borrower Joinder
Agreement to be duly executed by its authorized officers, and the Agent, for
the benefit of the Lenders, has caused the same to be accepted by its
authorized officer, as of the day and year first above written.
<<APPLICANT BORROWER>>
By:
Name:
<PAGE> 160
Title:
NATIONAL EQUIPMENT SERVICES, INC.
By:
Name:
Title:
FIRST UNION COMMERCIAL CORPORATION
By:
Name:
Title:
- -3-
<PAGE> 161
SCHEDULE A
to
Borrower Joinder Agreement
Schedules to Credit Agreement
(to be updated as necessary)
Schedule 1(b) to Security Agreement
Intellectual Property
Schedule 3(a) to Security Agreement
Chief Executive Office
Schedule 3(b) to Security Agreement
Location of Collateral
Schedule 3(c) to Security Agreement
Mergers, Consolidations, Changes in
Structure or Use of Tradenames
Schedule 1 to Pledge Agreement
Pledged Stock
<PAGE> 162
SCHEDULE 1.1A
LENDERS AND COMMITMENTS
<TABLE>
<CAPTION>
REVOLVING TERM
REVOLVING CREDIT TERM LOAN
CREDIT COMMITMENT LOAN COMMITMENT
LENDER COMMITMENT PERCENTAGE COMMITMENT PERCENTAGE
- ------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
First Union $17,391,304.35 17.391304348% $2,608,695.65 17.391304348%
Commercial
Corporation
BankBoston, N.A. $15,217,391.30 15.217391304% $2,282,608.70 15.217391304%
American National $15,217,391.30 15.217391304% $2,282,608.70 15.217391304%
Bank and Trust
Company of Chicago
Comerica Bank $10,869,565.22 10.869565217% $1,630,434.78 10.869565217%
The CIT Group/ $8,260,869.57 8.260869565% $1,239,130.43 8.260869565%
Business
Credit, Inc.
Bankers Trust $8,260,869.57 8.260869565% $1,239,130.43 8.260869565%
Company
Harris Trust and $8,260,869.57 8.260869565% $1,239,130.43 8.260869565%
Savings Bank
Heller Financial, $8,260,869.57 8.260869565% $1,239,130.43 8.260869565%
Inc.
Mercantile Business $8,260,869.57 8.260869565% $1,239,130.43 8.260869565%
Credit, Inc.
------------- ------------ ------------- ------------
TOTAL $100,000,000 100% $15,000,000 100%
============= ============ ============= ============
</TABLE>
<PAGE> 163
SCHEDULE 1.1B
CLOSING CONDITIONS
The obligation of each Lender to make Loans and/or of the Issuing Bank to issue
Letters of Credit shall be subject to the satisfaction, on or prior to the
Closing Date, of the following conditions precedent:
1. Executed Credit Documents. Receipt by the Agent of duly executed
copies of:
(a) the Credit Agreement;
(b) the Notes;
(c) the Security Documents; and
(d) all other Credit Documents,
each in form and substance acceptable to the Lenders in their sole
discretion.
2. Corporate Documents. Receipt by the Agent of the following:
(a) Charter Documents. Copies of the articles or certificates of
incorporation or other charter documents of each Borrower certified to be true
and complete as of a recent date by the appropriate Governmental Authority of
the state or other jurisdiction of its incorporation and certified by a
secretary or assistant secretary of such Borrower to be true and correct as of
the Closing Date.
(b) Bylaws. A copy of the bylaws of each Borrower certified by a
secretary or assistant secretary of such Borrower to be true and correct as of
the Closing Date.
(c) Resolutions. Copies of resolutions of the Board of Directors of
each Borrower approving and adopting the Credit Documents to which it is a
party, the transactions contemplated therein and authorizing execution and
delivery thereof, certified by a secretary or assistant secretary of such
Borrower to be true and correct and in force and effect as of the Closing Date.
(d) Good Standing. Copies of (i) certificates of good standing,
existence or its equivalent with respect to each Borrower certified as of a
recent date by the appropriate governmental authorities of the state or other
jurisdiction of incorporation and each other jurisdiction in which the failure
to so qualify and be in good standing could reasonably be expected to have a
Material Adverse Effect and (ii) to the extent available, a certificate
indicating payment of all corporate franchise taxes certified as of a recent
date by the appropriate governmental taxing authorities.
(e) Incumbency. An incumbency certificate of each Borrower certified
by a secretary or assistant secretary to be true and correct as of the Closing
Date.
3. Financial Statements. Receipt by the Agent and the Lenders of the
financial statements described in Section 6.6 of the Credit Agreement and such
other information relating to the Borrowers or the Closing Date Acquisitions
as the Agent may reasonably require in connection with the structuring and
syndication of credit facilities of the type described herein. The Borrowers
shall certify as of the Closing Date that such financial statements have been
prepared in accordance with the books and records of the Borrowers and their
predecessor corporation, as applicable, and fairly present in all material
respects the
<PAGE> 164
financial condition of each of the Borrowers and such predecessor corporations
at the dates thereof and the results of operations for the periods indicated
(subject, in the case of unaudited financial statements, to normal year-end
adjustments and the absence of footnote disclosures), and such financial
statements have been prepared in conformity with GAAP consistently applied
throughout the periods involved.
4. Opinions of Counsel. Receipt by the Agent of an opinion, or opinions
(which shall cover, among other things, authority, legality, validity, binding
effect, enforceability, and attachment and perfection of liens), satisfactory
to the Agent, addressed to the Agent and the Lenders and dated the Closing
Date, from legal counsel to the Borrowers.
5. Environmental Reports. Receipt by the Agent in form and substance
satisfactory to it of the environmental assessment reports and related
documents prepared in connection with the Closing Date Acquisitions or
otherwise prepared for any of the Borrowers in respect of Real Estate.
6. Personal Property Collateral. The Agent shall have received:
(a) searches of Uniform Commercial Code filings in the jurisdiction
of the chief executive office of each Borrower and each jurisdiction where any
Collateral is located or where a filing would need to be made in order to
perfect the Agent's security interest in the Collateral, copies of the financing
statements on file in such jurisdictions and evidence that no Liens exist other
than Permitted Liens;
(b) duly executed UCC financing statements for each appropriate
jurisdiction as is necessary, in the Agent's sole discretion, to perfect the
Agent's security interest in the Collateral;
(c) searches of ownership of intellectual property in the appropriate
governmental offices and such patent/trademark/copyright filings as requested
by the Agent in order to perfect the Agent's security interest in the
Collateral;
(d) all stock certificates evidencing the Capital Stock pledged to
the Agent pursuant to the Pledge Agreement, together with duly executed in
blank undated stock powers attached thereto;
(e) such patent/trademark/copyright filings as requested by the Agent
in order to perfect the Agent's security interest in the Collateral;
(f) all instruments and chattel paper in the possession of any of the
Borrowers, together with allonges or assignments as may be necessary or
appropriate to perfect the Agent's security interest in the Collateral to the
extent required under the Security Agreement; and
(g) duly executed consents as are necessary, in the Agent's sole
discretion, to perfect the Lenders' security interest in the Collateral.
7. Priority of Liens. The Agent shall have received satisfactory evidence
that (a) the Agent, on behalf of the Lenders, holds a perfected, first priority
Lien on all Collateral (subject to clause (b)) and (b) none of the Collateral
is subject to any other Liens other than Permitted Liens.
8. Availability. After giving effect to the initial Loans made and
Letters of Credit issued hereunder on the Closing Date, there shall be at least
$3,000,000 of availability existing under the Revolving Credit Committed Amount.
<PAGE> 165
9. Opening Borrowing Base Certificate. Receipt by the Agent of a Borrowing
Base Certificate as of the Closing Date after giving effect to the Sprintank
Acquisition, substantially in the form of Exhibit L and certified by the chief
financial officer of the Company to be true and correct as of the Closing Date.
10. Evidence of Insurance. Receipt by the Agent of copies of insurance
policies or certificates of insurance of the Borrowers or certificates of
insurance of the Borrowers evidencing liability and casualty insurance meeting
the requirements set forth in the Credit Documents, including, but not limited
to, naming the Agent as sole loss payee on behalf of the Lenders.
11. Corporate Structure. The corporate capital and ownership structure of
the Company and its Subsidiaries (after giving effect to the Sprintank
Acquisition) shall be as described in Schedule 6.9.
12. Equity Investment. Receipt by the Agent of evidence that a cash equity
investment of at least $20,500,000 shall have been made in the Company by Golder
Thoma and/or its Affiliates (net of reasonable expenses payable to third parties
in connection therewith) on terms that are reasonably satisfactory to the Agent.
13. Subordinated Debt (a) the Borrowers shall have issued Subordinated Debt
pursuant to the Existing Subordinated Notes, (b) the Agent shall have received a
copy, certified by an officer of the Company as true and complete, of each
Existing Subordinated Note as originally executed and delivered, and no
amendment or modification thereof shall have been entered into on or prior to
the Closing Date which shall not have been approved by each of the Lenders and
(c) the Borrowers shall have received proceeds (or other equivalent value
therefor) from the issuance of the Existing Subordinated Notes in an aggregate
principal amount of $1,000,000.
14. Consents. Receipt by the Agent of evidence that all governmental,
shareholder and third party consents (including Hart-Scott-Rodino clearance) and
approvals required in connection with the Sprintank Acquisition and the related
financings and other transactions contemplated hereby and expiration of all
applicable waiting periods without any action being taken by any authority that
could restrain, prevent or impose any material adverse conditions on the
Sprintank Acquisition or such other transactions or that could seek or threaten
any of the foregoing, and no law or regulation shall be applicable which in the
judgment of the Agent could have such effect.
15. Litigation. There shall not exist (a) any order, decree, judgment,
ruling or injunction which restrains the consummation of the Sprintank
Acquisition in the manner contemplated by the Sprintank Purchase Agreement or
(b) any pending or threatened action, suit, investigation or proceeding against
a Borrower that could reasonably be expected to have a Material Adverse Effect.
16. Other Indebtedness. Receipt by the Agent of evidence that, after giving
effect to the Sprintank Acquisition and the making of the Loans made on the
Closing Date, the Borrowers shall have no Funded Indebtedness other than the
Indebtedness other than the Indebtedness under (a) the Credit Documents and (b)
the Subordinated Notes.
17. Solvency Certificate. Receipt by the Agent of an officer's certificate
for each Borrower prepared by the chief financial officer of each such Borrower
as to the financial condition, solvency and related matters of each such
Borrower, in each case after giving effect to the Closing Date Acquisitions and
the initial borrowings under the Credit Documents, in substantially the form of
Exhibit C hereto.
18. Sprintank Purchase Agreement. There shall not have been any material
modification, amendment, supplement or waiver to the Sprintank Purchase
Agreement without the prior written consent of the Agent, including, but not
limited to, any modification, amendment, supplement or waiver relating to the
<PAGE> 166
amount or type of consideration to be paid in connection with the Sprintank
Acquisition and the contents of all disclosure schedules and exhibits, and the
Sprintank Acquisition shall have been consummated in accordance with the terms
of the Sprintank Purchase Agreement (without waiver of any conditions precedent
to the obligations of the buyer thereunder). The Agent shall have received the
final Sprintank Purchase Agreement, together with all exhibits and schedules
thereto, certified by an officer of the Company.
19. Officer's Certificates. The Agent shall have received a certificate
or certificates executed by an Executive Officer of the Company as of the
Closing Date stating that (a) each Borrower is in compliance with all existing
financial obligations, (b) all governmental, shareholder and third party
consents and approvals, if any, with respect to the Credit Documents and the
transactions contemplated thereby have been obtained, (c) no action, suit,
investigation or proceeding is pending or threatened in any court or before any
arbitrator or governmental instrumentality that purports to affect any Borrower
or any transaction contemplated by the Credit Documents, if such action, suit,
investigation or proceeding could reasonably be expected to have a Material
Adverse Effect, (d) the transactions contemplated by the Sprintank Purchase
Agreement have been consummated in accordance with the terms thereof and (e)
immediately after giving effect to this Credit Agreement, the other Credit
Documents and all the transactions contemplated therein to occur on such date,
(i) each of the Borrowers is solvent, (ii) no Default or Event of Default
exists, (iii) all representations and warranties contained herein and in the
other Credit Documents are true and correct in all material respects, and (iv)
the Borrowers are in compliance with each of the financial convenants set forth
in Section 8.
20. Fees and Expenses. Payment by the Borrowers of all fees and expenses
owed by them to the Lenders and the Agent, including, without limitation,
payment to the Agent of the fees set forth in the Fee Letter.
21. Sources and Uses: Payment Instructions. Receipt by the Agent of (a) a
statement of sources and uses of funds covering all payments reasonably expected
to be made by the Company in connection with the transactions contemplated by
the Credit Documents to be consummated on the Closing Date and reflecting all
of the Closing Date Acquisitions, in each case, including an itemized estimate
of all fees, expenses and other closing costs and (b) payment instructions with
respect to each wire transfer to be made by the Agent on behalf of the Lenders
or the Company or any other Borrower on the Closing Date setting forth the
amount of such transfer, the name and number of the account to which such
transfer is to be made, the name and ABA number of the bank or other financial
institution where such account is located and the name and telephone number of
an individual that can be contacted to confirm receipt of such transfer.
22. Powers of Attorney. Receipt by the Agent of copies of the powers of
attorney executed by the Borrowers (other than the Company) appointing certain
officers of the Company to execute certain ancillary documents on behalf of the
Borrowers.
23. Other. Receipt by the Lenders of such other documents, instruments,
agreements or information as reasonably requested by any Lender, including, but
not limited to, information regarding litigation, tax, accounting, labor,
insurance, pension liabilities (actual or contingent), real estate leases,
material contracts, debt agreements, property ownership and contingent
liabilities of the Borrowers.
The documents referred to in this Schedule shall be delivered to the Agent
and the Lenders no later than the Closing Date. The certificates and opinions
referred to in this Schedule shall be dated the Closing Date.
<PAGE> 167
- 5 -
<PAGE> 1
Exhibit 4.6(ii)
FIRST AMENDMENT
TO CREDIT AGREEMENT
THIS AMENDMENT, dated as of July 18, 1997 (the "Amendment") relating to
the Credit Agreement referenced below, by and among NATIONAL EQUIPMENT
SERVICES, INC., a Delaware corporation (the "Company"), NES ACQUISITION CORP.,
a Delaware corporation, BAT ACQUISITION CORP., a Delaware corporation, AERIAL
PLATFORMS, INC., a Georgia corporation, and MST ENTERPRISES, INC., a Virginia
corporation, (collectively referred to as the "Subsidiary Borrowers" or
individually referred to as a "Subsidiary Borrower") (hereinafter, the Company
and the Subsidiary Borrowers collectively referred to as the "Borrowers" or
individually referred to as a "Borrower"), each of those financial institutions
identified as Lenders on the signature pages hereto (together with each of
their successors and assigns, referred to individually as a "Lender" and,
collectively, as the "Lenders"), and FIRST UNION COMMERCIAL CORPORATION
("FUCC"), acting in the manner and to the extent described in Article XIII of
the Credit Agreement (in such capacity, the "Agent"). Terms used herein but
not otherwise defined herein shall have the meanings provided in the Credit
Agreement.
W I T N E S S E T H
WHEREAS, a $115,000,000 credit facility has been extended to the
Borrowers pursuant to the terms of that certain Credit Agreement dated as of
July 1, 1997 (as amended, modified or otherwise supplemented, the "Credit
Agreement") among the Borrowers, the Lenders and the Agent;
WHEREAS, the Borrowers have requested an amendment to the Credit
Agreement; and
WHEREAS, the Lenders are willing to make such amendment;
NOW, THEREFORE, IN CONSIDERATION of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
A. The definition of Permitted Liens set forth in Section 1.1 of the
Credit Agreement is amended by adding the following:
(xii) the liens in favor of Mustang Manufacturing Company, Inc. on
certain assets of MST Enterprises, Inc. filed in the State of Virginia
for a period of ninety (90) days from the date of this Amendment; and
(xiii) the lien in favor of The Gradall Company on certain assets of
MST Enterprises, Inc. filed in the State of Virginia for a period of
ninety (90) days from the date of this Amendment.
B. Except as modified hereby, all of the terms and provisions of the
Credit Agreement (and Exhibits and Schedules thereto) remain in full force and
effect.
<PAGE> 2
C. The Borrower agrees to pay all reasonable costs and expenses of the
Administrative Agent in connection with the preparation, execution and delivery
of this Amendment, including without limitation the reasonable fees and
expenses of Moore & Van Allen, PLLC.
D. This Amendment may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original and it shall
not be necessary in making proof of this Amendment to produce or account for
more than one such counterpart.
E. This Amendment, and the Credit Agreement as amended hereby, shall be
governed by and construed and interpreted in accordance with the laws of the
State of New York.
[Remainder of Page Intentionally Left Blank]
2
<PAGE> 3
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.
BORROWER: NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Paul R. Ingersoll
--------------------------------
Name: Paul R. Ingersoll
Title: Vice President
NES ACQUISITION CORP.
By: /s/ Paul R. Ingersoll
--------------------------------
Name: Paul R. Ingersoll
Title: Vice President
BAT ACQUISITION CORP.
By: /s/ Paul R. Ingersoll
--------------------------------
Name: Paul R. Ingersoll
Title: Vice President
AERIAL PLATFORMS, INC.
By: /s/ Paul R. Ingersoll
--------------------------------
Name: Paul R. Ingersoll
Title: Vice President
MST ENTERPRISES, INC.
By: /s/ Paul R. Ingersoll
---------------------------------------
Name: Paul R. Ingersoll
Title: Vice President
AGENT: FIRST UNION COMMERCIAL CORPORATION,
as Agent and a Lender
By: /s/ Eric Butler
---------------------------------------
Name: Eric Butler
Title: Senior Vice President
[SIGNATURES CONTINUE]
3
<PAGE> 4
LENDERS: BANKBOSTON, N.A.,
as a Lender
By: /s/ Mark M. Andrew
-------------------------------
Name: Mark M. Andrew
Title: Vice President
AMERICAN NATIONAL BANK AND TRUST COMPANY OF
CHICAGO, as a Lender
By: /s/ Elizabeth J. Limpert
Name: Elizabeth J. Limpert
Title: First Vice President
COMERICA BANK,
as a Lender
By: /s/ Gregory N. Block
-------------------------------
Name: Gregory N. Block
Title: Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Mary James
------------------------------
Name: Mary James
Title: Vice President
BANKERS TRUST COMPANY,
as a Lender
By: /s/ Robert R. Telesca
------------------------------------------
Name: Robert R. Telesca
Title: Assistant Vice President
[SIGNATURES CONTINUE]
4
<PAGE> 5
HARRIS TRUST AND SAVINGS BANK,
as a Lender
By /s/ John M. Dillon
------------------------------------
Name: John M. Dillon
Title: Vice President
HELLER FINANCIAL, INC.,
as a Lender
By: /s/ Tara Hopkins
-----------------------------------
Name: Tara Hopkins
Title: Assistant Vice President
MERCANTILE BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Mercantile Business Credit Inc.
------------------------------------
Name: Carolyn M. Rooney
Title: Vice President
5
<PAGE> 1
Exhibit 4.6(iii)
SECOND AMENDMENT TO CREDIT AGREEMENT
AND CONSENT
THIS AMENDMENT AND CONSENT, dated as of October 29, 1997 (the "Amendment")
relating to the Credit Agreement referenced below, by and among NATIONAL
EQUIPMENT SERVICES, INC., a Delaware corporation (the "Company"), NES
ACQUISITION CORP., a Delaware corporation, BAT ACQUISITION CORP., a Delaware
corporation, AERIAL PLATFORMS, INC., a Georgia corporation, and MST
ENTERPRISES, INC., a Virginia corporation, (collectively referred to as the
"Subsidiary Borrowers" or individually referred to as a "Subsidiary Borrower")
(hereinafter, the Company and the Subsidiary Borrowers collectively referred to
as the "Borrowers" or individually referred to as a "Borrower"), each of those
financial institutions identified as Lenders on the signature pages hereto
(together with each of their successors and assigns, referred to individually
as a "Lender" and, collectively, as the "Lenders"), and FIRST UNION COMMERCIAL
CORPORATION ("FUCC"), acting in the manner and to the extent described in
Article XIII of the Credit Agreement (in such capacity, the "Agent"). Terms
used herein but not otherwise defined herein shall have the meanings provided
in the Credit Agreement.
W I T N E S S E T H
WHEREAS, a $115,000,000 credit facility has been extended to the
Borrowers pursuant to the terms of that certain Credit Agreement dated as of
July 1, 1997 (as amended, modified or otherwise supplemented, the "Credit
Agreement") among the Borrowers, the Lenders and the Agent;
WHEREAS, the Company proposes to issue the Senior Subordinated Notes (as
defined below);
WHEREAS, the Borrowers have requested that (a) the Required Lenders
consent to the issuance of the Senior Subordinated Notes and acknowledge that
the Senior Subordinated Notes constitute Subordinated Debt under the Credit
Agreement and (b) certain amendments, inter alia, be made to the Credit
Agreement to permit the making of the payment of interest on the Senior
Subordinated Notes and to modify the Leverage Ratio; and
WHEREAS, the Lenders are willing to furnish such consent and
acknowledgment and make such amendments;
NOW, THEREFORE, IN CONSIDERATION of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
(A) Each of the Lenders executing this Amendment hereby consents to the
issuance of the Senior Subordinated Notes and acknowledges that the Senior
Subordinated Notes constitute Subordinated Debt under the Credit Agreement.
The Company hereby confirms and agrees that it will prepay the Term Loans
promptly upon receipt of the proceeds of the Senior Subordinated Notes.
<PAGE> 2
(B) 1. (a) The definition of Leverage Ratio is amended by adding "minus
proceeds of the Senior Subordinated Notes held in cash by the Company or
invested by the Company in Cash Equivalents" immediately after the term
"Consolidated Funded Indebtedness" each time it appears therein.
(b) Section 1.1 of the Credit Agreement is hereby amended by
adding the following new definition:
"Senior Subordinated Notes" shall mean the $100,000,000
Senior Subordinated Notes of the Company to be issued by the
Company on or about November 26, 1997 due in 2004,
substantially on the terms and conditions approved by the
Required Lenders.
2. Section 9.13 of the Credit Agreement is hereby amended by
deleting the phrase "Permitted Liens" from subclause (i) thereof , and
inserting in place thereof the phrase "pursuant to the indenture for the
Senior Subordinated Notes".
3. Section 9.14 of the Credit Agreement is hereby amended by
inserting immediately after the phrase "Existing Subordinated Notes" in
the ninth (9th) line thereof, the new phrase "and the Senior Subordinated
Notes".
4. Section 9.17 of the Credit Agreement is hereby amended by
inserting immediately after the phrase "Capital Stock" in clause (a)
thereof, the new phrase "other than pursuant to the indenture for the
Senior Subordinated Notes".
(C) Each Borrower hereby represents and warrants that (i) the
representations and warranties contained in Section 6 of the Credit Agreement
are correct on and as of the date hereof as though made on and as of such date
(except for those representations and warranties which by their terms relate
solely to an earlier date) and after giving effect to the amendments contained
herein, (ii) no Default or Event of Default exists under the Credit Agreement
on and as of the date hereof and after giving effect to the amendments
contained herein, (iii) it has the corporate power and authority to execute and
deliver this Amendment and to perform its obligations hereunder and has taken
all necessary corporate action to authorize the execution, delivery and
performance by it of this Amendment and (iv) it has duly executed and delivered
this Amendment, and this Amendment constitutes its legal, valid and binding
obligation enforceable in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency or other
similar laws affecting the rights of creditors generally or by general
principles of equity.
(D) Except as modified hereby, all of the terms and provisions of the
Credit Agreement (and Exhibits and Schedules thereto) remain in full force and
effect.
2
<PAGE> 3
(E) The Borrowers agrees to pay all reasonable costs and expenses of the
Agent in connection with the preparation, execution and delivery of this
Amendment, including without limitation the reasonable fees and expenses of
Moore & Van Allen, PLLC.
(F) This Amendment may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original and it shall
not be necessary in making proof of this Amendment to produce or account for
more than one such counterpart.
(G) The effectiveness of this Amendment is subject to the receipt by the
Lenders of the final indenture for the Senior Subordinated Notes and the
approval of the terms and provisions thereof by the Required Lenders.
(H) This Amendment and the Credit Agreement as amended hereby shall be
governed by and construed and interpreted in accordance with the laws of the
State of New York.
[Remainder of Page Intentionally Left Blank]
3
<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of
this Amendment to be duly executed and delivered as of the date first above
written.
BORROWER: NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Paul R. Ingersoll
-------------------------------------------
Name: Paul R. Ingersoll
Title: Vice President and Secretary
NES ACQUISITION CORP.
By: /s/ Paul R. Ingersoll
---------------------------------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
BAT ACQUISITION CORP.
By: /s/ Paul R. Ingersoll
---------------------------------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
AERIAL PLATFORMS, INC.
By: /s/ Paul R. Ingersoll
-----------------------------------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
MST ENTERPRISES, INC.
By: /s/ Paul R. Ingersoll
-----------------------------------------------
Name: Paul R. Ingersoll
Title: Vice President, Secretary and Treasurer
AGENT: FIRST UNION COMMERCIAL CORPORATION,
as Agent and a Lender
4
<PAGE> 5
By: /s/ Eric Butler
------------------------
Name: Eric Butler
Title: Senior Vice President
[SIGNATURES CONTINUE]
LENDERS: BANKBOSTON, N.A.,
as a Lender
By: /s/ Mark M. Andrew
-----------------------------
Name: Mark M. Andrew
Title: Vice President
AMERICAN NATIONAL BANK AND TRUST COMPANY OF
CHICAGO, as a Lender
By: /s/ David Weislogel
--------------------------------
Name: David Weislogel
Title: Vice President
COMERICA BANK,
as a Lender
By: /s/ Gregory N. Block
--------------------------------
Name: Gregory N. Block
Title: Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Mary James
-----------------------------
Name: Mary James
Title: Vice President
BANKERS TRUST COMPANY,
5
<PAGE> 6
as a Lender
By: /s/ Robert R. Telesca
----------------------------------------
Name: Robert R. Telesca
Title: Assistant Vice President
[SIGNATURES CONTINUE]
6
<PAGE> 7
HARRIS TRUST AND SAVINGS BANK,
as a Lender
By: /s/ John M. Dillon
----------------------------
Name: John M. Dillon
Title: Vice President
HELLER FINANCIAL, INC.,
as a Lender
By: /s/ Tara Hopkins
----------------------------
Name: Tara Hopkins
Title: Assistant Vice President
MERCANTILE BUSINESS CREDIT, INC.,
as a Lender
By: /s/ Mercantile Business Credit, Inc.
----------------------------------------------
Name: Carolyn M. Rooney
Title: Vice President
7
<PAGE> 1
Exhibit 4.6(iv)
BORROWER JOINDER AGREEMENT
THIS BORROWER JOINDER AGREEMENT (the "Agreement"), dated as of July 18,
1997, is by and between MST ENTERPRISES, INC., a Virginia corporation (the
"Applicant Borrower"), and FIRST UNION COMMERCIAL CORPORATION, in its capacity
as Agent (the "Agent") under that certain Credit Agreement (as amended and
modified, the "Credit Agreement") dated as of July 1, 1997 by and among
National Equipment Services, Inc., a Delaware corporation and certain related
borrowing entities (the "Borrowers"), the Lenders party thereto and the Agent.
All of the defined terms in the Credit Agreement are incorporated herein by
reference.
The Applicant Borrower has indicated its desire to become a Borrower
pursuant to the terms of the Credit Agreement.
Accordingly the Applicant Borrower hereby agrees as follows with the
Agent, for the benefit of the Lenders:
1. The Applicant Borrower hereby acknowledges, agrees and confirms that, by
its execution of this Agreement, the Applicant Borrower will be deemed to be a
party to the Credit Agreement and a "Borrower" for all purposes of the Credit
Agreement and the other Credit Documents, and shall have all of the obligations
of a Borrower thereunder as if it has executed the Credit Agreement and the
other Credit Documents. The Applicant Borrower hereby ratifies, as of the date
hereof, and agrees to be bound by, all of the terms, provisions and conditions
contained in the Credit Agreement and in the Credit Documents, including
without limitation (i) all of the representations and warranties of the Credit
Parties set forth in Section 6 of the Credit Agreement, as supplemented from
time to time in accordance with the term thereof, and (ii) all of the
affirmative and negative covenants set forth in Sections 7, 8, and 9 of the
Credit Agreement.
2. The Applicant Borrower hereby acknowledges, agrees and confirms that, by
its execution of this Agreement, the Applicant Borrower will be deemed to be a
party to the Security Agreement, and shall have all the obligations of an
"Obligor" (as such term is defined in the Security Agreement) thereunder as if
it had executed the Security Agreement. The Applicant Borrower hereby
ratifies, as of the date hereof, and agrees to be bound by, all of the terms,
provisions and conditions contained in the Security Agreement. Without
limiting generality of the foregoing terms of this paragraph 2, the Applicant
Borrower hereby grants to the Agent, for the benefit of the Lenders, a
continuing security interest in, and a right of set off against any and all
right, title and interest of the Applicant Borrower in and to the Collateral
(as such term is defined in Section 2 of the Security Agreement) of the
Applicant Borrower.
3. The Applicant Borrower hereby acknowledges, agrees and confirms that, by
its execution of this Agreement, the Applicant Borrower will be deemed to be a
party to the Pledge Agreement, and shall have all the obligations of a "Pledgor"
thereunder as if it had executed the Pledge Agreement. The Applicant Borrower
hereby ratifies, as of the date hereof, and agrees to be bound by, all the
terms, provisions and conditions contained in the Pledge Agreement. Without
limiting the generality of the foregoing terms of this paragraph 3, the
Applicant Borrower hereby pledges and assigns to the Agent, for the benefit of
the Lenders, and grants to the Agent, for the benefit of the Lenders, a
continuing security interest in any and all right, title and interest of the
Applicant Borrower in and to Pledged Stock (as such term is defined in Section 1
of the Pledge Agreement) and the other Collateral (as such term is defined in
Section 1 of the Pledge Agreement).
4. The Applicant Borrower acknowledges and confirms that it has received a
copy of the Credit Agreement and the schedules and exhibits thereto, the Pledge
Agreement and the schedules and exhibits thereto and the Security Agreement and
the schedules and exhibits relating thereto. The
<PAGE> 2
information on the Schedules to the Credit Agreement, the Pledge Agreement and
the Security Agreement are amended to provide the information shown on the
attached Schedule A.
5. National Equipment Services, Inc. confirms that all of its and its
Subsidiaries' obligations under the Credit Agreement are, and upon the
Applicant Borrower becoming a Borrower shall continue to be, in full force and
effect. National Equipment Services, Inc. further confirms that immediately
upon the Applicant Borrower becoming a Borrower the term "Obligations", as used
in the Credit Agreement, shall include all Obligations of such Applicant
Borrower under the Credit Agreement and under each other Credit Document.
6. The Applicant Borrower hereby agrees that upon becoming a Borrower it will
assume all Obligations of a Borrower as set forth in the Credit Agreement. By
its execution of this Agreement, the Applicant Borrower appoints each of Paul
R. Ingersoll, Vice President and Kevin Rodgers, Chief Executive Officer, of
National Equipment Services, Inc., to be its attorneys ("its Attorneys") and in
its name and on its behalf and as its act and deed or otherwise to sign all
documents and carry out all such acts as are necessary or appropriate in
connection with executing any Notice of Borrowing, Notice of
Extension/Conversion or any Borrowing Base Certificate or any security
documents (the "Documents") in connection with the Credit Agreement, provided
that such Documents are in substantially the form provided therefor in the
applicable exhibits thereto. This Power of Attorney shall be valid for the
duration of the term of the Credit Agreement. The Applicant Borrower hereby
undertakes to ratify everything which either of its Attorneys shall do in order
to execute the Documents mentioned herein.
7. Each of National Equipment Services, Inc. and the Applicant Borrower
agrees that at any time and from time to time, upon the written request of the
Agent, it will execute and deliver such further documents and do such further
acts and things as the Agent may reasonably request in order to effect the
purposes of this Agreement.
8. This Agreement may be executed in two or more counterparts, each of which
shall constitute an original but all of which when taken together shall
constitute one contract.
9. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of New York.
<PAGE> 3
IN WITNESS WHEREOF, the Applicant Borrower has caused this Borrower
Joinder Agreement to be duly executed by its authorized officers, and the
Agent, for the benefit of the Lenders, has caused the same to be accepted by
its authorized officer, as of the day and year first above written.
MST ENTERPRISES, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
NATIONAL EQUIPMENT SERVICES, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
FIRST UNION COMMERCIAL CORPORATION
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
<PAGE> 4
SCHEDULE A
to
Borrower Joinder Agreement
Schedules to Credit Agreement
(to be updated as necessary)
Schedule 1(b) to Security Agreement
Intellectual Property
Schedule 3(a) to Security Agreement
Chief Executive Office
Schedule 3(b) to Security Agreement
Location of Collateral
Schedule 3(c) to Security Agreement
Mergers, Consolidations, Changes in
Structure or Use of Tradenames
Schedule 1 to Pledge Agreement
Pledged Stock
<PAGE> 1
Exhibit 4.7
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT dated as of July 1, 1997 (as amended, modified or
otherwise supplemented, the "Pledge Agreement" or this "Agreement") by NATIONAL
EQUIPMENT SERVICES, INC., a Delaware corporation (the "Company") and those
subsidiaries of the Company identified as "Pledgors" on the signature pages
hereof and such other parties as may become Pledgors hereunder after the date
hereof (hereinafter, the Company and such subsidiary Pledgors collectively
referred to herein as the "Pledgors" or individually referred to as a
"Pledgor") in favor of FIRST UNION COMMERCIAL CORPORATION, as Agent (in such
capacity, the "Agent") for the Lenders under the Credit Agreement described
below and any Affiliates of Lenders which provide interest rate or currency
protection agreements as hereafter provided (collectively, the "Lenders").
RECITALS
WHEREAS, the Lenders have severally agreed to make loans and extensions of
credit to the Company and each of the Pledgors identified as "Pledgors" on the
signature pages hereto on the date hereof (collectively, the "Borrowers")
pursuant to the terms of that certain Credit Agreement dated as of the date
hereof (as amended, modified or otherwise supplemented, the "Credit Agreement")
among the Borrowers, the Lenders identified therein and the Agent;
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective loans and
extensions of credit to the Borrowers thereunder that the Pledgors shall have
executed and delivered this Pledge Agreement to the Agent for the ratable
benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the Agent
and the Lenders to enter into the Credit Agreement and to induce the Lenders to
make their respective loans and extensions of credit thereunder, the Pledgors
hereby agree with the Agent, for the ratable benefit of the Lenders, as
follows:
1. Defined Terms. (a) Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein shall have the meanings given to them in
the Credit Agreement. For purposes of this Agreement, the term "Lender" shall
include any Affiliate of any Lender which has entered into an Interest Rate
Protection Agreement with a Borrower to the extent permitted by the Credit
Agreement in respect of the obligations of such Borrower under the Credit
Agreement.
(b) The following terms shall have the following meanings:
"Agreement": this Pledge Agreement, as the same may be amended,
modified or otherwise supplemented from time to time.
"Code": the Uniform Commercial Code from time to time in effect in
the State of New York.
<PAGE> 2
"Collateral": the Pledged Stock and all Proceeds thereof.
"Collateral Account": any account established to hold money
Proceeds, maintained under the sole dominion and control of the Agent,
subject to withdrawal by the Agent for the account of the Lenders as
provided in Section 8(a).
"Issuers": the collective reference to the companies identified on
Schedule 1 attached hereto as the issuers of the Pledged Stock;
individually, each an "Issuer."
"Pledged Stock": the shares of capital stock listed on Schedule 1
hereto, together with all stock certificates, options or rights of any
nature whatsoever that may be issued or granted by any Issuer to a
Pledgor in respect of the Pledged Stock while this Agreement is in
effect.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(1) of the Uniform Commercial Code in effect in the State of North
Carolina on the date hereof and, in any event, shall include, without
limitation, all dividends or other income from the Pledged Stock,
collections thereon or distributions with respect thereto.
"Secured Obligations": the collective reference to the following:
(a) All unpaid principal of and interest on (including, without
limitation, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of the Loans and other obligations
owing under the Credit Agreement and interest accruing at the then
applicable rate provided in the Credit Agreement after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Pledgors, whether or not
a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans and all other obligations and liabilities of the
Pledgors to the Agent and the Lenders, whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, the Credit Agreement,
any Notes, the other Credit Documents, any Interest Rate Protection
Agreements with the Agent or any Lender in respect of the Pledgors'
obligations under the Credit Agreement to the extent permitted by the
Credit Agreement or any other document made, delivered or given in
connection therewith, in each case, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and disbursements of
counsel to the Agent and the Lenders that are required to be paid by the
Pledgors pursuant to the terms of the Credit Agreement, any other Credit
Document or any such Interest Rate Protection Agreements); and
(b) All other indebtedness, liabilities and obligations of any
kind or nature, now existing or hereafter arising, owing by the
Pledgors to the Agent or any Lender, arising under this Pledge
Agreement or any of the other Credit Documents, whether primary,
secondary, direct, contingent, or joint and several.
<PAGE> 3
"Securities Act": the Securities Act of 1933, as amended.
(c) 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, and
section and paragraph references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. Pledge; Grant of Security Interest. Each of the Pledgors hereby
delivers to the Agent, for the ratable benefit of the Lenders, all the Pledged
Stock and hereby grants to the Agent, for the ratable benefit of the Lenders, a
first security interest in the Collateral, as collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Secured Obligations.
3. Stock Powers. Concurrently with the delivery to the Agent of each
certificate representing one or more shares of Pledged Stock, each of the
Pledgors shall deliver to the Agent an undated stock power covering such
certificate, duly executed in blank.
4. Representations and Warranties. Each of the Pledgors represents and
warrants that:
(a) The shares of Pledged Stock constitute all the issued and
outstanding shares of all classes of capital stock of each Issuer.
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) The Pledgor is the record and beneficial owner of, and has good
and marketable title to, the Pledged Stock, free of any and all Liens or
options in favor of, or claims of, any other Person, except the security
interests created by this Agreement.
(d) Upon delivery to the Agent of the stock certificates evidencing
the Pledged Stock, the security interest created by this Agreement will
constitute a valid, perfected first priority security interest in the
Collateral, enforceable in accordance with its terms against all creditors
of the Pledgor and any Persons purporting to purchase any Collateral from
the Pledgor, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied
covenant of good faith and fair dealing.
5. Covenants. Each of the Pledgors covenants and agrees with the Agent
and the Lenders that, from and after the date of this Agreement until this
Agreement is terminated and the security interests created hereby are released:
<PAGE> 4
(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing
a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights, whether
in addition to, in substitution of, as a conversion of, or in exchange
for any shares of the Pledged Stock, or otherwise in respect thereof, the
Pledgor shall accept the same as the agent of the Agent and the Lenders,
hold the same in trust for the Agent and the Lenders and deliver the same
forthwith to the Agent in the exact form received, duly endorsed by the
Pledgor to the Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by the Pledgor and with,
if the Agent so requests, signature guaranteed, to be held by the Agent,
subject to the terms hereof, as additional collateral security for the
Secured Obligations. Any sums paid upon or in respect of the Pledged
Stock upon the liquidation or dissolution of any Issuer shall be paid
over to the Agent to be held by it hereunder as additional collateral
security for the Secured Obligations, and in case any distribution of
capital shall be made on or in respect of the Pledged Stock or any
property shall be distributed upon or with respect to the Pledged Stock
pursuant to the recapitalization or reclassification of the capital of
the Issuer or pursuant to the reorganization thereof, the property so
distributed shall be delivered to the Agent to be held by it hereunder as
additional collateral security for the Secured Obligations. If any sums
of money or property so paid or distributed in respect of the Pledged
Stock shall be received by the Pledgor, the Pledgor shall, until such
money or property is paid or delivered to the Agent, hold such money or
property in trust for the Agent and the Lenders, segregated from other
funds of the Pledgor, as additional collateral security for the Secured
Obligations.
(b) Without the prior written consent of the Agent, the Pledgor will
not (i) vote to enable, or take any other action to permit, any Issuer to
issue any stock or other equity securities of any nature or to issue any
other securities convertible into or granting the right to purchase or
exchange for any stock or equity securities of any nature of any Issuer,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant
any option with respect to, the Collateral, (iii) create, incur or permit
to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Collateral, or any interest therein, except for the
security interests created by this Agreement or (iv) enter into any
agreement or undertaking restricting the right or ability of the Pledgor or
the Agent to sell, assign or transfer any of the Collateral.
(c) The Pledgor shall maintain the security interest created by this
Agreement as a first, perfected security interest and shall defend such
security interest against claims and demands of all Persons whomsoever.
At any time and from time to time, upon the written request of the Agent,
and at the sole expense of the Pledgor, the Pledgor will promptly and
duly execute and deliver such further instruments and documents and take
such further actions as the Agent may reasonably request for the purposes
of obtaining or preserving the full benefits of this Agreement and of the
rights and powers herein granted. If any amount payable under or in
connection with any of the Collateral shall be or
<PAGE> 5
become evidenced by any promissory note, other instrument or chattel
paper, such note, instrument or chattel paper shall be promptly delivered
to the Agent, duly endorsed in a manner satisfactory to the Agent, to be
held as Collateral pursuant to this Agreement.
(d) The Pledgor shall pay, and save the Agent and the Lenders
harmless from, any and all liabilities with respect to, or resulting from
any delay in paying, any and all stamp, excise, sales or other taxes
which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated
by this Agreement, except for any such liabilities which result from the
gross negligence or willful misconduct of the Agent.
6. Cash Dividends; Voting Rights. Unless an Event of Default shall have
occurred and be continuing and the Agent shall have given notice to the
Pledgors of the Agent's intent to exercise its corresponding rights pursuant to
Section 7 below, the Pledgors shall be permitted to receive all cash dividends
paid in the normal course of business of the Issuers and consistent with past
practice or otherwise to enable the partners or shareholders of the Pledgors to
pay taxes, to the extent permitted by the Credit Agreement, in respect of the
Pledged Stock and to exercise all voting and corporate rights with respect to
the Pledged Stock; provided, however, that no vote shall be cast or corporate
right exercised or other action taken which, in the Agent's reasonable
judgment, would impair the Collateral or which would be inconsistent with or
result in any violation of any provision of the Credit Agreement, this
Agreement or any other Credit Document.
7. Rights of the Lenders and the Agent. (a) All money Proceeds received
by the Agent hereunder shall be held by the Agent for the benefit of the
Lenders in a Collateral Account. All Proceeds while held by the Agent in a
Collateral Account (or by the Pledgors in trust for the Agent and the Lenders)
shall continue to be held as collateral security for all the Secured
Obligations and shall not constitute payment thereof until applied as provided
in Section 8(a).
(b) At any time after an Event of Default shall have occurred and be
continuing and the Agent shall give notice of its intent to exercise such
rights to the Pledgors, (i) the Agent shall have the right to receive any and
all cash dividends paid in respect of the Pledged Stock and make application
thereof to the Secured Obligations in the order set forth in Section 11 of the
Security Agreement, and (ii) all shares of the Pledged Stock shall be
registered in the name of the Agent or its nominee, and the Agent or its
nominee may thereafter exercise (A) all voting, corporate and other rights
pertaining to such shares of the Pledged Stock at any meeting of shareholders
of any Issuer or otherwise and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options pertaining to such
shares of the Pledged Stock as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any and
all of the Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
Issuer, or upon the exercise by the Pledgors or the Agent of any right,
privilege or option pertaining to such shares of the Pledged Stock, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Stock with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Agent may
<PAGE> 6
determine), all without liability except to account for property actually
received by it, but the Agent shall have no duty to the Pledgors to exercise
any such right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing.
8. Remedies. (a) At any time after an Event of Default shall have
occurred and be continuing, at the Agent's election, the Agent may apply all or
any part of Proceeds held in any Collateral Account in payment of the Secured
Obligations in the order set forth in Section 11 to the Security Agreement.
(b) At any time after an Event of Default shall have occurred, the Agent,
on behalf of the Lenders, may exercise, in addition to all other rights and
remedies granted in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Secured Obligations, all rights and
remedies of a secured party under the Code. Without limiting the generality of
the foregoing, the Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Pledgors or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
assign, give an option or options to purchase or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, in the
over-the-counter market, at any exchange, broker's board or office of the Agent
or any Lender or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. The Agent or any Lender
shall have the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the whole or
any part of the Collateral so sold, free of any right or equity of redemption in
the Pledgors to the extent permitted by applicable law. The Agent shall apply
any Proceeds from time to time held by it and the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred in respect
thereof or incidental to the care or safekeeping of any of the Collateral or in
any way relating to the Collateral or the rights of the Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to the Agent, to the payment in whole or in part of the
Secured Obligations, in such order as the Agent may elect, and only after such
application and after the payment by the Agent of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Agent account for the surplus, if any, to the Pledgors. If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least 20
days before such sale or other disposition. The Pledgors shall remain liable
for any deficiency if the proceeds of any sale or other disposition of
Collateral are insufficient to pay the Secured Obligations and the fees and
disbursements of any attorneys employed by the Agent or any Lender to collect
such deficiency.
9. Registration Rights; Private Sales. (a) If the Agent shall determine
to exercise its right to sell any or all of the Pledged Stock pursuant to
Section 8 hereof, and if in the opinion of the Agent it is necessary or
advisable to have the Pledged Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act, the Pledgors will cause
the Issuer
<PAGE> 7
thereof to (i) execute and deliver, and cause the directors and officers of
such Issuer to execute and deliver, all such instruments and documents, and do
or cause to be done all such other acts as may be, in the opinion of the Agent,
necessary or advisable to register the Pledged Stock, or that portion thereof
to be sold, under the provisions of the Securities Act, (ii) to use its best
efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date of the
first public offering of the Pledged Stock, or that portion thereof to be sold,
and (iii) to make all amendments thereto and/or to the related prospectus
which, in the opinion of the Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. Each
Pledgor acknowledges and agrees to cause such Issuer to comply with the
provisions of the securities or "Blue Sky" laws of any and all jurisdiction
which the Agent shall designate and to make available to its security holders,
as soon as practicable, an earnings statement (which need not be audited) which
will satisfy the provisions of Section 11(a) of the Securities Act.
(b) The Pledgors recognize that the Agent may be unable to effect a public
sale of any or all the Pledged Stock, by reason of certain prohibitions
contained in the Securities Act and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obligated to agree, among
other things, to acquire such securities for their own account for investment
and not with a view to the distribution or resale thereof. The Pledgors agree
that any such private sale may result in prices and other terms less favorable
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner. The Agent shall be under no obligation to
delay a sale of any of the Pledged Stock for the period of time necessary to
permit the Issuer thereof to register such securities for public sale under the
Securities Act, or under applicable state securities laws, even if such Issuer
agree to do so.
(c) The Pledgors further agree to use best efforts to do or cause to be
done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Stock pursuant to this Section valid and binding
and in compliance with any and all other applicable requirements of law. The
Pledgors further agree that a breach of any of the covenants contained in this
Section will cause irreparable injury to the Agent and the Lenders, that the
Agent and the Lenders have no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this Section
shall be specifically enforceable against the Pledgors, and the Pledgors hereby
waive and agree not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred under the Credit Agreement.
10. Irrevocable Authorization and Instruction to Issuer. The Pledgors
hereby authorize and instruct each Issuer to comply with any instruction
received by them or any one of them from the Agent in writing that (a) states
that an Event of Default has occurred and (b) is otherwise in accordance with
the terms of this Agreement, without any other or further instructions from the
Pledgors, and the Pledgors agree that each Issuer shall be fully protected in
so complying.
<PAGE> 8
11. Agent's Appointment as Attorney-in-Fact. (a) The Pledgors hereby
irrevocably constitute and appoint the Agent and any officer or agent of the
Agent, with full power of substitution, as their true and lawful
attorney-in-fact with fully irrevocable power and authority in the place and
stead of the Pledgors and in the name of the Pledgors or in the Agent's own
name, from time to time after the occurrence and during the continuation of an
Event of Default, in the Agent's discretion, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement, including, without
limitation, any financing statements, endorsement, assignment or other
instruments of transfer.
(b) The Pledgors hereby ratify all that the Agent shall lawfully do or
cause to be done pursuant to the power of attorney granted in Section 11(a).
All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.
12. Duty of Agent. The Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Code or otherwise, shall be to deal with it in the
same manner as the Agent deals with similar securities and property for its own
account, except that the Agent shall have no obligation to invest funds held in
any Collateral Account and may hold the same as demand deposits. Neither the
Agent, any Lender nor any of their respective directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon any of
the Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of the Pledgors or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
13. Execution of Financing Statements. Pursuant to Section 9-402 of the
Code, the Pledgors authorize the Agent to file financing statements with
respect to the Collateral without the signature of the Pledgors in such form
and in such filing offices as the Agent reasonably determines appropriate to
perfect the security interests of the Agent under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
14. Authority of Agent. The Pledgors acknowledge that the rights and
responsibilities of the Agent under this Agreement with respect to any action
taken by the Agent or the exercise or non-exercise by the Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Agent and the Pledgors, the Agent shall be conclusively presumed to be acting
as agent for the Lenders with full and valid authority so to act or refrain
from acting, and neither any of the Pledgors nor any Issuer shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
15. Notices. All notices shall be given or made in accordance with
Section 14.5 of the Credit Agreement.
<PAGE> 9
16. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
17. Amendments in Writing; No Waiver; Cumulative Remedies. (a) None of the
terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Pledgors and
the Agent, provided that any provision of this Agreement may be waived by the
Agent, on behalf of the Lenders, in a letter or agreement executed by the Agent
or by facsimile transmission from the Agent.
(b) Neither the Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 17(a) hereof), be deemed to delay, indulge, omit
or otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
exercising on the part of the Agent or any Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Agent or any Lender of any right or remedy
hereunder on any one occasion shall not be construed as a bar to any right or
remedy which the Agent or such Lender would otherwise have on any future
occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
18. Section Headings. The section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
19. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of the Pledgors and shall inure to the benefit of the
Agent and the Lenders and their successors and assigns, provided that the
Pledgors may not assign any of their rights or obligations under this Agreement
without the prior written consent of the Agent and any such purported
assignment shall be null and void.
20. Governing Law; Submission to Jurisdiction; Venue; Arbitration. THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK. THE PROVISIONS OF THE CREDIT AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION, VENUE AND ARBITRATION ARE HEREBY INCORPORATED BY
REFERENCE HEREIN, MUTATIS MUTANDIS.
<PAGE> 10
21. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
PLEDGOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING OUT OF THIS PLEDGE AGREEMENT, THE CREDIT DOCUMENTS OR ANY OTHER
AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
[Remainder of Page Intentionally Left Blank]
<PAGE> 11
IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement to
be duly executed and delivered as of the date first above written.
PLEDGORS: NATIONAL EQUIPMENT SERVICES, INC.,
a Delaware corporation
By: /s/ Paul R. Ingersoll
----------------------
Name: Paul R. Ingersoll
----------------------
Title: Vice President
----------------------
NES ACQUISITION CORP.,
a Delaware corporation
By: /s/ Paul R. Ingersoll
----------------------
Name: Paul R. Ingersoll
----------------------
Title: Vice President
----------------------
BAT ACQUISITION CORP.,
a Delaware Corporation
By: /s/ Paul R. Ingersoll
----------------------
Name: Paul R. Ingersoll
----------------------
Title: Vice President
----------------------
AERIAL PLATFORMS, INC.,
a Georgia corporation
By: /s/ Paul R. Ingersoll
----------------------
Name: Paul R. Ingersoll
----------------------
Title: Vice President
----------------------
BANK: FIRST UNION COMMERCIAL CORPORATION,
as Agent
By: /s/ Todd A. Witmer
----------------------
Name: Todd A. Witmer
----------------------
Title: Vice President
----------------------
<PAGE> 12
Schedule 1
Description of Pledged Stock
<TABLE>
<CAPTION>
No. of
Pledgor Issuer Class Description Cert. No. Shares Percentage
- ------- ------ ----------------- --------- ------ ----------
<S> <C> <C> <C> <C> <C>
Common
</TABLE>
<PAGE> 13
SCHEDULE 2
Irrevocable Stock Power
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of capital stock of _____________________, a ________
corporation:
Certificate No. No. of Shares
and irrevocably appoints
its agent and attorney-in-fact to transfer all or any part of such capital
stock and to take all necessary and appropriate action to effect any such
transfer. The agent and attorney-in-fact may substitute and appoint one or
more persons to act for him.
Date: ______________________________,
a ____________ corporation
By:___________________________
Name:
Title:
Witnessed by: [Signature Guaranteed:]
________________________
________________________
<PAGE> 1
Exhibit 4.8
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is entered into as of
July 1, 1997 among NATIONAL EQUIPMENT SERVICES, INC., a Delaware corporation
(the "Company"), the subsidiary borrowers listed on the signature pages
attached hereto and such other subsidiaries of the Company as may from time to
time become borrowers as provided under the Credit Agreement described below
(the "Subsidiary Borrowers") (hereinafter, the Company and the Subsidiary
Borrowers collectively referred to as the "Borrowers" or individually referred
to as a "Borrower") and FIRST UNION COMMERCIAL CORPORATION, in its capacity as
agent (in such capacity, the "Agent") for the financial institutions from time
to time party to the Credit Agreement referred to hereinbelow (the "Lenders").
RECITALS
WHEREAS, pursuant to that certain Credit Agreement, dated as of the date
hereof (as amended, modified, extended, renewed or replaced from time to time,
the "Credit Agreement"), among the Borrowers, the Lenders and the Agent, the
Lenders have agreed to make Loans and issue Letters of Credit upon the terms
and subject to the conditions set forth therein; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the obligations of the Lenders to make their respective Loans and
to issue Letters of Credit under the Credit Agreement that the Borrowers shall
have executed and delivered this Security Agreement to the Agent for the
ratable benefit of the Lenders.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
(a) Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to such terms in the Credit Agreement,
and the following terms which are defined in the Uniform Commercial Code
in effect in the State of New York on the date hereof (the "UCC"), are
used herein as so defined: Accounts, Chattel Paper, Deposit Accounts,
Documents, Equipment, Farm Products, Fixtures, General Intangibles,
Instruments, Inventory and Proceeds. For purposes of this Security
Agreement, the term "Lender" shall include any affiliate of a Lender which
has entered into an Interest Rate Protection Agreement with a Borrower in
respect of the Obligations of the Borrowers under the Credit Agreement.
a. In addition, the following terms shall have the
following meanings:
"Contracts": (a) the Closing Date Acquisition Documents and the
Acquisition Documents, (b) all Equipment Leases and (c) all other
contracts and agreements to which a Borrower is a party, as each may be
amended, supplemented or otherwise modified from time to time, including,
without limitation, (i) all rights of a Borrower to receive moneys due and
to become due to it thereunder or in connection therewith, (ii) all rights
of a
<PAGE> 2
Borrower to damages arising out of or for breach or default in respect
thereof and (iii) all rights of a Borrower to exercise all remedies
thereunder.
"Copyright Licenses": any written agreement, naming any Borrower as
licensor, granting any right under any Copyright including, without
limitation, any thereof referred to in Schedule 1(b) hereto.
"Copyrights": (a) all registered United States copyrights in all
Works, now existing or hereafter created or acquired, all registrations
and recordings thereof, and all applications in connection therewith,
including, without limitation, registrations, recordings and applications
in the United States Copyright office including, without limitation, any
thereof referred to in Schedule 1(b) hereto, and (b) all renewals thereof
including, without limitation, any thereof referred to in Schedule 1(b)
hereto.
"Equipment Leases": all leases of Equipment entered into by a
Borrower acting as lessor, as each may be amended, supplemented or
otherwise modified from time to time.
"Insurance Policies": all insurance policies insuring the Borrowers
and their assets and any life insurance policies securing the lives of
officers of the Borrowers which name one or more Borrowers as beneficiary
thereof.
"Patent License": all agreements, whether written or oral, providing
for the grant by or to a Borrower of any right to manufacture, use or sell
any invention covered by a Patent, including, without limitation, any
thereof referred to in Schedule 1(b) hereto.
"Patents": (a) all letters patent of the United States or any other
country and all reissues and extensions thereof, including, without
limitation, any thereof referred to in Schedule 1(b) hereto, and (b) all
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any thereof referred to in Schedule 1(b)
hereto.
"Secured Obligations": (a) all of the Borrowers' obligations under
the Credit Agreement and the other Credit Documents (hereinafter, the
"Obligations"), (b) all expenses and charges, legal and otherwise,
reasonably incurred by the Agent in collecting or enforcing any
Obligations or in realizing on or protecting any security therefor,
including without limitation the security afforded hereunder and (c) all,
liabilities and obligations arising under Interest Rate Protection
Agreements between a Borrower and a Lender in respect of the Obligations.
"Trademark License": any agreement, written or oral, providing for
the grant by or to an Borrower of any right to use any Trademark,
including, without limitation, any thereof referred to in Schedule 1(b)
hereto.
"Trademarks": (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and the
goodwill associated therewith, now existing or hereafter adopted or
<PAGE> 3
acquired, all registrations and recordings thereof, and all applications
in connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, including, without limitation, any thereof referred to in
Schedule 1(b) hereto, and (b) all renewals thereof.
"UCC": as defined in Section 1 hereof.
"Work": any work which is subject to copyright protection pursuant
to Title 17 of the United States Code.
2. Grant of Security Interest in the Collateral. To secure the prompt
payment and performance in full when due, whether by lapse of time,
acceleration or otherwise, of the Secured Obligations, each Borrower hereby
grants to the Agent, for the benefit of the Lenders, a continuing security
interest in, and a right to set off against, any and all right, title and
interest of such Borrower in and to the following, whether now owned or
existing or owned, acquired, or arising hereafter (collectively, the
"Collateral"):
(a) all Accounts;
(b) all Chattel Paper;
(c) all Copyrights;
(d) all Copyright Licenses;
(e) all Deposit Accounts, including, without limitation, all Lockbox
Accounts, the FUCC Account and any replacement or successor accounts
relating thereto;
(f) all Documents;
(g) all Equipment;
(h) all Fixtures;
(i) all General Intangibles, including, without limitation,
all rights under the Contracts;
(j) all Instruments;
(k) all Inventory;
(l) all Patents;
<PAGE> 4
(m) all Patent Licenses;
(n) all Trademarks;
(o) all Trademark Licenses;
(p) all Insurance Policies;
(q) all books, records, ledger cards, files,
correspondence, computer programs, tapes, disks, and related
data processing software (owned by such Borrower or in which it
has an interest) that at any time evidence or contain
information relating to any Collateral or are otherwise
necessary or helpful in the collection thereof or realization
thereupon;
(r) to the extent not otherwise included, all other
personal property of such Borrower; and
(s) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing.
The Borrowers and the Agent, on behalf of the Lenders, hereby acknowledge
and agree that the security interest created hereby in the Collateral (i)
constitutes continuing collateral security for all of the Secured Obligations,
whether now existing or hereafter arising and (ii) is not to be construed as an
assignment in the nature of a sale of any Copyrights, Copyright Licenses,
Patents, Patent Licenses, Trademarks or Trademark Licenses.
3. Representations and Warranties. Each Borrower hereby represents and
warrants to the Agent, for the benefit of the Lenders, that so long as any of
the Secured Obligations remain outstanding or any Credit Document is in effect
or any Letter of Credit shall remain outstanding, and until all of the
Commitments shall have been terminated:
(a) Chief Executive Office; Books & Records. Each Borrower's chief
executive office and chief place of business is (and for the prior four
months have been) located at the locations set forth on Schedule 3(a)
hereto, and each Borrower keeps its books and records at such locations.
(b) Location of Collateral, Etc. The location of all Collateral
owned by each Borrower (excluding Rental Equipment currently under lease)
is as shown on Schedule 3(b)(i) hereto.
(c) Ownership. Each Borrower is the legal and beneficial owner of
its Collateral and has the right to pledge, sell, assign or transfer the
same. Each Borrower's legal name is as shown in this Security Agreement
and no Borrower has in the past four months changed its name, been party
to a merger, consolidation or other change in structure or used any trade
name, d/b/a or other fictitious business name, except as set forth in
Schedule 3(c) attached hereto.
<PAGE> 5
(d) Security Interest/Priority. This Security Agreement creates a
valid security interest in favor of the Agent, for the benefit of the
Lenders, in the Collateral of such Borrower and, when properly perfected
by filing, shall constitute a valid perfected security interest in such
Collateral, to the extent such security can be perfected by filing under
the UCC, free and clear of all Liens, except for Permitted Liens.
(e) Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
(f) Accounts. (i) Each Account of the Borrowers and the papers and
documents relating thereto are genuine and in all material respects what
they purport to be, (ii) each Account arises out of (A) a bona fide sale
of goods sold and delivered by such Borrower (or is in the process of
being delivered) or (B) services theretofore actually rendered by such
Borrower to, the account debtor named therein and (iii) no Account of a
Borrower is evidenced by any Instrument or Chattel Paper unless such
Instrument or Chattel Paper has been theretofore endorsed over and
delivered to the Agent.
(g) Copyrights, Patents and Trademarks.
(i) Schedule 1(b) hereto includes all Copyrights, Copyright
Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses
owned by the Borrowers in their own names as of the date hereof.
(ii) To the best of each Borrower's knowledge, each Copyright,
Patent and Trademark of such Borrower is valid, subsisting,
unexpired, enforceable and has not been abandoned.
(iii) Except as set forth in Schedule 1(b) hereto, none of such
Copyrights, Patents and Trademarks is the subject of any licensing or
franchise agreement.
(iv) No holding, decision or judgment has been rendered by any
court, tribunal, agency or other governmental body or authority which
would limit, cancel or question the validity of any Copyright, Patent
or Trademark.
(v) No action or proceeding is pending seeking to limit, cancel
or question the validity of any Copyright, Patent or Trademark, or
which, if adversely determined, would have a material adverse effect
on the value of such Copyright, Patent or Trademark.
(vi) All applications pertaining to the Copyrights, Patents and
Trademarks of each Borrower have been duly and properly filed, and
all registrations or letters pertaining to such Copyrights, Patents
and Trademarks have been duly
<PAGE> 6
and properly filed and issued, and all of such Copyrights, Patents
and Trademarks are valid and enforceable.
(vii) No Borrower has made any assignment or agreement in
conflict with the security interest in the Copyrights, Patents or
Trademarks of such Borrower hereunder.
(h) Inventory. No Inventory is held by a Borrower pursuant to
consignment, sale or return, sale on approval or similar arrangement.
4. Covenants. Each Borrower (except for such covenants which specifically
pertain to the Company only) covenants that, so long as any of the Secured
Obligations remain outstanding or any Credit Document is in effect or any
Letter of Credit shall remain outstanding, and until all of the Commitments
shall have been terminated, such Borrower shall:
(a) Other Liens. Defend the Collateral against the claims and
demands of all other parties claiming an interest therein, keep the
Collateral free from all Liens, except for Permitted Liens, and not sell,
exchange, transfer, assign, lease or otherwise dispose of the Collateral
or any interest therein, except as permitted under the Credit Agreement.
(b) Preservation of Collateral. Keep the Collateral in good order,
condition and repair and not use the Collateral in violation of the
provisions of this Security Agreement or any other agreement relating to
the Collateral or any policy insuring the Collateral or any applicable
statute, law, bylaw, rule, regulation or ordinance which violation (in the
case of any such agreement, statute, law, bylaw, rule, regulation or
ordinance) could be reasonably expected to materially and adversely effect
the value of such Collateral or its utility to such Borrower in the
conduct of such Borrower's business in the ordinary course.
(c) Instruments/Chattel Paper. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced by any
Instrument or Chattel Paper, promptly deliver such Instrument or Chattel
Paper to the Agent, duly endorsed in a manner satisfactory to the Agent,
to be held as Collateral pursuant to this Security Agreement; provided,
however, that with respect to instruments or chattel paper where the
obligor is not a Borrower or a Subsidiary of a Borrower, such instruments
or chattel paper shall not be required to be delivered to the Agent until
such time as the Agent shall have requested delivery of the same or until
an Event of Default shall have occurred.
(d) Change in Location. Not, without providing 30 days prior written
notice to the Agent and without filing such amendments to any previously
filed financing statements as the Agent may require, (a) change the
location of its chief executive office and chief place of business (as
well as its books and records) from the locations set forth on Schedule
3(a) hereto, (b) change the location of its Collateral from the locations
set forth for such Borrower on Schedule 3(b)(i) hereto, or (c) change its
name, be party to a merger, consolidation or other change in structure or
use any trade name, d/b/a or other fictitious business name other than as
permitted under the Credit Agreement.
<PAGE> 7
(e) Inspection. Upon reasonable notice, at such reasonable times and as
often as may be reasonably desired, allow the Agent, any Lender or their
respective representatives free access to and right of inspection of the
tangible Collateral.
(f) Perfection of Security Interest. Execute and deliver to the
Agent such agreements, assignments or instruments (including affidavits,
notices, reaffirmations and amendments and restatements of existing
documents, as the Agent may reasonably request) and do all such other
things as the Agent may reasonably deem necessary or appropriate (i) to
assure to the Agent its security interests hereunder, including (A) such
financing statements (including renewal statements) or amendments thereof
or supplements thereto or other instruments as the Agent may from time to
time reasonably request in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC, (B) with regard to
Copyrights, a Notice of Grant of Security Interest in Copyrights in the
form of Schedule 4(f)(i), (C) with regard to Patents, a Notice of Grant of
Security Interest in Patents for filing with the United States Patent and
Trademark Office in the form of Schedule 4(f)(ii) attached hereto and (D)
with regard to Trademarks, a Notice of Grant of Security Interest in
Trademarks for filing with the United States Patent and Trademark Office
in the form of Schedule 4(f)(iii) attached hereto, (ii) to consummate the
transactions contemplated hereby and (iii) to otherwise protect and assure
the Agent of its rights and interests hereunder. To that end, each
Borrower agrees that the Agent may file one or more financing statements
disclosing the Agent's security interest in any or all of the Collateral
of such Borrower without, to the extent permitted by law, such Borrower's
signature thereon, and further each Borrower also hereby irrevocably
makes, constitutes and appoints the Agent, its nominee or any other person
whom the Agent may designate, as such Borrower's attorney in fact with
full power and for the limited purpose to sign in the name of such
Borrower any such financing statements, or amendments and supplements to
financing statements, renewal financing statements, notices or any similar
documents which in the Agent's reasonable discretion would be necessary,
appropriate or convenient in order to perfect and maintain perfection of
the security interests granted hereunder, such power, being coupled with
an interest, being and remaining irrevocable so long as the Credit
Agreement is in effect or any amounts payable thereunder or under any
other Credit Document or any Letter of Credit shall remain outstanding,
and until all of the Commitments thereunder shall have terminated. Each
Borrower hereby agrees that a carbon, photographic or other reproduction
of this Security Agreement or any such financing statement is sufficient
for filing as a financing statement by the Agent without notice thereof to
such Borrower wherever the Agent may in its sole discretion desire to file
the same. In the event for any reason the law of any jurisdiction other
than North Carolina becomes or is applicable to the Collateral of any
Borrower or any part thereof, or to any of the Secured Obligations, such
Borrower agrees to execute and deliver all such instruments and to do all
such other things as the Agent in its sole discretion reasonably deems
necessary or appropriate to preserve, protect and enforce the security
interests of the Agent under the law of such other jurisdiction (and, if a
Borrower shall fail to do so promptly upon the request of the Agent, then
the Agent may execute any and all such requested documents on behalf of
such Borrower pursuant to the power of attorney granted hereinabove). If
any Collateral is in the possession or control of a Borrower's agents and
the Agent so requests, such Borrower agrees to
<PAGE> 8
notify such agents in writing of the Agent's security interest therein
and, upon the Agent's request, instruct them to hold all such Collateral
for the Lenders' account and subject to the Agent's further instructions.
Each Borrower agrees to mark its books and records to reflect the security
interest of the Agent in the Collateral.
(g) Covenants Relating to Accounts.
(i) Upon the occurrence of a Cash Management Event, comply with
all provisions of the Credit Agreement relating to the establishment
and maintenance of the Lockboxes.
(ii) Comply with all reporting requirements set forth in the
Credit Agreement with respect to Accounts.
(iii) Unless and until an Event of Default occurs and is
continuing, each Borrower may settle and adjust disputes and claims
with its customers and account debtors and grant discounts, credits
and allowances in the ordinary course of its business as presently
conducted and otherwise for amounts and on terms which such Borrower
in good faith considers advisable. Upon the occurrence of any Event
of Default and during the continuation thereof, if so instructed by
the Agent, such Borrower shall settle and adjust disputes and claims,
at no expense to the Agent, but no discount, credit or allowance
other than on normal trade terms in the ordinary course of business
shall be granted to any customer or account debtor without the
Agent's consent. The Agent may (but shall not be required to), at
all times upon the occurrence of any Event of Default and during the
continuance thereof, settle or adjust disputes and claims directly
with customers or account debtors for amounts and upon terms which
the Agent considers advisable.
(h) Covenants Relating to Inventory.
(i) Maintain, keep and preserve the Inventory in good, rentable
condition at its own cost and expense.
(ii) Comply with all reporting requirements set forth in the
Credit Agreement with respect to Inventory.
(iii) If any of the Inventory is at any time evidenced by a
document of title, (A) promptly cause each such document of title to
name on the face thereof the Agent, for the Lenders, as lienholder of
such title and (B) promptly upon request by the Agent, deliver such
document of title to the Agent.
(i) Covenants Relating to Copyrights.
(i) Employ each Copyright with such notice of copyright as may
be required by law to secure copyright protection.
<PAGE> 9
(ii) Not do any act or knowingly omit to do any act whereby any
Copyright may become invalidated and (A) not do any act, or knowingly
omit to do any act, whereby any Copyright may become injected into
the public domain; (B) notify the Agent immediately if it knows, or
has reason to know, that any Copyright may become injected into the
public domain or of any adverse determination or development
(including, without limitation, the institution of, or any such
determination or development in, any court or tribunal in the United
States or any other country) regarding a Borrower's ownership of any
such Copyright or its validity; (C) take all necessary steps as it
shall deem appropriate under the circumstances, to maintain and
pursue each application (and to obtain the relevant registration) and
to maintain each registration of each Copyright owned by a Borrower
including, without limitation, filing of applications for renewal
where necessary; and (D) promptly notify the Agent of any material
infringement of any Copyright of a Borrower of which it becomes aware
and take such actions as it shall reasonably deem appropriate under
the circumstances to protect such Copyright, including, where
appropriate, the bringing of suit for infringement, seeking
injunctive relief and seeking to recover any and all damages for such
infringement.
(iii) Not make any assignment or agreement in conflict with the
security interest in the Copyrights of each Borrower hereunder,
except for licenses thereof which such Borrower has reasonably
determined to be advisable or advantageous and which comply with the
provisions of Section 9.16 of the Credit Agreement.
(j) Covenants Relating to Patents and Trademarks.
(i) (A) Continue to use each Trademark on each and every
trademark class of goods applicable to its current line as reflected
in its current catalogs, brochures and price lists in order to
maintain such Trademark in full force free from any claim of
abandonment for non-use, (B) maintain as in the past the quality of
products and services offered under such Trademark, (C) employ such
Trademark with the appropriate notice of registration, (D) not adopt
or use any mark which is confusingly similar or a colorable imitation
of such Trademark unless the Agent, for the ratable benefit of the
Lenders, shall obtain a perfected security interest in such mark
pursuant to this Security Agreement, and (E) not (and not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to
do any act whereby any Trademark may become invalidated.
(ii) Not do any act, or omit to do any act, whereby any Patent
may become abandoned or dedicated.
(iii) Notify the Agent and the Lenders immediately if it knows,
or has reason to know, that any application or registration relating
to any Patent or
<PAGE> 10
Trademark may become abandoned or dedicated, or of any adverse
determination or development (including, without limitation, the
institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office or any
court or tribunal in any country) regarding a Borrower's ownership of
any Patent or Trademark or its right to register the same or to keep
and maintain the same.
(iv) Whenever a Borrower, either by itself or through an agent,
employee, licensee or designee, shall file an application for the
registration of any Patent or Trademark with the United States Patent
and Trademark Office or any similar office or agency in any other
country or any political subdivision thereof, a Borrower shall report
such filing to the Agent and the Lenders within five Business Days
after the last day of the fiscal quarter in which such filing occurs.
Upon request of the Agent, a Borrower shall execute and deliver any
and all agreements, instruments, documents and papers as the Agent
may request to evidence the Agent's and the Lenders' security
interest in any Patent or Trademark and the goodwill and general
intangibles of a Borrower relating thereto or represented thereby.
(v) Take all reasonable and necessary steps, including, without
limitation, in any proceeding before the United States Patent and
Trademark Office, or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue
each application (and to obtain the relevant registration) and to
maintain each registration of the Patents and Trademarks, including,
without limitation, filing of applications for renewal, affidavits of
use and affidavits of incontestability.
(vi) Promptly notify the Agent and the Lenders after it learns
that any Patent or Trademark included in the Collateral is infringed,
misappropriated or diluted by a third party and promptly sue for
infringement, misappropriation or dilution, to seek injunctive relief
where appropriate and to recover any and all damages for such
infringement, misappropriation or dilution, or take such other
actions as it shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark.
(vii) Not make any assignment or agreement in conflict with the
security interest in the Patents or Trademarks of each Borrower
hereunder, except for licenses thereof which such Borrower has
reasonably determined to be advisable or advantageous and which
comply with the provisions of Section 9.16 of the Credit Agreement.
(k) New Patents, Copyrights and Trademarks. Promptly provide the
Agent with (i) a listing of all applications, if any, for new Copyrights,
Patents or Trademarks (together with a listing of the issuance of
registrations or letters on present applications), which new applications
and issued registrations or letters shall be subject to the terms and
conditions hereunder, and (ii) (A) with respect to Copyrights, a duly
executed Notice of Security Interest in Copyrights, (B) with respect to
Patents, a duly executed Notice of Security Interest in Patents, (C) with
respect to Trademarks, a duly executed Notice of Security Interest in
Trademarks or (D) such other duly
<PAGE> 11
executed documents as the Agent may request in a form acceptable to
counsel for the Agent and suitable for recording to evidence the security
interest in the Copyright, Patent or Trademark which is the subject of
such new application.
(l) Insurance. Have and maintain at all times with respect to the
Collateral the same types and amounts of insurance as the Borrowers are
required to maintain pursuant to the Credit Agreement. All insurance
proceeds shall be subject to the Lien of the Agent hereunder; provided
that any such insurance proceeds may be retained by the Borrowers to the
extent permitted under the Credit Agreement.
(m) Equipment.
(i) At all times, maintain its Equipment in good working order
(ordinary wear and tear and damages from casualty and condemnation
excepted) and in compliance with all applicable safety standards.
(ii) If any of the Equipment is at any time evidenced by a
document of title, (A) promptly cause each such document of title to
name on the face thereof the Agent, for the Lenders, as lienholder of
such title and (B) promptly upon request by the Agent, deliver such
document of title to the Agent.
(n) Bank Accounts. At all times upon and during the occurrence of a
Cash Management Event, maintain the Lockbox Accounts, the FUCC Account and
any replacement or successor accounts relating thereto in accordance with
the terms of the Lockbox Agreements and the Credit Agreement, as
applicable, and cause all amounts received in the Lockboxes relating
thereto to be deposited into the applicable Lockbox Account or the FUCC
Account, as the case may be, and to be applied as set forth in the
applicable Lockbox Account Agreement, the Credit Agreement and this
Security Agreement, as applicable. All amounts on deposit in the Lockbox
Accounts, the FUCC Account and any replacement or successor accounts
relating thereto shall be subject to the Lien of the Agent hereunder.
5. Special Provisions Relating to Accounts.
(a) Anything herein to the contrary notwithstanding, each of the
Borrowers shall remain liable under each of the Accounts to observe and
perform all the conditions and obligations to be observed and performed by
it thereunder, all in accordance with the terms of any agreement giving
rise to each such Account. Neither the Agent nor any Lender shall have
any obligation or liability under any Account (or any agreement giving
rise thereto) by reason of or arising out of this Security Agreement or
the receipt by the Agent or any Lender of any payment relating to such
Account pursuant hereto, nor shall the Agent or any Lender be obligated in
any manner to perform any of the obligations of a Borrower under or
pursuant to any Account (or any agreement giving rise thereto), to make
any payment, to make any inquiry as to the nature or the sufficiency of
any payment received by it or as to the sufficiency of any performance by
any party under any Account (or any agreement giving rise thereto), to
present
<PAGE> 12
or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to it or
to which it may be entitled at any time or times.
(b) At any time after the occurrence and during the continuation of
an Event of Default, the Agent shall have the right, but not the
obligation, to make test verifications of the Accounts in any manner and
through any medium that it reasonably considers advisable, and the
Borrowers shall furnish all such assistance and information as the Agent
may require in connection with such test verifications. At any time and
from time to time, upon the Agent's request and at the expense of the
Borrowers, the Borrowers shall cause independent public accountants or
others satisfactory to the Agent to furnish to the Agent reports showing
reconciliations, aging and test verifications of, and trial balances for,
the Accounts. The Agent in its own name or in the name of others may
communicate with account debtors on the Accounts to verify with them to
the Agent's satisfaction the existence, amount and terms of any Accounts.
6. Special Provisions Regarding Inventory.
(a) Unless and until an Event of Default occurs and is continuing and
the Agent instructs such Borrower otherwise, each Borrower may, without
further consent or approval of the Agent, use, consume, sell, lease and
exchange the Inventory in the ordinary course of its business as presently
conducted. In the case of a sale or exchange of Inventory permitted by
the Credit Agreement, the security interest created hereby in the
Inventory so sold or exchanged (but not in any proceeds arising from such
sale or exchange) shall cease immediately without any further action on
the part of the Agent.
(b) Upon the Lenders' making any Loan pursuant to the Credit
Agreement or the Issuing Bank issuing any Letter of Credit pursuant to the
Credit Agreement, each Borrower shall be deemed to have warranted that all
warranties of such Borrower set forth in this Security Agreement with
respect to its Inventory are true and correct in all material respects
with respect to such Inventory, including without limitation that such
Inventory is located at a location permitted by Section 3(b) or 4(d)
hereof.
7. Advances by Lenders. On failure of any Borrower to perform any of the
covenants and agreements contained herein, the Agent may, in its reasonable
discretion, but shall not be obligated to, perform the same and in so doing may
expend such sums as the Agent may reasonably deem advisable in the performance
thereof, including, without limitation, the payment of any insurance premiums,
the payment of any taxes, a payment to obtain a release of a Lien or potential
Lien (other than a Permitted Lien), reasonable expenditures made in defending
against any adverse claim (other than in respect of a Permitted Lien) and all
other reasonable expenditures which the Agent or the Lenders may make for the
protection of the security hereof or which may be compelled to make by
operation of law. All such sums and amounts so expended shall be repayable by
the Borrowers on a joint and several basis promptly upon timely notice thereof
and demand therefor, shall constitute additional Secured Obligations and shall
bear interest from the date said amounts are expended at the default rate
specified in Section 4.2 of the Credit Agreement. No such performance of any
covenant or agreement by the Agent or the Lenders on behalf of any Borrower,
and no such advance or expenditure therefor, shall
<PAGE> 13
relieve the Borrowers of any breach under the terms of this Security Agreement
or the other Credit Documents. The Lenders may make any payment authorized
pursuant to this Section 7 in accordance with any bill, statement or estimate
procured from the appropriate public office or holder of the claim to be
discharged without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax assessment, sale, forfeiture, tax
lien, title or claim except to the extent such payment is being contested in
good faith by a Borrower in appropriate proceedings and against which adequate
reserves are being maintained in accordance with GAAP.
8. Events of Default.
The occurrence of an event which under the Credit Agreement would
constitute an Event of Default shall be an Event of Default hereunder (an
"Event of Default").
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and
during continuation thereof, the Lenders shall have, in addition to the
rights and remedies provided herein, in the Credit Documents or by law
(including, but not limited to, the rights and remedies set forth in the
Uniform Commercial Code of the jurisdiction applicable to the affected
Collateral), the rights and remedies of a secured party under the UCC
(regardless of whether the UCC is the law of the jurisdiction where the
rights and remedies are asserted and regardless of whether the UCC applies
to the affected Collateral), and further, the Agent may, with or without
judicial process or the aid and assistance of others, (i) enter on any
premises on which any of the Collateral may be located and, without
resistance or interference by the Borrowers, take possession of the
Collateral and remove from any premises where same may be located any and
all documents, instruments, files and records (including the copying of
any computer records), and any receptacles or cabinets containing same,
relating to the Collateral, or the Agent may use (at the expense of the
Borrowers) such of the supplies or space of any Borrower at such
Borrower's place of business or otherwise, as may be necessary to properly
administer and control the Collateral or the handling of collections and
realizations thereon, (ii) dispose of any Collateral on any such
premises, (iii) maintain such possession on any Borrower's premises (each
Borrower hereby agreeing to lease warehouses and storage facilities to the
Agent or its designee if the Agent so requests), (iv) require the
Borrowers to assemble and make available to the Agent at the expense of
the Borrowers any Collateral at any place and time designated by the Agent
which is reasonably convenient to both parties, (v) remove any Collateral
from any such premises for the purpose of effecting sale or other
disposition thereof, and/or (vi) without demand and without advertisement,
notice, hearing or process of law, all of which each of the Borrowers
hereby waives to the fullest extent permitted by law, at any place and
time or times, sell and deliver any or all Collateral held by or for it at
public or private sale, by one or more contracts, in one or more parcels,
for cash, upon credit or otherwise, at such prices and upon such terms as
the Agent deems advisable, in its sole discretion (subject to any and all
mandatory legal requirements). If the Agent exercises its right to take
possession of the Collateral, each Borrower shall also at its expense
perform any and all other steps reasonably requested by the Agent to
preserve and protect the security interest
<PAGE> 14
hereby granted in the Collateral, such as placing and maintaining signs
indicating the security interest of the Agent, appointing overseers for
the Collateral and maintaining inventory records. The Agent shall be
entitled to use all Proprietary Rights and computer software programs and
data bases used by any Borrower in connection with their respective
businesses or in connection with the Collateral. In addition to all other
sums due the Agent and the Lenders with respect to the Secured
Obligations, the Borrowers shall pay the Agent and each of the Lenders all
reasonable documented costs and expenses incurred by the Agent or any such
Lender, including, but not limited to, reasonable attorneys' fees and
court costs, in obtaining or liquidating the Collateral, in enforcing
payment of the Secured Obligations, or in the prosecution or defense of
any action or proceeding by or against the Agent or any Lender or the
Borrowers concerning any matter arising out of or connected with this
Security Agreement or the Collateral or the Secured Obligations, including
without limitation any of the foregoing arising in, arising under or
related to a case under the United States Bankruptcy Code. To the extent
the rights of notice cannot be legally waived hereunder, each Borrower
agrees that any requirement of reasonable notice shall be met if such
notice is personally served on or mailed, postage prepaid, to such
Borrower in accordance with the notice provisions of Section 14.5 of the
Credit Agreement at least 10 days before the time of sale or other event
giving rise to the requirement of such notice. The Agent and the Lenders
shall not be obligated to make any sale or other disposition of the
Collateral regardless of notice having been given. To the extent
permitted by law, any Lender may be a purchaser at any such sale. To the
extent permitted by law, each of the Borrowers hereby waives all of its
rights of redemption with respect to any such sale. Subject to the
provisions of applicable law, the Agent and the Lenders may postpone or
cause the postponement of the sale of all or any portion of the Collateral
by announcement at the time and place of such sale, and such sale may,
without further notice, to the extent permitted by law, be made at the
time and place to which the sale was postponed, or the Agent and the
Lenders may further postpone such sale by announcement made at such time
and place. After the occurrence and during the continuance of an Event of
Default, each Borrower agrees that all returned, reclaimed or repossessed
merchandise or goods shall be set aside by such Borrower, marked with the
Lenders' name and held by such Borrower for the Lenders' account as owner
and assignee.
(b) Remedies relating to Accounts. Upon the occurrence of an Event
of Default and during the continuation thereof, whether or not the Agent
has exercised any or all of its rights and remedies hereunder, the Agent
or its designee may notify any Borrower's customers and account debtors
that the Accounts of such Borrower have been assigned to the Agent or of
the Agent's security interest therein, and may (i) bring suit, in the name
of any Borrower or the Lenders, and generally shall have all other rights
respecting said Accounts, including without limitation the right to
accelerate or extend the time of payment, settle, compromise, release in
whole or in part any amounts owing on any Accounts and issue credits in
the name of any Borrower or the Lenders, (ii) in the Agent's discretion,
file any claim or take any other action or proceeding to protect and
realize upon the security interest of the Lenders in the Accounts and
(iii) sell, assign and deliver the Accounts and any returned, reclaimed or
repossessed merchandise, with or without advertisement, at public or
private sale, which sale shall be conducted in a commercially reasonable
manner, for
cash, on credit or otherwise, at Agent's sole option and discretion, and
any Lender may bid or become a
<PAGE> 15
purchaser at any such sale, free from any right of redemption, which right
is hereby expressly waived by each Borrower. Each Borrower acknowledges
and agrees that the Proceeds of its Accounts remitted to or on behalf of
the Agent in accordance with the provisions of this Section 9(b) shall be
solely for the Agent's own convenience and that such Borrower shall not
have any right, title or interest in such Accounts or in any such other
amounts except as expressly provided herein. The Agent may apply all or
any part of any Proceeds of Accounts or other Collateral received by it
from any source to the payment of the Secured Obligations (whether or not
then due and payable). The Agent shall have no obligation to apply or give
credit for any item included in proceeds of Accounts or other Collateral
until the applicable Lockbox Bank has received final payment therefor at
its offices in cash. However, if the Agent does permit credit to be given
for any item prior to a Lockbox Bank receiving final payment therefor and
such Lockbox Bank fails to receive such final payment or an item is
charged back to the Agent or any Lockbox Bank for any reason, the Agent
may at its election in either instance charge the amount of such item back
against any such Lockbox Accounts, together with interest thereon at a
rate per annum equal to the default rate specified in Section 4.2 of the
Credit Agreement. Each Borrower hereby indemnifies the Agent from and
against all liabilities, damages, losses, actions, claims, judgments,
costs, expenses, charges and reasonable attorneys' fees (except such as
result from the Agent's gross negligence or willful misconduct) suffered
or incurred by the Agent because of the maintenance of the foregoing
arrangements. The Agent shall have no liability or responsibility to any
Borrower for a Lockbox Bank accepting any check, draft or other order for
payment of money bearing the legend "payment in full" or words of similar
import or any other restrictive legend or endorsement whatsoever or be
responsible for determining the correctness of any remittance (it being
understood that this sentence shall in no way affect the liability or
responsibility of any such Lockbox Bank).
(c) Remedies relating to Inventory. Immediately upon the occurrence
of any Event of Default, the Agent may foreclose the security interests
created pursuant to the Credit Documents by any available judicial
procedure, or take possession of any or all of the Inventory without
judicial process and enter any premises where any Inventory may be located
for the purpose of taking possession of or removing the same. The Agent
shall have the right, without notice of advertisement, to sell, lease, or
otherwise dispose of all or any part of the Inventory whether in its then
condition or after further preparation or processing, in the name of any
Borrower or the Lenders, or in the name of such other party as the Agent
may designate, either at public or private sale or at any broker's board,
in lots or in bulk, for cash or for credit, with or without warranties or
representations, and upon such other terms and conditions as the Agent in
its sole discretion may deem advisable, and the Agent or any other Lender
shall have the right to purchase at any such sale. If any Inventory shall
require rebuilding, repairing, maintenance or preparation, the Agent shall
have the right, at its option, to do such of the aforesaid as is
necessary, for the purpose of putting the Inventory in such salable form
as the Agent shall deem appropriate. Each Borrower agrees, at the request
of the Agent, to assemble the Inventory and to make it available to the
Agent at places which the Agent shall select, whether at the premises of
any Borrower or elsewhere, and to make available to the Agent the premises
and facilities of any Borrower for the
<PAGE> 16
purpose of the Agent's taking possession of, removing or putting the
Inventory in salable form.
(d) Nonexclusive Nature of Remedies. Failure by the Agent or the
Lenders to exercise any right, remedy or option under this Security
Agreement, any other Credit Document or as provided by law, or any delay
by the Agent or the Lenders in exercising the same, shall not operate as a
waiver of any such right, remedy or option. No waiver hereunder shall be
effective unless it is in writing, signed by the party against whom such
waiver is sought to be enforced and then only to the extent specifically
stated, which in the case of the Agent or the Lenders shall only be
granted as provided herein. To the extent permitted by law, neither the
Agent, the Lenders, nor any party acting as attorney for the Agent or the
Lenders, shall be liable hereunder for any acts or omissions or for any
error of judgment or mistake of fact or law other than their gross
negligence or willful misconduct hereunder. The rights and remedies of
the Agent and the Lenders under this Security Agreement shall be
cumulative and not exclusive of any other right or remedy which the Agent
or the Lenders may have.
(e) Retention of Collateral. Upon the occurrence and during the
continuance of an Event of Default, the Agent may, after providing the
notices required by Section 9-505(2) of the UCC or otherwise complying
with the requirements of applicable law of the relevant jurisdiction, to
the extent the Agent is in possession of any of the Collateral, retain the
Collateral in satisfaction of the Secured Obligations. Unless and until
the Agent shall have provided such notices, however, the Agent shall not
be deemed to have retained any Collateral in satisfaction of any Secured
Obligations for any reason.
(f) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which the
Agent or the Lenders are legally entitled, the Borrowers shall be jointly
and severally liable for the deficiency, together with interest thereon at
the default rate specified in Section 4.2 of the Credit Agreement,
together with the costs of collection and the reasonable fees of any
attorneys employed by the Agent to collect such deficiency. Any surplus
remaining after the full payment and satisfaction of the Secured
Obligations shall be returned to the Borrowers or to whomsoever a court of
competent jurisdiction shall determine to be entitled thereto.
10. Rights of the Agent.
(a) Power of Attorney. In addition to other powers of attorney
contained herein, each Borrower hereby designates and appoints the Agent,
on behalf of the Lenders, and each of its designees or agents, as
attorney-in-fact of such Borrower, irrevocably and with power of
substitution, with authority to take any or all of the following actions
upon the occurrence and during the continuance of an Event of Default:
(i) to demand, collect or settle, compromise, adjust, give
discharges and releases, all as the Agent may reasonably determine;
<PAGE> 17
(ii) to commence and prosecute any actions at any court
for the purposes of collecting any Collateral and enforcing any
other right in respect thereof;
(iii) to defend, settle or compromise any action brought
and, in connection therewith, give such discharge or release as
the Agent may deem reasonably appropriate;
(iv) receive, open and dispose of mail addressed to a
Borrower and endorse checks, notes, drafts, acceptances, money
orders, bills of lading, warehouse receipts or other
instruments or documents evidencing payment, shipment or
storage of the goods giving rise to the Collateral of such
Borrower on behalf of and in the name of such Borrower, or
securing, or relating to such Collateral;
(v) sell, assign, transfer, make any agreement in respect
of, or otherwise deal with or exercise rights in respect of,
any Collateral or the goods or services which have given rise
thereto, as fully and completely as though the Agent were the
absolute owner thereof for all purposes;
(vi) adjust and settle claims under any insurance policy
relating thereto;
(vii) execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements,
security agreements, affidavits, notices and other agreements,
instruments and documents that the Agent may determine
necessary in order to perfect and maintain the security
interests and liens granted in this Security Agreement and in
order to fully consummate all of the transactions contemplated
therein;
(viii) institute any foreclosure proceedings that the
Agent may deem appropriate; and
(ix) do and perform all such other acts and things as the
Agent may reasonably deem to be necessary, proper or convenient
in connection with the Collateral.
This power of attorney is a power coupled with an interest and shall be
irrevocable (i) for so long as any of the Secured Obligations remain
outstanding or any Letter of Credit shall remain outstanding and (ii)
until all of the Commitments shall have been terminated. The Agent shall
be under no duty to exercise or withhold the exercise of any of the
rights, powers, privileges and options expressly or implicitly granted to
the Agent in this Security Agreement, and shall not be liable for any
failure to do so or any delay in doing so. The Agent shall not be liable
for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity
<PAGE> 18
or its capacity as attorney-in-fact except acts or omissions resulting
from its gross negligence or willful misconduct. This power of attorney
is conferred on the Agent solely to protect, preserve and realize upon its
security interest in the Collateral.
(b) [reserved]
(c) Assignment by the Agent. Subject to Sections 13.9 and 14.6(c) of
the Credit Agreement, the Agent may from time to time assign the Secured
Obligations and any portion thereof and/or the Collateral and any portion
thereof, and the assignee shall be entitled to all of the rights and
remedies of the Agent under this Security Agreement in relation thereto.
(d) The Agent's Duty of Care. Other than the exercise of reasonable
care to assure the safe custody of the Collateral while being held by the
Agent hereunder, the Agent shall have no duty or liability to preserve
rights pertaining thereto, it being understood and agreed that the
Borrowers shall be responsible for preservation of all rights in the
Collateral, and the Agent shall be relieved of all responsibility for the
Collateral upon surrendering it or tendering the surrender of it to the
Borrowers. The Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral in its possession if the
Collateral is accorded treatment substantially equal to that which the
Agent accords its own property, which shall be no less than the treatment
employed by a reasonable and prudent agent in the industry, it being
understood that the Agent shall not have responsibility for taking any
necessary steps to preserve rights against any parties with respect to any
of the Collateral.
11. Application of Proceeds and Cash. Any amounts on deposit in the
Lockbox Accounts, the FUCC Account and any replacement or successor accounts
relating thereto, as applicable, shall be applied by the Agent in accordance
with the terms of the Credit Agreement and the Lockbox Agreement relating
thereto. Upon the occurrence of and during the continuance of an Event of
Default, the Proceeds and avails of the Collateral at any time received by the
Agent, directly or through the Lockboxes, shall, when received by the Agent in
cash or its equivalent, be applied as follows: first, to all reasonable costs
and expenses of the Agent (including without limitation, reasonable attorneys'
fees and expenses) incurred in connection with the implementation and/or
enforcement of this Security Agreement and/or any of the other Credit
Documents; second, to all costs and expenses of the Lenders (including without
limitation, reasonable attorneys' fees and expenses) incurred in connection
with the implementation and/or enforcement of this Security Agreement and/or
any of the other Credit Documents; third, to the principal amount of the
Secured Obligations; fourth, to such of the Secured Obligations consisting of
accrued but unpaid interest and fees; fifth, to all other amounts payable with
respect to the Secured Obligations; and sixth, to the payment of the surplus,
if any, to whoever may be lawfully entitled to receive such surplus. The
Borrowers shall remain liable to the Agent and the Lenders for any deficiency.
12. Costs of Counsel. If at any time hereafter, whether upon the
occurrence of an Event of Default or not, the Agent employs counsel to prepare
or consider amendments, waivers or consents with respect to this Security
Agreement, or to take action or make a response in or with respect to any legal
or arbitral proceeding relating to this Security Agreement or relating to the
Collateral, or to protect the Collateral or exercise any rights or remedies
under this Security Agreement or with respect to the
<PAGE> 19
Collateral, then the Borrowers agree to promptly pay upon demand any and all
such reasonable documented costs and expenses of the Agent or the Lenders, all
of which costs and expenses shall constitute Secured Obligations hereunder.
13. Continuing Agreement.
(a) This Security Agreement shall be a continuing agreement in every
respect and shall remain in full force and effect so long as the Credit
Agreement is in effect or any amounts payable thereunder or under any
other Credit Document or any Letter of Credit shall remain outstanding,
and until all of the Commitments thereunder shall have terminated (other
than any contingent indemnity obligations not yet due and payable). Upon
such payment and termination, this Security Agreement shall be
automatically terminated and, the Lenders shall, upon the request and at
the expense of the Borrowers, forthwith release all of its liens and
security interests hereunder and shall execute and deliver all UCC
termination statements and/or other documents reasonably requested by the
Borrowers evidencing such termination. Notwithstanding the foregoing all
releases and indemnities provided hereunder shall survive termination of
this Security Agreement.
(b) This Security Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Agent or any Lender as a
preference, fraudulent conveyance or otherwise under any bankruptcy,
insolvency or similar law, all as though such payment had not been made;
provided that in the event payment of all or any part of the Secured
Obligations is rescinded or must be restored or returned, all reasonable
costs and expenses (including without limitation, any reasonable legal
fees and disbursements) incurred by the Agent or any Lender in defending
and enforcing such reinstatement shall be deemed to be included as a part
of the Secured Obligations.
14. Amendments; Waivers; Modifications. This Security Agreement and the
provisions hereof may not be amended, waived, modified, changed, discharged or
terminated except as set forth in Section 14.10 of the Credit Agreement.
15. Successors in Interest. This Security Agreement shall create a
continuing security interest in the Collateral and shall be binding upon each
Borrower, its successors and assigns and shall inure, together with the rights
and remedies of the Agent and the Lenders hereunder, to the benefit of the
Agent and the Lenders and their successors and permitted assigns; provided,
however, that none of the Borrowers may assign its rights or delegate its
duties hereunder without the prior written consent of the Agent. To the
fullest extent permitted by law, each Borrower hereby releases the Agent and
each Lender, and its successors and permitted assigns, from any liability for
any act or omission relating to this Security Agreement or the Collateral,
except for any liability arising from the gross negligence or willful
misconduct of the Agent, or such Lender, or its officers, employees or agents.
16. Notices. All notices required or permitted to be given under this
Security Agreement shall be in conformance with Section 14.5 of the Credit
Agreement.
<PAGE> 20
17. Counterparts. This Security Agreement may be executed in any number
of counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Security Agreement to produce or
account for more than one such counterpart.
18. Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Security Agreement.
19. Governing Law; Submission to Jurisdiction; Venue; Arbitration. THIS
SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK. THE PROVISIONS OF THE CREDIT AGREEMENT RELATING TO
SUBMISSION TO JURISDICTION, VENUE AND ARBITRATION ARE HEREBY INCORPORATED BY
REFERENCE HEREIN, MUTATIS MUTANDIS.
20. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
BORROWER HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING OUT OF THIS SECURITY AGREEMENT, THE CREDIT DOCUMENTS OR ANY OTHER
AGREEMENTS OR TRANSACTIONS RELATED HERETO OR THERETO.
21. Severability. If any provision of the Security Agreement is
determined to be illegal, invalid or unenforceable, such provision shall be
fully severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.
22. Entirety. This Security Agreement and the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and supersede
all prior agreements and understandings, oral or written, if any, including any
commitment letters or correspondence relating to the Credit Documents or the
transactions contemplated herein and therein.
23. Survival. All representations and warranties of the Borrowers
hereunder shall survive the execution and delivery of this Security Agreement
and the other Credit Documents, the delivery of the Notes and the making of the
Loans and the issuance of the Letters of Credit under the Credit Agreement.
24. Other Security. To the extent that any of the Secured Obligations are
now or hereafter secured by property other than the Collateral (including,
without limitation, real property and securities owned by a Borrower), or by a
guarantee, endorsement or property of any other Person, then the Agent and the
Lenders shall have the right to proceed against such other property, guarantee
or endorsement upon the occurrence of any Event of Default, and the Agent and
the Lenders shall have the right, in their sole discretion, to determine which
rights, security, liens, security interests or remedies the Agent and the
Lenders shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto,
<PAGE> 21
without in any way modifying or affecting any of them or any of the Agent's and
the Lender's rights or the Secured Obligations under this Security Agreement or
under any other of the Credit Documents.
25. Joint and Several Obligations of Borrowers.
(a) Each of the Borrowers is accepting joint and several liability
hereunder in consideration of the financial accommodation to be provided
by the Lenders under the Credit Agreement, for the mutual benefit,
directly and indirectly, of each of the Borrowers and in consideration of
the undertakings of each of the Borrowers to accept joint and several
liability for the obligations of each of them.
(b) Each of the Borrowers jointly and severally hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a
co-debtor, joint and several liability with the other Borrowers with
respect to the payment and performance of all of the Secured Obligations
arising under this Security Agreement and the other Credit Documents, it
being the intention of the parties hereto that all the Secured Obligations
shall be the joint and several obligations of each of the Borrowers
without preferences or distinction among them.
(c) Anything else in this Security Agreement notwithstanding, the
grant by each Borrower hereunder of a security interest in the Collateral
owned by such Borrower shall secure the Secured Obligations only for the
maximum amount that can be incurred without rendering this Security
Agreement, as it relates to such Borrower, void or voidable under
applicable law relating to fraudulent obligations, fraudulent conveyance
or fraudulent transfer, and not any greater amount.
26. Rights of Required Lenders. All rights of the Agent hereunder, if not
exercised by the Agent, may be exercised by the Required Lenders.
27. Conflicts with Credit Agreement. Notwithstanding any other provision
hereof, in the event of any conflict between the terms of this Agreement and
the Credit Agreement, the provisions of the Credit Agreement shall govern and
apply.
[remainder of page intentionally left blank]
<PAGE> 22
Each of the parties hereto has caused a counterpart of this Security
Agreement to be duly executed and delivered as of the date first above written.
BORROWERS: NATIONAL EQUIPMENT SERVICES, INC.,
a Delaware corporation
By: /s/ Paul R. Ingersoll
Name: Paul R. Ingersoll
Title: Vice President
NES ACQUISITION CORP.,
a Delaware corporation
By: /s/ Paul R. Ingersoll
Name: Paul R. Ingersoll
Title: Vice President
BAT ACQUISITION CORP.,
a Delaware Corporation
By: /s/ Paul R. Ingersoll
Name: Paul R. Ingersoll
Title: Vice President
AERIAL PLATFORMS, INC.,
a Georgia corporation
By: /s/ Paul R. Ingersoll
Name: Paul R. Ingersoll
Title: Vice President
AGENT: FIRST UNION COMMERCIAL CORPORATION,
as Agent
By: /s/ Todd A. Witmer
Name: Todd A. Witmer
Title: Vice President
<PAGE> 23
SCHEDULE 4(f)(i)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
COPYRIGHTS
United States Copyright Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated
as of July 1, 1997 (as the same may be amended, modified,
extended or restated from time to time, the "Security
Agreement") by and among the Borrowers party thereto (each
a "Borrower" and collectively, the "Borrowers") and First
Union Commercial Corporation, as Agent (the "Agent") for
the lenders referenced therein (the "Lenders"), the
undersigned Borrower has granted a continuing security
interest in and continuing lien upon, the copyrights and
copyright applications shown below to the Agent for the
ratable benefit of the Lenders:
COPYRIGHTS
<TABLE>
<CAPTION>
Date of
Copyright No. Description of Copyright Copyright
------------- ------------------------ ---------
<S> <C> <C>
</TABLE>
Copyright Applications
<TABLE>
<CAPTION>
Copyright Description of Copyright Date of Copyright
Applications No. Applied For Applications
---------------- ------------------------- ------------------
<S> <C> <C>
</TABLE>
The undersigned Borrower and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing
copyrights and copyright applications (i) may only be terminated in
accordance with the terms of the Security Agreement and (ii) is not to be
construed as an assignment of any copyright or copyright application.
<PAGE> 24
Very truly yours,
__________________________________
[Borrower]
By:
Name:
Title:
Acknowledged and Accepted:
FIRST UNION COMMERCIAL CORPORATION,
as Agent
By:
Name:
Title:
<PAGE> 25
SCHEDULE 4(f)(ii)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
PATENTS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement
dated as of July 1, 1997 (the "Security Agreement")
by and among the Borrowers party thereto (each a
"Borrower" and collectively, the "Borrowers") and
First Union Commercial Corporation, as Agent (the
"Agent") for the lenders referenced therein (the
"Lenders"), the undersigned Borrower has granted a
continuing security interest in and continuing lien
upon, the patents and patent applications shown
below to the Agent for the ratable benefit of the
Lenders:
PATENTS
<TABLE>
<CAPTION>
Description of Patent Date of
Patent No. Item Patent
---------- ----------- ------
<S> <C> <C>
</TABLE>
Patent Applications
<TABLE>
<CAPTION>
Patent Description of Patent Date of Patent
Applications No. Applied For Applications
---------------- --------------------- ------------------
<S> <C> <C>
</TABLE>
The undersigned Borrower and the Agent, on behalf of the Lenders, hereby
acknowledge and agree that the security interest in the foregoing patents
and patent applications (i) may only be terminated in accordance with the
terms of the Security Agreement and (ii) is not to be construed as an
assignment of any patent or patent application.
<PAGE> 26
Very truly yours,
__________________________________
[Borrower]
By:
Name:
Title:
Acknowledged and Accepted:
FIRST UNION COMMERCIAL CORPORATION,
as Agent
By:
Name:
Title:
<PAGE> 27
SCHEDULE 4(f)(iii)
NOTICE
OF
GRANT OF SECURITY INTEREST
IN
TRADEMARKS
United States Patent and Trademark Office
Gentlemen:
Please be advised that pursuant to the Security Agreement dated as
of July 1, 1997 (the "Security Agreement") by and among the
Borrowers party thereto (each a "Borrower" and collectively,
the "Borrowers") and First Union Commercial Corporation, as
Agent (the "Agent") for the lenders referenced therein (the
"Lenders"), the undersigned Borrower has granted a continuing
security interest in and continuing lien upon, the trademarks
and trademark applications shown below to the Agent for the
ratable benefit of the Lenders:
TRADEMARKS
<TABLE>
<CAPTION>
Description of Trademark Date of
Trademark No. Item Trademark
------------- --------- ---------
<S> <C> <C>
</TABLE>
Trademark Applications
<TABLE>
<CAPTION>
Trademark Description of Trademark Date of Trademark
Applications No. Applied For Applications
---------------- ------------------------ -----------------
<S> <C> <C>
</TABLE>
The undersigned Borrower and the Agent, on behalf of the
Lenders, hereby acknowledge and agree that the security
interest in the foregoing trademarks and trademark
applications (i) may only be terminated in accordance with
the terms of the Security Agreement and (ii) is not to be
construed as an assignment of any trademark or trademark
application.
<PAGE> 28
Very truly yours,
__________________________________
[Borrower]
By:
Name:
Title:
Acknowledged and Accepted:
FIRST UNION COMMERCIAL CORPORATION,
as Agent
By:
Name:
Title:
<PAGE> 1
Exhibit 5.1
To Call Writer Direct:
312 861-2000
December 31, 1997
National Equipment Services, Inc.
1800 Sherman Avenue
Suite 100
Evanston, IL 60201
Re: 10% Senior Subordinated Notes due 2004, Series B
Ladies and Gentlemen:
We are acting as special counsel to National Equipment Services, Inc., a
Delaware corporation (the "Company"), in connection with the proposed
registration by the Company of up to $100,000,000 in aggregate principal amount
of the Company's 10% Senior Subordinated Notes due 2004, Series B (the
"Exchange Notes"), pursuant to a Registration Statement on Form S-4 to be filed
with the Securities and Exchange Commission (the "Commission") on or about
December 22, 1997 under the Securities Act of 1933, as amended (the "Securities
Act") (such Registration Statement, as amended or supplemented, is hereinafter
referred to as the "Registration Statement"), for the purpose of effecting an
exchange offer (the "Exchange Offer") for the Company's 10% Senior Subordinated
Notes due 2004 (the "Old Notes"). We are also acting as special counsel to NES
Acquisition Corp. ("NES Acquisition"), BAT Acquisition Corp. ("BAT"), Aerial
Platforms, Inc. ("Aerial"), and MST Enterprises, Inc. ("MST," and together with
NES Acquisition, BAT and Aerial, the "Subsidiary Guarantors") as issuers of
guarantees (collectively, the "Guarantees") of the obligations of the Company
under the Exchange Notes. The Exchange Notes and the Guarantees are to be
issued pursuant to the Indenture (the "Indenture"), dated as of November 25,
1997, among the Company, the Subsidiary Guarantors and Harris Trust and Savings
Bank, as Trustee, in exchange for and in replacement of the Company's
outstanding Old Notes, of which $100,000,000 in aggregate principal amount is
outstanding.
In that connection, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary for the purposes of this
opinion, including (i) the corporate and organizational documents of the
Company and each Subsidiary Guarantor, (ii) minutes and records of the
corporate
<PAGE> 2
National Equipment Services, Inc.
December 31, 1997
Page 2
proceedings of the Company and each Subsidiary Guarantor with respect to the
issuance of the Exchange Notes and the Guarantees, respectively, (iii) the
Registration Statement and exhibits thereto and (iv) the Registration Rights
Agreement, dated as of November 25, 1997, among the Company, the Subsidiary
Guarantors, Smith Barney Inc., First Union Capital Markets Corp. and Salomon
Brothers Inc.
For purposes of this opinion, we have assumed the authenticity of all
documents submitted to us as originals, the conformity to the originals of all
documents submitted to us as copies and the authenticity of the originals of
all documents submitted to us as copies. We have also assumed the genuineness
of the signatures of persons signing all documents in connection with which
this opinion is rendered, the authority of such persons signing on behalf of
the parties thereto other than the Company and the Subsidiary Guarantors, and
the due authorization, execution and delivery of all documents by the parties
thereto other than the Company and the Subsidiary Guarantors. As to any facts
material to the opinions expressed herein which we have not independently
established or verified, we have relied upon statements and representations of
officers and other representatives of the Company and others.
Based upon and subject to the foregoing qualifications, assumptions and
limitations and the further limitations set forth below, we are of the opinion
that:
(1) Each of the Company, NES Acquisition and BAT is a corporation existing
and in good standing under the General Corporation Law of the State of
Delaware. Aerial is a corporation existing and in good standing under the
Georgia Business Corporation Code. MST is a corporation existing and in good
standing under the Virginia Stock Corporation Act.
(2) The sale and issuance of the Exchange Notes has been validly
authorized by the Company.
(3) The Guarantees have been validly authorized by each of the Subsidiary
Guarantors.
(4) When, as and if (i) the Registration Statement shall have become
effective pursuant to the provisions of the Securities Act, (ii) the Indenture
shall have been qualified pursuant to the
<PAGE> 3
National Equipment Services, Inc.
December 31, 1997
Page 3
provisions of the Trust Indenture Act of 1939, as amended, (iii) the Old Notes
shall have been validly tendered to the Company, (iv) the Exchange Notes
shall have been issued in the form and containing the terms described in the
Registration Statement, the Indenture, the resolutions of the Company's and
each Subsidiary Guarantor's Board of Directors (or authorized committee
thereof) authorizing the foregoing and any legally required consents,
approvals, authorizations and other order of the Commission and any other
regulatory authorities to be obtained, and (v) the Exchange Notes have been
authenticated by the Trustee, the Exchange Notes when issued pursuant
to the Exchange Offer will be legally issued, fully paid and nonassessable and
will constitute valid and binding obligations of the Company and each Guarantee
will constitute the valid and binding obligation of the respective Subsidiary
Guarantor.
Our opinions expressed above are subject to the qualifications that we
express no opinion as to the applicability of, compliance with, or effect of
(i) any bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent
conveyance, moratorium or other similar law affecting the enforcement of
creditors' rights generally, (ii) general principles of equity (regardless of
whether enforcement is considered in a proceeding in equity or at law), (iii)
public policy considerations which may limit the rights of parties to obtain
certain remedies and (iv) any laws except the laws of the State of New York and
the General Corporation Law of the State of Delaware (in the case of the
Company, NES Acquisition and BAT), on the Georgia Business Corporation Code (in
the case of Aerial) and on the Virginia Stock Corporation Act (in the case of
MST). We advise you that issues addressed by this letter may be governed in
whole or in part by other laws, but we express no opinion as to whether any
relevant difference exists between the laws upon which our opinions are based
and any other laws which may actually govern. For purposes of the opinions in
paragraph 1, we have relied exclusively upon (a) in the case of the Company,
NES Acquisition and BAT, recent certificates issued by the Delaware Secretary
of State, (b) in the case of Aerial, a recent certificate issued by the Georgia
Secretary of State, and (c) in the case of MST, a recent certificate issued by
the Virginia State Corporation Commission and such opinions are not intended to
provide any conclusion or assurance beyond that conveyed by such certificates.
We have assumed without investigation that there has been no relevant change or
development between the respective dates of such certificates and the date of
this letter.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. We also consent to the reference to our firm under the
heading "Legal Matters" in the Registration Statement. In giving this consent,
we do not thereby admit that we are in the category of persons
<PAGE> 4
National Equipment Services, Inc.
December 31, 1997
Page 4
whose consent is required under Section 7 of the Securities Act of the rules
and regulations of the Commission.
We do not find it necessary for the purposes of this opinion, and
accordingly we do not purport to cover herein, the application of the
securities or "Blue Sky" laws of the various states to the issuance of the
Exchange Notes.
This opinion is limited to the specific issues addressed herein, and no
opinion may be inferred or implied beyond that expressly stated herein. We
assume no obligation to revise or supplement this opinion should the present
laws of the State of New York or the General Corporation Law of the State of
Delaware, the Georgia Business Corporation Code or the Virginia Stock
Corporation Act be changed by legislative action, judicial decision or
otherwise.
This opinion is furnished to you in connection with the filing of the
Registration Statement, and is not to be used, circulated, quoted or otherwise
relied upon for any other purposes.
Yours very truly,
/s/ KIRKLAND & ELLIS
KIRKLAND & ELLIS
<PAGE> 1
Exhibit 10.1(i)
PROFESSIONAL SERVICES AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of June 4, 1996, by and between
Golder, Thoma, Cressey, Rauner, Inc., a Delaware Corporation ("GTCR"), and
National Equipment Services, Inc., a Delaware corporation (the "Company").
Capitalized terms used but not otherwise defined herein have the meanings set
forth in the Purchase Agreement (as defined herein).
WHEREAS, Golder, Thoma, Cressey, Rauner Fund IV, L.P., an Illinois limited
partnership ("Purchaser"), of which GTCR is the indirect general partner, will
purchase (the "Investment"), pursuant to that certain Purchase Agreement (the
"Purchase Agreement") of even date herewith between the Company and Purchaser,
a portion of the Company's Common Stock;
WHEREAS, the Company desires to receive financial and management
consulting services from GTCR, and obtain the benefit of the experience of GTCR
in business and financial management generally and its knowledge of the Company
and the Company's financial affairs in particular; and
WHEREAS, in connection with the Investment, GTCR is willing to provide
financial and management consulting services to the Company and the
compensation arrangements set forth in this Agreement are designed to
compensate GTCR for such services.
NOW, THEREFORE, in consideration of the foregoing premises and the
respective agreements hereinafter set forth and the mutual benefits to be
derived herefrom, GTCR and the Company hereby agree as follows:
1. Engagement. The Company hereby engages GTCR as a financial and
management consultant, and GTCR hereby agrees to provide financial and
management consulting services to the Company, all on the terms and subject to
the conditions set forth below.
2. Services of GTCR. GTCR hereby agrees during the term of this
engagement to consult with the Company's Board and management of the Company
and its subsidiaries in such manner and on such business and financial matters
as may be reasonably requested from time to time by the Board, including but
not limited to:
(i) corporate strategy;
(ii) budgeting of future corporate investments;
(iii) acquisition and divestiture strategies; and
(iv) debt and equity financings.
<PAGE> 2
3. Personnel. GTCR shall provide and devote to the performance of this
Agreement such partners, employees and agents of GTCR as GTCR shall deem
appropriate for the furnishing of the services required thereby.
4. Investment Fee. At the time of the closing of any debt or equity
financing of the Company (other than such financing by any Executive or any
other member of the Company's senior management), the Company shall pay to GTCR
a fee in immediately available funds equal to one percent (1%) of the aggregate
amount of proceeds made available (whether or not then drawn down) to the
Company in connection with such financing.
5. Management Fee. The Company shall pay to GTCR within 90 days after the
end of each fiscal year subsequent to the consummation of the Base Acquisition
(as defined in the Management Agreements) a management fee equal to $200,000.
6. Expenses. The Company shall promptly reimburse GTCR for such
reasonable travel expenses and other out-of-pocket fees and expenses as may be
incurred by GTCR, its directors, officers and employees in connection with the
Closing and in connection with the rendering of services hereunder.
7. Term. This Agreement will continue from the date hereof until
Purchaser ceases to own at least 10% of the Investor Common Stock. No
termination of this Agreement, whether pursuant to this paragraph or otherwise,
shall affect the Company's obligations with respect to the fees, costs and
expenses incurred by GTCR in rendering services hereunder and not reimbursed by
the Company as of the effective date of such termination.
8. Liability. Neither GTCR nor any of its affiliates, partners, employees
or agents shall be liable to the Company or its subsidiaries or affiliates for
any loss, liability, damage or expense arising out of or in connection with the
performance of services contemplated by this Agreement, unless such loss,
liability, damage or expense shall be proven to result directly from the gross
negligence or willful misconduct of GTCR.
9. Indemnification. The Company agrees to indemnify and hold harmless
GTCR, its partners, affiliates, officers, agents and employees against and
from any and all loss, liability, suits, claims, costs, damages and expenses
(including attorneys' fees) arising from their performance hereunder, except as
a result of their gross negligence or intentional wrongdoing.
10. GTCR an Independent Contractor. GTCR and the Company agree that GTCR
shall perform services hereunder as an independent contractor, retaining
control over and responsibility for its own operations and personnel. Neither
GTCR nor its directors, officers, or employees shall be considered employees or
agents of the Company as a result of this Agreement nor shall any of them have
authority to contract in the name of or bind the Company, except as expressly
agreed to in writing by the Company.
-2-
<PAGE> 3
11. Notices. Any notice, report or payment required or permitted to be
given or made under this Agreement by one party to the other shall be deemed to
have been duly given or made if personally delivered or, if mailed, when mailed
by registered or certified mail, postage prepaid, to the other party at the
following addresses (or at such other address as shall be given in writing by
one party to the other):
If to GTCR:
Golder, Thoma, Cressey, Rauner, Inc.
6100 Sears Tower
Chicago, IL 60606-6402
Attention: Carl D. Thoma
If to the Company:
National Equipment Services, Inc.
6100 Sears Tower
Chicago, IL 60606-6402
Attention: President
12. Entire Agreement; Modification. This Agreement (a) contains the
complete and entire understanding and agreement of GTCR and the Company with
respect to the subject matter hereof; and (b) supersedes all prior and
contemporaneous understandings, conditions and agreements, oral or written,
express or implied, respecting the engagement of GTCR in connection with the
subject matter hereof.
13. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach of that provision or any other
provision hereof.
14. Assignment. Neither GTCR nor the Company may assign its rights or
obligations under this Agreement without the express written consent of the
other; provided that GTCR, without the consent of the Company, may assign its
rights and obligations hereunder to any successor entity to GTCR.
15. Successors. This Agreement and all the obligations and benefits
hereunder shall inure to the successors and permitted assigns of the parties.
16. Counterparts. This Agreement may be executed and delivered by each
party hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original and both of which taken together shall
constitute one and the same agreement.
- 3 -
<PAGE> 4
17. Choice of Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
* * * * *
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, GTCR and the Company have caused this Professional
Services Agreement to be duly executed and delivered on the date and year first
above written.
GOLDER, THOMA, CRESSEY, RAUNER, INC.
By: /s/ Carl D. Thoma
------------------
Its: Principal
------------------
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin P. Rodgers
---------------------
Its: President
---------------------
- 5 -
<PAGE> 1
Exhibit 10.1(ii)
AMENDMENT NO.1 TO
PROFESSIONAL SERVICES AGREEMENT
THIS AMENDMENT NO.1 to Professional Services Agreement (this "Agreement")
is dated as of December 31, 1996 between National Equipment Services, Inc., a
Delaware corporation (the "Company") and Golder, Thoma, Cressey, Rauner, Inc.,
a Delaware corporation ("GTCR"). This Agreement amends the Professional
Services Agreement, dated as of June 4, 1996 (the "Original Agreement"),
between the Company and GTCR. Capitalized terms used but not defined herein
shall have the meanings assigned them in the Original Agreement.
WHEREAS, the parties hereto now desire to amend the Original Agreement as
set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
the Original Agreement as follows:
Section 1. Amendments to Original Agreement. As of the date hereof, the
Original Agreement shall be amended as follows:
1.1. Section 7 of the Original Agreement shall be and hereby is amended by
deleting the word "ceases" and replacing it with the words "or any of
Purchaser's affiliates cease" in the second line thereof.
Section 2. Miscellaneous.
2.1. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.2. Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.1
to Professional Services Agreement on the day and year first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
-----------------
Its: President
-----------------
GOLDER, THOMA, CRESSEY, RAUNER , INC.
By: /s/ Carl D. Thoma
Its: Principal
<PAGE> 1
Exhibit 10.2
PURCHASE AGREEMENT
THIS AGREEMENT is made as of June 4, 1996, between National Equipment
Services, Inc., a Delaware corporation (the "Company"), and Golder, Thoma,
Cressey, Rauner Fund IV, L.P., an Illinois limited partnership (the
"Purchaser"). Except as otherwise indicated herein, capitalized terms used
herein are defined in Section 6 hereof.
The parties hereto agree as follows:
Section 1. Authorization and Closing.
1A. Authorization of the Common Stock. The Company shall authorize the
issuance and sale to the Purchaser of up to 24,250 shares of its Class A Common
Stock, par value $.01 per share (the "Class A Common"), and 75,000 shares of
its Class B Common Stock, par value $.01 per share (the "Class B Common"), each
having the rights and preferences set forth in Exhibit A attached hereto. The
Class A Common and the Class B Common are collectively referred to herein as
the "Common Stock."
1B. Purchase and Sale of the Common Stock.
(a) At the Closing (as defined in subparagraph 1C below), the Company
shall sell to the Purchaser and, subject to the terms and conditions set forth
herein, the Purchaser shall purchase from the Company, 30,000 shares of Class B
Common at a price of $10 per share.
(b) The Company has been organized for the purpose of owning and operating
equipment rental facilities (the "Core Business") by means of first acquiring
an existing business satisfactory to the Purchaser and thereafter from time to
time making additional acquisitions which are synergistic with or otherwise
complementary to such initial acquisition and the Core Business. The Purchaser
intends to provide up to $25,000,000 (including the Common Stock purchased at
the Closing) in equity financing to the Company as the equity portion of the
debt and equity financing necessary to fund such acquisitions. The funds
obtained by the Company from the Purchaser on the date hereof, along with
additional investments by the Purchaser up to an aggregate of $500,000
(including the investment by the Purchaser on the date hereof), shall finance
the Company's costs of conducting a search for the initial acquisition. The
Purchaser's obligation to purchase any additional stock of the Company will be
conditioned on the Company not being in default under any of its material
agreements, adequate debt financing being available to fund any proposed
acquisition on terms satisfactory to the Purchaser and the Company's operations
and the acquisition being satisfactory to the Purchaser. In order to implement
the foregoing, the Purchaser may purchase from time to time after the Closing,
upon the written request of the Company's board of directors (the "Board"), up
to 24,250 shares of Class A Common at a price of $1,000 per share (as adjusted
from
<PAGE> 2
time to time as a result of stock dividends, stock splits, recapitalization and
similar events) and an additional 45,000 shares of Class B Common at a price of
$10 per share (as adjusted from time to time as a result of stock dividends,
stock splits, recapitalization and similar events). At the time of any such
purchase, the Purchaser shall be entitled to receive, and the Company shall be
obligated to deliver, satisfactory representations and warranties similar to
(and in addition to) those contained in Section 5 herein and all other
information and documentation as the Purchaser may reasonably request.
(c) Sellers of Businesses. The Purchaser hereby acknowledges that certain
sellers of businesses to be acquired by the Company ("Sellers") may desire to
invest in stock of the Company in connection with the consummation of such
acquisitions (whether such investments are structured as purchases for cash,
contributions of stock in transactions intended to be tax free under Section
351 of the IRC, or otherwise). Accordingly, the parties hereby agree upon the
occurrence of any such investment, the Purchaser's obligation to purchase
additional stock of the Company hereunder shall be reduced by the purchase
price of the stock of the Company to be purchased by any such Seller.
1C. The Closing. The closing of the purchase and sale of the Common Stock
(the "Closing") shall take place at the offices of Kirkland & Ellis, 200 East
Randolph Drive, Chicago, Illinois 60601 at 10:00 a.m. on the date hereof, or at
such other place or on such other date as may be mutually agreeable to the
Company and the Purchaser. At the Closing, the Company shall deliver to the
Purchaser stock certificates evidencing the Class B Common to be purchased by
the Purchaser, registered in the Purchaser's name, upon payment of the purchase
price thereof by a cashier's or certified check, or by wire transfer of
immediately available funds to such account as designated by the Company in the
amount of $300,000.
Section 2. Conditions of the Purchaser's Obligation at the Closing. The
obligation of the Purchaser to purchase and pay for the Common Stock at the
Closing is subject to the satisfaction as of the Closing of the following
conditions:
2A. Representations and Warranties; Covenants. The representations and
warranties contained in Section 5 hereof shall be true and correct at and as of
the Closing as though then made, except to the extent of changes caused by the
transactions expressly contemplated herein, and the Company shall have
performed in all material respects all of the covenants required to be
performed by it hereunder prior to the Closing.
2B. Certificate of Incorporation. The Company's certificate of
incorporation (the "Certificate of Incorporation") shall include the provisions
set forth in Exhibit A hereto, shall be in full force and effect under the laws
of Delaware as of the Closing and shall not have been amended or modified.
2C. Management Agreement. The Company shall have entered into management
<PAGE> 3
agreements, in form and substance substantially similar to Exhibits B-1
and B-2 attached hereto (the "Management Agreement"), with Kevin Rodgers and
Paul Ingersoll (collectively, the "Executives"), the Management Agreements
shall not have been amended or modified and shall be in full force and effect
as of the Closing, and each of the Executives shall have purchased the Class B
Common proposed to be purchased by him thereunder.
2D. Stockholders Agreement. The Company, the Purchaser and the Executives
shall have entered into a stockholders agreement in form and substance
substantially similar to Exhibit C attached hereto (the "Stockholders
Agreement"), and the Stockholders Agreement shall be in full force and effect
as of the Closing.
2E. Professional Services Agreement. The Company and Golder, Thoma,
Cressey, Rauner, Inc. shall have entered into a professional services agreement
in form and substance substantially similar to Exhibit D attached hereto (the
"Professional Services Agreement"), and the Professional Services Agreement
shall be in full force and effect as of the Closing.
2F. Registration Agreement. The Company, the Purchaser and the Executives
shall have entered into a registration agreement in form and substance
substantially similar to Exhibit E attached hereto (the "Registration
Agreement"), and the Registration Agreement shall be in full force and effect
as of the Closing.
2G. Closing Documents. The Company shall have delivered to the Purchaser
all of the following documents:
(i) an Officer's Certificate, dated the date of the Closing, stating
that the conditions specified in Section 1 and paragraphs 2A through 2F,
inclusive, have been fully satisfied;
(ii) certified copies of the resolutions duly adopted by the Board
authorizing the execution, delivery and performance of this Agreement,
the Management Agreements, the Stockholders Agreement, the Professional
Services Agreement and each of the other agreements contemplated hereby,
the issuance and sale of the Class A Common and the Class B Common and
the consummation of all other transactions contemplated by this
Agreement;
(iii) certified copies of the Certificate of Incorporation and the
Company's bylaws, each as in effect at the Closing; and
(iv) such other documents relating to the transactions contemplated
by this Agreement as the Purchaser or its counsel may reasonably request.
2H. Fees and Expenses. The Company shall have reimbursed the Purchaser for
<PAGE> 4
the fees and expenses as provided in paragraph 7A hereof.
2I. Compliance with Applicable Laws. The purchase of Common Stock by the
Purchaser hereunder shall not be prohibited by any applicable law or
governmental regulation, shall not subject the Purchaser to any penalty,
liability or, in the Purchaser's sole judgment, other onerous condition under
or pursuant to any applicable law or governmental regulation, and shall be
permitted by laws and regulations of the jurisdictions to which the Purchaser
is subject.
2J. Waiver. Any condition specified in this Section 2 may be waived only
if such waiver is set forth in a writing executed by the Purchaser.
Section 3. Covenants.
3A. Financial Statements and Other Information. The Company shall deliver
to the Purchaser (so long as the Purchaser holds any Common Stock) and to each
holder of at least 25% of the Class A Investor Common Stock and each holder of
at least 25% of the Class B Investor Common Stock:
(i) as soon as available but in any event within 30 days after the
end of each quarterly accounting period in each fiscal year, unaudited
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such quarterly period and for the period
from the beginning of the fiscal year to the end of such quarter, and
consolidating and consolidated balance sheets of the Company and its
Subsidiaries as of the end of such quarterly period, all prepared in
accordance with generally accepted accounting principles, consistently
applied, subject to the absence of footnote disclosures and to normal
year-end adjustments;
(ii) accompanying the financial statements referred to in
subparagraph (i), an Officer's Certificate stating that neither the
Company nor any of its Subsidiaries is in default under any of its other
material agreements or, if any such default exists, specifying the nature
and period of existence thereof and what actions the Company and its
Subsidiaries have taken and propose to take with respect thereto;
(iii) within 120 days after the end of each fiscal year,
consolidating and consolidated statements of income and cash flows of the
Company and its Subsidiaries for such fiscal year, and consolidating and
consolidated balance sheets of the Company and its Subsidiaries as of the
end of such fiscal year, setting forth in each case comparisons to the
annual budget and to the preceding fiscal year, all prepared in
accordance with generally accepted accounting principles, consistently
applied, and accompanied by (a) with respect to the consolidated portions
of such statements (except with respect to budget data), an opinion
containing no exceptions or qualifications (except for qualifications
regarding specified contingent liabilities) of an independent accounting
firm of recognized national standing acceptable to the holders of a
majority of each of the Class A Investor Common
<PAGE> 5
Stock and the Class B Investor Common Stock, and (b) a copy of such
firm's annual management letter to the Board;
(iv) promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning significant
aspects of the Company's operations or financial affairs given to the
Company by its independent accountants (and not otherwise contained in
other materials provided hereunder);
(v) on or immediately prior to the date of consummation of the Base
Acquisition (as defined in the Management Agreements) and thereafter at
least 30 days prior to the beginning of each fiscal year, an annual
budget prepared on a monthly basis for the Company and its Subsidiaries
for such fiscal year (displaying anticipated statements of income and
cash flows), and promptly upon preparation thereof any other significant
budgets prepared by the Company and any revisions of such annual or other
budgets, and within 30 days after any monthly period in which there is a
material adverse deviation from the annual budget, an Officer's
Certificate explaining the deviation and what actions the Company has
taken and proposes to take with respect thereto;
(vi) promptly (but in any event within five business days) after the
discovery or receipt of notice of any default under any material
agreement to which it or any of its Subsidiaries is a party or any other
event or circumstance affecting the Company or any Subsidiary which is
reasonably likely to have a material adverse effect on the financial
condition, operating results, assets, operations or business prospects of
the Company or any Subsidiary (including the filing of any material
litigation against the Company or any Subsidiary or the existence of any
material dispute with any Person which involves a reasonable likelihood
of such litigation being commenced), an Officer's Certificate specifying
the nature and period of existence thereof and what actions the Company
and its Subsidiaries have taken and propose to take with respect thereto;
and
(vii) with reasonable promptness, such other information and
financial data concerning the Company and its Subsidiaries as any Person
entitled to receive information under this paragraph 3A may reasonably
request.
Each of the financial statements referred to in subparagraph (i) and (iii)
shall be true and correct in all material respects as of the dates and for the
periods stated therein, subject in the case of the unaudited financial
statements to changes resulting from normal year-end audit adjustments (none of
which would, alone or in the aggregate, be materially adverse to the financial
condition, operating results, assets, operations or business prospects of the
Company and its Subsidiaries taken as a whole).
3B. Inspection of Property. The Company shall permit any representatives
designated by the Purchaser (so long as the Purchaser holds at least 10% of the
Investor Common Stock) or any holder of at least 25% of the outstanding Class A
Investor Common Stock or at least
<PAGE> 6
25% of the outstanding Class B Investor Common Stock, upon reasonable notice
and during normal business hours and such other times as any such holder may
reasonably request, to (i) visit and inspect any of the properties of the
Company and its Subsidiaries, (ii) examine the corporate and financial records
of the Company and its Subsidiaries and make copies thereof or extracts
therefrom and (iii) discuss the affairs, finances and accounts of any such
corporations with the directors, officers, key employees and independent
accountants of the Company and its Subsidiaries; provided that the Company
shall have the right to have its chief financial officer present at any
meetings with the Company's independent accountants.
3C. Restrictions. The Company shall not, without the prior written
consent of the holders of a majority of the Class A Investor Common Stock or,
in the event no Class A Investor Common Stock is outstanding, without the prior
written consent of the holders of a majority of the Class B Investor Common
Stock:
(i) directly or indirectly declare or pay any dividends or make any
distributions upon any of its equity securities, other than payments of
Yield and return of Original Cost (as such terms are defined in the
Certificate of Incorporation) on the Class A Common pursuant to the
Certificate of Incorporation;
(ii) except pursuant to the Management Agreements and the
Stockholders Agreement, directly or indirectly redeem, purchase or
otherwise acquire, or permit any Subsidiary to redeem, purchase or
otherwise acquire, any of the Company's equity securities (including,
without limitation, warrants, options and other rights to acquire equity
securities);
(iii) except as expressly contemplated by this Agreement and the
Management Agreements, authorize, issue, sell or enter into any agreement
providing for the issuance (contingent or otherwise), or permit any
Subsidiary to authorize, issue, sell or enter into any agreement
providing for the issuance (contingent or otherwise) of, (a) any notes or
debt securities containing equity features (including, without
limitation, any notes or debt securities convertible into or exchangeable
for equity securities, issued in connection with the issuance of equity
securities or containing profit participation features) or (b) any equity
securities (or any securities convertible into or exchangeable for any
equity securities) or rights to acquire any equity securities, other than
the issuance of equity securities by a Subsidiary to the Company or
another Subsidiary;
(iv) merge or consolidate with any Person or permit any Subsidiary
to merge or consolidate with any Person (other than a wholly owned
Subsidiary);
(v) sell, lease or otherwise dispose of, or permit any Subsidiary to
sell, lease or otherwise dispose of, more than 5% of the consolidated
assets of the Company and its Subsidiaries (computed on the basis of book
value, determined in accordance with generally accepted accounting
principles consistently applied, or fair market value,
<PAGE> 7
determined by the Board in its reasonable good faith judgment) in any
transaction or series of related transactions (other than sales of
inventory in the ordinary course of business);
(vi) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without limitation,
any reorganization into partnership form);
(vii) acquire, or permit any Subsidiary to acquire, any interest in
any business (whether by a purchase of assets, purchase of stock, merger
or otherwise), or enter into any joint venture;
(viii) enter into, or permit any Subsidiary to enter into, the
ownership, active management or operation of any business other than the
Core Business and other related businesses;
(ix) enter into, or permit any Subsidiary to enter into, any
transaction with any of its or any Subsidiary's officers, directors,
employees or Affiliates or any individual related by blood, marriage or
adoption to any such Person (a "Relative") or any entity in which any
such Person or individual owns a beneficial interest (a "Related
Entity"), except for normal employment arrangements and benefit programs
on reasonable terms and except as otherwise expressly contemplated by
this Agreement, the Management Agreements and the Professional Services
Agreement; provided that in no event shall any Relative or Related Entity
be employed by, render services to or receive compensation from the
Company or any Subsidiary; or
(x) create, incur, assume or suffer to exist, or permit any
Subsidiary to create, incur, assume or suffer to exist, Indebtedness
exceeding the amounts approved therefor by the Board in the annual
budget.
3D. Affirmative Covenants. So long as the Purchaser holds at least
10% of the Investor Common Stock, the Company shall, and shall cause each
Subsidiary to:
(i) comply with all applicable laws, rules and regulations of all
governmental authorities, the violation of which would reasonably be
expected to have a material adverse effect upon the financial condition,
operating results, assets, operations or business prospects of the
Company and its Subsidiaries taken as a whole, and pay and discharge when
payable all taxes, assessments and governmental charges (except to the
extent the same are being contested in good faith and adequate reserves
therefor have been established); and
(ii) enter into and maintain appropriate nondisclosure and
noncompete agreements with its key employees.
<PAGE> 8
3E. Current Public Information. At all times after the Company has filed
a registration statement with the Securities and Exchange Commission pursuant
to the requirements of either the Securities Act or the Securities Exchange
Act, the Company shall file all reports required to be filed by it under the
Securities Act and the Securities Exchange Act and the rules and regulations
adopted by the Securities and Exchange Commission thereunder and shall take
such further action as any holder or holders of Restricted Securities may
reasonably request, all to the extent required to enable such holders to sell
Restricted Securities pursuant to (i) Rule 144 adopted by the Securities and
Exchange Commission under the Securities Act (as such rule may be amended from
time to time) or any similar rule or regulation hereafter adopted by the
Securities and Exchange Commission or (ii) a registration statement on Form S-2
or S-3 or any similar registration form hereafter adopted by the Securities and
Exchange Commission. Upon request, the Company shall deliver to any holder of
Restricted Securities a written statement as to whether it has complied with
such requirements.
3F. Amendment of Other Agreements. The Company shall not amend, modify or
waive any provision of the Management Agreements without the prior written
consent of the holders of a majority of each of the Class A Investor Common
Stock and Class B Investor Common Stock, and the Company shall enforce the
provisions of the Management Agreements and shall exercise all of its rights
and remedies thereunder (including, without limitation, any repurchase options
and first refusal rights) unless it is otherwise directed by the holders of a
majority of each of the Class A Investor Common Stock and Class B Investor
Common Stock.
3G. Limited Preemptive Rights.
(i) Except for the issuance of Common Stock or any securities containing
options or rights to acquire any shares of Common Stock (a) to the Executives
pursuant to the Management Agreements, (b) to other executives of the Company
on terms and conditions approved by the Board (provided that the exception
contained in this clause (b) shall not apply with respect to issuances in
excess of 6% of the Company's common equity), (c) in connection with the
acquisition of another company or business on terms and conditions approved by
the Board and the Purchaser, or (d) pursuant to a public offering registered
under the Securities Act, if the Company at any time after the Closing
authorizes the issuance or sale of any shares of Common Stock or any securities
containing options or rights to acquire any shares of Common Stock (other than
as a dividend on the outstanding Common Stock), the Company shall first offer
to sell to each holder of Investor Common Stock a portion of such stock or
securities equal to the quotient determined by dividing (1) the number of
shares of Investor Common Stock held by such holder by (2) the total number of
shares of Common Stock outstanding on a fully diluted basis immediately prior
to such issuance. Each holder of Investor Common Stock shall be entitled to
purchase all or any portion of such stock or securities at the most favorable
price and on the most favorable terms as such stock or securities are to be
offered to any other Persons.
(ii) In order to exercise its purchase rights hereunder, a holder of
Investor
<PAGE> 9
Common Stock must within 15 days after receipt of written notice from the
Company describing in reasonable detail the stock or securities being offered,
the purchase price thereof, the payment terms and such holder's percentage
allotment deliver a written notice to the Company describing its election
hereunder. If all of the stock and securities offered to the holders of
Investor Common Stock is not fully subscribed by such holders, the remaining
stock and securities shall be reoffered by the Company to the holders
purchasing their full allotment upon the terms set forth in this paragraph,
except that such holders must exercise their purchase rights within five days
after receipt of such reoffer.
(iii) Upon the expiration of the offering periods described above, the
Company shall be entitled to sell such stock or securities which the holders of
Investor Common Stock have not elected to purchase during the 90 days following
such expiration on terms and conditions no more favorable to the purchasers
thereof than those offered to such holders. Any stock or securities offered or
sold by the Company after such 90-day period must be reoffered to the holders
of Investor Common Stock pursuant to the terms of this paragraph.
(iv) Nothing contained in this paragraph 3G shall be deemed to amend,
modify or limit in any way the restrictions on the issuance of shares of Common
Stock set forth in paragraph 3C hereof or elsewhere in this Agreement, in the
Stockholders Agreement or in any other agreement to which the Company is bound.
3H. Public Disclosures. The Company shall not, nor shall it permit any
Subsidiary to, disclose the Purchaser's name or identity as an investor in the
Company in any press release or other public announcement or in any document or
material filed with any governmental entity, without the prior written consent
of the Purchaser, unless such disclosure is required by applicable law or
governmental regulations or by order of a court of competent jurisdiction, in
which case prior to making such disclosure the Company shall give written
notice to the Purchaser describing in reasonable detail the proposed content of
such disclosure and shall permit the Purchaser to review and comment upon the
form and substance of such disclosure.
3I. Unrelated Business Taxable Income. The Company shall not engage in
any transaction which is reasonably likely to cause the Investor or any of its
limited partners which are exempt from income taxation under Section 501(a) of
the IRC and, if applicable, any pension plan that any such trust may be a part
of, to recognize unrelated business taxable income as defined in Section 512
and Section 514 of the IRC.
3J. Hart-Scott-Rodino Compliance. In connection with any transaction in
which the Company is involved which is required to be reported under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended from time to
time (the "HSR Act"), the Company shall prepare and file all documents with the
Federal Trade Commission and the United States Department of Justice which may
be required to comply with the HSR Act, and shall promptly furnish all
materials thereafter requested by any of the regulatory agencies having
jurisdiction over such filings,
<PAGE> 10
in connection with the transactions contemplated thereby. The Company shall
take all reasonable actions and shall file and use reasonable best efforts to
have declared effective or approved all documents and notifications with any
governmental or regulatory bodies, as may be necessary or may reasonably be
requested under federal antitrust laws for the consummation of the subject
transaction. The Purchaser shall provide to the Company all information
concerning itself and its Affiliates as is necessary in order for the Company
to properly complete and file the documents referred to above in this paragraph
3J.
Section 4. Transfer of Restricted Securities.
(i) Restricted Securities are transferable only pursuant to (a) public
offerings registered under the Securities Act, (b) Rule 144 or Rule 144A of the
Securities and Exchange Commission (or any similar rule or rules then in force)
if such rule or rules are available and (c) subject to the conditions specified
in subparagraph (ii) below, any other legally available means of transfer.
(ii) In connection with the transfer of any Restricted Securities (other
than a transfer described in subparagraph 4(i)(a) or (b) above), the holder
thereof shall deliver written notice to the Company describing in reasonable
detail the transfer or proposed transfer, together with an opinion of Kirkland
& Ellis or other counsel which (to the Company's reasonable satisfaction) is
knowledgeable in securities law matters to the effect that such transfer of
Restricted Securities may be effected without registration of such Restricted
Securities under the Securities Act. In addition, if the holder of the
Restricted Securities delivers to the Company an opinion of Kirkland & Ellis or
such other counsel that no subsequent transfer of such Restricted Securities
shall require registration under the Securities Act, the Company shall promptly
upon such contemplated transfer deliver new certificates for such Restricted
Securities which do not bear the Securities Act legend set forth in paragraph
7C. If the Company is not required to deliver new certificates for such
Restricted Securities not bearing such legend, the holder thereof shall not
transfer the same until the prospective transferee has confirmed to the Company
in writing its agreement to be bound by the conditions contained in this
paragraph and paragraph 7C.
(iii) Upon the request of the Purchaser, the Company shall promptly supply
to the Purchaser or its prospective transferees all information regarding the
Company required to be delivered in connection with a transfer pursuant to Rule
144A of the Securities and Exchange Commission.
Section 5. Representations and Warranties of the Company. As a material
inducement to the Purchaser to enter into this Agreement and purchase the
Common Stock, the Company hereby represents and warrants to the Purchaser that:
5A. Organization and Corporate Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
is qualified to do
<PAGE> 11
business in every jurisdiction in which the failure to so qualify might
reasonably be expected to have a material adverse effect on the financial
condition, operating results, assets, operations or business prospects of the
Company and its Subsidiaries taken as a whole. The Company has all requisite
corporate power and authority and all material licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted and to carry
out the transactions contemplated by this Agreement. The copies of the
Company's Certificate of Incorporation and bylaws which have been furnished to
the Purchaser's counsel reflect all amendments made thereto at any time prior
to the date of this Agreement and are correct and complete.
5B. Capital Stock and Related Matters.
(i) As of the Closing and immediately thereafter, the authorized capital
stock of the Company shall consist of 175,000 shares of Common Stock, of which
25,000 shares shall be designated as Class A Common (none of which shall be
issued and outstanding and 24,250 of which shall be reserved for issuance to
the Purchaser pursuant to subparagraph 1B(b) hereof), and 150,000 shares shall
be designated as Class B Common (30,108 of which shall be issued and
outstanding, 45,000 of which shall be reserved for issuance to the Purchaser
pursuant to subparagraph 1B(b) hereof, 8,892 of which shall be reserved for
issuance to the Executives pursuant to the Management Agreements and 6,000
shall be reserved for issuance to certain other members of senior management of
the Company). As of the Closing, the Company shall not have outstanding any
stock or securities convertible or exchangeable for any shares of its capital
stock or containing any profit participation features, nor shall it have
outstanding any rights or options to subscribe for or to purchase its capital
stock or any stock or securities convertible into or exchangeable for its
capital stock or any stock appreciation rights or phantom stock plans other
than pursuant to and as contemplated by this Agreement and the Management
Agreements. As of the Closing, the Company shall not be subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or any warrants, options or other rights
to acquire its capital stock, except pursuant to this Agreement and the
Management Agreements. As of the Closing, all of the outstanding shares of the
Company's capital stock shall be validly issued, fully paid and nonassessable.
(ii) There are no statutory or, to the best of the Company's knowledge,
contractual stockholders preemptive rights or rights of refusal with respect to
the issuance of the Class B Common hereunder or the issuance of the Common
Stock pursuant to paragraph 1B(b) hereof, except as expressly provided herein.
Based in part on the investment representations of the Purchaser in paragraph
7C hereof and of the Executives in paragraph 1(c) of each of the Management
Agreements, the Company has not violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of its
capital stock, and the offer, sale and issuance of the Common Stock hereunder
and pursuant to paragraph 1B(b) hereof do not and will not require registration
under the Securities Act or any applicable state securities laws. To the best
of the Company's knowledge, there are no agreements between the Company's
stockholders with respect
<PAGE> 12
to the voting or transfer of the Company's capital stock or with respect to any
other aspect of the Company's affairs, except for Stockholders Agreement and
the Management Agreements.
5C. Subsidiaries; Investments. The Company does not own or hold any
shares of stock or any other security or interest in any other Person or any
rights to acquire any such security or interest, and the Company has never had
any Subsidiary.
5D. Authorization; No Breach. The execution, delivery and performance of
this Agreement, the Management Agreements, the Stockholders Agreement, the
Professional Services Agreement, the Registration Agreement and all other
agreements contemplated hereby to which the Company is a party and the filing
of the Certificate of Incorporation have been duly authorized by the Company.
This Agreement, the Management Agreements, the Stockholders Agreement, the
Professional Services Agreement, the Registration Agreement, the Certificate of
Incorporation and all other agreements contemplated hereby each constitutes a
valid and binding obligation of the Company, enforceable in accordance with its
terms. The execution and delivery by the Company of this Agreement, the
Management Agreements, the Stockholders Agreement, the Professional Services
Agreement, the Registration Agreement and all other agreements contemplated
hereby to which the Company is a party, the offering, sale and issuance of the
Common Stock hereunder and pursuant to subparagraph 1B(b) and the fulfillment
of and compliance with the respective terms hereof and thereof by the Company
do not and will not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) result in
the creation of any lien, security interest, charge or encumbrance upon the
Company's capital stock or assets pursuant to, (iv) give any third party the
right to modify, terminate or accelerate any obligation under, (v) result in a
violation of, or (vi) require any authorization, consent, approval, exemption
or other action by or notice to any court or administrative or governmental
body pursuant to, the Certificate of Incorporation or bylaws of the Company, or
any law, statute, rule or regulation to which the Company is subject, or any
agreement, instrument, order, judgment or decree to which the Company is a
party or by which it is bound.
5E. Conduct of Business; Liabilities. Other than the negotiation,
execution and delivery of this Agreement, the Management Agreements, the
Stockholders Agreement, the Professional Services Agreement, the Registration
Agreement and the other agreements contemplated hereby and thereby, prior to
the Closing, the Company has not (i) conducted any business, (ii) incurred any
expenses, obligations or liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise, whether or not known to the Company and whether due
or to become due and regardless of when asserted), (iii) owned any assets, (iv)
entered into any contracts or agreements, or (v) violated any laws or
governmental rules or regulations.
5F. Tax Matters. The Company has filed all tax returns (if any) which it
is required to file under applicable laws and regulations; all such returns are
complete and correct in all material respects; the Company has paid all taxes
due and owing by it and has withheld and paid over all taxes which it is
obligated to withhold from amounts paid or owing to any employee,
<PAGE> 13
stockholder, creditor or other third party; the Company has not waived any
statute of limitations with respect to taxes or agreed to any extension of time
with respect to a tax assessment or deficiency; the assessment of any
additional taxes for periods for which returns have been filed is not expected;
no foreign, federal, state or local tax audits are pending or being conducted
with respect to the Company, no information related to tax matters has been
requested by any foreign, federal, state or local taxing authority and no
notice indicating an intent to open an audit or other review has been received
by the Company from any foreign, federal, state or local taxing authority; and
there are no unresolved questions or claims concerning the Company's tax
liability. The Company has not made an election under Section 341(f) of the
IRC.
5G. Litigation, etc. There are no actions, suits, proceedings, orders,
investigations or claims pending or, to the best of the Company's knowledge,
threatened against or affecting the Company (or to the best of the Company's
knowledge, pending or threatened against or affecting any of the officers,
directors or employees of the Company with respect to their businesses or
proposed business activities) at law or in equity, or before or by any
governmental department, commission, board, bureau, agency or instrumentality
(including, without limitations, any actions, suit, proceedings or
investigations with respect to the transactions contemplated by this Agreement)
which could have a material adverse effect on the financial condition,
operating results, assets, operations or business prospects of the Company and
its Subsidiaries taken as a whole; the Company is not subject to any
arbitration proceedings under collective bargaining agreements or otherwise or,
to the best of the Company's knowledge, any governmental investigations or
inquiries; and, to the best of the Company's knowledge, there is no basis for
any of the foregoing. The Company is not subject to any judgment, order or
decree of any court or other governmental agency. The Company has not received
any opinion or memorandum or legal advice from legal counsel to the effect that
it is exposed, from a legal standpoint, to any liability or disadvantage which
may be material to its business.
5H. Brokerage. There are no claims for brokerage commissions, finders,
fees or similar compensation in connection with the transactions contemplated
by this Agreement based on any arrangement or agreement binding upon the
Company. The Company shall pay, and hold the Purchaser harmless against, any
liability, loss or expense (including, without limitation, attorneys, fees and
out-of-pocket expenses) arising in connection with any such claim.
5I. Governmental Consent, etc. No permit, consent, approval or
authorization of, or declaration to or filing with, any governmental authority
is required in connection with the execution, delivery and performance by the
Company of this Agreement or the other agreements contemplated hereby, or the
consummation by the Company of any other transactions contemplated hereby or
thereby.
5J. ERISA. The Company does not maintain or have any obligation to
contribute to or any other liability with respect to or under (including but
not limited to current or potential withdrawal liability), nor has it ever
maintained or had any obligation to contribute to or any other
<PAGE> 14
liability with respect to or under, (i) any plan or arrangement whether or not
terminated, which provides medical, health, life insurance or other welfare
type benefits for current or future retired or terminated employees (except for
limited continued medical benefit coverage required to be provided under
Section 4980B of the IRC or as required under applicable state law), (ii) any
"multiemployer plan" (as defined in Section 3(37) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), (iii) any employee plan
which is a tax-qualified "defined benefit plan" (as defined in Section 3(35) of
ERISA), whether or not terminated, (iv) any employee plan which is a
tax-qualified "defined contribution plan" (as defined in Section 3(34) of
ERISA), whether or not terminated, or (v) any other plan or arrangement
providing benefits to current or former employees, including any bonus plan,
plan for deferred compensation, employee health or other welfare benefit plan
or other arrangement, whether or not terminated. For purposes of this
subparagraph 5J, the term "Company" includes all organizations under common
control with the Company pursuant to Section 414(b) or (c) of the IRC.
5K. Compliance with Laws. The Company has not violated any law or any
governmental regulation or requirement which violation would reasonably be
expected to have a material adverse effect upon the financial condition,
operating results, assets, operations or business prospects of the Company, and
the Company has not received notice of any such violation. The Company is not
subject to any clean up liability, and the Company has no reason to believe it
may become subject to any clean up liability, under any federal, state or local
environmental law, rule or regulation.
5L. Disclosure. Neither this Agreement nor any of the schedules,
attachments, written statements, documents, certificates or other items
prepared or supplied to the Purchaser by or on behalf of the Company with
respect to the transactions contemplated hereby contain any untrue statement of
a material fact or omit a material fact necessary to make each statement
contained herein or therein not misleading. There is no fact which the Company
has not disclosed to the Purchaser in writing and of which any of its officers,
directors or executive employees is aware and which has had or might reasonably
be anticipated to have a material adverse effect upon the existing or expected
financial condition, operating results, assets, customer or supplier relations,
employee relations or business prospects of the Company.
5M. Closing Date. The representations and warranties of the Company
contained in this Section 5 and elsewhere in this Agreement and all information
contained in any exhibit, schedule or attachment hereto or in any writing
delivered by, or on behalf of, the Company to the Purchaser shall be true and
correct in all material respects on the date of the Closing as though then
made, except as affected by the transactions expressly contemplated by this
Agreement.
5N. Post-Closing Representations and Warranties. In connection with any
reaffirmation after the Closing of the representations and warranties contained
in this Section 5, the following shall apply:
<PAGE> 15
(i) The representations contained in Section 5B shall be deemed to
be true and correct on any date after the Closing if such representations
are true and correct except for the fact that (A) shares of Class A
Common and additional shares of Class B Common may have been issued to
the Purchaser pursuant to subparagraph 1B(b) hereof, (B) additional
shares of Class B Common may have been issued to the Executives pursuant
to the Management Agreements, (C) additional shares of Common Stock or
securities containing options or rights to acquire any shares of Common
Stock may have been issued to the Company's employees on terms and
conditions approved by the Board and the Purchaser, and (D) additional
shares of Common Stock or securities containing options or rights to
acquire any shares of Common Stock may have been issued in connection
with the acquisition of another company or business on terms and
conditions approved by the Board and the Purchaser;
(ii) The representations contained in Section 5C shall be deemed to
be amended to add the following language at the end thereof:
"except for shares of stock or other securities or
interests in any Person and Subsidiaries acquired
after June 4, 1996, in each case with the approval of
the Board and the Purchaser."
(iii) The representations contained in Section 5E shall be deemed to
be amended to substitute the following representation in its place:
"The Company and its Subsidiaries do not have any
material obligation or liability (whether accrued,
absolute, contingent, unliquidated or otherwise,
whether or not known to the Company or any Subsidiary,
whether due or to become due and regardless of when
asserted) other than: (i) liabilities set forth on
most recent balance sheet (including any notes
thereof) delivered to the Purchaser pursuant to
Section 3A hereof; (ii) liabilities and obligations
which have arisen after the date of such balance sheet
in the ordinary course of business (none of which is a
liability resulting from breach of contract, breach of
warranty, tort, infringement, claim or lawsuit) and
(iii) liabilities and obligations which have been
disclosed to and approved by the Board."
(iv) The representations contained in Section 5J shall be deemed to
be amended to add the following language at the end of the first sentence
thereof:
", in each case except for such plans or arrangements
which have been approved by the Board."
<PAGE> 16
Section 6. Definitions. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"Affiliate" of any particular person or entity means any other person or
entity controlling, controlled by or under common control with such particular
person or entity.
"Class A Investor Common Stock" means (i) the Class A Common issued
pursuant to subparagraph 1B(b) and (ii) any capital stock issued or issuable
with respect to the Class A Common referred to in clause (i) above by way of
stock dividends or stock splits or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular shares of Class A Investor Common Stock, such shares shall cease to
be Class A Investor Common Stock when they have been (a) effectively registered
under the Securities Act and disposed of in accordance with the Registration
statement covering them or (b) distributed to the public through a broker,
dealer or market maker pursuant to Rule 144 under the Securities Act (or any
similar rule then in force).
"Class B Investor Common Stock" means (i) the Class B Common issued
hereunder or pursuant to subparagraph 1B(b) and (ii) any capital stock issued
or issuable with respect to the Class B Common referred to in clause (i) above
by way of stock dividends or stock splits or in connection with a combination
of shares, recapitalization, merger, consolidation or other reorganization. As
to any particular shares of Class B Investor Common Stock, such shares shall
cease to be Class B Investor Common Stock when they have been (a) effectively
registered under the Securities Act and disposed of in accordance with the
Registration statement covering them or (b) distributed to the public through a
broker, dealer or market maker pursuant to Rule 144 under the Securities Act
(or any similar rule then in force).
"Indebtedness" means all indebtedness for borrowed money (including
purchase money obligations) maturing one year or more from the date of creation
or incurrence thereof or renewable or extendible at the option of the debtor to
a date one year or more from the date of creation or incurrence thereof, all
indebtedness under revolving credit arrangements extending over a year or more,
all capitalized lease obligations and all guarantees of any of the foregoing.
"Investor Common Stock" means the Class A Investor Common Stock and the
Class B Investor Common Stock.
"IRC" means the Internal Revenue Code of 1986, as amended, and any
reference to any particular IRC section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"Officer's Certificate" means a certificate signed by the Company's
president or its chief financial officer, in his capacity as such, stating
that, to the best of such officer's knowledge, (i) the officer signing such
certificate has made or has caused to be made such investigations as are
<PAGE> 17
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate and (ii) such certificate does not misstate any
material fact and does not omit to state any fact necessary to make the
certificate not misleading.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Restricted Securities" means (i) the Common Stock issued hereunder and
pursuant to subparagraph 1B(b) hereof and (ii) any securities issued with
respect to the securities referred to in clause (i) or (ii) above by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Restricted Securities, such securities shall cease to be Restricted
Securities when they have (a) been effectively registered under the Securities
Act and disposed of in accordance with the registration statement covering
them, (b) become eligible for sale pursuant to Rule 144(k) (or any similar
provision then in force) under the Securities Act or (c) been otherwise
transferred and new certificates for them not bearing the Securities Act legend
set forth in paragraph 7C have been delivered by the Company in accordance with
paragraph 4(ii). Whenever any particular securities cease to be Restricted
Securities, the holder thereof shall be entitled to receive from the Company,
without expense, new securities of like tenor not bearing a Securities Act
legend of the character set forth in paragraph 7C.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
agency succeeding to the functions thereof.
"Subsidiary" means any corporation of which the securities having a
majority of the ordinary voting power in electing the board of directors are,
at the time as of which any determination is being made, owned by the Company
either directly or through one or more Subsidiaries.
<PAGE> 18
Section 7. Miscellaneous.
7A. Expenses. The Company agrees to pay, and hold the Purchaser and all
holders of Investor Common Stock harmless against liability for the payment of,
(i) the fees and expenses of their counsel arising in connection with the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated by this Agreement (including but not limited to fees
and expenses arising with respect to any subsequent purchase of Common Stock
pursuant to subparagraph 1B(b) hereof), (ii) the fees and expenses incurred
with respect to any amendments or waivers (whether or not the same become
effective) under or in respect of this Agreement, the Management Agreements,
the Stockholders Agreement, the Professional Services Agreement, the other
agreements contemplated hereby and the Certificate of Incorporation, (iii)
stamp and other taxes which may be payable in respect of the execution and
delivery of this Agreement or the issuance, delivery or acquisition of any
shares of Common Stock purchased hereunder or in accordance with subparagraph
1B(b) hereof, and (iv) the fees and expenses incurred with respect to the
interpretation or enforcement of the rights granted under this Agreement, the
Management Agreements, the Stockholders Agreement, the Professional Services
Agreement, the other agreements contemplated hereby and the Certificate of
Incorporation and the Company's bylaws.
7B. Remedies. Each holder of Investor Common Stock shall have all rights
and remedies set forth in this Agreement and the Certificate of Incorporation
and all rights and remedies which such holders have been granted at any time
under any other agreement or contract and all of the rights which such holders
have under any law. Any Person having any rights under any provision of this
Agreement shall be entitled to enforce such rights specifically (without
posting a bond or other security), to recover damages by reason of any breach
of any provision of this Agreement and to exercise all other rights granted by
law.
7C. Purchaser's Investment Representations. The Purchaser hereby
represents that it is acquiring the Restricted Securities purchased hereunder
or acquired pursuant hereto for its own account with the present intention of
holding such securities for purposes of investment, and that it has no
intention of selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities laws; provided
that nothing contained herein shall prevent the Purchaser and subsequent
holders of Restricted Securities from transferring such securities in
compliance with the provisions of Section 4 hereof. Each certificate for
Restricted Securities shall be imprinted with a legend in substantially the
following form:
"The securities represented by this certificate were originally
issued on _________ and have not been registered under the
Securities Act of 1933, as amended. The transfer of the
securities represented by this certificate is subject to the
conditions specified in the Purchase Agreement, dated as of June
4, 1996, between the issuer (the "Company") and a certain
investor, and the Company reserves the right to refuse the
transfer of such securities until such conditions have been
fulfilled with respect to such transfer. A copy of such
conditions shall be furnished by the Company to the
<PAGE> 19
holder hereof upon written request and without charge."
7D. Consent to Amendments. Except as otherwise expressly provided herein,
the provisions of 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 has obtained the written consent of the
holders of a majority of the Investor Common Stock. No other course of dealing
between the Company and the holder of any Common Stock or any delay in
exercising any rights hereunder or under the Certificate of Incorporation shall
operate as a waiver of any rights of any such holders. In addition, this
Agreement shall not be amended, modified or supplemented without the prior
written consent of the holders of a majority of the Common Stock then held by
the Executives and their Permitted Transferees (as defined in the Management
Agreements). For purposes of this Agreement, shares of Common Stock held by
the Company or any Subsidiaries shall not be deemed to be outstanding.
7E. Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by any Purchaser or on its behalf.
7F. Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether so expressed or
not. In addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Purchaser's benefit as a
purchaser or holder of Common Stock are also for the benefit of, and
enforceable by, any subsequent holder of such Common Stock. The rights and
obligations of the Purchaser under this Agreement and the agreements
contemplated hereby may be assigned by the Purchaser at any time, in whole or
in part, to any investment fund managed by Golder, Thoma, Cressey, Rauner,
Inc., or any successor thereto.
7G. Generally Accepted Accounting Principles. Where any accounting
determination or calculation is required to be made under this Agreement or the
exhibits hereto, such determination or calculation (unless otherwise provided)
shall be made in accordance with generally accepted accounting principles,
consistently applied, except that if because of a change in generally accepted
accounting principles the Company would have to alter a previously utilized
accounting method or policy in order to remain in compliance with generally
accepted accounting principles, such determination or calculation shall
continue to be made in accordance with the Company's previous accounting
methods and policies.
7H. Severability. 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 is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder
<PAGE> 20
of this Agreement.
7I. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall constitute one
and the same Agreement.
7J. Descriptive Headings; Interpretation. The descriptive headings of
this Agreement are inserted for convenience only and do not constitute a
Section of this Agreement. The use of the word "including" in this Agreement
shall be by way of example rather than by limitation.
7K. Governing Law. The corporate law of Delaware shall govern all issues
concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity and interpretation of this
Agreement and the exhibits and schedules hereto shall be governed by and
construed in accordance with the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Illinois.
7L. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable express courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the Purchaser and to the Company at the address
indicated below:
<PAGE> 21
If to the Company:
National Equipment Services, Inc.
6100 Sears Tower
Chicago, Illinois 60606-6402
Attention: President
If to the Purchaser:
Golder, Thoma, Cressey, Rauner Fund IV, L.P.
6100 Sears Tower
Chicago, Illinois 60606-6402
Attention: Carl D. Thoma
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
* * * * *
<FF>
<PAGE> 22
IN WITNESS WHEREOF, the parties hereto have executed this Purchase
Agreement on the date first written above.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin P. Rodgers
Its: President
GOLDER, THOMA, CRESSEY, RAUNER
FUND IV, L.P.
By: GTCR IV, L.P., its General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.,
its General Partner
By: /s/ Carl D. Thoma
Its: Principal
<PAGE> 1
Exhibit 10.3(i)
STOCKHOLDERS AGREEMENT
THIS AGREEMENT is made as of June 4, 1996 by and between National
Equipment Services, Inc., a Delaware corporation (the "Company"), Golder,
Thoma, Cressey, Rauner Fund IV, L.P., an Illinois limited partnership (the
"Investor"), and Kevin Rodgers and Paul Ingersoll (collectively, the
"Executives"). The Investor and the Executives are collectively referred to
herein as the "Stockholders" and individually as a "Stockholder." Capitalized
terms used but not otherwise defined herein are defined in paragraph 7 hereof.
The Investor will purchase shares of the Company's Class A Common Stock,
par value $.01 per share (the "Class A Common"), and the Company's Class B
Common Stock, par value $.01 per share (the "Class B Common" and, together with
the Class A Common, the "Common Stock"), pursuant to a purchase agreement
between the Investor and the Company dated as of the date hereof (the "Purchase
Agreement"). Each of the Executives will purchase shares of Class B Common
pursuant to separate Management Agreements.
The execution and delivery of this Agreement is a condition to the
Investor's purchase of Common Stock pursuant to the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Board of Directors.
(a) From and after the Closing and until the provisions of this paragraph
1 cease to be effective, each Stockholder shall vote all of his Stockholder
Shares and any other voting securities of the Company over which such
Stockholder has voting control and shall take all other necessary or desirable
actions within his control (whether in his capacity as a stockholder, director,
member of a board committee or officer of the Company or otherwise, and
including, without limitation, attendance at meetings in person or by proxy for
purposes of obtaining a quorum and execution of written consents in lieu of
meetings), and the Company shall take all necessary and desirable actions
within its control (including, without limitation, calling special board and
stockholder meetings), so that:
(i) the authorized number of directors on the Company's board of
directors (the "Board") shall be established at the number determined by
the Investor, provided that such authorized number shall be no fewer than
three directors;
(ii) the following persons shall be elected to the Board
(A) two representative designated by the Investor (the
"Investor Directors"), who shall initially be Carl D. Thoma and
William C. Kessinger;
<PAGE> 2
(B) one representative designated by the holders of a majority
of the Class B Common then held by the Executives and their
Permitted Transferees (the "Executive Director"), who shall
initially be Kevin Rodgers; and
(C) if the size of the Board shall be set by the Investor at
greater than three directors, additional representatives chosen
jointly by the Investor and the Executives (the "Additional
Directors"); provided that if the Investor and the Executives are
unable to agree on the Additional Directors within 10 days after
the date specified by the Investor for electing the Additional
Directors, the Investor, in its sole discretion, shall designate
the Additional Directors;
(iii) the authorized number of directors on the board of directors
of each of the Company's Subsidiaries (each a "Sub Board") shall be the
same as that of the Board;
(iv) the removal from the Board or a Sub Board (with or without
cause) of the Investor Director or any Executive Director shall be only
upon the written request of the person or persons originally entitled to
designate such director pursuant to subparagraph 1(a)(ii) above, and the
removal from the Board of any Additional Director shall be only upon the
written request of the Investor; provided that if any Executive Director
ceases to be an employee of the Company and its subsidiaries, he shall be
removed as a director promptly after his employment ceases on a date
specified by the Investor; and
(v) in the event that any representative designated hereunder for
any reason ceases to serve as a member of the Board or a Sub Board during
his term of office, the resulting vacancy on the Board or the Sub Board
shall be filled by a representative designated by the person or persons
originally entitled to designate such director pursuant to subparagraph
1(a)(ii) above.
(b) There shall be at least four meetings of the Board during every
fiscal year, at least one of which shall be held in each 120-day period during
the Company's fiscal year. The Company shall pay all out-of-pocket expenses
incurred by each director in connection with attending regular and special
meetings of the Board, any Sub Board and any committee thereof.
(c) If any party fails to designate a representative to fill a
directorship pursuant to the terms of this paragraph 1, the election of a
person to such directorship shall be accomplished in accordance with the
Company's bylaws and applicable law.
2. Conflicting Agreements. Each Stockholder represents that he or
it has not granted and is not a party to any proxy, voting trust or other
agreement which is inconsistent with or conflicts with the provisions of this
Agreement, and no holder of Stockholder Shares shall grant any proxy or become
party to any voting trust or other agreement which is inconsistent with or
conflicts with the provisions of this Agreement.
3. Legend. Each certificate evidencing Stockholder Shares and each
certificate issued in exchange for or upon the transfer of any Stockholder
Shares (if such shares remain Stock
<PAGE> 3
holder Shares as defined herein after such transfer) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"The securities represented by this certificate are
subject to a Stockholders Agreement dated as of June
4, 1996, among the issuer of such securities (the
"Company") and certain of the Company's stockholders.
A copy of such Stockholders Agreement will be
furnished without charge by the Company to the holder
hereof upon written request."
The Company shall imprint such legend on certificates evidencing Stockholder
Shares outstanding prior to the date hereof. The legend set forth above shall
be removed from the certificates evidencing any shares which cease to be
Stockholder Shares.
4. Public Offering. In the event that the Board and the holders of a
majority of the shares of Common Stock then outstanding approve an initial
public offering and sale of Common Stock (a "Public Offering") pursuant to an
effective registration statement under the Securities Act, the holders of
Common Stock shall take all necessary or desirable actions in connection with
the consummation of the Public Offering. In the event that such Public
Offering is an underwritten offering and the managing underwriters advise the
Company in writing that in their opinion the Common Stock structure shall
adversely affect the marketability of the offering, each holder of Common Stock
shall consent to and vote for a recapitalization, reorganization and/or
exchange of the Common Stock into securities that the managing underwriters,
the Board and holders of a majority of the shares of Common Stock then
outstanding (voting as a single class) find acceptable and shall take all
necessary or desirable actions in connection with the consummation of the
recapitalization, reorganization and/or exchange; provided that the resulting
securities reflect and are consistent with the rights and preferences set forth
in the Company's Certificate of Incorporation as in effect immediately prior to
such Public Offering.
5. Sale of the Company.
<PAGE> 4
(a) If the Board and the holders of a majority of the shares of Common
Stock (voting as a single class) then outstanding approve a Sale of the Company
(an "Approved Sale"), each holder of Common Stock shall vote for, consent to
and raise no objections against such Approved Sale. If the Approved Sale is
structured as a (i) merger or consolidation, each holder of Common Stock shall
waive any dissenters' rights, appraisal rights or similar rights in connection
with such merger or consolidation or (ii) sale of stock, each holder of Common
Stock shall agree to sell all of his Common Stock and rights to acquire Common
Stock on the terms and conditions approved by the Board and the holders of a
majority of the Common Stock (voting as a single class) then outstanding. Each
holder of Common Stock shall take all necessary or desirable actions in
connection with the consummation of the Approved Sale as requested by the
Company. The Company will provide each holder of Stockholder Shares with all
material information in its possession regarding such Approved Sale, so long as
such holders enter into such confidentiality agreements as the purchaser(s) in
such Approved Sale reasonably require.
(b) The obligations of the holders of Common Stock with respect to the
Approved Sale of the Company are subject to the satisfaction of the following
conditions: (i) upon the consummation of the Approved Sale, each holder of
Common Stock shall receive the same form of consideration and the same amount
of consideration as set forth in paragraph 6 below; (ii) if any holders of a
class of Common Stock are given an option as to the form and amount of
consideration to be received, each holder of such class of Common Stock shall
be given the same option; and (iii) each holder of then currently exercisable
rights to acquire shares of a class of Common Stock shall be given an
opportunity to either (A) exercise such rights prior to the consummation of the
Approved Sale and participate in such sale as holders of such class of Common
Stock or (B) upon the consummation of the Approved Sale, receive in exchange
for such rights consideration equal to the amount determined by multiplying (1)
the same amount of consideration per share of a class of Common Stock received
by holders of such class of Common Stock in connection with the Approved Sale
less the exercise price per share of such class of Common Stock of such rights
to acquire such class of Common Stock by (2) the number of shares of such class
of Common Stock represented by such rights. The provisions contained in this
paragraph 5 shall supersede any restrictions on transfer or other contrary
provisions contained in any other agreement, document or instrument to which
any Stockholder is a party.
6. Distributions upon Sale of the Company. In the event of a sale or
exchange by the Stockholders of a majority of the Common Stock held by the
Stockholders (whether by sale, merger, recapitalization, reorganization,
consolidation, combination, sale or transfer of the Company's capital stock or
otherwise), each Stockholder shall receive in exchange for the shares of Common
Stock held by such Stockholder the same portion of the aggregate consideration
from such sale or exchange that such Stockholder would have received if such
aggregate consideration had been distributed by the Company in complete
liquidation pursuant to the rights and preferences set forth in the Company's
Certificate of Incorporation as in effect immediately prior to such sale or
exchange. Each holder of Common Stock shall take all necessary or desirable
actions in connection with the distribution of the aggregate consideration from
such sale or exchange as requested by the Company.
<PAGE> 5
7. Participation Rights. At least 40 days prior to any sale, transfer,
assignment, pledge or other disposal (a "Transfer") of any Stockholder Shares
by the Investor or any of its Affiliates after which the Investor or such
Affiliate would not have control of the Company (other than a distribution of
such shares to the Investor's limited and general partners pursuant to the
partnership agreement then in effect between such partners), or the prospective
transferee would have control of the Company, the Investor shall deliver a
written notice (the "Sale Notice") to the Company and each of the other
Stockholders (the "Other Stockholders"), specifying in reasonable detail the
class(es) of the Stockholder Shares to be transferred, the identity of the
prospective transferee(s) and the terms and conditions of the Transfer. If the
consideration to be paid in connection with such Transfer is other than cash,
the Investor will provide the Other Stockholders with all material information
in the Investor's possession regarding such non-cash consideration. The Other
Stockholders may elect to participate in the contemplated Transfer by
delivering written notice to the Investor within 30 days after delivery of the
Sale Notice. With respect to each class of Stockholder Shares to be
Transferred, if any Other Stockholders have elected to participate in such
Transfer, the Investor or such Affiliate and such Other Stockholders shall be
entitled to sell in the contemplated Transfer, at the same price and on the
same terms, a number of Stockholder Shares of such class equal to the product
of (i) the quotient determined by dividing (1) the number of Stockholder Shares
of such class held by such Person by (2) the aggregate number of Stockholder
Shares of such class owned by the Investor or such Affiliate and the Other
Stockholders participating in such sale and (ii) the aggregate number of such
class of Stockholder Shares to be sold in the contemplated Transfer. For
purposes of the preceding sentence, all Stockholder Shares held by any
Permitted Transferee of any Other Stockholder shall be deemed held by such
Other Stockholder himself. Any Stockholder Shares referred to in a Sale Notice
which are not transferred by the Investor during the 90-day period immediately
following the date on which such Sale Notice has been given to the Other
Stockholders (at a price and on terms no more favorable to the Investor than
specified in the Sale Notice) will be subject to the provisions of this
paragraph 7 upon subsequent transfer. The restrictions on the Transfer of
Stockholder Shares set forth in this paragraph 7 will terminate (A) with
respect to all Stockholder Shares upon the occurrence of a Public Offering and
(B) with respect to any particular Stockholder Share, when such Stockholder
Share has been (x) effectively registered under the Securities Act and disposed
of in accordance with the registration statement covering them or (y) sold to
the public through a broker, dealer or market maker pursuant to Rule 144 (or
any similar provision then in force) under the Securities Act. The provisions
contained in this paragraph 7 shall supersede any restrictions on transfer or
other contrary provisions contained in any other agreement, document or
instrument to which any Other Stockholder is a party.
8. Limited Preemptive Rights.
<PAGE> 6
(i) Except for the issuance of Common Stock or any securities containing
options or rights to acquire any shares of Common Stock (a) to the Company's
employees on terms and conditions approved by the Board (including, without
limitation, to the Executives pursuant to the Management Agreements), (b) in
connection with the acquisition of another company or business on terms and
conditions approved by the Board, or (c) pursuant to a public offering
registered under the Securities Act, if the Company at any time after the
Closing authorizes the issuance or sale of any shares of Common Stock or any
securities containing options or rights to acquire any shares of Common Stock
(other than as a dividend on the outstanding Common Stock), the Company shall
first offer to sell to each holder of Executive Common Stock a portion of such
stock or securities equal to the quotient determined by dividing (1) the number
of shares of Executive Common Stock held by such holder by (2) the total number
of shares of Common Stock outstanding on a Fully-Diluted Basis immediately
prior to such issuance. Each holder of Executive Common Stock shall be
entitled to purchase all or any portion of such stock or securities at the most
favorable price and on the most favorable terms as such stock or securities are
to be offered to any other Persons.
(ii) In order to exercise its purchase rights hereunder, a holder of
Executive Common Stock must within 15 days after receipt of written notice from
the Company describing in reasonable detail the stock or securities being
offered, the purchase price thereof, the payment terms and such holder's
percentage allotment deliver a written notice to the Company describing its
election hereunder. If all of the stock and securities offered to the holders
of Executive Common Stock is not fully subscribed by such holders, the
remaining stock and securities shall be reoffered by the Company to the holders
purchasing their full allotment upon the terms set forth in this paragraph,
except that such holders must exercise their purchase rights within five days
after receipt of such reoffer.
(iii) Upon the expiration of the offering periods described above, the
Company shall be entitled to sell such stock or securities which the holders of
Executive Common Stock have not elected to purchase during the 90 days
following such expiration on terms and conditions no more favorable to the
purchasers thereof than those offered to such holders. Any stock or securities
offered or sold by the Company after such 90-day period must be reoffered to
the holders of Executive Common Stock pursuant to the terms of this paragraph.
(iv) Nothing contained in this paragraph 8 shall be deemed to amend,
modify or limit in any way the restrictions on the issuance of shares of Common
Stock set forth in the Purchase Agreement, elsewhere in this Agreement or in
any other agreement to which the Company is bound.
<PAGE> 7
9. Other Matters.
(a) Related Party Transactions. So long as the Company is not in monetary
default under any loan facility between the Company and any Independent Third
Party, the Investor agrees to not, and agrees to cause each Affiliate of the
Investor to not, consummate, or agree to consummate, any transaction (whether
through the execution of a new contract, the amendment of an existing contract
or otherwise) with the Company or any of its Subsidiaries unless such
transaction is approved by the holders of a majority of the Executive Common
Stock; provided that this subparagraph (a) shall not apply to the transactions
contemplated by paragraph 1B of the Purchase Agreement or to the Professional
Services Agreement (as defined in the Purchase Agreement) as in effect on the
date hereof.
(b) Issuances. So long as the Company is not in monetary default under
any loan facility between the Company and any Independent Third Party, the
Investor agrees to not, and agrees to cause each Affiliate of the Investor to
not, purchase any Common Stock or any securities containing options or rights
to acquire any shares of Common Stock unless the Investor and/or its Affiliates
has theretofore purchased all of securities contemplated by paragraph 1B of the
Purchase Agreement on the terms described in the Purchase Agreement.
(c) Redemptions. The Company agrees to not redeem or otherwise acquire
any Common Stock, except (i) for repurchases of capital stock from employees of
the Company and its Subsidiaries upon termination of employment pursuant to the
Management Agreements or other arrangements approved by the Board, (ii) to the
extent approved unanimously by the Board or (iii) pursuant to a purchase offer
made pro rata to all holders of Common Stock on the basis of the number of
shares of Common Stock owned by each such holder; provided that the foregoing
shall not affect the Company's right to pay the Yield and Unreturned Original
Cost in respect of its Class A Common Stock.
10. Financial Statements and Other Information. The Company shall deliver
to each holder of Executive Common Stock (so long as such Person is not
employed by the Company) all of the information contemplated by paragraph 3A of
the Purchase Agreement.
11. Inspection of Property. The Company shall permit any representatives
designated by any holder of Executive Common Stock (so long as such Person is
not employed by the Company), upon reasonable notice and during normal business
hours and such other times as any such holder may reasonably request, to (i)
visit and inspect any of the properties of the Company and its Subsidiaries,
(ii) examine the corporate and financial records of the Company and its
Subsidiaries and make copies thereof or extracts therefrom and (iii) discuss
the affairs, finances and accounts of any such corporations with the directors,
officers, key employees and independent accountants of the Company and its
Subsidiaries; provided that the Company shall have the right to have its chief
financial officer present at any meetings with the Company's independent
accountants.
12. Definitions.
<PAGE> 8
"Additional Executive" means any member of the Company's senior management
who becomes a "Stockholder" in accordance with paragraph 9 of this Agreement.
"Affiliate" of the Investor means any general or limited partner of the
Investor or any other person, entity or investment fund controlling, controlled
by or under common control with the Investor.
"Closing" shall have the meaning set forth in the Purchase Agreement.
"Executive Common Stock" means (i) the Class B Common issued pursuant to
the Management Agreements and (ii) any capital stock issued or issuable with
respect to the Class B Common referred to in clause (i) above by way of stock
dividends or stock splits or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular shares of Executive Common Stock, such shares shall cease to be
Executive Common Stock when they have been (a) effectively registered under the
Securities Act and disposed of in accordance with the Registration statement
covering them or (b) distributed to the public through a broker, dealer or
market maker pursuant to Rule 144 under the Securities Act (or any similar rule
then in force).
"Fully-Diluted Basis" includes, without duplication, (i) all shares of
Common Stock outstanding at the time of determination, (ii) all shares of
Common Stock issuable upon the exercise, conversion or exchange of all
warrants, options or other rights to subscribe for or to acquire, directly or
indirectly, Common Stock, whether or not then exercisable or convertible, and
(iii) all shares of Common Stock issuable upon the conversion or exchange of
all stock or other securities which are convertible into or exchangeable for,
directly or indirectly, Common Stock, whether or not then convertible or
exchangeable.
"Indebtedness" shall have the meaning set forth in the Purchase Agreement.
"Independent Third Party" means any Person who, immediately prior to the
contemplated transaction, does not own in excess of 5% of the Company's Common
Stock on a Fully-Diluted Basis (a "5% Owner"), who is not controlling,
controlled by or under common control with any such 5% Owner and who is not the
spouse or descendent (by birth or adoption) of any such 5% Owner or a trust for
the benefit of such 5% Owner and/or such other Persons.
"Management Agreements" means the senior management agreements between the
Company and each Executive and Additional Executive, in form and substance
substantially similar to Exhibits B-1 and B-2 attached to the Purchase
Agreement.
"Permitted Transferee" means (i) in the case of any Executive and any
Additional Executive, his spouse and/or descendants (whether natural or
adopted), and any trust solely for the benefit of such person and/or his spouse
and/or descendants, and (ii) in the case of the Investor, its Affiliates.
<PAGE> 9
"Public Offering" means the sale in an underwritten public offering
registered under the Securities Act of shares of the Company's Common Stock
approved by the Board.
"Public Sale" means any sale of Stockholder Shares to the public pursuant
to an offering registered under the Securities Act or to the public through a
broker, dealer or market maker pursuant to the provisions of Rule 144 adopted
under the Securities Act.
"Sale of the Company" means any transaction or series of transactions
pursuant to which any Independent Third Party or group of Independent Third
Parties in the aggregate acquire(s) (i) capital stock of the Company possessing
the voting power (other than voting rights accruing only in the event of a
default, breach or event of noncompliance) to elect a majority of the Company's
board of directors (whether by merger, consolidation, reorganization,
combination, sale or transfer of the Company's capital stock, shareholder or
voting agreement, proxy, power of attorney or otherwise) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Stockholder Shares" means (i) any Common Stock purchased or otherwise
acquired by any Stockholder (including, without limitation, any shares acquired
pursuant to paragraph 16 below), (ii) any equity securities issued or issuable
directly or indirectly with respect to the Common Stock referred to in clause
(i) above by way of stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular shares constituting Stockholder Shares,
such shares will cease to be Stockholder Shares when they have been (x)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them or (y) sold to the public through
a broker, dealer or market maker pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act.
13. Transfers; Transfers in Violation of Agreement. Prior to transferring
any Stockholder Shares to any person or entity, the transferring Stockholder
shall cause the prospective transferee to execute and deliver to the Company
and the other Stockholders a counterpart of this Agreement. Any transfer or
attempted transfer of any Stockholder Shares in violation of any provision of
this Agreement shall be void, and the Company shall not record such transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such shares for any purpose.
14. Additional Stockholders. In connection with the issuance of any
additional equity securities of the Company, the Company may permit such person
to become a party to this Agreement and succeed to all of the rights and
obligations of a "Stockholder" under this Agreement by obtaining an executed
counterpart signature page to this Agreement, and, upon such execution, such
person shall for all purposes be a "Stockholder" party to this Agreement.
<PAGE> 10
15. Holdback Agreement. Each holder of Stockholder Shares shall not
effect any public sale or distribution (including sales pursuant to Rule 144)
of equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and the 180-day period beginning on the effective date of an initial Public
Offering, unless the underwriters managing such initial Public Offering
otherwise agree.
16. Antidilution.
(a) Subject to paragraph 16(c) below, if the Investor or any other
investor (including, without limitation, any Seller (as defined in the Purchase
Agreement)) shall invest up to an additional $5 million in the Company (in
addition to the $25 million investment contemplated by Sections 1B(b) and 1B(c)
of the Purchase Agreement) (the "Second Tranche"), the Company shall
simultaneously offer to sell to each Executive and Additional Executive who is
then employed by the Company or any Subsidiary (the "Eligible Executives")
12.5% of the common equity component of any such investment including, for
purposes of such calculation, any shares issued to the Eligible Executives
pursuant to this paragraph and any common equity participation accruing to the
holders of any preferential security issued in such transaction, multiplied by
a fraction, the numerator of which is the number of shares of Common Stock on a
Fully-Diluted basis then held by such Eligible Executive, and the denominator
of which is the number of shares of Common Stock on a Fully-Diluted Basis then
held by all Eligible Executives, for a price per share equal to the price per
share of common equity issued to the Investor or such other investor in such
transaction.
(b) Subject to paragraph 16(c) below, if the Investor or any other
investor (including, without limitation, any Seller) shall invest up to an
additional $5 million in the Company (in addition to the $25 million investment
contemplated by Sections 1B(b) and 1B(c) of the Purchase Agreement and the $5
million investment contemplated by paragraph 16(a) above) (the "Third
Tranche"), the Company shall simultaneously offer to sell to each Eligible
Executive 10.0% of the common equity component of any such investment
including, for purposes of such calculation, any shares issued to the Eligible
Executives pursuant to this paragraph and any common equity participation
accruing to the holders of any preferential security issued in such
transaction, multiplied by a fraction, the numerator of which is the number of
shares of Common Stock on a Fully-Diluted basis then held by such Eligible
Executive, and the denominator of which is the number of shares of Common Stock
on a Fully-Diluted Basis then held by all Eligible Executives, for a price per
share equal to the price per share of common equity issued to the Investor or
such other investor in such transaction.
(c) Notwithstanding paragraphs 16(a) and 16(b) above, the anti-dilution
protections described in such paragraphs will not apply if, at the time the
Investor or such other investor shall invest in the Second Tranche or the Third
Tranche, the Company is in monetary default under and loan facility between the
Company and any Independent Third Party. In addition, in connection with the
issuance of any shares to any Eligible Executive pursuant to paragraph 16(a) or
16(b) above, such Eligible Executive will enter into (or have entered into) an
agreement with the Company substantially in the form of the portion of the
Management Agreements entitled
<PAGE> 11
"Provisions Relating to Executive Stock," which agreement will be binding on
such Eligible Executive and the Company with respect to such shares; provided
that such shares shall be subject to a two-year vesting period which begins on
the date of issuance of such shares and vests ratably on a daily basis during
such two year period.
17. Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Stockholders unless such modification,
amendment or waiver is approved in writing by the Company, the Investor, each
Executive and each Additional Executive. The failure of any party to enforce
any of the provisions of this Agreement shall in no way be construed as a
waiver of such provisions and shall not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
18. Severability. 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 is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
19. Entire Agreement. Except as otherwise expressly set forth herein,
this document embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.
20. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Stockholders and any subsequent
holders of Stockholder Shares and the respective successors and assigns of each
of them, so long as they hold Stockholder Shares. In addition, the rights and
obligations of the Investor under this Agreement and the agreements
contemplated hereby may be assigned by the Investor at any time, in whole or in
part, to any investment fund managed by Golder, Thoma, Cressey, Rauner, Inc.,
or any successor thereto.
21. Counterparts. This Agreement may be executed in separate counterparts
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
22. Remedies. The Company, the Investor, each Executive and each
Additional Executive shall be entitled to enforce their rights under this
Agreement specifically to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights existing in their
favor. The parties hereto agree and acknowledge that money damages may not be
<PAGE> 12
an adequate remedy for any breach of the provisions of this Agreement and that
the Company, the Investor, each Executive and each Additional Executive may in
its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
a bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.
23. Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any
subsequent holder of Common Stock subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. Notices will be deemed to have been given hereunder when
delivered personally, three days after deposit in the U.S. mail and one day
after deposit with a reputable overnight courier service. The Company's
address is:
National Equipment Services, Inc.
6100 Sears Tower
Chicago, Illinois 60606-6402
Attention: President
24. Governing Law. The corporate law of Delaware shall govern all issued
concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity and interpretation of this
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Illinois, without giving effect to any choice of law or
other conflict of law provision or rule (whether of the State of Illinois or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Illinois.
25. Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
* * * * *
<FF>
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement on the day and year first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By /s/ Kevin P. Rodgers
Its President
GOLDER, THOMA, CRESSEY, RAUNER
FUND IV, L.P.
By: GTCR IV, L.P.,
its General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.,
its General Partner
By: /s/ Carl D. Thoma
Its: Principal
/s/ Kevin Rodgers
Kevin Rodgers
/s/ Paul Ingersoll
Paul Ingersoll
<PAGE> 1
Exhibit 10.3(ii)
AMENDMENT NO. 1 TO
STOCKHOLDERS AGREEMENT
THIS AMENDMENT NO.1 to Stockholders Agreement (this "Agreement") is dated
as of December 31, 1996 by and among National Equipment Services, Inc., a
Delaware corporation (the "Company"), Golder, Thoma, Cressey, Rauner Fund IV,
L.P., a Delaware limited partnership (the "Investor"), Kevin Rodgers
("Rodgers"), Paul Ingersoll ("Ingersoll") and Dennis O'Connor ("O'Connor").
This Agreement amends the Stockholders Agreement, dated as of June 4, 1996 (the
"Original Agreement"), between the Company, the Investor, Rodgers and
Ingersoll. Capitalized terms used but not defined herein shall have the
meanings assigned them in the Original Agreement.
WHEREAS, the parties hereto now desire to amend the Original Agreement as
set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
the Original Agreement as follows:
Section I. Amendments to Original Agreement. As of the date hereof, the
Original Agreement shall be amended as follows:
I.1. Section 16(a) of the Original Agreement shall be and hereby is
amended by (i) deleting the words "(including, without limitation, any Seller
(as defined in the Purchase Agreement))" in the second line thereof and (ii)
deleting the words "Sections 1B(b) and 1B(c)" and replacing them with the words
"Section 1B(b)" in the fourth line thereof.
I.2. Section 16(b) of the Original Agreement shall be and hereby is
amended by (i) deleting the words "(including, without limitation, any Seller)"
in the second line thereof and (ii) deleting the words "Sections 1B(b) and
1B(c)" and replacing them with the words "Section 1B(b)" in the third line
thereof.
I.3. The Original Agreement shall be and hereby is amended by adding
O'Connor as a party thereto and as a Stockholder thereunder. O'Connor hereby
agrees to be bound by all of the covenants, terms and conditions contained in
the Original Agreement, as amended. The parties hereto agree that the signature
page hereto bearing O'Connor's signature constitutes a "counterpart signature
page" to the Original Agreement pursuant to Section 14 of the Original
Agreement.
<PAGE> 2
Section II. Miscellaneous.
II.1. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
II.2. Governing Law. This Agreement will be governed by and construed
in accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of Illinois or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Illinois.
<FF>
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.1
to Stockholders Agreement on the day and year first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
-----------------------------
Its: President
-----------------------------
GOLDER, THOMA, CRESSEY, RAUNER FUND IV, L.P.
By: GTCR IV, L.P.
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
Its: General Partner
By: /s/ Carl D. Thoma
------------------------------
Its: Principal
/s/ Kevin Rodgers
------------------------------
KEVIN RODGERS
/s/ Paul R. Ingersoll
------------------------------
PAUL INGERSOLL
/s/ Dennis O'Connor
------------------------------
DENNIS O'CONNOR
<PAGE> 1
Exhibit 10.4(i)
REGISTRATION AGREEMENT
THIS AGREEMENT is made as of June 4, 1996, between National Equipment
Services, Inc., a Delaware corporation (the "Company"), Golder, Thoma, Cressey,
Rauner Fund IV, L.P., a Delaware limited partnership (the "Investor"), and
Kevin Rodgers and Paul Ingersoll (collectively, the "Executives").
The Company and the Investor are parties to a Purchase Agreement of even
date herewith (the "Purchase Agreement"). In order to induce the Investor to
enter into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the Closing under the Purchase Agreement.
Unless otherwise provided in this Agreement, capitalized terms used herein
shall have the meanings set forth in paragraph 8 hereof.
The parties hereto agree as follows:
1. Demand Registrations.
(a) Requests for Registration. At any time, the holders of a majority of
the Registrable Securities may request registration under the Securities Act of
all or any portion of their Registrable Securities on Form S-1 or any similar
long-form registration ("Long-Form Registrations"), and the holders of a
majority of the Registrable Securities may request registration under the
Securities Act of all or any portion of their Registrable Securities on Form
S-2 or S-3 or any similar short-form registration ("Short-Form Registrations")
if available. All registrations requested pursuant to this paragraph 1(a) are
referred to herein as "Demand Registrations." Each request for a Demand
Registration shall specify the approximate number of Registrable Securities
requested to be registered and the anticipated per share price range for such
offering. Within ten days after receipt of any such request, the Company shall
give written notice of such requested registration to all other holders of
Registrable Securities and shall include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within 15 days after the receipt of the Company's notice.
(b) Long-Form Registrations. The holders of Registrable Securities shall
be entitled to request (i) four Long-Form Registrations in which the Company
shall pay all Registration Expenses ("Company-paid Long-Form Registrations")
and (ii) an unlimited number of Long-Form Registrations in which the holders of
Registrable Securities shall pay their share of the Registration Expenses as
set forth in paragraph 5 hereof. A registration shall not count as one of the
permitted Long-Form Registrations until it has become effective and no
Company-paid Long-Form Registration shall count as one of the permitted
Long-Form Registrations unless the holders of Registrable Securities are able
to register and sell at least 90% of the Registrable Securities requested to be
included in such registration; provided that in any event the Company shall pay
all Registration Expenses in connection with any registration initiated as a
Company-paid Long-Form Registration
<PAGE> 2
whether or not it has become effective and whether or not such registration has
counted as one of the permitted Company-paid Long-Form Registrations.
(c) Short-Form Registrations. In addition to the Long-Form Registrations
provided pursuant to paragraph 1(b), the holders of Registrable Securities
shall be entitled to request an unlimited number of Short-Form Registrations in
which the Company shall pay all Registration Expenses. Demand Registrations
shall be Short-Form Registrations whenever the Company is permitted to use any
applicable short form. After the Company has become subject to the reporting
requirements of the Securities Exchange Act, the Company shall use its best
efforts to make Short-Form Registrations on Form S-3 available for the sale of
Registrable Securities.
(d) Priority on Demand Registrations. The Company shall not include in
any Demand Registration any securities which are not Registrable Securities
without the prior written consent of the holders of a majority of the
Registrable Securities included in such registration. If a Demand Registration
is an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering
exceeds the number of Registrable Securities and other securities, if any,
which can be sold in an orderly manner in such offering within a price range
acceptable to the holders of a majority of the Registrable Securities to be
included in such registration, therein without adversely affecting the
marketability of the offering, the Company shall include in such registration
prior to the inclusion of any securities which are not Registrable Securities
the number of Registrable Securities requested to be included which in the
opinion of such underwriters can be sold in an orderly manner within the price
range of such offering, pro rata among the respective holders thereof on the
basis of the amount of Registrable Securities owned by each such holder.
Without the consent of the Company and the holders of a majority of the
Registrable Securities included in such registration, any Persons other than
holders of Registrable Securities who participate in Demand Registrations which
are not at the Company's expense must pay their share of the Registration
Expenses as provided in paragraph 5 hereof.
(e) Restrictions on Long-Form Registrations. The Company shall not be
obligated to effect any Long-Form Registration within 180 days after the
effective date of a previous Long-Form Registration or a previous registration
in which the holders of Registrable Securities were given piggyback rights
pursuant to paragraph 2 and in which there was no reduction in the number of
Registrable Securities requested to be included. The Company may postpone for
up to 180 days the filing or the effectiveness of a registration statement for
a Demand Registration if the Company and the holders of a majority of the
Registrable Securities agree that such Demand Registration would reasonably be
expected to have a material adverse effect on any proposal or plan by the
Company or any of its Subsidiaries to engage in any acquisition of assets
(other than in the ordinary course of business) or any merger, consolidation,
tender offer, reorganization or similar transaction; provided that in such
event, the holders of Registrable Securities initially requesting such Demand
Registration shall be entitled to withdraw such request and, if such request is
withdrawn, such Demand Registration shall not count as one of the permitted
Demand Registrations hereunder and the Company shall pay all Registration
Expenses in connection with such registration. The Company may delay a Demand
Registration hereunder only once in any twelve-month period.
<PAGE> 3
(f) Selection of Underwriters. The holders of a majority of the
Registrable Securities included in any Demand Registration/Long-Form
Registration shall have the right to select the investment banker(s) and
manager(s) to administer the offering.
(g) Other Registration Rights. Except as provided in this Agreement, the
Company shall not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the holders of a majority of the Registrable Securities.
2. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register any of
its securities under the Securities Act (other than pursuant to a Demand
Registration) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the
Company shall give prompt written notice (in any event within three business
days after its receipt of notice of any exercise of demand registration rights
other than under this Agreement) to all holders of Registrable Securities of
its intention to effect such a registration and shall include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 20 days after the
receipt of the Company's notice.
(b) Piggyback Expenses. The Registration Expenses of the holders of
Registrable Securities shall be paid by the Company in all Piggyback
Registrations.
(c) Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in an orderly manner in such offering within a price range
acceptable to the Company, the Company shall include in such registration (i)
first, the securities the Company proposes to sell, (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
shares owned by each such holder, and (iii) third, other securities requested
to be included in such registration.
(d) Priority on Secondary Registrations. If a Piggyback Registration is
an underwritten secondary registration on behalf of holders of the Company's
securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in an orderly manner in such
offering within a price range acceptable to the holders of a majority of the
Registrable Securities to be included in such registration, the Company shall
include in such registration (i) first, the securities requested to be included
therein by the holders requesting such registration, (ii) second, the
Registrable Securities requested to be included in such registration, pro
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<PAGE> 4
rata among the holders of such Registrable Securities on the basis of the
number of shares owned by each such holder, and (iii) third, other securities
requested to be included in such registration.
(e) Selection of Underwriters. If any Piggyback Registration is an
underwritten offering, the selection of investment banker(s) and manager(s) for
the offering must be approved by the holders of a majority of the Registrable
Securities included in such Piggyback Registration. Such approval shall not be
unreasonably withheld.
(f) Other Registrations. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to
paragraph 1 or pursuant to this paragraph 2, and if such previous registration
has not been withdrawn or abandoned, the Company shall not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-8 or any successor form), whether on its
own behalf or at the request of any holder or holders of such securities, until
a period of at least 180 days has elapsed from the effective date of such
previous registration.
3. Holdback Agreements.
(a) Each holder of Registrable Securities shall not effect any public sale
or distribution (including sales pursuant to Rule 144) of equity securities of
the Company, or any securities convertible into or exchangeable or exercisable
for such securities, during the seven days prior to and the 180-day period
beginning on the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration in which Registrable Securities are
included (except as part of such underwritten registration), unless the
underwriters managing the registered public offering otherwise agree.
(b) The Company (i) shall not effect any public sale or distribution of
its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and during the
180-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-8 or any
successor form), unless the underwriters managing the registered public
offering otherwise agree, and (ii) shall cause each holder of its Common Stock,
or any securities convertible into or exchangeable or exercisable for Common
Stock, purchased from the Company at any time after the date of this Agreement
(other than in a registered public offering) to agree not to effect any public
sale or distribution (including sales pursuant to Rule 144) of any such
securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.
4. Registration Procedures. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered
pursuant to this Agreement, the Company
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<PAGE> 5
shall use its best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company shall as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall furnish to the counsel selected by the
holders of a majority of the Registrable Securities covered by such
registration statement copies of all such documents proposed to be filed, which
documents shall be subject to the review and comment of such counsel);
(b) notify each holder of Registrable Securities of the effectiveness of
each registration statement filed hereunder and prepare and file with the
Securities and Exchange 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 for a period of not
less than 180 days and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such
seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions
as any seller reasonably requests and do any and all other acts and things
which may be reasonably necessary or advisable to enable such seller to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such seller (provided that the Company shall not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company shall prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable
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<PAGE> 6
Securities, such prospectus shall not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements therein not
misleading;
(f) cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed and,
if not so listed, to be listed on the NASD automated quotation system and, if
listed on the NASD automated quotation system, use its best efforts to secure
designation of all such Registrable Securities covered by such registration
statement as a NASDAQ "national market system security" within the meaning of
Rule 11Aa2-1 of the Securities and Exchange Commission or, failing that, to
secure NASDAQ authorization for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register as such with respect to such Registrable Securities with the
NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities being sold or the underwriters, if
any, reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities (including effecting a stock split or a combination
of shares);
(i) make available for inspection by any seller of Registrable Securities,
any underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable rules and
regulations of the Securities and Exchange Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) permit any holder of Registrable Securities which holder, in its sole
and exclusive judgment, might be deemed to be an underwriter or a controlling
person of the Company, to participate in the preparation of such registration
or comparable statement and to require the insertion therein of material,
furnished to the Company in writing, which in the reasonable judgment of such
holder and its counsel should be included;
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<PAGE> 7
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order;
(m) use its best efforts to cause such 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 sellers
thereof to consummate the disposition of such Registrable Securities; and
(n) obtain a cold comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by cold comfort letters as the holders of a majority of the Registrable
Securities being sold reasonably request (provided that such Registrable
Securities constitute at least 10% of the securities covered by such
registration statement).
5. Registration Expenses.
(a) All expenses incident to the Company's performance of or compliance
with this Agreement, including without limitation all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws,
printing expenses, messenger and delivery expenses, fees and disbursements of
custodians, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions) and other Persons retained by the Company (all such expenses being
herein called "Registration Expenses"), shall be borne as provided in this
Agreement, except that the Company shall, in any event, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit or quarterly review, the expense of any liability insurance
and the expenses and fees for listing the securities to be registered on each
securities exchange on which similar securities issued by the Company are then
listed or on the NASD automated quotation system.
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Registrable Securities
included in such registration for the reasonable fees and disbursements of one
counsel chosen by the holders of a majority of the Registrable Securities
included in such registration and for the reasonable fees and disbursements of
each additional counsel retained by any holder of Registrable Securities for
the purpose of rendering a legal opinion on behalf of such holder in connection
with any underwritten Demand Registration or Piggyback Registration.
(c) To the extent Registration Expenses are not required to be paid by the
Company, each holder of securities included in any registration hereunder shall
pay those
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<PAGE> 8
Registration Expenses allocable to the registration of such holder's securities
so included, and any Registration Expenses not so allocable shall be borne by
all sellers of securities included in such registration in proportion to the
aggregate selling price of the securities to be so registered.
6. Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by law, each
holder of Registrable Securities, its officers and directors and each Person
who controls such holder (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for
use therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.
(b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company,
its directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such holder; provided that the obligation to indemnify
shall be individual, not joint and several, for each holder and shall be
limited to the net amount of proceeds received by such holder from the sale of
Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (provided that the failure to give prompt notice shall
not impair any Person's right to indemnification hereunder to the extent such
failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume
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<PAGE> 9
the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party shall
not be subject to any liability for any settlement made by the indemnified
party without its consent (but such consent shall not be unreasonably
withheld). An indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to
such claim.
(d) The indemnification provided for under this Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of securities. The Company
also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
7. Participation in Underwritten Registrations. No Person may participate
in any registration hereunder which is underwritten unless such Person (i)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements;
provided that no holder of Registrable Securities included in any underwritten
registration shall be required to make any representations or warranties to the
Company or the underwriters (other than representations and warranties
regarding such holder and such holder's intended method of distribution) or to
undertake any indemnification obligations to the Company or the underwriters
with respect thereto, except as otherwise provided in paragraph 6 hereof.
8. Definitions.
(a) "Executive Registrable Securities" means any shares of Common Stock
held as of the date hereof, or acquired hereafter from the Company, by the
executive employees of the Company and its Subsidiaries who are or become
parties to this Agreement, including, without limitation, the Executives.
(b) "Investor Registrable Securities" means (i) any Class A Common issued
pursuant to the Purchase Agreement (whether issued before, on or after the date
hereof), (ii) any Class B Common issued pursuant to the Purchase Agreement
(whether issued before or after the date hereof), (iii) any other Common Stock
issued or issuable with respect to the securities referred to in clauses (i)
and (ii) by way of a stock dividend or stock split or in connection with an
exchange or combination of shares, recapitalization, merger, consolidation or
other reorganization (a "Reorganization"), and (iv) any other shares of Common
Stock held by Persons holding securities
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<PAGE> 10
described in clauses (i) to (iii), inclusive, above; provided that in the event
that pursuant to a Reorganization, equity securities are issued which do not
participate in the residual equity of the Company ("Non-Participating
Securities"), such Non-Participating Securities will not be Investor
Registrable Securities.
(c) "Registrable Securities" means Investor Registrable Securities and
Executive Registrable Securities. As to any particular Registrable Securities,
such securities shall cease to be Executive or Investor Registrable Securities
when they have been distributed to the public pursuant to a offering registered
under the Securities Act or sold to the public through a broker, dealer or
market maker in compliance with Rule 144 under the Securities Act (or any
similar rule then in force). For purposes of this Agreement, a Person shall be
deemed to be a holder of Registrable Securities whenever such Person has the
right to acquire such Registrable Securities (upon conversion or exercise in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected.
(d) Unless otherwise stated, other capitalized terms contained herein have
the meanings set forth in the Purchase Agreement.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not hereafter enter
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the holders of Registrable Securities in this
Agreement.
(b) Adjustments Affecting Registrable Securities. The Company shall not
take any action, or permit any change to occur, with respect to its securities
which would adversely affect the ability of the holders of Registrable
Securities to include such Registrable Securities in a registration undertaken
pursuant to this Agreement or which would adversely affect the marketability of
such Registrable Securities in any such registration (including, without
limitation, effecting a stock split or a combination of shares).
(c) Remedies. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and
to exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
- 10 -
<PAGE> 11
(d) Amendments and Waivers. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of a majority of the Registrable
Securities; provided that no such amendment or action which adversely affects
any one holder or group of holders of Registrable Securities, as such,
vis-a-vis the other holders of Registrable Securities, as such, shall be
effective against such holder or group of holders without the prior written
consent of such holder or group of holders.
(e) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not, and the rights and obligations of the Investor
under this Agreement and the agreements contemplated hereby may be assigned by
the Investor at any time, in whole or in part, to any investment fund managed
by Golder, Thoma, Cressey, Rauner, Inc., or any successor thereto. In
addition, whether or not any express assignment has been made, the provisions
of this Agreement which are for the benefit of purchasers or holders of
Registrable Securities are also for the benefit of, and enforceable by, any
subsequent holder of Registrable Securities.
(f) Severability. 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 is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.
(g) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall constitute one
and the same Agreement.
(h) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
(i) Governing Law. The corporate law of the State of Delaware shall
govern all issues and questions concerning the relative rights of the Company
and its stockholders. All other issues and questions concerning the
construction, validity, interpretation and enforcement of this Agreement and
the exhibits and schedules hereto shall be governed by, and construed in
accordance with, the laws of the State of Illinois, without giving effect to
any choice of law or conflict of law rules or provisions (whether of the State
of Illinois or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Illinois.
(j) Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or mailed to the recipient by certified or
- 11 -
<PAGE> 12
registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to the Investor and to the
Executives at the addresses indicated on the Company's books and records and to
the Company at the address of its corporate headquarters or to such other
address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party.
* * * * *
- 12 -
<PAGE> 13
IN WITNESS WHEREOF, the parties have executed this Registration Agreement
as of the date first written above.
NATIONAL EQUIPMENT SERVICES,
INC.
By: /s/ Kevin Rodgers
-----------------
Its: President
-----------------
GOLDER, THOMA, CRESSEY, RAUNER FUND IV, L.P.
By: GTCR IV, L.P.
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
Its: General Partner
By: /s/ Carl D. Thoma
-----------------
Its: Principal
/s/ Kevin P. Rodgers
--------------------
Kevin Rodgers
/s/ Paul R. Ingersoll
---------------------
Paul Ingersoll
- 13 -
<PAGE> 1
Exhibit 10.4(ii)
AMENDMENT NO.1 TO
REGISTRATION AGREEMENT
THIS AMENDMENT NO.1 to Registration Agreement (this "Agreement") is dated
as of December 31, 1996 by and among National Equipment Services, Inc., a
Delaware corporation (the "Company"), Golder, Thoma, Cressey, Rauner Fund IV,
L.P., a Delaware limited partnership (the "Investor"), Kevin Rodgers
("Rodgers"), Paul Ingersoll ("Ingersoll") and Dennis O'Connor ("O'Connor").
This Agreement amends the Registration Agreement, dated as of June 4, 1996 (the
"Original Agreement"), between the Company, the Investor, Rodgers and
Ingersoll. Capitalized terms used but not defined herein shall have the
meanings assigned them in the Original Agreement.
WHEREAS, the parties hereto now desire to amend the Original Agreement as
set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
the Original Agreement as follows:
Section 1. Amendments to Original Agreement. As of the date hereof, the
Original Agreement shall be amended as follows:
1.1. Section 8(c) of the Original Agreement shall be and hereby is amended
by (a) deleting the words "and Executive Registrable Securities" and replacing
them with the words ," Executive Registrable Securities and Seller Registrable
Securities" in the first and second lines thereof and (b) deleting the words
"or Investor" and replacing them with the words ", Investor or Seller" in the
third line thereof.
1.2. A new Section 8(d) is hereby added to the Original Agreement, to be
inserted immediately after Section 8(c) of the Original Agreement and to read
as follows:
"(d) "Seller Registrable Securities" means (i) any Class A Common issued
pursuant to the Stock Purchase Agreement, dated on or about January 6, 1997,
between the Company and Industrial Crane Maintenance Systems, Inc. (the "ICMS
Purchase Agreement") (whether issued before, on or after the date hereof),
(ii) any Class B Common issued pursuant to the ICMS Purchase Agreement (whether
issued before or after the date hereof), (iii) any other Common Stock issued or
issuable with respect to the securities referred to in clauses (i) and (ii) by
way of a Reorganization, and (iv) any other shares of Common Stock held by
Persons holding securities described in clauses (i) to (iii), inclusive, above;
provided that in the event that pursuant to a Reorganization, equity
<PAGE> 2
securities are issued which are Non-Participating Securities, such
Non-Participating Securities will not be Seller Registrable Securities."
1.3. The Original Agreement shall be and hereby is amended by adding
O'Connor as a party thereto. O'Connor hereby agrees to be bound by all of the
covenants, terms and conditions contained in the Original Agreement, as
amended. The parties hereto agree that the signature page hereto bearing
O'Connor's signature constitutes a counterpart signature page to the Original
Agreement.
Section 2. Miscellaneous.
2.1. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.2. Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.1
to Registration Agreement on the day and year first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
--------------------------------------
Its: President
GOLDER, THOMA, CRESSEY, RAUNER FUND IV, L.P.
By: GTCR IV, L.P.
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
Its: General Partner
By: /s/ Carl D. Thoma
--------------------------------------
Its: Principal
/s/ Kevin Rodgers
--------------------------------------------
KEVIN RODGERS
/s/ Paul R. Ingersoll
--------------------------------------------
PAUL INGERSOLL
/s/ Dennis O'Connor
--------------------------------------------
DENNIS O'CONNOR
<PAGE> 1
Exhibit 10.5(i)
SENIOR MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of June 4, 1996, between National Equipment
Services, Inc., a Delaware corporation (the "Company"), and Kevin Rodgers
("Executive").
The Company and Executive desire to enter into an agreement pursuant to
which Executive will purchase, and the Company will sell, 8,000 shares of the
Company's Class B Common Stock, par value $.01 per share (the "Class B Common
Stock"). All of such shares of Class B Common Stock and all shares of Class B
Common Stock hereafter acquired by Executive are referred to herein as
"Executive Stock." Certain definitions are set forth in paragraph 9 of this
Agreement.
The execution and delivery of this Agreement by the Company and Executive
is a condition to the purchase of shares of Class B Common Stock and Class A
Common Stock, par value $.01 per share (the "Class A Common Stock" and,
together with the Class B Common Stock, the "Common Stock"), by Golder, Thoma,
Cressey, Rauner Fund IV, L. P. or an Affiliate thereof (the "Investor")
pursuant to a purchase agreement between the Company and the Investor dated as
of the date hereof (the "Purchase Agreement"). Certain provisions of this
Agreement are intended for the benefit of, and will be enforceable by, the
Investor.
The parties hereto agree as follows:
PROVISIONS RELATING TO EXECUTIVE STOCK
1. Purchase and Sale of Executive Stock.
(a) Upon execution of this Agreement, Executive will purchase, and the
Company will sell, 96 shares of Class B Common Stock at a price of $10 per
share. The Company will deliver to Executive the certificates representing
such Class B Common Stock, and Executive will deliver to the Company a
cashier's or certified check or wire transfer of funds in the aggregate amount
of $192 and a promissory note in the form of Exhibit A attached hereto (an
"Executive Note") in an aggregate principal amount of $768. Executive's
obligations under such Executive Note shall be secured by a pledge of all of
the shares of Executive Stock to the Company, and in connection therewith,
Executive shall enter into a pledge agreement in the form of Exhibit B attached
hereto (the "Pledge Agreement").
(b) Upon the purchase from time to time by the Investor or any Seller (as
defined in the Purchase Agreement) of up to 24,250 shares of Class A Common
Stock and up to an additional 45,000 shares of Class B Common Stock pursuant to
subparagraphs 1B(b) or 1B(c) of the
<PAGE> 2
Purchase Agreement, Executive will purchase, and the Company will sell, up to
an aggregate of 7,904 additional shares of Class B Common Stock at a price of
$10 per share (each, a "Mandatory Purchase"); provided that Executive will have
the option to purchase all or any portion of such 7,904 additional shares of
Class B Common Stock at a price of $10 per share at such earlier time or times
as Executive shall determine (each, an "Optional Purchase"). The number of
shares of Class B Common Stock to be sold by the Company and purchased by
Executive pursuant to any Mandatory Purchase shall equal (i) 7,904 multiplied
by a fraction (A) the numerator of which will be the sum of (I) the product of
(x) the number of shares of Class A Common Stock to be concurrently purchased
by the Investor or such Seller multiplied by 1,000 plus (II) the product of (x)
the number of shares of Class B Common Stock to be concurrently purchased by
the Investor or such Seller multiplied by (y) 10 and (B) the denominator of
which will be 24,700,000, minus (ii) the number of shares, if any, previously
purchased by Executive in Optional Purchases which have not previously been
applied to reduce Mandatory Purchases pursuant this clause (ii). The Company
will deliver to Executive the certificates representing such Class B Common
Stock, and Executive will deliver to the Company (a) a cashier's or certified
check or wire transfer of funds or any combination thereof in the aggregate
amount of $10 multiplied by 20% of the number of shares of Class B Common Stock
so purchased by Executive and (b) an Executive Note in an aggregate principal
amount of $10 multiplied by 80% of the number of shares of Class B Common Stock
so purchased by Executive. Executive's obligations under each Executive Note
shall be secured by a pledge of all of the shares of Executive Stock to the
Company pursuant to the Pledge Agreement.
(c) Within 30 days after Executive purchases any Executive Stock from the
Company, Executive will make an effective election with the Internal Revenue
Service under Section 83(b) of the Internal Revenue Code and the regulations
promulgated thereunder in the form of Exhibit C attached hereto.
(d) In connection with the purchase and sale of the Executive Stock
hereunder, Executive represents and warrants to the Company that:
(i) The Executive Stock to be acquired by Executive pursuant to this
Agreement will be acquired for Executive's own account and not with a
view to, or intention of, distribution thereof in violation of the
Securities Act, or any applicable state securities laws, and the
Executive Stock will not be disposed of in contravention of the
Securities Act or any applicable state securities laws.
(ii) Executive is an executive officer of the Company, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Stock.
(iii) Executive is able to bear the economic risk of his investment
in the Executive Stock for an indefinite period of time because the
Executive Stock has not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under
- 2 -
<PAGE> 3
the Securities Act or an exemption from such registration is available.
(iv) Executive has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of Executive
Stock and has had full access to such other information concerning the
Company as he has requested.
(v) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and
the execution, delivery and performance of this Agreement by Executive
does not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which Executive is a party or any
judgment, order or decree to which Executive is subject.
(e) As an inducement to the Company to issue the Executive Stock to
Executive, as a condition thereto, Executive acknowledges and agrees that
neither the issuance of the Executive Stock to Executive nor any provision
contained herein shall entitle Executive to remain in the employment of the
Company and its Subsidiaries or affect the right of the Company to terminate
Executive's employment at any time for any reason.
2. Vesting of Executive Stock.
(a) Except as otherwise provided in paragraph 2(b) below, all shares of
Executive Stock will become vested in accordance with the following schedule,
if as of each such date Executive is still employed by the Company or any of
its Subsidiaries:
<TABLE>
<CAPTION>
Cumulative
Percentage of Executive
Date Stock Vested
------------------------------- ----------------
<S> <C>
Closing of the Base Acquisition 15%
1st Anniversary of Closing
of the Base Acquisition 32%
2nd Anniversary of Closing
of the Base Acquisition 49%
3rd Anniversary of Closing
of the Base Acquisition 66%
4th Anniversary of Closing
of the Base Acquisition 83%
5th Anniversary of Closing
of the Base Acquisition 100%
</TABLE>
- 3 -
<PAGE> 4
(b) If Executive ceases to be employed by the Company and its Subsidiaries
on any date other than any anniversary date prior to the fifth anniversary of
the Closing, the cumulative percentage of Executive Stock to become vested will
be determined on a pro rata basis according to the number of days elapsed since
the prior anniversary date. Upon the occurrence of a Sale of the Company, all
shares of Executive Stock which have not yet become vested shall become vested
at the time of such event. Shares of Executive Stock which have become vested
are referred to herein as "Vested Shares," and all other shares of Executive
Stock are referred to herein as "Unvested Shares."
3. Repurchase Option.
(a) In the event Executive ceases to be employed by the Company and its
Subsidiaries for any reason (the "Termination"), the Executive Stock (whether
held by Executive or one or more of Executive's transferees, other than the
Company or an Exempt Transferee (as defined in paragraph 4(e) below)) will be
subject to repurchase by the Company and the Investor pursuant to the terms and
conditions set forth in this paragraph 3 (the "Repurchase Option").
(b) In the event of Termination, the purchase price for each Unvested
Share will be Executive's Original Cost for such share, and the purchase price
for each Vested Share will be the Fair Market Value for such share.
(c) The Company's board of directors (the "Board") may elect to purchase
all or any portion of the Unvested Shares and the Vested Shares by delivering
written notice (the "Repurchase Notice") to the holder or holders of the
Executive Stock within 90 days after the Termination. The Repurchase Notice
will set forth the number of Unvested Shares and Vested Shares to be acquired
from each holder, the aggregate consideration to be paid for such shares and
the time and place for the closing of the transaction. The number of shares to
be repurchased by the Company shall first be satisfied to the extent possible
from the shares of Executive Stock held by Executive at the time of delivery of
the Repurchase Notice. If the number of shares of Executive Stock then held by
Executive is less than the total number of shares of Executive Stock which the
Company has elected to purchase, the Company shall purchase the remaining
shares elected to be purchased from the other holder(s) of Executive Stock
under this Agreement, pro rata according to the number of shares of Executive
Stock held by such other holder(s) at the time of delivery of such Repurchase
Notice (determined as nearly as practicable to the nearest share). The number
of Unvested Shares and Vested Shares to be repurchased hereunder will be
allocated among Executive and the other holders of Executive Stock (if any) pro
rata according to the number of shares of Executive Stock to be purchased from
such person.
(d) If for any reason the Company does not elect to purchase all of the
Executive Stock pursuant to the Repurchase Option, the Investor shall be
entitled to exercise the Repurchase Option for the shares of Executive Stock
the Company has not elected to purchase (the "Available Shares"). As soon as
practicable after the Company has determined that there will be Available
- 4 -
<PAGE> 5
Shares, but in any event within 45 days after the Termination, the Company
shall give written notice (the "Option Notice") to the Investor setting forth
the number of Available Shares and the purchase price for the Available Shares.
The Investor may elect to purchase any or all of the Available Shares by
giving written notice to the Company within one month after the Option Notice
has been given by the Company. As soon as practicable, and in any event within
ten days, after the expiration of the one-month period set forth above, the
Company shall notify each holder of Executive Stock as to the number of shares
being purchased from such holder by the Investor (the "Supplemental Repurchase
Notice"). At the time the Company delivers the Supplemental Repurchase Notice
to the holder(s) of Executive Stock, the Company shall also deliver written
notice to the Investor setting forth the number of shares the Investor is
entitled to purchase, the aggregate purchase price and the time and place of
the closing of the transaction. The number of Unvested Shares and Vested
Shares to be repurchased hereunder shall be allocated among the Company and the
Investor pro rata according to the number of shares of Executive Stock to be
purchased by each of them.
(e) The closing of the purchase of the Executive Stock pursuant to the
Repurchase Option shall take place on the date designated by the Company in the
Repurchase Notice or Supplemental Repurchase Notice, which date shall not be
more than one month nor less than five days after the delivery of the later of
either such notice to be delivered. The Company and/or the Investor will pay
for the Executive Stock to be purchased pursuant to the Repurchase Option by
delivery of a check or wire transfer of funds in the aggregate amount of the
purchase price for such shares. In addition, the Company may pay the purchase
price for such shares by offsetting amounts outstanding under the Executive
Notes issued to the Company hereunder and any other bona fide debts owed by
Executive to the Company. The Company and the Investor will be entitled to
receive representations and warranties from the sellers as to their title to
the Executive Stock being sold and to require all sellers' signatures be
guaranteed.
(f) The right of the Company and the Investor to repurchase Vested Shares
pursuant to this paragraph 3 shall terminate upon the first to occur of the
Sale of the Company or a Public Offering.
(g) All shares of Executive Stock purchased by the Company pursuant to
this paragraph 3 and pursuant to paragraph 4 shall remain available for
reissuance to new executives as determined by the Board.
4. Restrictions on Transfer of Executive Stock.
(a) Retention of Executive Stock. Until the fifth anniversary of the date
of this Agreement, Executive shall not sell, transfer, assign, pledge or
otherwise dispose of any interest in any shares of Executive Stock, except for
Exempt Transfers (as defined in paragraph 4(b) below) other than sales to the
public pursuant to Rule 144 promulgated under the Securities Act or any similar
rule then in force).
- 5 -
<PAGE> 6
(b) Transfer of Executive Stock. Subject to paragraph 4(a) above,
Executive shall not Transfer any interest in any shares of Executive Stock,
except pursuant to (i) the provisions of paragraph 3 hereof, the provisions of
paragraph 7 of the Stockholders Agreement, a Public Sale or a Sale of the
Company ("Exempt Transfers") or (ii) the provisions of this paragraph 4;
provided that in no event shall any Transfer of Executive Stock pursuant to
this paragraph 4 be made for any consideration other than cash payable upon
consummation of such Transfer or in installments over time. Prior to making
any Transfer other than an Exempt Transfer, Executive will give written notice
(the "Sale Notice") to the Company and the Investor. The Sale Notice will
disclose in reasonable detail the identity of the prospective transferee(s),
the number of shares to be transferred and the terms and conditions of the
proposed transfer. Executive will not consummate any Transfer until 110 days
after the Sale Notice has been given to the Company and to the Investor, unless
the parties to the Transfer have been finally determined pursuant to this
paragraph 4 prior to the expiration of such 110-day period. (The date of the
first to occur of such events is referred to herein as the "Authorization
Date").
(c) First Refusal Rights. The Company may elect to purchase all (but not
less than all) of the shares of Executive Stock to be transferred upon the same
terms and conditions as those set forth in the Sale Notice by delivering a
written notice of such election to Executive and the Investor within 60 days
after the Sale Notice has been given to the Company. If the Company has not
elected to purchase all of the Executive Stock to be transferred, the Investor
may elect to purchase all (but not less than all) of the Executive Stock to be
transferred upon the same terms and conditions as those set forth in the Sale
Notice by giving written notice of such election to Executive within 90 days
after the Sale Notice has been given to the Investor. If neither the Company
nor the Investor elect to purchase all of the shares of Executive Stock
specified in the Sale Notice, Executive may transfer the shares of Executive
Stock specified in the Sale Notice, subject to the provisions of paragraph 4(d)
below, at a price and on terms no more favorable to the transferee(s) thereof
than specified in the Sale Notice during the 60-day period immediately
following the Authorization Date. Any shares of Executive Stock not
transferred within such 60-day period will be subject to the provisions of this
paragraph 4(c) upon subsequent transfer. The Company may pay the purchase
price for such shares by offsetting amounts outstanding under any bona fide
debts owed by Executive to the Company.
(d) Participation Rights. If neither the Company nor the Investor has
elected to purchase all of the Executive Stock specified in the Sale Notice
pursuant to paragraph 4(c) above, the Investor may elect to participate in the
contemplated Transfer by delivering written notice to Executive and the Company
within 100 days after receipt by the Investor of the Sale Notice. If the
Investor has elected to participate in such sale, Executive and the Investor
will be entitled to sell in the contemplated sale, at the same price and on the
same terms, a number of shares of the Company's Class B Common Stock equal to
the product of (i) the quotient determined by dividing the percentage of the
Company's Class B Common Stock (on a fully diluted basis) held by the Investor,
by the aggregate percentage of the Company's Class B Common Stock (on a fully
diluted basis) owned by Executive (including both Vested and Unvested Shares)
and the Investor and (ii) the
- 6 -
<PAGE> 7
number of shares of Class B Common Stock to be sold in the contemplated sale.
For example, if:
(i) the Sale Notice contemplated a sale of 100 shares of Class B
Common Stock and no Class A Common Stock;
(ii) Executive was at such time the owner of 120 shares of Class B
Common Stock (which was equal to 30% of Class B Common Stock on a fully
diluted basis); and
(iii) the Investor elected to participate and the Investor owned 80
shares of Class B Common Stock (which was equal to 20% of Class B Common
Stock on a fully diluted basis) and 250 shares of Class A Common Stock;
then
(A) Executive would be entitled to sell 60 shares of Class B Common
Stock (30% ) 50% x 100 shares); and
(B) the Investor would be entitled to sell 40 shares of Class B
Common Stock (20% ) 50% x 100 shares) and 125 shares of Class A Common
Stock (the same percentage of the Investor's Class A Common Stock as the
percentage of the Investor's Class B Common Stock being sold, i.e., 50%).
Executive will use his best efforts to obtain the agreement of the prospective
transferee(s) to the participation of the Investor in the contemplated Transfer
and will not transfer any Executive Stock to the prospective transferee(s) if
such transferee(s) refuses to allow the participation of the Investor.
(e) Certain Permitted Transfers. The restrictions contained in this
paragraph 4 will not apply with respect to (i) transfers of shares of Executive
Stock pursuant to applicable laws of descent and distribution or (ii) transfers
of shares of Executive Stock among Executive's Family Group; provided that such
restrictions will continue to be applicable to the Executive Stock after any
such transfer and the transferees of such Executive Stock have agreed in
writing to be bound by the provisions of this Agreement.
(f) Termination of Restrictions. The restrictions on the Transfer of
shares of Executive Stock set forth in this paragraph 4 will continue with
respect to each share of Executive Stock until the date on which such Executive
Stock has been transferred in a transaction permitted by this paragraph 4
(except in a transaction contemplated by subparagraph 4(e)); provided that in
any event such restrictions will terminate on the first to occur of a Sale of
the Company or a Public Offering.
- 7 -
<PAGE> 8
5. Additional Restrictions on Transfer of Executive Stock.
(a) Legend. The certificates representing the Executive Stock will bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED AS OF ___________, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN
REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
SENIOR MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE
OF THE COMPANY DATED AS OF JUNE 4, 1996. A COPY OF SUCH AGREEMENT
MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL
PLACE OF BUSINESS WITHOUT CHARGE."
(b) Opinion of Counsel. No holder of Executive Stock may sell, transfer
or dispose of any Executive Stock (except pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company an
opinion of counsel (reasonably acceptable in form and substance to the Company)
that neither registration nor qualification under the Securities Act and
applicable state securities laws is required in connection with such transfer.
PROVISIONS RELATING TO EMPLOYMENT
6. Employment. The Company agrees to employ Executive and Executive
accepts such employment for the period beginning as of the date hereof and
ending upon termination pursuant to paragraph 6(b) hereof (the "Employment
Period").
(a) Salary, Bonus and Benefits. During the period from the date hereof
until consummation of the Base Acquisition, the Company will pay Executive an
annual base salary (the "Annual Base Salary") of $150,000. Upon consummation
of the Base Acquisition, Executive's Annual Base Salary will be raised to
$225,000, which amount shall be reviewed (but not reduced) annually by the
Board in its sole discretion. Upon consummation of the Base Acquisition,
Executive will also receive a bonus equal to the amount necessary to raise his
effective Annual Base Salary prior to consummation of the Base Acquisition to
$225,000. After the consummation of the Base Acquisition, Executive will be
eligible for a bonus of up to 50% of Executive's Annual Base Salary for such
year. It is anticipated that such bonus will be awarded by the Board if
Executive meets or
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<PAGE> 9
exceeds the annual operational and financial objectives agreed to by the Board
and Executive. If the Company has not met or exceeded its financial or
operational objectives, a bonus of less than 50% of Executive's Annual Base
Salary may be awarded in the Board's discretion. Executive's Annual Base
Salary for any partial year will be prorated based upon the number of days
elapsed in such year. In addition, during the Employment Period, Executive
will be entitled to all such other benefits as are approved by the Board and
made available to the Company's senior management (including, without
limitation, participation in a Company sponsored 401(k) profit sharing plan).
(b) Termination. The Employment Period will continue until Executive's
resignation (with or without Good Reason), Disability or death or until the
Board determines in its good faith judgment that termination of Executive's
employment is in the best interests of the Company. After the consummation of
the Base Acquisition, if Executive's employment is terminated by the Company
without Cause, by the Executive with Good Reason or as a result of Executive's
Disability or death, until the end of the six-month period commencing on the
date of termination, the Company shall pay to Executive (or his estate)
Executive's Annual Base Salary and allow Executive to continue participating in
all of the Company's medical, disability and life insurance plans to the extent
permitted by the Company's insurance carriers at a cost not materially in
excess of the Company's cost for such insurance immediately prior to the date
of termination. In addition, the Company shall have the option, by delivering
written notice to Executive within 45 days after the date of termination of
Executive's employment, to extend the severance period to the second
anniversary of the date of termination (the "Extended Period"). During the
Extended Period, if any, the Company shall pay to Executive (or his estate)
Executive's Annual Base Salary and allow Executive to continue participating in
all of the Company's medical, disability and life insurance plans to the extent
permitted by the Company's insurance carriers at a cost not materially in
excess of the Company's cost for such insurance immediately prior to the date
of termination. Notwithstanding the foregoing, the severance payments and
rights to benefits set forth in this paragraph 6(b) shall cease and the Company
shall have no further obligation hereunder upon Executive's breach of paragraph
8(a) below.
(c) No Mitigation. The Company agrees that Executive shall not be
required to mitigate the amount of any payment provided for in paragraph 6(b)
by seeking other employment or otherwise, and the Company agrees that it is not
entitled to any setoff against such payments for any income earned by Executive
after termination.
7. Confidential Information. Executive acknowledges that the information,
observations and data obtained by him during the course of his performance
under this Agreement concerning the business and affairs of the Company and its
affiliates are the property of the Company. Therefore, Executive agrees that
during the Employment Period and for two years thereafter, he will not disclose
to any unauthorized person or use for his own account any of such information,
observations or data without the Board's written consent, unless and to the
extent that the aforementioned matters become publicly available other than as
a result of Executive's wrongful acts or omissions to act or are required to be
disclosed by court order. Executive agrees to deliver
- 9 -
<PAGE> 10
to the Company at the termination of his employment, or at any other time the
Company may request in writing, all memoranda, notes, plans, records, reports
and other documents (and copies thereof) relating to the business of the
Company and its affiliates (including, without limitation, all acquisition
prospects, lists and contact information) which he may then possess or have
under his control.
8. Noncompetition and Nonsolicitation
(a) Noncompetition. Executive acknowledges that in the course of his
employment with the Company he will become familiar with the Company's trade
secrets and with other confidential information concerning the Company and that
his services will be of special, unique and extraordinary value to the Company.
Therefore, Executive agrees that, during the Employment Period and for six
months thereafter and during the Extended Period, if any (the "Noncompete
Period"), he shall not directly or indirectly own, manage, control, participate
in, consult with, render services for, or in any manner engage in any business
competing with the businesses of the Company or its Subsidiaries or any
businesses in which the company or any of its Subsidiaries has entertained
discussions or has requested and received information relating to the
acquisition of such business by the Company or its Subsidiaries prior to the
termination of the Executive's employment with the Company, in each case as
such businesses exist or are in process on the date of the termination of
Executive's employment, within the United States.
(b) Nonsolicitation. During the two years following the date of
termination of Executive's employment, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company
or any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the Employment
Period, or (iii) induce or attempt to induce any customer, supplier, licensee
or other business relation of the Company or any Subsidiary to cease doing
business with the Company or such Subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any Subsidiary.
- 10 -
<PAGE> 11
(c) Enforcement. If, at the time of enforcement of paragraph 7 or 8 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and
that the court shall be allowed to revise the restrictions contained herein to
cover the maximum duration, scope and area permitted by law. Because
Executive's services are unique and because Executive has access to
confidential information, the parties hereto agree that money damages would be
an inadequate remedy for any breach of this Agreement. Therefore, in the event
a breach or threatened breach of this Agreement, the Company or its successors
or assigns may, in addition to other rights and remedies existing in their
favor, apply to any court of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce, or prevent any
violations of, the provisions hereof (without posting a bond or other
security).
(d) Submission to Jurisdiction. Each of the parties (i) submits to the
jurisdiction of any state or federal court sitting in Chicago, Illinois in any
action or proceeding arising out of or relating to paragraphs 7 and/or 8 of
this Agreement, (ii) agrees that all claims in respect of such action or
proceeding may be heard or determined in any such court and (iii) agrees not to
bring any action or proceeding arising out of or relating to paragraphs 7
and/or 8 of this Agreement in any other court. Each of the parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety or other security that might be required of
any other party with respect thereto. Each party agrees that a final judgment
in any action or proceeding so brought shall be conclusive and may be enforced
by suit on the judgment or in any other manner provided by law.
GENERAL PROVISIONS
9. Definitions.
"Affiliate" of the Investor means any direct or indirect general or
limited partner of the Investor, or any employee or owner thereof, or any other
person, entity or investment fund controlling, controlled by or under common
control with the Investor, and will include, without limitation, Golder, Thoma,
Cressey, Rauner, Inc. and its owners and employees.
"Base Acquisition" means the acquisition or series of acquisitions by the
Company of an equipment rental business or businesses which, in the aggregate,
has a 12-month trailing EBITDA of at least $4.5 million.
"Cause"means (i) the commission of a felony or a crime involving moral
turpitude or the commission of any other significant act involving dishonesty,
disloyalty or fraud with respect to the Company or any Subsidiary, (ii) conduct
tending to bring the Company or any Subsidiary into substantial public disgrace
or disrepute, (iii) substantial and repeated failure to perform duties as
reasonably directed by the Board of Directors which is not cured within 30 days
after written notice
- 11 -
<PAGE> 12
thereof to Executive, (iv) gross negligence or willful misconduct with respect
to the Company or any of its Subsidiaries which is not cured within 30 days
after written notice thereof to Executive, or (v) any other material breach of
this Agreement by the Executive which is not cured within 30 days after written
notice thereof to Executive.
"Common Equity Value" means the fair market value of the Company's entire
common equity determined on a going concern basis (deducting for such purposes
any preferential amounts accruing to or for the benefit of holders of any class
of such common equity), as between a willing buyer and a willing seller, taking
into account all relevant factors determinative of value, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale, as determined by agreement between the Company and the
Executive. If such agreement is not reached within 30 days after the delivery
of the Repurchase Notice, Common Equity Value shall be determined by an
investment banking firm agreed upon by the Company and the Executive, which
firm shall submit to the Company, the Company and the Executive a report within
30 days of its engagement setting forth such determination. If the parties are
unable to agree on an investment banking firm within 45 days after delivery of
the Repurchase Notice, a firm shall be selected by lot (within seven days) from
the investment banking firms set forth on Exhibit D attached hereto, after the
Company and the Executive have each eliminated one such firm. Such investment
banking firm shall render a determination within 15 days of its engagement.
The expenses of such firm will be borne the Company, and the determination of
such firm will be final and binding upon all parties.
"Disability" means the Executive's inability, due to illness, accident,
injury, physical or mental incapacity or other disability, to carry out
effectively his duties and obligations to the Company hereunder or to
participate effectively and actively in the management of the Company for 100
days in any consecutive period of six months, as determined in the good faith
judgment of the Board. In the event the Executive does not agree with the
Board's determination of Disability, a determination shall be made by a panel
of three doctors. The first shall be chosen by the Company, the second shall
be chosen by the Executive, and the third shall be chosen by the first two.
Any doctor selected by a party will not be affiliated, associated or related to
the party selecting that doctor in any manner whatsoever. The opinion of a
majority of the panel of doctors shall be binding on the parties hereto. The
costs involved in such determination shall be borne by the party against whom
the panel decides.
"EBITDA" means net income plus the sum of (i) interest expense, (ii)
income tax expense, (iii) management fee expense to the Investor or any of its
Affiliates, and (iv) depreciation expense, amortization expense and other
non-cash charges deducted in arriving at such net income, each as calculated in
accordance with generally accepted accounting principles.
"Executive's Family Group" means Executive's spouse and descendants
(whether natural or adopted) and any trust solely for the benefit of Executive
and/or Executive's spouse and/or descendants.
- 12 -
<PAGE> 13
"Executive Stock" will continue to be Executive Stock in the hands of any
holder other than Executive (except for the Company and the Investor and except
for transferees in a Public Sale), and except as otherwise provided herein,
each such other holder of Executive Stock will succeed to all rights and
obligations attributable to Executive as a holder of Executive Stock hereunder.
Executive Stock will also include shares of the Company's capital stock issued
with respect to Executive Stock by way of a stock split, stock dividend or
other recapitalization. Notwithstanding the foregoing, all Unvested Shares
shall remain Executive Stock after any Transfer thereof.
"Fair Market Value" of each share of Common Stock means the composite
closing price of the sales of the Common Stock on the securities exchanges on
which the Common Stock may at the time be listed (as reported in The Wall
Street Journal), or, if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if the Common Stock is not so listed, the
closing price (or last price, if applicable) of sales of the Common Stock on
The Nasdaq Stock Market (as reported in The Wall Street Journal), or if the
Common Stock is not quoted in The Nasdaq Stock Market but is traded
over-the-counter, the average of the highest bid and lowest asked prices on
such day in the over-the-counter market as reported by the National Quotation
Bureau Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which the Fair
Market Value is being determined and the 20 consecutive business days prior to
such day. If at any time the Common Stock is not listed on any securities
exchange, quoted in the Nasdaq Stock Market, or quoted in the over-the-counter
market, the Fair Market Value shall be equal to the portion of the Common
Equity Value which would be available to the class of Common Stock being valued
upon liquidation of the Company, divided by the total number of shares of
Common Stock of such class outstanding on a fully-diluted basis.
"Good Reason" means (i) any movement of the Company's corporate
headquarters to a location more than 50 miles from its current location, (ii)
any substantial reduction of the Executive's duties and responsibilities to the
Company, (iii) any reduction in the Executive's Base Salary below its then
current level, or (iv) any other material breach of this Agreement by the
Company which is not cured within 30 days after written notice thereof to the
Company.
"Original Cost" means with respect to each share of Class B Common Stock
purchased hereunder, $10 (as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations).
"Permitted Transferee" means any holder of Executive Stock who acquired
such stock pursuant to a transfer permitted by paragraph 4(e).
"Public Offering" means the sale in an underwritten public offering
registered under the Securities Act of shares of the Company's Common Stock
approved by the Board.
- 13 -
<PAGE> 14
"Public Sale" means any sale pursuant to a registered public offering
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or
market maker.
"Sale of the Company" means any transaction or series of transactions
pursuant to which any person(s) or entity(ies) (including any Affiliates of the
Investor) other than the Investor in the aggregate acquire(s) (i) capital stock
of the Company possessing the voting power (other than voting rights accruing
only in the event of a default, breach or event of noncompliance) to elect a
majority of the Company's board of directors (whether by merger, consolidation,
reorganization, combination, sale or transfer of the Company's capital stock,
shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii)
all or substantially all of the Company's assets determined on a consolidated
basis; provided that the term "Sale of the Company" shall not include an
initial Public Offering.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Subsidiary" means any corporation of which the Company owns securities
having a majority of the ordinary voting power in electing the board of
directors directly or through one or more subsidiaries.
"Transfer" means to sell, transfer, assign, pledge or otherwise dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law).
10. Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
If to the Company:
National Equipment Services, Inc.
6100 Sears Tower
Chicago, Illinois 60606-6402
Attention: President
If to the Executive:
Kevin Rodgers
234 Warwick Road
Kenilworth, Illinois 60043
- 14 -
<PAGE> 15
If to the Investor:
Golder, Thoma, Cressey Fund IV, L.P.
6100 Sears Tower
Chicago, Illinois 60606-6402
Attention: Carl D. Thoma
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
11. General Provisions.
(a) Expenses. The Company agrees to pay, and hold Executive and all
holders of Executive Stock harmless against liability for the payment of, (i)
the fees and expenses of their counsel arising in connection with the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated by this Agreement, (ii) the fees and expenses
incurred with respect to any amendments or waivers (whether or not the same
become effective) under or in respect of this Agreement, the agreements
contemplated hereby and the Certificate of Incorporation, (iii) stamp and other
taxes which may be payable in respect of the execution and delivery of this
Agreement or the issuance, delivery or acquisition of any shares of Common
Stock purchased hereunder, and (iv) the fees and expenses incurred with respect
to the interpretation or enforcement of the rights granted under this
Agreement, the Stockholders Agreement, the other agreements contemplated hereby
and the Certificate of Incorporation and the Company's bylaws.
(b) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Executive Stock in violation of any provision of this Agreement
shall be void, and the Company shall not record such Transfer on its books or
treat any purported transferee of such Executive Stock as the owner of such
stock for any purpose.
(c) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(d) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements
- 15 -
<PAGE> 16
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
(e) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(f) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, the Investor and their respective successors and
assigns (including subsequent holders of Executive Stock); provided that the
rights and obligations of Executive under this Agreement shall not be
assignable except in connection with a permitted transfer of Executive Stock
hereunder; provided further that the rights and obligations of the Investor
under this Agreement and the agreements contemplated hereby may be assigned by
the Investor at any time, in whole or in part, to any investment fund managed
by Golder, Thoma, Cressey, Rauner, Inc., or any successor thereto.
(g) Choice of Law. The corporate law of the State of Delaware will govern
all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by
and construed in accordance with the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Illinois.
(h) Remedies. Each of the parties to this Agreement (including the
Investor) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorney's fees) caused
by any breach of any provision of this Agreement and to exercise all other
rights existing in its favor. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that any party may in its sole discretion apply to any court
of law or equity of competent jurisdiction (without posting any bond or
deposit) for specific performance and/or other injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement.
(i) Amendment and Waiver. The provisions of this Agreement may be amended
and waived only with the prior written consent of the Company, Executive and
the Investor.
(j) Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the state
in which the Company's chief executive office is located, the time period shall
be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
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<PAGE> 17
(k) Termination. This Agreement (except for the provisions of paragraph
6) shall survive the termination of Executive's employment with the Company and
shall remain in full force and effect after such termination.
* * * * *
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<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Senior
Management Agreement on the date first written above.
NATIONAL EQUIPMENT SERVICES, INC.
By /s/ Paul R. Ingersoll
---------------------
Its Vice President
/s/ Kevin P. Rodgers
--------------------
Kevin Rodgers
Agreed and Accepted:
GOLDER, THOMA, CRESSEY, RAUNER FUND IV, L.P.
By: GTCR IV, L.P.,
its General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.,
its General Partner
By: /s/ Carl D. Thoma
Its: Principal
- 18 -
<PAGE> 19
EXHIBIT D
INVESTMENT BANKING FIRMS
1. Bear, Stearns & Co. Inc.
2. Donaldson, Lufkin & Jenrette Securities Corporation
3. CS First Boston
4. Goldman, Sachs & Co
5. Lehman Brothers.
6. Merrill Lynch & Co.
7. Morgan Stanley & Co. Incorporated
8. William Blair & Company
- 19 -
<PAGE> 1
Exhibit 10.5(ii)
AMENDMENT NO.1 TO
SENIOR MANAGEMENT AGREEMENT
THIS AMENDMENT NO.1 to Senior Management Agreement (this "Agreement") is
dated as of December 31, 1996 between National Equipment Services, Inc., a
Delaware corporation (the "Company") and Kevin Rodgers ("Rodgers"). This
Agreement amends the Senior Management Agreement, dated as of June 4, 1996 (the
"Original Agreement"), between the Company and Rodgers. Capitalized terms used
but not defined herein shall have the meanings assigned them in the Original
Agreement.
WHEREAS, the parties hereto now desire to amend the Original Agreement as
set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
the Original Agreement as follows:
Section 1. Amendments to Original Agreement. As of the date hereof, the
Original Agreement shall be amended as follows:
1.1. Section 1(b) of the Original Agreement shall be and hereby is amended
by (i) deleting the words "or any Seller (as defined in the Purchase
Agreement)" in the first and second lines thereof, (ii) deleting the words
"subparagraphs 1B(b) or 1B(c)" and replacing them with the words "subparagraph
1B(b)" in the third line thereof and (iii) deleting the words "or such Seller"
in the twelfth line thereof and in the thirteenth line thereof.
Section 2. Miscellaneous.
2.1. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.2. Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.1
to Senior Management Agreement on the day and year first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
-----------------
Its: President
-----------------
/s/ Kevin Rodgers
------------------
KEVIN RODGERS
Agreed and Accepted:
GOLDER, THOMA, CRESSEY, RAUNER FUND IV, L.P.
By: GTCR IV, L.P.
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
Its: General Partner
By: /s/ Carl D. Thoma
--------------------
Its: Principal
<PAGE> 1
Exhibit 10.6(i)
SENIOR MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of June 4, 1996, between National Equipment
Services, Inc., a Delaware corporation (the "Company"), and Paul Ingersoll
("Executive").
The Company and Executive desire to enter into an agreement pursuant to
which Executive will purchase, and the Company will sell, 1,000 shares of the
Company's Class B Common Stock, par value $.01 per share (the "Class B Common
Stock"). All of such shares of Class B Common Stock and all shares of Class B
Common Stock hereafter acquired by Executive are referred to herein as
"Executive Stock." Certain definitions are set forth in paragraph 9 of this
Agreement.
The execution and delivery of this Agreement by the Company and Executive
is a condition to the purchase of shares of Class B Common Stock and Class A
Common Stock, par value $.01 per share (the "Class A Common Stock" and,
together with the Class B Common Stock, the "Common Stock"), by Golder, Thoma,
Cressey, Rauner Fund IV, L. P. or an Affiliate thereof (the "Investor")
pursuant to a purchase agreement between the Company and the Investor dated as
of the date hereof (the "Purchase Agreement"). Certain provisions of this
Agreement are intended for the benefit of, and will be enforceable by, the
Investor.
The parties hereto agree as follows:
PROVISIONS RELATING TO EXECUTIVE STOCK
1. Purchase and Sale of Executive Stock.
(a) Upon execution of this Agreement, Executive will purchase, and the
Company will sell, 12 shares of Class B Common Stock at a price of $10 per
share. The Company will deliver to Executive the certificates representing
such Class B Common Stock, and Executive will deliver to the Company a
promissory note in the form of Exhibit A attached hereto (an "Executive Note")
in an aggregate principal amount of $120. Executive's obligations under such
Executive Note shall be secured by a pledge of all of the shares of Executive
Stock to the Company, and in connection therewith, Executive shall enter into a
pledge agreement in the form of Exhibit B attached hereto (the "Pledge
Agreement").
(b) Upon the purchase from time to time by the Investor or any Seller (as
defined in the Purchase Agreement) of up to 24,250 shares of Class A Common
Stock and up to an additional 45,000 shares of Class B Common Stock pursuant to
subparagraphs 1B(b) or 1B(c) of the Purchase Agreement, Executive will
purchase, and the Company will sell, up to an aggregate of 988
<PAGE> 2
additional shares of Class B Common Stock at a price of $10 per share (each, a
"Mandatory Purchase"); provided that Executive will have the option to purchase
all or any portion of such 988 additional shares of Class B Common Stock at a
price of $10 per share at such earlier time or times as Executive shall
determine (each, an "Optional Purchase"). The number of shares of Class B
Common Stock to be sold by the Company and purchased by Executive pursuant to
any Mandatory Purchase shall equal (i) 988 multiplied by a fraction (A) the
numerator of which will be the sum of (I) the product of (x) the number of
shares of Class A Common Stock to be concurrently purchased by the Investor or
such Seller multiplied by 1,000 plus (II) the product of (x) the number of
shares of Class B Common Stock to be concurrently purchased by the Investor or
such Seller multiplied by (y) 10 and (B) the denominator of which will be
24,700,000, minus (ii) the number of shares, if any, previously purchased by
Executive in Optional Purchases which have not previously been applied to
reduce Mandatory Purchases pursuant this clause (ii). The Company will deliver
to Executive the certificates representing such Class B Common Stock, and
Executive will deliver to the Company an Executive Note in an aggregate
principal amount of $10 multiplied by the number of shares of Class B Common
Stock so purchased by Executive. Executive's obligations under each Executive
Note shall be secured by a pledge of all of the shares of Executive Stock to
the Company pursuant to the Pledge Agreement.
(c) Within 30 days after Executive purchases any Executive Stock from the
Company, Executive will make an effective election with the Internal Revenue
Service under Section 83(b) of the Internal Revenue Code and the regulations
promulgated thereunder in the form of Exhibit C attached hereto.
(d) In connection with the purchase and sale of the Executive Stock
hereunder, Executive represents and warrants to the Company that:
(i) The Executive Stock to be acquired by Executive pursuant to this
Agreement will be acquired for Executive's own account and not with a
view to, or intention of, distribution thereof in violation of the
Securities Act, or any applicable state securities laws, and the
Executive Stock will not be disposed of in contravention of the
Securities Act or any applicable state securities laws.
(ii) Executive is an executive officer of the Company, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Stock.
(iii) Executive is able to bear the economic risk of his investment
in the Executive Stock for an indefinite period of time because the
Executive Stock has not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
(iv) Executive has had an opportunity to ask questions and receive
answers
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<PAGE> 3
concerning the terms and conditions of the offering of Executive Stock
and has had full access to such other information concerning the Company
as he has requested.
(v) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and
the execution, delivery and performance of this Agreement by Executive
does not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which Executive is a party or any
judgment, order or decree to which Executive is subject.
(e) As an inducement to the Company to issue the Executive Stock to
Executive, as a condition thereto, Executive acknowledges and agrees that
neither the issuance of the Executive Stock to Executive nor any provision
contained herein shall entitle Executive to remain in the employment of the
Company and its Subsidiaries or affect the right of the Company to terminate
Executive's employment at any time for any reason.
2. Vesting of Executive Stock.
(a) Except as otherwise provided in paragraph 2(b) below, all shares of
Executive Stock will become vested in accordance with the following schedule,
if as of each such date Executive is still employed by the Company or any of
its Subsidiaries:
-3-
<PAGE> 4
<TABLE>
<CAPTION>
Cumulative
Percentage of Executive
Date Stock Vested
------------------------------- ----------------
<S> <C>
Closing of the Base Acquisition 15%
1st Anniversary of Closing
of the Base Acquisition 32%
2nd Anniversary of Closing
of the Base Acquisition 49%
3rd Anniversary of Closing
of the Base Acquisition 66%
4th Anniversary of Closing
of the Base Acquisition 83%
5th Anniversary of Closing
of the Base Acquisition 100%
</TABLE>
(b) If Executive ceases to be employed by the Company and its Subsidiaries
on any date other than any anniversary date prior to the fifth anniversary of
the Closing, the cumulative percentage of Executive Stock to become vested will
be determined on a pro rata basis according to the number of days elapsed since
the prior anniversary date. Upon the occurrence of a Sale of the Company, all
shares of Executive Stock which have not yet become vested shall become vested
at the time of such event. Shares of Executive Stock which have become vested
are referred to herein as "Vested Shares," and all other shares of Executive
Stock are referred to herein as "Unvested Shares."
3. Repurchase Option.
(a) In the event Executive ceases to be employed by the Company and its
Subsidiaries for any reason (the "Termination"), the Executive Stock (whether
held by Executive or one or more of Executive's transferees, other than the
Company or an Exempt Transferee (as defined in paragraph 4(e) below)) will be
subject to repurchase by the Company and the Investor pursuant to the terms and
conditions set forth in this paragraph 3 (the "Repurchase Option").
(b) In the event of Termination, the purchase price for each Unvested
Share will be Executive's Original Cost for such share, and the purchase price
for each Vested Share will be the Fair Market Value for such share.
(c) The Company's board of directors (the "Board") may elect to purchase
all or any portion of the Unvested Shares and the Vested Shares by delivering
written notice (the "Repurchase Notice") to the holder or holders of the
Executive Stock within 90 days after the Termination. The Repurchase Notice
will set forth the number of Unvested Shares and Vested Shares to be acquired
from each holder, the aggregate consideration to be paid for such shares and
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the time and place for the closing of the transaction. The number of shares to
be repurchased by the Company shall first be satisfied to the extent possible
from the shares of Executive Stock held by Executive at the time of delivery of
the Repurchase Notice. If the number of shares of Executive Stock then held by
Executive is less than the total number of shares of Executive Stock which the
Company has elected to purchase, the Company shall purchase the remaining
shares elected to be purchased from the other holder(s) of Executive Stock
under this Agreement, pro rata according to the number of shares of Executive
Stock held by such other holder(s) at the time of delivery of such Repurchase
Notice (determined as nearly as practicable to the nearest share). The number
of Unvested Shares and Vested Shares to be repurchased hereunder will be
allocated among Executive and the other holders of Executive Stock (if any) pro
rata according to the number of shares of Executive Stock to be purchased from
such person.
(d) If for any reason the Company does not elect to purchase all of the
Executive Stock pursuant to the Repurchase Option, the Investor shall be
entitled to exercise the Repurchase Option for the shares of Executive Stock
the Company has not elected to purchase (the "Available Shares"). As soon as
practicable after the Company has determined that there will be Available
Shares, but in any event within 45 days after the Termination, the Company
shall give written notice (the "Option Notice") to the Investor setting forth
the number of Available Shares and the purchase price for the Available Shares.
The Investor may elect to purchase any or all of the Available Shares by
giving written notice to the Company within one month after the Option Notice
has been given by the Company. As soon as practicable, and in any event within
ten days, after the expiration of the one-month period set forth above, the
Company shall notify each holder of Executive Stock as to the number of shares
being purchased from such holder by the Investor (the "Supplemental Repurchase
Notice"). At the time the Company delivers the Supplemental Repurchase Notice
to the holder(s) of Executive Stock, the Company shall also deliver written
notice to the Investor setting forth the number of shares the Investor is
entitled to purchase, the aggregate purchase price and the time and place of
the closing of the transaction. The number of Unvested Shares and Vested
Shares to be repurchased hereunder shall be allocated among the Company and the
Investor pro rata according to the number of shares of Executive Stock to be
purchased by each of them.
(e) The closing of the purchase of the Executive Stock pursuant to the
Repurchase Option shall take place on the date designated by the Company in the
Repurchase Notice or Supplemental Repurchase Notice, which date shall not be
more than one month nor less than five days after the delivery of the later of
either such notice to be delivered. The Company and/or the Investor will pay
for the Executive Stock to be purchased pursuant to the Repurchase Option by
delivery of a check or wire transfer of funds in the aggregate amount of the
purchase price for such shares. In addition, the Company may pay the purchase
price for such shares by offsetting amounts outstanding under the Executive
Notes issued to the Company hereunder and any other bona fide debts owed by
Executive to the Company. The Company and the Investor will be entitled to
receive representations and warranties from the sellers as to their title to
the Executive Stock being sold and to require all sellers' signatures be
guaranteed.
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(f) The right of the Company and the Investor to repurchase Vested Shares
pursuant to this paragraph 3 shall terminate upon the first to occur of the Sale
of the Company or a Public Offering.
(g) All shares of Executive Stock purchased by the Company pursuant to
this paragraph 3 and pursuant to paragraph 4 shall remain available for
reissuance to new executives as determined by the Board.
4. Restrictions on Transfer of Executive Stock.
(a) Retention of Executive Stock. Until the fifth anniversary of the date
of this Agreement, Executive shall not sell, transfer, assign, pledge or
otherwise dispose of any interest in any shares of Executive Stock, except for
Exempt Transfers (as defined in paragraph 4(b) below) other than sales to the
public pursuant to Rule 144 promulgated under the Securities Act or any similar
rule then in force).
(b) Transfer of Executive Stock. Subject to paragraph 4(a) above,
Executive shall not Transfer any interest in any shares of Executive Stock,
except pursuant to (i) the provisions of paragraph 3 hereof, the provisions of
paragraph 7 of the Stockholders Agreement, a Public Sale or a Sale of the
Company ("Exempt Transfers") or (ii) the provisions of this paragraph 4;
provided that in no event shall any Transfer of Executive Stock pursuant to
this paragraph 4 be made for any consideration other than cash payable upon
consummation of such Transfer or in installments over time. Prior to making
any Transfer other than an Exempt Transfer, Executive will give written notice
(the "Sale Notice") to the Company and the Investor. The Sale Notice will
disclose in reasonable detail the identity of the prospective transferee(s),
the number of shares to be transferred and the terms and conditions of the
proposed transfer. Executive will not consummate any Transfer until 110 days
after the Sale Notice has been given to the Company and to the Investor, unless
the parties to the Transfer have been finally determined pursuant to this
paragraph 4 prior to the expiration of such 110-day period. (The date of the
first to occur of such events is referred to herein as the "Authorization
Date").
(c) First Refusal Rights. The Company may elect to purchase all (but not
less than all) of the shares of Executive Stock to be transferred upon the same
terms and conditions as those set forth in the Sale Notice by delivering a
written notice of such election to Executive and the Investor within 60 days
after the Sale Notice has been given to the Company. If the Company has not
elected to purchase all of the Executive Stock to be transferred, the Investor
may elect to purchase all (but not less than all) of the Executive Stock to be
transferred upon the same terms and conditions as those set forth in the Sale
Notice by giving written notice of such election to Executive within 90 days
after the Sale Notice has been given to the Investor. If neither the Company
nor the Investor elect to purchase all of the shares of Executive Stock
specified in the Sale Notice, Executive may transfer the shares of Executive
Stock specified in the Sale Notice, subject to the provisions of paragraph 4(d)
below, at a price and on terms no more favorable to the transferee(s) thereof
than
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specified in the Sale Notice during the 60-day period immediately following the
Authorization Date. Any shares of Executive Stock not transferred within such
60-day period will be subject to the provisions of this paragraph 4(c) upon
subsequent transfer. The Company may pay the purchase price for such shares by
offsetting amounts outstanding under any bona fide debts owed by Executive to
the Company.
(d) Participation Rights. If neither the Company nor the Investor has
elected to purchase all of the Executive Stock specified in the Sale Notice
pursuant to paragraph 4(c) above, the Investor may elect to participate in the
contemplated Transfer by delivering written notice to Executive and the Company
within 100 days after receipt by the Investor of the Sale Notice. If the
Investor has elected to participate in such sale, Executive and the Investor
will be entitled to sell in the contemplated sale, at the same price and on the
same terms, a number of shares of the Company's Class B Common Stock equal to
the product of (i) the quotient determined by dividing the percentage of the
Company's Class B Common Stock (on a fully diluted basis) held by the Investor,
by the aggregate percentage of the Company's Class B Common Stock (on a fully
diluted basis) owned by Executive (including both Vested and Unvested Shares)
and the Investor and (ii) the number of shares of Class B Common Stock to be
sold in the contemplated sale.
For example, if:
(i) the Sale Notice contemplated a sale of 100 shares of Class B
Common Stock and no Class A Common Stock;
(ii) Executive was at such time the owner of 120 shares of Class B
Common Stock (which was equal to 30% of Class B Common Stock on a fully
diluted basis); and
(iii) the Investor elected to participate and the Investor owned 80
shares of Class B Common Stock (which was equal to 20% of Class B Common
Stock on a fully diluted basis) and 250 shares of Class A Common Stock;
then
(A) Executive would be entitled to sell 60 shares of Class B Common
Stock (30% ) 50% x 100 shares); and
(B) the Investor would be entitled to sell 40 shares of Class B
Common Stock (20% ) 50% x 100 shares) and 125 shares of Class A Common
Stock (the same percentage of the Investor's Class A Common Stock as the
percentage of the Investor's Class B Common Stock being sold, i.e., 50%).
Executive will use his best efforts to obtain the agreement of the prospective
transferee(s) to the participation of the Investor in the contemplated Transfer
and will not transfer any Executive Stock
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to the prospective transferee(s) if such transferee(s) refuses to allow the
participation of the Investor.
(e) Certain Permitted Transfers. The restrictions contained in this
paragraph 4 will not apply with respect to (i) transfers of shares of Executive
Stock pursuant to applicable laws of descent and distribution or (ii) transfers
of shares of Executive Stock among Executive's Family Group; provided that such
restrictions will continue to be applicable to the Executive Stock after any
such transfer and the transferees of such Executive Stock have agreed in
writing to be bound by the provisions of this Agreement.
(f) Termination of Restrictions. The restrictions on the Transfer of
shares of Executive Stock set forth in this paragraph 4 will continue with
respect to each share of Executive Stock until the date on which such Executive
Stock has been transferred in a transaction permitted by this paragraph 4
(except in a transaction contemplated by subparagraph 4(e)); provided that in
any event such restrictions will terminate on the first to occur of a Sale of
the Company or a Public Offering.
5. Additional Restrictions on Transfer of Executive Stock.
(a) Legend. The certificates representing the Executive Stock will bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED AS OF ___________, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN
REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
SENIOR MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE
OF THE COMPANY DATED AS OF JUNE 4, 1996. A COPY OF SUCH AGREEMENT
MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL
PLACE OF BUSINESS WITHOUT CHARGE."
(b) Opinion of Counsel. No holder of Executive Stock may sell, transfer
or dispose of any Executive Stock (except pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company an
opinion of counsel (reasonably acceptable in form and substance to the Company)
that neither registration nor qualification under the Securities Act and
applicable state securities laws is required in connection with such transfer.
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PROVISIONS RELATING TO EMPLOYMENT
6. Employment. The Company agrees to employ Executive and Executive
accepts such employment for the period beginning as of the date hereof and
ending upon termination pursuant to paragraph 6(b) hereof (the "Employment
Period").
(a) Salary, Bonus and Benefits. During the period from the date hereof
until consummation of the Base Acquisition, the Company will pay Executive an
annual base salary (the "Annual Base Salary") of $60,000. Upon consummation of
the Base Acquisition, Executive's Annual Base Salary will be raised to $80,000,
which amount shall be reviewed (but not reduced) annually by the Company's
Chief Executive Officer with the approval of the Board in its sole discretion.
Upon consummation of the Base Acquisition, Executive will also receive a bonus
equal to the amount necessary to raise his effective Annual Base Salary prior
to consummation of the Base Acquisition to $80,000. Executive's Annual Base
Salary for any partial year will be prorated based upon the number of days
elapsed in such year. In addition, during the Employment Period, Executive
will be entitled to all such other benefits as are approved by the Board and
made available to the Company's senior management (including, without
limitation, participation in a Company sponsored 401(k) profit sharing plan).
(b) Termination. The Employment Period will continue until Executive's
resignation (with or without Good Reason), Disability or death or until the
Board determines in its good faith judgment that termination of Executive's
employment is in the best interests of the Company. After the consummation of
the Base Acquisition, if Executive's employment is terminated by the Company
without Cause, by the Executive with Good Reason or as a result of Executive's
Disability or death, until the end of the six-month period commencing on the
date of termination, the Company shall pay to Executive (or his estate)
Executive's Annual Base Salary and allow Executive to continue participating in
all of the Company's medical, disability and life insurance plans to the extent
permitted by the Company's insurance carriers at a cost not materially in
excess of the Company's cost for such insurance immediately prior to the date
of termination. In addition, the Company shall have the option, by delivering
written notice to Executive within 45 days after the date of termination of
Executive's employment, to extend the severance period to the second
anniversary of the date of termination (the "Extended Period"). During the
Extended Period, if any, the Company shall pay to Executive (or his estate)
Executive's Annual Base Salary and allow Executive to continue participating in
all of the Company's medical, disability and life insurance plans to the extent
permitted by the Company's insurance carriers at a cost not materially in
excess of the Company's cost for such insurance immediately prior to the date
of termination. Notwithstanding the foregoing, the severance payments and
rights to benefits set forth in this paragraph 6(b) shall cease and the Company
shall have no further obligation hereunder upon Executive's breach of paragraph
8(a) below.
(c) No Mitigation. The Company agrees that Executive shall not be
required to mitigate the amount of any payment provided for in paragraph 6(b)
by seeking other employment
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or otherwise, and the Company agrees that it is not entitled to any setoff
against such payments for any income earned by Executive after termination.
7. Confidential Information. Executive acknowledges that the information,
observations and data obtained by him during the course of his performance
under this Agreement concerning the business and affairs of the Company and its
affiliates are the property of the Company. Therefore, Executive agrees that
during the Employment Period and for two years thereafter, he will not disclose
to any unauthorized person or use for his own account any of such information,
observations or data without the Board's written consent, unless and to the
extent that the aforementioned matters become publicly available other than as
a result of Executive's wrongful acts or omissions to act or are required to be
disclosed by court order. Executive agrees to deliver to the Company at the
termination of his employment, or at any other time the Company may request in
writing, all memoranda, notes, plans, records, reports and other documents (and
copies thereof) relating to the business of the Company and its affiliates
(including, without limitation, all acquisition prospects, lists and contact
information) which he may then possess or have under his control.
8. Noncompetition and Nonsolicitation
(a) Noncompetition. Executive acknowledges that in the course of his
employment with the Company he will become familiar with the Company's trade
secrets and with other confidential information concerning the Company and that
his services will be of special, unique and extraordinary value to the Company.
Therefore, Executive agrees that, during the Employment Period and for six
months thereafter and during the Extended Period, if any (the "Noncompete
Period"), he shall not directly or indirectly own, manage, control, participate
in, consult with, render services for, or in any manner engage in any business
competing with the businesses of the Company or its Subsidiaries or any
businesses in which the company or any of its Subsidiaries has entertained
discussions or has requested and received information relating to the
acquisition of such business by the Company or its Subsidiaries prior to the
termination of the Executive's employment with the Company, in each case as
such businesses exist or are in process on the date of the termination of
Executive's employment, within the United States.
(b) Nonsolicitation. During the two years following the date of
termination of Executive's employment, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company
or any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the Employment
Period, or (iii) induce or attempt to induce any customer, supplier, licensee
or other business relation of the Company or any Subsidiary to cease doing
business with the Company or such Subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any Subsidiary.
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(c) Enforcement. If, at the time of enforcement of paragraph 7 or 8 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and that
the court shall be allowed to revise the restrictions contained herein to cover
the maximum duration, scope and area permitted by law. Because Executive's
services are unique and because Executive has access to confidential
information, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event a breach or
threatened breach of this Agreement, the Company or its successors or assigns
may, in addition to other rights and remedies existing in their favor, apply to
any court of competent jurisdiction for specific performance and/or injunctive
or other relief in order to enforce, or prevent any violations of, the
provisions hereof (without posting a bond or other security).
(d) Submission to Jurisdiction. Each of the parties (i) submits to the
jurisdiction of any state or federal court sitting in Chicago, Illinois in any
action or proceeding arising out of or relating to paragraphs 7 and/or 8 of
this Agreement, (ii) agrees that all claims in respect of such action or
proceeding may be heard or determined in any such court and (iii) agrees not to
bring any action or proceeding arising out of or relating to paragraphs 7
and/or 8 of this Agreement in any other court. Each of the parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety or other security that might be required of
any other party with respect thereto. Each party agrees that a final judgment
in any action or proceeding so brought shall be conclusive and may be enforced
by suit on the judgment or in any other manner provided by law.
GENERAL PROVISIONS
9. Definitions.
"Affiliate" of the Investor means any direct or indirect general or
limited partner of the Investor, or any employee or owner thereof, or any other
person, entity or investment fund controlling, controlled by or under common
control with the Investor, and will include, without limitation, Golder, Thoma,
Cressey, Rauner, Inc. and its owners and employees.
"Base Acquisition" means the acquisition or series of acquisitions by the
Company of an equipment rental business or businesses which, in the aggregate,
has a 12-month trailing EBITDA of at least $4.5 million.
"Cause"means (i) the commission of a felony or a crime involving moral
turpitude or the commission of any other significant act involving dishonesty,
disloyalty or fraud with respect to the Company or any Subsidiary, (ii) conduct
tending to bring the Company or any Subsidiary into substantial public disgrace
or disrepute, (iii) substantial and repeated failure to perform duties as
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reasonably directed by the Board of Directors which is not cured within 30 days
after written notice thereof to Executive, (iv) gross negligence or willful
misconduct with respect to the Company or any of its Subsidiaries which is not
cured within 30 days after written notice thereof to Executive, or (v) any
other material breach of this Agreement by the Executive which is not cured
within 30 days after written notice thereof to Executive.
"Common Equity Value" means the fair market value of the Company's entire
common equity determined on a going concern basis (deducting for such purposes
any preferential amounts accruing to or for the benefit of holders of any class
of such common equity), as between a willing buyer and a willing seller, taking
into account all relevant factors determinative of value, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale, as determined by agreement between the Company and the
Executive. If such agreement is not reached within 30 days after the delivery
of the Repurchase Notice, Common Equity Value shall be determined by an
investment banking firm agreed upon by the Company and the Executive, which
firm shall submit to the Company, the Company and the Executive a report within
30 days of its engagement setting forth such determination. If the parties are
unable to agree on an investment banking firm within 45 days after delivery of
the Repurchase Notice, a firm shall be selected by lot (within seven days) from
the investment banking firms set forth on Exhibit D attached hereto, after the
Company and the Executive have each eliminated one such firm. Such investment
banking firm shall render a determination within 15 days of its engagement.
The expenses of such firm will be borne the Company, and the determination of
such firm will be final and binding upon all parties.
"Disability" means the Executive's inability, due to illness, accident,
injury, physical or mental incapacity or other disability, to carry out
effectively his duties and obligations to the Company hereunder or to
participate effectively and actively in the management of the Company for 100
days in any consecutive period of six months, as determined in the good faith
judgment of the Board. In the event the Executive does not agree with the
Board's determination of Disability, a determination shall be made by a panel
of three doctors. The first shall be chosen by the Company, the second shall
be chosen by the Executive, and the third shall be chosen by the first two.
Any doctor selected by a party will not be affiliated, associated or related to
the party selecting that doctor in any manner whatsoever. The opinion of a
majority of the panel of doctors shall be binding on the parties hereto. The
costs involved in such determination shall be borne by the party against whom
the panel decides.
"EBITDA" means net income plus the sum of (i) interest expense, (ii)
income tax expense, (iii) management fee expense to the Investor or any of its
Affiliates, and (iv) depreciation expense, amortization expense and other
non-cash charges deducted in arriving at such net income, each as calculated in
accordance with generally accepted accounting principles.
"Executive's Family Group" means Executive's spouse and descendants
(whether natural or adopted) and any trust solely for the benefit of Executive
and/or Executive's spouse and/or
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descendants.
"Executive Stock" will continue to be Executive Stock in the hands of any
holder other than Executive (except for the Company and the Investor and except
for transferees in a Public Sale), and except as otherwise provided herein,
each such other holder of Executive Stock will succeed to all rights and
obligations attributable to Executive as a holder of Executive Stock hereunder.
Executive Stock will also include shares of the Company's capital stock issued
with respect to Executive Stock by way of a stock split, stock dividend or
other recapitalization. Notwithstanding the foregoing, all Unvested Shares
shall remain Executive Stock after any Transfer thereof.
"Fair Market Value" of each share of Common Stock means the composite
closing price of the sales of the Common Stock on the securities exchanges on
which the Common Stock may at the time be listed (as reported in The Wall
Street Journal), or, if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if the Common Stock is not so listed, the
closing price (or last price, if applicable) of sales of the Common Stock on
The Nasdaq Stock Market (as reported in The Wall Street Journal), or if the
Common Stock is not quoted in The Nasdaq Stock Market but is traded
over-the-counter, the average of the highest bid and lowest asked prices on
such day in the over-the-counter market as reported by the National Quotation
Bureau Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which the Fair
Market Value is being determined and the 20 consecutive business days prior to
such day. If at any time the Common Stock is not listed on any securities
exchange, quoted in the Nasdaq Stock Market, or quoted in the over-the-counter
market, the Fair Market Value shall be equal to the portion of the Common
Equity Value which would be available to the class of Common Stock being valued
upon liquidation of the Company, divided by the total number of shares of
Common Stock of such class outstanding on a fully-diluted basis.
"Good Reason" means (i) any movement of the Company's corporate
headquarters to a location more than 50 miles from its current location, (ii)
any substantial reduction of the Executive's duties and responsibilities to the
Company, (iii) any reduction in the Executive's Base Salary below its then
current level, or (iv) any other material breach of this Agreement by the
Company which is not cured within 30 days after written notice thereof to the
Company.
"Original Cost" means with respect to each share of Class B Common Stock
purchased hereunder, $10 (as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations).
"Permitted Transferee" means any holder of Executive Stock who acquired
such stock pursuant to a transfer permitted by paragraph 4(e).
"Public Offering" means the sale in an underwritten public offering
registered under the Securities Act of shares of the Company's Common Stock
approved by the Board.
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"Public Sale" means any sale pursuant to a registered public offering
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or
market maker.
"Sale of the Company" means any transaction or series of transactions
pursuant to which any person(s) or entity(ies) (including any Affiliates of the
Investor) other than the Investor in the aggregate acquire(s) (i) capital stock
of the Company possessing the voting power (other than voting rights accruing
only in the event of a default, breach or event of noncompliance) to elect a
majority of the Company's board of directors (whether by merger, consolidation,
reorganization, combination, sale or transfer of the Company's capital stock,
shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii)
all or substantially all of the Company's assets determined on a consolidated
basis; provided that the term "Sale of the Company" shall not include an
initial Public Offering.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Subsidiary" means any corporation of which the Company owns securities
having a majority of the ordinary voting power in electing the board of
directors directly or through one or more subsidiaries.
"Transfer" means to sell, transfer, assign, pledge or otherwise dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law).
10. Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
If to the Company:
National Equipment Services, Inc.
6100 Sears Tower
Chicago, Illinois 60606-6402
Attention: President
If to the Executive:
Paul Ingersoll
1416 N. Cleveland
Chicago, Illinois 60010
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If to the Investor:
Golder, Thoma, Cressey Fund IV, L.P.
6100 Sears Tower
Chicago, Illinois 60606-6402
Attention: Carl D. Thoma
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
11. General Provisions.
(a) Expenses. The Company agrees to pay, and hold Executive and all
holders of Executive Stock harmless against liability for the payment of, (i)
the fees and expenses of their counsel arising in connection with the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated by this Agreement, (ii) the fees and expenses
incurred with respect to any amendments or waivers (whether or not the same
become effective) under or in respect of this Agreement, the agreements
contemplated hereby and the Certificate of Incorporation, (iii) stamp and other
taxes which may be payable in respect of the execution and delivery of this
Agreement or the issuance, delivery or acquisition of any shares of Common
Stock purchased hereunder, and (iv) the fees and expenses incurred with respect
to the interpretation or enforcement of the rights granted under this
Agreement, the Stockholders Agreement, the other agreements contemplated hereby
and the Certificate of Incorporation and the Company's bylaws.
(b) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Executive Stock in violation of any provision of this Agreement
shall be void, and the Company shall not record such Transfer on its books or
treat any purported transferee of such Executive Stock as the owner of such
stock for any purpose.
(c) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(d) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject
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matter hereof in any way.
(e) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(f) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, the Investor and their respective successors and
assigns (including subsequent holders of Executive Stock); provided that the
rights and obligations of Executive under this Agreement shall not be
assignable except in connection with a permitted transfer of Executive Stock
hereunder; provided further that the rights and obligations of the Investor
under this Agreement and the agreements contemplated hereby may be assigned by
the Investor at any time, in whole or in part, to any investment fund managed
by Golder, Thoma, Cressey, Rauner, Inc., or any successor thereto.
(g) Choice of Law. The corporate law of the State of Delaware will govern
all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by
and construed in accordance with the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Illinois.
(h) Remedies. Each of the parties to this Agreement (including the
Investor) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorney's fees) caused
by any breach of any provision of this Agreement and to exercise all other
rights existing in its favor. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that any party may in its sole discretion apply to any court
of law or equity of competent jurisdiction (without posting any bond or
deposit) for specific performance and/or other injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement.
(i) Amendment and Waiver. The provisions of this Agreement may be amended
and waived only with the prior written consent of the Company, Executive and
the Investor.
(j) Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the state
in which the Company's chief executive office is located, the time period shall
be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
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<PAGE> 17
(k) Termination. This Agreement (except for the provisions of paragraph
6) shall survive the termination of Executive's employment with the Company and
shall remain in full force and effect after such termination.
* * * * *
-17-
<PAGE> 1
Exhibit 10.6(ii)
AMENDMENT NO.1 TO
SENIOR MANAGEMENT AGREEMENT
THIS AMENDMENT NO.1 to Senior Management Agreement (this "Agreement") is
dated as of December 31, 1996 between National Equipment Services, Inc., a
Delaware corporation (the "Company") and Paul Ingersoll ("Ingersoll"). This
Agreement amends the Senior Management Agreement, dated as of June 4, 1996 (the
"Original Agreement"), between the Company and Ingersoll. Capitalized terms
used but not defined herein shall have the meanings assigned them in the
Original Agreement.
WHEREAS, the parties hereto now desire to amend the Original Agreement as
set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree to amend
the Original Agreement as follows:
Section 1. Amendments to Original Agreement. As of the date hereof, the
Original Agreement shall be amended as follows:
1.1. Section 1(b) of the Original Agreement shall be and hereby is amended
by (i) deleting the words "or any Seller (as defined in the Purchase
Agreement)" in the first and second lines thereof, (ii) deleting the words
"subparagraphs 1B(b) or 1B(c)" and replacing them with the words "subparagraph
1B(b)" in the third line thereof and (iii) deleting the words "or such Seller"
in the twelfth line thereof and in the thirteenth line thereof.
Section 2. Miscellaneous.
2.1. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
2.2. Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
<PAGE> 2
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No.1
to Senior Management Agreement on the day and year first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
-----------------
Its: President
-----------------
/s/ Paul R. Ingersoll
---------------------
PAUL INGERSOLL
Agreed and Accepted:
GOLDER, THOMA, CRESSEY, RAUNER FUND IV, L.P.
By: GTCR IV, L.P.
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
Its: General Partner
By: /s/ Carl D. Thoma
-----------------
Its: Principal
<PAGE> 1
Exhibit 10.7
SENIOR MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of December 31, 1996, between National Equipment
Services, Inc., a Delaware corporation (the "Company"), and Dennis O'Connor
("Executive").
The Company and Executive desire to enter into an agreement pursuant to
which Executive will purchase, and the Company will sell, 2,000 shares of the
Company's Class B Common Stock, par value $.01 per share (the "Class B Common
Stock"). All of such shares of Class B Common Stock and all shares of Class B
Common Stock hereafter acquired by Executive are referred to herein as
"Executive Stock." Certain definitions are set forth in paragraph 9 of this
Agreement.
The execution and delivery of this Agreement by the Company and Executive
is a condition to the purchase of shares of Class B Common Stock and Class A
Common Stock, par value $.01 per share (the "Class A Common Stock" and,
together with the Class B Common Stock, the "Common Stock"), by Golder, Thoma,
Cressey, Rauner Fund IV, L. P. or an Affiliate thereof (the "Investor")
pursuant to a purchase agreement between the Company and the Investor dated as
of June 4, 1996 (as amended from time to time, the "Purchase Agreement").
Certain provisions of this Agreement are intended for the benefit of, and will
be enforceable by, the Investor.
The parties hereto agree as follows:
PROVISIONS RELATING TO EXECUTIVE STOCK
1. Purchase and Sale of Executive Stock.
(a) Upon execution of this Agreement, Executive will purchase, and the
Company will sell, 24 shares of Class B Common Stock at a price of $10 per
share. The Company will deliver to Executive the certificates representing
such Class B Common Stock, and Executive will deliver to the Company a
promissory note in the form of Exhibit A attached hereto (an "Executive Note")
in an aggregate principal amount of $240. Executive's obligations under such
Executive Note shall be secured by a pledge of all of the shares of Executive
Stock to the Company, and in connection therewith, Executive shall enter into a
pledge agreement in the form of Exhibit B attached hereto (the "Pledge
Agreement").
(b) Upon the purchase from time to time by the Investor of up to 24,250
shares of Class A Common Stock and up to an additional 45,000 shares of Class B
Common Stock pursuant to subparagraph 1B(b) of the Purchase Agreement,
Executive will purchase, and the Company will
<PAGE> 2
sell, up to an aggregate of 1,976 additional shares of Class B Common Stock
at a price of $10 per share (each, a "Mandatory Purchase"); provided that
Executive will have the option to purchase all or any portion of such 1,976
additional shares of Class B Common Stock at a price of $10 per share at
such earlier time or times as Executive shall determine (each, an "Optional
Purchase"). The number of shares of Class B Common Stock to be sold
by the Company and purchased by Executive pursuant to any Mandatory Purchase
shall equal (i) 1,976 multiplied by a fraction (A) the numerator of which will
be the sum of (I) the product of (x) the number of shares of Class A Common
Stock to be concurrently purchased by the Investor multiplied by 1,000 plus
(II) the product of (x) the number of shares of Class B Common Stock to be
concurrently purchased by the Investor multiplied by (y) 10 and (B) the
denominator of which will be 24,700,000, minus (ii) the number of shares, if
any, previously purchased by Executive in Optional Purchases which have not
previously been applied to reduce Mandatory Purchases pursuant this clause
(ii). The Company will deliver to Executive the certificates representing such
Class B Common Stock, and Executive will deliver to the Company an Executive
Note in an aggregate principal amount of $10 multiplied by the number of shares
of Class B Common Stock so purchased by Executive. Executive's obligations
under each Executive Note shall be secured by a pledge of all of the shares of
Executive Stock to the Company pursuant to the Pledge Agreement.
(c) Within 30 days after Executive purchases any Executive Stock from the
Company, Executive will make an effective election with the Internal Revenue
Service under Section 83(b) of the Internal Revenue Code and the regulations
promulgated thereunder in the form of Exhibit C attached hereto.
(d) In connection with the purchase and sale of the Executive Stock
hereunder, Executive represents and warrants to the Company that:
(i) The Executive Stock to be acquired by Executive pursuant to this
Agreement will be acquired for Executive's own account and not with a
view to, or intention of, distribution thereof in violation of the
Securities Act, or any applicable state securities laws, and the
Executive Stock will not be disposed of in contravention of the
Securities Act or any applicable state securities laws.
(ii) Executive is an executive officer of the Company, is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Executive Stock.
(iii) Executive is able to bear the economic risk of his investment
in the Executive Stock for an indefinite period of time because the
Executive Stock has not been registered under the Securities Act and,
therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available.
(iv) Executive has had an opportunity to ask questions and receive
answers
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<PAGE> 3
concerning the terms and conditions of the offering of Executive
Stock and has had full access to such other information concerning the
Company as he has requested.
(v) This Agreement constitutes the legal, valid and binding
obligation of Executive, enforceable in accordance with its terms, and
the execution, delivery and performance of this Agreement by Executive
does not and will not conflict with, violate or cause a breach of any
agreement, contract or instrument to which Executive is a party or any
judgment, order or decree to which Executive is subject.
(e) As an inducement to the Company to issue the Executive Stock to
Executive, as a condition thereto, Executive acknowledges and agrees that
neither the issuance of the Executive Stock to Executive nor any provision
contained herein shall entitle Executive to remain in the employment of the
Company and its Subsidiaries or affect the right of the Company to terminate
Executive's employment at any time for any reason.
2. Vesting of Executive Stock.
(a) Except as otherwise provided in paragraph 2(b) below, all shares of
Executive Stock will become vested in accordance with the following schedule,
if as of each such date Executive is still employed by the Company or any of
its Subsidiaries:
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<PAGE> 4
<TABLE>
<S> <C>
Cumulative
Percentage of Executive
Date Stock Vested
------ ------------------------
Closing of the Base Acquisition 15%
1st Anniversary of Closing
of the Base Acquisition 32%
2nd Anniversary of Closing
of the Base Acquisition 49%
3rd Anniversary of Closing
of the Base Acquisition 66%
4th Anniversary of Closing
of the Base Acquisition 83%
5th Anniversary of Closing
of the Base Acquisition 100%
</TABLE>
(b) If Executive ceases to be employed by the Company and its Subsidiaries
on any date other than any anniversary date prior to the fifth anniversary of
the Closing, the cumulative percentage of Executive Stock to become vested will
be determined on a pro rata basis according to the number of days elapsed since
the prior anniversary date. Upon the occurrence of a Sale of the Company, all
shares of Executive Stock which have not yet become vested shall become vested
at the time of such event. Shares of Executive Stock which have become vested
are referred to herein as "Vested Shares," and all other shares of Executive
Stock are referred to herein as "Unvested Shares."
3. Repurchase Option.
(a) In the event Executive ceases to be employed by the Company and its
Subsidiaries for any reason (the "Termination"), the Executive Stock (whether
held by Executive or one or more of Executive's transferees, other than the
Company or an Exempt Transferee (as defined in paragraph 4(e) below)) will be
subject to repurchase by the Company and the Investor pursuant to the terms and
conditions set forth in this paragraph 3 (the "Repurchase Option").
(b) In the event of Termination, the purchase price for each Unvested
Share will be Executive's Original Cost for such share, and the purchase price
for each Vested Share will be the Fair Market Value for such share.
(c) The Company's board of directors (the "Board") may elect to purchase
all or any portion of the Unvested Shares and the Vested Shares by delivering
written notice (the "Repurchase Notice") to the holder or holders of the
Executive Stock within 90 days after the Termination. The Repurchase Notice
will set forth the number of Unvested Shares and Vested Shares to be acquired
from each holder, the aggregate consideration to be paid for such shares and
- 4 -
<PAGE> 5
the time and place for the closing of the transaction. The number of shares
to be repurchased by the Company shall first be satisfied to the extent
possible from the shares of Executive Stock held by Executive at the time
of delivery of the Repurchase Notice. If the number of shares of Executive
Stock then held by Executive is less than the total number of shares of
Executive Stock which the Company has elected to purchase, the Company shall
purchase the remaining shares elected to be purchased from the other holder(s)
of Executive Stock under this Agreement, pro rata according to the number of
shares of Executive Stock held by such other holder(s) at the time of delivery
of such Repurchase Notice (determined as nearly as practicable to the nearest
share). The number of Unvested Shares and Vested Shares to be repurchased
hereunder will be allocated among Executive and the other holders of Executive
Stock (if any) pro rata according to the number of shares of Executive Stock to
be purchased from such person.
(d) If for any reason the Company does not elect to purchase all of the
Executive Stock pursuant to the Repurchase Option, the Investor shall be
entitled to exercise the Repurchase Option for the shares of Executive Stock
the Company has not elected to purchase (the "Available Shares"). As soon as
practicable after the Company has determined that there will be Available
Shares, but in any event within 45 days after the Termination, the Company
shall give written notice (the "Option Notice") to the Investor setting forth
the number of Available Shares and the purchase price for the Available Shares.
The Investor may elect to purchase any or all of the Available Shares by giving
written notice to the Company within one month after the Option Notice has been
given by the Company. As soon as practicable, and in any event within ten
days, after the expiration of the one-month period set forth above, the Company
shall notify each holder of Executive Stock as to the number of shares being
purchased from such holder by the Investor (the "Supplemental Repurchase
Notice"). At the time the Company delivers the Supplemental Repurchase Notice
to the holder(s) of Executive Stock, the Company shall also deliver written
notice to the Investor setting forth the number of shares the Investor is
entitled to purchase, the aggregate purchase price and the time and place of
the closing of the transaction. The number of Unvested Shares and Vested
Shares to be repurchased hereunder shall be allocated among the Company and the
Investor pro rata according to the number of shares of Executive Stock to be
purchased by each of them.
(e) The closing of the purchase of the Executive Stock pursuant to the
Repurchase Option shall take place on the date designated by the Company in the
Repurchase Notice or Supplemental Repurchase Notice, which date shall not be
more than one month nor less than five days after the delivery of the later of
either such notice to be delivered. The Company and/or the Investor will pay
for the Executive Stock to be purchased pursuant to the Repurchase Option by
delivery of a check or wire transfer of funds in the aggregate amount of the
purchase price for such shares. In addition, the Company may pay the purchase
price for such shares by offsetting amounts outstanding under the Executive
Notes issued to the Company hereunder and any other bona fide debts owed by
Executive to the Company. The Company and the Investor will be entitled to
receive representations and warranties from the sellers as to their title to
the Executive Stock being sold and to require all sellers' signatures be
guaranteed.
- 5 -
<PAGE> 6
(f) The right of the Company and the Investor to repurchase Vested Shares
pursuant to this paragraph 3 shall terminate upon the first to occur of the
Sale of the Company or a Public Offering.
(g) All shares of Executive Stock purchased by the Company pursuant to
this paragraph 3 and pursuant to paragraph 4 shall remain available for
reissuance to new executives as determined by the Board.
4. Restrictions on Transfer of Executive Stock.
(a) Retention of Executive Stock. Until the fifth anniversary of the date
of this Agreement, Executive shall not sell, transfer, assign, pledge or
otherwise dispose of any interest in any shares of Executive Stock, except for
Exempt Transfers (as defined in paragraph 4(b) below) other than sales to the
public pursuant to Rule 144 promulgated under the Securities Act or any similar
rule then in force).
(b) Transfer of Executive Stock. Subject to paragraph 4(a) above,
Executive shall not Transfer any interest in any shares of Executive Stock,
except pursuant to (i) the provisions of paragraph 3 hereof, the provisions of
paragraph 7 of the Stockholders Agreement, a Public Sale or a Sale of the
Company ("Exempt Transfers") or (ii) the provisions of this paragraph 4;
provided that in no event shall any Transfer of Executive Stock pursuant to
this paragraph 4 be made for any consideration other than cash payable upon
consummation of such Transfer or in installments over time. Prior to making
any Transfer other than an Exempt Transfer, Executive will give written notice
(the "Sale Notice") to the Company and the Investor. The Sale Notice will
disclose in reasonable detail the identity of the prospective transferee(s),
the number of shares to be transferred and the terms and conditions of the
proposed transfer. Executive will not consummate any Transfer until 110 days
after the Sale Notice has been given to the Company and to the Investor, unless
the parties to the Transfer have been finally determined pursuant to this
paragraph 4 prior to the expiration of such 110-day period. (The date of the
first to occur of such events is referred to herein as the "Authorization
Date").
(c) First Refusal Rights. The Company may elect to purchase all (but not
less than all) of the shares of Executive Stock to be transferred upon the same
terms and conditions as those set forth in the Sale Notice by delivering a
written notice of such election to Executive and the Investor within 60 days
after the Sale Notice has been given to the Company. If the Company has not
elected to purchase all of the Executive Stock to be transferred, the Investor
may elect to purchase all (but not less than all) of the Executive Stock to be
transferred upon the same terms and conditions as those set forth in the Sale
Notice by giving written notice of such election to Executive within 90 days
after the Sale Notice has been given to the Investor. If neither the Company
nor the Investor elect to purchase all of the shares of Executive Stock
specified in the Sale Notice, Executive may transfer the shares of Executive
Stock specified in the Sale Notice, subject to the provisions of paragraph 4(d)
below, at a price and on terms no more favorable to the transferee(s) thereof
than
- 6 -
<PAGE> 7
specified in the Sale Notice during the 60-day period immediately following the
Authorization Date. Any shares of Executive Stock not transferred within such
60-day period will be subject to the provisions of this paragraph 4(c) upon
subsequent transfer. The Company may pay the purchase price for such shares by
offsetting amounts outstanding under any bona fide debts owed by Executive to
the Company.
(d) Participation Rights. If neither the Company nor the Investor has
elected to purchase all of the Executive Stock specified in the Sale Notice
pursuant to paragraph 4(c) above, the Investor may elect to participate in the
contemplated Transfer by delivering written notice to Executive and the Company
within 100 days after receipt by the Investor of the Sale Notice. If the
Investor has elected to participate in such sale, Executive and the Investor
will be entitled to sell in the contemplated sale, at the same price and on the
same terms, a number of shares of the Company's Class B Common Stock equal to
the product of (i) the quotient determined by dividing the percentage of the
Company's Class B Common Stock (on a fully diluted basis) held by the Investor,
by the aggregate percentage of the Company's Class B Common Stock (on a fully
diluted basis) owned by Executive (including both Vested and Unvested Shares)
and the Investor and (ii) the number of shares of Class B Common Stock to be
sold in the contemplated sale.
For example, if:
(i) the Sale Notice contemplated a sale of 100 shares of Class B
Common Stock and no Class A Common Stock;
(ii) Executive was at such time the owner of 120 shares of Class B
Common Stock (which was equal to 30% of Class B Common Stock on a fully
diluted basis); and
(iii) the Investor elected to participate and the Investor owned 80
shares of Class B Common Stock (which was equal to 20% of Class B Common
Stock on a fully diluted basis) and 250 shares of Class A Common Stock;
then
(A) Executive would be entitled to sell 60 shares of Class B Common
Stock (30% ) 50% x 100 shares); and
(B) the Investor would be entitled to sell 40 shares of Class B
Common Stock (20% ) 50% x 100 shares) and 125 shares of Class A Common
Stock (the same percentage of the Investor's Class A Common Stock as the
percentage of the Investor's Class B Common Stock being sold, i.e., 50%).
Executive will use his best efforts to obtain the agreement of the prospective
transferee(s) to the participation of the Investor in the contemplated Transfer
and will not transfer any Executive Stock
- 7 -
<PAGE> 8
to the prospective transferee(s) if such transferee(s) refuses to allow the
participation of the Investor.
(e) Certain Permitted Transfers. The restrictions contained in this
paragraph 4 will not apply with respect to (i) transfers of shares of Executive
Stock pursuant to applicable laws of descent and distribution or (ii) transfers
of shares of Executive Stock among Executive's Family Group; provided that such
restrictions will continue to be applicable to the Executive Stock after any
such transfer and the transferees of such Executive Stock have agreed in
writing to be bound by the provisions of this Agreement.
(f) Termination of Restrictions. The restrictions on the Transfer of
shares of Executive Stock set forth in this paragraph 4 will continue with
respect to each share of Executive Stock until the date on which such Executive
Stock has been transferred in a transaction permitted by this paragraph 4
(except in a transaction contemplated by subparagraph 4(e)); provided that in
any event such restrictions will terminate on the first to occur of a Sale of
the Company or a Public Offering.
5. Additional Restrictions on Transfer of Executive Stock.
(a) Legend. The certificates representing the Executive Stock will bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS
OF DECEMBER 31, 1996, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER,
CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET FORTH IN A
SENIOR MANAGEMENT AGREEMENT BETWEEN THE COMPANY AND AN EXECUTIVE OF THE
COMPANY DATED AS OF DECEMBER 31, 1996. A COPY OF SUCH AGREEMENT MAY BE
OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF
BUSINESS WITHOUT CHARGE."
(b) Opinion of Counsel. No holder of Executive Stock may sell, transfer
or dispose of any Executive Stock (except pursuant to an effective registration
statement under the Securities Act) without first delivering to the Company an
opinion of counsel (reasonably acceptable in form and substance to the Company)
that neither registration nor qualification under the Securities Act and
applicable state securities laws is required in connection with such transfer.
- 8 -
<PAGE> 9
PROVISIONS RELATING TO EMPLOYMENT
6. Employment. The Company agrees to employ Executive and Executive
accepts such employment for the period beginning as of the date hereof and
ending upon termination pursuant to paragraph 6(b) hereof (the "Employment
Period").
(a) Salary, Bonus and Benefits. During the period from the date hereof
until consummation of the Base Acquisition, the Company will pay Executive an
annual base salary (the "Annual Base Salary") of $95,000. Upon consummation of
the Base Acquisition, Executive's Annual Base Salary will be raised to
$125,000, which amount shall be reviewed (but not reduced) annually by the
Company's Chief Executive Officer with the approval of the Board in its sole
discretion. Upon consummation of the Base Acquisition, Executive will also
receive a bonus equal to the amount necessary to raise his effective Annual
Base Salary prior to consummation of the Base Acquisition to $125,000.
Executive's Annual Base Salary for any partial year will be prorated based upon
the number of days elapsed in such year. In addition, during the Employment
Period, Executive will be entitled to all such other benefits as are approved
by the Board and made available to the Company's senior management (including,
without limitation, participation in a Company sponsored 401(k) profit sharing
plan).
(b) Termination. The Employment Period will continue until Executive's
resignation (with or without Good Reason), Disability or death or until the
Board determines in its good faith judgment that termination of Executive's
employment is in the best interests of the Company. After the consummation of
the Base Acquisition, if Executive's employment is terminated by the Company
without Cause, by the Executive with Good Reason or as a result of Executive's
Disability or death, until the end of the six-month period commencing on the
date of termination, the Company shall pay to Executive (or his estate)
Executive's Annual Base Salary and allow Executive to continue participating in
all of the Company's medical, disability and life insurance plans to the extent
permitted by the Company's insurance carriers at a cost not materially in
excess of the Company's cost for such insurance immediately prior to the date
of termination. In addition, the Company shall have the option, by delivering
written notice to Executive within 45 days after the date of termination of
Executive's employment, to extend the severance period to the second
anniversary of the date of termination (the "Extended Period"). During the
Extended Period, if any, the Company shall pay to Executive (or his estate)
Executive's Annual Base Salary and allow Executive to continue participating in
all of the Company's medical, disability and life insurance plans to the extent
permitted by the Company's insurance carriers at a cost not materially in
excess of the Company's cost for such insurance immediately prior to the date of
termination. Notwithstanding the foregoing, the severance payments and rights
to benefits set forth in this paragraph 6(b) shall cease and the Company shall
have no further obligation hereunder upon Executive's breach of paragraph 8(a)
below.
(c) No Mitigation. The Company agrees that Executive shall not be
required to
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<PAGE> 10
mitigate the amount of any payment provided for in paragraph 6(b) by seeking
other employment or otherwise, and the Company agrees that it is not entitled
to any setoff against such payments for any income earned by Executive
after termination.
7. Confidential Information. Executive acknowledges that the information,
observations and data obtained by him during the course of his performance
under this Agreement concerning the business and affairs of the Company and its
affiliates are the property of the Company. Therefore, Executive agrees that
during the Employment Period and for two years thereafter, he will not disclose
to any unauthorized person or use for his own account any of such information,
observations or data without the Board's written consent, unless and to the
extent that the aforementioned matters become publicly available other than as
a result of Executive's wrongful acts or omissions to act or are required to be
disclosed by court order. Executive agrees to deliver to the Company at the
termination of his employment, or at any other time the Company may request in
writing, all memoranda, notes, plans, records, reports and other documents (and
copies thereof) relating to the business of the Company and its affiliates
(including, without limitation, all acquisition prospects, lists and contact
information) which he may then possess or have under his control.
8. Noncompetition and Nonsolicitation
(a) Noncompetition. Executive acknowledges that in the course of his
employment with the Company he will become familiar with the Company's trade
secrets and with other confidential information concerning the Company and that
his services will be of special, unique and extraordinary value to the Company.
Therefore, Executive agrees that, during the Employment Period and for six
months thereafter and during the Extended Period, if any (the "Noncompete
Period"), he shall not directly or indirectly own, manage, control, participate
in, consult with, render services for, or in any manner engage in any business
competing with the businesses of the Company or its Subsidiaries or any
businesses in which the company or any of its Subsidiaries has entertained
discussions or has requested and received information relating to the
acquisition of such business by the Company or its Subsidiaries prior to the
termination of the Executive's employment with the Company, in each case as
such businesses exist or are in process on the date of the termination of
Executive's employment, within the United States.
(b) Nonsolicitation. During the two years following the date of
termination of Executive's employment, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company
or any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the Employment
Period, or (iii) induce or attempt to induce any customer, supplier, licensee
or other business relation of the Company or any Subsidiary to cease doing
business with the Company or such Subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee or business
relation and the Company or any
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<PAGE> 11
Subsidiary.
(c) Enforcement. If, at the time of enforcement of paragraph 7 or 8 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum duration, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area and
that the court shall be allowed to revise the restrictions contained herein to
cover the maximum duration, scope and area permitted by law. Because
Executive's services are unique and because Executive has access to
confidential information, the parties hereto agree that money damages would be
an inadequate remedy for any breach of this Agreement. Therefore, in the event
a breach or threatened breach of this Agreement, the Company or its successors
or assigns may, in addition to other rights and remedies existing in their
favor, apply to any court of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce, or prevent any
violations of, the provisions hereof (without posting a bond or other
security).
(d) Submission to Jurisdiction. Each of the parties (i) submits to the
jurisdiction of any state or federal court sitting in Chicago, Illinois in any
action or proceeding arising out of or relating to paragraphs 7 and/or 8 of
this Agreement, (ii) agrees that all claims in respect of such action or
proceeding may be heard or determined in any such court and (iii) agrees not to
bring any action or proceeding arising out of or relating to paragraphs 7
and/or 8 of this Agreement in any other court. Each of the parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety or other security that might be required of
any other party with respect thereto. Each party agrees that a final judgment
in any action or proceeding so brought shall be conclusive and may be enforced
by suit on the judgment or in any other manner provided by law.
GENERAL PROVISIONS
9. Definitions.
"Affiliate" of the Investor means any direct or indirect general or
limited partner of the Investor, or any employee or owner thereof, or any other
person, entity or investment fund controlling, controlled by or under common
control with the Investor, and will include, without limitation, Golder, Thoma,
Cressey, Rauner, Inc. and its owners and employees.
"Base Acquisition" means the acquisition or series of acquisitions by the
Company of an equipment rental business or businesses which, in the aggregate,
has a 12-month trailing EBITDA of at least $4.5 million.
"Cause"means (i) the commission of a felony or a crime involving moral
turpitude or the commission of any other significant act involving dishonesty,
disloyalty or fraud with respect to the Company or any Subsidiary, (ii) conduct
tending to bring the Company or any Subsidiary into
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<PAGE> 12
substantial public disgrace or disrepute, (iii) substantial and repeated
failure to perform duties as reasonably directed by the Board of Directors
which is not cured within 30 days after written notice thereof to Executive,
(iv) gross negligence or willful misconduct with respect to the Company or any
of its Subsidiaries which is not cured within 30 days after written notice
thereof to Executive, or (v) any other material breach of this Agreement by
the Executive which is not cured within 30 days after written notice thereof
to Executive.
"Common Equity Value" means the fair market value of the Company's entire
common equity determined on a going concern basis (deducting for such purposes
any preferential amounts accruing to or for the benefit of holders of any class
of such common equity), as between a willing buyer and a willing seller, taking
into account all relevant factors determinative of value, using valuation
techniques then prevailing in the securities industry and assuming full
disclosure of all relevant information and a reasonable period of time for
effectuating such sale, as determined by agreement between the Company and the
Executive. If such agreement is not reached within 30 days after the delivery
of the Repurchase Notice, Common Equity Value shall be determined by an
investment banking firm agreed upon by the Company and the Executive, which
firm shall submit to the Company, the Company and the Executive a report within
30 days of its engagement setting forth such determination. If the parties are
unable to agree on an investment banking firm within 45 days after delivery of
the Repurchase Notice, a firm shall be selected by lot (within seven days) from
the investment banking firms set forth on Exhibit D attached hereto, after the
Company and the Executive have each eliminated one such firm. Such investment
banking firm shall render a determination within 15 days of its engagement.
The expenses of such firm will be borne the Company, and the determination of
such firm will be final and binding upon all parties.
"Disability" means the Executive's inability, due to illness, accident,
injury, physical or mental incapacity or other disability, to carry out
effectively his duties and obligations to the Company hereunder or to
participate effectively and actively in the management of the Company for 100
days in any consecutive period of six months, as determined in the good faith
judgment of the Board. In the event the Executive does not agree with the
Board's determination of Disability, a determination shall be made by a panel
of three doctors. The first shall be chosen by the Company, the second shall
be chosen by the Executive, and the third shall be chosen by the first two.
Any doctor selected by a party will not be affiliated, associated or related to
the party selecting that doctor in any manner whatsoever. The opinion of a
majority of the panel of doctors shall be binding on the parties hereto. The
costs involved in such determination shall be borne by the party against whom
the panel decides.
"EBITDA" means net income plus the sum of (i) interest expense, (ii)
income tax expense, (iii) management fee expense to the Investor or any of its
Affiliates, and (iv) depreciation expense, amortization expense and other
non-cash charges deducted in arriving at such net income, each as calculated in
accordance with generally accepted accounting principles.
"Executive's Family Group" means Executive's spouse and descendants
(whether
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<PAGE> 13
natural or adopted) and any trust solely for the benefit of Executive and/or
Executive's spouse and/or descendants.
"Executive Stock" will continue to be Executive Stock in the hands of any
holder other than Executive (except for the Company and the Investor and except
for transferees in a Public Sale), and except as otherwise provided herein,
each such other holder of Executive Stock will succeed to all rights and
obligations attributable to Executive as a holder of Executive Stock hereunder.
Executive Stock will also include shares of the Company's capital stock issued
with respect to Executive Stock by way of a stock split, stock dividend or
other recapitalization. Notwithstanding the foregoing, all Unvested Shares
shall remain Executive Stock after any Transfer thereof.
"Fair Market Value" of each share of Common Stock means the composite
closing price of the sales of the Common Stock on the securities exchanges on
which the Common Stock may at the time be listed (as reported in The Wall
Street Journal), or, if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if the Common Stock is not so listed, the
closing price (or last price, if applicable) of sales of the Common Stock on
The Nasdaq Stock Market (as reported in The Wall Street Journal), or if the
Common Stock is not quoted in The Nasdaq Stock Market but is traded
over-the-counter, the average of the highest bid and lowest asked prices on
such day in the over-the-counter market as reported by the National Quotation
Bureau Incorporated, or any similar successor organization, in each such case
averaged over a period of 21 days consisting of the day as of which the Fair
Market Value is being determined and the 20 consecutive business days prior to
such day. If at any time the Common Stock is not listed on any securities
exchange, quoted in the Nasdaq Stock Market, or quoted in the over-the-counter
market, the Fair Market Value shall be equal to the portion of the Common
Equity Value which would be available to the class of Common Stock being valued
upon liquidation of the Company, divided by the total number of shares of
Common Stock of such class outstanding on a fully-diluted basis.
"Good Reason" means (i) any movement of the Company's corporate
headquarters to a location more than 50 miles from its current location, (ii)
any substantial reduction of the Executive's duties and responsibilities to the
Company, (iii) any reduction in the Executive's Base Salary below its then
current level, or (iv) any other material breach of this Agreement by the
Company which is not cured within 30 days after written notice thereof to the
Company.
"Original Cost" means with respect to each share of Class B Common Stock
purchased hereunder, $10 (as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations).
"Permitted Transferee" means any holder of Executive Stock who acquired
such stock pursuant to a transfer permitted by paragraph 4(e).
"Public Offering" means the sale in an underwritten public offering
registered under
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<PAGE> 14
the Securities Act of shares of the Company's Common Stock approved by the
Board.
"Public Sale" means any sale pursuant to a registered public offering
under the Securities Act or any sale to the public pursuant to Rule 144
promulgated under the Securities Act effected through a broker, dealer or
market maker.
"Sale of the Company" means any transaction or series of transactions
pursuant to which any person(s) or entity(ies) (including any Affiliates of the
Investor) other than the Investor in the aggregate acquire(s) (i) capital stock
of the Company possessing the voting power (other than voting rights accruing
only in the event of a default, breach or event of noncompliance) to elect a
majority of the Company's board of directors (whether by merger, consolidation,
reorganization, combination, sale or transfer of the Company's capital stock,
shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii)
all or substantially all of the Company's assets determined on a consolidated
basis; provided that the term "Sale of the Company" shall not include an
initial Public Offering.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Subsidiary" means any corporation of which the Company owns securities
having a majority of the ordinary voting power in electing the board of
directors directly or through one or more subsidiaries.
"Transfer" means to sell, transfer, assign, pledge or otherwise dispose of
(whether with or without consideration and whether voluntarily or involuntarily
or by operation of law).
10. Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
If to the Company:
National Equipment Services, Inc.
6100 Sears Tower
Chicago, Illinois 60606-6402
Attention: President
If to the Executive:
Dennis O'Connor
87 Warrington Drive
Lake Bluff, Illinois 60044
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<PAGE> 15
If to the Investor:
Golder, Thoma, Cressey Fund IV, L.P.
6100 Sears Tower
Chicago, Illinois 60606-6402
Attention: Carl D. Thoma
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
11. General Provisions.
(a) Expenses. The Company agrees to pay, and hold Executive and all
holders of Executive Stock harmless against liability for the payment of, (i)
the fees and expenses of their counsel arising in connection with the
negotiation and execution of this Agreement and the consummation of the
transactions contemplated by this Agreement, (ii) the fees and expenses
incurred with respect to any amendments or waivers (whether or not the same
become effective) under or in respect of this Agreement, the agreements
contemplated hereby and the Certificate of Incorporation, (iii) stamp and other
taxes which may be payable in respect of the execution and delivery of this
Agreement or the issuance, delivery or acquisition of any shares of Common
Stock purchased hereunder, and (iv) the fees and expenses incurred with respect
to the interpretation or enforcement of the rights granted under this
Agreement, the Stockholders Agreement, the other agreements contemplated hereby
and the Certificate of Incorporation and the Company's bylaws.
(b) Transfers in Violation of Agreement. Any Transfer or attempted
Transfer of any Executive Stock in violation of any provision of this Agreement
shall be void, and the Company shall not record such Transfer on its books or
treat any purported transferee of such Executive Stock as the owner of such
stock for any purpose.
(c) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(d) Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject
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<PAGE> 16
matter hereof in any way.
(e) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(f) Successors and Assigns. Except as otherwise provided herein, this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company, the Investor and their respective successors and
assigns (including subsequent holders of Executive Stock); provided that the
rights and obligations of Executive under this Agreement shall not be
assignable except in connection with a permitted transfer of Executive Stock
hereunder; provided further that the rights and obligations of the Investor
under this Agreement and the agreements contemplated hereby may be assigned by
the Investor at any time, in whole or in part, to any investment fund managed
by Golder, Thoma, Cressey, Rauner, Inc., or any successor thereto.
(g) Choice of Law. The corporate law of the State of Delaware will govern
all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement and the exhibits hereto will be governed by
and construed in accordance with the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Illinois.
(h) Remedies. Each of the parties to this Agreement (including the
Investor) will be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including attorney's fees) caused
by any breach of any provision of this Agreement and to exercise all other
rights existing in its favor. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the provisions of
this Agreement and that any party may in its sole discretion apply to any
court of law or equity of competent jurisdiction (without posting any bond or
deposit) for specific performance and/or other injunctive relief in order to
enforce or prevent any violations of the provisions of this Agreement.
(i) Amendment and Waiver. The provisions of this Agreement may be amended
and waived only with the prior written consent of the Company, Executive and
the Investor.
(j) Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the state
in which the Company's chief executive office is located, the time period shall
be automatically extended to the business day immediately following such
Saturday, Sunday or holiday.
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<PAGE> 17
(k) Termination. This Agreement (except for the provisions of paragraph
6) shall survive the termination of Executive's employment with the Company and
shall remain in full force and effect after such termination.
* * * * *
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<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Senior
Management Agreement on the date first written above.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
------------------------------
Its: President
/s/ Dennis O'Connor
-------------------------------------
DENNIS O'CONNOR
Agreed and Accepted:
GOLDER, THOMA, CRESSEY, RAUNER FUND V, L.P.
By: GTCR V, L.P.,
-------------------------------------
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.,
-------------------------------------
Its: General Partner
By: /s/ Carl D. Thoma
-------------------------------------
Its: Principal
<PAGE> 1
Exhibit 10.8
EXECUTIVE STOCK PLEDGE AGREEMENT
THIS AGREEMENT is made as of June 4, 1996, by and between National
Equipment Services, Inc., a Delaware corporation (the "Company"), and Kevin
Rodgers (the "Executive").
WHEREAS, the Company and the Pledgor are parties to an Senior Management
Agreement, dated as of the date hereof, pursuant to which the Pledgor has
agreed to purchase, in the aggregate, 8,000 shares of the Company's Class B
Common Stock, par value $.01 per share (collectively, the "Pledged Shares"),
for an aggregate purchase price of $80,000.00.
WHEREAS, the Company has allowed the Pledgor to purchase the Pledged
Shares by delivery to the Company of cash in the amount of $16,000.00 and
promissory notes (the "Notes") in the aggregate principal amount of $64,000.00;
and
WHEREAS, this Executive Stock Pledge Agreement provides the terms and
conditions upon which the Notes are secured by a pledge to the Company of the
Pledged Shares.
NOW, THEREFORE, the Pledgor and the Company hereby agree as follows:
1. Pledge. The Pledgor hereby pledges to the Company, and grants to the
Company a security interest in, the Pledged Shares as security for the prompt
and complete payment when due of the unpaid principal of and interest on the
Notes.
2. Delivery of Pledged Shares. Upon the execution of this Executive Stock
Pledge Agreement, the Pledgor shall deliver to the Company the certificates
representing the Pledged Shares theretofore issued to the Pledgor, together
with duly executed forms of assignment sufficient to transfer title thereto to
the Company. In addition, as and when additional Pledged Shares are issued to
the Pledgor, the Pledgor shall deliver to the Company the certificates
representing such Pledged Shares together with duly executed forms of
assignment sufficient to transfer title thereto to the Company.
3. Voting Rights; Cash Dividends. Notwithstanding anything to the
contrary contained herein, during the term of this Executive Stock Pledge
Agreement until such time as there exists a default in the payment of principal
or interest on the Notes or any other default under the Notes, the Pledgor
shall be entitled to all voting rights with respect to the Pledged Shares and
shall be entitled to receive all cash dividends paid in respect of the Pledged
Shares. Upon the occurrence of and during the continuance of any such default,
the Company shall retain all such cash dividends payable on the Pledged Shares
as additional security hereunder.
4. Stock Dividends; Distributions, etc. If, while this Executive Stock
Pledge Agreement is in effect, the Pledgor becomes entitled to receive or
receives any securities or other
<PAGE> 2
property in addition to, in substitution of, or in exchange for any of the
Pledged Shares (whether as a distribution in connection with any
recapitalization, reorganization or reclassification, a stock dividend or
otherwise), the Pledgor shall accept such securities or other property on
behalf of and for the benefit of the Company as additional security for the
Pledgor's obligations under the Notes and shall promptly deliver such
additional security to the Company together with duly executed forms of
assignment, and such additional security shall be deemed to be part of the
Pledged Shares hereunder.
5. Default. If the Pledgor defaults in the payment of the principal or
interest under the Notes as it becomes due (whether upon demand, acceleration
or otherwise) or any other event of default under the Notes occurs (including
the bankruptcy or insolvency of the Pledgor), the Company may exercise any and
all the rights, powers and remedies of any owner of the Pledged Shares
(including the right to vote the shares and receive dividends and distributions
with respect to such shares) and shall have and may exercise without demand any
and all the rights and remedies granted to a secured party upon default under
the Uniform Commercial Code of the State of Illinois or otherwise available to
the Company under applicable law. Without limiting the foregoing, the Company
is authorized to sell, assign and deliver at its discretion, from time to time,
all or any part of the Pledged Shares at any private sale or public auction, on
not less than ten days written notice to the Pledgor, at such price or prices
and upon such terms as the Company may deem advisable. The Pledgor shall have
no right to redeem the Pledged Shares after any such sale or assignment. At
any such sale or auction, the Company may bid for, and become the purchaser of,
the whole or any part of the Pledged Shares offered for sale. In case of any
such sale, after deducting the costs, attorneys' fees and other expenses of
sale and delivery, the remaining proceeds of such sale shall be applied to the
principal of and accrued interest on the Notes; provided, however, that after
payment in full of the indebtedness evidenced by the Notes, the balance of the
proceeds of sale then remaining shall be paid to the Pledgor and the Pledgor
shall be entitled to the return of any of the Pledged Shares remaining in the
hands of the Company. The Pledgor shall be liable for any deficiency if the
remaining proceeds are insufficient to pay the indebtedness under the Notes in
full, including the fees of any attorneys employed by the Company to collect
such deficiency.
6. Costs and Attorneys' Fees. All costs and expenses, including
reasonable attorneys' fees, incurred in exercising any right, power or remedy
conferred by this Executive Stock Pledge Agreement or in the enforcement
thereof, shall become part of the indebtedness secured hereunder and shall be
paid by the Pledgor or repaid from the proceeds of the sale of the Pledged
Shares hereunder.
7. Payment of Indebtedness and Release of Pledged Shares. Upon payment in
full of the indebtedness evidenced by the Notes, the Company shall surrender
the Pledged Shares to the Pledgor together with all forms of assignment.
8. Further Assurances. The Pledgor agrees that at any time and from time
to time upon the written request of the Company, the Pledgor will execute and
deliver such further
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<PAGE> 3
documents and do such further acts and things as the Company may reasonably
request in order to effect the purposes of this Executive Stock Pledge
Agreement.
9. Severability. Any provision of this Executive Stock Pledge Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
10. No Waiver; Cumulative Remedies. The Company shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Company, and then only to the extent therein set forth. A waiver by the
Company of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company would otherwise
have on any future occasion. No failure to exercise nor any delay in
exercising on the part of the Company, any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided are
cumulative and may be exercised singly or concurrently, and are not exclusive
of any rights or remedies provided by law.
11. Waivers, Amendments; Applicable Law. None of the terms or provisions
of this Executive Stock Pledge Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by the parties
hereto. This Agreement and all obligations of the Pledgor hereunder shall
together with the rights and remedies of the Company hereunder, inure to the
benefit of the Company and its successors and assigns. This Executive Stock
Pledge Agreement shall be governed by, and be construed and interpreted in
accordance with, the laws of the State of Illinois.
* * * * *
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<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this Executive Stock
Pledge Agreement on the date first written above.
NATIONAL EQUIPMENT SERVICES, INC.
By /s/ Paul R. Ingersoll
--------------------------
Its Vice President
--------------------------
/s/ Kevin P. Rodgers
--------------------------
Kevin Rodgers
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<PAGE> 1
Exhibit 10.9
EXECUTIVE STOCK PLEDGE AGREEMENT
THIS AGREEMENT is made as of June 4, 1996, by and between National
Equipment Services, Inc., a Delaware corporation (the "Company"), and Paul
Ingersoll (the "Executive").
WHEREAS, the Company and the Pledgor are parties to an Senior Management
Agreement, dated as of the date hereof, pursuant to which the Pledgor has
agreed to purchase, in the aggregate, 1,000 shares of the Company's Class B
Common Stock, par value $.01 per share (collectively, the "Pledged Shares"),
for an aggregate purchase price of $10,000.00.
WHEREAS, the Company has allowed the Pledgor to purchase the Pledged
Shares by delivery to the Company of promissory notes (the "Notes") in the
aggregate principal amount of $10,000.00; and
WHEREAS, this Executive Stock Pledge Agreement provides the terms and
conditions upon which the Notes are secured by a pledge to the Company of the
Pledged Shares.
NOW, THEREFORE, the Pledgor and the Company hereby agree as follows:
1. Pledge. The Pledgor hereby pledges to the Company, and grants to the
Company a security interest in, the Pledged Shares as security for the prompt
and complete payment when due of the unpaid principal of and interest on the
Notes.
2. Delivery of Pledged Shares. Upon the execution of this Executive Stock
Pledge Agreement, the Pledgor shall deliver to the Company the certificates
representing the Pledged Shares theretofore issued to the Pledgor, together
with duly executed forms of assignment sufficient to transfer title thereto to
the Company. In addition, as and when additional Pledged Shares are issued to
the Pledgor, the Pledgor shall deliver to the Company the certificates
representing such Pledged Shares together with duly executed forms of
assignment sufficient to transfer title thereto to the Company.
3. Voting Rights; Cash Dividends. Notwithstanding anything to the
contrary contained herein, during the term of this Executive Stock Pledge
Agreement until such time as there exists a default in the payment of principal
or interest on the Notes or any other default under the Notes, the Pledgor
shall be entitled to all voting rights with respect to the Pledged Shares and
shall be entitled to receive all cash dividends paid in respect of the Pledged
Shares. Upon the occurrence of and during the continuance of any such default,
the Company shall retain all such cash dividends payable on the Pledged Shares
as additional security hereunder.
4. Stock Dividends; Distributions, etc. If, while this Executive Stock
Pledge Agreement is in effect, the Pledgor becomes entitled to receive or
receives any securities or other
<PAGE> 2
property in addition to, in substitution of, or in exchange for any of the
Pledged Shares (whether as a distribution in connection with any
recapitalization, reorganization or reclassification, a stock dividend or
otherwise), the Pledgor shall accept such securities or other property on
behalf of and for the benefit of the Company as additional security for the
Pledgor's obligations under the Notes and shall promptly deliver such
additional security to the Company together with duly executed forms of
assignment, and such additional security shall be deemed to be part of the
Pledged Shares hereunder.
5. Default. If the Pledgor defaults in the payment of the principal or
interest under the Notes as it becomes due (whether upon demand, acceleration
or otherwise) or any other event of default under the Notes occurs (including
the bankruptcy or insolvency of the Pledgor), the Company may exercise any and
all the rights, powers and remedies of any owner of the Pledged Shares
(including the right to vote the shares and receive dividends and distributions
with respect to such shares) and shall have and may exercise without demand any
and all the rights and remedies granted to a secured party upon default under
the Uniform Commercial Code of the State of Illinois or otherwise available to
the Company under applicable law. Without limiting the foregoing, the Company
is authorized to sell, assign and deliver at its discretion, from time to time,
all or any part of the Pledged Shares at any private sale or public auction, on
not less than ten days written notice to the Pledgor, at such price or prices
and upon such terms as the Company may deem advisable. The Pledgor shall have
no right to redeem the Pledged Shares after any such sale or assignment. At
any such sale or auction, the Company may bid for, and become the purchaser of,
the whole or any part of the Pledged Shares offered for sale. In case of any
such sale, after deducting the costs, attorneys' fees and other expenses of
sale and delivery, the remaining proceeds of such sale shall be applied to the
principal of and accrued interest on the Notes; provided, however, that after
payment in full of the indebtedness evidenced by the Notes, the balance of the
proceeds of sale then remaining shall be paid to the Pledgor and the Pledgor
shall be entitled to the return of any of the Pledged Shares remaining in the
hands of the Company. The Pledgor shall be liable for any deficiency if the
remaining proceeds are insufficient to pay the indebtedness under the Notes in
full, including the fees of any attorneys employed by the Company to collect
such deficiency.
6. Costs and Attorneys' Fees. All costs and expenses, including
reasonable attorneys' fees, incurred in exercising any right, power or remedy
conferred by this Executive Stock Pledge Agreement or in the enforcement
thereof, shall become part of the indebtedness secured hereunder and shall be
paid by the Pledgor or repaid from the proceeds of the sale of the Pledged
Shares hereunder.
7. Payment of Indebtedness and Release of Pledged Shares. Upon payment in
full of the indebtedness evidenced by the Notes, the Company shall surrender
the Pledged Shares to the Pledgor together with all forms of assignment.
8. Further Assurances. The Pledgor agrees that at any time and from time
to time upon the written request of the Company, the Pledgor will execute and
deliver such
- 2 -
<PAGE> 3
further documents and do such further acts and things as the Company may
reasonably request in order to effect the purposes of this Executive Stock
Pledge Agreement.
9. Severability. Any provision of this Executive Stock Pledge Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
10. No Waiver; Cumulative Remedies. The Company shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Company, and then only to the extent therein set forth. A waiver by the
Company of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company would otherwise
have on any future occasion. No failure to exercise nor any delay in
exercising on the part of the Company, any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided are
cumulative and may be exercised singly or concurrently, and are not exclusive
of any rights or remedies provided by law.
11. Waivers, Amendments; Applicable Law. None of the terms or provisions
of this Executive Stock Pledge Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by the parties
hereto. This Agreement and all obligations of the Pledgor hereunder shall
together with the rights and remedies of the Company hereunder, inure to the
benefit of the Company and its successors and assigns. This Executive Stock
Pledge Agreement shall be governed by, and be construed and interpreted in
accordance with, the laws of the State of Illinois.
* * * * *
- 3 -
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this Executive Stock
Pledge Agreement on the date first written above.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin P. Rodgers
--------------------------------
Its: President
--------------------------------
/s/ Paul R. Ingersoll
--------------------------------------
PAUL INGERSOLL
- 4 -
<PAGE> 1
Exhibit 10.10
EXECUTIVE STOCK PLEDGE AGREEMENT
THIS AGREEMENT is made as of December 31, 1996, by and between National
Equipment Services, Inc., a Delaware corporation (the "Company"), and Dennis
O'Connor (the "Executive").
WHEREAS, the Company and the Pledgor are parties to an Senior Management
Agreement, dated as of the date hereof, pursuant to which the Pledgor has
agreed to purchase, in the aggregate, 2,000 shares of the Company's Class B
Common Stock, par value $.01 per share (collectively, the "Pledged Shares"),
for an aggregate purchase price of $20,000.00.
WHEREAS, the Company has allowed the Pledgor to purchase the Pledged
Shares by delivery to the Company of promissory notes (the "Notes") in the
aggregate principal amount of $20,000.00; and
WHEREAS, this Executive Stock Pledge Agreement provides the terms and
conditions upon which the Notes are secured by a pledge to the Company of the
Pledged Shares.
NOW, THEREFORE, the Pledgor and the Company hereby agree as follows:
1. Pledge. The Pledgor hereby pledges to the Company, and grants to the
Company a security interest in, the Pledged Shares as security for the prompt
and complete payment when due of the unpaid principal of and interest on the
Notes.
2. Delivery of Pledged Shares. Upon the execution of this Executive Stock
Pledge Agreement, the Pledgor shall deliver to the Company the certificates
representing the Pledged Shares theretofore issued to the Pledgor, together
with duly executed forms of assignment sufficient to transfer title thereto to
the Company. In addition, as and when additional Pledged Shares are issued to
the Pledgor, the Pledgor shall deliver to the Company the certificates
representing such Pledged Shares together with duly executed forms of
assignment sufficient to transfer title thereto to the Company.
3. Voting Rights; Cash Dividends. Notwithstanding anything to the
contrary contained herein, during the term of this Executive Stock Pledge
Agreement until such time as there exists a default in the payment of principal
or interest on the Notes or any other default under the Notes, the Pledgor
shall be entitled to all voting rights with respect to the Pledged Shares and
shall be entitled to receive all cash dividends paid in respect of the Pledged
Shares. Upon the occurrence of and during the continuance of any such default,
the Company shall retain all such cash dividends payable on the Pledged Shares
as additional security hereunder.
<PAGE> 2
4. Stock Dividends; Distributions, etc. If, while this Executive Stock
Pledge Agreement is in effect, the Pledgor becomes entitled to receive or
receives any securities or other property in addition to, in substitution of,
or in exchange for any of the Pledged Shares (whether as a distribution in
connection with any recapitalization, reorganization or reclassification, a
stock dividend or otherwise), the Pledgor shall accept such securities or other
property on behalf of and for the benefit of the Company as additional security
for the Pledgor's obligations under the Notes and shall promptly deliver such
additional security to the Company together with duly executed forms of
assignment, and such additional security shall be deemed to be part of the
Pledged Shares hereunder.
5. Default. If the Pledgor defaults in the payment of the principal or
interest under the Notes as it becomes due (whether upon demand, acceleration
or otherwise) or any other event of default under the Notes occurs (including
the bankruptcy or insolvency of the Pledgor), the Company may exercise any and
all the rights, powers and remedies of any owner of the Pledged Shares
(including the right to vote the shares and receive dividends and distributions
with respect to such shares) and shall have and may exercise without demand any
and all the rights and remedies granted to a secured party upon default under
the Uniform Commercial Code of the State of Illinois or otherwise available to
the Company under applicable law. Without limiting the foregoing, the Company
is authorized to sell, assign and deliver at its discretion, from time to time,
all or any part of the Pledged Shares at any private sale or public auction, on
not less than ten days written notice to the Pledgor, at such price or prices
and upon such terms as the Company may deem advisable. The Pledgor shall have
no right to redeem the Pledged Shares after any such sale or assignment. At
any such sale or auction, the Company may bid for, and become the purchaser of,
the whole or any part of the Pledged Shares offered for sale. In case of any
such sale, after deducting the costs, attorneys' fees and other expenses of
sale and delivery, the remaining proceeds of such sale shall be applied to the
principal of and accrued interest on the Notes; provided, however, that after
payment in full of the indebtedness evidenced by the Notes, the balance of the
proceeds of sale then remaining shall be paid to the Pledgor and the Pledgor
shall be entitled to the return of any of the Pledged Shares remaining in the
hands of the Company. The Pledgor shall be liable for any deficiency if the
remaining proceeds are insufficient to pay the indebtedness under the Notes in
full, including the fees of any attorneys employed by the Company to collect
such deficiency.
6. Costs and Attorneys' Fees. All costs and expenses, including
reasonable attorneys' fees, incurred in exercising any right, power or remedy
conferred by this Executive Stock Pledge Agreement or in the enforcement
thereof, shall become part of the indebtedness secured hereunder and shall be
paid by the Pledgor or repaid from the proceeds of the sale of the Pledged
Shares hereunder.
7. Payment of Indebtedness and Release of Pledged Shares. Upon payment in
full of the indebtedness evidenced by the Notes, the Company shall surrender
the Pledged Shares to the Pledgor together with all forms of assignment.
- 2 -
<PAGE> 3
8. Further Assurances. The Pledgor agrees that at any time and from time
to time upon the written request of the Company, the Pledgor will execute and
deliver such further documents and do such further acts and things as the
Company may reasonably request in order to effect the purposes of this
Executive Stock Pledge Agreement.
9. Severability. Any provision of this Executive Stock Pledge Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
10. No Waiver; Cumulative Remedies. The Company shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Company, and then only to the extent therein set forth. A waiver by the
Company of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company would otherwise
have on any future occasion. No failure to exercise nor any delay in
exercising on the part of the Company, any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided are
cumulative and may be exercised singly or concurrently, and are not exclusive
of any rights or remedies provided by law.
11. Waivers, Amendments; Applicable Law. None of the terms or provisions
of this Executive Stock Pledge Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by the parties
hereto. This Agreement and all obligations of the Pledgor hereunder shall
together with the rights and remedies of the Company hereunder, inure to the
benefit of the Company and its successors and assigns. This Executive Stock
Pledge Agreement shall be governed by, and be construed and interpreted in
accordance with, the laws of the State of Illinois.
* * * * *
- 3 -
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this Executive Stock
Pledge Agreement on the date first written above.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
------------------------------------
Its: President
/s/ Dennis O'Connor
------------------------------------------
Dennis O'Connor
- 4 -
<PAGE> 1
Exhibit 10.11
PROMISSORY NOTE
$63,232.00 January 6, 1997
For value received, Kevin Rodgers (the "Executive") promises to pay to the
order of National Equipment Services, Inc., a Delaware corporation (the
"Company") or its successors or assigns, at such place as designated in writing
by the holder hereof, the aggregate principal sum of $63,232.00. This Note was
issued pursuant to and is subject to the terms of the Senior Management
Agreement, dated as of June 4, 1996, by and between the Company and the
Executive (the "Senior Management Agreement").
The amounts due under this Note are secured by a pledge of shares of the
Company's Class B Common Stock, par value $.01 per share, and shares of the
Company's Common Stock, par value $.01 per share (the "Pledged Shares")
purchased by the Executive under the Senior Management Agreement.
Interest will accrue on the outstanding principal amount of this Note at a
fixed rate equal to the applicable federal rate as set forth in Section 1274(d)
of the Internal Revenue Code of 1986, as amended, as in effect on the date
hereof with respect to obligations of the type described in this Note, and
shall be payable in full at such time as the final principal amount of this
Note becomes due and payable.
The outstanding principal amount of this Note shall be due and payable on
January 6, 2007, except that, if earlier, the full principal amount of the Note
shall be due and payable upon the first to occur of (i) termination of the
Executive's employment with the Company or any of its subsidiaries for any
reason, and (ii) a Sale of the Company (as defined in the Senior Management
Agreement).
This Note may be prepaid by the Executive in part or in full at any time
and from time to time. In addition, this Note shall be prepaid to the extent
that the Executive receives any proceeds from the sale or other disposition of
any Pledged Shares. Payments from such proceeds shall be applied first to the
then outstanding principal portion of this Note and then to accrued and unpaid
interest thereon.
If the Executive fails to make any payment of principal or interest
hereunder as it becomes due or if the Executive becomes subject to any
applicable bankruptcy laws, all principal and interest hereunder shall
immediately become due and payable and the Company may exercise any and all of
its rights, powers and remedies at law or in equity. In the event the
Executive fails to pay any amounts due hereunder (whether by acceleration or
otherwise), the Executive shall pay to
<PAGE> 2
the holder hereof, in addition to such amounts due, all costs of collection,
including reasonable attorneys fees.
The Executive, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time and that the holder hereof may
accept security for this Note or release security for this Note, all without in
any way affecting the liability of the Executive hereunder.
/s/ Kevin Rodgers
--------------------------------------
KEVIN RODGERS
- 2 -
<PAGE> 1
Exhibit 10.12
PROMISSORY NOTE
$9,880.00 January 6, 1997
For value received, Paul Ingersoll (the "Executive") promises to pay to
the order of National Equipment Services, Inc., a Delaware corporation (the
"Company") or its successors or assigns, at such place as designated in writing
by the holder hereof, the aggregate principal sum of $9,880.00. This Note was
issued pursuant to and is subject to the terms of the Senior Management
Agreement, dated as of June 4, 1996, by and between the Company and the
Executive (the "Senior Management Agreement").
The amounts due under this Note are secured by a pledge of shares of the
Company's Class B Common Stock, par value $.01 per share, and shares of the
Company's Common Stock, par value $.01 per share (the "Pledged Shares")
purchased by the Executive under the Senior Management Agreement.
Interest will accrue on the outstanding principal amount of this Note at a
fixed rate equal to the applicable federal rate as set forth in Section 1274(d)
of the Internal Revenue Code of 1986, as amended, as in effect on the date
hereof with respect to obligations of the type described in this Note, and
shall be payable in full at such time as the final principal amount of this
Note becomes due and payable.
The outstanding principal amount of this Note shall be due and payable on
January 6, 2007, except that, if earlier, the full principal amount of the Note
shall be due and payable upon the first to occur of (i) termination of the
Executive's employment with the Company or any of its subsidiaries for any
reason, and (ii) a Sale of the Company (as defined in the Senior Management
Agreement).
This Note may be prepaid by the Executive in part or in full at any time
and from time to time. In addition, this Note shall be prepaid to the extent
that the Executive receives any proceeds from the sale or other disposition of
any Pledged Shares. Payments from such proceeds shall be applied first to the
then outstanding principal portion of this Note and then to accrued and unpaid
interest thereon.
If the Executive fails to make any payment of principal or interest
hereunder as it becomes due or if the Executive becomes subject to any
applicable bankruptcy laws, all principal and interest hereunder shall
immediately become due and payable and the Company may exercise any and all of
its rights, powers and remedies at law or in equity. In the event the
Executive fails to
<PAGE> 2
pay any amounts due hereunder (whether by acceleration or otherwise), the
Executive shall pay to the holder hereof, in addition to such amounts due, all
costs of collection, including reasonable attorneys fees.
The Executive, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time and that the holder hereof may
accept security for this Note or release security for this Note, all without in
any way affecting the liability of the Executive hereunder.
/s/ Paul Ingersoll
--------------------------------------
Paul Ingersoll
- 2 -
<PAGE> 1
Exhibit 10.13
PROMISSORY NOTE
$19,760.00 January 6, 1997
For value received, Dennis O'Connor (the "Executive") promises to pay to
the order of National Equipment Services, Inc., a Delaware corporation (the
"Company") or its successors or assigns, at such place as designated in writing
by the holder hereof, the aggregate principal sum of $19,760.00. This Note was
issued pursuant to and is subject to the terms of the Senior Management
Agreement, dated as of December 31, 1996, by and between the Company and the
Executive (the "Senior Management Agreement").
The amounts due under this Note are secured by a pledge of shares of the
Company's Class B Common Stock, par value $.01 per share, and shares of the
Company's Common Stock, par value $.01 per share (the "Pledged Shares")
purchased by the Executive under the Senior Management Agreement.
Interest will accrue on the outstanding principal amount of this Note at a
fixed rate equal to the applicable federal rate as set forth in Section 1274(d)
of the Internal Revenue Code of 1986, as amended, as in effect on the date
hereof with respect to obligations of the type described in this Note, and
shall be payable in full at such time as the final principal amount of this
Note becomes due and payable.
The outstanding principal amount of this Note shall be due and payable on
January 6, 2007, except that, if earlier, the full principal amount of the Note
shall be due and payable upon the first to occur of (i) termination of the
Executive's employment with the Company or any of its subsidiaries for any
reason, and (ii) a Sale of the Company (as defined in the Senior Management
Agreement).
This Note may be prepaid by the Executive in part or in full at any time
and from time to time. In addition, this Note shall be prepaid to the extent
that the Executive receives any proceeds from the sale or other disposition of
any Pledged Shares. Payments from such proceeds shall be applied first to the
then outstanding principal portion of this Note and then to accrued and unpaid
interest thereon.
If the Executive fails to make any payment of principal or interest
hereunder as it becomes due or if the Executive becomes subject to any
applicable bankruptcy laws, all principal and interest hereunder shall
immediately become due and payable and the Company may exercise any and all of
its rights, powers and remedies at law or in equity. In the event the
Executive fails to pay any amounts due hereunder (whether by acceleration or
otherwise), the Executive shall pay to
<PAGE> 2
the holder hereof, in addition to such amounts due, all costs of collection,
including reasonable attorneys fees.
The Executive, or his successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
nonpayment of this Note, and expressly agrees that this Note, or any payment
hereunder, may be extended from time to time and that the holder hereof may
accept security for this Note or release security for this Note, all without in
any way affecting the liability of the Executive hereunder.
/s/ Dennis O'Connor
--------------------------------------
Dennis O'Connor
- 2 -
<PAGE> 1
Exhibit 10.14
SECURITIES TRANSFER AGREEMENT
THIS AGREEMENT (this "Agreement") is made as of December 31, 1996 by and
among National Equipment Services, Inc., a Delaware corporation (the
"Company"), Golder, Thoma, Cressey, Rauner Fund IV, L.P., a Delaware limited
partnership ("Fund IV"), Golder, Thoma, Cressey, Rauner Fund V, L.P., a
Delaware limited partnership ("Fund V"), Kevin Rodgers ("Rodgers"), Paul
Ingersoll ("Ingersoll") and Dennis O'Connor ("O'Connor").
WHEREAS, Fund IV is a party to, or has certain rights pursuant to, (i) the
Purchase Agreement (the "Purchase Agreement"), dated as of June 4, 1996, by and
between the Company and Fund IV, as amended, (ii) the Stockholders Agreement
(the "Stockholders Agreement"), dated as of June 4, 1996, by and among the
Company, Fund IV, Rodgers and Ingersoll, as amended, (iii) the Registration
Agreement, dated as of June 4, 1996, by and among the Company, Fund IV, Rodgers
and Ingersoll, as amended, (iv) the Senior Management Agreement, dated as of
June 4, 1996, by and between the Company and Rodgers, as amended, and (v) the
Senior Management Agreement, dated as of June 4, 1996, by and between the
Company and Ingersoll, as amended (collectively, the "NES Agreements").
WHEREAS, Fund IV owns 30,000 shares (the "Shares") of the Company's Class
B Common Stock, par value $.01 per share (the "Class B Common Stock").
WHEREAS, Fund IV desires to sell, and Fund V desires to purchase, the
Shares.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Purchase and Sale of the Shares. Upon the terms and subject to the
conditions set forth herein, Fund IV will sell to Fund V, and Fund V shall
purchase from Fund IV, all of the Shares at a price of $10.00 per share.
2. The Closing. The closing of the purchase and sale of the Shares
hereunder (the "Closing") shall take place as of the date hereof at the offices
of Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois 60601. At the
Closing, Fund IV shall deliver to Fund V stock certificates evidencing the
Shares to be purchased by Fund V, upon payment by Fund V of $300,000.00 in
cash.
<PAGE> 2
3. Representations and Warranties of Fund IV. As a material inducement to
Fund V to enter into this Agreement and purchase the Shares, Fund IV hereby
represents and warrants that:
(a) Title. Fund IV owns beneficially and of record all of the Shares to
be transferred, free and clear of any liens, security interests or other
encumbrances, other than pursuant to the NES Agreements.
(b) Enforceability. Fund IV has duly executed and delivered this
Agreement and this Agreement constitutes a valid and binding obligation of Fund
IV, enforceable in accordance with its terms.
4. Representations and Warranties of Fund V. As a material inducement to
Fund IV to enter into this Agreement and sell the Shares, Fund V hereby
represents and warrants that:
(a) Securities Act. The Shares to be acquired by Fund V pursuant to this
Agreement will be acquired for the account of Fund V and not with a view to, or
intention of, distribution thereof in violation of the Securities Act of 1933,
as amended (the "Securities Act"), or any applicable state securities laws, and
the Shares will not be disposed of in contravention of the Securities Act or
any applicable state securities laws.
(b) Enforceability. Fund V has duly executed and delivered this Agreement
and this Agreement constitutes a valid and binding obligation of Fund V,
enforceable in accordance with its terms.
5. Assignment of Rights and Assumption of Obligations. Fund IV hereby
transfers and assigns, and Fund V hereby accepts the transfer and assignment
of, all of the rights and obligations of Fund IV pursuant to the NES
Agreements. Fund V hereby agrees to be subject to all of the rights and
obligations and to be bound by all of the terms and conditions set forth in the
NES Agreements to the same extent as if Fund V were originally a party thereto.
6. Consents and Waivers. The Company, Rodgers, Ingersoll and O'Connor
hereby (i) consent to the transactions contemplated herein, (ii) agree to
permit the rights granted to Fund IV pursuant to the NES Agreements to be
transferred to Fund V, subject to the performance by Fund V of the obligations
applicable to purchasers of securities thereunder and (iii) waive any and all
requirements and breaches arising under any of the NES Agreements and any
agreements mentioned therein resulting from the consummation of the
transactions contemplated herein (including, without limitation, the
requirements set forth in Section 4(ii) of the Purchase Agreement and Section 7
of the Stockholders Agreement).
7. Miscellaneous.
(a) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not.
(b) Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(c) Severability. 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
<PAGE> 3
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or any other
jurisdiction, but this Agreement shall be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
(d) Entire Agreement. Except as otherwise expressly set forth herein,
this document embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.
(e) Counterparts. This Agreement may be executed in separate counterparts
each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
(f) Governing Law. The corporate law of the State of Delaware will govern
all questions concerning the relative rights of the Company and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in
accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
(g) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed this Securities
Transfer Agreement on the day and year first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
--------------------------------------------
Its: President
GOLDER, THOMA, CRESSEY, RAUNER FUND IV, L.P.
By: GTCR IV, L.P.
--------------------------------------------
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
--------------------------------------------
Its: General Partner
By: /s/ Carl D. Thoma
--------------------------------------------
Its: Principal
GOLDER, THOMA, CRESSEY, RAUNER FUND V, L.P.
By: GTCR V, L.P.
--------------------------------------------
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
--------------------------------------------
Its: General Partner
By: /s/ Carl D. Thoma
--------------------------------------------
Its: Principal
/s/ Kevin Rodgers
--------------------------------------------
KEVIN RODGERS
/s/ Paul R. Ingersoll
--------------------------------------------
PAUL INGERSOLL
/s/ Dennis O'Connor
--------------------------------------------
DENNIS O'CONNOR
<PAGE> 1
Exhibit 10.15
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of January 6, 1997 (this
"Agreement"), is made by and among National Equipment Services, Inc., a
Delaware corporation (the "Company"), Industrial Crane Maintenance Systems,
Inc., a Texas corporation (the "Purchaser"), and Golder, Thoma, Cressey, Rauner
Fund V, L.P., a Delaware limited partnership ("Fund V"), Kevin Rodgers
("Rodgers"), Dennis O'Connor ("O'Connor") and Paul Ingersoll ("Ingersoll," and
together with Fund V, Rodgers and O'Connor referred to herein as the "Existing
Stockholders"). Except as otherwise indicated, capitalized terms used herein
are defined in Section 6 hereof.
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of January 6,
1997 (the "Acquisition Agreement"), by and among the Company, the Purchaser
and others, the Company will purchase certain of the assets and assume certain
of the liabilities of the Purchaser (the "Acquisition").
WHEREAS, the purchase and sale of stock contemplated by this Agreement
will be consummated contemporaneously with the consummation of the Acquisition
pursuant to the terms of the Acquisition Agreement.
The parties hereto agree as follows:
1. Authorization of Stock. The Company will authorize the issuance and
sale to the Purchaser of 97 shares of the Company's Class A Common Stock, par
value $.01 per share (the "Class A Common Stock") at a purchase price of
$1000.00 per share, and 300 shares of the Company's Class B Common Stock, par
value $.01 per share (the "Class B Common Stock") at a purchase price of $10.00
per share, each having the rights described in the Company's Certificate of
Incorporation (as amended, the "Certificate of Incorporation"). The shares of
Class A Common Stock and Class B Common Stock being purchased by the Purchaser
hereunder are collectively referred to herein as the "Shares."
2. Purchase and Sale of Shares.
(a) Purchase and Sale. The Company will sell to the Purchaser, and, on
the terms and subject to the conditions set forth herein, the Purchaser will
purchase from the Company, the Shares, at the purchase price per Share as set
forth in Section 1 above.
(b) The Closing. The Closing of the sale and purchase of the Shares (the
"Closing") will take place at the offices of Kirkland & Ellis, 200 East
Randolph Drive, Chicago, Illinois 60601. At the Closing, the Company will
deliver to the Purchaser certificates evidencing the number of Shares to be
purchased by the Purchaser, issued in the name of the Purchaser, upon
<PAGE> 2
payment of the purchase price therefor by wire transfer of immediately
available funds to the bank account designated by the Company.
3. Restrictions on Transfers.
(a) Restrictions. Subject to the Stockholders Agreement, Restricted
Securities are transferable pursuant to (i) public offerings registered under
the Securities Act, (ii) Rule 144 or Rule 144A of the Securities and Exchange
Commission (or any similar rule then in force) if such rule is available, and
(iii) subject to the conditions specified in Section 3(b) below, any other
legally available means of transfer pursuant to the Securities Act.
(b) Procedure for Transfer. In connection with the transfer of any
Restricted Securities (other than a transfer referred to in Section 3(a)(i)
above), the holder thereof will deliver written notice to the Company
describing in reasonable detail the transfer or proposed transfer, together
with an opinion of counsel (unless waived by the Company) which (to the
Company's reasonable satisfaction) is knowledgeable in securities law matters
to the effect that such transfer of Restricted Securities may be effected
without registration of such Restricted Securities under the Securities Act.
In addition, if the holder of such Restricted Securities delivers to the
Company an opinion of such counsel that no subsequent transfer of such
Restricted Securities will require registration under the Securities Act, the
Company will promptly upon such contemplated transfer deliver new certificates
for such Restricted Securities which do not bear the Securities Act Legend set
forth in Section 5(a) below. If the Company is not required to deliver new
certificates for such Restricted Securities not bearing such legend, the holder
thereof will not transfer the same until the prospective transferee has
confirmed to the Company in writing its agreement to be bound by the conditions
contained in this Section and Section 5(a).
(c) Transferees. Upon request of the Purchaser, the Company shall
promptly supply to the Purchaser or its prospective transferees all information
regarding the Company required to be delivered in connection with a transfer
pursuant to Rule 144A of the Securities and Exchange Commission.
4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser that as of the Closing:
(a) Organization, etc. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Company has all requisite corporate power and authority to carry on its
businesses as now conducted and presently proposed to be conducted and to carry
out the transactions contemplated by this Agreement.
- 2 -
<PAGE> 3
(b) Capital Stock and Related Matters.
(i) As of the Closing hereunder, (a) the authorized capital stock of
the Company will consist of 25,000 shares of Class A Common Stock and
150,000 shares of Class B Common Stock, and (b) the Company will have
issued, and there will be outstanding 1,647 shares of Class A Common Stock
and 86,300 shares of Class B Common Stock.
(ii) As of the Closing hereunder, the Company will not have
outstanding, nor will it have entered into any contract or agreement
(other than this Agreement) to issue, any stock or securities convertible
or exchangeable for any shares of its capital stock, nor will it have
outstanding, nor will it have entered into any contract or agreement
(other than this Agreement) to issue, any rights or options to subscribe
for or to purchase any capital stock or any stock or securities
convertible into or exchangeable or exercisable for any capital stock,
except (i) pursuant to the Senior Management Agreements and (ii) pursuant
to the Purchase Agreement. As of the Closing, all of the outstanding
shares of the Company's capital stock will have been duly authorized, and
upon payment therefor will be validly issued and will be fully paid and
nonassessable.
(c) Authorization; No Breach. The execution, delivery and performance of
this Agreement has been duly authorized by the Company. This Agreement
constitutes a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to the availability of equitable remedies
and to the laws of bankruptcy and other similar laws affecting creditors'
rights generally. The execution and delivery by the Company of this Agreement
and the offering, sale and issuance of the Shares hereunder, do not and will
not (i) conflict with or result in a breach of the terms, conditions or
provisions of, (ii) constitute a default under, (iii) result in the creation of
any lien, security interest, charge or encumbrance upon the Company's capital
stock or assets pursuant to, (iv) give any third party the right to accelerate
any obligation under, (v) result in a violation of, or (vi) require any
authorization, consent, approval, exemption or other action by or notice to any
court or administrative or governmental body (other than in connection with
certain state and federal securities laws) pursuant to, the Certificate of
Incorporation or the Company's bylaws, or any law, statute, rule, regulation,
instrument, order, judgment or decree to which the Company is subject or any
agreement or instrument to which the Company is a party.
5. Purchaser's Representations and Warranties
(a) Purchaser's Investment Representations. The Purchaser hereby
represents that it is acquiring the Restricted Securities purchased hereunder
or acquired pursuant hereto for its own account with the present intention of
holding such securities for investment purposes and that it has no intention of
selling such securities in a public distribution in violation of the federal
securities laws or any applicable state securities laws; provided that nothing
contained herein will prevent the Purchaser and the subsequent holders of
Restricted Securities from transferring such securities in compliance with the
provisions of Section 3 hereof and in compliance with the provisions of the
Stockholders Agreement. Each certificate for such Restricted Securities will
be imprinted with a legend in substantially the following form (the "Securities
Act Legend"):
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<PAGE> 4
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
_______________, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THE TRANSFER OF SUCH SECURITIES IS SUBJECT
TO THE CONDITIONS SET FORTH AND OTHERWISE REFERENCED IN THE STOCK PURCHASE
AGREEMENT, DATED AS OF JANUARY 6, 1997, BY AND AMONG THE ISSUER (THE
"COMPANY") AND CERTAIN INVESTORS, AND THE COMPANY RESERVES THE RIGHT TO
REFUSE TO TRANSFER SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED WITH RESPECT TO SUCH TRANSFER. UPON WRITTEN REQUEST, A COPY OF
SUCH CONDITIONS WILL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF
WITHOUT CHARGE."
Whenever any Shares cease to be Restricted Securities and are not otherwise
restricted securities, the holder thereof will be entitled to receive from the
Company, without expense, upon surrender to the Company of the certificate
representing such Shares, a new certificate representing such Shares of like
tenor but not bearing a legend of the character set forth above.
(b) Other Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to and covenants and agrees with, the Company
that:
(i) the Purchaser has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the securities
purchased hereunder and has had full access to such other information
concerning the Company as the Purchaser may have requested and that in
making its decision to invest in the securities being purchased hereunder
it is not in any way relying on the fact that any other Person has decided
to invest in the securities;
(ii) the Purchaser (a) is an "accredited investor" as defined in
Rule 501(a) under the Securities Act or (b) by reason of its business and
financial experience, and the business and financial experience of those
retained by it to advise it with respect to its investment in the
securities being purchased hereunder, it, together with such advisors, has
such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of its
prospective investment in such securities, is able to bear the economic
risk of such investment and, at the present time, is able to afford a
complete loss of such investment; and
(iii) (A) the Purchaser has the requisite power and authority to
purchase the securities to be purchased by it hereunder and has authorized
the purchase of such securities and (B) the purchase of the securities to
be purchased by it hereunder does not violate its charter, by-laws or
other organizational documents.
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<PAGE> 5
6. Definitions.
"Fair Market Value" of each Share means the value agreed upon by the
holder thereof and the Board; provided that if the holder thereof and the Board
are unable to agree upon such value, then the holder thereof and the Company
will share the cost, on an equal basis, of a mutually acceptable business
appraiser whose determination will be binding.
"Person" means an individual, a partnership, a limited liability company,
a joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"Public Offering" means the sale in an underwritten public offering
registered under the Securities Act of 1933, as amended from time to time, of
shares of the Company's capital stock approved by the Board.
"Purchase Agreement" means that certain Purchase Agreement, dated as of
June 4, 1996, between the Company and Golder, Thoma, Cressey, Rauner Fund IV,
L.P., an Illinois limited partnership, as the same may be amended or amended
and restated from time to time.
"Registration Agreement" means that certain Registration Agreement, dated
as of June 4, 1996, among the Company and others, as the same may be amended or
amended and restated from time to time.
"Restricted Securities" means the Shares issued hereunder and any
securities issued with respect to the Shares by way of a dividend or split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. Restricted Securities will continue as
such in the hands of any transferee; provided that, as to any particular
Restricted Securities, such securities will cease to be Restricted Securities
when they have (a) been effectively registered under the Securities Act and
disposed of in accordance with the registration statement covering them, (b)
become eligible for sale pursuant to Rule 144 or Rule 144A of the Securities
and Exchange Commission (or any similar rule then in force) and disposed of in
accordance therewith or (c) been otherwise transferred and new securities for
them not bearing the Securities Act Legend set forth in Section 5(a) have been
delivered by the Company in accordance with Section 3(b). Whenever any
particular securities cease to be Restricted Securities, the holder thereof
will be entitled to receive from the Company, without expense, new securities
of like tenor not bearing a Securities Act Legend of the character set forth in
Section 5(a).
"Rule 144" means Rule 144 promulgated by the Securities and Exchange
Commission under the Securities Act as such rule may be amended from time to
time, or any similar rule then in force.
"Rule 144A" means Rule 144A promulgated by the Securities and Exchange
Commission under the Securities Act as such rule may be amended from time to
time, or any similar rule then in force.
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<PAGE> 6
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
agency succeeding to the functions thereof.
"Senior Management Agreements" means those certain Senior Management
Agreements, whether in existence as of the date hereof or entered into at a
later date, between the Company and each of the executive officers of the
Company who own any capital stock of the Company.
"Stockholders Agreement" means that certain Stockholders Agreement, dated
as of June 4, 1996, among the Company and others, as the same may be amended or
amended and restated from time to time.
7. Miscellaneous.
(a) Joinder. The Company, the Purchaser and the Existing Stockholders
hereby agree that the Stockholders Agreement and the Registration Agreement are
hereby amended by adding the Purchaser as a party thereto and as a Stockholder
under the Stockholders Agreement. The Purchaser hereby agrees to be subject to
all of the rights and obligations and to be bound by all of the terms and
conditions set forth in the Stockholders Agreement and the Registration
Agreement to the same extent as if the Purchaser were originally a party
thereto. The Company and the Existing Stockholders hereby waive any and all
requirements and/or breaches arising under the Stockholders Agreement, the
Registration Agreement and any agreements mentioned therein resulting from the
consummation of the transactions contemplated herein.
(b) Repurchase of Shares.
(i) In the event James G. Kowalik, the holder of 50% of the issued
and outstanding capital stock of the Purchaser, ceases to be employed by
the Company or its subsidiaries for any reason (the "Termination"), the
Shares (whether held by the Purchaser or one or more of the Purchaser's
transferees, other than the Company, Fund V or an affiliate of the Company
or Fund V) will be subject to repurchase by the Company and Fund V
pursuant to the terms and conditions set forth in this Section 7(b) (the
"Repurchase Option").
(ii) In the event of Termination, the purchase price for each Share
will be the Fair Market Value for such share.
(iii) The Company's board of directors (the "Board") may elect to
purchase all or any portion of the Shares by delivering written notice
(the "Repurchase Notice") to the holder or holders of the Shares within 90
days after the Termination. The Repurchase Notice
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<PAGE> 7
will set forth the number of Shares to be acquired from each holder, the
aggregate consideration to be paid for such shares and the time and place
for the closing of the transaction.
(iv) If for any reason the Company does not elect to purchase all of
the Shares pursuant to the Repurchase Option, Fund V shall be entitled to
exercise the Repurchase Option for the Shares the Company has not elected
to purchase (the "Available Shares"). As soon as practicable after the
Company has determined that there will be Available Shares, but in any
event within 45 days after the Termination, the Company shall give written
notice (the "Option Notice") to Fund V setting forth the number of
Available Shares and the purchase price for the Available Shares. Fund V
may elect to purchase any or all of the Available Shares by giving written
notice to the Company within one month after the Option Notice has been
given by the Company. As soon as practicable, and in any event within ten
days after the expiration of the one-month period set forth above, the
Company shall notify each holder of Shares as to the number of Shares
being purchased from such holder by Fund V (the "Supplemental Repurchase
Notice"). At the time the Company delivers the Supplemental Repurchase
Notice to the holder(s) of Shares, the Company shall also deliver written
notice to Fund V setting forth the number of shares Fund V is entitled to
purchase, the aggregate purchase price and the time and place of the
closing of the transaction.
(v) The closing of the purchase of the Shares pursuant to the
Repurchase Option shall take place on the date designated by the Company
in the Repurchase Notice or Supplemental Repurchase Notice, which date
shall not be more than one month nor less than five days after the
delivery of the later of either such notice to be delivered. The Company
and/or Fund V will pay for the Shares to be purchased pursuant to the
Repurchase Option by delivery of a check or wire transfer of funds in the
aggregate amount of the purchase price for such shares. In addition, the
Company may pay the purchase price for such shares by offsetting amounts
outstanding under any bona fide debts owed by the Purchaser to the
Company. The Company and Fund V will be entitled to receive
representations and warranties from the sellers as to their title to the
Shares being sold and to require all sellers' signatures be guaranteed.
(vi) The right of the Company and the Investor to repurchase Shares
pursuant to this Section 7(b) shall terminate upon the occurrence of a
Public Offering.
(c) Remedies. The holders of Shares acquired hereunder (directly or
indirectly) will have all of the rights and remedies set forth in this
Agreement, the Certificate of Incorporation, and all of the rights and remedies
which such holders have been granted at any time under any other agreement or
contract, and all of the rights and remedies which such holders have under any
law. Any Person having any rights under any provision of this Agreement will
be entitled to enforce such rights specifically, to recover damages by reason
of any breach of any provision of this Agreement, and to exercise all other
rights granted by law.
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<PAGE> 8
(d) Amendments and Waivers. Except as otherwise provided herein, no
modification, amendment or waiver of any provision hereof will be effective
against the Company or the Purchaser unless such modification, amendment or
waiver is approved in writing by each of the Company and the Purchaser. The
failure of any party to enforce any provision of this Agreement or under any
agreement contemplated hereby or under the Certificate of Incorporation or the
Company's bylaws will in no way be construed as a waiver of such provisions and
will not affect the right of such party thereafter to enforce each and every
provision of this Agreement, any agreement referred to herein, the Certificate
of Incorporation, or the Company's bylaws in accordance with their terms.
(e) Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by any party in connection
herewith will survive the execution and delivery of this Agreement, regardless
of any investigation made by the Company or the Purchaser or on any of their
behalves.
(f) Successors and Assigns.
(i) Except as otherwise expressly provided herein, all covenants and
agreements contained in this Agreement by or on behalf of any of the
parties hereto will bind and inure to the benefit of the respective
successors and assigns of such parties whether so expressed or not. In
addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Purchaser's benefit as the
purchaser or holder of Shares, as the case may be, are also for the
benefit of and enforceable by any subsequent holder of the Purchaser's
Shares.
(ii) If a sale, transfer, assignment or other disposition of any
Shares is made in accordance with the provisions of this Agreement to any
Person and such securities remain Restricted Securities immediately after
such disposition, such Person shall, at or prior to the time such
securities are acquired, execute a counterpart of this Agreement with such
modifications thereto as may be necessary to reflect such acquisition, and
such other documents as are necessary to confirm such Person's agreement
to become a party to, and to be bound by, all covenants, terms and
conditions of this Agreement, the Stockholders Agreement and the
Registration Agreement, each as theretofore amended.
(g) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable under any applicable law or rule in any jurisdiction,
such provision will be ineffective only to the extent of such invalidity,
illegality or unenforceability in such jurisdiction, without invalidating the
remainder of this Agreement in such jurisdiction or any provision hereof in any
other jurisdiction.
(h) Counterparts. This Agreement may be executed simultaneously in
separate counterparts, any one of which need not contain the signatures of more
than one party, but all such
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<PAGE> 9
counterparts taken together will constitute one and the same Agreement.
(i) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
(j) Governing Law. The corporate laws of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
securityholders. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in
accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
(k) Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
received by certified mail, return receipt requested, or sent by guaranteed
overnight courier service. Notices, demands and communications will be sent to
parties hereto at the addresses indicated below:
Notices to the Company:
National Equipment Services, Inc.
6100 Sears Tower
Chicago, Illinois 60606
Attention: Chief Executive Officer
With a copy to:
Kirkland and Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Sanford E. Perl
Notices to the Purchaser:
Industrial Crane Maintenance Systems, Inc.
c/o ES&L Service
12 Circle Way
Lake Jackson, Texas 77566
Attn: James G. Kowalik
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
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<PAGE> 10
* * * * *
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<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement on the day and year first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
--------------------------------
Its: President
--------------------------------
INDUSTRIAL CRANE MAINTENANCE SYSTEMS, INC.
By: /s/ Jerry M. Wolverton
--------------------------------
Its:
--------------------------------
GOLDER, THOMA, CRESSEY, RAUNER FUND V, L.P.
By: GTCR V, L.P.
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
Its: General Partner
By: Carl D. Thoma
--------------------------------
Its: Principal
/s/ Kevin Rodgers
--------------------------------
KEVIN RODGERS
/s/ Dennis O'Connor
--------------------------------
DENNIS O'CONNOR
/s/ Paul R. Ingersoll
--------------------------------
PAUL INGERSOLL
<PAGE> 1
Exhibit 10.17
LEASE
THIS LEASE (this "Lease") is made and entered into this 6th day of
January, 1997, by and between ES&L Service, a Texas general partnership
(hereinafter called "Landlord"), and NES Acquisition Corp., a Delaware
corporation (hereinafter called "Tenant").
W I T N E S S E T H:
Landlord, for and in consideration of the covenants and agreements
hereinafter set forth to be kept and performed by both parties, does hereby
demise and lease to Tenant (for the term hereinafter stipulated) the premises
(hereinafter called the "Demised Premises") commonly known as Rt. 4, 1100 S.
Brooks, Brazoria, Texas 77422, consisting of an area approximately 45,300
square feet.
Landlord hereby leases the Demised Premises to Tenant and hereby grants to
Tenant its guests, invitees and licensees all easements, rights and privileges
appurtenant thereto, including the right to use adjoining parking areas,
driveways, roads, alleys and means of ingress and egress.
1. TERM; RENEWAL AND USE.
A. The original term ("Term") of this Lease shall begin on January 6, 1997
(the "Commencement Date") and shall expire on January 5, 1999. Tenant may
renew the Term of the Lease for an additional three (3) year period by
providing Landlord with notice of such renewal 90 days prior to the
expiration of the Term. The "Term" shall include the original Term and
any renewals thereof.
B. The Demised Premises may be used and occupied for any lawful purpose.
2. RENTAL.
A. Tenant does hereby covenant and agree to pay to Landlord, for the use
and occupancy of the Demised Premises, at the times and in the manner
hereinafter provided, $5,000 a month during the original Term and any renewal
Term ("Base Rent"). Such Base Rent shall be paid in advance, without notice or
invoice from Landlord, on the first day of each and every month during the Term
hereof. In the event such Base Rent shall be determined under the provisions
of Article 2 hereof to commence on a day other than the first day of a month or
the term shall end on other than the last day of a month, then Base Rent shall
be prorated accordingly.
B. In order to secure the performance of the provisions of this Lease to
be performed by the Tenant, Tenant has deposited with Landlord cash in the sum
of $5,000 (the "Security Deposit"). In the event a default occurs of the type
described in Article 17 hereof, Landlord may use or apply all or any part of
the Security Deposit to remedy any such default. The Security Deposit may be
applied to the last monthly Base Rent payment. Any balance of the Security
Deposit remaining at the expiration of the Term shall be returned to Tenant
within thirty (30) days after the expiration of the Term.
<PAGE> 2
3. TAXES. Landlord agrees to pay on or before the date when due, all real
estate property taxes, general and special assessments which may be levied or
assessed against the Demised Premises.
4. COMPLIANCE WITH LAWS. Tenant and Landlord agree to comply with all laws,
ordinances, orders and regulations regarding the use and occupancy of the
Demised Premises and the cleanliness, safety or operation thereof. Tenant
agrees to comply with the reasonable regulations and requirements of any
insurance underwriter, inspection bureau or similar agency with respect to
improvements installed by Tenant. Tenant agrees to permit Landlord to comply
with such recommendations and requirements with respect to that portion of the
Demised Premises for which Landlord is responsible to repair and maintain.
5. CONDITION OF PREMISES. Tenant shall, during the Term of this Lease, have
the right to report to Landlord any defects or condition which are in need of
repair based upon the obligations of Landlords under this Lease. In connection
therewith, Landlord shall be obligated within a reasonable amount of time, not
to exceed thirty (30) days, to cure and correct such defects and conditions.
Landlord warrants that upon delivery of the Demised Premises to Tenant the
interior and exterior of the Demised Premises will meet with all present codes
required at the time by regulations of governing authorities. If at any time
the Demised Premises does not meet with codes as required by regulations of
governing authorities, then, except for work that is specifically required by
Tenant's use and occupancy, the Demised Premises will be brought up to the
proper standards at Landlord's expense. If Landlord fails to prosecute such
diligently and continuously until completion then Tenant may prosecute such
repairs itself and apply the cost of same against the next Base Rent obligation
due hereunder. Landlord shall also be responsible for paying any and all fines
or penalties assessed by any governmental authority if the Demised Premises
fails to meet codes and regulations of governmental authorities during the Term
of this Lease with respect to items for which Landlord is responsible to repair
and maintain as set forth in Article 6 of this Lease. Tenant shall be
responsible for paying any or all fines or penalties for noncompliance or
violation of codes and regulations of governmental authorities during the Term
of this Lease with respect to items for which Tenant is responsible to repair
and maintain as set forth in this Lease.
6. REPAIRS AND MAINTENANCE. Landlord covenants and agrees, at its expense
without reimbursement or contribution by Tenant, to keep, maintain and replace,
if necessary, the foundations, the exterior paint, the HVAC system, the
plumbing system, the electrical system, the utility lines and connections to
and other systems servicing the Demised Premises, the sprinkler mains, if any,
structural elements including, without limitation, the roof, roof membrane,
roof covering (including interior ceiling), load-bearing walls, floors and
masonry walls in good condition and repair. Tenant covenants and agrees to
keep and maintain the Demised Premises in the same condition as existed at the
Commencement Date, normal wear and tear, damage from casualty and condemnation
excepted. In the event the Demised Premises become or are out of repair and
condition due to the failure of Landlord or Tenant to comply with the terms of
this Article 6, then the non-defaulting party shall have the right to perform
or cause to be performed any and all repairs necessary to restore and repair
the Demised Premises.
7. ALTERATIONS. Tenant shall not make any exterior or structural alterations
in any portion of the Demised Premises nor any alterations in the interior or
the exterior of the Demised Premises without, in each instance, first obtaining
the written consent of Landlord, which consent shall not be unreasonably
withheld. Tenant shall be permitted to make interior nonstructural
alterations, additions and improvements without Landlord's prior consent.
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<PAGE> 3
8. FIXTURES AND PERSONAL PROPERTY. Any trade fixtures, business equipment,
inventory, trademarked items, signs, and other removable personal property
installed in or on the Demised Premises ("Tenant's Property"), shall remain the
property of the Tenant. Landlord agrees that Tenant shall have the right, at
any time or from time to time, to remove any and all of Tenant's Property.
Tenant, at its expense, shall immediately repair any damage occasioned by the
removal of Tenant's Property and upon expiration or earlier termination of this
Lease, shall leave the Demised Premises in a neat and clean condition, free of
debris, normal wear and tear excepted.
9. LIENS. Neither Landlord nor Tenant shall permit to be created nor to remain
undischarged any lien, encumbrance or charge arising out of any work or work
claim of any contractor, mechanic or laborer of Tenant or material supplied by
a materialman to, Landlord or Tenant which might be, or become, a lien or
encumbrance or charge upon the Demised Premises. If any lien or notice of lien
on account of an alleged debt of Landlord or Tenant or any notice of contract
by a party engaged by Landlord or Tenant or Landlord's or Tenant's contractor
to work in the Demised Premises shall be filed against the Demised Premises,
the responsible party shall, within thirty (30) days after notice of the filing
thereof, cause the same to be discharged of record by payment, deposit or bond.
10. ACCESS TO PREMISES. Upon reasonable prior written notice, but in no event
less than twenty-four (24) hours (except in the case of an emergency), Landlord
may enter the Demised Premises during Tenant's business hours for purposes of
inspection, to show the Demised Premises to prospective purchasers and lenders,
or to perform maintenance and repair obligations imposed upon Landlord by this
Lease.
11. SERVICES.
A. Landlord agrees to cause the necessary mains, conduits and other
facilities to be provided to make water, sewer, gas, phone and electricity
available to the Demised Premises and to make available to Tenant water, sewer,
gas, phone and electrical services prior to the Commencement Date at Landlord's
expense.
B. Tenant shall be solely responsible for and promptly pay all charges for
the use and consumption of sewer, gas, electricity, water, phone and all other
utility services used within the Demised Premises.
C. Tenant shall be solely responsible for any necessary upgrading of
mains, conduits and other facilities in connection with Tenant's election to
upgrade water, sewer, gas, phone and electricity services to the Demised
Premises for Tenant's own use.
D. Landlord shall not be liable to Tenant for damages or otherwise if the
said utilities or services are interrupted or terminated because of necessary
repairs, installations, or improvements, or any cause beyond the Landlord's
reasonable control, nor shall any such interruption or termination relieve
Tenant of the performance of any of its obligations hereunder, except that if
Tenant is unable to operate its business, there shall be an abatement of all
Base Rent and all other charges and items payable under this Lease during such
time period and if such interruption shall continue for a period of more than
seven (7) days, then Tenant may terminate the Lease.
12. DAMAGE TO PREMISES. In the event the Demised Premises is damaged or
destroyed or rendered totally or partially untenantable for its accustomed use,
by fire or other casualty, then Landlord
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<PAGE> 4
shall, within sixty (60) days after such casualty, commence repair of said
Demised Premises and within one hundred twenty (120) days after commencement of
such repair, restore the Demised Premises to substantially the same condition
in which it was immediately prior to the occurrence of the casualty, except as
otherwise provided in this Article 12. From the date of such casualty until
the Demised Premises is so repaired and restored all Base Rent and all other
charges and items payable under this Lease shall abate in such proportion as
the part of the Demised Premises thus damaged, destroyed or rendered
untenantable bears to the total Demised Premises. If the Demised Premises
cannot be repaired within 120 days, then Landlord or Tenant shall have right to
terminate this Lease effective as of the date of such casualty, by giving one
to the other within thirty (30) days of such casualty, written notice of
termination. Tenant may also terminate this Lease upon thirty (30) days notice
if Landlord fails to commence or complete such restoration and repairs within
the time period specified in this Article 12. If notice of termination is
given within the applicable thirty (30) day period, this Lease shall terminate
and Base Rent and all other charges shall abate as aforesaid from the date of
such casualty, and Landlord shall promptly repay to Tenant any Base Rent paid
in advance which has not been earned as of the date of such casualty.
13. INSURANCE.
A. Landlord also agrees to carry, during the Term hereof, all risk
property insurance (hereinafter, "Landlord's Property Insurance") covering fire
and extended coverage, vandalism and malicious mischief, sprinkler leakage and
all other perils of direct physical loss or damage insuring the improvements
and betterments located in the Demised Premises, including the Demised Premises
and all appurtenances thereto (excluding Tenant's Property) for the full
replacement value thereof. Landlord, upon request, shall furnish Tenant a
certificate of such Landlord's Property Insurance. During the Term of this
Lease, Tenant agrees to reimburse to Landlord, for Tenant's proportionate share
of Landlord's annual total costs for the premiums for Landlord's Property
Insurance.
B. Tenant agrees to carry, during the Term hereof, Commercial General
Liability insurance on the Demised Premises, naming Landlord as an additional
insured, covering both Tenant and Landlord as their interest may appear, with
companies reasonably satisfactory to Landlord and giving Landlord and Tenant a
minimum of ten (10) days' written notice by the insurance company prior to
cancellation or termination of such insurance. Such insurance shall be for
limits of not less than One Million Dollars ($1,000,000.00) combined Bodily
Injury and Property Damage Liability.
C. Landlord and Tenant and all parties claiming under them, mutually
release and discharge each other from all claims and liabilities arising from
or caused by any casualty or hazard, covered or required hereunder to be
covered in whole or in part by insurance on the Demised Premises or in
connection with property on or activities conducted on the Demised Premises,
and waive any right of subrogation which might otherwise exist in or accrue to
any person on account thereof. This waiver shall not be required if the
insurance carrier charges an additional premium in order to provide such waiver
and the party benefitting from the waiver does not agree to pay the additional
premium.
14. INDEMNIFICATION.
A. Tenant hereby indemnifies and holds Landlord harmless from and against
any and all claims, demands, liabilities and expenses, including attorneys,
fees, arising from Tenant's use of the Demised Premises or from any act
permitted, or any omission to act, in or about the Demised Premises by Tenant
or its agents, employees or contractors, or from any breach or default by
Tenant of this Lease, except to the
- 4 -
<PAGE> 5
extent caused by Landlord's negligence or willful misconduct. In the event any
action or proceeding shall be brought against Landlord by reason of any such
claim, Tenant shall defend the same at Tenant's expense by counsel reasonably
satisfactory to Landlord.
B. Landlord hereby indemnifies and holds Tenant harmless from and against
any and all claims, demands, liabilities and expenses, including attorneys'
fees, arising from Landlord's obligations, actions or from any act permitted,
or any omission to act, in or about the Demised Premises by Landlord or its
agents, employees, contractors or invitees, or from any breach or default by
Landlord of this Lease, except to the extent caused by Tenant's negligence or
willful misconduct. In the event any action or proceeding shall be brought
against Tenant by reason of any such claim, Landlord shall defend the same at
Landlord's expense by counsel reasonably satisfactory to Tenant.
15. ASSIGNMENT, SUBLETTING AND OWNERSHIP.
A. Tenant shall have the right to sublet, assign or otherwise transfer its
interest in this Lease to any parent, affiliate, or operating subsidiary of
Tenant, subsidiary of Tenant's parent, or to a corporation with which it may
merge or consolidate or to a Company, entity or individual that purchases all
or substantially all of the assets or common stock of Tenant either in one
transaction or a series of transactions, without Landlord's approval, written
or otherwise. In the event of any such subletting, assignment or other
transfer, Tenant shall automatically be released from all liability upon such
assignment or sublease with respect to that portion of the Tenant's leasehold
estate so assigned or subleased.
B. The consent by Landlord to any other transfer, assignment, subletting,
encumbrance, license or concession agreement, change of ownership or
hypothecation shall not be unreasonably withheld, conditioned or delayed;
provided, however, if Landlord fails to respond to any request by Tenant for
Landlord's consent or approval within fifteen (15) days of such request, the
consent or approval of Landlord shall be deemed given.
C. Landlord shall have the right to transfer, assign and convey, in whole
or in part, any or all of the right, title and interest to the Demised
Premises, provided such transferee or assignee shall be bound by the terms,
covenants and agreements herein contained, and shall expressly assume and agree
to perform the covenants and agreements of Landlord herein contained.
16. NON-DISTURBANCE AND ATTORNMENT.
A. Upon written request of Landlord, or any mortgagee or beneficiary of
Landlord, Tenant will, in writing, subordinate its right hereunder to the
interest of any ground lessor of the land upon which the Demised Premises is
situated and to the lien of any mortgage or deed of trust now or hereafter in
force against the land and building of which the Demised Premises is a part,
and upon any building hereafter placed upon the land of which the Demised
Premises is a part and to all advances made or hereafter to be made upon the
security thereof; provided, however, that the ground lessor, or the mortgagee
or trustee named in said mortgage or trust deed shall agree that Tenant's
peaceable possession of the Demised Premises or its rights under this Lease
will not be disturbed on account thereof.
B. In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deeds of
trust, upon any such foreclosure or sale Tenant agrees to
- 5 -
<PAGE> 6
recognize such beneficiary or purchaser as the Landlord under this Lease,
provided Tenant's rights under this Lease continue unabated and its tenancy
shall not be disturbed.
17. DEFAULTS BY TENANT.
A. The occurrence of any of the following shall constitute a material
default and breach of this Lease by Tenant:
1. Any failure by Tenant to pay Base Rent or make any other payment
required to be made by Tenant hereunder within ten (10) days after receipt
of written notice from the Landlord; and
2. A failure by Tenant to observe and perform any other material
provision of this Lease to be observed or performed by the Tenant, where
such failure continues for thirty (30) days after written notice thereof
by Landlord to Tenant, except that this thirty (30) day period shall be
extended for a reasonable period of time if the alleged default is not
reasonably capable of cure within said thirty (30) day period and Tenant
proceeds to diligently cure the default.
B. In the event of any such default by Tenant, then Landlord shall be
entitled to terminate this Lease by giving written notice of termination to
Tenant, in which event Tenant shall immediately surrender the Demised Premises
to Landlord. If Tenant fails to so surrender the Demised Premises, then
Landlord may, without prejudice to any other remedy it has for possession of
the Demised Premises or arrearages in Base Rent or other damages, re-enter and
take possession of the Demised Premises and expel or remove Tenant and any
other person occupying the Demised Premises or any part thereof, in accordance
with applicable law.
18. DEFAULTS BY LANDLORD. If Landlord should be in default in the performance
of any of its obligations under this Lease, which default continues for a
period of more than thirty (30) days after receipt of written notice from
Tenant specifying such default, or if such default is of a nature to require
more than thirty (30) days for remedy and continues beyond the time reasonably
necessary to cure (and Landlord has not undertaken procedures to cure the
default within such thirty (30) day period and diligently pursued such efforts
to complete such cure), Tenant may, in addition to any other remedy available
at law or in equity, at its option, upon written notice, terminate this Lease,
or may incur any expense necessary to perform the obligation of Landlord
specified in such notice and deduct such expense from the Base Rent or other
charges and payments next becoming due.
19. SURRENDER OF PREMISES. Tenant shall, upon the expiration of the Term
granted herein, or any earlier termination of this Lease for any cause,
surrender to Landlord the Demised Premises, and all alterations, improvements
and other additions which may be made or installed by either party to, in, upon
or about the Demised Premises, other than Tenant's Property which shall remain
the property of Tenant as provided in Article 8 hereof.
20. EMINENT DOMAIN.
A. In the event that any portion of the Demised Premises shall be
appropriated or taken under the power of eminent domain by any public or
quasipublic authority, then at the election of Tenant, this Lease shall
terminate and expire as of the date of such taking, and both Landlord and
Tenant shall thereupon
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<PAGE> 7
be released from any liability thereafter accruing hereunder. Notice of any
termination relating to such eminent domain proceeding must be made by Tenant
to Landlord within sixty (60) days after receipt of written notice of such
taking.
B. If Tenant elects not to so terminate this Lease, Landlord shall
promptly repair and restore the Demised Premises to the condition that existed,
as near as possible, prior to such appropriation or taking, and Tenant may
remain in that portion of the Demised Premises which shall not have been
appropriated or taken, and thereafter all Base Rent and all other payments and
charges under this Lease of Tenant shall be adjusted on an equitable basis,
taking into account the relative value of the portion taken as compared to the
portion remaining.
C. Tenant shall have the right to pursue a claim for damages with the
public or quasipublic authority in connection with any eminent domain
proceeding.
21. ATTORNEYS' FEES. In the event that at any time during the Term of this
Lease either Landlord or Tenant shall institute any action or proceeding
against the other relating to the provisions of this Lease, or any default
hereunder, the unsuccessful party in such action or proceeding agrees to
reimburse the successful party for the reasonable expenses of attorneys' fees
and paralegal fees and disbursements incurred therein by the successful party.
Such reimbursement shall include all legal expenses incurred prior to trial, at
trial and at all levels of appeal and post-judgment proceedings.
22. NOTICES. Notices and demands required, or permitted, to be sent to those
listed hereunder shall be sent by certified mail, return receipt requested,
postage prepaid, or by Federal Express or other reputable overnight courier
service and shall be deemed to have been given upon the date the same is
postmarked if sent by certified mail or the day deposited with Federal Express
or such other reputable overnight courier service, but shall not be deemed
received until one (1) business day following deposit with Federal Express or
other reputable overnight courier service or three (3) days following deposit
in the United States Mail if sent by certified mail to address shown below, and
addressed to:
<TABLE>
<S> <C>
LANDLORD: TENANT:
- --------- -------
ES&L Service NES Acquisition Corp.
12 Circle Way c/o National Equipment Services, Inc.
Lake Jackson, Texas 77566 6100 Sears Tower
Attn: James G. Kowalik Chicago, Illinois 60606
Attn: Kevin P. Rodgers
</TABLE>
or at such other address requested in writing by either party upon thirty (30)
days' notice to the other party.
23. REMEDIES. All rights and remedies of Landlord and Tenant herein created or
otherwise extending at law are cumulative, and the exercise of one or more
rights or remedies may be exercised and enforced concurrently or consecutively
and whenever and as often as deemed desirable.
24. SUCCESSORS AND ASSIGNS. All covenants, promises, conditions,
representations and agreements herein contained shall be binding upon, apply
and inure to the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
- 7 -
<PAGE> 8
25. WAIVER. The failure of either Landlord or Tenant to insist upon strict
performance by the other of any of the covenants, conditions, and agreements of
this Lease shall not be deemed a waiver of any subsequent breach or default in
any of the covenants, conditions and agreements of this Lease.
26. HOLDING OVER. If Tenant or any party claiming under Tenant remains in
possession of the Demised Premises or any part thereof after any termination or
expiration of this Lease, Landlord, in Landlord's sole discretion, may treat
such holdover as an automatic renewal of this Lease for a month-to-month
tenancy subject to all the terms and conditions provided herein.
27. INTERPRETATION. The parties hereto agree that it is their intention hereby
to create only the relationship of Landlord and Tenant, and no provision
hereof, or act of either party hereunder, shall ever be construed as creating
the relationship of principal and agent, or a partnership, or a joint venture
or enterprise between the parties hereto.
28. COVENANT OF TITLE AND QUIET ENJOYMENT. Landlord covenants that it has full
right, power and authority to make this Lease, and that Tenant or any permitted
assignee or sublessee of Tenant, upon the payment of the Base Rent and
performance of the covenants hereunder, shall and may peaceably and quietly
have, hold and enjoy the Demised Premises and improvements thereon during the
Term or any renewal or extension thereof.
29. ESTOPPEL. At any time and from time to time either party, upon request of
the other party, will execute, acknowledge and deliver an instrument, stating,
if the same be true, that this Lease is a true and exact copy of this Lease
between the parties hereto, that there are no amendments hereof (or stating
what amendments there may be), that the same is then in full force and effect
and that, to the best of its knowledge, there are no offsets, defenses or
counterclaims with respect to the payment of Base Rent reserved hereunder or in
the performance of the other terms, covenants and conditions hereof on the part
of Tenant or Landlord, as the case may be, to be performed, and that as of such
date no default has been declared hereunder by either party or if not
specifying the same. Such instrument will be executed by the other party and
delivered to the requesting party within fifteen (15) days of receipt, or else
the statements made in the proposed estoppel request shall be deemed to be
correct.
30. CONSENT. Wherever in this Lease Landlord or Tenant is required to give its
consent or approval, such consent or approval shall not be unreasonably
withheld, conditioned or delayed. Except as otherwise provided in this Lease,
if no written response to a consent or request for approval is provided within
fifteen (15) days from the receipt of the request, then the consent shall be
presumed to have been given.
31. WAIVER OF LANDLORD'S LIEN. Landlord hereby waives any contractual,
statutory or other Landlord's lien on Tenant's furniture, fixtures, supplies,
equipment, inventory and Tenant's Property.
32. SEVERABILITY. Any provision of this Lease which shall prove to be invalid,
void or illegal shall in no way affect, impair or invalidate any other
provisions hereof and such other provisions shall remain in full force and
effect.
33. GOVERNING LAW AND VENUE. This Lease shall be governed by the laws of the
state in which the Demised Premises is located.
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<PAGE> 9
34. BROKERS. Landlord and Tenant represent and warrant one to the other that
they have not had any dealing with any real estate brokers or agents in
connection with the negotiation of this Lease. Landlord and Tenant indemnify
and hold each other harmless from and against any and all liability and cost
which Landlord or Tenant may suffer in connection with real estate brokers
claiming by, through or under either party seeking any commission, fee or
payment in connection with this Lease.
35. TENANT'S CONDUCT OF BUSINESS. Notwithstanding anything herein to the
contrary, nothing herein shall be construed as an obligation for Tenant to open
or operate its business in the Demised Premises. Tenant shall have the right
to remove Tenant's Property and cease operations in the Demised Premises at any
time and at Tenant's sole discretion.
36. TIME OF THE ESSENCE. Time shall be of the essence in interpreting the
provisions of this Lease.
37. ENTIRE AGREEMENT. This Lease contains all of the agreements of the parties
hereto with respect to matters covered or mentioned in this Lease and no prior
agreement, letters, representations, warranties, promises or understandings
pertaining to any such matters shall be effective for any such purpose. This
Lease may be amended or added to only by an agreement in writing signed by the
parties hereto or their respective successors in interest.
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<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the day
and year first mentioned.
TENANT:
NES ACQUISITION CORP.,
a Delaware corporation
By: /s/ Kevin Rodgers
----------------------------------
Name: Kevin Rodgers
------------------------------
Title: President
------------------------------
LANDLORD:
ES&L SERVICE,
a Texas general partnership
By: /s/ James G. Kowalik
----------------------------------
Name: James G. Kowalik
------------------------------
Title: co-owner
------------------------------
<PAGE> 1
Exhibit 10.18
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of January 6, 1997, between NES Acquisition Corp., a Delaware corporation (the
"Company"), and James G. Kowalik ("Executive").
The Company is a wholly-owned subsidiary of National Equipment Services,
Inc., a Delaware corporation.
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive hereby
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in paragraph 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the President
of the Company and shall have the normal duties, responsibilities and authority
of the President, subject to the overall direction and authority of the
Company's Chief Executive Officer and the Company's board of directors (the
"Board").
(b) Executive shall report to the Company's Chief Executive Officer, and
Executive shall devote his best efforts and his full business time and
attention to the business and affairs of the Company and its Subsidiaries.
(c) For purposes of this Agreement, "Subsidiaries" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one or more Subsidiaries.
3. Base Salary and Benefits.
(a) During the Employment Period, Executive's base salary shall be at
least $100,000 per annum and shall be subject to review by the Board on an
annual basis (the "Base Salary"), which salary shall be payable in regular
installments in accordance with the Company's general payroll practices and
shall be subject to customary withholding. In addition, during the Employment
Period, Executive shall be entitled to participate in all of the Company's
employee benefit programs for which senior executive employees of the Company
and its Subsidiaries are generally eligible.
<PAGE> 2
(b) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of such
expenses.
(c) In addition to the Base Salary, Executive will be eligible to earn an
annual bonus to be calculated in the manner set forth on Exhibit A attached
hereto.
4. Term.
(a) The Employment Period shall terminate upon the second anniversary of
the date hereof, unless earlier terminated (i) by Executive's resignation,
death or disability, (ii) by the Company for Cause or (iii) by the Company
other than for Cause.
(b) If the Employment Period is terminated pursuant to clause (a)(i) or
clause (a)(ii) above, Executive shall be entitled to receive his Base Salary
through the date of termination. If the Employment Period is terminated
pursuant to clause (a)(iii) above, Executive shall be entitled to receive his
Base Salary through the second anniversary of the date hereof.
(c) Notwithstanding anything in this Agreement to the contrary, the
Company shall have no obligation to pay any amounts payable under this
Agreement during such times as Executive is in breach of paragraph 5, 6 or 7
hereof.
(d) All of Executive's rights to fringe benefits and bonuses hereunder (if
any) which accrue or become payable after the termination of the Employment
Period shall cease upon such termination.
(e) For purposes of this Agreement, "Cause" shall mean (i) the commission
of a felony or any other act or omission involving dishonesty, disloyalty or
fraud with respect to the Company or any of its Subsidiaries or any of their
customers or suppliers, (ii) conduct tending to bring the Company or any of its
Subsidiaries into substantial public disgrace or disrepute, (iii) substantial
and repeated failure to perform duties as reasonably directed by the Board,
(iv) gross negligence or willful misconduct with respect to the Company or any
of its Subsidiaries or (v) any other material breach of this Agreement.
5. Confidential Information. Executive acknowledges that the information,
observations and data obtained by him while employed by the Company and its
Subsidiaries concerning the business or affairs of the Company or any of its
Subsidiaries ("Confidential Information") are the property of the Company or
such Subsidiary. Therefore, Executive agrees that he shall not disclose to any
unauthorized person or use for his own purposes any Confidential Information
without the prior written consent of the Board, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of Executive's acts or omissions. Executive
shall deliver to the Company at the termination of the Employment Period, or at
any other time the Company may request, all memoran-
- 2 -
<PAGE> 3
da, notes, plans, records, reports, computer tapes, printouts and software and
other documents and data (and copies thereof) relating to the Confidential
Information, Work Product (as defined below) or the business of the Company or
any Subsidiary which he may then possess or have under his control.
6. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable)
which relate to the Company's or any of its Subsidiaries' actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by Executive while employed by the
Company or its Subsidiaries ("Work Product") belong to the Company or such
Subsidiary. Executive shall promptly disclose such Work Product to the Board
and perform all actions reasonably requested by the Board (whether during or
after the Employment Period) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
7. Non-Compete, Non-Solicitation.
(a) In further consideration of the compensation to be paid to Executive
hereunder, Executive acknowledges that in the course of his employment with the
Company he shall become familiar with the Company's trade secrets and with
other Confidential Information concerning the Company and its Subsidiaries and
that his services shall be of special, unique and extraordinary value to the
Company and its Subsidiaries. Therefore, Executive agrees that, during the
Employment Period and for two years thereafter (the "Noncompete Period"), he
shall not directly or indirectly own any interest in, manage, control,
participate in, consult with or render services for any crane or hoist rental
or maintenance business anywhere in North America or in any other country in
which the Company or its Subsidiaries conduct business. Nothing herein shall
prohibit Executive from being a passive owner of not more than 2% of the
outstanding stock of any class of a corporation which is publicly traded, so
long as Executive has no active participation in the business of such
corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company
or any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the Employment
Period or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company or any
Subsidiary to cease doing business with the Company or such Subsidiary, or in
any way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or any Subsidiary (including,
without limitation, making any negative statements or communications about the
Company or its Subsidiaries).
8. Enforcement. If, at the time of enforcement of paragraph 5, 6 or 7 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reason-
- 3 -
<PAGE> 4
able under such circumstances shall be substituted for the stated period, scope
or area. Because Executive's services are unique and because Executive has
access to Confidential Information and Work Product, the parties hereto agree
that money damages would not be an adequate remedy for any breach of this
Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce, or prevent any violations of, the provisions hereof (without
posting a bond or other security). In addition, in the event of an alleged
breach or violation by Executive of paragraph 7, the Noncompete Period shall be
tolled until such breach or violation has been duly cured. Executive agrees
that the restrictions contained in paragraph 7 are reasonable.
9. Other Businesses. As long as Executive is employed by the Company or
any of its Subsidiaries, Executive agrees that he will not, except with the
express written consent of the Board, become engaged in, or render services
for, any business other than the business of the Company, any of its
Subsidiaries or any corporation or partnership in which the Company or any of
its Subsidiaries have an equity interest.
10. Executive's Representations. Executive hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms. Executive hereby acknowledges and represents that he has
consulted with independent legal counsel regarding his rights and obligations
under this Agreement and that he fully understands the terms and conditions
contained herein.
11. Survival. Paragraphs 5, 6 and 7 shall survive and continue in full
force in accordance with their terms notwithstanding any termination of the
Employment Period.
12. Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
Notices to Executive:
James G. Kowalik
12 Circle Way
Lake Jackson, Texas 77566
- 4 -
<PAGE> 5
Notices to the Company:
NES Acquisition Corp.
c/o National Equipment Services
6100 Sears Tower
Chicago, Illinois 60606
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
13. Severability. 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 is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
14. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way.
15. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
16. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
17. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and
- 5 -
<PAGE> 6
assigns, except that Executive may not assign his rights or delegate his
obligations hereunder without the prior written consent of the Company.
18. CHOICE OF LAW. ALL ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS AND
SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF ILLINOIS, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR
CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF ILLINOIS OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF ILLINOIS.
19. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
* * * * *
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
-----------------------------
Its: President
-----------------------------
/s/ James G. Kowalik
------------------------------------
AMES G. KOWALIK
<PAGE> 1
Exhibit 10.20
THE PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS SUBJECT TO
CERTAIN SUBORDINATION PROVISIONS SET FORTH IN SECTION 3 HEREIN AND
SET-OFF PROVISIONS SET FORTH IN SECTION 5 HEREIN. THIS NOTE WAS
ORIGINALLY ISSUED ON FEBRUARY 18, 1997 AND HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY COMPARABLE
STATE SECURITIES LAW.
NATIONAL EQUIPMENT SERVICES, INC.
JUNIOR SUBORDINATED PROMISSORY NOTE
February 18, 1997 $500,000.00
National Equipment Services, Inc., a Delaware corporation (the "Company"),
hereby promises to pay to the order of Carter Wilson the principal amount of
$500,000.00, together with interest thereon calculated from the date hereof in
accordance with the provisions of this Note.
This Junior Subordinated Promissory Note (this "Note") was issued pursuant
to an Stock Purchase Agreement, dated as of the date hereof (as amended and
modified from time to time, the "Purchase Agreement"), by and among the
Company, the initial holder of this Note and certain other Persons, and this
Note is the "Subordinated Note" referred to in the Purchase Agreement. The
Purchase Agreement contains terms governing the rights of the holder of this
Note, and all provisions of the Purchase Agreement are hereby incorporated
herein by reference. Except as defined in Section 7 hereof or unless otherwise
indicated herein, capitalized terms used in this Note have the same meanings
set forth in the Purchase Agreement.
1. Interest.
(a) Rate of Interest. Interest shall accrue on a daily basis at the rate
of ten percent (10%) per annum (calculated on the basis of a 365/366 day year,
as applicable) on the unpaid principal amount of this Note outstanding from
time to time, or (if less) at the highest rate then permitted under applicable
law.
(b) Payment of Interest. On the last day of each quarter, beginning March
31, 1997 (each, an "Interest Payment Date"), the Company shall pay to the
holder of this Note all interest which has accrued since the preceding Interest
Payment Date (or, in the case of the initial Interest Payment Date, since the
date of issuance of this Note). Any accrued interest which for any reason has
not theretofore been paid shall be paid in full on the date on which the final
principal payment on this Note is made.
<PAGE> 2
2. Payment of Principal on Note.
(a) Scheduled Payments. The Company shall pay the principal amount of
$500,000.00 (or such lesser principal amount then outstanding) to the holder of
this Note on the fifth anniversary of the date hereof, together with all
accrued and unpaid interest on the principal amount being repaid.
(b) Prepayments. The Company may, at any time and from time to time
without premium or penalty, prepay all or any portion of the outstanding
principal amount of this Note; provided that such prepayment is not prohibited
by the provisions of Section 3 hereof. In connection with each prepayment of
principal hereunder, the Company shall also pay all accrued and unpaid interest
on the principal amount being repaid.
3. Subordination; Restrictions on Payment.
(a) Anything in this Note to the contrary notwithstanding, the obligations
of the Company in respect of the principal, interest, fees and charges on this
Note shall be subordinate and junior in right of payment, to the extent and in
the manner hereinafter set forth, to all Superior Debt.
(b) In the event that the Company makes a general assignment for the
benefit of creditors; or an order, judgment or decree is entered adjudicating
the Company bankrupt or insolvent; or any order for relief with respect to the
Company is entered under the Federal Bankruptcy Code; or the Company petitions
or applies to any tribunal for the appointment of a custodian, trustee,
receiver or liquidator of the Company or of any substantial part of the assets
of the Company, or commences any proceeding relating to the Company under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction; or any such petition or
application is filed, or any such proceeding is commenced, against the Company
(collectively referred to as an "Insolvency Event"), or upon any acceleration
of Superior Debt, then:
(i) the holders of Superior Debt shall be entitled to receive
payment in full in cash of all principal, premium, interest, fees and
charges then due on all Superior Debt (including interest, fees and
charges accruing thereon after the commencement of any such proceedings
(irrespective of whether such interest, fees and charges are allowed as a
claim in such proceedings)) before the holder of this Note is entitled to
receive any payment on account of principal, interest or other amounts
due (or past due) upon this Note, and the holders of Superior Debt shall
be entitled to receive for application in payment thereof any payment or
distribution of any kind or character, whether in cash, property or
securities or by set-off or otherwise, which may be payable or
deliverable in any such proceedings in respect of this Note; and
(ii) any payment or distribution of assets of the Company, of any
kind or character, whether in cash, property or securities, to which the
holder of this Note would be entitled except for the provisions of this
Section 3(b) shall be paid or
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<PAGE> 3
delivered by the Company directly to the holders of all Superior Debt in
the manner provided in Section 3(g) below, for application in payment
thereof until all Superior Debt (including interest, fees and charges
accrued thereon after the date of commencement of such proceedings
(irrespective of whether such interest, fees and charges are allowed as a
claim in such proceedings)) shall have been paid in full in cash.
(c) In any proceedings with respect to any Insolvency Event, the holders
of Superior Debt are authorized:
(i) to submit and enforce any claims on this Note either in the name
of the holders of Superior Debt or in the name of the holder of this Note
as the attorney-in-fact of the holder of this Note in the event such
claims have not been submitted by the holder of this Note before 10 days
prior to the date when submission of such claims is due;
(ii) to accept and execute receipts for any payment or distribution
made with respect to this Note and to apply such payment or distribution
to the payment of the Superior Debt; and
(iii) to take any action and to execute any instruments necessary to
effectuate the foregoing, either in the name of the holders of Superior
Debt or in the name of the holder of this Note as the attorney-in-fact of
the holder of this Note.
(d) Until all Superior Debt shall have been paid in full in cash, the
Company shall not, directly or indirectly, make any payment of any amount
payable with respect to this Note, except for regularly scheduled quarterly
interest payments; provided, that no payment of interest shall be made if there
shall have occurred and be continuing or there would exist as a result of such
a payment or distribution any default or event of default under any of the
terms of any agreement relating to, or instrument evidencing, any Superior
Debt, which (whether with or without notice, lapse of time or both) would
permit the holder of such Superior Debt to accelerate all or any portion of
such Superior Debt (collectively, the "Blockage Events"). The Company shall
use reasonable efforts to notify the holder of this Note in writing of the
occurrence of a Blockage Event; provided, that, notwithstanding anything to the
contrary in this Note, the failure of the Company to so notify the holder of
this Note of the occurrence of a Blockage Event shall have no effect on the
obligations of the Company or the holder of this Note during the continuance of
such Blockage Event as set forth therein. Upon termination of a Blockage Event
(so long as no other Blockage Event has occurred and is continuing), the
Company shall resume making regularly scheduled quarterly payments of interest
pursuant to the terms and conditions of this Note.
(e) Any amendment or modification of the terms of Section 3 of this Note
shall not be effective against any Person who was a holder of Superior Debt
prior to or at the time of such amendment or modification unless such holder of
Superior Debt so consents.
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<PAGE> 4
(f) The holders of Superior Debt may, at any time, in their discretion,
renew, amend, extend or otherwise modify the terms and provisions of Superior
Debt so held or exercise any of their rights under the Superior Debt including,
without limitation, the waiver of defaults thereunder and the amendment of any
of the terms or provisions thereof (or any notice evidencing or creating the
same), all without notice to or assent from the holder of this Note. No
compromise, alteration, amendment, renewal or other change of, or waiver,
consent or other action in respect of any liability or obligation under or in
respect of, any terms, covenants or conditions of the Superior Debt (or any
instrument evidencing or creating the same), whether or not such release is in
accordance with the provisions of the Superior Debt (or any instrument
evidencing or creating the same), shall in any way alter or affect any of the
subordination provisions of this Note.
(g) If, notwithstanding the provisions of Section 3 of this Note, any
payment or distribution of any character (whether in cash, securities or other
property) or any security shall be received by the holder of this Note in
contravention of this Section 3 and before all the Superior Debt shall have
been paid in full in cash, such payment, distribution or security shall be held
in trust for the benefit of, and shall be immediately paid over or delivered or
transferred to, the holders of Superior Debt or their duly appointed agents for
application of payment according to the priorities of such Superior Debt and
ratably among the holders of any class of Superior Debt. Such payments
received by the holder of this Note and delivered to the holders of the
Superior Debt shall be deemed not to be a payment on this Note for any reason
whatsoever and the indebtedness under this Note shall remain as if such
erroneous payment had never been paid by the Company or received by the holder
of this Note. In the event of the failure of any holder of this Note to
endorse or assign any such payment, distribution or security, each holder of
any Superior Debt is hereby irrevocably authorized to endorse or assign the
same.
(h) No present or future holder of Superior Debt shall be prejudiced in
its right to enforce the provisions of Section 3 of this Note by any act or
failure to act on the part of the Company.
(i) If there shall exist (i) any Blockage Event, or (ii) any Event of
Default under this Note, the holder of this Note shall not take or continue any
action, or exercise or continue to exercise any rights, remedies or powers
under the terms of this Note, or exercise or continue to exercise any other
right or remedy at law or equity that such holder might otherwise possess, to
collect any amount due and payable in respect of this Note, including, without
limitation, the acceleration of this Note (and if this Note has already been
accelerated, the holder will, immediately upon becoming aware of the occurrence
of such Blockage Event or Event of Default, reverse such acceleration), the
commencement of any foreclosure on any lien or security interest, the filing of
any petition in bankruptcy or the taking advantage of any other insolvency law
of any jurisdiction, unless and until the Superior Debt shall have been fully
and finally paid (whether in cash or such other form of consideration
acceptable to the holders of Superior Debt in their sole discretion) and
satisfied, unless one or more of the holders of the Superior Debt shall have
accelerated the maturity of Superior Debt in an amount in excess of $1,000,000,
in which case the holder of this Note shall be entitled to accelerate the
maturity hereof but shall not be entitled to take any other action described
above and, provided further, that the holder of this Note acknowledges and
agrees that the acceleration of this Note shall immediately be reversed if and
when (A) one or more holders of
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<PAGE> 5
Superior Debt take similar action which results in the aggregate amount of
Superior Debt to be accelerated to be less than $5,000,000 or (B) such Superior
Debt is fully and finally paid (whether in cash or such other form of
consideration acceptable to the holders of Superior Debt in their sole
discretion). Notwithstanding the foregoing or any permissible action taken by
the holder of this Note, the holder of this Note shall not be entitled to
receive any payment in contravention of the other provisions of this Section 3,
including without limitation Sections 3(b), 3(d) and 3(g).
(j) If any payment or distribution to which any holder of this Note would
otherwise have been entitled but for the provisions of this Section 3 shall
have been applied, pursuant to the provisions of this Section 3, to the payment
of Superior Debt, then and in such case and to such extent, the holder of this
Note (A) shall be entitled to receive from the holders of such Superior Debt at
the time outstanding any payments or distributions received by such holders of
Superior Debt in excess of the amount sufficient to pay all Superior Debt in
full (whether or not then due and whether such payment was in cash or such
other form of consideration acceptable to the holders of Superior Debt in their
sole discretion), (B) following payment in full of the Superior Debt (whether
in cash or such other form of consideration acceptable to the holders of
Superior Debt in their sole discretion), shall be entitled to receive any and
all further payments or distributions applicable to Superior Debt, and (C)
following payment in full of the Superior Debt (whether in cash or such other
form of consideration acceptable to the holders of Superior Debt in their sole
discretion), shall be subrogated to the rights of the holders of the Superior
Debt to receive distributions applicable to the Superior Debt, in each case
until this Note shall have been paid in full in cash or such other
consideration acceptable to the Holder of this Note in its sole discretion. If
any holder of this Note has been subrogated to the rights of the holders of
Superior Debt due to the operation of this Section 3(j), the Company agrees to
take all such reasonable actions as are requested by such holder of this Note
in order to cause such holder to be able to obtain payments from the Company
with respect to such subrogation rights as soon as possible.
(k) The provisions of this Section 3 are solely for the purpose of
defining the relative rights of the holders of Superior Debt, on the one hand,
and the holder of this Note on the other, against the Company and its assets,
and nothing herein is intended to or shall impair, as between the Company and
the holder of this Note, the obligations of this Company which are absolute and
unconditional, to pay to the holder the principal and interest on this Note as
and when they become due and payable in accordance with their terms, or is
intended to or will affect the relative rights of the holder of this Note and
creditors of the Company other than the holders of the Superior Debt, nor,
except as provided in this Section 3, will anything herein or therein prevent
the holder of this Note from exercising all remedies otherwise permitted by
applicable law upon default under this Note subject to the rights, if any,
under this Section 3 of the holders of Superior Debt in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy and subject to this Section 3.
4. Events of Default.
(a) Definition. For purposes of this Note, an Event of Default shall be
deemed to have occurred if
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<PAGE> 6
(i) the Company fails to pay when due and payable (whether at
maturity or otherwise) the full amount of interest then accrued on any
Note or the full amount of any principal payment on any Note, and such
failure to pay is not cured within five business days after the
occurrence thereof; or
(ii) an Insolvency Event occurs.
The foregoing shall constitute Events of Default whatever the reason or cause
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body.
(b) Consequences of Events of Default. Subject to Section 3:
(i) If any Event of Default of the type described in Section 4(a)(i)
has occurred and is continuing, the holder of this Note may declare all
or any portion of the outstanding principal amount of this Note (together
with all accrued interest thereon and all other amounts due and payable
with respect thereto) to be immediately due and payable and may demand
immediate payment of all or any portion of the outstanding principal
amount of this Note (together with all such other amounts then due and
payable). If the holder of this Note demands immediate payment of all or
any portion of this Note, the Company shall immediately pay to such
holder all amounts due and payable with respect to this Note.
(ii) If an Event of Default of the type described in Section
4(a)(ii) has occurred, the aggregate principal amount of this Note
(together with all accrued interest thereon and all other amounts due and
payable with respect thereto) shall become immediately due and payable
without any action on the part of the holder of this Note, and the
Company shall immediately pay to the holder of this Note all amounts due
and payable with respect to this Note.
(iii) The holder of this Note shall also have any other rights which
such holder may have been afforded under any contract or agreement at any
time and any other rights which such holder may have pursuant to
applicable law.
(iv) The Company hereby waives diligence, presentment, protest and
demand and notice of protest and demand, dishonor and nonpayment of this
Note, and expressly agrees that this Note, or any payment hereunder, may
be extended from time to time and that the holder hereof may accept
security for this Note or release security for this Note, all without in
any way affecting the liability of the Company hereunder.
5. Right of Set-off. In the event that the Company or any other Purchaser
Party (as defined in the Purchase Agreement) is entitled to indemnification or
other payment under Section 9.2 of the Purchase Agreement for so long as this
Note has not been paid in full and canceled, such
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<PAGE> 7
indemnification or other payment may, at the option of the Company, be
discharged by the Company by setting off the amount of such indemnification or
other payment against the principal amount of, and interest on, this Note;
provided, however, that in the event the holder reasonably and in good faith
disputes the amount of such indemnification or other payment, the Company shall
not set-off such indemnification or other payment against this Note until such
dispute has been resolved in the manner set forth in the Purchase Agreement.
6. Amendment and Waiver. Except as otherwise expressly provided herein,
the provisions of this Note 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 has obtained the written consent of the holder of
this Note.
7. Definitions. For purposes of this Note, the following capitalized
terms have the following meaning.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a
majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that Person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association or other business
entity.
"Superior Debt" means all (i) principal of, and interest and premium (if
any) on, indebtedness for borrowed money of the Company (including, without
limitation, guarantees and other contingent obligations with respect to
indebtedness for borrowed money of its Subsidiaries) owing to commercial banks,
investment banks, insurance companies and other recognized lending institutions
or entities, whether now outstanding or hereafter created, incurred, assumed or
guaranteed, and (ii) renewals, extensions, refundings, refinancings, deferrals,
restructurings, amendments and modifications of the items described in (i)
above.
8. Cancellation. After all principal and accrued interest at any time
owed on this Note has been paid in full, this Note shall be surrendered to the
Company for cancellation and shall not be reissued.
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<PAGE> 8
9. Payments. All payments to be made to the holder of this Note shall be
made in the lawful money of the United States of America in immediately
available funds.
10. Place of Payment. Payments of principal and interest shall be
delivered to the holder of this Note at such address as is specified by prior
written notice by the holder to the Company.
* * * * *
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<PAGE> 9
IN WITNESS WHEREOF, the Company has executed and delivered this Junior
Subordinated Promissory Note on the date first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
---------------------------
Its: Chief Executive Officer
---------------------------
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<PAGE> 1
Exhibit 10.21
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of February 18, 1997, by and between Aerial Platforms, Inc., a Georgia
corporation (the "Company"), and Carter Wilson ("Executive").
WHEREAS, the Company is a wholly-owned subsidiary of National Equipment
Services, Inc., a Delaware corporation.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive hereby
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in Section 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the President
of the Company and shall have the normal duties, responsibilities and authority
of the President, subject to the overall direction and authority of the
Company's Chief Executive Officer and the Company's board of directors (the
"Board").
(b) Executive shall report to the Company's Chief Executive Officer, and
Executive shall devote his best efforts and his full business time and
attention to the business and affairs of the Company and its Subsidiaries.
Executive shall perform his duties and responsibilities to the best of his
abilities in a diligent, trustworthy, businesslike and efficient manner.
(c) For purposes of this Agreement, "Subsidiaries" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one or more Subsidiaries.
3. Base Salary and Benefits.
(a) During the Employment Period, Executive's base salary shall be
$100,000 per annum and shall be subject to review by the Board on an annual
basis (the "Base Salary"), which salary shall be payable in regular
installments in accordance with the Company's general payroll practices and
shall be subject to customary withholding. In addition, during the Employment
Period,
<PAGE> 2
Executive shall be entitled to participate in all of the Company's employee
benefit programs for which senior executive employees of the Company and its
Subsidiaries are generally eligible.
(b) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of such
expenses.
(c) In addition to the Base Salary, Executive will be eligible to earn an
annual bonus to be calculated in the manner set forth on Exhibit A attached
hereto.
4. Term.
(a) The Employment Period shall terminate upon the third anniversary of
the date hereof, unless earlier terminated (i) by Executive's resignation,
death or disability, (ii) by the Company for Cause or (iii) by the Company
other than for Cause.
(b) If the Employment Period is terminated pursuant to clause (a)(i) or
clause (a)(ii) above, Executive shall be entitled to receive his Base Salary
through the date of termination. If the Employment Period is terminated
pursuant to clause (a)(iii) above, Executive shall be entitled to receive his
Base Salary through the first to occur of (i) the six month anniversary of the
date of termination and (ii) the third anniversary of the date hereof, if and
only if Executive has not breached and does not breach Section 5, 6 or 7
hereof.
(c) All of Executive's rights to fringe benefits and bonuses hereunder (if
any) which accrue or become payable after the termination of the Employment
Period shall cease upon such termination.
(d) For purposes of this Agreement, "Cause" shall mean (i) the commission
of a felony or a crime involving moral turpitude or the commission of any other
act or omission involving dishonesty, disloyalty or fraud with respect to the
Company or any of its Subsidiaries or any of their customers or suppliers, (ii)
conduct tending to bring the Company or any of its Subsidiaries into
substantial public disgrace or disrepute, (iii) substantial and repeated
failure to perform duties as reasonably directed by the Board, (iv) gross
negligence or willful misconduct with respect to the Company or any of its
Subsidiaries or (v) any other material breach of this Agreement.
5. Confidential Information. Executive acknowledges that the information,
observations and data obtained by him while employed by the Company and its
Subsidiaries concerning the business or affairs of the Company or any of its
Subsidiaries ("Confidential Information") are the property of the Company or
such Subsidiary. Therefore, Executive agrees that he shall not disclose to any
unauthorized person or use for his own purposes any Confidential Information
without the prior written consent of the Board, unless and to the extent that
the aforementioned matters become generally known to and available for use by
the public other than as a result of Executive's acts or omissions. Executive
shall deliver to the Company at the
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<PAGE> 3
termination of the Employment Period, or at any other time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or
the business of the Company or any Subsidiary which he may then possess or have
under his control.
6. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable)
which relate to the Company's or any of its Subsidiaries' actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by Executive while employed by the
Company or its Subsidiaries ("Work Product") belong to the Company or such
Subsidiary. Executive shall promptly disclose such Work Product to the Board
and perform all actions reasonably requested by the Board (whether during or
after the Employment Period) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
7. Non-Compete, Non-Solicitation.
(a) In further consideration of the compensation to be paid to Executive
hereunder, Executive acknowledges that in the course of his employment with the
Company he shall become familiar with the Company's trade secrets and with
other Confidential Information concerning the Company and its Subsidiaries and
that his services shall be of special, unique and extraordinary value to the
Company and its Subsidiaries. Therefore, Executive agrees that, during the
Employment Period and for five years thereafter (the "Noncompete Period"), he
shall not directly or indirectly own any interest in, manage, control,
participate in, consult with or render services for any crane or hoist rental
or maintenance business anywhere in the State of Georgia or any other
geographic area in which the Company conducts its business as of the date
hereof. Nothing herein shall prohibit Executive from being a passive owner of
not more than 2% of the outstanding stock of any class of a corporation which
is publicly traded, so long as Executive has no active participation in the
business of such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company
or any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the Employment
Period or (iii) induce or attempt to induce any customer, supplier, licensee,
licensor, franchisee or other business relation of the Company or any
Subsidiary to cease doing business with the Company or such Subsidiary, or in
any way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or any Subsidiary (including,
without limitation, making any negative statements or communications about the
Company or its Subsidiaries).
8. Enforcement. If, at the time of enforcement of Section 5, 6 or 7 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then
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<PAGE> 4
existing, the parties hereto agree that the maximum period, scope or
geographical area reasonable under such circumstances shall be substituted for
the stated period, scope or area. Because Executive's services are unique and
because Executive has access to Confidential Information and Work Product, the
parties hereto agree that money damages would not be an adequate remedy for any
breach of this Agreement. Therefore, in the event a breach or threatened
breach of this Agreement, the Company or its successors or assigns may, in
addition to other rights and remedies existing in their favor, apply to any
court of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce, or prevent any violations of, the provisions
hereof (without posting a bond or other security). Executive agrees that the
restrictions contained in Section 7 are reasonable.
9. Other Businesses. As long as Executive is employed by the Company or
any of its Subsidiaries, Executive agrees that he will not, except with the
express written consent of the Board, become engaged in, or render services
for, any business other than the business of the Company, any of its
Subsidiaries or any corporation or partnership in which the Company or any of
its Subsidiaries have an equity interest.
10. Executive's Representations. Executive hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms. Executive hereby acknowledges and represents that he has
consulted with independent legal counsel regarding his rights and obligations
under this Agreement and that he fully understands the terms and conditions
contained herein.
11. Survival. Sections 5, 6 and 7 shall survive and continue in full
force in accordance with their terms notwithstanding any termination of the
Employment Period.
12. Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
Notices to Executive:
Carter Wilson
c/o Aerial Platforms, Inc.
1857 Doan Way
Norcross, GA 30093
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<PAGE> 5
Notices to the Company:
Aerial Platforms, Inc.
c/o National Equipment Services
6100 Sears Tower
Chicago, Illinois 60606
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
13. Severability. 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 is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
14. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way.
15. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
16. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
17. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and
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<PAGE> 6
assigns, except that Executive may not assign his rights or delegate his
obligations hereunder without the prior written consent of the Company.
18. Choice of Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Georgia, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Georgia or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Georgia.
19. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
* * * * *
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
AERIAL PLATFORMS, INC.
By: /s/ Carter B. Wilson
---------------------
Its: President
---------------------
/s/ Carter B. Wilson
----------------------------
Carter Wilson
<PAGE> 1
Exhibit 10.22
STATE OF GEORGIA
GWINNETT COUNTY
THIS LEASE AGREEMENT, made this 30th day of May, 1990, by and between
WEEKS SUPER PARTNERSHIP, LTD., hereinafter referred to as "Landlord," and
AERIAL PLATFORMS, INC., hereinafter referred to as "Tenant;"
WITNESSETH:
1.01 Landlord hereby leases to Tenant, and Tenant hereby leases from
Landlord, the property hereinafter referred to as the LEASED PREMISES,
described as: 16,000 sq. ft. of office/warehouse at 1857 Doan Way, Norcross,
Georgia, Gwinnett County, Building 5A,in Gwinnett Park, an shown on plan
attached hereto an Exhibit "A" and by reference incorporated herein.
TERM
2.01 TO HAVE AND TO HOLD said Leased Premises for a term of three (3)
years, commencing on June 1, 1990, and continuing until midnight on May 31,
1993, upon the following terms, conditions, and covenants:
RENTAL
3.01 As rental for the Leased Promises, Tenant agrees to pay to A. R. WEEKS
& ASSOCIATES, INC., for the account of Landlord, the sum of Forty-four Thousand
Seven Hundred and NO/100 ($44,700.00) Dollars per year, payable in monthly
installments each in the amount of Three Thousand Seven Hundred Twenty-Five and
N)/100 ($3,725.00) Dollars on or before the first day of each calendar month
beginning on June 1, 1990, and thereafter for the remainder of the term,
together with any other additional rental as hereinafter set forth. Tenant
shall pay interest at a rate of twelve percent (12%) per annum on all late
payments of rent. If the Lease shall commence on any date other than the first
day of a calendar month, or and on any date, other than the last day of a
calendar month, rent for such month shall be prorated. Tenant has deposited
with Landlord, upon delivery of this Lease Agreement, an amount equal to Three
Thousand Seven Hundred Twenty-Five and NO/100 ($3,725.00) Dollars, to be
applied as first month's rental.
3.02 In addition to the Rentals called for herein, Landlord agrees to
contract for the landscape maintenance service and Tenant agrees to pay the
Landlord an additional rental of Seventy and NO/100 ($70.00) Dollars per month
for said landscaping service. Said fee shall increase six percent (6%) each
year during the term of the lease.
<PAGE> 2
3.03 The rental provided in paragraph 3.01 "Rental" above, includes the
construction of tenant improvements on the basis set forth in the plans and
specifications attached, or to be attached, hereto in Exhibit "B".
3.04 Tenant agrees to pay as additional rent to Landlord, upon demand, its
pro rata share of any utility surcharges, or any other costs levied, assessed or
imposed by, or at the direction of, or resulting from statutes or regulations,
or interpretations thereof, promulgated by any Federal, State, Municipal or
local governmental authorities in connection with the use or occupancy of the
Leased Premises.
DELAY IN DELIVERY OF POSSESSION
4.01 If Landlord, for any reason whatsoever, cannot deliver possession of
the Leased Promises to Tenant at the commencement of the term of this Lease,
this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant
for any loss or damage resulting therefrom, but in the event there shall be a
proportionate reduction of rent covering the period between the commencement of
the term and the time when Landlord can deliver possession. If delay is longer
than three (3) months, Landlord will provide Tenant such space (not exceeding in
area the Leased Premises) as Landlord may have available, until the Leased
Premises can be completed, at no charge to Tenants The term of this Lease shall
be extended by such delay.
USE OF LEASED PREMISES
5.01 The Leased Promises may be used and occupied only for general
manufacturing and assembly, testing, warehousing and distribution, showroom and
offices and for no other purpose or purposes, without Landlord's prior written
consent. Tenant shall promptly comply at its sole expense with all laws,
ordinances, orders, and regulations affecting the Leased Premises and their
cleanliness, safety, occupation and use. Tenant shall not do or permit anything
to be done in or about the Leased Premises that will in any way increase the
fire insurance upon the building. Tenant will not perform any act or carry on
any practices that may injure the building or be a nuisance or menace to tenants
of adjoining promises. Tenant shall, at Tenant's sole cost and expense, comply
fully with all environmental laws and regulations, and all other legal
requirements, applicable to Tenant's operations at, on or within, or to Tenant's
use and occupancy of, the Leased Premises.
5.02 Tenant shall not (either with or without negligence) cause or permit
the escape, disposal or release of any biologically or chemically active or
other hazardous substances, or materials. Tenant shall not allow the storage or
use of such substances or materials in any manner not sanctioned by law or by
the highest standards prevailing in the industry for the storage and use of such
substances or materials, nor allow to be brought into the Project any such
materials or substances except to use in the ordinary course of Tenant's
business, and then only after written notice is given to Landlord of the
identity of such substances or materials. Without limitation,
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hazardous substances and materials shall include those described in the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended, 42 U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. Section 6901 et seq., any applicable state
or local laws and the regulations adopted under these acts. If any lender or
governmental agency shall ever require testing to ascertain whether or not
there has been any release of hazardous materials, then the reasonable costs
thereof shall be reimbursed by Tenant to Landlord upon demand as additional
charges if such requirement applies to the Leased Premises. In addition,
Tenant shall execute affidavits, representations and the like from time to time
at Landlord's request concerning Tenant's beat knowledge and belief regarding
the presence of hazardous substances or materials on the Leased Premises. In
all events, Tenant shall indemnify Landlord in the manner elsewhere provided in
this lease from any release of hazardous materials on the Leased Promises
occurring while Tenant is in possession, or elsewhere if caused by Tenant or
persons acting under Tenant. The within covenants shall survive the expiration
or earlier termination of the lease term. Tenant shall not be held responsible
for any hazardous substances or materials existing prior to it's occupancy or
use.
UTILITIES
6.01 Landlord shall not be liable in the event of any interruption in the
supply of any utilities. Tenant agrees that it will not install any equipment
which will exceed or overload the capacity of any utility facilities and that if
any equipment installed by Tenant shall require additional utility facilities,
the same shall be installed by Tenant at Tenant's expense in accordance with
plans and specifications approved in writing by Landlord. Tenant shall be solely
responsible for and shall pay all charges for use or consumption of sanitary
sewer, water, gas, electricity and any other utility services.
ACCEPTANCE OF LEASED PREMISES
7.01 By entry hereunder, Tenant acknowledges that it has examined the
Leased Premises and accepts the same an being in the condition called for by
this Lease, and as suited for the uses intended by Tenant.
ALTERATIONS, MECHANICS' LIENS
8.01 Alterations may not be made to the Leased Premises without prior
written consent of Landlord, and any alterations of the Leased Premises
excepting movable furniture and trade fixtures shall at Landlord's option become
part of the realty and belong to Landlord.
8.02 Should Tenant desire to alter the Leased Premises and Landlord gives
written consent to such alterations, at Landlord's option, Tenant shall contract
with a contractor approved by Landlord for the construction of such alterations.
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<PAGE> 4
8.03 Notwithstanding anything in paragraph 8.02 above, Tenant may, upon
written consent of Landlord, install trade fixtures, machinery or other trade
equipment in conformance with all applicable laws, statutes, ordinances, rules,
regulations, and the same may be removed upon the termination of this Lease
provided Tenant shall not be in default under any of the terms and conditions of
this Lease, and the Leased Premises are not damaged by such removal. Tenant
shall return the Leased Premises an the termination of this Lease in the same
condition as when rented to Tenant, reasonable wear and tear only excepted.
Tenant shall keep the Leased Premises, the building and property in which the
Leased Premises are situated free from any liens arising out of any work
performed for, materials furnished to, or obligations incurred by Tenant. All
such work provided for above, shall be done at such times and in such manner an
Landlord may from time to time desire. Tenant shall give Landlord written
notice five (5) days prior to employing any laborer or contractor to perform
work resulting in an alteration of the Leased Premises so that Landlord may post
a notice of non-responsibility.
WASTE AND QUIET CONDUCT
9.01 Tenant shall not commit, or suffer any waste upon the Leased Premises,
or any nuisance, or other act or thing which may disturb the quiet enjoyment of
any other tenant in the building containing the Leased Premises or any building
in the project in which the Leased Premises are located.
FIRE INSURANCE, HAZARDS
10.01 No use shall be made or permitted to be made of the Leased Promises,
nor acts done which might increase the existing rate of insurance upon the
building or cause the cancellation of any insurance policy covering the
building, or any part thereof, nor shall Tenant sell, or permit to be kept, used
or sold, in or about the Leased Premises, any article which may be prohibited by
the Standard form of fire insurance policies Tenant shall, at its sole cost and
expense, comply with any and all requirements pertaining to the Leased Premises,
of any insurance organization or company, necessary for the maintenance of
reasonable fire and public liability insurance, covering the Leased Premises,
building and appurtenances.
INDEMNIFICATION BY TENANT
11.01 Tenant shall indemnify and hold harmless Landlord against and from
all claims arising from any and all claims arising from Tenant's use of the
Leased Premises (other than those arising from negligence of Landlord or its
agents or employees), or the conduct of its business or from any activity, work,
or thing done, permitted or suffered by the Tenant in or about the Leased
Premises, and shall further indemnify and hold harmless Landlord against and
from any and all claims arising breach or default in the performance of any
obligation on Tenant's part to be performed under the terms of this Lease, or
arising from any act, neglect, fault or omission of the
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<PAGE> 5
Tenant, or of its agents or employees, and from and against all costs,
attorney's fees, expenses and liabilities incurred in or about such claim or
any action or proceeding brought relative thereto and in case any action or
proceeding be brought against Landlord by reason of any such claim, Tenant upon
notice from Landlord shall defend the same at Tenant's expense by counsel,
chosen by Tenant and who is reasonably acceptable to Landlord. Tenant, as a
material part of the consideration to Landlord, hereby assumes all risk of
damage to property or injury to persons in or about the Leased Premises from
any cause whatsoever except that which in caused by the failure of Landlord to
observe any of the terms and conditions of this Lease where such failure has
persisted for an unreasonable period of time after written notice of such
failure, and Tenant hereby waives all claims in respect thereof against
Landlord. The obligations of Tenant under this section arising by reason of
any occurrence taking place during the term of this Lease shall survive any
termination of this Lease.
WAIVER OF CLAIMS
12.01 Tenant, as a material part of the consideration to be rendered to
Landlord, hereby waives all claims against Landlord for damages to goods, wares
and merchandise in, upon or about the Leased Premises and for injury to Tenant,
its agents, employees, invitees or third persons in or about the Leased Premises
from any cause arising at any time, other than the negligence of Landlord, its
agents and employees.
REPAIRS
13.01 Tenant shall, at its sole cost, keep and maintain the Leased Promises
and appurtenances and every part thereof (excepting exterior walls and roofs
which Landlord agrees to repair) including by way of illustration and not by
way, of limitation all windows (Tenant accepts premises with a broken showroom
window and shall not be held liable for such repair during the term of this
lease), and skylights, doors, any store front and the interior of the Leased
Premises, including all plumbing, heating, air conditioning, sewer, electrical
systems and all fixtures and all other similar equipment serving the Leased
Premises in good and sanitary order, condition, and repair. Tenant shall be
responsible for all pent control within the Leased Premises, including, but not
limited to the eradication of any ants or termites should infestation be
observed during the term of the Lease. Tenant shall, at its sole cost, keep and
maintain all utilities, fixtures and mechanical equipment used by Tenant in good
order, condition, and repair. All windows shall be washed and cleaned as often
as necessary to keep them clean and free from smudges and stains. In the event
Tenant fails to maintain the Leased Promises as required herein or fails to
commence repairs (requested by Landlord In writing) within thirty (30) days
after such request, or fails diligently to proceed thereafter to complete such
repairs, Landlord slash have the right in order to preserve the Leased Premises
or portion thereof and/or the appearance thereof, to make such repairs or have a
contractor make such repairs and charge Tenant for the cost thereof as
additional rent, together with interest at the rate of twelve percent (12%) per
annum from the date of making such payments.
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<PAGE> 6
13.02 Landlord agrees to keep in good repair the roof, foundations, and
exterior walls of the Leased Premises except repairs rendered necessary by the
negligence of Tenant, its agents, employees or invitees. Landlord gives to
Tenant exclusive control of Leased Promises and shall be under no obligations
to inspect said Leased Premises. Tenant shall promptly report in writing to
Landlord any defective condition known to it which Landlord is required to
repair, and Landlord shall move with reasonable diligence to repair such item.
Failure to report such defects shall make Tenant responsible to Landlord for
any liability incurred by Landlord by reason of such defects.
13.03 Tenant shall obtain upon occupancy and keep current during the lease
term a service maintenance contract on the heating, ventilation and air
conditioning (HVAC) equipment serving the Leased Promises. The contract shall
be between Tenant and a dealer-authorized company acceptable to Landlord, and
shall at a minimum provide for an equipment check and tune-up service each
spring and fall, and filter and lubrication service every three months. A copy
of said contract shall be provided to Landlord, as shall any modification
extension, renewal or replacement thereof.
l3.04 Landlord warrants that, at the time of execution of this Lease, all
plumbing, heating, air conditioning, electrical systems and all fixtures and
all other similar equipment serving the Leased Premises are in good and working
order, In the event that such equipment should need repairs during the first
forty-five (45) days after the date of execution of this Lease, for reasons
other than the actions of Tenant,, its employees, invitees or customers, Tenant
shall promptly report in writing to Landlord such defective condition and
Landlord shall move with reasonable diligence to repair such item.
SIGNS, LANDSCAPING
14.01 Landlord shall have the right to control landscaping and approve the
placing of signs and the size and quality of the same. Tenant shall make no
alterations or additions to the Leased Premises or landscaping and shall place
no exterior signs on the Leased Premises without the prior written consent of
Landlord. Any signs not in conformity with the Lease may be immediately
removed by Landlord.
ENTRY BY LANDLORD
15.01 Tenant shall permit Landlord and Landlord agents to enter the
Leased, Promises at all reasonable times for the purpose of inspecting the same
or for the purpose of maintaining the building, or for the purpose of making
repairs, alterations, or additions' to any portion of the building, including
the erection and maintenance of such scaffolding, canopies, fences and props as
may be required, or for the purpose of posting notices of non-responsibility
for alterations, additions, or repairs, or for the purpose of showing the
Leased Premises to prospective tenants, or placing upon the building any usual
or ordinary "for sale" signal, without any rebate of rent and without any
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<PAGE> 7
liability to Tenant for any loss of occupation or quiet enjoyment of the Leased
Premises thereby occasioned; and shall permit Landlord at any time within
thirty (30) days prior to the expiration of this Lease, to place upon the
Leased Promises any usual or ordinary "to let" or "to lease" signs. For each
of the aforesaid purposes, Landlord shall at all times have and retain a key
with which to unlock all of the exterior doors about the Leased Premises.
TAXES
16.01 (a) Tenant shall, without notice or demand, as additional rent, pay
and discharge, on or before the last day on which the same may be paid without
penalty, "all taxes", (as hereinafter defined) which shall or may during the
term be levied, assessed or imposed on or become a lion upon or grow due or
payable out of or for or by reason or the Leaned Promises or any part thereof
or the Landlord's interest in the real property described on Exhibit "A"
hereto. For the purposes hereof "taxes" means all taxes at any time imposed by
the United States of America or by any state, city, county or other political
or taxing subdivision thereof upon or against this Lease, the Leased Promises,
the use or occupancy thereof, the buildings, improvement or personalty thereon,
and all assessments imposed subsequent to the execution and delivery of this
lease by both Landlord and Tenant (including assessments for benefits from
public works or improvements, whether commenced or completed prior to the
commencement of the term hereof and whether or not to be completed within said
term), levies, license fees, permit fees, water rents and clergies, sewer
rents, excises, franchises, imposts, interest, costs, penalties and charges,
general and special, ordinary and extraordinary, of whatever name, nature and
kind, and whether or not within the contemplation of the parties hereto, which
are now or may hereafter be levied, assessed, charged or imposed upon or
against, this Lease, the Leaned Promises, the use or occupancy thereof or the
building, improvements or personal property thereon or which are or may become
a lion an any thereof. Notwithstanding anything hereinabove to the contrary,
"taxes" shall not include any penalties or interest imposed or incurred because
of Landlord's dilatory payment, unless the delay in payment is due to Tenant's
breach of its obligations under this Section 16.
(b) All assessments imposed upon the Leaned Promises during the final year
of the term of this Lease for public improvements which shall benefit the Leased
Promises after the expiration of this Lease shall be equitably pro rated, so
that only the portion of such assessments properly. allocable to the term of
this Lease shall be included in determining Tenant's share of "taxes" in
accordance with Section l6.0l(a) above.
16.02 Tenant shall pay-as additional rent the amount of all taxes, other
than Income taxes, upon or measured by the rent payable hereunder, whether an a
sales tax, transaction privilege tax, excise tax, or otherwise, which additional
rent shall be due and payable at the same time as each installment of basic
rent.
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<PAGE> 8
l6.03 Joint Assessment. If the Leaned Promises are not separately
assessed, Tenant's liability shall be an equitable proportion of the real
property taxes for all of the land and improvements included with the tax
parcel assessed, such proportion to be determined by Landlord from the
respective valuations assigned in the assessor's work shoots or such other
information aim may be reasonably available. Landlord's reasonable
determination thereof, in good faith, shall be conclusive.
16.04 Personal Property Taxes. Tenant shall pay prior to delinquency all
taxes assessed against and levied upon trade fixtures, furnishings, equipment
and all other personal property of Tenant contained in the Leased Promises or
elsewhere.
INSURANCE
17.01 Liability Insurance. Tenant, at its own expense, shall provide and
keep in force with companies acceptable to Landlord public liability insurance
for the benefit of Landlord and Tenant jointly against liability for bodily
injury and property damage in the amount of not less than Five Hundred Thousand
Dollars ($500,000.00) in respect to injuries to or death of more than one
person in any one occurrence, in the amount of not less than Five Hundred
Thousand Dollars ($500,000.00) in respect to injuries to or death of any one
person, and in the amount of not less than Five Hundred Thousand Dollars
($500,000.00) per occurrence in respect to damage to property, such limits to
be for any greater amounts as may be reasonably Indicated by circumstances from
time to time existing. Tenant shall furnish Landlord with a certificate of
such policy within thirty (30) days of the commencement date of this Lease and
whenever required shall satisfy Landlord that such policy is ill full force and
effect. Such policy shall name Landlord as all additional insured and shall be
primary and non-contributing wine any insurance carried by Landlord. The
policy shall further provide that it shall not be canceled or altered without
twenty (20) days prior written notice to Landlord. The limits of said
insurance shall not, however, limit the liability of Tenant hereunder. in the
event that the Leaned Premises constitute a part of a larger property said
insurance shall have a Landlord's Protective Liability endorsement attached
thereto. If Tenant shall fail to procure and maintain said Insurance Landlord
may, but shall not be required to procure and maintain the same but at the
expense of Tenant.
17.02 Property Insurance. (a) Tenant shall maintain In full force and
effect on all of its fixtures and equipment in the Leased Premises a policy or
policies of fire and extended coverage insurance with standard coverage
endorsement to the extent of at least eighty percent (80%) of their insurable
value. During the term of this Lease the proceeds from any such policy or
policies of insurance shall be used for the repair or replacement of the
fixtures, and Landlord will sign all documents necessary or proper in
connection with the settlement of any claim or lose by Tenant. Landlord will
not carry Insurance on Tenant's possessions. Tenant shall furnish Landlord
with a certificate of such policy within thirty (30) days of the commencement
of this Lease, and whenever required, shall satisfy Landlord that such policy
is in full force and effect.
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<PAGE> 9
(b) Landlord shall obtain and keep In force during the term of this Lease
a policy or policies of Insurance covering loss or damage to the Leased
Promises, in the amount of the full replacement value thereof, as the same may
exist from time to time, but in no event less than the total amount of
promissory notes secured by liens on the Leased Premises against all perils
included within the classification of fire, extended coverage, vandalism,
malicious mischief, special extended perils (all risk) and sprinkler leakage,
said insurance shall provide for payment of loss thereunder to Landlord or to
the holders of mortgages or deeds of trust on the Leased Premises.
(c) If the Leased Premises are part of a larger building, or if the Leased
Premises are part of a group of buildings owned by Landlord, which are adjacent
to Leased Premises, then Tenant shall pay for any increase in the property
insurance of such other building or buildings if said increase is caused by
Tenant's acts, omissions, use or occupancy of the Leased Promises.
(e) All policies of insurance shall provide that the insurers waive any
right of subrogation against Landlord or Tenant.
ABANDONMENT
18.01 Tenant shall not vacate nor abandon the Leased Promises at any time
during the term of this Lease; and If Tenant shall abandon, vacate or surrender
the Leased Premises, or be dispossessed by process of law, or otherwise, any
personal property belonging to Tenant and left on the Leased Promises shall, at
the option of the Landlord, be deemed abandoned and be and become the property
of Landlord.
DESTRUCTION
l9.01 In the event of (a) a partial destruction of the Leased Premises or
tho buildings of which the Leased Premises are a part (hereinafter called
the "building") during the lease term which requires repairs to either the
Leased Promises or the building, or (b) the Leased Promises or the building
being declared unsafe or unfit for occupancy by any authorized public authority
for any reason other than Tenant's act, use or occupation which declaration
requires repairs to either the Leased Promises or the building, Landlord shall
forthwith make repairs, provided repairs can be made within sixty (60) days
under the laws and regulations of authorized public authorities, but partial
destruction (including any destruction necessary in order to make repairs
required by any declaration) shall in no way annul or void this Lease, except
that Tenant shall be entitled to a proportionate reduction of rent while such
repairs are being made. The proportionate reduction is to be based upon the
extent to which the making of repairs shall interfere with the business carried
on by Tenant in the Leased Premises. In making repairs Landlord shall be
obligated to replace only such glazing as shall have been damaged by fire and
other damaged glazing shall be replaced by Tenant if repairs cannot be made
within sixty (60) days, Landlord may, at its option, make same within a
reasonable time, this Lease continuing in full force and effect and the rent to
be
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<PAGE> 10
proportionately abated, as in this paragraph provided. In the event that
Landlord does not so elect to make repairs which cannot be made within sixty
(60) days, or repairs cannot be made under current laws and regulations, this
Lease may be terminated at the option of either party. A total destruction
(including any destruction required by any authorized public authority) of
either the Leased Promises or the building shall terminate this Lease. In the
event of any dispute between Landlord and Tenant relative to the provisions of
this paragraph, they may each select an arbitrator, the two arbitrators so
selected shall select a third arbitrator and the three arbitrators so selected
shall hear and determine the controversy and their decision thereon shall be
final and binding on both Landlord and Tenant who shall bear the cost of such
arbitration equally between them. Landlord shall not be required to repair any
property installed in the Leased Promises by Tenant. Tenant waives any right
under applicable laws inconsistent with the terms of this paragraph and in the
event of a destruction agrees to accept any offer by Landlord to provide
Tenants with comparable space within the project in which the Leaned Premises
are located on the same terms as this Lease,
ASSIGNMENT AND SUBLETTING
20.01 Landlord shall have the right to transfer and assign, in whole or in
part its rights and obligations in the building and property that are the
subject of this Lease. Tenant shall not assign this Lease or sublet all or any
part of the Leased Premises without the prior written consent (such consent
shall not be unreasonably withheld) of the Landlord. In the event of any
assignment or subletting, Tenant shall nevertheless at all times, remain fully
responsible and liable for the payment of the rant and for compliance with all
of its other obligations under the terms, provisions and covenants of this
Lease. Upon the occurrence of an "event of default" as defined below, if all
or any part of the Leased Premises are then assigned or sublet, Landlord, in
addition to any other remedies provided by this Lease by law, may at its
option, collect, directly from the assignee or subtenant all rents becoming due
to Tenant by reason of the assignment or sublease, and Landlord shall leave a
security interest in all properties on the Leased Premises to secure payment of
such sum. Any collection directly by Landlord from the assignee or subtenant
shall not be construed to constitute a novation or a release of Tenant from the
further performance of Its obligations under this Lease.
INSOLVENCY OF TENANT
21.01 Either (a) the appointment of a receiver to take possession of all
or substantially all of the assets of Tenant, or (b) a general assignment by
Tenant for the benefit of creditors, or (c) any action taken or suffered by
Tenant under any insolvency or bankruptcy act shall, if any such appointment,
assignments or action continues for a period of thirty (30) days, constitute a
breach of this Lease by Tenant and Landlord may at its election without notice
" terminate this Lease and in that event be entitled to immediate possession of
the Leased Promises and damages as provided below.
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BREACH BY TENANT
22.01 In the event of a default, Landlord in addition to any and all other
rights or remedies that it may have hereunder, at law or in equity shall have
the right to either terminate this Lease or from time to time, without
terminating this Lease relet the Leased Promises or any part thereof for the
account and in the name of Tenant or otherwise, for any such term or terms and
conditions as Landlord in its solo discretion may dean advisable with the right
to make reasonable alterations and repairs to the Leased Promises. Tenant
shall pay to Landlord, as soon as ascertained, the costs and expenses incurred
by Landlord in such resetting or in making ouch reasonable alterations and
repairs. Should such rentals received from time to time from such reletting
during any month be loss than that agreed to be paid during that month by
Tenant hereunder, the Tenant shall pay such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly.
22.01 No such reletting of the Leased Promises by Landlord shall be
construed as an election on its part to terminate this Lease unless a notice of
such intention be given to Tenant or unless the termination thereof be decreed
by a court of competent jurisdiction. Notwithstanding any such reletting
without termination. Landlord may at any time thereafter elect to terminate
this Loan* for such previous breach provided it has not been cured. Should
Landlord at any time terminate this Lease for any breach, in addition to any
other remedy it may have, it may recover from Tenant all damages it may incur
by reason of such breach, including the cost of recovering the Leased Premises,
and included (1) all amounts that would have fallen due as rent between the
time of termination of this Lease and the time of judgment, or other award,
less the avail of all relettings and attornments, plus interest on the balance
at the rate of twelve percent (12%) per year; and (2) the worth at the time of
the judgment or other award, of the amount by which the unpaid rent for the
balance of the term exceeds the amount of such rental loan that Tenant proves
could be reasonably avoided; (3) any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to
perform his obligations under this Lease or which in the ordinary course of
events would likely to result therefrom, "Worth" as used in this provision, is
computed by discounting the total at the discount rate of the Federal Reserve
Bank of Atlanta at the time of the judgment, or award, plus one percent (1%).
ATTORNEY'S FEES
23.01 If Landlord and Tenant litigate any provision of this Lease or the
subject matter of this Lease, the unsuccessful litigant will pay to the
successful litigant all costs and expenses, including reasonable attorneys'
fees and court costs, incurred by the successful litigant at trial and on any
appeal, it, without fault, either Landlord or Tenant is made a party to any
litigation instituted by or against the other, the other will indemnify the
faultless one against all lose, liability,, and expense, including reasonable
attorneys' fees and court costs, incurred by it in connection with such
litigation.
- 11 -
<PAGE> 12
CONDEMNATION
24.01 If at any time during the term of this Lease, title to the entire
Leaned Promises should become vented in a public or quasi-public authority by
virtue of the exercise of expropriation, appropriation, condemnation or other
power in the nature of eminent domain, or by voluntary transfer from the owner
of the Leased Premises under threat of such a taking then this Lease shall
terminate as of the time of such vesting of title, after which neither party
shall be further obligated to the other except for occurrence antedating such
taking. The same results shall follow if less than the entire Leased Promises
be thus taken, or transferred in lieu of such a taking, but to such extent that
it would be legally and commercially impossible for Tenant to occupy the
portion of the Leased Promises remaining, and impossible for Tenant to
reasonably conduct his trade or business therein.
24.02 Should there be such a partial taking or transfer in lieu thereof,
but not to such an extent as to make such continued occupancy and operation by
Tenant an impossibility, then this Lease shall continue on all of its same
terms and conditions subject only to an equatable reduction in rent
proportionate to such taking.
24.03 In the event of any such taking or transfer, whether of the entire
Leased Premises, or a portion thereof, it is expressly agreed and understood
that all sums awarded, allowed or received in connection therewith shall belong
to Landlord, and any rights otherwise vested in Tenant are hereby assigned to
Landlord, and Tenant shall have no interest in or claim to any such sums or any
portion thereof, whether the same bo for the taking of the property or for
damages, or otherwise.
NOTICES
25.01 All notices, statements, demands, requests, consents, approvals,
authorization offers agreements, appointments, or designations under this Lease
by either party to the other shall be in writing and shall be sufficiently
given and served upon the other party, if sent by certified mail, return
receipt requested, postage prepaid, and addressed as follower:
(a) To Tenant at the Leased Promises;
(b) To Landlord, addressed to Landlord at 4497 Park Drive,
Norcross, Georgia 30093, with a copy to such other place as Landlord
may from time to time designate by notice to Tenant.
WAIVER
26.01 The waiver by Landlord of any breach of any term, covenant, or
condition herein contained shall not be deemed to be a waiver of such term,
covenant, or condition or any subsequent breach of the same or any other term,
covenant, or condition herein contained. The subsequent acceptance of rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding
breach by Tenant of any term, covenant, or condition of this Lease, other than
the failure of Tenant
- 12 -
<PAGE> 13
to pay the particular rental so accepted, regardless of Landlord's knowledge of
such preceding breach at the time of acceptance of such rent.
EFFECT HOLDING OVER
27.01 If Tenant should remain in possession of the Leased Premises after
the expiration of the lease term and without executing a now lease, then such
holding over shall be construed as a tenancy from month to month, subject to
all the conditions, provisions, and obligations of this Lease insofar an the
same are applicable to a month to month tenancy, except that the rent payable
pursuant to subparagraph 3.01 hereof shall be doubled.
SUBORDINATION
28.01 This Lease, at Landlord's option, shall be subordinate to any ground
lease, first priority mortgage, first priority dead of trust, or first priority
security deed now or hereafter placed upon the real property of which the
Leased Promises are a part and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof
28.02 Tenant agrees to execute any documents required to effectuate such
subordination or to make this Lease prior to the lien of any such ground lease,
mortgage, deed of trust, or security deed, as the case may be, including
specifically a subordination, non-disturbance and attornment agreement in the
form hereto attached as Exhibit "C", and failing to do so within ton (10) days
after written demand, does hereby make, constitute and irrevocably appoint
Landlord as Tenant's attorney in fact and in Tenant's name, place and stead, to
do so. If requested to do so, Tenant agrees to attorn to any person or other
entity that acquires title to the real property encompassing the Leased
Premises, whether through judicial foreclosure, sale under power, or otherwise,
and to any assignee of such person or other entity.
ESTOPPEL CERTIFICATE
29.01 Upon ten (10) days notice from Landlord to Tenant, Tenant shall
deliver a certificate dated an of the first day of the calendar month in which
such notice is received, executed by an appropriate officer, partner, or
individual, in the form as Landlord may require and stating but not limited to
the following (i) the commencement date of this Lease; (ii) the space occupied
by Tenant hereunder; (iii) the expiration date hereof; (iv) a description of
any renewal or expansion options; (v) the amount of rental currently and
actually paid by Tenant under this Lease; (vi) the nature of any default or
claimed default hereunder by Landlord and (vii) that Tenant in not In default
hereunder nor has any event occurred which with the passage of time or the
giving of notice would become a default by Tenant hereunder.
- 13 -
<PAGE> 14
PARKING
30.01 No vehicle may be repaired or serviced in the parking area and any
vehicle deemed abandoned by Landlord will be towed from the project and all
costs therein shall be borne by the Tenant, All driveways, ingress and egress,
and all parking spaces are for the joint use of all tenants. No area outside
of the Leased Promises shall be used by Tenant for storage without Landlord's
prior written permission. There shall be no parking permitted on any of the
streets or roadways located In Gwinnett Parks.
MORTGAGE PROTECTION
31.01 In the event of any default on the part of Landlord, Tenant will
give notice by registered or certified mail to any beneficiary of a deed or
trust or holder or a security deed or mortgage covering the Leased Premises
whose address shall have been furnished it, and shall offer such beneficiary or
holder a reasonable opportunity to cure the default, including time to obtain
possession of the Leased Premises by power of sale or a judicial foreclosure,
if such should prove necessary to effect a cure.
PROTECTIVE COVENANTS
32.01 This Lease is subject to the Protective Covenants, attached hereto
an Exhibit "D", and to such rules and regulations pertaining to Gwinnett Park
which may hereafter be adopted and promulgated.
MISCELLANEOUS PROVISIONS
A. Whenever the singular number in used in this Lease and when required by
the context, the same shall include the plural, and the masculine gender shall
include the feminine and neuter genders, and the word "person" shall include
corporation, firm or association. If there be more than one tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
B. The headings or titles to paragraphs of this Lease are not a part of
this Lease and shall have no effect upon the construction or interpretation of
any part of this Lease,
C. This instrument contains all of the agreements and conditions made
between the parties to this Lease and may not be modified orally or in any
other manner than by agreement in writing signed by all parties to this Lease.
D. Time is of the essence of each torn and provision of this Lease.
- 14 -
<PAGE> 15
E. Except an otherwise expressly stated, each payment required to be made
by Tenant shall be in addition to and not in substitution for other payments to
be made by Tenant.
F. Subject to paragraph 20, the terms and provisions of this Lease shall
be binding upon and inure to the benefit of the heirs, executors,
administrators, successors, and assigns of Landlord and Tenant.
G. All covenants and agreements to be performed by Tenant under any of the
terms of his Lease shall be performed by Tenant at Tenant's sole cost and
expense and without any abatement of rent.
H. Where the consent of a party Is required, such consent will not be
unreasonably withhold.
I. This Lease shall create the relationship of Landlord and Tenant between
Landlord and Tenant; no estate shall pass out of Landlord; Tenant has only a
usufruct, not subject to levy and/or sale and not assignable by Tenant except
an provided in paragraph 20.01 hereof.
J. Tenant acknowledges and agrees that Landlord shall not provide guards
or other security protection for the Leased Premises and that any and all
security protection shall be the sole responsibility of Tenant.
K. This Lease shall be governed by Georgia law.
I. Tenant shall not record this Lease or a memorandum thereof without the
written consent of Landlord. Upon the request of Landlord, Tenant shall join
in the execution of a memorandum or so-called "short form" of this Lease for
the purpose of recordation. Said memorandum or short form of this Lease shall
describe the parties, the Leased Premises and the lease term, and shall
incorporate Lease by reference.
M. Landlord's liability for performance of its obligations under tile
terms of this Lease shall be limited to its interest in the Leased Premises.
- 15 -
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto who are individuals have set their
hands and seals, and tile parties who are corporations have caused this
instrument to be duly executed by its proper officers and its corporate seal to
be affixed, as of the day and year first above written.
Signed, sealed and delivered as LANDLORD:
to Landlord, in the presence of: WEEKS SUPER PARTNERSHIP, LTD.
/s/ Renita R. Miles By: /s/ A.R. Weeks Jr.
- ------------------- ---------------------
Name:
Its:
- ----------------------------
Notary Public
Signed, sealed and delivered as TENANT:
to Landlord, in the presence of: AERIAL PLATFORMS, INC.
By: /s/ Carter B. Wilson
- ---------------------------- ----------------------
Name: Carter B. Wilson
Its: President
- ----------------------------
Notary Public
ATTEST:
By: /s/ Vicky B. Wilson
----------------------
Name: Vicky B. Wilson
Its: Corporate Secretary
[CORPORATE SEAL]
- 16 -
<PAGE> 17
EXHIBIT C
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT, made as of the ___ day of _______________________, 19__,
between _____________________________ with offices at ________________________
("Tenant") and ___________________________________ (herein, together with its
successors, transferees and assigns, the "Mortgagee") ;
W I T N E S S E T H:
WHEREAS, Mortgagee is about to or has heretofore granted to _____________,
a Georgia partnership (the "owner") a first mortgage loan, which loan in
secured by a security deed (herein "Mortgage") dated as of ___________________,
19__ and duly recorded on _______________________________________, 19__ in the
land records of Gwinnett County, Georgia; and
WHEREAS, the Mortgage is to be a first and prior lien upon the Owner's fee
estate In the real property described in Exhibit "A" annexed hereto ("Mortgaged
Premises"); and
WHEREAS, Tenant In occupying a portion of the Mortgaged Premises under a
lease dated an of ___________________________________, 19___ in which Owner is
Landlord (the "Lease") covering that portion of the Mortgaged Promises therein
more particularly described (the "Leased Promises"); and
WHEREAS, Tenant desires to be assured of its continued and undisturbed
occupancy of the Leased Promises should the Mortgage be foreclosed or the
Mortgaged Promises sold pursuant to any power of sale contained therein and
Mortgagee in agreeable thereto.
NOW THEREFORE, in consideration of the mutual covenants contained In this
Agreement and in further consideration of the sum of ONE DOLLAR ($1.00) each to
the other in hand paid, the receipt whereof in hereby acknowledged, Tenant and
Mortgagee mutually covenant and agree an follows:
FIRST: The Lease and all of Tenant's rights, interest and estate therein
and thereunder are hereby made subject and subordinate to the lien of the
Mortgage and to any extensions, renewals, replacements, modifications,
additions or consolidations thereof and to all rights, title and interest of
Mortgagee and its successors and assigns therein and thereunder.
SECOND: In the event, however, proceedings shall ever be instituted by
Mortgages to foreclose or liquidate the Mortgage to foreclose or liquidate the
Mortgage, the Tenant's possession of its leased portion of the Mortgaged
Premises shall not be disturbed by the foreclosure proceedings
<PAGE> 18
and the Mortgaged Promises shall be sold at any foreclosure sale subject to
Tenant's possession on condition that:
(a) there shall be, at, the time of commencement of foreclosure
proceedings, an well an all subsequent times, no default by Tenant in
the due and timely observance and performance of any covenant and
agreement in. the Lease to be observed and performed by Tenant; and
(b) the Tenant shall not have entered into any agreement modifying any
term, condition or agreement of the Mortgagee-approved Lease without
the prior written consent of Mortgagee.
THIRD: Tenant shall attorn to Mortgagee while Mortgages is in possession
of the Mortgaged Premises, or to a Receiver appointed in any action or
proceeding to foreclose the Mortgage. In the event of the completion of
foreclosure proceedings and sale of the Mortgaged Premises or in the event the
Mortgagee should otherwise acquire possession of the Mortgaged Premises, the
Tenant will promptly upon demand attorn to the purchaser at the foreclosure
sale or to Mortgagee, as the case may be, and will recognize such purchaser or
the Mortgagee as the Tenant's landlord. The Tenant agrees to execute and
deliver, at any time and from time to time, upon the request of the Mortgagee
or the purchaser at the foreclosure sale, as the case may be, any Instrument
which may be necessary or appropriate to such successor landlord to evidence
such attornment. The Tenant shall,, upon demand of the Mortgagee or any
Receiver or purchaser at the foreclosure sale, pay to the Mortgagee or to such
Receiver or purchaser, an the case may be, all rental monies then due or an
they thereafter become due.
FOURTH: Upon the attornment provided for in preceding Paragraph THIRD the
Tenant's occupancy shall thereafter be in full force and effect as under a
direct Lease between Mortgagee, the Receiver or the purchaser At the
foreclosure sale, as the case may be, and Tenant. it is specifically understood
and agreed that Mortgagee or any such Receiver or purchaser shall not be:
(a) liable for any act, omission, negligence or default of arty prior
landlord, or
(b) subject to any offsets, claims or defenses which Tenant might have
against any prior landlord; or
(c) bound by any rent or additional rent which Tenant might have a d for
more than one month in advance to any prior landlord; or
(d) bound by any amendment or modification of the Lease made without the
prior written consent of the Mortgagee.
<PAGE> 19
FIFTH: On and after the date Tenant in good standing attorns to Mortgagee
or any Receiver or subsequent owner in pursuance of its agreement herein set
forth, Mortgagee, the Receiver or such subsequent owner will undertake and
perform all subsequent obligations of the Landlord an not forth in the Lease
for the benefit of and undisturbed occupancy of Tenant under the Lease.
SIXTH: Tenant agrees it will not amend, modify nor abridge the Lease in
any way, nor cancel or surrender the same without prior written approval of the
Mortgagee other than by reason of a continued uncured material default of the
landlord under the Lease, nor will the Lease ever merge into the fee in the
event that Mortgagee acquires fee title to the Mortgaged Premises.
SEVENTH: Any notices or other communication to be given hereunder by
either party shall be In writing and shall be deemed to have been sufficiently
given or served for all purposes if sent by registered or certified rail with
return receipt requested to the other party hereto at its address above stated
or such other address of which written notification has been timely given to
the other party.
EIGHTH: Mortgagee has and shall have the continuing right to execute and
record in the Land Records of Gwinnett County, Georgia at any time, in its
unilateral discretion, a Declaration of Subordination for the purpose of
thereby subordinating its rights, title and interest in and under the Mortgage
to the rights, title and interest of Tenant under the Lease. Such Declaration
cf Subordination shall, at Mortgagee's election, operate, function and be in
full force and effect for whatever period of time Mortgagee declares therein
that it shall be in force not exceeding the term of the Lease and any
extensions thereof and the said Declaration may be voided unilaterally by
Mortgagee when it so elects.
NINTH: Tenant waives any and all rights it may have to execute and record
after the date hereof any document purporting to again or further subordinate
its right, title or interest under the Lease to the lien of either the Mortgage
or any other mortgage or deed of trust or any ground lease or any agreement
modifying or amending the Mortgage except with the written consent of
Mortgagee.
TENTH: This Agreement cannot be changed orally but only in writing signed
by both parties hereto.
ELEVENTH: This Agreement may be recorded by either party at its own
expense in the Land Records of Gwinnett County, Georgia whenever, in Its sole
discretion, either party elects so to do.
<PAGE> 20
TWELFTH: All of the terms, covenants and conditions hereof shall run with
the Mortgaged Promises and shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused title Agreement to be
duly executed, acknowledged and delivered the day and year first above written.
SIGNED, SEALED AND DELIVERED TENANT:
in the presence of:
- -----------------------
BY: /s/ Carter B. Wilson
- ----------------------- ----------------------------
MORTGAGEE
- ----------------------- BY: ----------------------------
- -----------------------
The undersigned Owner of the leased and mortgaged promises hereby consents
to the foregoing Agreement and agrees to be bound by and subject to the terms
thereof.
BY: ----------------------------
<PAGE> 21
EXHIBIT D
PROTECTIVE COVENANTS
GWINNETT PARK
NORCROSS, GEORGIA
1. The exterior walls of all buildings shall be of masonry construction, its
equivalent or better. The use of materials shall be subject to the
approval of the Planning Advisory Committee.
2. No site or lot shall be used for any purpose or business which in
considered dangerous or unsafe, or which constitutes a nuisance, or in
noxious or offensive by reason of emission of dust, odor, gas, smoker
fuses or noise.
3. No loading docks shall be constructed facing any public street or highway
unless said loading dock and every part thereof is at least one hundred
(100) feet inside the right-of-way line of the street or highway on which
said loading dock fronts.
4. Outdoor storage yards shall be screened from public view and shall be
placed as to conform with the building line restrictions set forth in
Paragraph 7 of theme restrictive covenants.
5. Tenants shall not permit their employees to regularly park during business
hours on public streets within said Park. It will be the responsibility
of the said tenant, their successors, assigns, or other persons holding
under them to provide adequate off-street parking for employees and
visitors within property lines. All such parking areas shall be covered
with a hard, dust free, paved surface, All paved areas will be curbed.
6. The ratio of building coverage to the total site area will be subject to
the approval of the Planning Committee but in no case may the ratio exceed
fifty percent (50%).
7. No building shall be constructed on any lot nearer than thirty (30) feet
to the right-of-way line of street. In the case of cornet lots both
thirty (30) foot front setbacks will apply, There must be maintained a
strip of twelve (12) feet minimum of landscaped ground, landscaped in
accordance with the architects' plans, along and within the street
property lines, exclusive of drives and walks.
8. Minimum side yards shall be twenty-five (25) feet and shall aggregate
fifty (50) feet on each individually owned lot, provided, however, where
suitable the twenty-five (25) foot
<PAGE> 22
minimum may be waived by the Planning Advisory Committee, In tits event
more than one lot shall be owned by one person or entity and In the
improvement of such lot or tract a building shall be erected on more than
one lot, then the side line restriction on the Interior line or lines
shall be waived. Provided, further, that if a part of a tract or lot
shall be shod before any improvement shall have been erected, then the
line between the part sold and the part retained shall be the property
line to which the setback restriction shall apply.
9. The tenant of any site or lot shall at all times keep the Leased
Premises, buildings, improvements and appurtenances in a safe, clean,
wholesome condition and comply in all respects with all government,
health, fire and police requirements and regulations, and any tenant will
remove at his or its own expense any rubbish of any character whatsoever
which may accumulate on said site or lot, and in the event said tenant
fails to comply with any or all of the aforesaid specifications and/or
requirements, then and only then, the owner shall leave the right,
privilege and license to enter upon the Leased Premises and make any and
all corrections or Improvements that may be necessary to meet such
standards at the expense of the tenants.
10. The tenant of any site or lot shall at all times keep the landscaping in
good order and condition. Should the tenant of any sit or lot fail to
remedy any deficiency in the maintenance of the landscaping after proper
notification by the Planning Advisory Committee, the owner hereby
expressly reserves the right, privilege and license to make any and all
corrections or improvements in landscape maintenance at the expense of the
tenant.
11. Plans and specifications for the construction, installation or alteration
of all outdoor signs shall be first submitted to and have the written
approval of Gwinnett Park, its successors or assigns, which approval shall
not be unreasonably withheld.
12. The invalidation of any one of the restrictions herein set forth or the
failure to enforce any of said restrictions at the time of its violation
shall in no event effect any of the other restrictions nor be deemed a
waiver of the right to enforce tho same thereafter.
13. Each of the above and foregoing protective covenants shall apply to owners
of property within the Gwinnett Park, an well as tenants. Wherever the
word "tenant" is used in these protective covenants, the same shall be
construed to include owners.
<PAGE> 23
FIRST AMENDMENT TO LEASE AGREEMENT
THIS FIRST AMENDMENT TO LEASE AGREEMENT (hereinafter referred to as the
"First Amendment") is made as of the 15th day of April, 1993, by and between
WEEKS SUPER PARTNERSHIP, LTD., by WWW, Ltd., as sole general partner,
hereinafter referred to as "Landlord"), and AERIAL PLATFORMS, INC. (hereinafter
referred to as "Tenant").
WITNESSETH:
WHEREAS, Landlord is landlord and Tenant is tenant under that certain
Lease Agreement (hereinafter referred to as the "Agreement") dated May 30,
1990, for the lease of 16,000 square feet of office/warehouse space at 1857
Doan Way, Norcross, Gwinnett County, Georgia, and certain easements, rights and
privileges appurtenant thereto (hereinafter referred to as the "Leased
Premises"); and
WHEREAS, the Agreement will expire by its terms on May 31, 1993 and Tenant
desires to continue to occupy the Leased Premises; and
WHEREAS, Landlord and Tenant desire to enter into this First Amendment and
have agreed to provide for an extension of the Lease and a rental rate
applicable to the Leased Premises being leased by Tenant;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid by
Landlord and Tenant to one another, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Landlord and Tenant, Landlord and Tenant amend the Agreement as follows:
1. Provided that Tenant is not in default hereunder at the time the
renewal term commences, the Agreement is hereby extended for an additional
three (3) year term effective June 1, 1993 and expiring on May 31, 1996, on all
the same terms, covenants and conditions as the original Agreement, with the
same base year as the original term, except the base monthly rental for the new
term shall be the sum of FORTY EIGHT THOUSAND AND 00/100 DOLLARS ($48,000.00)
per year payable in monthly installments of FOUR THOUSAND AND 00/100 DOLLARS
($4,000.00) due on or before the first day of each calendar month during the
term. The landscape maintenance fee shall continue at the same rate as the
original Agreement and shall continue to increase 6% annually as provided in
the Agreement.
2. Landlord shall, at Landlord's cost and expense, repair the cracks and
fill the potholes in the entrance driveway of the Leased Premises prior to June
1, 1993.
<PAGE> 24
3. Except as expressly modified by this First Amendment, all provisions,
terms and conditions of the Agreement shall remain in full force and effect.
4. In the event a provision of this First Amendment conflicts with a
provision of the Agreement, the First Amendment shall supersede and control.
5. All terms and phrases used herein shall have the same meaning as
assigned to them in the Agreement.
6. This First Amendment shall not be of any legal effect or consequence
unless signed by Landlord and Tenant, and once signed by Landlord and Tenant it
shall be binding upon and insure to the benefit of Landlord, Tenant, and their
respective legal representatives, successors and assigns.
7. This First Amendment has been executed and shall be construed under the
laws of the State of Georgia.
<PAGE> 25
IN WITNESS WHEREOF, the undersigned have caused this First Amendment to be
executed under seal and delivered as of the day and year first above written.
LANDLORD:
Singed, sealed and delivered WEEKS SUPER PARTNERSHIP, LTD.
in the presence of:
By: WWW, LTD., as sole general partner
- ----------------------------
Witness By: /s/ A.R. Weeks, Jr.
----------------------------------
Name: A.R. WEEKS, JR.
- ----------------------------
Notary Public
TENANT:
Signed, sealed and delivered AERIAL PLATFORMS, INC.
in the presence of:
BY: /s/ Carter B. Wilson
- ---------------------------- ---------------------------------
Witness Name:
---------------------------------
Title: President
- ---------------------------- ---------------------------------
Notary Public
ATTEST:
By: /s/ Vicky B. Wilson
--------------------------------
Name: Vicky B. Wilson
--------------------------------
Title: CORP. SEC/TREAS.
--------------------------------
[CORPORATE SEAL]
<PAGE> 26
SECOND AMENDMENT TO LEASE AGREEMENT
THIS SECOND AMENDMENT TO LEASE AGREEMENT (hereinafter referred to as the
"Second Amendment") is made as of the 6th day of March 1996, by and between
WEEKS REALTY, L.P. (hereinafter referred to as "Landlord") and AERIAL
PLATFORMS, INC. (hereinafter referred to as "Tenant").
WITNESSETH:
WHEREAS, Weeks Super Partnership, Ltd. and Tenant entered into that
certain Lease Agreement dated May 30, 1990, as amended by that certain First
Amendment to Lease Agreement dated April 15, 1993 (hereinafter collectively
referred to as the "Agreement") for the lease of 16,000 sq. ft. of
office/warehouse space at 1857 Doan Way, Norcross, Georgia which is more
particularly described in Exhibit "A" to the Agreement and certain easements,
rights and privileges appurtenant thereto (hereinafter referred to as the
"Leased Premises"); and
WHEREAS, Weeks Realty, L.P. succeeded to the interest of the Landlord
under the Agreement and is the Landlord with respect to the Leased Premises;
and
WHEREAS, the Agreement will expire by its terms on May 31, 1996 and Tenant
desires to continue to occupy the Leased Premises; and
WHEREAS, Landlord and Tenant desire to enter into this Second Amendment in
order to provide for an extension of the Agreement by Tenant upon terms and
conditions mutually acceptable to Landlord and Tenant;
NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid by
Landlord and Tenant to one another, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
Landlord and Tenant, Landlord and Tenant amend the Agreement as follows:
1. The Agreement is hereby extended for an additional two (2) year term
effective June 1, 1996 and continuing until midnight on May 31, 1998 on all of
the same terms, covenants and conditions as the original Agreement with the
same base year except that the base monthly rental for the new term shall be
the sum of Fifty Two Thousand Eight Hundred and 00/100 Dollars ($52,800.00) per
year payable in monthly installments of Four Thousand Four Hundred and 00/100
Dollars ($4,400.00) due on or before the first day of each calendar month
during the term. The landscape maintenance fee shall continue to increase 6%
annually as provided in the Agreement.
<PAGE> 27
2. Except as expressly modified by this Second Amendment, all provisions,
terms and conditions of the Agreement shall remain in full force and effect.
3. In the event a provision of this Second Amendment conflicts with a
provision of the Agreement, the Second Amendment shall supersede and control.
4. All terms and phrases used herein shall have the same meaning as
assigned to them in the Agreement.
5. This Second Amendment shall not be of any legal effect or consequence
unless signed by Landlord and Tenant, and once signed by Landlord and Tenant it
shall be binding upon and inure to the benefit of Landlord, Tenant, and their
respective legal representatives, successors and assigns.
6. This Second Amendment has been executed and shall be construed under
the laws of the State of Georgia.
<PAGE> 28
IN WITNESS WHEREOF, the undersigned have caused this Second Amendment to
be executed under seal and delivered as of the day and year first above
written.
LANDLORD:
Signed, sealed and delivered WEEKS REALTY, L.P., a Georgia limited
in the presence of: partnership
By: Weeks Corporation, a Georgia
corporation, its sole general partner
/s/Roni D. Comer
- ----------------------------
Witness
/s/ Stephanie Pongetti By: /s/ A.R. Weeks, Jr.
- ---------------------------- --------------------------------
Notary Public Name: A.R. Weeks, Jr.
--------------------------------
Its: Chairman/CEO
--------------------------------
[Corporate Seal]
TENANT:
Signed, sealed and delivered AERIAL PLATFORMS, INC.
in the presence of:
/s/ Deborah H. Abbott
- ----------------------------
Witness
By: /s/ Carter B. Wilson
- ---------------------------- --------------------------------
Notary Public Name: Carter B. Wilson
--------------------------------
Title: President
--------------------------------
ATTEST:
By: /s/ Vicky B. Wilson
---------------------------------
Name: Vicky B. Wilson
---------------------------------
Title: Corporate Secretary/Treasurer
---------------------------------
[CORPORATE SEAL]
<PAGE> 1
Exhibit 10.23
STOCK TRANSFER AGREEMENT
THIS STOCK TRANSFER AGREEMENT (this "Agreement"), dated as of February 18,
1997, is made by and among National Equipment Services, Inc., a Delaware
corporation (the "Company"), Carter B. Wilson ("Wilson"), Golder, Thoma,
Cressey, Rauner Fund V, L.P., a Delaware limited partnership ("GTCR"), Kevin
Rodgers ("Rodgers"), Dennis O'Connor ("O'Connor") and Paul Ingersoll
("Ingersoll," and together with GTCR, Rodgers and O'Connor referred to herein
as the "Existing Stockholders"). Except as otherwise indicated, capitalized
terms used herein are defined in Section 5 hereof.
WHEREAS, pursuant to a Stock Purchase Agreement, dated as of the date
hereof (the "Acquisition Agreement"), by and among the Company, Wilson, and
Aerial Platforms, Inc. ("Aerial"), the Company agreed to purchase, and Wilson
agreed to sell, 100% of the stock of Aerial (the "Acquisition").
WHEREAS, as partial consideration for the Acquisition, the Company agreed
to issue to Wilson 97 shares of its Class A Common Stock, par value $.01 per
share and 300 shares of its Class B Common Stock, par value $.01 per share
(collectively, the "Shares").
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Joinder. The Company, Wilson and the Existing Stockholders hereby
agree that the Stockholders Agreement and the Registration Agreement are hereby
amended by adding Wilson as a party thereto and as a Stockholder under the
Stockholders Agreement. Wilson hereby agrees to be subject to all of the
rights and obligations and to be bound by all of the terms and conditions set
forth in the Stockholders Agreement and the Registration Agreement to the same
extent as if Wilson were originally a party thereto. The Company and the
Existing Stockholders hereby waive any and all requirements and/or breaches
arising under the Stockholders Agreement, the Registration Agreement and any
agreements mentioned therein resulting from the consummation of the
transactions contemplated herein.
2. Restrictions on Transfer of Shares. In addition to the restrictions on
transfer set forth in the Stockholders Agreement and the Acquisition Agreement,
the holders of the Shares shall not sell, transfer, assign pledge or otherwise
dispose of (a "Transfer") any interest in any of the Shares except pursuant to
the following provisions:
(a) Retention of Shares. Until the fifth anniversary of the date of this
Agreement, each holder of Shares shall not Transfer any interest in any of the
Shares, except for Exempt Transfers (as defined in Section 2(b) below).
<PAGE> 2
(b) Transfer of Shares. Subject to Section 2(a) above and to any other
restrictions set forth in the Stockholders Agreement and the Acquisition
Agreement, each holder of Shares shall not Transfer any interest in any of the
Shares, except pursuant to (i) the provisions of Section 3 below or the
provisions of Section 5 or 7 of the Stockholders Agreement ("Exempt Transfers")
or (ii) the provisions of this Section 2; provided that in no event shall any
Transfer of Shares pursuant to this Section 2 be made for any consideration
other than cash payable upon consummation of such Transfer or in installments
over time. Prior to making any Transfer other than an Exempt Transfer, each
holder of Shares proposing to Transfer Shares (a "Selling Holder") will give
written notice (the "Sale Notice") to the Company and GTCR. The Sale Notice
will disclose in reasonable detail the identity of the prospective
transferee(s), the number and class of Shares to be transferred and the terms
and conditions of the proposed Transfer. The Selling Holder will not
consummate any Transfer until 110 days after the Sale Notice has been given to
the Company and to GTCR, unless the parties to the Transfer have been finally
determined pursuant to this Section 2 prior to the expiration of such 110-day
period (the date of the first to occur of such events is referred to herein as
the "Authorization Date").
(c) First Refusal Rights. The Company may elect to purchase all (but not
less than all) of the Shares to be transferred upon the same terms and
conditions as those set forth in the Sale Notice by delivering a written notice
of such election to the Selling Holder and GTCR within 60 days after the Sale
Notice has been given to the Company. If the Company has not elected to
purchase all of the Shares to be Transferred, GTCR may elect to purchase all
(but not less than all) of the Shares to be transferred upon the same terms and
conditions as those set forth in the Sale Notice by giving written notice of
such election to the Selling Holder within 90 days after the Sale Notice has
been given to GTCR. If neither the Company nor GTCR elect to purchase all of
the Shares specified in the Sale Notice, the Selling Holder may Transfer the
Shares specified in the Sale Notice at a price and on terms no more favorable
to the transferee(s) thereof than specified in the Sale Notice during the
60-day period immediately following the Authorization Date. Any Shares not
transferred within such 60-day period will be subject to the provisions of this
Section 2(c) upon subsequent Transfer. The Company may pay the purchase price
for such shares by offsetting amounts outstanding under any bona fide debts
owed by the Selling Holder to the Company.
(d) Certain Permitted Transfers. The restrictions contained in this
Section 2 will not apply with respect to transfers of Shares pursuant to
applicable laws of descent and distribution; provided that such restrictions
will continue to be applicable to the Shares after any such transfer and the
transferees of such Shares have agreed in writing to be bound by the provisions
of this Agreement.
(e) Termination of Restrictions. The restrictions on the Transfer of
Shares set forth in this Section 2 will continue with respect to each Share
until the date on which such Share has been transferred in a transaction
permitted by this Section 2 (except in a transaction contemplated by Section
2(d)); provided that in any event such restrictions will terminate on the first
to occur of a Sale of the Company or a Public Offering.
- 2 -
<PAGE> 3
3. Repurchase of Shares.
(a) In the event Wilson ceases to be employed by the Company or its
subsidiaries for any reason (the "Termination"), the Shares (whether held by
Wilson or one or more of Wilson's transferees, other than the Company, GTCR or
an affiliate of the Company or GTCR) will be subject to repurchase by the
Company and GTCR pursuant to the terms and conditions set forth in this Section
3 (the "Repurchase Option"). In the event of Termination, the purchase price
for each Share will be the Fair Market Value for such share.
(b) The Company's board of directors (the "Board") may elect to purchase
all or any portion of the Shares by delivering written notice (the "Repurchase
Notice") to the holder or holders of the Shares within 90 days after the
Termination. The Repurchase Notice will set forth the number of Shares to be
acquired from each holder, the aggregate consideration to be paid for such
shares and the time and place for the closing of the transaction.
(c) If for any reason the Company does not elect to purchase all of the
Shares pursuant to the Repurchase Option, GTCR shall be entitled to exercise
the Repurchase Option for the Shares the Company has not elected to purchase
(the "Available Shares"). As soon as practicable after the Company has
determined that there will be Available Shares, but in any event within 45 days
after the Termination, the Company shall give written notice (the "Option
Notice") to GTCR setting forth the number of Available Shares and the purchase
price for the Available Shares. GTCR may elect to purchase any or all of the
Available Shares by giving written notice to the Company within one month after
the Option Notice has been given by the Company. As soon as practicable, and
in any event within ten days after the expiration of the one-month period set
forth above, the Company shall notify each holder of Shares as to the number of
Shares being purchased from such holder by GTCR (the "Supplemental Repurchase
Notice"). At the time the Company delivers the Supplemental Repurchase Notice
to the holder(s) of Shares, the Company shall also deliver written notice to
GTCR setting forth the number of shares GTCR is entitled to purchase, the
aggregate purchase price and the time and place of the closing of the
transaction.
(d) The closing of the purchase of the Shares pursuant to the Repurchase
Option shall take place on the date designated by the Company in the Repurchase
Notice or Supplemental Repurchase Notice, which date shall not be more than one
month nor less than five days after the delivery of the later of either such
notice to be delivered. The Company and/or GTCR will pay for the Shares to be
purchased pursuant to the Repurchase Option by delivery of a check or wire
transfer of funds in the aggregate amount of the purchase price for such
shares. In addition, the Company may pay the purchase price for such shares by
offsetting amounts outstanding under any bona fide debts owed by Wilson to the
Company. The Company and GTCR will be entitled to receive representations and
warranties from the sellers as to their title to the Shares being sold and to
require all sellers' signatures be guaranteed.
(e) The right of the Company and GTCR to repurchase Shares pursuant to
this Section 3 shall terminate upon the occurrence of a Public Offering.
- 3 -
<PAGE> 4
4. Legend. The certificates representing the Shares will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED AS OF FEBRUARY [18], 1997, HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION
THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN RIGHTS
OF FIRST REFUSAL AND CERTAIN OTHER AGREEMENTS SET FORTH IN A STOCK
TRANSFER AGREEMENT BETWEEN THE COMPANY AND CERTAIN STOCKHOLDERS OF
THE COMPANY DATED AS OF FEBRUARY [18], 1997. A COPY OF SUCH
AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S
PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
No holder of Shares may sell, transfer or dispose of any Shares (except
pursuant to an effective registration statement under the Securities Act)
without first delivering to the Company an opinion of counsel (reasonably
acceptable in form and substance to the Company) that neither registration nor
qualification under the Securities Act and applicable state securities laws is
required in connection with such transfer.
5. Definitions.
"Fair Market Value" of each Share means the value agreed upon by the
holder thereof and the Board; provided that if the holder thereof and the Board
are unable to agree upon such value, then the holder thereof and the Company
will share the cost, on an equal basis, of a mutually acceptable business
appraiser whose determination will be binding.
"Person" means an individual, a partnership, a limited liability company,
a joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"Public Offering" means the sale in an underwritten public offering
registered under the Securities Act of 1933, as amended from time to time, of
shares of the Company's capital stock approved by the Board.
- 4 -
<PAGE> 5
"Registration Agreement" means that certain Registration Agreement, dated
as of June 4, 1996, among the Company and others, as the same may be amended or
amended and restated from time to time.
"Sale of the Company" means any transaction or series of transactions
pursuant to which any person(s) or entity(ies) other than GTCR in the aggregate
acquire(s) (i) capital stock of the Company possessing the voting power (other
than voting rights accruing only in the event of a default, breach or event of
noncompliance) to elect a majority of the Company's board of directors (whether
by merger, consolidation, reorganization, combination, sale or transfer of the
Company's capital stock, shareholder or voting agreement, proxy, power of
attorney or otherwise) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Stockholders Agreement" means that certain Stockholders Agreement, dated
as of June 4, 1996, among the Company and others, as the same may be amended or
amended and restated from time to time.
6. Miscellaneous.
(a) Remedies. The holders of Shares acquired hereunder (directly or
indirectly) will have all of the rights and remedies set forth in this
Agreement, and all of the rights and remedies which such holders have been
granted at any time under any other agreement or contract, and all of the
rights and remedies which such holders have under any law. Any Person having
any rights under any provision of this Agreement will be entitled to enforce
such rights specifically, to recover damages by reason of any breach of any
provision of this Agreement, and to exercise all other rights granted by law.
(b) Amendments and Waivers. Except as otherwise provided herein, no
modification, amendment or waiver of any provision hereof will be effective
against the Company or Wilson unless such modification, amendment or waiver is
approved in writing by each of the Company and Wilson. The failure of any
party to enforce any provision of this Agreement or under any agreement
contemplated hereby or under the Company's certificate of incorporation or
bylaws will in no way be construed as a waiver of such provisions and will not
affect the right of such party thereafter to enforce each and every provision
of this Agreement, any agreement referred to herein, the Company's certificate
of incorporation or bylaws in accordance with their terms.
(c) Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by any party in connection
herewith will survive the execution and delivery of this Agreement, regardless
of any investigation made by the Company or Wilson or on any of their behalves.
- 5 -
<PAGE> 6
(d) Successors and Assigns.
(i) Except as otherwise expressly provided herein, all covenants and
agreements contained in this Agreement by or on behalf of any of the
parties hereto will bind and inure to the benefit of the respective
successors and assigns of such parties whether so expressed or not. In
addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for Wilson's benefit as Wilson or
holder of Shares, as the case may be, are also for the benefit of and
enforceable by any subsequent holder of Wilson's Shares.
(ii) If a sale, transfer, assignment or other disposition of any
Shares is made in accordance with the provisions of this Agreement to any
Person, such Person shall, at or prior to the time such securities are
acquired, execute a counterpart of this Agreement with such modifications
thereto as may be necessary to reflect such acquisition, and such other
documents as are necessary to confirm such Person's agreement to become a
party to, and to be bound by, all covenants, terms and conditions of this
Agreement, the Stockholders Agreement and the Registration Agreement, each
as theretofore amended.
(e) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable under any applicable law or rule in any jurisdiction,
such provision will be ineffective only to the extent of such invalidity,
illegality or unenforceability in such jurisdiction, without invalidating the
remainder of this Agreement in such jurisdiction or any provision hereof in any
other jurisdiction.
(f) Counterparts. This Agreement may be executed simultaneously in
separate counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one
and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
(h) Governing Law. The corporate laws of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
securityholders. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in
accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
(i) Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
received by certified mail, return receipt
- 6 -
<PAGE> 7
requested, or sent by guaranteed overnight courier service. Notices, demands
and communications will be sent to parties hereto at the addresses indicated
below:
Notices to the Company:
National Equipment Services, Inc.
6100 Sears Tower
Chicago, Illinois 60606
Attention: Chief Executive Officer
With a copy to:
Kirkland and Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Sanford E. Perl
Notices to Wilson:
c/o Aerial Platforms, Inc.
1857 Doan Way
Norcross, GA 30093
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
* * * * *
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Stock Transfer
Agreement on the day and year first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
------------------------------
Its: President
------------------------------
/s/ Carter B. Wilson
------------------------------------
CARTER B. WILSON
GOLDER, THOMA, CRESSEY, RAUNER FUND V, L.P.
By: GTCR V, L.P.
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
Its: General Partner
By: /s/ Carl D. Thoma
------------------------------
Its: Principal
/s/ Kevin Rodgers
------------------------------------
KEVIN RODGERS
/s/ Dennis O'Connor
------------------------------------
DENNIS O'CONNOR
/s/ Paul R. Ingersoll
------------------------------------
PAUL INGERSOLL
<PAGE> 1
EXHIBIT 10.25
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of March 17, 1997, by and between NES Acquisition Corp., a Delaware corporation
(the "Company"), and James Horsley ("Executive").
WHEREAS, the Company is a wholly-owned subsidiary of National Equipment
Services, Inc., a Delaware corporation ("NES").
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive hereby
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in Section 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the President
of the Lone Star Rentals Division of the Company and shall have the normal
duties, responsibilities and authority of the President of the Lone Star
Rentals Division of the Compan, subject to the overall direction and authority
of the Company's Chief Executive Officer and the Company's board of directors
(the "Board").
(b) Executive shall report to the Company's Chief Executive Officer, and
Executive shall devote his best efforts and his full business time and
attention to the business and affairs of the Company and its Subsidiaries.
Executive shall perform his duties and responsibilities to the best of his
abilities in a diligent, trustworthy, businesslike and efficient manner.
(c) For purposes of this Agreement, "Subsidiaries" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one or more Subsidiaries.
3. Base Salary and Benefits.
(a) During the Employment Period, Executive's base salary shall be
$100,000.00 per annum and shall be subject to review by the Board on an annual
basis (the "Base Salary"), which salary shall be payable in regular
installments in accordance with the Company's general payroll practices and
shall be subject to customary withholding. In addition, during the Employment
Period, Executive shall be entitled to participate in all of the Company's
employee benefit programs for which senior executive employees of the Company
and its Subsidiaries are generally eligible.
<PAGE> 2
(b) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's requirements with respect to reporting and documentation of such
expenses.
(c) The Company shall provide Executive a monthly allowance of $_______
for expenses incurred by Executive in connection with Executive's use of his
personal vehicles in connection with the performance of his duties hereunder.
(d) In addition to the Base Salary, Executive will be eligible to earn an
annual bonus to be calculated in the manner set forth on Exhibit A attached
hereto.
4. Term.
(a) The Employment Period shall terminate upon the second anniversary of
the date hereof unless extended by mutual agreement of the parties or unless
earlier terminated (i) by Executive's resignation, death or disability, (ii) by
the Company for Cause or (iii) by the Company other than for Cause.
(b) If the Employment Period is terminated pursuant to clause (a)(i) or
clause (a)(ii) above, Executive shall be entitled to receive his Base Salary
through the date of termination. If the Employment Period is terminated
pursuant to clause (a)(iii) above, Executive shall be entitled to receive his
Base Salary through the first to occur of (i) the six month anniversary of the
date of termination and (ii) the second anniversary of the date hereof, if and
only if Executive has not breached and does not breach Section 5, 6 or 7
hereof.
(c) All of Executive's rights to fringe benefits and bonuses hereunder (if
any) which accrue or become payable after the termination of the Employment
Period shall cease upon such termination.
(d) For purposes of this Agreement, "Cause" shall mean (i) the commission
of a felony or a crime involving moral turpitude or the commission of any other
act or omission involving dishonesty, disloyalty or fraud with respect to the
Company or any of its Subsidiaries or any of their customers or suppliers, (ii)
conduct tending to bring the Company or any of its Subsidiaries into
substantial public disgrace or disrepute, (iii) substantial and repeated
failure to perform duties as reasonably directed by the Board, (iv) gross
negligence or willful misconduct with respect to the Company or any of its
Subsidiaries or (v) any other material breach of this Agreement.
5. Confidential Information. Executive acknowledges that the information,
observations and data obtained by him while he was employed by Lone Star
Rentals, Inc., the Company's predecessor, and while employed by the Company and
its Subsidiaries concerning the business or affairs of the Company or any of its
Subsidiaries ("Confidential Information") are the property of the Company or
such Subsidiary. Therefore, Executive agrees that he shall not disclose to any
unauthorized person or use for his own purposes any Confidential Information
without the
- 2 -
<PAGE> 3
prior written consent of the Board, unless and to the extent that the
aforementioned matters become generally known to and available for use by the
public other than as a result of Executive's acts or omissions. Executive
shall deliver to the Company at the termination of the Employment Period, or at
any other time the Company may request, all memoranda, notes, plans, records,
reports, computer tapes, printouts and software and other documents and data
(and copies thereof) relating to the Confidential Information, Work Product (as
defined below) or the business of the Company or any Subsidiary which he may
then possess or have under his control.
6. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable)
which relate to the Company's or any of its Subsidiaries' actual or anticipated
business, research and development or existing or future products or services
and which are conceived, developed or made by Executive while employed by the
Company or its Subsidiaries ("Work Product") belong to the Company or such
Subsidiary. Executive shall promptly disclose such Work Product to the Board
and perform all actions reasonably requested by the Board (whether during or
after the Employment Period) to establish and confirm such ownership
(including, without limitation, assignments, consents, powers of attorney and
other instruments).
7. Non-Compete, Non-Solicitation.
(a) In further consideration of the compensation to be paid to Executive
hereunder, Executive acknowledges that in the course of his employment with the
Company he shall become familiar with the Company's trade secrets and with
other Confidential Information concerning the Company and its Subsidiaries and
that his services shall be of special, unique and extraordinary value to the
Company and its Subsidiaries. Therefore, Executive agrees that during the
Employment Period and two years thereafter (the "Noncompete Period"), he shall
not directly or indirectly own any interest in, manage, control, participate
in, consult with or render services for any business competing with the
businesses of the Company or NES or any of the Affiliates of NES (including,
without limitation, the sale, rental and maintenance of construction equipment)
(a) prior to termination of the Employment Period, anywhere in the United
States or (b) after termination of the Employment Period, within 150 miles of
any store location of NES or any Affiliate of NES (but excluding any store
location of the Company, NES or any Affiliate of NES which is opened within 150
miles of any store location of a competing enterprise with respect to which
Executive has previously incurred significant financial obligations or in which
Executive has previously made a significant financial investment without
violating the provisions of this Section 7). Nothing herein shall prohibit
Executive from being a passive owner of not more than 2% of the outstanding
stock of any class of a corporation which is publicly traded, so long as
Executive has no active participation in the business of such corporation. The
earlier termination of the noncompetition agreements contained in Article 4 of
the Asset Purchase Agreement, dated as of the date hereof (the "Purchase
Agreement"), among Executive, the Company and Lone Star Rentals, Inc.
("Seller"), shall not affect in any manner the operation and effectiveness of
this Section 7. Notwithstanding any provision to the contrary, if the
Employment Period has terminated, the obligations of Executive
under this Section 7 shall terminate if (i) the Company fails to make a payment
to Seller when due pursuant to Section 2.3(a) or Section 2.5 of the Purchase
Agreement and such non-payment
- 3 -
<PAGE> 4
continues after sixty (60) days written notice from Executive to NES and the
Company; or (ii) NES ceases to pay quarterly interest payments as provided in
the Promissory Note (as such term is defined in the Purchase Agreement) and
such non-payment continues after sixty (60) days written notice from Seller to
NES and the Company; or (iii) the Company fails to make a payment of rent when
due under any of the Stockholder Lease Agreements (as such term is defined in
the Purchase Agreement), other than as a result of a breach of such Stockholder
Lease Agreement by Executive, and without the written consent of Executive,
and such non-payment continues after sixty (60) days written notice from
Executive to NES and the Company.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company
or any Subsidiary and any employee thereof, (ii) hire any person who was an
employee of the Company or any Subsidiary at any time during the Employment
Period or during the Noncompete Period, without the prior written consent of
the Board (as to Executive's brother, which consent shall not be unreasonably
withheld) or (iii) induce or attempt to induce any customer, supplier,
licensee, licensor, franchisee or other business relation of the Company or any
Subsidiary to cease doing business with the Company or such Subsidiary, or in
any way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or any Subsidiary (including,
without limitation, making any negative statements or communications about the
Company or its Subsidiaries).
8. Enforcement. If, at the time of enforcement of Section 5, 6 or 7 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services are unique and because Executive has access to
Confidential Information and Work Product, the parties hereto agree that money
damages would not be an adequate remedy for any breach of this Agreement.
Therefore, in the event a breach or threatened breach of this Agreement, the
Company or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce,
or prevent any violations of, the provisions hereof (without posting a bond or
other security). In addition, in the event of an alleged breach or violation
by Executive of Section 7, the Noncompete Period shall be tolled until such
breach or violation has been duly cured. Executive agrees that the
restrictions contained in Section 7 are reasonable.
9. Other Businesses. As long as Executive is employed by the Company or
any of its Subsidiaries, Executive agrees that he will not, except with the
express written consent of the Board (which shall not be unreasonably
withheld), become engaged in, or render services for, any business other than
the business of the Company, any of its Subsidiaries or any corporation or
partnership in which the Company or any of its Subsidiaries have an equity
interest.
10. Executive's Representations. Executive hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and will not conflict with, breach, violate or
cause a default under any contract, agreement,
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<PAGE> 5
instrument, order, judgment or decree to which Executive is a party or by which
he is bound, (ii) Executive is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any other
person or entity and (iii) upon the execution and delivery of this Agreement by
the Company, this Agreement shall be the valid and binding obligation of
Executive, enforceable in accordance with its terms. Executive hereby
acknowledges and represents that he has consulted with independent legal
counsel regarding his rights and obligations under this Agreement and that he
fully understands the terms and conditions contained herein.
11. Survival. Sections 5, 6 and 7 shall survive and continue in full
force in accordance with their terms notwithstanding any termination of the
Employment Period.
12. Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
Notices to Executive:
--------------------
James Horsley
18107 Colonial Forest Circle
Spring, Texas 77379
With copy to:
------------
Michael R. Carr
902 Main Street
Humble, Texas 77338
Notices to the Company:
----------------------
NES Acquisition Corp.
c/o National Equipment Services
6100 Sears Tower
Chicago, Illinois 60606
Attn.: Kevin P. Rodgers
With a copy to:
--------------
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
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<PAGE> 6
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S. mail.
13. Severability. 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 is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
14. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way.
15. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
16. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
17. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
his rights or delegate his obligations hereunder without the prior written
consent of the Company.
18. Choice of Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Illinois, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Illinois or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Illinois.
19. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
- 6 -
<PAGE> 7
* * * * *
- 7 -
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
NES ACQUISITION CORP.
By: /s/ Dennis O'Connor
-----------------------
Its: Chief Financial Officer
-----------------------
/s/ James E. Horsley
-----------------------------
James Horsley
<PAGE> 9
EXHIBIT A
BONUS CALCULATION
[TO COME FROM K. RODGERS]
- 9 -
<PAGE> 1
EXHIBIT 10.26
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of March 17,
1997, is made by and among National Equipment Services, Inc., a Delaware
corporation (the "Company"), James Horsley (the "Purchaser"), Golder, Thoma,
Cressey, Rauner Fund V, L.P., a Delaware limited partnership ("GTCR"), Kevin
Rodgers ("Rodgers"), Dennis O'Connor ("O'Connor") and Paul Ingersoll
("Ingersoll," and together with GTCR, Rodgers and O'Connor referred to herein
as the "Existing Stockholders"). Except as otherwise indicated, capitalized
terms used herein are defined in Section 9 hereof.
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of the date
hereof (the "Acquisition Agreement"), by and among the Company, NES Acquisition
Corp., a Delaware corporation and wholly-owned subsidiary of the Company
("Acquisition Corp."), the Purchaser and Lone Star Rentals, Inc., a Texas
corporation ("LSR"), Acquisition Corp. agreed to purchase, and LSR agreed to
sell, substantially all of the assets of LSR (the "Acquisition").
WHEREAS, the purchase and sale of stock contemplated by this Agreement
will be consummated immediately following with the consummation of the
Acquisition pursuant to the terms of the Acquisition Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Authorization of Stock. The Company will authorize the issuance and
sale to the Purchaser of 485 shares of the Company's Class A Common Stock, par
value $.01 per share (the "Class A Common Stock") at a purchase price of
$1000.00 per share, and 1,500 shares of the Company's Class B Common Stock, par
value $.01 per share (the "Class B Common Stock") at a purchase price of $10.00
per share, each having the rights described in the Company's Certificate of
Incorporation (as amended, the "Certificate of Incorporation"). The shares of
Class A Common Stock and Class B Common Stock which are purchased by the
Purchaser hereunder are collectively referred to herein as the "Shares."
2. Purchase and Sale of Shares.
(a) Initial Purchase and Sale. The Company will sell to the Purchaser,
and, on the terms and subject to the conditions set forth herein, the Purchaser
will purchase from the Company, 97 shares of Class A Common Stock and 300
shares of Class B Common Stock, at the purchase price per Share as set forth in
Section 1 above.
<PAGE> 2
(b) The Initial Closing. The initial closing of the sale and purchase of
Shares (the "Initial Closing") will take place on March 17, 1997, at the
offices of Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois, 60601
or such other place as the parties may agree. At the Initial Closing, the
Company will deliver to the Purchaser certificates evidencing the 97 shares of
Class A Common Stock and 300 shares of Class B Common Stock, issued in the name
of the Purchaser, upon payment of the purchase price therefor by certified
check or wire transfer of immediately available funds to the bank account
designated by the Company.
(c) Optional Purchase. The Purchaser may, at his sole discretion, within
120 days of the Initial Closing, elect to purchase up to 388 shares of Class A
Common Stock and up to 1,200 shares of Class B Common Stock at a single closing
(the "Second Closing") by delivering written notice of such election (the
"Purchase Election Notice") which sets forth the number of shares of Class A
Common Stock (the "Second Closing Class A Quantity") and the number of shares
of Class B Common Stock (the "Second Closing Class B Quantity") which the
Purchaser desires to purchase from the Company; provided that the ratio of the
Second Closing Class A Quantity to the Second Closing Class B Quantity shall
equal 97:300. At the Second Closing, the Company will sell to the Purchaser,
and, on the terms and subject to the conditions set forth herein, the Purchaser
will purchase from the Company, the Second Closing Class A Quantity of shares
of Class A Common Stock and Second Closing Class B Quantity of shares of Class
B Common Stock, at the purchase price per Share as set forth in Section 1
above.
(d) The Second Closing. The Second Closing of the sale and purchase of
Shares will take place, at the offices of Kirkland & Ellis, 200 East Randolph
Drive, Chicago, Illinois, 60601 or such other place as the parties may agree
on a date determined by the Company; provided that such date shall be more than
ten (10) business days after the delivery of the Purchase Election Notice. At
the Second Closing, the Company will deliver to the Purchaser certificates
evidencing the Second Closing Class A Quantity of shares of Class A Common
Stock and the Second Closing Class B Quantity of shares of Class B Common
Stock, issued in the name of the Purchaser, upon payment of the purchase price
therefor by certified check or wire transfer of immediately available funds to
the bank account designated by the Company.
3. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser that as of the Initial Closing:
(a) Organization, etc. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Company has all requisite corporate power and authority to carry on its
businesses as now conducted and presently proposed to be conducted and to carry
out the transactions contemplated by this Agreement.
(b) Authorization; No Breach. The execution, delivery and performance of
this Agreement has been duly authorized by the Company. This Agreement
constitutes a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to the
- 2 -
<PAGE> 3
availability of equitable remedies and to the laws of bankruptcy and other
similar laws affecting creditors' rights generally. The execution and delivery
by the Company of this Agreement and the offering, sale and issuance of the
Shares hereunder, do not and will not (i) conflict with or result in a breach
of the terms, conditions or provisions of, (ii) constitute a default under,
(iii) result in the creation of any lien, security interest, charge or
encumbrance upon the Company's capital stock or assets pursuant to, (iv) give
any third party the right to accelerate any obligation under, (v) result in a
violation of, or (vi) require any authorization, consent, approval, exemption
or other action by or notice to any court or administrative or governmental
body (other than in connection with certain state and federal securities laws)
pursuant to, the Certificate of Incorporation or the Company's bylaws, or any
law, statute, rule, regulation, instrument, order, judgment or decree to which
the Company is subject or any agreement or instrument to which the Company is a
party.
4. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company that as of the Initial Closing:
(a) Authority, etc. The Purchaser has full power, authority and legal
capacity to enter into this Agreement and to perform his obligations hereunder.
(b) Authorization; No Breach. This Agreement has been duly executed and
delivered by the Purchaser. This Agreement constitutes a valid and binding
obligation of the Purchaser enforceable in accordance with its terms, subject
to the availability of equitable remedies and to the laws of bankruptcy and
other similar laws affecting creditors' rights generally. The execution and
delivery by the Purchaser of this Agreement does not and will not (i) conflict
with or result in a breach of the terms, conditions or provisions of, (ii)
constitute a default under, (iii) result in the creation of any lien, security
interest, charge or encumbrance upon the Purchaser's assets pursuant to, (iv)
give any third party the right to accelerate any obligation under, (v) result
in a violation of, or (vi) require any authorization, consent, approval,
exemption or other action by or notice to any court or administrative or
governmental body (other than in connection with certain state and federal
securities laws) pursuant to, any law, statute, rule, regulation, instrument,
order, judgment or decree to which the Purchaser is subject or any agreement or
instrument to which the Purchaser is a party.
(c) Investment Representations. The Purchaser (a) understands that the
Shares have not been, and will not be, registered under the Securities Act of
1933, as amended, or under any state securities laws, and are being offered and
sold in reliance upon federal and state exemptions for transactions not
involving any public offering, (b) understands that the Shares are not
transferable, (c) is acquiring the Shares solely for its own account for
investment purposes, and not with a view to the distribution thereof, (d) is an
"accredited investor" as defined in Rule 501(a) under the Securities Act, (e)
acknowledges that it has been furnished with such financial and other
information concerning the Company as it considers necessary in connection with
its purchase of the Shares and evaluating the merits and the risks inherent in
holding the Shares, (f) has carefully reviewed such information and is
thoroughly familiar with the proposed business, operations, properties and
financial condition of the the Company, (g) has discussed with representatives
of the
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<PAGE> 4
Company any questions it may have had with respect thereto has received certain
information concerning the Company and (h) is able to bear the economic risk
and lack of liquidity inherent in holding the Shares.
5. Joinder. The Company, the Purchaser and the Existing Stockholders
hereby agree that the Stockholders Agreement and the Registration Agreement are
hereby amended by adding the Purchaser as a party thereto and as a Stockholder
under the Stockholders Agreement. The Purchaser hereby agrees to be subject to
all of the rights and obligations and to be bound by all of the terms and
conditions set forth in the Stockholders Agreement and the Registration
Agreement to the same extent as if the Purchaser were originally a party
thereto. The Company and the Existing Stockholders hereby waive any and all
requirements and/or breaches arising under the Stockholders Agreement, the
Registration Agreement and any agreements mentioned therein resulting from the
consummation of the transactions contemplated herein.
6. Restrictions on Transfer of Shares. In addition to the restrictions on
transfer set forth in the Stockholders Agreement, the holders of the Shares
shall not sell, transfer, assign pledge or otherwise dispose of (a "Transfer")
any interest in any of the Shares except pursuant to the following provisions:
(a) Retention of Shares. Until the fifth anniversary of the date of this
Agreement, each holder of Shares shall not Transfer any interest in any of the
Shares, except for Exempt Transfers (as defined in Section 6(b) below).
(b) Transfer of Shares. Subject to Section 6(a) above and to any other
restrictions set forth in the Stockholders Agreement and the Acquisition
Agreement, each holder of Shares shall not Transfer any interest in any of the
Shares, except pursuant to (i) the provisions of Section 7 below or the
provisions of Section 5 or 7 of the Stockholders Agreement ("Exempt Transfers")
or (ii) the provisions of this Section 6; provided that in no event shall any
Transfer of Shares pursuant to this Section 6 be made for any consideration
other than cash payable upon consummation of such Transfer or in installments
over time. Prior to making any Transfer other than an Exempt Transfer, each
holder of Shares proposing to Transfer Shares (a "Selling Holder") will give
written notice (the "Sale Notice") to the Company and GTCR. The Sale Notice
will disclose in reasonable detail the identity of the prospective
transferee(s), the number and class of Shares to be transferred and the terms
and conditions of the proposed Transfer. The Selling Holder will not
consummate any Transfer until 110 days after the Sale Notice has been given to
the Company and to GTCR, unless the parties to the Transfer have been finally
determined pursuant to this Section 6 prior to the expiration of such 110-day
period (the date of the first to occur of such events is referred to herein as
the "Authorization Date").
(c) First Refusal Rights. The Company may elect to purchase all (but not
less than all) of the Shares to be transferred upon the same terms and
conditions as those set forth in the Sale Notice by delivering a written notice
of such election to the Selling Holder and GTCR within 60 days after the Sale
Notice has been given to the Company. If the Company has not elected to
- 4 -
<PAGE> 5
purchase all of the Shares to be Transferred, GTCR may elect to purchase all
(but not less than all) of the Shares to be transferred upon the same terms and
conditions as those set forth in the Sale Notice by giving written notice of
such election to the Selling Holder within 90 days after the Sale Notice has
been given to GTCR. If neither the Company nor GTCR elect to purchase all of
the Shares specified in the Sale Notice, the Selling Holder may Transfer the
Shares specified in the Sale Notice at a price and on terms no more favorable
to the transferee(s) thereof than specified in the Sale Notice during the
60-day period immediately following the Authorization Date. Any Shares not
transferred within such 60-day period will be subject to the provisions of this
Section 6(c) upon subsequent Transfer. The Company may pay the purchase price
for such shares by offsetting amounts outstanding under any bona fide debts
owed by the Selling Holder to the Company.
(d) Certain Permitted Transfers. The restrictions contained in this
Section 6 will not apply with respect to transfers of Shares pursuant to
applicable laws of descent and distribution; provided that such restrictions
will continue to be applicable to the Shares after any such transfer and the
transferees of such Shares have agreed in writing to be bound by the provisions
of this Agreement.
(e) Termination of Restrictions. The restrictions on the Transfer of
Shares set forth in this Section 6 will continue with respect to each Share
until the date on which such Share has been transferred in a transaction
permitted by this Section 6 (except in a transaction contemplated by Section
6(d)); provided that in any event such restrictions will terminate on the first
to occur of a Sale of the Company or a Public Offering.
7. Repurchase of Shares.
(a) In the event the Purchaser ceases to be employed by the Company or its
subsidiaries for any reason (the "Termination"), the Shares (whether held by
the Purchaser or one or more of the Purchaser's transferees, other than the
Company, GTCR or an affiliate of the Company or GTCR) will be subject to
repurchase by the Company and GTCR pursuant to the terms and conditions set
forth in this Section 7 (the "Repurchase Option"). In the event of
Termination, the purchase price for each Share will be the Fair Market Value
for such share.
(b) The Company's board of directors (the "Board") may elect to purchase
all or any portion of the Shares by delivering written notice (the "Repurchase
Notice") to the holder or holders of the Shares within 90 days after the
Termination. The Repurchase Notice will set forth the number of Shares to be
acquired from each holder, the aggregate consideration to be paid for such
shares and the time and place for the closing of the transaction.
(c) If for any reason the Company does not elect to purchase all of the
Shares pursuant to the Repurchase Option, GTCR shall be entitled to exercise
the Repurchase Option for the Shares the Company has not elected to purchase
(the "Available Shares"). As soon as practicable after the Company has
determined that there will be Available Shares, but in any event within 45 days
after the Termination, the Company shall give written notice (the "Option
Notice") to GTCR
- 5 -
<PAGE> 6
setting forth the number of Available Shares and the purchase price for the
Available Shares. GTCR may elect to purchase any or all of the Available
Shares by giving written notice to the Company within one month after the
Option Notice has been given by the Company. As soon as practicable, and in
any event within ten days after the expiration of the one-month period set
forth above, the Company shall notify each holder of Shares as to the number of
Shares being purchased from such holder by GTCR (the "Supplemental Repurchase
Notice"). At the time the Company delivers the Supplemental Repurchase Notice
to the holder(s) of Shares, the Company shall also deliver written notice to
GTCR setting forth the number of shares GTCR is entitled to purchase, the
aggregate purchase price and the time and place of the closing of the
transaction.
(d) The closing of the purchase of the Shares pursuant to the Repurchase
Option shall take place on the date designated by the Company in the Repurchase
Notice or Supplemental Repurchase Notice, which date shall not be more than one
month nor less than five days after the delivery of the later of either such
notice to be delivered. The Company and/or GTCR will pay for the Shares to be
purchased pursuant to the Repurchase Option by delivery of a check or wire
transfer of funds in the aggregate amount of the purchase price for such
shares. In addition, the Company may pay the purchase price for such shares by
offsetting amounts outstanding under any bona fide debts owed by the Purchaser
or LSR to the Company. The Company and GTCR will be entitled to receive
representations and warranties from the sellers as to their title to the Shares
being sold and to require all sellers' signatures be guaranteed.
(e) The right of the Company and GTCR to repurchase Shares pursuant to
this Section 7 shall terminate upon the occurrence of a Public Offering.
8. Legend. The certificates representing the Shares will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED AS OF _______, 1997, HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION
FROM REGISTRATION THEREUNDER. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER, CERTAIN RIGHTS OF
FIRST REFUSAL AND CERTAIN OTHER AGREEMENTS SET FORTH
IN A STOCK PURCHASE AGREEMENT BETWEEN THE COMPANY AND
CERTAIN STOCKHOLDERS OF THE COMPANY DATED AS OF MARCH
17, 1997. A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY
THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE OF
BUSINESS WITHOUT CHARGE."
- 6 -
<PAGE> 7
No holder of Shares may sell, transfer or dispose of any Shares (except
pursuant to an effective registration statement under the Securities Act)
without first delivering to the Company an opinion of counsel (reasonably
acceptable in form and substance to the Company) that neither registration nor
qualification under the Securities Act and applicable state securities laws is
required in connection with such transfer.
9. Definitions.
"Fair Market Value" of each Share means the value agreed upon by the
holder thereof and the Board; provided that if the holder thereof and the Board
are unable to agree upon such value, then the holder thereof and the Company
will share the cost, on an equal basis, of a mutually acceptable business
appraiser whose determination will be binding.
"Person" means an individual, a partnership, a limited liability company,
a joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"Public Offering" means the sale in an underwritten public offering
registered under the Securities Act of 1933, as amended from time to time, of
shares of the Company's capital stock approved by the Board.
"Registration Agreement" means that certain Registration Agreement, dated
as of June 4, 1996, among the Company and others, as the same may be amended or
amended and restated from time to time.
"Sale of the Company" means any transaction or series of transactions
pursuant to which any person(s) or entity(ies) other than GTCR in the aggregate
acquire(s) (i) capital stock of the Company possessing the voting power (other
than voting rights accruing only in the event of a default, breach or event of
noncompliance) to elect a majority of the Company's board of directors (whether
by merger, consolidation, reorganization, combination, sale or transfer of the
Company's capital stock, shareholder or voting agreement, proxy, power of
attorney or otherwise) or (ii) all or substantially all of the Company's assets
determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Stockholders Agreement" means that certain Stockholders Agreement, dated
as of June 4, 1996, among the Company and others, as the same may be amended or
amended and restated from time to time.
10. Miscellaneous.
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<PAGE> 8
(a) Remedies. The holders of Shares acquired hereunder (directly or
indirectly) will have all of the rights and remedies set forth in this
Agreement, and all of the rights and remedies which such holders have been
granted at any time under any other agreement or contract, and all of the
rights and remedies which such holders have under any law. Any Person having
any rights under any provision of this Agreement will be entitled to enforce
such rights specifically, to recover damages by reason of any breach of any
provision of this Agreement, and to exercise all other rights granted by law.
(b) Amendments and Waivers. Except as otherwise provided herein, no
modification, amendment or waiver of any provision hereof will be effective
against the Company or the Purchaser unless such modification, amendment or
waiver is approved in writing by each of the Company and the Purchaser. The
failure of any party to enforce any provision of this Agreement or under any
agreement contemplated hereby or under the Company's certificate of
incorporation or bylaws will in no way be construed as a waiver of such
provisions and will not affect the right of such party thereafter to enforce
each and every provision of this Agreement, any agreement referred to herein,
the Company's certificate of incorporation or bylaws in accordance with their
terms.
(c) Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by any party in connection
herewith will survive the execution and delivery of this Agreement, regardless
of any investigation made by the Company or the Purchaser or on any of their
behalves.
(d) Successors and Assigns.
(i) Except as otherwise expressly provided herein, all covenants and
agreements contained in this Agreement by or on behalf of any of the
parties hereto will bind and inure to the benefit of the respective
successors and assigns of such parties whether so expressed or not. In
addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Purchaser's benefit as a
holder of Shares are also for the benefit of and enforceable by any
subsequent holder of the Purchaser's Shares.
(ii) If a sale, transfer, assignment or other disposition of any
Shares is made in accordance with the provisions of this Agreement to any
Person, such Person shall, at or prior to the time such securities are
acquired, execute a counterpart of this Agreement with such modifications
thereto as may be necessary to reflect such acquisition, and such other
documents as are necessary to confirm such Person's agreement to become a
party to, and to be bound by, all covenants, terms and conditions of this
Agreement, the Stockholders Agreement and the Registration Agreement,
each as theretofore amended.
(e) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable under any applicable law or rule in any jurisdiction,
such provision will be ineffective only to the extent of such invalidity,
illegality or
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<PAGE> 9
unenforceability in such jurisdiction, without invalidating the remainder of
this Agreement in such jurisdiction or any provision hereof in any other
jurisdiction.
(f) Counterparts. This Agreement may be executed simultaneously in
separate counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one
and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
(h) Governing Law. The corporate laws of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
securityholders. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in
accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
(i) Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
received by certified mail, return receipt requested, or sent by guaranteed
overnight courier service. Notices, demands and communications will be sent to
parties hereto at the addresses indicated below:
Notices to the Company:
----------------------
National Equipment Services, Inc.
6100 Sears Tower
Chicago, Illinois 60606
Attention: Chief Executive Officer
with a copy to:
--------------
Kirkland and Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Sanford E. Perl
Notices to the Purchaser:
------------------------
James Horsley
18107 Colonial Forest Circle
Spring, TX 77379
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<PAGE> 10
with a copy to:
--------------
Michael R. Carr
902 Main
Humble, TX 77338
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
* * * * *
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<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement on the day and year first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin P. Rodgers
------------------------
Its: President
------------------------
/s/ James E. Horsley
-----------------------------
JAMES HORSLEY
GOLDER, THOMA, CRESSEY, RAUNER
FUND V, L.P.
By: GTCR V, L.P.
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
Its: General Partner
By: /s/ Carl D. Thoma
-----------------------------
Its: Principal
/s/ Kevin Rodgers
-----------------------------
KEVIN RODGERS
/s/ Dennis O'Connor
-----------------------------
DENNIS O'CONNOR
/s/ Paul R. Ingersoll
-----------------------------
PAUL INGERSOLL
<PAGE> 1
Exhibit 10.27
LEASE AGREEMENT
THE STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF HARRIS )
THIS LEASE AGREEMENT, made and entered into effective this 17th day of
March, 1997, (the "Effective Date") by and between JAMES E. HORSLEY,
hereinafter called "Landlord", and NES ACQUISITION CORP., hereinafter called
"Tenant"
W I T N E S S E T H
In consideration of the rent hereinafter stipulated and agreed to be paid
by Tenant to Landlord, and of the terms, covenants, and conditions herein
contained and on the part of the Tenant to be kept, observed and performed, the
Landlord has LEASED, LET and DEMISED, and does by these presents LEASE, LET and
DEMISE unto the Tenant the followings described property for the period of
time, subject to and upon the terms, covenants and conditions hereinbelow set
forth, to-wit:
1. DESCRIPTION OF LEASED PREMISES. The leased premises (the "Leased
Premises"), known as 6093 North Shepherd, Houston, Texas 77091 are described as
follows:
See Exhibit "A" attached hereto and made a part hereof for all purposes
In addition to the Leased Premises, Landlord hereby leases and grants to
Tenant (a) all rights, easements and appurtenances, if any, belonging or
appertaining to the Leased Premises by reference, and (b) all rights, title and
interest of Landlord in and to any and all roads, streets, alleys and ways, if
any, bounding the Leased Premises. The parking areas, driveways, exits and
entrances of the Leased Premises may not be modified, reduced and/or relocated
without the consent of Tenant
<PAGE> 2
2. TERM OF LEASE. The initial term of this Lease is five (5) years (the
"Term"), beginning on Effective Date unless sooner terminated or extended under
the terms hereof
3. EXTENSIONS. Tenant shall have the option of extending the Term for
four (4) additional periods of five (5) years each (individually, an
"Extension" and collectively, the "Extensions"), commencing at midnight on the
date on which the Term or any Extension expires Tenant shall give Landlord
written notice exercising the applicable Extension not later than the date
which is 90 days prior to the expiration of the Term or the Extension, as the
case may be.
The Rent for each Extension, subject to any adjustment pursuant to
subparagraph (a) above, is as follows:
<TABLE>
<CAPTION>
LEASE YEAR MONTHLY RENT
- ---------- ------------
<S> <C>
06-10 $4,400.00
11-15 $4,840.00
16-20 $5,324.00
21-25 $5,856.00
</TABLE>
(10% increase over each prior 5 year rate).
4. RENT. During the Term, Tenant covenants and agrees to pay to Landlord
monthly rent in the amount of $4,000.00 ("Monthly Rent"). All such rental
payments shall be payable in lawful money of the United States of America,
monthly in advance, on or before the first day of each month. If the Effective
Date of this Lease is other than on the first of a calendar month, the rental
for the portion of the initial calendar month in which this Lease is in effect
shall be prorated based upon 30 days in a calendar month. In the event the
final month of this Lease is other than a full calendar month, the final month's
rent shall likewise be prorated. Should Tenant fail to pay such
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<PAGE> 3
Monthly Rent, charges or other sums due hereunder within ten (10) days of the
due date thereof provided in this Lease, Tenant further agrees to pay to
Landlord as a late charge to compensate Landlord for the added administrative
expense caused by such late payment a one time sum equal to 5% of any
outstanding balance of Monthly Rent (or other amounts) required to be paid
under this Lease. Tenant shall also pay to Landlord as additional rental under
this Lease any excise, sales, privilege or gross receipts tax levied, if any,
on rents or charges paid hereunder.
5. USE OF LEASED PREMISES. Tenant may use the Leased Premises only in a
lawful manner for: (i) the operation of an equipment rental and sales
business, or (ii) any other lawful use, provided Tenant receives the consent of
Landlord which consent shall not be unreasonably withheld, conditioned, or
delayed.
6. REAL ESTATE AND OTHER TAXES. Landlord shall pay before they become
delinquent real estate taxes imposed during the Term and any Extensions upon or
against the Leased Premises ("Real Estate Taxes"), Landlord shall be solely
responsible for payment of any and all penalties imposed for any late payment.
Tenant shall, within thirty (30) days upon receipt from Landlord of a copy of
the paid tax bill and an invoice, reimburse Landlord for payment of the Real
Estate Taxes.
Real Estate Taxes for the year in which the Term shall begin and the year
in which the Lease shall terminate shall be prorated so that Tenant shall pay
only those portions thereof which corresponds with the portion of said years as
are within the Term or the current Extension. Nothing herein contained shall
require Tenant to pay monthly corporation, franchise, income, estate, gift or
inheritance taxes imposed on Monthly Rent which may be levied or assessed
against landlord, fee owner, or their successor in title.
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<PAGE> 4
7. PROPERTY INSURANCE. Tenant shall carry its own insurance on any of its
property that may be located on the demised premises, and it is further agreed
that LANDLORD SHALL NOT BE RESPONSIBLE OR LIABLE FOR ANY DAMAGE WHATSOEVER
CAUSED TO ANY PROPERTY OF TENANT LOCATED ON THE DEMISED PREMISES except to the
extent such damage is covered by insurance or caused by the negligence or
willful act of Landlord or Landlord's agent, invitee, or licensee. Tenant
shall pay for and maintain in effect fire and extended coverage on all
improvements on the Leased Premises in the sum as required by Landlord but not
exceeding replacement cost of the improvements and liability insurance as
approved by Landlord in the amount of at least $1,000,000.00 per person,
$3,000,000.00 per incident, and $300,000.00 property damage with Landlord and
Tenant shown as insured parties. Each party hereby waives any rights against
the other for damages to property to the extent such loss is covered by
insurance and agrees that insurance policies of the parties shall contain a
waiver of subrogation rights as to the other party.
8. CONDITION OF PREMISES: REPAIRS. The Leased Premises are leased to the
Tenant in the CONDITION AS IS Taking possession of the Leased Premises by
Tenant shall be conclusive evidence as against Tenant that the Leased Premises
are in satisfactory condition when possession was so taken. Except as stated
herein, no promises of Landlord to alter, remodel, improve, repair, decorate or
clean the Leased Premises or any part thereof have been made, and no
representation respecting the condition of the Leased Premises, has been made
to. Tenant by or on behalf of Landlord. Except for any damage resulting from
the negligence or willful acts of Landlord or Landlord's agents, Tenant shall at
its own expense keep the improvements located on the Leased Premises in good
operating condition, including replacement if necessary, and tenantable
condition
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<PAGE> 5
together with the air conditioning and heating system and shall promptly
and adequately repair all damage to such Leased Premises, including but not
limited to, replacing or repairing all damaged or broken glass, fixtures and
appurtenances.
Landlord, its officers, agents and representatives shall have the right to
enter all parts of the Leased Premises during regular business hours and upon
forty-eight (48) hours notice to Tenant to inspect the Leased Premises and
Tenant shall not be entitled to any abatement or reduction of rent by reason
thereof as long as such inspection is done in a manner as to not interfere with
Tenant's business operations.
Tenant shall be responsible for installation, maintenance and repair of
any security system desired for the Leased Premises as well as for the
electrical and plumbing systems within the Leased Premises and for the air
conditioning and heating system. Tenant, at its sole expense, shall promptly
replace and maintain any lighting located on the Leased Premises. Tenant shall
maintain in good operating condition any water fixtures and plumbing within the
Leased Premises and shall be solely responsible for any additional cost
incurred due to any leaks from fixtures within the Leased Premises
9. INSPECTION OF THE PREMISES Tenant hereby agrees and represents that
Tenant has inspected the Leased Premises and accepts the Leased Premises in the
condition now existing, AS IS.
10. UTILITIES. Tenant shall make Tenant's own contracts and shall pay for
all utilities
used or consumed by Tenant in, on or about the Leased Premises including water
service and sanitary sewer service provided to the Leased Premises Tenant shall
be solely responsible for any telephone service and any other service or
utility desired by Tenant Landlord shall not be responsible
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<PAGE> 6
for and damages or losses incurred by Tenant for the failure of Landlord to
furnish any service or utility to the Tenant as long as Landlord does not
maliciously, or in bad faith cause such interruption of services. Furthermore,
at the termination of this Lease, Tenant shall be responsible for the closing
out of Tenant's accounts with the various utilities companies for the services
supplied to the Leased Premises, and shall be solely responsible for the
payment of said accounts Upon vacating the premises, Tenant shall leave the
electrical, water and sewer services in place and intact. Any improvements and
additions to the electrical or plumbing services to the Leased Premises made
during the Lease, whether by Tenant or anyone else, shall become part of the
Leased Premises and remain with the Leased Premises upon Tenant vacating the
premises.
11. COMPLIANCE WITH ORDINANCES, ETC. Tenant agrees that Tenant will
promptly execute and fulfill all ordinances, regulations, and laws of the
United States, the State of Texas, County, City and other governmental
agencies, boards or departments applicable to Tenant's use of the Leased
Premises and all ordinances or orders imposed by the Board of Health,
Sanitation and Police or Fire Departments for the correction, prevention, and
abatement of nuisances in or upon or connected with the activities conducted by
the Tenant in or upon the Leased Premises during the term of this Lease and at
all times while Tenant is in possession of the Leased Premises.
12. ASSIGNMENT, SUB-LETTING PROHIBITED. Tenant shall have the
unrestricted right to assign, sublet, license, or transfer any or all of its
rights and privileges under this Lease, provided that no such transfer shall
operate to relieve Tenant of Tenant's obligations under the Lease.
13. DAMAGE BY FIRE OR OTHER CASUALTY. If the Leased Premises shall be
damaged by fire or other casualty resulting from any fault, negligence, or
willful act of Tenant, its
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<PAGE> 7
agents, employees or invitees, such damage shall be repaired by and at the
expense of Tenant under the direction and supervision of Landlord and rent
shall continue without abatement.
If in the last year of a Term or any Extension, if applicable,
improvements on the Leased Premises should be so badly damaged by fire or other
casualty as to make the Leased Premises untenantable, then, Landlord or Tenant
shall have the option to terminate this Lease by written notice delivered to
the other party within thirty (30) days following the event of such damage or
destruction, in which event neither party hereto shall thereafter have any
further future obligations hereunder. In any other event, unless mutually
agreed to the contrary, this Lease shall continue in force and effect, in which
event Landlord shall promptly and diligently repair and restore the damaged or
destroyed portions of the Leased Premises to substantially, the same condition
existing prior to such damage or destruction. Should Landlord fail to
substantially complete repair or rebuilding of such improvements within 180
days of such damage, Tenant shall have the right to terminate this Lease by
notice to Landlord within 30 days after such 180 days period. For the period
beginning on the date that the Leased Premises were rendered untenantable to
the date of restoration of the Leased Premises to substantially the same
condition existing prior to such damage, the Monthly Rent payable hereunder
shall be proportionately abated.
14. ATTORNEY'S FEES. In the event Tenant shall make default in the
payment of Monthly Rent or other sum of money as the same shall become due and
payable to Landlord hereunder, and shall remain in default for a period of ten
days after the applicable cure period, and such rent or other sum of money is
placed in the hands of an attorney for collection or is collected
through suit, bankruptcy or other judicial proceeding, then Tenant agrees to
pay to Landlord all reasonable attorney's fees and costs incurred by Landlord
due to such non-payment.
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<PAGE> 8
15. DEFAULT, TERMINATION, ETC. It is further covenanted and agreed by the
parties hereto that: (i) if said Tenant shall fail to use said premises only in
a lawful manner as stated herein; or (ii) if said Tenant shall fail to pay the
rental herein stipulated as same becomes due, or (iii) if Tenant shall neglect
or fail to perform and observe an, of the covenants and agreements contained in
this Agreement which are on Tenant's part to be performed, then on the
happening, of any one or more of these events, the Landlord, or those claiming
under Landlord, may (i) for monetary defaults, upon ten (10) days written notice
to Tenant and the noncuring of such default by the end of such ten (10) days;
and (ii) for non-monetary defaults, upon thirty (30) days written notice to
Tenant and the noncuring of such default by the end of such thirty (30) days,
immediately or at any time thereafter, and without further notice or demand, and
with or without legal action or suit, terminate Tenant's rights to possession
under this Lease, and enter upon and into the premises herein demised, or any
part thereof, and repossess the same, and expel said Tenant or those claiming
under Tenant, and remove Tenant's effects if necessary, without being deemed
guilty of any manner of trespass, all and any claim of damages for and by reason
hereby expressly waived and without prejudice to any remedies which might be
otherwise used for the collection of arrearages for rent or repossession of said
premises. Upon termination of Tenant's right to possession of the Leased
Premises, Tenant shall have ten (10) days to vacate the Leased Premises, leaving
the Leased Premises in broom-clean condition and in as good a condition as at
the initiation of this Lease. Landlord is authorized to remove any personal
property of Tenant remaining on the Leased Premises upon termination of Tenant's
right to possession of the Leased Premises and to place same in the name of
Tenant in any storage facility in the county in which the Leased Premises are
located, or to otherwise dispose of such goods as abandoned property without any
liability to Tenant. If the
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<PAGE> 9
Tenant shall abandon or vacate said premises, or be evicted therefrom on
account of any default herein, Landlord shall be at liberty, if Landlord sees
fit and thinks it advisable, to re-let same; and if sufficient rental shall not
be realized on such re-letting to satisfy the rent herein reserved, the Tenant
agrees to satisfy any deficiency that may arise therefrom, for all of which the
hereinafter described liens are expressly reserved. Landlord shall also have
the option of terminating this Lease upon the default of Tenant and should such
premises not be returned to Landlord in as good as condition as upon the date
rentals began to accrue under this Lease, Tenant shall be responsible for all
such repair and restoration costs in addition to all accrued and unpaid rentals
upon such termination. Notwithstanding any provision to the contrary, Tenant's
obligation to return in "as a good a condition" shall take into account
ordinary wear with further consideration of Tenant's maintenance obligation
hereunder. Furthermore, as an additional cumulative remedy, in the event
notice of default has been given to Tenant by Landlord and such Default has not
been cured, Landlord shall be entitled and is hereby authorized, without any
further notice to Tenant whatsoever, to enter the Leased Premises and to
change, alter and/or modify the door locks and gate locks on the Leased
Premises and to exclude Tenant from such Leased Premises until Tenant cures
such default. Exercise by Landlord of any of the remedies granted under this
section or otherwise available shall not be deemed to be an acceptance of
surrender of the Leased Premises by Tenant, whether by agreement or by
operation of law, it being understood that such surrender can be effected only
by the written agreement of Landlord. Notwithstanding the foregoing, under no
circumstances shall Landlord have the right to accelerate rent.
16. LIENS. Except for any mortgage, deed of trust or similar instrument
executed by Landlord, Landlord and Tenant covenant each with the other not to
permit any judgment, attachment
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<PAGE> 10
and/or lien (an "Encumbrance") to be filed against the Leased Premises. Should
any judgment, attachment and/or lien of any nature be filed against the Leased
Premises, the party from whose fault or alleged debt such lien arises shall
within thirty (30) days cause such Encumbrance to be removed by substitution of
collateral or otherwise.
17. SUBROGATION OF LANDLORD'S LIEN. In the event Tenant, its subtenants
or assigns acquires and/or leases personal property to be installed, rented
from, and used upon the Leased Premises subject to a conditional sales
contract, chattel mortgage or other security agreement or lease, (the "Superior
Lien"), Landlord hereby subrogates to the Superior Lien any claim arising by
way of any landlord's lien (whether created by statute, contract or otherwise)
with respect to such personal property and agrees to execute and deliver to any
such secured creditor and/or lessor a subrogation of any lien Landlord may have
upon such personal property. Such subrogation will be on a form provided by
Tenant authorizing the secured creditor and/or lessor to enter upon the Leased
Premises, in accordance with the terms of this Lease, and remove such personal
property in the event of default under the terms of the conditional sales
contract, chattel mortgage, security agreement and/or lease. This Section
shall not be interpreted as creating a lien in favor of Landlord. Provided
however, such subrogation shall not be effective as to any rentals or storage
costs occurring thirty (30) days after the holder of the Superior Lien is given
notice of termination of the Tenant's right to possession of the Leased
Premises.
18. CONDEMNATION. If while this Lease is in effect there shall be taken
by exercise of the power of eminent domain any part of the Leased Premises,
all sums awarded or agreed upon between Landlord and the condemning authority
for the taking of the Leased Premises, whether as damages or as compensation,
shall be the property of Landlord. Should Landlord receive condem-
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<PAGE> 11
nation funds for the taking of improvements or personal property which are paid
for by Tenant, Landlord shall pay such funds to Tenant to the extent of the net
book value of such depreciable improvements. Tenant shall be entitled to
terminate this Lease if such portion taken by condemnation renders the Leased
Premises unsuitable for the purposes utilized by Tenant prior to such
condemnation. If this Lease is terminated due to condemnation, rental shall be
payable up to the date that possession is taken by the condemning authority,
and Landlord will refund to Tenant any prepaid unaccrued rent less any sum then
owing by Tenant to Landlord. Landlord shall have the option to continue this
lease after any partial condemnation only in the event the remaining Leased
Premises are suitable for the purposes utilized by the Tenant prior to such
condemnation with reasonable adjustment to the rental rate.
19. NON-WAIVER. Neither acceptance of rent or any other amount due
hereunder by Landlord nor failure to complain of any action, non-action or
default of Tenant, whether singular or repetitive, shall constitute a waiver of
any of Landlord's fights hereunder. Waiver by Landlord of any right for any
default by Tenant shall not constitute a waiver of any right for either a
subsequent default of the same obligation or any other default. No act or
thing done by Landlord or its agents or representatives shall be deemed to be
an acceptance of surrender of the Leased Premises and no agreements to accept a
surrender of the Leased Premises shall be valid unless it is in writing and
signed by a duly authorized officer or agent of Landlord.
20. HOLDING OVER. If Tenant should remain in possession of the Leased
Premises after the expiration or termination of this Lease, without the
execution by Landlord and Tenant of a new lease, then Tenant shall be deemed to
by occupying the Leased Premises as a tenant-at-
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<PAGE> 12
sufferance subject to all the covenants and obligations of this Lease, provided
however, the monthly rent shall be one and one-half the rental rate in effect
on termination of the Lease.
21. NOTICES. Any and all notice which must or which may be given by the
Landlord to the Tenant or by the Tenant to the Landlord under any of the
provisions of this Agreement must be in writing and may be served by United
States Certified or Registered Mail, with Return Receipt Requested, or by
delivery in person, unless otherwise required under any provision hereof.
Notices mailed to the Landlord shall be addressed to Landlord at the address
stated below the signature of Landlord hereinbelow, or to such other address as
Landlord may at any time, or from time to time, hereafter designate by written
notice thereof to the Tenant and notices mailed to Tenant shall be addressed to
Tenant at the address stated below the signature of Tenant hereinbelow, or at
such address as Tenant may at any time, or from time to time, hereafter
designate by written notice thereof to the Landlord.
22. BINDING ON HEIRS, ETC. The agreements, conditions, covenants, and
terms herein contained, shall in every case, apply to, be binding upon and
inure to the benefit of the respective parties hereto, their heirs, executors,
administrators, successors and assigns, with the same force and effect as is
specifically mentioned in each instance where a party hereto is named.
23. ASSIGNMENT BY LANDLORD. Landlord shall have the right to transfer and
assign, in whole or in part, all its rights and obligation hereunder and in the
Center and property referred to in this Lease, and in such event and upon its
transferee's assuming Landlord's obligations hereunder, no further liability or
obligation shall thereafter accrue against the present Landlord under
this Lease.
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<PAGE> 13
24. LAW GOVERNING AND VENUE. This Lease shall be governed by and
construed in accordance with the laws of the State of Texas and venue for all
purposes shall be in Harris County, Texas.
25. DEPOSIT. Tenant shall deposit with Landlord the sum equal to one
month's rental upon execution of this Lease as security for all of Tenant's
obligations under this Lease. Tenant shall not have the right to use this sum
as payment of the last month's rent. No interest shall accrue on this deposit.
26. IDENTIFICATION.
(a) Except to the extent covered by insurance, Landlord hereby indemnifies
and holds Tenant, Tenant's nominees, officers, directors, agents, employees,
successors and assigns harmless from and against any and all claims, demands,
liabilities, and expenses, including attorneys' fees and litigation expenses,
arising from (i) the negligence or willful acts of Landlord or its agents,
employees, or contractors occurring on the Leased Premises, or (ii) the
presence of Hazardous Substances (hereafter defined) or materials on the Leased
Premises prior to Effective Date, except to the extent caused by Tenant's
negligence or willful misconduct. In the event any action or proceeding shall
be brought against Tenant by reason of any such claims, Landlord shall defend
the same at Landlord's expense by counsel selected by Tenant.
(b) Tenant hereby indemnifies and holds Landlord, Landlord's nominees,
officers, directors, agents, employees, successors and assigns harmless from and
against any and all claims, demands, liabilities, and expenses, including
attorneys' fees and litigation expenses, arising from (i) the negligence or
willful acts of Tenant or its agents, employees, invitees, or contractors
occurring on the Leased Premises after Effective Date, or (ii) the presence of
Hazardous Substances or
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<PAGE> 14
Materials on the Leased Premises after Effective Date, except to the extent
caused by Landlord's negligence or willful misconduct. In the event any action
or proceeding shall be brought against Landlord by reason of any such claims,
Tenant shall defend the same at Tenant's expense by counsel selected by
Landlord.
27. NON-DISTURBANCE AND ATTORNMENT; MEMORANDUM OF LEASE. Landlord, within
thirty (30) days after the Effective Date, will obtain from every senior
landlord, mortgagee and holder of a deed of trust upon the Leased Premises,
(collectively "Senior Interest Holders") an agreement in recordable form
acceptable to Tenant wherein the Senior Interest Holders agree not to disturb
Tenant's possession of the Leased Premises or deprive Tenant of an rights or
increase any of its obligations under this Lease, provided Tenant is not in
default of its obligations under this Lease, otherwise Tenant may terminate
this Lease. Landlord agrees, upon request of Tenant, to execute and deliver to
Tenant a memorandum of this Lease in recordable form acceptable to Tenant.
28. LANDLORD'S TITLE AND QUIET ENJOYMENT. Landlord represents and
warrants that Landlord is seized in fee simple title to the Property, free,
clear and unencumbered except as otherwise disclosed herein Landlord covenants
that so long as Tenant fulfills the conditions and covenants required of it to
be performed, Tenant will have peaceful and quiet possession thereof Landlord
further represents and warrants that it has good right, full power and lawful
authority to enter into the Lease for the Term and any Extensions.
29. REPRESENTATIONS AND WARRANTIES OF LANDLORD
(a) Hazardous Substances. Except in accordance with applicable
governmental regulations and in accordance with ordinary business practice, the
Property does not presently
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<PAGE> 15
contain and is free from all hazardous substances and/or wastes, toxic and
nontoxic pollutants and contaminants including, but not limited to, petroleum
products and asbestos (collectively, "Hazardous Substances"). Landlord has not
received any notification from any federal, state, county or city agency or
authority relating to Hazardous Substances, in or near the Property. Neither
party shall cause or permit any Hazardous Substances to be brought upon, kept
or used in or about the Property by such party, its agents, employees,
contractors, invitees, tenants, subtenants or licensees without the prior
written consent of the other party. Neither party shall unreasonably withhold
its consent thereto as long as such party demonstrates to the other party's
reasonable satisfaction that each such Hazardous Substance is necessary or
useful to its business or to the business of its agents, employees,
contractors, invitees, tenants, subtenants or licensees, and will be used, kept
and stored in a manner that complies with all applicable governmental laws and
regulations. If consented to, the requesting party shall promptly deliver to
the other party true and complete copies of all notices received by such party
from any governmental authority with respect to the generation, storage or
disposal of such Hazardous Substances.
(b) Litigation. There are no claims, causes of action or other litigation
or proceedings pending or, to the best of Landlord's knowledge, threatened in
respect to the ownership, operation or environmental condition of the Property
or any pan hereof, except for claims which are fully insured and as to which
the insurer has accepted defense without reservation.
(c) Violation. There are no violations of any health, safety, pollution,
zoning or other laws, ordinances, rules or regulations including, without
limitation, the ADA with respect to any portion of the Property which have not
been heretofore entirely corrected.
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<PAGE> 16
(d) Zoning. The Property is currently zoned (if applicable) to allow the
use of the Leased premises for Tenant's Use.
(e) Authority. Landlord has full capacity, right, power and authority to
executed, deliver and perform this Lease and all documents to be executed by
Landlord pursuant hereto, and all required action and approvals therefor have
been duly taken and obtained The individual signing this Lease and all other
documents executed pursuant hereto on behalf of Landlord is duly authorized.
This Lease and all documents to be executed pursuant hereto by Landlord are
binding upon and enforceable against Landlord in accordance with their
respective terms, and the transaction contemplated hereby will not result in a
breach of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, or other agreement to which Landlord or the Leased
premises is subject or by which Landlord or the Leased Premises is bound.
(f) Notwithstanding any provision to the contrary, Landlord shall be
responsible for the structural integrity of the present building(s) on the
Leased Premises as long as any failure of such structural integrity is not due
to a failure to properly maintain. Such items of structural integrity shall
include the exterior walls, concrete foundation, and roof, provided however,
Landlord shall not be responsible for normal maintenance of such items.
30. ESTOPPEL CERTIFICATE. Tenant and Landlord at any time and from time
to time, upon not less than twenty (20) business days' prior written request
from the other party, to execute, acknowledge and deliver to the requesting
party a statement in writing, in form and content reasonably acceptable to the
requesting party, an estoppel certificate. In the event either party fails
to execute and deliver any such instrument within the foregoing time period,
the delinquent party
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<PAGE> 17
shall be deemed to have acknowledged and agreed with and to the matters set
forth in such certificate.
31. MISCELLANEOUS
(a) If either party is delayed or prevents from performing any of its
obligations under this Lease by reason of strike, lockouts, labor troubles,
failure of power, riots, insurrection, war, acts of God or any other cause
beyond such party's control, the period of such event or such prevention shall
be deemed added to the time period herein provided for the performance of any
such obligation by the applicable party.
(b) This Lease contains the entire agreement between the parties. No
modification, alteration or amendment of the Lease shall be binding unless in
writing and executed by the parties.
(c) The representations, warranties and indemnities contained in this
Lease shall survive the termination or expiration of this Lease.
(d) Each party hereto has reviewed and revised (or requested revisions of)
this Lease, and therefore any usual rules of construction requiring, that
ambiguities are to be resolved against a particular party shall not be
applicable in the construction and interpretation of this Lease or any Exhibit
hereto.
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<PAGE> 18
(e) Time is of the essence of this Lease and each provision, provided,
however, if the final (but not any interim) date of any period set forth herein
falls on a Saturday, Sunday or legal holiday under the laws of the United
States of America, the final date of such period shall be extended to the next
business day.
EXECUTED AS EFFECTIVE in duplicate originals effective the date first
above written.
LANDLORD: TENANT:
/s/ James E. Horsley By: /s/ Dennis J. O'Connor
- ---------------------------- -----------------------------------------------
JAMES E. HORSLEY Person: DENNIS J. O'CONNOR
18107 Colonial Forest Circle Title: Chief Financial Equipment Services, Inc.
Spring, Texas 77379 Address: c/o National Equipment Services, Inc.
(281) 376-6188 6100 Sears Tower
Chicago, Illinois 60606
Attention: Kevin P. Rodgers
Phone: (312) 382-2223
Fax: (312) 382-2201
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<PAGE> 19
(ACKNOWLEDGMENT)
THE STATE OF TEXAS {
{
COUNTY OF HARRIS {
The foregoing instrument was acknowledged before me on this 17th day of
March, 1997, by JAMES E. HORSLEY.
/s/ Carole McDonald
---------------------------------
Notary Public in and for
The State of Texas
THE STATE OF TEXAS {
{
COUNTY OF HARRIS {
The foregoing instrument was acknowledged before me on this 17th day of
March, 1997, by DENNIS J. O'CONNOR, Chief Financial Officer of NES ACQUISITION
CORP., a Delaware Corporation, on behalf of said corporation.
/s/ Carole McDonald
---------------------------------
Notary Public in and for
The State of Texas
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<PAGE> 20
EXHIBIT "A"
LEGAL DESCRIPTION
Lot(s) FORTY-NINE (49), FIFTY (50), FIFTY-ONE (51), SIXTY-SIX (66), SIXTY-SEVEN
(67) and SIXTY-EIGHT (68), in Block THREE (3), of STUEBNEE AIRLINE ROAD
ADDITION, a subdivision in Harris County, Texas, according to the map or plat
thereof, recorded in Volume 18, Page 67 of the Map Records of Harris County,
Texas.
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<PAGE> 1
Exhibit 10.28
LEASE AGREEMENT
THE STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS
COUNTY OF HARRIS )
THIS LEASE AGREEMENT, made and entered into effect this 17th day of March,
1997, (the "Effective Date") by and between JAMES E. HORSLEY, hereinafter
called "Landlord", and NES ACQUISITION CORP. hereinafter called "Tenant".
WITNESSETH
In consideration of the rent hereinafter stipulated and agreed to be paid
by Tenant to Landlord, and of the terms, covenants, and conditions herein
contained and on the part of the Tenant to be kept, observed and performed, the
Landlord has LEASED, LET and DEMISED, and does by these presents LEASE, LET and
DEMISE unto the Tenant the following described property for the period of time,
subject to and upon the terms, covenants and conditions hereinbelow set forth,
to wit:
1. DESCRIPTION OF LEASED PREMISES. The leased premises (the "Leased
Premises"), known as 18918 F.M. 249, Houston, Texas 77070 are described as
follows:
See Exhibit A attached hereto and made a part hereof for all purposes.
In addition to the Leased Premises, Landlord hereby leases and grants to
Tenant (a) all rights easements and appurtenances, if any, belonging or
appertaining to the Leased Premises by reference, and (b) all rights, title and
interest of Landlord in and to any and all roads, alleys and ways, if any,
bounding the Leased Premises. The parking areas, driveways, exits and
entrances of the Leased Premises may not be modified, reduced and/or located
without the consent of Tenant.
2. TERM OF LEASE. The initial term of this Lease is five (5) years (the
"Term"), beginning on Effective Date unless sooner terminated or extended under
the terms hereof.
<PAGE> 2
3. EXTENSIONS. Tenant shall have the option of extending the Term for
four (4) additional periods of five (5) years each (individually, an
"Extension" and collectively, the "Extensions"), commencing at midnight on the
date on which the Term or any Extension expires Tenant shall give Landlord
written notice exercising the applicable Extension not later than the date
which is 90 days prior to the expiration of the Term of the Extension, as the
case may be.
The Rent for each Extension, subject to any adjustment pursuant to
subparagraph (a) above, is as follows:
<TABLE>
<CAPTION>
Lease Year Monthly Rent
- ---------- ------------
<S> <C>
06-10 $3,520.00
11-15 $3,872.00
16-20 $4,259.00
21-25 $4,685.00
</TABLE>
(10% increase over each prior 5 year rate).
4. RENT. During the Term, Tenant covenants and agrees to pay to Landlord
monthly rent in the amount of $3,200,000 ("Monthly Rent"). All such rental
payments shall be payable in lawful money of the United States of America,
monthly in advance, on or before the first day of each month. If the Effective
Date of this Lease is other than on the first of a calendar month, the rental
for the portion of the initial calendar month in which this Lease is in effect
shall be prorated based upon 30 days in a calendar month. In the event the
final month of this Lease is other than a full calendar month, the final
month's rent shall likewise be prorated. Should tenant fail to pay such
Monthly Rent, charges or other sums due hereunder within ten (10) days of the
due date thereof provided in this Lease, Tenant further agrees to pay to
Landlord as a late charge to compensate
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<PAGE> 3
Landlord for the added administrative expense caused by such late payment a one
time sum equal to 5% of any outstanding balance of Monthly Rent (or other
amounts) required to be paid under this Lease. Tenant shall also pay to
Landlord as additional rental under this Lease any excise, sales, privilege or
gross receipts tax levied, if any, on rents or charges paid hereunder.
5. USE OF LEASED PREMISES. Tenant may use the Leased Premises only in a
lawful manner for (i) the operation of an equipment rental and sales business,
or (ii) any other lawful use, provided Tenant receives the consent of Landlord
which consent shall not be unreasonably withheld, conditioned, or delayed.
6. REAL ESTATE AND OTHER TAXES. Landlord shall pay before they become
delinquent real estate taxes imposed during the Term and any Extensions upon or
against the Leased Premises ("Real Estate Taxes") Landlord shall be solely
responsible for payment of any and all penalties imposed for any late payment.
Tenant shall, within thirty (30) days upon receipt from Landlord of a copy of
the paid tax bill and an invoice, reimburse Landlord for payment of the Real
Estate Taxes.
Real Estate Taxes for the year in which the Term shall begin and the year
in which the Lease shall terminate shall be prorated so that Tenant shall pay
only those portions thereof which corresponds with the portion of said years as
are within the Term or the current Extension. Nothing herein contained shall
require Tenant to pay monthly corporation, franchise, income, estate, gift or
inheritance taxes imposed on Monthly Rent which may be levied or assessed
against landlord, fee owner, or their successor in title.
7. PROPERTY INSURANCE. Tenant shall carry its own insurance on any of its
property that may be located on the demised premises, and it is further agreed
that LANDLORD
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<PAGE> 4
SHALL NOT BE RESPONSIBLE OR LIABLE FOR ANY DAMAGE WHATSOEVER CAUSED TO ANY
PROPERTY OF TENANT LOCATED ON THE DEMISED PREMISES except to the extent such
damage is covered by insurance or caused by the negligence or willful act of
Landlord or Landlord's agent, invitee, or licensee. Tenant shall pay for and
maintain in effect fire and extended coverage on all improvements on the Leased
Premises in the sum as required by Landlord but not exceeding replacement cost
of the improvements and liability insurance as approved by Landlord in the
amount of at least $1,000,000.00 per person, $3,000,000.00 per incident, and
$300,000.00 property damage with Landlord and Tenant shown as insured parties.
Each party hereby waives any rights against the other for damages to property
to the extent such loss is covered by insurance and agrees that insurance
policies of the parties shall contain a waiver of subrogation rights as to the
other party.
8. CONDITION OF PREMISES; REPAIRS. The Leased Premises are leased to the
Tenant in the CONDITION AS IS. Taking possession of the Leased Premises by
Tenant shall be conclusive evidence as against Tenant that the Leased Premises
are in satisfactory condition when possession was so taken. Except as stated
herein, no promises of Landlord to alter, remodel, improve, repair decorate or
clean the Leased Premises or any part thereof have been made, and no
representation respecting the condition of the Leased Premises has been made to
Tenant by or on behalf of Landlord. Except for any damage resulting from the
negligence or willful acts of Landlord or Landlord's agents, Tenant shall at
its own expense keep the improvements located on the leased Premises in good
operating condition, including replacement, if necessary, and tenantable
condition together with the air conditioning and heating system and shall
promptly and adequately repair all
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<PAGE> 5
damage to such Leased premises, including but not limited to, replacing or
repairing all damaged or broken glass, fixtures and appurtenances.
Landlord, its officers, agents and representatives shall have the right to
enter all parts of the Leased Premises during regular business hours and upon
forty-eight (48) hours notice to Tenant to inspect the Leased Premises and
Tenant shall not be entitled to any abatement or reduction of rent by reason
thereof as long as such inspection is done in a manner as to not interfere with
Tenant's business operations.
Tenant shall be responsible for installation, maintenance and repair of
any security system desired for the Leased Premises as well as for the
electrical and plumbing systems within the Leased Premises and for the air
conditioning and heating system. Tenant, at its sole expense, shall promptly
replace and maintain any lighting located on the leased premises. Tenant shall
maintain in good operating condition any water fixtures and plumbing within the
Leased premises and shall be solely responsible for any additional cost
incurred due to any leaks from fixtures within the Leased Premises.
9. INSPECTION OF THE PREMISES. Tenant hereby agrees and represents that
Tenant has inspected the Leased Premises and accepts the Leased Premises in the
condition now existing, AS IS.
10. UTILITIES. Tenant shall make Tenant's own contracts and shall pay for
all utilities used or consumed by Tenant in, on or about the Leased Premises
including water service and sanitary sewer service provided to the Leased
Premises. Tenant shall be solely responsible for any telephone service and any
other service or utility desired by Tenant. Landlord shall not be responsible
for any damages or losses incurred by Tenant for the failure of Landlord to
furnish any
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<PAGE> 6
service or utility to the Tenant as long as Landlord does not maliciously or in
bad faith cause such interruption of services. Furthermore, at the termination
of this Lease, Tenant shall be responsible for the closing out of Tenant's
accounts with the various utilities companies for the services supplied to the
Leased Premises, and shall be solely responsible for the payment of said
accounts. Upon vacating the premises, Tenant shall leave the electrical, water
and sewer services in place and intact. Any improvements and additions to the
electrical or plumbing services to the Leased Premises made during the Lease,
whether by Tenant or anyone else, shall become part of the leased Premises and
remain with the Leased Premises upon Tenant vacating the premises.
11. COMPLIANCE WITH ORDINANCES, ETC. Tenant agrees that Tenant will
promptly execute and fulfill all ordinances, regulations, and laws of the
United States, the State of Texas, County, City and other governmental
agencies, boards or departments applicable to Tenant's use of the Leased
Premises and all ordinances or orders imposed by the Board of Health,
Sanitation and Police or Fire Departments for the correction, prevention, and
abatement of nuisances in or upon or connected with the activities conducted by
the Tenant in or upon the Leased Premises during the term of this Lease and at
all times while Tenant is in possession of the Leased Premises.
12. ASSIGNMENT,SUB-LETTING PROHIBITED. Tenant shall have the
unrestricted right to assign, sublet, license, or transfer any or all of its
rights and privileges under this Lease, provided that no such transfer shall
operate to relieve Tenant of Tenant's obligations under the Lease.
13. DAMAGE BY FIRE OR OTHER CASUALTY. If the Leased Premises shall be
damaged by fire or other casualty resulting from any fault, negligence, or
willful act of tenant, its agents, employees or invitees, such damage shall be
repaired by and at the expense of Tenant under the direction and supervision of
Landlord and rent shall continue without abatement.
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<PAGE> 7
If in the last year of a Term or any Extension, if applicable,
improvements on the Leased Premises should be so badly damaged by fire or other
casualty as to make the Leased Premises untenantable, then, Landlord or Tenant
shall have the option to terminate this Lease by written notice delivered to
the other party within thirty (30) days following the event of such damage or
destruction, in which event neither party hereto shall thereafter have any
further future obligations hereunder. In any other event, unless mutually
agreed to the contrary, this Lease shall continue in force and effect, in which
event Landlord shall promptly and diligently repair and restore the damaged or
destroyed portions of the Leased Premises to substantially the same condition
existing prior to such damage or destruction. Should Landlord fail to
substantially complete repair or rebuilding of such improvements within 180
days of such damage, Tenant shall have the right to terminate this Lease by
notice to Landlord within 30 days after such 180 days period. For the period
beginning on the date that the Leased Premises were rendered untenantable to
the date of restoration of the Leased Premises to substantially the same
condition existing prior to such damage, the Monthly Rent payable hereunder
shall be proportionately abated.
14. ATTORNEY'S FEES. In the event Tenant shall make default in the
payment of Monthly Rent or other sum of money as the same shall become due and
payable to Landlord hereunder, and shall remain in default for a period of ten
days after the applicable cure period, and such rent or other sum of money is
placed in the hands of an attorney for collection or is collected through suit,
bankruptcy or other judicial proceeding, then Tenant agrees to pay to Landlord
all reasonable attorney's fees and costs incurred by Landlord due to such
non-payment.
15. DEFAULT, TERMINATION, ETC. It is further covenanted and agreed by the
parties hereto that: (i) if said Tenant shall fail to use said premises only
in a lawful manner as stated
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<PAGE> 8
herein; or (ii) if said Tenant shall fair to pay the rental herein stipulated
as same becomes due, or (iii) if Tenant shall neglect or fail to perform and
observe any of the covenants and agreements contained in this Agreement which
are on tenant's part to be performed, then on the happening of any one or more
of these events, the Landlord, or those claiming under Landlord, may (i) for
monetary defaults, upon ten (10) days written notice to Tenant and the
noncuring of such default by the end of such ten (10) days, and (ii) for
non-monetary defaults, upon thirty (30) days written notice to Tenant and the
noncuring of such default by the end of such thirty (30) days, immediately or
at any time thereafter, and without further notice or demand, and with or
without legal action or suit, terminate Tenant's rights to possession under
this Lease, and enter upon and into the premises herein demised, or any part
thereof, and repossess the same, and expel said Tenant or those claiming under
Tenant, and remove Tenant's effects if necessary, without being deemed guilty
of any manner of trespass, all and any claim of damages for and by reason
hereby expressly waived and without prejudice to any remedies which might be
otherwise used for the collection of arrearages for rent or repossession of
said premises. Upon termination of Tenant's right to possession of the Leased
Premises, Tenant shall have ten (10) days to vacate the Leased Premises,
leaving the Leased Premises in broom-clean condition and in as good a condition
as at the initiation of this Lease. Landlord is authorized to remove any
personal property of Tenant remaining on the Leased Premises upon termination
of Tenant's right to possession of the Leased Premises and to place same in the
name of Tenant in any storage facility in the county in which the Leased
Premises are located, or to otherwise dispose of such goods as abandoned
property without any liability to Tenant. If the Tenant shall abandon or
vacate said premises, or be evicted therefrom on account of any default herein,
Landlord shall be at liberty, if Landlord sees fit and thinks it advisable to
re-let same; and if sufficient rental shall not be
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<PAGE> 9
realized on such re-letting to satisfy the rent herein reserved, the Tenant
agrees to satisfy any deficiency that may arise therefrom, for all of which the
hereunder described liens are expressly reserved. Landlord shall also have the
option of terminating this Lease upon the default of Tenant and should such
premises not be returned to Landlord in as good as condition as upon the date
rentals began to accrue under this Lease, Tenant shall be responsible for all
such repair and restoration costs in addition to all accrued and unpaid rentals
upon such termination. Notwithstanding any provision to the contrary, Tenant's
obligation to return in "as a good a condition" shall take into account
ordinary wear with further consideration of Tenant's maintenance obligation
hereunder. Furthermore, as an additional cumulative remedy, in the event
notice of default has been given to Tenant by Landlord and such Default has not
been cured, Landlord shall be entitled and is hereby authorized, without any
further notice to Tenant whatsoever, to enter the Leased Premises and to
change, alter and/or modify the door locks and gate locks on the Leased
Premises and to exclude Tenant from such Leased Premises until Tenant cures
such default. Exercise by Landlord of any of the remedies granted under this
section or otherwise available shall not be deemed to be an acceptance of
surrender of the Leased Premises by Tenant, whether by agreement or by
operation of law, it being understood that such surrender can be effected only
by the written agreement of Landlord. Notwithstanding the foregoing, under no
circumstances shall Landlord have the right to accelerate rent.
16. LIENS. Except for any mortgage, deed of trust or similar instrument
executed by Landlord, Landlord and Tenant covenant each with the other not to
permit any judgment, attachment and/or lien (an "Encumbrance") to be filed
against the Leased Premises. Should any judgment, attachment, and/or lien of
any nature be filed against the Leased Premises, the party from whose
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<PAGE> 10
fault or alleged debt such lien arises shall within thirty (30) days cause such
Encumbrance to be removed by substitution of collateral or otherwise.
17. SUBROGATION OF LANDLORD'S LIEN. In the event Tenant, its subtenants
or assigns acquires and/or leases personal property to be installed, rented
from, and used upon the Leased Premises subject to a conditional sales
contract, chattel mortgage or other security agreement or lease, (the "Superior
Lien"), Landlord hereby subrogates to the Superior Lien any claim arising by
way of any landlord's lien (Whether created by statute, contract or otherwise)
with respect to such personal property and agrees to execute and deliver to any
such secured creditor and/or lessor a subrogation of any lien Landlord may have
upon such personal property. Such subrogation will be on a form provided by
Tenant authorizing the secured creditor and/or lessor to enter upon the Leased
Premises, in accordance with the terms of this Lease, and remove such personal
property in the event of default under the terms of the conditional sales
contract, chattel mortgage, security agreement and/or lease. This Section
shall not be interpreted as creating a lien in favor of Landlord. Provided
however, such subrogation shall not be effective as to any rentals or storage
costs occurring thirty (30) days after the holder of the Superior Lien is given
notice of termination of the Tenant's right to possession of the Leased
Premises.
18. CONDEMNATION. If while this Lease is in effect there shall be taken
by exercise of the power of eminent domain any part of the Leased Premises, all
sums awarded or agreed upon between Landlord and the condemning authority for
the taking of the Leased Premises, whether as damages or as compensation, shall
be the property of Landlord. Should Landlord receive condemnation funds for
the taking of improvements or personal property which are paid for by Tenant,
Landlord shall pay such funds to Tenant to the extent of the net book value of
such
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<PAGE> 11
depreciable improvements. Tenant shall be entitled to terminate this Lease if
such portion taken by condemnation renders the Leased Premises unsuitable for
the purposes utilized by Tenant prior to such condemnation. If this Lease is
terminated due to condemnation, rental shall be payable up to the date that
possession is taken by the condemning authority, and Landlord will refund to
Tenant any prepaid unaccrued rent less any sum then owing by Tenant to
Landlord. Landlord shall have the option to continue this lease after any
partial condemnation only in the event the remaining Leased Premises are
suitable for the purposes utilized by the Tenant prior to such condemnation
with reasonable adjustment to the rental rate.
19. NON-WAIVER. Neither acceptance of rent or any other amount due
hereunder by Landlord nor failure to complain of any action, non-action or
default of Tenant, whether singular or repetitive, shall constitute a waiver of
any of Landlord's rights hereunder. Waiver by Landlord of any right for any
default by Tenant shall not constitute a waiver of any right for either a
subsequent default of the same obligation or any other default. No act or
thing done by Landlord or its agents or representatives shall be deemed to be
an acceptance of surrender of the Leased Premises and no agreements to accept a
surrender of the Leased Premises shall be valid unless it is in writing and
signed by a duly authorized officer or agent of Landlord.
20. HOLDING OVER. If Tenant should remain in possession of the Leased
Premises after the expiration or termination of this Lease, without the
execution by Landlord and Tenant of a new lease, then Tenant shall be deemed to
by occupying the Leased Premises as a tenant-at-sufferance subject to all the
covenants and obligations of this Lease, provided however, the monthly rent
shall be one and one-half the rental rate in effect on termination of the
Lease.
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<PAGE> 12
21. NOTICES. Any and all notice which must or which may be given by the
Landlord to the Tenant or by the Tenant to the Landlord under any of the
provisions of this Agreement must be in writing and may be served by United
States Certified or Registered Mail, with Return Receipt Requested, or by
delivery in person, unless otherwise required under any provision hereof.
Notices mailed to the Landlord shall be addressed to Landlord at the address
stated below the signature of Landlord hereinbelow, or to such other address as
Landlord may at any time, or from time to time, hereafter designate by written
notice thereof to the Tenant, and notices mailed to Tenant shall be addressed
to Tenant at the address stated below the signature of Tenant hereinbelow, or
at such address as Tenant may, at any time, or from time to time, hereafter
designate by written notice thereof to the Landlord.
22. BINDING ON HEIRS, ETC. The agreements, conditions, covenants, and
terms herein contained, shall in every case, apply to, be binding upon and
inure to the benefit of the respective parties hereto, their heirs, executors,
administrators, successors and assigns, with the same force and effect as is
specifically mentioned in each instance where a party hereto is named.
23. ASSIGNMENT BY LANDLORD. Landlord shall have the right to transfer and
assign, in whole or in part, all its rights and obligation hereunder and in the
Center and property referred to in this Lease, and in such event and upon its
transferee's assuming Landlord's obligations hereunder, no further liability or
obligation shall thereafter accrue against the present Landlord under this
Lease.
24. LAW GOVERNING AND VENUE. This Lease shall be governed by and
construed in accordance with the laws of the State of Texas and venue for all
purposes shall be in Harris County, Texas.
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<PAGE> 13
25. DEPOSIT. Tenant shall deposit with Landlord the sum equal to one
month's rental upon execution of this Lease as security for all of Tenant's
obligations under this Lease. Tenant shall not have the right to use this sum
as payment of the last month's rent. No interest shall accrue on this deposit.
26. INDEMNIFICATION.
(a) Except to the extent covered by insurance, Landlord hereby indemnifies
and holds Tenant, Tenant's nominees, officers, directors, agents, employees,
successors and assigns harmless from the against any and all claims, demands,
liabilities, and expenses, including attorneys' fees and litigation expenses,
arising from (i) the negligence or willful acts of Landlord or its agents,
employees, or contractors occurring on the Leased Premises, or (ii) the
presence of Hazardous Substances (hereafter defined) or materials on the Leased
Premises prior to Effective Date, except to the extent caused by Tenant's
negligence or willful misconduct. In the event any action or proceeding shall
be brought against Tenant by reason of any such claims, Landlord shall defend
the same at Landlord's expense by counsel selected by Tenant.
(b) Tenant hereby indemnifies and holds Landlord, Landlord's nominees,
officers, directors, agents, employees, successors and assigns harmless from
and against any and all claims, demands, labilities, and expenses, including
attorneys' fees and litigation expenses, arising from (i) the negligence or
willful acts of Tenant or its agents, employees, invitees, or contractors
occurring on the Leased Premises after Effective Date, or (ii) the presence of
Hazardous Substances or Materials on the Leased Premises after Effective Date,
except to the extent caused by Landlord's negligence or willful misconduct. In
the event any action or proceeding shall be brought against
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<PAGE> 14
Landlord by reason of any such claims, Tenant shall defend the same at Tenant's
expense by counsel selected by Landlord.
27. NON-DISTURBANCE AND ATTORNMENT; MEMORANDUM OF LEASE. Landlord, within
thirty (30) days after the Effective Date, will obtain from every senior
landlord, mortgagee and holder of a deed of trust upon the Leased Premises,
(collectively "Senior Interest Holders") and agreement in recordable form
acceptable to Tenant wherein the Senior Interest Holders agree not to disturb
Tenant's possession of the Leased Premises or deprive Tenant of any rights or
increase any of its obligations under this Lease, provided Tenant is not in
default of its obligations under this Lease, otherwise Tenant may terminate
this Lease. Landlord agrees, upon request of Tenant, to execute and deliver to
Tenant a memorandum of this Lease in recordable form acceptable to Tenant.
28. LANDLORD'S TITLE AND QUIET ENJOYMENT. Landlord represents and
warrants that Landlord is seized in fee simple title to the Property, free,
clear and unencumbered except as otherwise disclosed herein. Landlord
covenants that so long as Tenant fulfills the conditions and covenants required
of it to be performed, Tenant will have peaceful and quiet possession thereof.
Landlord further represents and warrants that it has good right, full power and
lawful authority to enter into the Lease for the Term and any Extensions.
29. REPRESENTATIONS AND WARRANTIES OF LANDLORD.
(a) Hazardous Substances. Except in accordance with applicable
governmental regulations and in accordance with ordinary business practice, the
Property does not presently contain and is free from all hazardous substances
and/or wastes, toxic and nontoxic pollutants and contaminants including, but
not limited to, petroleum products and asbestos (collectively,
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<PAGE> 15
"Hazardous Substances"). Landlord has not received any notification from any
federal, state, county or city agency or authority relating to Hazardous
Substances, in or near the Property. Neither party shall cause or permit any
Hazardous Substances to be brought upon, kept or used in or about the Property
by such party, its agents, employees, contractors, invitees, tenants,
subtenants or licensees without the prior written consent of the other party.
Neither party shall unreasonably withhold its consent thereto as long as such
party demonstrates to the other party's reasonable satisfaction that each such
Hazardous Substance is necessary or useful to its business or to the business
of its agents, employees, contractors, invitees, tenants, subtenants or
licensees, and will be used, kept and stored in a manner that complies with all
applicable governmental laws and regulations. If consented to, the requesting
party shall promptly deliver to the other party true and complete copies of all
notices received by such party from any governmental authority with respect to
the generation, storage or disposal of such Hazardous Substances. Tenant is
aware that an underground diesel fuel storage tank is presently located at the
Leased Premises. Such fiberglass storage tank was installed in 1988. Landlord
shall have the right to remove such tank at its expense.
(b) Litigation. There are no claims, causes of action or other litigation
or proceedings pending or, to the best of Landlord's knowledge, threatened in
respect to the ownership, operation or environmental condition of the Property
or any part hereof, except for claims which are fully insured and as to which
the insurer has accepted defense without reservation.
(c) Violation. There are no violations of any health, safety, pollution,
zoning or other laws, ordinances, rules or regulations including, without
limitation, the ADA with respect to any portion of the Property which have not
been heretofore entirely corrected.
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<PAGE> 16
(d) Zoning. The Property is currently zoned (if applicable) to allow the
use of the Leased Premises for Tenant's Use.
(e) Authority. Landlord has full capacity, right, power and authority to
executed, deliver and perform this Lease and all documents to be executed by
Landlord pursuant hereto, and all required action and approvals therefor have
been duly taken and obtained. The individual signing this Lease and all other
documents executed pursuant hereto on behalf of Landlord is duly authorized.
This Lease and all documents to be executed pursuant hereto by Landlord are
binding upon and enforceable against Landlord in accordance with their
respective terms, and the transaction contemplated hereby will not result in a
breach of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, or other agreement to which Landlord or the Leased
Premises is subject or by which Landlord or the Leased Premises is bound.
(f) Notwithstanding any provision to the contrary, Landlord shall be
responsible for the structural integrity of the present building(s) on the
Leased Premises as long as any failure of such structural integrity is not due
to a failure to properly maintain. Such items of structural integrity shall
include the exterior walls, concrete foundation, and roof, provided however,
Landlord shall not be responsible for normal maintenance of such items.
30. ESTOPPEL CERTIFICATE. Tenant and Landlord agree at any time and from
time to time, upon not less than twenty (20) business days' prior written
request from the other party, to execute, acknowledge and deliver to the
requesting party a statement in writing, in form and content reasonable
acceptable to the requesting party, an estoppel certificate. In the event
either party fails to execute and deliver any such instrument within the
foregoing time period, the delinquent party
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<PAGE> 17
shall be deemed to have acknowledged and agreed with and to the matters set
forth in such certificate.
31. MISCELLANEOUS.
(a) If either party is delayed or prevents from performing any of its
obligations under this Lease by reason of strike, lockouts, labor troubles,
failure of power, riots, insurrection, war, acts of God or any other cause
beyond such party's control, the period of such event or such prevention shall
be deemed added to the time period herein provided for the performance of any
such obligation by the applicable party.
(b) This Lease contains the entire agreement between the parties. No
modification, alteration or amendment of the lease shall be binding unless in
writing and executed by the parties.
(c) The representations, warranties and indemnities contained in this
Lease shall survive the termination or expiration of this Lease.
(d) Each party hereto has reviewed and revised (or requested revisions of)
this Lease, and therefore any usual rules of construction requiring that
ambiguities are to be resolved against a particular party shall not be
applicable in the construction and interpretation of this Lease or any Exhibit
hereto.
(e) Time if of the essence of this Lease and each provision, provided,
however, if the final (but not any interim) date of any period set forth herein
falls on a Saturday, Sunday or legal holiday under the laws of the United
States of America, the final date of such period shall be extended to the next
business day.
EXECUTED AS EFFECTIVE in duplicate originals effective the date first
above written.
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<PAGE> 18
LANDLORD: TENANT:
/s/ James E. Horsley NES ACQUISITION CORP.
- ----------------------------
JAMES E. HORSLEY
18107 Colonial Forest Circle /s/ Dennis J. O'Connor
Spring, Texas 77379 -----------------------------------
(281) 376-6188 Person: DENNIS J. O'CONNOR
Title: Chief Financial Officer
Address: c/o National Equipment Services, Inc.
6100 Sears Tower
Chicago, Illinois 60606
Attention: Kevin P. Rodgers
Phone: (312) 382-2223
Fax: (312) 382-2201
- 18 -
<PAGE> 19
(ACKNOWLEDGEMENT)
THE STATE OF TEXAS
COUNTY OF HARRIS
The foregoing instrument was acknowledged before me on this 17 day of
March, 1997, by JAMES E. HORSLEY.
/s/ Carole McDonald
-----------------------
Notary Public in and or
(SEAL) The State of Texas
THE STATE OF TEXAS
COUNTY OF HARRIS
The foregoing instrument was acknowledged before me on this 17 day of
March, 1997, by DENNIS J. O'CONNOR, Chief Financial Officer of NES ACQUISITION
CORP., a Delaware Corporation, on behalf of said corporation.
/s/ Carole McDonald
-----------------------
Notary Public in and or
(SEAL) The State of Texas
- 19 -
<PAGE> 20
TOMBALL
EXHIBIT "A"
LEGAL DESCRIPTION
All the tract or parcel of land out of the Larenzo DeZavalla Survey, Abstract
Number 950, in Harris County, Texas, and being out of and a part of that
certain 4.03384 acre tract of land conveyed to Martha Korn, Trustee, under
Harris County Clerk's File Number E447193, and being more particularly
described by metes and bounds as follows:
BEGINNING at an old automobile axle found marking the southeast corner of the
said 4.03384 acre tract, said point being in the West line of Prestonwood
Forest Section One, and located North 02 deg. 43 min. 49 sec. West, 152.11 feet
from the southwest corner of said Prestonwood Forest Section One, according to
a map or plat thereof recorded in Volume 173, Page 126 of the Harris County Map
Records;
THENCE, South 61 deg. 50 min. 08 sec. West, 232.90 feet along the south line of
said 4.03384 acre tract to a 1/2 inch iron rod found in the east line of F.M.
Highway No. 149, based on a right-of-way width of 180 feet, said point being
the southwest corner of the said 4.03384 acre tract and the herein described
tract;
THENCE, in a northwesterly direction with the said east line of F.M. Highway
No. 149 following the arc of a curve to the right, having a radius of 2774.79
feet and a central angle of 02 deg. 07 min. 41 sec. a distance of 103.06 feet
to a 5/8 inch iron rod found for the northwest corner of the herein described
tract;
THENCE, North 61 deg. 50 min. 08 sec. East, 305.36 feet to a 1/2 inch iron rod
found in the east line of said 4.03384 acre tract, and the said west line of
Prestonwood Forest Section One, for the northeast corner of the herein
described tract;
THENCE, South 02 deg. 43 min. 49 sec. East, 110.73 feet with the east line of
said 4.03384 acre tract, and west line of Prestonwood Forest Section One, to
the POINT OF BEGINNING of the herein described 0.61844 acre tract.
- 20 -
<PAGE> 21
AND INCLUDING:
FIELD NOTES
0.3908 acre or 17,024.77 square feet of land, lying and being situated in
the Lorenzo De Zavalla Survey, Abstract 950, Harris County, Texas and being a
portion of that certain 0.7889 acre tract described in deed dated September 9,
1982 from Daniel Chazin to Peter S. Terpstra and R. Kent McGaughy, recorded
under County Clerk's File Number H609488, Deed Records of Harris County, Texas;
said 0.3908 acre or 17,024.77 square feet of land being more particularly
described by metes and bounds as follows:
Beginning at a 1 inch iron rod set in concrete for the most northerly
corner of the said 0.7889 acre tract;
Thence South, along the easterly line of said 0.7889 acre tract 240.13
feet to a 1 inch iron pipe in the northeasterly right of way line of State
Highway 249, based on 400 feet in width;
Thence in a northwesterly direction along the said highway right of way
line and along a curve to the right having a central angle of 02 deg. 17 min.
48 sec. and a radius of 5529.58 feet for a distance of 221.66 feet to a 1 inch
iron pipe for corner;
Thence North 64 deg. 45 min. 00 sec. East, 154.02 feet to the point or
place of beginning and containing as aforesaid 9.3908 acre or 17,024.77 square
feet of land.
Surveyed: May 23, 1992
-------------------------------------------
Wallace Fones
Registered Professional Land Surveyor, #116
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<PAGE> 22
TOGETHER WITH:
a sanitary sewer easement with the right to construct, replace, and maintain
sanitary sewer lines over and across the passageway described in this paragraph
and located on the property as follows:
0.0165 acre or 717.25 square feet of land, lying and being
situated in the Lorenzo De Zavalla Survey, Abstract 950, Harris
County, Texas and being a portion of that certain 0.7889 acre
tract described in deed dated September 9, 1992 from Daniel Chazin
to Peter S. Terpstra and R. Kent McGaughy, recorded under County
Clerk's File Number H-609488, Deed Records of Harris County,
Texas; said 0.0165 acre or 7.7.25 square feet of land being more
particularly described by metes and bounds as follows:
Commencing at a 1 inch iron rod set in concrete for the most
northerly corner of the said 0.7889 acre tract;
Thence South, along the easterly line of said 0.7889 acre
tract 162.11 feet to a point for the place of beginning of the
tract herein described;
Thence South, continuing along the easterly line of said
0.7889 acre tract, 78.02 feet to a 1 inch iron pipe in the
northeasterly right of way line of State Highway 249 based on 400
feet in width;
Thence along said highway right of way line and along a curve
to the right having a central angle of 00 deg. 09 min. 58 sec. and
a radius of 5529.58 feet, a distance of 16.08 feet to a point for
corner;
Thence North, parallel to and 10.00 feet west of said
easterly line of 0.7889 acre tract, 65.43 feet to a point for
corner;
Thence East, a distance of 10.00 feet to the point or place
of beginning and containing as aforesaid 0.0165 acre or 717.25
square feet of land.
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<PAGE> 23
SAVE AND EXCEPT:
Being 0.187 of one acre (8,138 square feet) of land, more or less, out of a
called 0.61844 of one acre tract of land situated in the Lorenzo DeZavalla
Survey, Abstract 950, Harris County, Texas; said 0.61844 of one acre tract
being the same land described in deed from Keith Twiggs, Inc. to Jack E. Fulton
and James E. Horsley, dated May 27, 1987 and recorded under File Number
L148515, Film Code Number 181-34-0497 of the Harris County Official Public
Records of Real Property (H.C.O.P.R.R.P.); said 0.187 of one acre of land, more
or less, being more particularly described by metes and bounds as follows, with
all bearings based on the Texas Coordinate System, South Central Zone. All
distances and coordinates are surface and may be converted to grid by
multiplying by the combined adjustment factor of 0.999870:
Commencing at a 1/2-inch iron pipe found for the southeast corner of said
0.61844 of one acre tract being the most northerly corner of a called 0.7889 of
one acre tract, described in deed to Peter S. Terpstra and R. Kent McGaughy and
recorded under File Number H609488, Film Code Number 024-97-0721, of the
H.C.O.P.R.R.P.; thence as follows:
South 62 deg. 04 min. 50 sec. West, along the line common to said 0.61844
of one acre tract and said 0.7889 of one acre tract, a distance of 152.83
feet to the point of intersection with the proposed northeasterly
right-of-way line of State Highway 249 (S.H. 249) (400 feet wide), and
being the POINT OF BEGINNING (X = 3,089,185.83, Y = 793,415.71), from which
a 5/8-inch iron rod with S.D.H.P.T. aluminum cap at baseline station
130+00.00 bears along the arc of a curve to the left (Central Angle =
01 deg. 20 min. 45 sec; Radius = 5,529.58 feet; Chord Bearing and
Distance = South 40 deg. 43 min. 15 sec. East, 129.88 feet), an arc
distance of 129.88 feet;
1.) THENCE, SOUTH 62 deg. 04 min. 50 sec. West, continuing along said
common line, a distance of 78.78 feet to the point of intersection
with the existing northeasterly right-of-way line of said S.H. 240
(180 feet wide), and being in the arc of a non-tangent curve to the
right, from which a found 1/2-inch iron pipe bears South 62 deg.
04 min. 50 sec. West, 0.65 feet;
2.) THENCE, northwesterly, along the arc of said curve to the right
(Central Angle = 02 deg. 07 min. 30 sec.; Radius = 2,774.79 feet;
Chord Bearing and Distance = North 42 deg. 18 min. 15 sec. West,
102.91 feet), an arc distance of 102.91 feet to a point for corner,
being in the line common to said 0.61844 of one acre tract and a
called 3.4152 acre tract described in deed to NWH Properties, Inc.,
recorded under File Number J185936, Film Code Number 061-94-2444,
of the H.C.O.P.R.R.P., from which a found 5/8-inch iron rod bears
South 61 deg. 50 min. 19 sec West, 1.50 feet;
3.) THENCE NORTH 61 deg. 50 min. 19 sec East, along said common line,
a distance of 83.81 feet to a point of intersection with said
proposed northeasterly right-of-way
- 23 -
<PAGE> 24
line of S.H. 249, being in the arc of a non-tangent curve to the left,
having a radial bearing of South 51 deg. 00 min. 36 sec. West;
4.) THENCE, southeasterly, along said proposed northeasterly
right-of-way line of S.H. 249 and the arc of said curve to the left
(Central Angle = 01 deg. 03 min. 29 sec.; Radius = 5,529.58 feet;
Chord Bearing and Distance = South 39 deg. 31 min. 08 sec. East,
102.12 feet), an arc distance of 102.12 feet to the POINT OF
BEGINNING, containing an area of 0.187 of one acre (8.138 square
feet) of land, more or less.
- 24 -
<PAGE> 1
Exhibit 10.29
LEASE AGREEMENT
THE STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS
COUNTY OF HARRIS )
THIS LEASE AGREEMENT, made and entered into effective this 17 day of
March, 1997, (the "Effective Date") by and between JAMES E. HORSLEY,
hereinafter called "Landlord", and NES ACQUISITION CORP., hereinafter called
"Tenant".
W I T N E S S E T H
In consideration of the rent hereinafter stipulated and agreed to be paid
by Tenant to Landlord, and of the terms, covenants, and conditions herein
contained and on the part of the Tenant to be kept, observed and performed, the
Landlord has LEASED, LET and DEMISED, and does by these presents LEASE, LET and
DEMISE unto the Tenant the following described property for the period of time,
subject to and upon the terms, covenants and conditions hereinbelow set forth,
to-wit:
1. DESCRIPTION OF LEASED PREMISES. The leased premises (the "Leased
Premises"), known as 1731 First Street, Humble, Texas 77338 are described as
follows:
See Exhibit "A" attached hereto and made a part hereof for all purposes.
In addition to the Leased Premises, Landlord hereby leases and grants to
Tenant (a) all rights, easements and appurtenances, if any, belonging or
appertaining to the Leased Premises by reference, and (b) all rights, title and
interest of Landlord in and to any and all roads, streets, alleys and ways, if
any, bounding the Leased Premises. The parking areas, driveways, exits and
entrances of the Leased Premises may not be modified, reduced and or relocated
without the consent of Tenant.
- 1 -
<PAGE> 2
2. TERM OF LEASE. The initial term of this Lease is five (5) years (the
"Terms"), beginning on Effective Date unless sooner terminated or extended
under the terms hereof.
3. EXTENSIONS. Tenant shall have the option of extending the Term for
four (4) additional periods of five (5) years each (individually, an
"Extension" and collectively, the "Extensions"), commencing at midnight on the
date on which the Term or any Extension expires. Tenant shall give Landlord
written notice exercising the applicable Extension not later than the date
which is 90 days prior to the expiration of the Term or the Extension, as the
case may be.
The Rent for each Extension, subject to any adjustment pursuant to
subparagraph (a) above, is as follows:
<TABLE>
<CAPTION>
LEASE YEAR MONTHLY RENT
- ---------- ------------
<S> <C>
06-10 $4,180.00
11-15 $4,598.00
16-20 $5,057.00
21-25 $5,563.00
</TABLE>
(10% increase over each prior 5 year rate).
4. RENT. During the Term, Tenant covenants and agrees to pay to Landlord
monthly rent in the amount of $3,800.00 ("Monthly Rent"). All such rental
payments shall be payable in lawful money of the United States of America,
monthly in advance, on or before the first day of each month. If the Effective
Date of this Lease is other than on the first of a calendar month, the rental
for the portion of the initial calendar month in which this Lease is in effect
shall be prorated based upon 30 days in a calendar month. In the event the
final month of this Lease is other than a full calendar month, the final
month's rent shall likewise by prorated. Should Tenant fail to pay such
- 2 -
<PAGE> 3
Monthly Rent, charges or other sums due hereunder within ten (10) days of the
due date thereof provided in this Lease, Tenant further agrees to pay to
Landlord as a late charge to compensate Landlord for the added administrative
expense caused by such late payment a one time sum equal to 5% of any
outstanding balance of Monthly Rent (or other amounts) required to be paid
under this Lease. Tenant shall also pay to Landlord as additional rental under
this Lease any excise, sales, privilege or gross receipts tax levied, if any,
on rents or charges paid hereunder.
5. USE OF LEASED PREMISES. Tenant may use the Leased Premises only in a
lawful manner for: (i) the operation of an equipment rental and sales
business, or (ii) any other lawful use, provided Tenant receives the consent of
Landlord which consent shall not be unreasonably withheld, conditioned, or
delayed.
6. REAL ESTATE AND OTHER TAXES. Landlord shall pay before they become
delinquent real estate taxes imposed during the Term and any Extensions upon or
against the Leased Premises ("Real Estate Taxes"). Landlord shall be solely
responsible for payment of any and all penalties imposed for any late payment.
Tenant shall, within thirty (30) days upon receipt from Landlord of a copy of
the paid tax bill and an invoice, reimburse Landlord for payment of the Real
Estate Taxes.
Real Estate Taxes for the year in which the Term shall begin and the year
in which the Lease shall terminate shall be prorated so that Tenant shall pay
only those portions thereof which corresponds with the portion of said years as
are within the Term or the current Extension. Nothing herein contained shall
require Tenant to pay monthly corporation, franchise, income, estate, gift or
inheritance taxes imposed on Monthly Rent which may be levied or assessed
against landlord, fee owner, or their successor in title.
- 3 -
<PAGE> 4
7. PROPERTY INSURANCE. Tenant shall carry its own insurance on any of its
property that may be located on the demised premises, and it is further agreed
that LANDLORD SHALL NOT BE RESPONSIBLE OR LIABLE FOR ANY DAMAGE WHATSOEVER
CAUSED TO ANY PROPERTY OF TENANT LOCATED ON THE DEMISED PREMISES except to the
extent such damage is covered by insurance or caused by the negligence or
willful act of Landlord or Landlord's agent, invitee, or licensee. Tenant
shall pay for and maintain in effect fire and extended coverage on all
improvements on the Leased Premises in the sum as required by Landlord but not
exceeding replacement cost of the improvements and liability insurance as
approved by Landlord in the amount of at least $1,000,000.00 per person,
$3,000,000.00 per incident, and $3,000,000.00 property damage with Landlord and
Tenant shown as insured parties. Each party hereby waives any rights against
the other for damages to property to the extent such loss is covered by
insurance and agrees that insurance policies of the parties shall contain a
waiver of subrogation rights as to the other party.
8. CONDITION OF PREMISES: REPAIRS. The Leased Premises are leased to the
Tenant in the CONDITION AS IS. Taking possession of the Leased Premises by
Tenant shall be conclusive evidence as against Tenant that the Leased Premises
are in satisfactory condition when possession was so taken. Except as stated
herein, no promises of Landlord to alter, remodel, improve, repair, decorate or
clean the Leased Premises or any part thereof have been made, and no
representation respecting the condition of the Leased Premises, has been made
to Tenant by or on behalf of Landlord. Except for any damage resulting from
the negligence or willful acts of Landlord or Landlord's agents, Tenant shall
at its own expense keep the improvements located on the Leased Premises in good
operating condition, including replacement if necessary, and tenantable
condition
- 4 -
<PAGE> 5
together with the air conditioning and heating system and shall promptly and
adequately repair all damage to such Leased Premises, including but not limited
to, replacing or repairing all damaged or broken glass, fixtures and
appurtenances.
Landlord, its officers, agents and representatives all have the right to
enter all parts of the Leased Premises during regular business hours and upon
forty-eight (48) hours notice to Tenant to inspect the Leased Premises and
Tenant shall not be entitled to any abatement or reduction of rent by reason
thereof as long as such inspection is done in a manner as to not interfere with
Tenant's business operations.
Tenant shall be responsible for installation, maintenance and repair of
any security system desired for the Leased Premises as well as for the
electrical and plumbing systems within the Leased Premises and for the air
conditioning and heating system. Tenant, at its sole expense, shall promptly
replace and maintain any lighting located on the Leased Premises. Tenant shall
maintain in good operating condition any water fixtures and plumbing within the
Leased Premises and shall be solely responsible for any additional cost
incurred due to any leaks from fixtures within the Leased Premises.
9. INSPECTION OF THE PREMISES. Tenant hereby agrees and represents that
Tenant has inspected the Leased Premises and accepts the Leased Premises in the
condition now existing, AS IS.
10. UTILITIES. Tenant shall make Tenant's own contracts and shall pay for
all utilities used or consumed by Tenant in, on or about the Leased Premises
including water service and sanitary sewer service provided to the Leased
Premises. Tenant shall be solely responsible for any telephone service and any
other service or utility desired by Tenant. Landlord shall not be
- 5 -
<PAGE> 6
responsible for any damages or losses incurred by Tenant for the failure of
Landlord to furnish any service or utility to the Tenant as long as Landlord
does not maliciously or in bad faith cause such interruption of services.
Furthermore, at the termination of this Lease, Tenant shall be responsible for
the closing out of Tenant's accounts with the various utilities companies for
the services supplied to the Leased Premises, and shall be solely responsible
for the payment of said accounts. Upon vacating the premises, Tenant shall
leave the electrical, water and sewer services in place and intact. Any
improvements and additions to the electrical or plumbing services to the Leased
Premises made during the Lease, whether by Tenant or anyone else, shall become
part of the Leased Premises and remain with the Leased Premises upon Tenant
vacating the premises.
11. COMPLIANCE WITH ORDINANCES, ETC. Tenant agrees that Tenant will
promptly execute and fulfill all ordinances, regulations, and laws of the
United States, the State of Texas, County, City and other governmental
agencies, boards or departments applicable to Tenant's use of the Leased
Premises and all ordinances or orders imposed by the Board of Health,
Sanitation and Police or Fire Departments for the correction, prevention, and
abatement of nuisances in or upon or connected with the activities conducted by
the Tenant in or upon the Leased Premises during the term of this Lease and at
all times while Tenant is in possession of the Leased Premises.
12. ASSIGNMENT, SUB-LETTING PROHIBITED. Tenant shall have the
unrestricted right to assign, sublet, license, or transfer any or all of its
rights and privileges under this Lease, provided that no such transfer shall
operate to relieve Tenant of Tenant's obligations under the Lease.
13. DAMAGE BY FIRE OR OTHER CASUALTY. If the Leased Premises shall be
damaged by fire or other casualty resulting from any fault, negligence, or
willful act of Tenant, its
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<PAGE> 7
agents, employees or invitees, such damage shall be repaired by and at the
expense of Tenant under the direction and supervision of Landlord and rent
shall continue without abatement.
If in the last year of a Term or any Extension, if applicable,
improvements on the Leased Premises should be so badly damaged by fire or other
casualty as to make the Leased Premises untenantable, then, Landlord or Tenant
shall have the option to terminate this Lease by written notice delivered to
the other party within thirty (30) days following the event of such damage or
destruction, in which event neither party hereto shall thereafter have any
further future obligations hereunder. In any other event, unless mutually
agreed to the contrary, this Lease shall continue in force and effect, in which
event Landlord shall promptly and diligently repair and restore the damaged or
destroyed portions of the Leased Premises to substantially the same condition
existing prior to such damage or destruction. Should Landlord fail to
substantially complete repair or rebuilding of such improvements within 180
days of such damage, Tenant shall have the right to terminate this Lease by
notice to Landlord within 30 days after such 180 days period. For the period
beginning on the date that the Leased Premises were rendered untenantable to
the date of restoration of the Leased Premises to substantially the same
condition existing prior to such damage, the Monthly Rent payable hereunder
shall be proportionately abated.
14. ATTORNEY'S FEES. In the event Tenant shall make default in the
payment of Monthly Rent or other sum of money as the same shall become due and
payable to Landlord hereunder, and shall remain in default for a period of ten
days after the applicable cure period, and such rent or other sum of money is
placed in the hands of an attorney for collection or is collected through suit,
bankruptcy or other judicial proceeding, then Tenant agrees to pay to Landlord
all reasonable attorney's fees and costs incurred by Landlord due to such
non-payment.
- 7 -
<PAGE> 8
15. DEFAULT, TERMINATION, ETC. It is further covenanted and agreed by the
parties hereto that: (i) if said Tenant shall fail to use said premises only
in a lawful manner as stated herein; or (ii) if said Tenant shall fail to pay
the rental herein stipulated as same becomes due; or (iii) if Tenant shall
neglect or fail to perform and observe any of the covenants and agreements
contained in this Agreement which are on Tenant's part to be performed, then on
the happening of any one or more of these events, the Landlord, or those
claiming under Landlord, may (i) for monetary defaults, upon ten (10) days
written notice to Tenant and the noncuring of such default by the end of such
ten (10) days, and (ii) for non-monetary defaults, upon thirty (30) days
written notice to Tenant and the noncuring of such default by the end of such
thirty (30) days, immediately or at any time thereafter, and without further
notice or demand, and with or without legal action or suit, terminate Tenant's
rights to possession under this Lease, and enter upon and into the premises
herein demised, or any part thereof, and repossess the same, and expel said
Tenant or those claiming under Tenant, and remove Tenant's effects if
necessary, without being deemed guilty of any manner of trespass, all and any
claim of damages for and by reason hereby expressly waived and without
prejudice to any remedies which might be otherwise used for the collection of
arrearages for rent or repossession of said premises. Upon termination of
Tenant's right to possession of the Leased Premises, Tenant shall have ten (10)
days to vacate the Leased Premises, leaving the Leased Premises in broom-clean
condition and in as good a condition as at the initiation of this Lease.
Landlord is authorized to remove any personal property of Tenant remaining on
the Leased Premises upon termination of Tenant's right to possession of the
Leased Premises and to place same in the name of Tenant in any storage facility
in the county in which the Leased Premises are located, or to otherwise dispose
of such goods as abandoned property without any liability to Tenant. If the
Tenant shall abandon or
- 8 -
<PAGE> 9
vacate said premises, or be evicted therefrom on account of any default herein,
Landlord shall be at liberty, if Landlord sees fit and thinks it advisable, to
re-let same, and if sufficient rental shall not be realized on such re-letting
to satisfy the rent herein reserved, the Tenant agrees to satisfy any
deficiency that may arise therefrom, for all of which the hereinafter described
liens are expressly reserved. Landlord shall also have the option of
terminating this Lease upon the default of Tenant and should such premises not
be returned to Landlord in as good as condition as upon the date rentals began
to accrue under this Lease, Tenant shall be responsible for all such repair and
restoration costs in addition to all accrued and unpaid rentals upon such
termination. Notwithstanding any provision to the contrary, Tenant's
obligation to return in "as a good a condition" shall take into account
ordinary wear with further consideration of Tenant's maintenance obligation
hereunder. Furthermore, as an additional cumulative remedy, in the event
notice of default has been given to Tenant by Landlord and such Default has not
been cured, Landlord shall be entitled and is hereby authorized, without any
further notice to Tenant whatsoever, to enter the Leased Premises and to
change, alter and/or modify the door locks and gate locks on the Leased
Premises and to exclude Tenant from such Leased Premises until Tenant cures
such default. Exercise by Landlord of any of the remedies granted under this
section or otherwise available shall not be deemed to be an acceptance of
surrender of the Leased Premises by Tenant, whether by agreement or by
operation of law, it being understood that such surrender can be effected only
by the written agreement of Landlord. Notwithstanding the foregoing, under no
circumstances shall Landlord have the right to accelerate rent.
16. LIENS. Except for any mortgage, deed of trust or similar instrument
executed by Landlord, Landlord and Tenant covenant each with the other not to
permit any judgment, attachment
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<PAGE> 10
and/or lien (an "Encumbrance") to be filed against the Leased Premises. Should
any judgment, attachment and/or lien of any nature be filed against the Leased
Premises, the party from whose fault or alleged debt such lien arises shall
within thirty (30) days cause such Encumbrance to be removed by substitution of
collateral or otherwise.
17. SUBROGATION OF LANDLORD'S LIEN. In the event Tenant, its subtenants
or assigns acquire and/or leases personal property to be installed, rented
from, and used upon the Leased Premises subject to a conditional sales
contract, chattel mortgage or other security agreement or lease, (the "Superior
Lien"), Landlord hereby subrogates to the Superior Lien any claim arising by
way of any landlord's lien (whether created by statute, contract or otherwise)
with respect to such personal property and agrees to execute and deliver to any
such secured creditor and/or lessor a subrogation of any lien Landlord may have
upon such personal property. Such subrogation will be on a form provided by
Tenant authorizing the secured creditor and/or lessor to enter upon the Leased
Premises, in accordance with the terms of this Lease, and remove such personal
property in the event of default under the terms of the conditional sales
contract, chattel mortgage, security agreement and/or lease. This Section
shall not be interpreted as creating a lien in favor of Landlord. Provided
however, such subrogation shall not be effective as to any rentals or storage
costs occurring thirty (30) days after the holder of the Superior Lien is given
notice of termination of the Tenant's right to possession of the Leased
Premises.
18. CONDEMNATION. If while this Lease is in effect there shall be taken
by exercise of the power of eminent domain any part of the Leased Premises, all
sums awarded or agreed upon between Landlord and the condemning authority for
the taking of the Leased Premises, whether as damages or as compensation, shall
be the property of Landlord. Should Landlord receive
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<PAGE> 11
condemnation funds for the taking of improvements or personal property which
are paid for by Tenant, Landlord shall pay such funds to Tenant to the extent
of the net book value of such depreciable improvements. Tenant shall be
entitled to terminate this Lease if such portion taken by condemnation renders
the Leased Premises unsuitable for the purposes utilized by Tenant prior to
such condemnation. If this Lease is terminated due to condemnation, rental
shall be payable up to the date that possession is taken by the condemning
authority, and Landlord will refund to Tenant any prepaid unaccrued rent less
any sum then owing by Tenant to Landlord. Landlord shall have the option to
continue this lease after any partial condemnation only in the event the
remaining Leased Premises are suitable for the purposes utilized by the Tenant
prior to such condemnation with reasonable adjustment to the rental rate.
19. NON-WAIVER. Neither acceptance of rent or any other amount due
hereunder by Landlord nor failure to complain of any action, non-action or
default of Tenant, whether singular or repetitive, shall constitute a waiver of
any of Landlord's rights hereunder. Waiver by Landlord of any right for any
default by Tenant shall not constitute a waiver of any right for either a
subsequent default of the same obligation or any other default. No act or
thing done by Landlord or its agents or representatives shall be deemed to be
an acceptance of surrender of the Leased Premises and no agreements to accept a
surrender of the Leased Premises shall be valid unless it is in writing and
signed by a duly authorized officer or agent of Landlord.
20. HOLDING OVER. If Tenant should remain in possession of the Leased
Premises after the expiration or termination of this Lease, without the
execution by Landlord and Tenant of a new lease, then Tenant shall be deemed to
be occupying the Leased Premises as a tenant-at-
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<PAGE> 12
sufferance subject to all the covenants and obligations of this Lease, provided
however, the monthly rent shall be one and one-half the rental rate in effect
on termination of the Lease.
21. NOTICES. Any and all notice which must or which may be given by the
Landlord to the Tenant or by the Tenant to the Landlord under any of the
provisions of this Agreement must be in writing and may be served by United
States Certified or Registered Mail, with Return Receipt Requested, or by
delivery in person, unless otherwise required under any provision hereof.
Notices mailed to the Landlord shall be addressed to Landlord at the address
stated below the signature of Landlord hereinbelow, or to such other address as
Landlord may at any time, or from time to time, hereafter designate by written
notice thereof to the Tenant, and notices mailed to Tenant shall be addressed
to Tenant at the address stated below the signature of Tenant hereinbelow, or
at such address as Tenant may, at any time, or from time to time, hereafter
designate by written notice thereof to the Landlord.
22. BINDING ON HEIRS, ETC. The agreements, conditions, covenants, and
terms herein contained, shall in every case, apply to, be binding upon and
inure to the benefit of the respective parties hereto, their heirs, executors,
administrators, successors and assigns, with the same force and effect as is
specifically mentioned in each instance where a party hereto is named.
23. ASSIGNMENT BY LANDLORD. Landlord shall have the right to transfer and
assign, in whole or in part, all its rights and obligation hereunder and in the
Center and property referred to in this Lease, and in such event and upon its
transferee's assuming Landlord's obligations hereunder, no further liability or
obligation shall thereafter accrue against the present Landlord under this
Lease.
- 12 -
<PAGE> 13
24. LAW GOVERNING AND VENUE. This Lease shall be governed by and
construed in accordance with the laws of the State of Texas and venue for all
purposes shall be in Harris County, Texas.
25. DEPOSIT. Tenant shall deposit with Landlord the sum equal to one
month's rental upon execution of this Lease as security for all of Tenant's
obligations under this Lease. Tenant shall not have the right to use this sum
as payment of the last month's rent. No interest shall accrue on this deposit.
26. INDEMNIFICATION.
(a) Except to the extent covered by insurance, Landlord hereby indemnifies
and holds Tenant, Tenant's nominees, officers, directors, agents, employees,
successors and assigns harmless from and against any and all claims, demands,
liabilities, and expenses, including attorneys' fees and litigation expenses,
arising from (i) the negligence or willful acts of Landlord or its agents,
employees, or contractors occurring on the Leased Premises, or (ii) the
presence of Hazardous Substances (hereafter defined) or materials on the Leased
Premises prior to effective Date, except to the extent caused by Tenant's
negligence or willful misconduct. In the event any action or proceeding shall
be brought against Tenant by reason of any such claims, Landlord shall defend
the same at Landlord's expense by counsel selected by Tenant.
(b) Tenant hereby indemnifies and holds Landlord, Landlord's nominees,
officers, directors, agents, employees, successors and assigns harmless from
and against any and all claims, demands, liabilities, and expenses, including
attorneys' fees and litigation expenses, arising from (i) the negligence or
willful acts of Tenant or its agents, employees, invitees, or contractors
occurring on the Leased Premises after Effective Date, or (ii) the presence of
Hazardous Substances or
- 13 -
<PAGE> 14
Materials on the Leased Premises after Effective Date, except to the extent
caused by Landlord's negligence or willful misconduct. In the event any action
or proceeding shall be brought against Landlord by reason of any such claims,
Tenant shall defend the same at Tenant's expense by counsel selected by
Landlord.
27. NON-DISTURBANCE AND ATTORNMENT: MEMORANDUM OF LEASE. Landlord, within
thirty (30) days after the Effective Date, will obtain from every senior
landlord, mortgagee and holder of a deed of trust upon the Leased Premises,
(collectively "Senior Interest Holders") an agreement in recordable form
acceptable to Tenant wherein the Senior Interest Holders agree not to disturb
Tenant's possession of the Leased Premises or deprive Tenant of any rights or
increase any of its obligations under this Lease, provided Tenant is not in
default of its obligations under this Lease, otherwise Tenant may terminate
this Lease. Landlord agrees, upon request of Tenant, to execute and deliver to
Tenant a memorandum of this Lease in recordable form acceptable to Tenant.
28. LANDLORD'S TITLE AND QUIET ENJOYMENT. Landlord represents and
warrants that Landlord is seized in fee simple title to the Property, free,
clear and unencumbered except as otherwise disclosed herein. Landlord
covenants that so long as Tenant fulfills the conditions and covenants required
of it to be performed. Tenant will have peaceful and quiet possession thereof.
Landlord further represents and warrants that it has good right, full power
and lawful authority to enter into the Lease for the Term and any Extensions.
29. REPRESENTATIONS AND WARRANTIES OF LANDLORD.
(a) Hazardous Substances. Except in accordance with applicable
governmental regulations and in accordance with ordinary business practice, the
Property does not presently
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<PAGE> 15
contain and is free from all hazardous substances and/or wastes, toxic and
nontoxic pollutants and contaminants including, but not limited to, petroleum
products and asbestos (collectively, "Hazardous Substances"). Landlord has not
received any notification from any federal, state, county or city agency or
authority relating to Hazardous Substances, in or near the Property. Neither
party shall cause or permit any Hazardous Substances to be brought upon, kept
or used in or about the Property by such party, its agents, employees,
contractors, invitees, tenants, subtenants or licensees without the prior
written consent of the other party. Neither party shall unreasonably withhold
its consent thereto as long as such party demonstrates to the other party's
reasonable satisfaction that each such Hazardous Substance is necessary or
useful to its business or to the business of its agents, employees,
contractors, invitees, tenants, subtenants or licensees, and will be used, kept
and stored in a manner that complies with all applicable governmental laws and
regulations. If consented to, the requesting party shall promptly deliver to
the other party true and complete copies of all notices received by such party
from any governmental authority with respect to the generation, storage or
disposal of such Hazardous Substances.
(b) Litigation. There are no claims, causes of action or other litigation
or proceedings pending or, to the best of landlord's knowledge, threatened in
respect to the ownership, operation or environmental condition of the Property
or any party hereof, except for claims which are fully insured and as to which
the insurer has accepted defense without reservation.
(c) Violation. There are no violations of any health, safety, pollution,
zoning or other laws, ordinances, rules or regulations including, without
imitation, the ADA with respect to any portion of the Property which have not
been heretofore entirely corrected.
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<PAGE> 16
(d) Zoning. The Property is currently zoned (if applicable) to allow the
use of the Leased premises for Tenant's Use.
(e) Authority. Landlord has full capacity, right, power and authority to
executed, deliver and perform this Lease and all documents to be executed by
Landlord pursuant hereto, and all required action and approvals therefor have
been duly taken and obtained. The individual signing this Lease and all other
documents executed pursuant hereto on behalf of Landlord is duly authorized.
This Lease and all documents to be executed pursuant hereto by Landlord are
binding upon and enforceable against Landlord in accordance with their
respective terms, and the transaction contemplated hereby will not result in a
breach of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement, or other agreement to which Landlord or the Leased
premises is subject or by which Landlord or the Leased Premises is bound.
(f) Notwithstanding any provision to the contrary, Landlord shall be
responsible for the structural integrity of the present building(s) on the
Leased Premises as long as any failure of such structural integrity is not due
to a failure to properly maintain. Such items of structural integrity shall
include the exterior walls, concrete foundation, and roof, provided however,
Landlord shall not be responsible for normal maintenance of such items.
30. ESTOPPEL CERTIFICATE. Tenant and landlord agree at any time and from
time to time, upon not less than twenty (20) business days' prior written
request from the other party, to execute, acknowledge and deliver to the
requesting party a statement in writing, in form and content reasonably
acceptable to the requesting party, an estoppel certificate. In the event
either party fails to execute and deliver any such instrument within the
foregoing time period, the delinquent party
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<PAGE> 17
shall be deemed to have acknowledged and agreed with and to the matters set
forth in such certificate.
31. MISCELLANEOUS.
(a) If either party is delayed or prevents from performing any of its
obligations under this Lease by reason of strike, lockouts, labor troubles,
failure of power, riots, insurrection, war, acts of God or any other cause
beyond such party's control, the period of such event or such prevention shall
be deemed added to the time period herein provided for the performance of any
such obligation by the applicable party.
(b) This Lease contains the entire agreement between the parties. No
modification, alteration or amendment of the Lease shall be binding unless in
writing and executed by the parties.
(c) The representations, warranties and indemnities contained in this
Lease shall survive the termination or expiration of this Lease.
(d) Each party hereto has reviewed and revised (or requested revisions of)
this Lease, and therefore any usual rules of construction requiring that
ambiguities are to be resolved against a particular party shall not be
applicable in the construction and interpretation of this Lease or any Exhibit
hereto.
- 17 -
<PAGE> 18
(e) Time is of the essence of this Lease and each provision, provided,
however, if the final (but not any interim) date of any period set forth herein
falls on a Saturday, Sunday or legal holiday under the laws of the United
States of America, the final date of such period shall be extended to the next
business day.
EXECUTED AS EFFECTIVE in duplicate originals effective the date first
above written.
<TABLE>
<S> <C>
LANDLORD: TENANT:
/s/ James E. Horsley By:/s/ Dennis J. O'Connor
- ---------------------------- -----------------------------------------------
JAMES E. HORSLEY Person: DENNIS J. O'CONNOR
18107 Colonial Forest Circle Title: chief Financial Equipment Services, Inc.
Spring, Texas 77379 Address: c/o National Equipment Services, Inc.
(281) 376-6188 6100 Sears Tower
Chicago, Illinois 60606
Attention: Kevin P. Rodgers
Phone: (312) 382-2223
Fax: (312) 382-2201
</TABLE>
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<PAGE> 19
(ACKNOWLEDGMENT)
THE STATE OF TEXAS {
{
COUNTY OF HARRIS {
The foregoing instrument was acknowledged before me on this 17th day of
March, 1997, by JAMES E. HORSLEY.
/s/ Carole McDonald
-------------------------------------
Notary Public in and for
The State of Texas
THE STATE OF TEXAS {
{
COUNTY OF HARRIS {
The foregoing instrument was acknowledged before me on this 17th day of
March, 1997, by DENNIS J. O'CONNOR, Chief Financial Officer of NES ACQUISITION
CORP., a Delaware Corporation, on behalf of said corporation.
/s/ Carole McDonald
-------------------------------------
Notary Public in and for
The State of Texas
- 19 -
<PAGE> 20
EXHIBIT "A"
TRACT:
A TRACT OR PARCEL OF LAND CONTAINING 0.45914 ACRE OUT OF GREAT LOT 3 OF
THE "ECHOLS" SUBDIVISION OUT OF THE JOHN BROWN JONES SURVEY, ABSTRACT 484
HARRIS COUNTY, TEXAS, ACCORDING TO THE MAP OR PLAT THEREOF, RECORDED IN VOL. 1
PAGE 81 OF THE HARRIS COUNTY MAP RECORDS, SAID 0.45914 ACRE TRACT BEING MORE
PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS, TO WIT:
BEGINNING AT A 1/2 inch iron rod marking the intersection of the East
line of Great Lot 3 and the West line of Great Lot 4 with the North
right-of-way line of State FM Hwy. #1960 Business (100.00 ft. right-of-way);
THENCE South 89 deg. 47 min. 00 sec. West with the North right-of-way line
of said FM Hwy. #1960 Business, a distance of 72.44 ft. to a 1/2 inch iron rod
at the Southwest corner and being in the mid point in the South line of said
Great Lot 3;
THENCE North 00 deg. 03 min. 20 sec. West with the mid line of said Great
Lot 3, a distance of 276.09 ft. to a 1/2 inch iron rod at the Northwest
corner;
THENCE North 89 deg. 47 min. 00 sec. East a distance of 72.44 ft. to a
1/2 include iron rod at the Northeast corner, being in the division line
between Great Lots 3 and 4;
THENCE South 00 deg. 03 min. 20 sec. East with the division line between
said Great Lots 3 and 4, a total distance of 276.09 ft. to the PLACE OF
BEGINNING and containing 0.45914 acre.
TRACT 2:
A TRACT OR PARCEL OF LAND CONTAINING 0.49593 ACRE, BEING THE SOUTHERLY
PORTION OF A CERTAIN 1.80645 ACRE TRACT OUT OF THE SOUTH PORTION OF GREAT LOT 4
OF ECHOLS SUBDIVISION (SOMETIMES CALLED ECHOLS ESTATE SUED.) OUT OF THE JOHN
BROWN JONES SURVEY HARRIS COUNTY, TEXAS, MAP OR FLAT THEREOF RECORDED IN VOLUME
1 PAGE 81 OF THE HARRIS COUNTY MAP RECORDS, SAID 0.49893 ACRE TRACT BEING OUT
OF 2 TRACTS RECORDED IN VOLUME 2020 PAGE 357 OF THE HARRIS COUNTY DEED RECORDS
AND VOLUME 666 PAGE 228 HARRIS COUNTY DEED RECORDS, SAID 0.49893 ACRE TRACT
BEING MORE PARTICULARLY DESCRIBED BY METES AND BOUNDS AS FOLLOWS, TO-WIT:
Commencing at a point in the North right-of-way line of State F.M. Highway
No. 1960 (Business-100 feet in width) with the intersection of the Easterly
line of Great Lot 6 which marks
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<PAGE> 21
the Southeast corner of a Texaco, Inc. fee tract in said Great Lot 6 whence a 4
inch T.T. concrete monument with brass disk marked E-2 (214) bears North 0 deg.
03 min. 51 sec. West, a distance of 5.52 feet;
Thence South 89 deg. 47 min. 00 sec. West, with the North right-of-way
line of said Highway, a distance of 289.76 feet to a 1/2 inch iron rod at the
Southeast corner of said 1.80645 acre tract and the PLACE OF BEGINNING of the
herein described 0.48983 acre tract which marks the intersection of the East
line of said Great Lot 4 and the West line of Great Lot 5 with the North
right-of-way line of said State F.M. Highway No. 1960;
THENCE continuing South 89 deg. 47 min. 00 set. West, with the North
right-of-way line of said Highway, passing the Southwest corner of said tract
described in Volume 2020 Page 357 of the Harris County Deed Records, in all a
distance of 144.89 feet to a 1/2 inch iron rod at the Southwest corner of the
herein described tract;
THENCE North 00 deg. 03 min. 20 sec. West, with the division line between
Great Lots 3 & 4 and with the West line of said tract recorded in Volume 6666
Page 228 of the Harris County Deed Records and with the East line of said
Texaco, Inc. Fee Tract, a distance of 150.00 feet to a 1/2 inch iron rod at
the Northwest corner;
THENCE North 89 deg. 47 min. 00 sec. East, parallel to the North line of
said Highway and crossing over said Great Lot 4, a distance of 144.87 feet to a
1/2 inch iron rod at the Northeast corner, being in the division line between
Great Lots 4 & 5;
THENCE South 0 deg. 03 min. 51 sec. East, with said division line and
with the West right-of-way line of a Texaco, Inc. Fee Tract passing a T.T.
concrete monument marked lip. E-2 (106), (brass plate broken off) at 143.70
feet, in all a distance of 150.00 feet to the PLACE OF BEGINNING and containing
0.45914 acre.
- 21 -
<PAGE> 22
STATE OF TEXAS ) ###-##-####
)
COUNTY OF HARRIS )
METES AND BOUNDS
TRACT 3 - 6,866 SQUARE FEET
All that certain tract of land being Tract 3 of 6,866 square feet being a part
of the John Brown Jones Survey, Abstract No. 484, Harris County, Texas and
being a portion of Great Lot 4 of the "Echols" Subdivision of the John Brown
Jones Survey, Harris County, Texas, according to the Map thereof, recorded in
Volume 1, Page 81 of the Harris County Map Records and also being a portion of
a tract of land called 1.80645 acres described in Deed from Hubert H. Vestal,
et al., to Farris Glass, rerecorded under Harris County Clerk's File No.
F-406184. Said tracts being more fully described as follows:
COMMENCING at an iron pin found for the Southeast corner of said 1.80645 acre
tract at the Southeast corner of Tract 2 of 21,720 square feet being on the
North right-of-way line of State F. M Highway No. 1960 (100 feet wide), said
pin being N 89* 35' 43" E a distance of 809.94 feet from the intersection of
the North right-of-way line of State F.M. Highway No. 1960 (100 feet wide) with
the East right-of-way line of Wilson Road.
THENCE N 00* 03' 51" W a distance of 150.00 feet to an iron pin found for the
POINT OF BEGINNING of this tract being the Southeast corner of this tract and
the Northeast corner of said Tract 2.
THENCE S 89* 30' 16" W a distance of 144.94 feet to an iron pin found for the
Southwest corner of this tract at the Northwest corner of said Tract 2.
THENCE N 00* 04' 58" W a distance of 47.37 feet to an iron pin found for the
Northwest corner of this tract at the Southwest corner of a tract of land
called 1.14793 acres described in Deed from Mike Boswell, et al., to S&F
Investments, recorded under Harris County Clerk's File No. J-465123.
THENCE N 89* 30' 16" E a distance of 144.96 feet along the South line of said
1.14793 acre tract to an iron pin found for the Northeast corner of this tract
at the Southeast corner of said 1.14793 acre tract.
THENCE S 00* 03' 51" E a distance of 47.37 feet back to the Place of Beginning
containing 6,866 square feet of land.
I hereby certify that this survey conforms
to the current Texas Society of
Professional Surveyors Standards and
Specifications for a Category 1A.
Condition II Survey
------------------------------------------
Barry White
Registered Public Surveyor, No. 4189
May 8, 1989
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<PAGE> 1
EXHIBIT 10.30
LEASE AGREEMENT
THE STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS.
COUNTY OF HARRIS )
THIS LEASE AGREEMENT, made and entered into effective this 17th day of
March, 1997, (the "Effective Date") by and between JAMES E. HORSLEY,
hereinafter called "Landlord", and NES ACQUISITION CORP., hereinafter called
"Tenant".
WITNESSETH
In consideration of the rent hereinafter stipulated and agreed to be paid
by Tenant to Landlord, and of the terms, covenants, and conditions herein
contained and on the pan of the Tenant to be kept, observed and performed, the
Landlord has LEASED, LET and DEMISED, and does by these presents LEASE, LET and
DEMISE unto the Tenant the following described property for the period of time,
subject to and upon the terms, covenants and conditions hereinbelow set forth,
to-wit.
1. DESCRIPTION OF LEASED PREMISES. The leased premises (the "Leased
Premises"), known as 3440 Red Bluff Road, Pasadena, Texas 77503 are described
as follows.
See Exhibit "A" attached hereto and made a part hereof for all purposes.
In addition to the Leased Premises, Landlord hereby leases and grants to
Tenant (a) all rights, easements and appurtenances, if any, belonging or
appertaining to the Leased Premises b), reference, and (b) all rights, title
and interest of Landlord in and to any and all roads, streets, alleys and ways,
<PAGE> 2
if any, bounding the Leased Premises. The parking areas, driveways, exits and
entrances of the Leased Premises may not be modified, reduced and/or relocated
without the consent of Tenant.
2. TERM OF LEASE. The initial term of this Lease is five (5) years (the
"Term"),
beginning on Effective Date unless sooner terminated or extended under the
terms hereof.
3. EXTENSIONS. Tenant shall have the option of extending the Term for
four (4) additional periods of five (5) years each (individually, an
"Extension" and collectively the "Extensions"), commencing at midnight on the
date on which the Term or any Extension expires. Tenant shall give Landlord
written notice exercising the applicable Extension not later than the date
which is 90 days prior to the expiration of the Term or the Extension, as the
case may be.
The Rent for each Extension, subject to any adjustment pursuant to
subparagraph (a) above, is as follows:
<TABLE>
<CAPTION>
LEASE YEAR MONTHLY RENT
- ---------- ------------
<S> <C>
06-10 $5,720.00
11-15 $6,292.00
16-20 $6,921.00
21-25 $7,613.00
</TABLE>
(10% increase over each prior 5 year rate).
4. RENT. During the Term, Tenant covenants and agrees to pay to Landlord
monthly rent in the amount of $5,200.00 ("Monthly Rent"). All such rental
payments shall be payable in lawful money of the United States of America,
monthly in advance, on or before the first day of each month. If the Effective
Date of this Lease is other than on the first of a calendar month, the rental
- 2 -
<PAGE> 3
for the portion of the initial calendar month in which this Lease is in effect
shall be prorated based upon 30 days in a calendar month. In the event the
final month of this Lease is other than a full calendar month, the final
month's rent shall likely be prorated. Should Tenant fail to pay such Monthly
Rent, charges or other sums due hereunder within ten (10) days of the due date
thereof provided in this Lease, Tenant further agrees to pay Landlord as a late
charge to compensate Landlord for the added administrative expense caused by
such late payment a one time sum equal to 5% of any outstanding balance of
Monthly Rent (or other amounts) required to be paid under this Lease. Tenant
shall also pay to Landlord as additional rental under this Lease any excise,
sales, privilege or gross receipts tax levied, if any, on rents or charges paid
hereunder.
5. USE OF LEASED PREMISES. Tenant may use the Leased Premises only in a
lawful manner for: (i) the operation of an equipment rental and sales
business; or (ii) any other lawful use, provided Tenant receives the consent of
Landlord which consent shall not be unreasonably withheld, conditioned, or
delayed.
6. REAL ESTATE AND OTHER TAXES. Landlord shall pay before they become
delinquent real estate taxes imposed during the Term and any Extensions upon or
against the Leased Premises ("Real Estate Taxes"). Landlord shall be solely
responsible for payment of any and all penalties imposed for any late payment.
Tenant shall, within thirty (30) days upon receipt from Landlord of a copy of
the paid tax bill and an invoice, reimburse Landlord for payment of the Real
Estate Taxes.
Real Estate Taxes for the year in which the Term shall begin and the year
in which the Lease shall terminate shall be prorated so that Tenant shall pay
only those portions thereof which
- 3 -
<PAGE> 4
corresponds with the portion of said years as are within the Term or the
current Extension. Nothing herein contained shall require Tenant to pay
monthly corporation, franchise, income, estate, gift or inheritance taxes
imposed on Monthly Rent which may be levied or assessed against landlord, fee
owner, or their successor in title.
7. PROPERTY INSURANCE. Tenant shall carry its own insurance on any of its
property that may be located on the demised premises, and it is further agreed
that LANDLORD SHALL NOT BE RESPONSIBLE OR LIABLE FOR ANY DAMAGE WHATSOEVER
CAUSED TO ANY PROPERTY OF TENANT LOCATED ON THE DEMISED PREMISES except to the
extent such damage is covered by insurance or caused by the negligence or
willful act of Landlord or Landlord's agent, or licensee. Tenant shall pay for
and maintain in effect fire and extended coverage on all improvements on the
Leased Premises in the sum as required by Landlord but not exceeding
replacement cost of the improvements and liability insurance as approved by
Landlord in the amount of at least $1,000,000.00 per person, $3,000,000.00 per
incident, and $300,000.00 property damage with Landlord and shown as insured
parties. Each party hereby waives any rights against the other for damages to
property to the extent such loss is covered by insurance and agrees that
insurance policies of the parties shall contain a waiver of subrogation rights
as to the other party.
8. CONDITION OF PREMISES; REPAIRS. The Leased Premises are leased to the
Tenant in the CONDITION AS IS. Taking possession of the Leased Premises by
Tenant shall be conclusive evidence as against Tenant that the Leased Premises
are in satisfactory, condition when possession was so taken. Except as stated
herein, no promises of Landlord to alter, remodel, improve, repair, decorate or
clean the Leased Premises or any part thereof have been made, and no
- 4 -
<PAGE> 5
representation respecting the condition of the Leased Premises, has been made to
Tenant by or on behalf of Landlord. Except for any damage resulting from the
negligence or willful acts of Landlord or Landlord's agents, Tenant shall at its
own expense keep the improvements located on the Leased Premises in good
operating condition, including replacement if necessary, and tenantable
condition together with the air conditioning and heating system and shall
promptly and adequately repair all damage to such Leased Premises, including but
not limited to, replacing or repairing all damaged or broken glass, fixtures and
appurtenances.
Landlord, its officers, agents and representatives shall have the right to
enter all parts of the Leased Premises during regular business hours and upon
forty-eight (48) hours notice to Tenant to inspect the Leased Premises and
Tenant shall not be entitled to any abatement or reduction of rent by reason
thereof as long as such inspection is done in a manner as to not interfere with
Tenant's business operations.
Tenant shall be responsible for installation, maintenance and repair of
any security system desired for the Leased Premises as well as for the
electrical and plumbing systems within the Leased Premises and for the air
conditioning and heating system. Tenant, at its sole expense, shall promptly
replace and maintain any lighting located on the Leased Premises. Tenant shall
maintain in good operating condition any water fixtures and plumbing within the
Leased Premises and shall be solely responsible for any additional cost
incurred due to any leaks from fixtures within the Leased Premises.
- 5 -
<PAGE> 6
9. INSPECTION OF THE PREMISES. Tenant hereby agrees and represents that
Tenant has inspected the Leased Premises and accepts the Leased Premises in the
condition now existing, AS IS.
10. UTILITIES. Tenant shall make Tenant's own contracts and shall pay for
all utilities used or consumed by Tenant in, on or about the Leased Premises
including water service and sanitary sewer service provided to the Leased
Premises Tenant shall be solely responsible for any telephone service and any
other service or utility desired by Tenant. Landlord shall not be responsible
for any damages or losses incurred by Tenant for the failure of Landlord to
furnish any service or utility to the Tenant as long as Landlord does not
maliciously or in bad faith cause such interruption of services, Furthermore,
at the termination of this Lease, Tenant shall be responsible for the closing
out of Tenant's accounts with the various utilities companies for the services
supplied to the Leased Premises, and shall be solely responsible for the
payment of said accounts. Upon vacating the premises, Tenant shall leave the
electrical, water and sewer services in place and intact. Any improvements and
additions to the electrical or plumbing services to the Leased Premises made
during the Lease, whether by Tenant or anyone else, shall become part of the
Leased Premises and remain with the Leased Premises upon Tenant vacating the
premises.
11. COMPLIANCE WITH ORDINANCES, ETC. Tenant agrees that Tenant will
promptly execute and fulfill all ordinances, regulations, and laws of the United
States, the State of Texas, County, City and other governmental agencies, boards
or departments applicable to Tenant's use of the Leased Premises and all
ordinances or orders imposed by the Board of Health, Sanitation and Police or
Fire Departments for the correction, prevention, and abatement of nuisances in
or upon
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<PAGE> 7
or connected with the activities conducted by the Tenant in or upon the Leased
Premises during the term of this Lease and at all times while Tenant is in
possession of the Leased Premises.
12. ASSIGNMENT, SUB-LETTING PROHIBITED. Tenant shall have the
unrestricted right to assign, sublet, license, or transfer any or all of its
rights and privileges under this Lease, provided that no such transfer shall
operate to relieve Tenant of Tenant's obligations under the Lease.
13. DAMAGE BY FIRE OR OTHER CASUALTY. If the Leased Premises shall be
damaged by fire or other casualty resulting from any fault, negligence, or
willful act of Tenant, its agents, employees or invitees, such damage shall be
repaired by and at the expense of Tenant under the direction and supervision of
Landlord and rent shall continue without abatement.
If in the last year of a Term or any Extension, if applicable,
improvements on the Leased Premises should be so badly damaged by fire or other
casualty as to make the Leased Premises untenantable, then, Landlord or Tenant
shall have the option to terminate this Lease by written notice delivered to
the other party within thirty (30) days following the event of such damage or
destruction, in which event neither party hereto shall thereafter have any
further future obligations hereunder. In any other event, unless mutually
agreed to the contrary, this Lease shall continue in force and effect, in which
event Landlord shall promptly and diligently repair and restore the damaged or
destroyed portions of the Leased Premises to substantially the same condition
existing prior to such damage or destruction. Should Landlord fail to
substantially complete repair or rebuilding of such improvements within 180
days of such damage, Tenant shall have the right to terminate this Lease by
notice to Landlord within 30 days after such 180 days period. For the period
- 7 -
<PAGE> 8
beginning on the date that the Leased Premises were rendered untenantable to
the date of restoration of the Leased Premises to substantially the same
condition existing prior to such damage, the Monthly Rent payable hereunder
shall be proportionately abated.
14. ATTORNEY'S FEES. In the event Tenant shall make default in the
payment of Monthly Rent or other sum of money as the same shall become due and
payable to Landlord hereunder, and shall remain in default for a period of ten
days after the applicable cure period, and such rent or other sum of money is
placed in the hands of an attorney for collection or is collected through suit,
bankruptcy or other judicial proceeding, then Tenant agrees to pay to Landlord
all reasonable attorney's fees and costs incurred by Landlord due to such
non-payment.
15. DEFAULT, TERMINATION, ETC. It is further covenanted and agreed by the
parties hereto that: (i) if said Tenant shall fail to use said premises only
in a lawful manner as stated herein; or (ii) if said Tenant shall fail to pay
the rental herein stipulated as same becomes due, or (iii) if Tenant shall
neglect or fail to perform and observe any of the covenants and agreements
contained in this Agreement which are on Tenant's part to be performed, then on
the happening of any one or more of these events, the Landlord, or those
claiming under Landlord, may (i) for monetary defaults, upon ten (10) days
written notice to Tenant and the noncuring of such default by the end of such
ten (10) days; and (ii) for non-monetary defaults, upon thirty (30) days
written notice to Tenant and the noncuring of such default by the end of such
default by the end of such thirty (30) days, immediately or at any time
thereafter, and without further notice or demand, and with or without legal
action or suit, terminate Tenant's rights to possession under this Lease, and
enter upon and into the premises herein demised, or any part thereof, and
repossess the same, and expel said Tenant or those claiming
- 8 -
<PAGE> 9
under Tenant, and remove Tenant's effects if necessary, without being deemed
guilty of any manner of trespass, all and any claim of damages for and by
reason hereby expressly waived and without prejudice to any remedies which
might be otherwise used for the collection of arrearages for rent or
repossession of said premises. Upon termination of Tenant's right to
possession of the Leased Premises, Tenant shall have ten (10) days to vacate
the Leased Premises, leaving the Leased Premises in broom-clean condition and
in as good a condition as at the initiation of this Lease. Landlord is
authorized to remove any personal property of Tenant remaining on the Leased
Premises upon termination of Tenant's right to possession of the Leased
Premises and to place same in the name of Tenant in any storage facility in the
county in which the Leased Premises are located, or to otherwise dispose of
such goods as abandoned property without any liability to Tenant. If the
Tenant shall abandon or vacate said Premises, or be evicted therefrom on
account of any default herein, Landlord shall be at liberty, if Landlord sees
fit and thinks it advisable, to re-let same; and if sufficient rental shall not
be realized on such re-letting to satisfy the rent herein reserved, the Tenant
agrees to satisfy any deficiency that may arise therefrom, for all of which the
hereinafter described liens are expressly reserved. Landlord shall also have
the option of terminating this Lease upon the default of Tenant and should such
Premises not be returned to Landlord in as good as condition as upon the date
rentals began to accrue under this Lease, Tenant shall be responsible for all
such repair and restoration costs in addition to all accrued and unpaid rentals
upon such termination. Notwithstanding any provision to the contrary, Tenant's
obligation to return in "as a good a condition" shall take into account
ordinary wear with further consideration of Tenant's maintenance obligation
hereunder. Furthermore, as an additional cumulative remedy, in the event
- 9 -
<PAGE> 10
notice of default has been given to Tenant by Landlord and such Default has not
been cured, Landlord shall be entitled and is hereby authorized, without any
further notice to Tenant whatsoever, to enter the Leased Premises and to
change, alter and/or modify the door locks and gate locks on the Leased
Premises and to exclude Tenant from such Leased Premises until Tenant cures
such default. Exercise by Landlord of any of the remedies granted under this
section or otherwise available shall not be deemed to be an acceptance of
surrender of the Leased Premises by Tenant, whether by agreement or by
operation of law, it being understood that such surrender can be effected only
by the written agreement of Landlord. Notwithstanding the foregoing, under no
circumstances shall Landlord have the right to accelerate rent.
16. LIENS. Except for any mortgage, deed of trust or similar instrument
executed by Landlord, Landlord and Tenant covenant each with the other not to
permit any judgment, attachment and/or lien (an "Encumbrance") to be riled
against the Leased Premises. Should any judgment, attachment and/or lien of an
nature be filed against the Leased Premises, the party from whose fault or
alleged debt such lien arises shall within thirty (30) days cause such
Encumbrance to be removed by substitution of collateral or otherwise.
17. SUBROGATION OF LANDLORD'S LIEN. In the event Tenant, its subtenants
or assigns acquires and/or leases personal property to be installed, rented
from, and used upon the Leased Premises subject to a conditional sales
contract, chattel mortgage or other security agreement or lease, (the "Superior
Lien"), Landlord hereby subrogates to the Superior Lien any claim arising by
way of any landlord's lien (whether created by statute, contract or otherwise)
with respect to such personal property and agrees to execute and deliver to any
such secured creditor and, or lessor a
- 10 -
<PAGE> 11
subrogation of any lien Landlord may have upon such personal property. Such
subrogation will be on a form provided by Tenant authorizing the secured
creditor and/or lessor to enter upon the Leased Premises, in accordance with
the terms of this Lease, and remove such personal property in the event of
default under the terms of the conditional sales contract, chattel mortgage,
security agreement and/or lease. This Section shall not be interpreted as
creating a lien in favor of Landlord. Provided however, such subrogation shall
not be effective as to any rentals or storage costs occurring thirty (30) days
after the holder of the Superior Lien is given notice of termination of the
Tenant's right to possession of the Leased Premises.
18. CONDEMNATION. If while this Lease is in effect there shall be taken
by exercise of the power of eminent domain any part of the Leased Premises, all
sums awarded or agreed upon between Landlord and the condemning authority for
the taking of the Leased Premises, whether as damages or as compensation, shall
be the property of Landlord. Should Landlord receive condemnation funds for
the taking of improvements or personal property which are paid for by Tenant,
Landlord shall pay such funds to Tenant to the extent of the net book value of
such depreciable improvements. Tenant shall be entitled to terminate this
Lease if such portion taken by condemnation renders the Leased Premises
unsuitable for the purposes utilized by Tenant prior to such condemnation. If
this Lease is terminated due to condemnation, rental shall be payable up to the
date that possession is taken by the condemning authority, and Landlord will
refund to Tenant any prepaid unaccrued rent less any sum then owing by Tenant
to Landlord. Landlord shall have the option to continue this lease after any
partial condemnation only in the event the remaining
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<PAGE> 12
Leased Premises are suitable for the purposes utilized by the Tenant prior to
such condemnation with reasonable adjustment to the rental rate.
19. NON-WAIVER. Neither acceptance of rent or any other amount due
hereunder by Landlord nor failure to complain of any action, non-action or
default of Tenant, whether singular or repetitive shall constitute a waiver of
any of Landlord's rights hereunder. Waiver by Landlord of any right for any
default by Tenant shall not constitute a waiver of any right for either a
subsequent default of the same obligation or any other default. No act or
thing done by Landlord or its agents or representatives shall be deemed to be
an acceptance of surrender of the Leased Premises and no agreements to accept a
surrender of the Leased Premises shall be valid unless it is in writing and
signed by a duly authorized officer or agent of Landlord.
20. HOLDING OVER. If Tenant should remain in possession of the Leased
Premises after the expiration or termination of this Lease, without the
execution by Landlord and Tenant of a new lease, then Tenant shall be deemed to
by occupying the Leased Premises as a tenant-at-sufferance subject to all the
covenants and obligations of this Lease, provided however, the monthly rent
shall be one and one-half the rental rate in effect on termination of the
Lease.
21. NOTICES. Any and all notice which must or which may be given by the
Landlord to the Tenant or by the Tenant to the Landlord under any of the
provisions of this Agreement must be in writing and may be served by United
States Certified or Registered Mail, with Return Receipt Requested, or by
delivery in person, unless otherwise required under any provision hereof
Notices mailed to the Landlord shall be addressed to Landlord at the address
stated below the signature of Landlord hereinbelow, or to such other address as
Landlord may at any time, or from time to time,
- 12 -
<PAGE> 13
hereafter designate by written notice thereof to the Tenant, and notices mailed
to Tenant shall be addressed to Tenant at the address stated below the
signature of Tenant hereinbelow, or at such address as Tenant may, at any time,
or from time to time, hereafter designate by written notice thereof to the
Landlord.
22. BINDING ON HEIRS, ETC. The agreements, conditions, covenant's, and
terms herein contained, shall in every case, apply to, be binding upon and inure
to the benefit of the respective parties hereto, their heirs, executors,
administrators, successors and assigns, with the same force and effect as is
specifically mentioned in each instance where a party hereto is named.
23. ASSIGNMENT BY LANDLORD. Landlord shall have the right to transfer and
assign, in whole or in part, all its rights and obligation hereunder and in the
Center and property referred to in this Lease, and in such event and upon its
transferees assuming Landlord's obligations hereunder, no further liability or
obligation shall thereafter accrue against the present Landlord under this
Lease.
24. LAW GOVERNING AND VENUE. This Lease shall be and construed in
accordance with the laws of the State of Texas and venue for all purposes shall
be in Harris County, Texas. 25. DEPOSIT. Tenant shall deposit with Landlord the
sum equal to one month's rental upon execution of this Lease as security for all
of Tenant's obligations under this Lease. Tenant shall not have the right to
use this sum as payment of the last month's rent. No interest shall accrue on
this deposit.
25. DEPOSIT. Tenant shall deposit with Landlord the sum equal to one
month's rental upon execution of this Lease as security for all of Tenant's
obligations under this Lease. Tenant shall not have the right to use this sum
as payment of the last months's rent. No interest shall accrue on this deposit.
- 13 -
<PAGE> 14
26. INDEMNIFICATION.
(a) Except to the extent covered by insurance, Landlord hereby indemnities
and holds Tenant, Tenant's nominees, officers, directors, agents, employees,
successors and assigns harmless from and against any and all claims, demands,
liabilities, and expenses, including attorneys' fees and litigation expenses,
arising from (i) the negligence or willful acts of' Landlord or its agents,
employees, or contractors occurring on the Leased Premises, or (ii) the
presence of Hazardous Substances (hereafter defined) or materials on the Leased
Premises prior to Effective Date, except to the extent caused by Tenant's
negligence or willful misconduct. In the event any action or proceeding shall
be brought against Tenant by reason of any such claims, Landlord shall defend
the same at Landlord's expense by counsel selected by Tenant.
(b) Tenant hereby indemnities and holds Landlord, Landlord's nominees,
officers, directors, agents, employees, successors and assigns harmless from
and against any and all claims, demands, liabilities, and expenses, including
attorney' fees and litigation expenses, arising from (i) the negligence or
willful acts of Tenant or its agents, employees, invitees, or contractors
occurring on the Leased Premises after Effective Date, or (ii) the presence of
Hazardous Substances or Materials on the Leased Premises after Effective Date,
except to the extent caused by Landlord's negligence or willful misconduct. In
the event any action or proceeding shall be brought against Landlord by reason
of any such claims, Tenant shall defend the same at Tenant's expense by counsel
selected by Landlord.
27. NON-DISTURBANCE AND ATTORNMENT; MEMORANDUM OF LEASE. Landlord, within
thirty (30) days after the Effective Date, will obtain from every senior
landlord,
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<PAGE> 15
mortgagee and holder of a deed of trust upon the Leased Premises, (collectively
"Senior Interest Holders") an agreement in recordable non-acceptable to Tenant
wherein the Senior Interest Holders agree not to disturb Tenant's possession of
the Leased Premises or deprive Tenant of any rights or increase any of its
obligations under this Lease, provided Tenant is not in default of its
obligations under this Lease, otherwise Tenant may terminate this Lease.
Landlord agrees, upon request of Tenant, to execute and deliver to Tenant a
memorandum of this Lease in recordable form acceptable to Tenant.
28. LANDLORD'S TITLE AND QUIET ENJOYMENT. Landlord represents and
warrants that Landlord is seized in fee simple title to the Property, free,
clear and unencumbered except as otherwise disclosed herein. Landlord
covenants that so long as Tenant fulfills the conditions and covenants required
of it to be performed, Tenant will have peaceful and quiet possession thereof
Landlord further represents and warrants that it has good right, full power and
lawful authority to enter into the Lease for the Term and any Extensions.
29. REPRESENTATIONS AND WARRANTIES OF LANDLORD.
(a) Hazardous Substances. Except in accordance with applicable
governmental regulations and in accordance with ordinary business practice, the
Property does not presently contain and is free from all hazardous substances
and/or wastes, toxic and nontoxic pollutants and contaminants including, but
not limited to, petroleum products and asbestos collectively, "Hazardous
Substances"). Landlord has not received any notification from any federal,
state, county or city agency or authority relating to Hazardous Substances, in
or near the Property. Neither party shall cause or permit any Hazardous
Substances to be brought upon, kept or used in or about the Property
- 15 -
<PAGE> 16
by such party, its agents, employees, contractors, invitees, tenants,
subtenants or licensees without the prior written consent of the other party.
Neither party shall unreasonably withhold its consent thereto as long as such
party demonstrates to the other party's reasonable satisfaction that each such
Hazardous Substance is necessary or useful to its business or to the business
of its agents, employees, contractors, invitees, tenants, subtenants or
licensees, and will be used, kept and stored in a manner that complies with all
applicable governmental laws and regulations. If consented to, the requesting
party shall promptly deliver to the other party true and complete copies of all
notices received by such party from any governmental authority with respect to
the generation, storage or disposal of such Hazardous Substances.
(b) Litigation. There are no claims, causes of action or other litigation
or proceedings pending or, to the best of Landlord's knowledge, threatened in
respect to the ownership, operation or environmental condition of the Property
or any part hereof, except for claims which are fully and insured and as to
which the insurer has accepted defense without reservation.
(c) Violation. There are no violations of any health, safety, pollution,
zoning or other laws, ordinances, rules or regulations including, without
limitation, the ADA with respect to any portion of the Property which have not
been heretofore entirely corrected.
(d) Zoning. The Property is currently zoned (if applicable) to allow the
use of the Leased premises for Tenant's Use.
(e) Authority. Landlord has full capacity, right, power and authority to
executed, deliver and perform this Lease and all documents to be executed by
Landlord pursuant hereto, and all required action and approvals therefor have
been duly taken and obtained. The individual signing
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<PAGE> 17
this Lease and all other documents executed pursuant hereto on behalf of
Landlord is duly authorized. This Lease and all documents to be executed
pursuant hereto by Landlord are binding upon and enforceable against Landlord
in accordance with their respective terms, and the transaction contemplated
hereby will not result in a breach of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, or other agreement to which
Landlord or the Leased premises is subject or by which Landlord or the Leased
Premises is bound.
(f) Notwithstanding any provision to the contrary, Landlord shall be
responsible for the structural integrity of the present building(s) on the
Leased Premises as long as any failure of such structural integrity is not due
to a failure to properly maintain. Such items of structural integrity shall
include the exterior walls, concrete foundation, and roof, provided however,
Landlord shall not be responsible for normal maintenance of such items.
30. ESTOPPEL CERTIFICATE. Tenant and Landlord agree at any time and from
time to time, upon not less than twenty (20) business days' prior written
request from the other party, to execute, acknowledge and deliver to the
requesting party a statement in writing, in form and content reasonably
acceptable to the requesting party, an estoppel certificate. In the event
either party fails to execute and deliver any such instrument within the
foregoing time period, the delinquent party shall be deemed to have
acknowledged and agreed with and to the matters set forth in such certificate.
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<PAGE> 18
31. MISCELLANEOUS.
(a) If either party is delayed or prevents from performing any of its
obligations under this Lease by reason of strike, lockouts, labor troubles,
failure of power, riots, insurrection, war, acts of God or any other cause
beyond such party's control, the period of such event or such prevention shall
be deemed added to the time period herein provided for the performance of any
such obligation by the applicable party.
(b) This Lease contains the entire agreement between the parties. No
modification. alteration or amendment of the Lease shall be binding unless in
writing and executed by the parties.
(c) The representations, warranties and indemnities contained in this
Lease shall survive the termination or expiration of this Lease.
(d) Each party hereto has reviewed and revised (or requested revisions of)
this Lease, and therefore any usual rules of construction requiring, that
ambiguities are to be resolved against a particular party shall not be
applicable in the construction and interpretation of this Lease or any Exhibit
hereto.
(e) Time is of the essence of this Lease and each provision, provided,
however, if the final (but not any interim) date of any period set forth herein
falls on a Saturday, Sunday or legal
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<PAGE> 19
holiday under the laws of the United States of America, the final date of such
period shall be extended to the next business day.
EXECUTED AS EFFECTIVE in duplicate originals effective the date first
above written.
LANDLORD: TENANT:
/s/ James E. Horsley By: /s/ Dennis J. O'Connor
- --------------------------- -----------------------------------------------
JAMES E. HORSLEY Person: DENNIS J. O'CONNOR
18107 Colonial Forest Circle Title: chief Financial Equipment Services, Inc.
Spring, Texas 77379 Address: c/o National Equipment Services, Inc.
(281) 376-6188 6100 Sears Tower
Chicago, Illinois 60606
Attention: Kevin P. Rodgers
Phone: (312) 382-2223
Fax: (312) 382-2201
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<PAGE> 20
(ACKNOWLEDGMENT)
THE STATE OF TEXAS {
{
COUNTY OF HARRIS {
The foregoing instrument was acknowledged before me on this 17th day of
March, 1997, by JAMES E. HORSLEY.
/s/ Carole McDonald
-------------------------------------
Notary Public in and for
The State of Texas
THE STATE OF TEXAS {
{
COUNTY OF HARRIS {
The foregoing instrument was acknowledged before me on this 17th day of
March, 1997, by DENNIS J. O'CONNOR, Chief Financial Officer of NES ACQUISITION
CORP., a Delaware Corporation, on behalf of said corporation.
/s/ Carole McDonald
-------------------------------------
Notary Public in and for
The State of Texas
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<PAGE> 21
EXHIBIT "A"
###-##-####
BEING 1.5 ACRES OF LAND, MORE OR LESS, OUT OF LOT TWO (2), BLOCK SEVEN (7),
HOUSTON SUBURBAN ESTATES, AS RECORDED IN VOLUME 7, PAGE 34 OF THE MAP RECORDS
OF HARRIS COUNTY, TEXAS AND BEING MORE PARTICULARLY DESCRIBED BY METES AND
BOUNDS AS FOLLOWS:
BEGINNING AT 5/8 INCH ROD SET FOR THE INTERSECTION OF THE NORTH LINE OF LOT TWO
(2) AND THE SOUTHWEST LINE OR RED BLUFF ROAD (BASED ON 80 FOOT WIDTH);
THENCE, SOUTH 55 DEG. 19 MIN. 00 SEC. EAST, WITH THE SOUTHWEST LINE OR RED
BLUFF ROAD, 136.20 FEET TO A POINT FOR CORNER;
THENCE, SOUTH, WITH THE EAST LINE OR LOT TWO (2), 248.44 FEET TO A 5/8 INCH
IRON ROD SET FOR CORNER;
THENCE, SOUTH 89 DEG. 53 MIN. 00 SEC. WEST, WITH THE SOUTH LINE OF LOT 2,
213.67 FEET TO A 5/8 INCH IRON ROD SET FOR CORNER;
THENCE, NORTH 326.17 FEET TO A 5/8 INCH IRON ROD SET FOR CORNER;
THENCE, NORTH 89 DEG. 53 MIN. 00 SEC. EAST, WITH THE NORTH LINE OR LOT 2,
101.67 FEET TO THE PLACE OF BEGINNING AND CONTAINING WITHIN THESE CALLS 1.50
ACRES OF LAND, MORE OR LESS.
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<PAGE> 22
EXHIBIT "A"
156-00-1685
A tract of land out of Lot Two (2), in Block Seven (7), of HOUSTON SUBURBAN
ESTATES, an addition in Harris County, Texas, according to this map or plat
thereof recorded in Volume 7, Page 33 of the Map Records of Harris County,
Texas, and being more particularly described by metes and bounds as follows:
BEGINNING at a 3/4 inch iron pipe marking the Northwest corner of the herein
described Lot 2, Block 7, Southwest corner of adjacent Lot 1, Block 7; said
point also located South, a distance of 326.17 feet from the Southeast
interacting corner formed by the intersection of the East line of Jasmine
Street, 60 feet wide, and the South line of San Augustine Street, 50 feet wide;
THENCE South 89 degrees 40 minutes 00 seconds East along the North line of the
herein described Lot 2, Block 7, South line of adjacent Lot 1, Block 7, a
distance of 760.54 feet to a 3/4 inch iron pipe on the Southwesterly line of
Red Bluff Road, 90 feet wide, as widen;
THENCE South 55 degrees 17 minutes 00 seconds East along the Southwesterly line
of Red Bluff Road, 90 feet wide, as widen, a distance of 136 feet to a 3/4 inch
iron pipe marking an angle point;
THENCE South, along the East line of the herein described Lot 2, Block 7, a
distance of 248.40 feet to a 3/4 inch iron pipe marking the Southeast corner of
the herein described Lot 2, Block 7;
THENCE North 89 degrees 40 minutes 00 seconds West along the South line of Lot
2, Block 7, North line of adjacent Lot 3, Block 7, a distance of 872.00 feet to
a 3/4 inch iron pipe on the East line of Jasmine Street, 60 feet wide;
THENCE North, along the East line of Jasmine Street, 60 feet wide, West line of
herein described Lot 2, Block 7, a distance of 326.17 feet to the POINT OF
BEGINNING of the tract containing 280.701 square feet;
SAVE & EXCEPT that certain tract of land conveyed to South Texas Industrial &
Welding Supply, Inc., by Deed recorded under Harris County Clark's File No.
G450085.
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<PAGE> 1
Exhibit 10.31
LEASE AGREEMENT
THE STATE OF TEXAS )
) KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF HARRIS )
THIS LEASE AGREEMENT, made and entered into effective this 17th day of
March, 1997, (the "Effective Date") by and between JAMES E. HORSLEY,
hereinafter called "Landlord", and NES ACQUISITION CORP., hereinafter called
"Tenant".
WITNESSETH
In consideration of the rent hereinafter stipulated and agreed to be paid
by Tenant to Landlord, and of the terms, covenants, and conditions herein
contained and on the part of the Tenant to be kept, observed and performed, the
Landlord has LEASED, LET and DEMISED, and does by these presents LEASE, LET and
DEMISE unto the Tenant the following described property for the period of time,
subject to and upon the terms, covenants and conditions hereinbelow set forth,
to-wit:
1. DESCRIPTION OF LEASED PREMISES. The leased premises (the "Leased
Premises"), known as 1745 N. Padre Island Drive, Corpus Christi, Texas 78408
are described as follows:
See Exhibit "A" attached hereto and made a part hereof for all purposes.
In addition to the Leased Premises, Landlord hereby leases and grants to
Tenant (a) all rights, easements and appurtenances, if any, belonging or
appertaining to the Leased Premises by reference, and (b) all rights, title and
interest of Landlord in and to any and all roads, streets, alleys and ways,
<PAGE> 2
if any, bounding the Leased Premises. The parking areas, driveways, exits and
entrances of the Leased Premises may not be modified, reduced and/or relocated
without the consent of Tenant.
2. TERM OF LEASE. The initial term of this Lease is five (5) years (the
"Term"), beginning on Effective Date unless sooner terminated or extended under
the terms hereof.
3. EXTENSIONS. Tenant shall have the option of extending the Term for
four (4) additional periods of five (5) years each (individually, an
"Extension" and collectively, the "Extensions"), commencing at midnight on the
date on which the Term or any Extension expires. Tenant shall give Landlord
written notice exercising the applicable Extension not later than the date
which is 90 days prior to the expiration of the Term or the Extension, as the
case may be.
The Rent for each Extension, subject to any adjustment pursuant to
subparagraph (a) above, is as follows:
<TABLE>
<CAPTION>
LEASE YEAR MONTHLY RENT
- ---------- ------------
<S> <C>
06-10 $4,400.00
11-15 $4,840.00
16-20 $5,324.00
21-25 $5,856.00
</TABLE>
(10% increase over each prior 5 year rate).
4. RENT. During the Term, Tenant covenants and agrees to pay to Landlord
monthly rent in the amount of $4,000.00 ("Monthly Rent"). All such rental
payments shall be payable in lawful money of the United States of America,
monthly in advance, on or before the first day of each month. If the Effective
Date of this Lease is other than on the first of a calendar month, the rental
- 2 -
<PAGE> 3
for the portion of the initial calendar month in which this Lease is in effect
shall be prorated based upon 30 days in a calendar month. In the event the
final month of this Lease is other than a full calendar month, the final
month's rent shall likewise be prorated. Should Tenant fail to pay such
Monthly Rent, charges or other sums due hereunder within ten (10) days of the
due date thereof provided in this Lease, Tenant further agrees to pay to
Landlord as a late charge to compensate Landlord for the added administrative
expense caused by such late payment a one time sum equal to 5% of any
outstanding balance of Monthly Rent (or other amounts) required to be paid
under this Lease. Tenant shall also pay to Landlord as additional rental under
this Lease any excise, sales, privilege or gross receipts tax levied, if any,
on rents or charges paid hereunder.
5. USE OF LEASED PREMISES. Tenant may use the Leased Premises only in a
lawful manner for: (i) the operation of an equipment rental and sales
business, or (ii) any other lawful use, provided Tenant receives the consent of
Landlord which consent shall not be unreasonably delinquent real estate taxes
imposed during the Term and any Extensions upon or against the Leased withheld,
conditioned, or delayed.
6. REAL ESTATE AND OTHER TAXES. Landlord shall pay before they become
Premises ("Real Estate Taxes"). Landlord shall be solely responsible for
payment of any and all penalties imposed for any late payment. Tenant shall,
within thirty (30) days upon receipt from Landlord of a copy of the paid tax
bill and an invoice, reimburse Landlord for payment of the Real Estate Taxes.
Real Estate Taxes for the year in which the Term shall begin and the year
in which the Lease shall terminate shall be prorated so that Tenant shall pay
only those thereof which corresponds with
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<PAGE> 4
the portion of said years as are within the Term or the current Extension.
Nothing herein contained shall require Tenant to pay monthly corporation,
franchise, income, estate, gift or inheritance taxes imposed on Monthly Rent
which may be levied or assessed against landlord, fee owner, or their successor
in title.
7. PROPERTY INSURANCE. Tenant shall carry its own insurance on any of its
property that may be located on the demised premises, and it is further agreed
that LANDLORD SHALL NOT BE RESPONSIBLE OR LIABLE FOR ANY DAMAGE WHATSOEVER
CAUSED TO ANY PROPERTY OF TENANT LOCATED ON THE DEMISED PREMISES except to the
extent such damage is covered by insurance or caused by the negligence or
willful act of Landlord or Landlord's agent, invitee, or licensee. Tenant
shall pay for and maintain in effect fire and extended coverage on all
improvements on the Leased Premises in the sum as required by Landlord but not
exceeding replacement cost of the improvements and liability insurance as
approved by Landlord in the amount of at least $1,000,000.00 per person,
$3,00,000.00 per incident, and $300,000.00 property damage with Landlord and
Tenant shown as insured parties. Each party hereby waives any rights against
the other for damages to property to the extent such loss is covered by
insurance and agrees that insurance policies of the parties shall contain a
waiver of subrogation rights as to the other party.
8. CONDITION OF PREMISES: REPAIRS. The Leased Premises are leased to the
Term in the CONDITION AS IS. Taking possession of the Leased Premises by
Tenant shall be conclusive evidence as against Tenant that the Leased Premises
are in satisfactory condition when possession was so taken. Except as stated
herein, no promises of Landlord to alter, remodel,
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<PAGE> 5
improve, repair, decorate or clean the Leased Premises or any part thereof have
been made, and no representation respecting the condition of the Leased
Premises, has been made to Tenant by or on behalf of Landlord. Except for any
damage resulting from the negligence or willful acts of Landlord or Landlord's
agents. Tenant shall at its own expense keep the improvements located on the
Leased Premises in good operating condition, including replacement if
necessary, and tenantable condition together with the air conditioning and
heating system and shall promptly and adequately repair all damage to such
Teased Premises, including but not limited to, replacing or repairing all
damaged or broken glass, fixtures and appurtenances.
Landlord, its officers, agents and representatives shall have the right to
enter all parts of the Leased Premises during regular business hours and upon
forty-eight (48) hours notice to Tenant to inspect the Leased Premises and
Tenant shall not be entitled to any abatement or reduction of rent by reason
thereof as long as such inspection is done in a manner as to not interfere with
Tenant's business operations.
Tenant shall be responsible for installation, maintenance and repair of
any security system desired for the Leased Premises as well as for the
electrical and plumbing systems within the Leased Premises and for the air
conditioning and heating system. Tenant, at its sole expense, shall promptly
replace and maintain any fighting located on the Leased Premises. Tenant shall
maintain in good operating condition any water fixtures and plumbing within the
Leased Premises and shall be solely responsible for any additional cost
incurred due to any leaks from fixtures within the Leased Premises.
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<PAGE> 6
9. INSPECTION OF THE PREMISES. Tenant hereby agrees and represents that
Tenant has inspected the Leased Premises and accepts the Leased Premises in the
condition now existing, AS IS.
10. UTILITIES. Tenant shall make Tenant's own contracts and shall pay for
all utilities used or consumed by Tenant in, on or about the Leased Premises
including water service and sanitary sewer service provided to the Leased
Premises. Tenant shall be solely responsible for any telephone service and any
other service or utility desired by Tenant. Landlord shall not be responsible
for any damages or losses incurred by Tenant for the failure of Landlord to
furnish any service or utility to the Tenant as long as Landlord does not
maliciously or in bad faith cause such interruption of services. Furthermore,
at the termination of this Lease, Tenant shall be responsible for the closing
out of Tenant's accounts with the various utilities companies for the services
supplied to the Leased Premises, and shall be solely responsible for the
payment of said accounts. Upon vacating the premises, Tenant shall leave the
electrical, water and sewer services in place and intact. Any improvements and
additions to the electrical or plumbing services to the Leased Premises made
during the Lease, whether by Tenant or anyone else, shall become part of the
Leased Premises and remain with the Leased Premises upon Tenant vacating the
premises.
11. COMPLIANCE WITH ORDINANCES, ETC. Tenant agrees that Tenant will
promptly execute and fulfill all ordinances, regulations, and laws of the
United States, the State of Texas, County, City and other governmental
agencies, boards or departments applicable to Tenant's use of the Leased
Premises and all ordinances or orders imposed by the Board of Health,
Sanitation and Police or Fire Departments for the correction, prevention, and
abatement of nuisances in or upon
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or connected with the activities conducted by the Tenant in or upon the Leased
Premises during the term of this Lease and at all times while Tenant is in
possession of the Leased Premises.
12. ASSIGNMENT, SUB-LETTING PROHIBITED. Tenant shall have the
unrestricted right to assign, sublet, license, or transfer any or all of its
fights and privileges under this Lease, provided that no such transfer shall
operate to relieve Tenant of Tenant's obligations under the Lease.
13. DAMAGE BY FIRE OR OTHER CASUALTY. If the Leased Premises shall be
damaged by fire or other casualty resulting from any fault, negligence, or
willful act of Tenant, its agents, employees or invitees, such damage shall be
repaired by and at the expense of Tenant under the direction and supervision of
Landlord and rent shall continue without abatement.
If in the last year of a Term or any Extension, if applicable,
improvements on the Leased Premises should be so badly damaged by fire or other
casualty as to make the Leased Premises untenantable, then, Landlord or Tenant
shall have the option to terminate this Lease by written notice delivered to
the other party within thirty (30) days following the event of such damage or
destruction, in which event neither party hereto shall thereafter have any
further future obligations hereunder. In any other event, unless mutually
agreed to the contrary, this Lease shall continue in force and effect, in which
event Landlord shall promptly and diligently repair and restore the damaged or
destroyed portions of the Leased Premises to substantially the same condition
existing prior to such damage or destruction. Should Landlord fail to
substantially complete repair or rebuilding of such improvements within 180
days of such damage, Tenant shall have the right to terminate this Lease by
notice to Landlord within 30 days after such 180 days period. For the period
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beginning on the date that the Leased Premises were rendered untenantable to
the date of restoration of the Leased Premises to substantially the same
condition existing prior to such damage, the Monthly Rent payable hereunder
shall be proportionately abated.
14. ATTORNEY'S FEES. In the event Tenant shall make default in the
payment of Monthly Rent or other sum of money as the same shall become due and
payable to Landlord hereunder, and shall remain in default for a period of ten
days after the applicable cure period, and such rent or other sum of money is
placed in the hands of an attorney for collection or is collected through suit,
bankruptcy or other judicial proceeding, then Tenant agrees to pay to Landlord
all reasonable attorney's fees and costs incurred by Landlord due to such
non-payment.
15. DEFAULT, TERMINATION, ETC. It is further covenanted and agreed by the
parties hereto that: (i) if said Tenant shall fail to use said premises only
in a lawful manner as stated herein; or (ii) if said Tenant shall fail to pay
the rental herein stipulated as same becomes due; or (iii) if Tenant shall
neglect or fail to perform and observe any of the covenants and agreements
contained in this Agreement which are on Tenant's part to be performed; then on
the happening of any one or more of these events, the Landlord, or those
claiming under Landlord, may (i) for monetary defaults, upon ten (10) days
written notice to Tenant and the noncuring of such default by the end of such
ten (10) days; and (ii) for non-monetary defaults, upon thirty (30) days
written notice to Tenant and the noncuring of such default by the end of such
thirty (30) days, immediately or at any time thereafter, and without further
notice or demand, and with or without legal action or suit, terminate Tenant's
rights to possession under this Lease, and enter upon and into the premises
herein demised, or any pan thereof, and repossess the same, and expel said
Tenant or those claiming under Tenant, and
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<PAGE> 9
remove Tenant's effects if necessary, without being deemed guilty of any manner
of trespass, all and any claim of damages for and by reason hereby expressly
waived and without prejudice to any remedies which might be otherwise used for
the collection of arrearages for rent or repossession of said premises. Upon
termination of Tenant's right to possession of the Leased Premises, Tenant
shall have ten (10) days to vacate the Leased Premises, leaving the Leased
Premises in broom-clean condition and in as good a condition as at the
initiation of this Lease. Landlord is authorized to remove any personal
property of Tenant remaining on the Leased Premises upon termination of
Tenant's right to possession of the Leased Premises and to place same in the
name of Tenant in any storage facility in the county in which the Leased
Premises are located, or to otherwise dispose of such goods as abandoned
property without any liability to Tenant. If the Tenant shall abandon or
vacate said premises, or be evicted therefrom on account of any default herein,
Landlord shall be at liberty, if Landlord sees fit and thinks it advisable, to
re-let same; and if sufficient rental shall not be realized on such re-letting
to satisfy the rent herein reserved, the Tenant agrees to satisfy any
deficiency that may arise therefrom, for all of which the hereinafter described
liens are expressly reserved. Landlord shall also have the option of
terminating this Lease upon the default of Tenant and should such premises not
be returned to Landlord in as good as condition as upon the date rentals began
to accrue under this Lease, Tenant shall be responsible for all such repair and
restoration costs in addition to all accrued and unpaid rentals upon such
termination. Notwithstanding any provision to the contrary, Tenant's
obligation to return in "as a good a condition" shall take into account
ordinary wear with further consideration of Tenant's maintenance obligation
hereunder. Furthermore, as an additional cumulative remedy, in the event
notice of
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default has been given to Tenant by Landlord and such Default has not been
cured, Landlord shall be entitled and is hereby authorized, without any further
notice to Tenant whatsoever, to enter the Leased Premises and to change, alter
and/or modify the door locks and gate locks on the Leased Premises and to
exclude Tenant from such Leased Premises until Tenant cures such default.
Exercise by Landlord of any of the remedies granted under this section or
otherwise available shall not be deemed to be an acceptance of surrender of the
Leased Premises by Tenant, whether by agreement or by operation of law, it
being understood that such surrender can be effected only by the written
agreement of Landlord. Notwithstanding the foregoing, under no circumstances
shall Landlord have the right to accelerate rent.
16. LIENS. Except for any mortgage, deed of trust or similar instrument
executed by Landlord, Landlord and Tenant covenant each with the other not to
permit any judgment, attachment and/or lien (an "Encumbrance") to be filed
against the Leased Premises. Should any judgment, attachment and/or lien of any
nature be filed against the Leased Premises, the party from whose fault or
alleged debt such lien arises shall within thirty (30) days cause such
Encumbrance to be removed by substitution of collateral or otherwise.
17. SUBROGATION OF LANDLORD'S LIEN. In the event Tenant, its subtenants
or assigns acquires and/or leases personal property to be installed, rented
from, and used upon the Leased Premises subject to a conditional sales
contract, chattel mortgage or other security agreement or lease, (the "Superior
Lien"), Landlord hereby subrogates to the Superior Lien any claim arising by
way of any landlord's lien (whether created by statute, contract or otherwise)
with respect to such personal property and agrees to execute and deliver to any
such secured creditor and/or lessor a
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<PAGE> 11
subrogation of any lien Landlord may have upon such personal property. Such
subrogation will be on a form provided by Tenant authorizing the secured
creditor and/or lessor to enter upon the Leased Premises, in accordance with
the terms of this Lease, and remove such personal property in the event of
default under the terms of the conditional sales contract, chattel mortgage,
security agreement and/or lease. This Section shall not be interpreted as
creating a lien in favor of Landlord. Provided however, such subrogation shall
not be effective as to any rentals or storage costs occurring thirty (30) days
after the holder of the Superior Lien is given notice of termination of the
Tenant's right to possession of the Leased Premises.
18. CONDEMNATION. If while this Lease is in effect there shall be taken
by exercise of the power of eminent domain any pan of the Leased Premises, all
sums awarded or agreed upon between Landlord and the condemning authority for
the taking of the Leased Premises, whether as damages or as compensation, shall
be the property of Landlord. Should Landlord receive condemnation funds for
the taking of improvements or personal property which are paid for by Tenant,
Landlord shall pay such funds to Tenant to the extent of the net book value of
such depreciable improvements. Tenant shall be entitled to terminate this
Lease if such portion taken by condemnation renders the Leased Premises
unsuitable for the purposes utilized by Tenant prior to such condemnation. If
this Lease is terminated due to condemnation, rental shall be payable up to the
date that possession is taken by the condemning authority, and Landlord will
refund to Tenant any prepaid unaccrued rent less any sum then owing by Tenant
to Landlord. Landlord shall have the option to continue this lease after any
partial condemnation only in the event the remaining
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<PAGE> 12
Leased Premises are suitable for the purposes utilized by the Tenant prior to
such condemnation with reasonable adjustment to the rental rate.
19. NON-WAIVER. Neither acceptance of rent or any other amount due
hereunder by Landlord nor failure to complain of any action, non-action or
default of Tenant, whether singular or repetitive, shall constitute a waiver of
any of Landlord's rights hereunder. Waiver by Landlord of any right for any
default by Tenant shall not constitute a waiver of any right for either a
subsequent default of the same obligation or any other default. No act or
thing done by Landlord or its agents or representatives shall be deemed to be
an acceptance of surrender of the Leased Premises and no agreements to accept a
surrender of the Leased Premises shall be valid unless it is in writing and
signed by a duly authorized officer or agent of Landlord.
20. HOLDING OVER. If Tenant should remain in possession of the Leased
Premises after the expiration or termination of this Lease, without the
execution by Landlord and Tenant of a new lease, then Tenant shall be deemed to
by occupying the Leased Premises as a tenant-at-sufferance subject to all the
covenants and obligations of this Lease, provided however, the monthly rent
shall be one and one-half the rental rate in effect on termination of the
Lease.
21. NOTICES. Any and all notice which must or which may be given by the
Landlord to the Tenant or by the Tenant to the Landlord under any of the
provisions of this Agreement must be in writing and may be served by United
States Certified or Registered Mail, with Return Receipt Requested, or by
delivery in person, unless otherwise required under any provision hereof Notices
mailed to the Landlord shall be addressed to Landlord at the address stated
below the signature of Landlord hereinbelow, or to such other address as
Landlord may at any time, or from time to time,
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<PAGE> 13
hereafter designate by written notice thereof to the Tenant, and notices mailed
to Tenant shall be addressed to Tenant at the address stated below the
signature of Tenant hereinbelow, or at such address as Tenant may, at any time,
or from time to time, hereafter designate by written notice thereof to the
Landlord.
22. BINDING ON HEIRS, ETC. The agreements, conditions, covenants, and
terms herein contained, shall in every case, apply to, be binding upon and
inure to the benefit of the respective parties hereto, their heirs, executors,
administrators, successors and assigns, with the same force and effect as is
specifically mentioned in each instance where a party hereto is named.
23. ASSIGNMENT BY LANDLORD. Landlord shall have the right to transfer and
assign, in whole or in part, all its rights and obligation hereunder and in the
Center and property referred to in this Lease, and in such event and upon its
transferee's assuming Landlord's obligations hereunder, no further liability or
obligation shall thereafter accrue against the present Landlord under this
Lease.
24. LAW GOVERNING AND VENUE. This Lease shall be governed by and
construed in accordance with the laws of the State of Texas and venue for all
purposes shall be in Harris County, Texas.
25. DEPOSIT. Tenant shall deposit with Landlord the sum equal to one
month's rental upon execution of this Lease as security for all of Tenant's
obligations under this Lease. Tenant shall not have the right to use this sum
as payment of the last month's rent. No interest shall accrue on this deposit.
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<PAGE> 14
26. INDEMNIFICATION.
(a) Except to the extent covered by insurance, Landlord hereby indemnities
and holds Tenant, Tenant's nominees, officers, directors, agents, employees,
successors and assigns harmless from and against any and all claims, demands,
liabilities, and expenses, including attorneys' fees and litigation expenses,
arising from (i) the negligence or willful acts of Landlord or its agents,
employees, or contractors occurring on the Leased Premises; or (ii) the
presence of Hazardous Substances (hereafter defined) or materials on the Leased
Premises prior to Effective Date, except to the extent caused by Tenant's
negligence or willful misconduct. In the event any action or proceeding shall
be brought against Tenant by reason of any such claims, Landlord shall defend
the same at Landlord's expense by counsel selected by Tenant.
(b) Tenant hereby indemnifies and holds Landlord, Landlord's nominees,
officers, directors, agents, employees, successors and assigns harmless from
and against any and all claims, demands, liabilities, and expenses, including
attorneys' fees and litigation expenses, arising from (i) the negligence or
willful acts of Tenant or its agents, employees, invitees, or contractors
occurring on the Leased Premises after Effective Date, or (ii) the presence of
Hazardous Substances or Materials on the Leased Premises after Effective Date,
except to the extent caused by Landlord's negligence or willful misconduct. In
the event any action or proceeding shall be brought against Landlord by reason
of any such claims, Tenant shall defend the same at Tenant's expense by counsel
selected by Landlord.
27. NON-DISTURBANCE AND ATTORNMENT; MEMORANDUM OF LEASE. Landlord, within
thirty (30) days after the Effective Date, will obtain from every senior
landlord,
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<PAGE> 15
mortgagee and holder of a deed of trust upon the Leased Premises, (collectively
"Senior Interest Holders") an agreement in recordable form acceptable to Tenant
wherein the Senior Interest Holders agree not to disturb Tenant's possession of
the Leased Premises or deprive Tenant of any fights or increase any of its
obligations under this Lease, provided Tenant is not in default of its
obligations under this Lease, otherwise Tenant may terminate this Lease.
Landlord agrees, upon request of Tenant, to execute and deliver to Tenant a
memorandum of this Lease in recordable form acceptable to Tenant.
28. LANDLORD'S TITLE AND QUIET ENJOYMENT. Landlord represents and
warrants that Landlord is seized in fee simple title to the Property, free,
clear and unencumbered except as otherwise disclosed herein. Landlord
covenants that so long as Tenant fulfills the conditions and covenants required
of it to be performed, Tenant will have peaceful and quiet possession thereof
Landlord further represents and warrants that it has good right, full power and
lawful authority to enter into the Lease for the Term and any Extensions.
29. REPRESENTATIONS AND WARRANTIES OF LANDLORD.
(a) Hazardous Substances. Except in accordance with applicable
governmental regulations and in accordance with ordinary business practice, the
Property does not presently contain and is free from all hazardous substances
and/or wastes, toxic and nontoxic pollutants and contaminants including but not
limited to, petroleum products and asbestos (collectively, "Hazardous
Substances"). Landlord has not received any notification from any federal,
state, county or city agency or authority relating to Hazardous Substances, in
or near the Property. Neither party shall cause or permit any Hazardous
Substances to be brought upon, kept or used in or about the Property
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by such party, its agents, employees, contractors, invitees, tenants,
subtenants or licensees without the prior written consent of the other party.
Neither party shall unreasonably withhold its consent thereto as long as such
party demonstrates to the other party's reasonable satisfaction that each such
Hazardous Substance is necessary or useful to its business or to the business
of its agents, employees, contractors, invitees, tenants, subtenants or
licensees, and will be used, kept and stored in a manner that complies with all
applicable governmental laws and regulations. If consented to, the requesting
party shall promptly deliver to the other party true and complete copies of all
notices received by such party from any governmental authority with respect to
the generation, storage or disposal of such Hazardous Substances. Tenant is
aware that tile containing some asbestos is located in the showroom/office
area.
(b) Litigation. There are no claims, causes of action or other litigation
or proceedings pending or, to the best of Landlord's knowledge, threatened in
respect to the ownership, operation or environmental condition of the Property
or any part hereof, except for claims which are fully insured and as to which
the insurer has accepted defense without reservation.
(c) Violation. There are no violations of any health, safety, pollution,
zoning or other laws, ordinances, rules or regulations including, without
limitation, the ADA with respect to any portion of the Property which have not
been heretofore entirely corrected.
(d) Zoning. The Property is currently zoned (if applicable) to allow the
use of the Leased premises for Tenant's Use.
(e) Authority. Landlord has full capacity, right, power and authority to
executed, deliver and perform this Lease and all documents to be executed by
Landlord pursuant hereto, and all
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required action and approvals therefor have been duly taken and obtained. The
individual signing this Lease and all other documents executed pursuant hereto
on behalf of Landlord is duly authorized. This Lease and all documents to be
executed pursuant hereto by Landlord are binding upon and enforceable against
Landlord in accordance with their respective terms, and the transaction
contemplated hereby will not result in a breach of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement to which Landlord or the Leased Premises is subject or by which
Landlord or the Leased Premises is bound.
(f) Notwithstanding any provision to the contrary, Landlord shall be
responsible for the structural integrity of the present building(s) on the
Leased Premises as long as any failure of such structure integrity is not due
to a failure to properly maintain. Such items of structural integrity shall
include the exterior walls, concrete foundation, and roof, provided however,
Landlord shall not be responsible for normal maintenance of such items.
30. ESTOPPEL CERTIFICATE. Tenant and Landlord agree at any time and from
time to time upon not less than twenty (20) business days' prior written
request from the other party, to execute acknowledge and deliver to the
requesting party a statement in writing, in form and content reasonably
acceptable to the requesting party, an estoppel certificate. In the event
either party fails to execute and deliver any such instrument within the
foregoing time period, the delinquent party shall be deemed to have
acknowledged and agreed with and to the matters set forth in such certificate.
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31. MISCELLANEOUS.
(a) If either party is delayed or prevents from performing any of its
obligations under this Lease by reason of strike, lockouts, labor troubles,
failure of power, riots, insurrection, war, acts of God or any other cause
beyond such party's control, the period of such event or such prevention shall
be deemed added to the time period herein provided for the performance of any
such obligation by the applicable party.
(b) This Lease contains the entire agreement between the parties. No
modification, alteration or amendment of the Lease shall be binding unless in
writing and executed by the parties.
(c) The representations, warranties and indemnities contained in this
Lease shall survive the termination or expiration of this Lease.
(d) Each Party hereto has reviewed and revised (or requested revisions of)
this Lease, and therefore any usual rules of construction requiring that
ambiguities are to be resolved against a particular party shall not be
applicable in the construction and interpretation of this Lease or any Exhibit
hereto.
(e) Time is of the essence of this Lease and each provision; provided,
however, if the final (but not any interim) date of any period set forth herein
falls on a Saturday, Sunday or legal holiday under the laws of the United
States of America, the final date of such period shall be extended to the next
business day.
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<PAGE> 19
EXECUTED AS EFFECTIVE in duplicate originals effective the date first
above written.
LANDLORD: TENANT:
/s/ James E. Horsely By: /s/ Dennis J. O'Connor
- -------------------- -----------------------------------
JAMES E. HORSLEY Person: DENNIS J. O'CONNOR
18107 Colonial Forest Circle Title: chief Financial Equipment Services, Inc.
Spring, Texas 77379 Address: c/o National Equipment Services, Inc.
(281) 376-6188 6100 Sears Tower
Chicago, Illinois 60606
Attention: Kevin P. Rodgers
Phone: (312) 382-2223
Fax: (312) 382-2201
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<PAGE> 20
(ACKNOWLEDGMENT)
THE STATE OF TEXAS {
{
COUNTY OF HARRIS {
The foregoing instrument was acknowledged before me on this 17th day of
March, 1997, by JAMES E. HORSLEY.
/s/ Carole McDonald
------------------------
Notary Public in and for
The State of Texas
THE STATE OF TEXAS {
{
COUNTY OF HARRIS {
The foregoing instrument was acknowledged before me on this 17th day of
March, 1997, by DENNIS J. O'CONNOR, Chief Financial Officer of NES ACQUISITION
CORP., a Delaware Corporation, on behalf of said corporation.
/s/ Carole McDonald
------------------------
Notary Public in and for
The State of Texas
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<PAGE> 21
EXHIBIT"A"
Location 5-1 at Lot 15A, Block 5, LATAN INDUSTRIAL AREA, as platted in the Map
or Plat Records of Nueces County, Texas.
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<PAGE> 1
Exhibit 10.32
THE PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS
SUBJECT TO CERTAIN SUBORDINATION PROVISIONS SET FORTH
IN SECTION 3 HEREIN AND SET-OFF PROVISIONS SET FORTH
IN SECTION 5 HEREIN. THE PAYMENT OF PRINCIPAL AND
INTEREST ON THIS NOTE IS SUBJECT TO CERTAIN RECOUPMENT
PROVISIONS SET FORTH IN AN ASSET PURCHASE AGREEMENT,
DATED AS OF MARCH 17, 1997, AMONG NES ACQUISITION
CORP., A WHOLLY-OWNED SUBSIDIARY OF THE ISSUER OF THIS
NOTE, THE PERSON TO WHOM THIS NOTE ORIGINGALLY WAS
ISSUED, AND CERTAIN OTHER PERSONS. THE ISSUER OF THIS
NOTE WILL FURNISH A COPY OF THESE PROVISIONS TO THE
HOLDER HEREOF WITHOUT CHARGE UPON WRITTEN REQUEST.
THIS NOTE WAS ORIGINALLY ISSUED ON MARCH 17, 1997 AND
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY COMPARABLE STATE SECURITIES
LAW.
NATIONAL EQUIPMENT SERVICES, INC.
JUNIOR SUBORDINATED PROMISSORY NOTE
March 17, 1997 $500,000.00
National Equipment Services, Inc., a Delaware corporation (the "Company"),
hereby promises to pay to the order of Lone Star Rentals, Inc. the principal
amount of $500,000.00, together with interest thereon calculated from the date
hereof in accordance with the provisions of this Note.
This Junior Subordinated Promissory Note (this "Note") was issued pursuant
to an Asset Purchase Agreement, dated as of the date hereof (as amended and
modified from time to time, the "Purchase Agreement"), by and among the Lone
Star Rentals, Inc., James Horsley and NES Acquisition Corp., and this Note is
the "Promissory Note" referred to in the Purchase Agreement. The Purchase
Agreement contains terms governing the rights of the holder of this Note, and
all provisions of the Purchase Agreement are hereby incorporated herein by
reference. Except as defined in Section 7 hereof or unless otherwise indicated
herein, capitalized terms used in this Note have the same meanings set forth in
the Purchase Agreement.
1. Interest.
(a) Rate of Interest. Interest shall accrue on a daily basis at the rate
of ten percent (10%) per annum (or (if less) at the highest rate then permitted
under applicable law) (calculated on the basis of a 365/366 day year, as
applicable) on the unpaid principal amount of this Note outstanding from time to
time and, to the extent permitted by applicable law, on any amount of interest
which has not been paid on the date on which it is payable until payment
thereof.
<PAGE> 2
(b) Payment of Interest. On the last day of each quarter, beginning June
30, 1997 (each, an "Interest Payment Date"), the Company shall pay to the holder
of this Note all interest which has accrued since the preceding Interest Payment
Date (or, in the case of the initial Interest Payment Date, since the date of
issuance of this Note). Any accrued interest which for any reason has not
theretofore been paid shall be paid in full on the date on which the final
principal payment on this Note is made.
2. Payment of Principal on Note.
(a) Scheduled Payments. The Company shall pay the principal amount of
$500,000.00 (or such lesser principal amount then outstanding) to the holder of
this Note on the fifth anniversary of the date hereof, together with all accrued
and unpaid interest on the principal amount being repaid.
(b) Prepayments. The Company may, at any time and from time to time
without premium or penalty, prepay all or any portion of the outstanding
principal amount of this Note; provided that such prepayment is not prohibited
by the provisions of Section 3 hereof. In connection with each prepayment of
principal hereunder, the Company shall also pay all accrued and unpaid interest
on the principal amount being repaid.
3. Subordination; Restrictions on Payment.
(a) Anything in this Note to the contrary notwithstanding, the obligations
of the Company in respect of the principal, interest, fees and charges on this
Note shall be subordinate and junior in right of payment, to the extent and in
the manner hereinafter set forth, to all Superior Debt.
(b) In the event that the Company makes a general assignment for the
benefit of creditors; or an order, judgment or decree is entered adjudicating
the Company bankrupt or insolvent; or any order for relief with respect to the
Company is entered under the Federal Bankruptcy Code; or the Company petitions
or applies to any tribunal for the appointment of a custodian, trustee, receiver
or liquidator of the Company or of any substantial part of the assets of the
Company, or commences any proceeding relating to the Company under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction; or any such petition or
application is filed, or any such proceeding is commenced, against the Company
(collectively referred to as an "Insolvency Event"), or upon any acceleration of
Superior Debt, then:
(i) the holders of Superior Debt shall be entitled to receive
payment in full in cash of all principal, premium, interest, fees
and charges then due on all Superior Debt (including interest,
fees and charges accruing thereon after the commencement of any
such proceedings (irrespective of whether such interest, fees and
charges are allowed as a claim in such proceedings)) before the
holder of this Note is entitled to receive any payment on account
of principal, interest or other amounts due (or past due) upon
this Note, and the holders of Superior Debt shall be
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<PAGE> 3
entitled to receive for application in payment thereof any payment
or distribution of any kind or character, whether in cash,
property or securities or by set-off or otherwise, which may be
payable or deliverable in any such proceedings in respect of this
Note; and
(ii) any payment or distribution of assets of the Company, of
any kind or character, whether in cash, property or securities, to
which the holder of this Note would be entitled except for the
provisions of this Section 3(b) shall be paid or delivered by the
Company directly to the holders of Superior Debt or their duly
appointed agents for application of payment according to the
priorities of such Superior Debt and ratably among the holders of
any class of Superior Debt, for application in payment thereof
until all Superior Debt (including interest, fees and charges
accrued thereon after the date of commencement of such proceedings
(irrespective of whether such interest, fees and charges are
allowed as a claim in such proceedings)) shall have been paid in
full in cash.
(c) In any proceedings with respect to any Insolvency Event, the holders
of Superior Debt are authorized:
(i) to submit and enforce any claims on this Note either in
the name of the holders of Superior Debt or in the name of the
holder of this Note as the attorney-in-fact of the holder of this
Note in the event such claims have not been submitted by the
holder of this Note before 10 days prior to the date when
submission of such claims is due;
(ii) to accept and execute receipts for any payment or
distribution made with respect to this Note and to apply such
payment or distribution to the payment of the Superior Debt; and
(iii) to take any action and to execute any instruments
necessary to effectuate the foregoing, either in the name of the
holders of Superior Debt or in the name of the holder of this Note
as the attorney-in-fact of the holder of this Note.
(d) No payment of interest or principal shall be made if there shall have
occurred and be continuing or there would exist as a result of such a payment
or distribution any default or event of default under any of the terms of any
agreement relating to, or instrument evidencing, any Superior Debt, which
(whether with or without notice, lapse of time or both) would permit the holder
of such Superior Debt to accelerate all or any portion of such Superior Debt
(collectively, the "Blockage Events"). The Company shall use reasonable
efforts to notify the holder of this Note in writing of the occurrence of a
Blockage Event; provided, that, notwithstanding anything to the contrary in
this Note (except as provided in Section 3(g)), the failure of the Company to
so notify the holder of this Note of the occurrence of a Blockage Event shall
have no effect on the obligations of the Company or the holder of this Note
during the continuance of such Blockage Event as set forth therein. Upon
termination of a Blockage Event (so long as no other Blockage Event has
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<PAGE> 4
occurred and is continuing), the Company shall resume making regularly
scheduled quarterly payments of interest pursuant to the terms and conditions
of this Note.
(e) Any amendment or modification of the terms of Section 3 of this Note
shall not be effective against any Person who was a holder of Superior Debt
prior to or at the time of such amendment or modification unless such holder of
Superior Debt so consents.
(f) The holders of Superior Debt may, at any time, in their discretion,
renew, amend, extend or otherwise modify the terms and provisions of Superior
Debt so held or exercise any of their rights under the Superior Debt including,
without limitation, the waiver of defaults thereunder and the amendment of any
of the terms or provisions thereof (or any notice evidencing or creating the
same), all without notice to or assent from the holder of this Note. No
compromise, alteration, amendment, renewal or other change of, or waiver,
consent or other action in respect of any liability or obligation under or in
respect of, any terms, covenants or conditions of the Superior Debt (or any
instrument evidencing or creating the same), whether or not such release is in
accordance with the provisions of the Superior Debt (or any instrument
evidencing or creating the same), shall in any way alter or affect any of the
subordination provisions of this Note.
(g) If, notwithstanding the provisions of Section 3 of this Note, any
payment or distribution of any character (whether in cash, securities or other
property) or any security shall be received by the holder of this Note in
contravention of this Section 3 and before all the Superior Debt shall have
been paid in full in cash, such payment, distribution or security shall be held
in trust for the benefit of, and shall be immediately paid over or delivered or
transferred to, the holders of Superior Debt or their duly appointed agents for
application of payment according to the priorities of such Superior Debt and
ratably among the holders of any class of Superior Debt; provided that (i) if
the Company or a holder of Superior Debt has not notified the holder of this
Note of the occurrence of a Blockage Event within 30 days after the holder of
this Note has received a payment of interest under this Note, the holder of
this Note shall have no obligation to deliver such payment to any holder of
Superior Debt and (ii) if the Company or a holder of Superior Debt has not
notified the holder of this Note of the occurrence of a Blockage Event within
90 days after the holder of this Note has received a payment of principal under
this Note, the holder of this Note shall have no obligation to deliver such
payment to any holder of Superior Debt. Any such payments received by the
holder of this Note and delivered to the holders of the Superior Debt shall be
deemed not to be a payment on this Note for any reason whatsoever and the
indebtedness under this Note shall remain as if such erroneous payment had
never been paid by the Company or received by the holder of this Note. In the
event of the failure of any holder of this Note to endorse or assign any such
payment, distribution or security, each holder of any Superior Debt is hereby
irrevocably authorized to endorse or assign the same.
(h) No present or future holder of Superior Debt shall be prejudiced in
its right to enforce the provisions of Section 3 of this Note by any act or
failure to act on the part of the Company.
(i) If there shall exist (i) any Blockage Event, or (ii) any Event of
Default under this Note, the holder of this Note shall not take or continue any
action, or exercise or continue to
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<PAGE> 5
exercise any rights, remedies or powers under the terms of this Note, or
exercise or continue to exercise any other right or remedy at law or equity
that such holder might otherwise possess, to collect any amount due and payable
in respect of this Note, including, without limitation, the acceleration of
this Note (and if this Note has already been accelerated, the holder will,
immediately upon becoming aware of the occurrence of such Blockage Event or
Event of Default, reverse such acceleration), the commencement of any
foreclosure on any lien or security interest, the filing of any petition in
bankruptcy or the taking advantage of any other insolvency law of any
jurisdiction, unless and until the Superior Debt shall have been fully and
finally paid (whether in cash or such other form of consideration acceptable to
the holders of Superior Debt in their sole discretion) and satisfied, unless
one or more of the holders of the Superior Debt shall have accelerated the
maturity of Superior Debt in an amount in excess of $1,000,000, in which case
the holder of this Note shall be entitled to accelerate the maturity hereof but
shall not be entitled to take any other action described above and, provided
further, that the holder of this Note acknowledges and agrees that the
acceleration of this Note shall immediately be reversed if and when (A) one or
more holders of Superior Debt take similar action which results in the
aggregate amount of Superior Debt to be accelerated to be less than $5,000,000
or (B) such Superior Debt is fully and finally paid (whether in cash or such
other form of consideration acceptable to the holders of Superior Debt in their
sole discretion). Notwithstanding the foregoing or any permissible action
taken by the holder of this Note, the holder of this Note shall not be entitled
to receive any payment in contravention of the other provisions of this Section
3, including without limitation Sections 3(b), 3(d) and 3(g).
(j) If any payment or distribution to which any holder of this Note would
otherwise have been entitled but for the provisions of this Section 3 shall
have been applied, pursuant to the provisions of this Section 3, to the payment
of Superior Debt, then and in such case and to such extent, the holder of this
Note (A) shall be entitled to receive from the holders of such Superior Debt at
the time outstanding any payments or distributions received by such holders of
Superior Debt in excess of the amount sufficient to pay all Superior Debt in
full (whether or not then due and whether such payment was in cash or such
other form of consideration acceptable to the holders of Superior Debt in their
sole discretion), (B) following payment in full of the Superior Debt (whether
in cash or such other form of consideration acceptable to the holders of
Superior Debt in their sole discretion), shall be entitled to receive any and
all further payments or distributions applicable to Superior Debt, and (C)
following payment in full of the Superior Debt (whether in cash or such other
form of consideration acceptable to the holders of Superior Debt in their sole
discretion), shall be subrogated to the rights of the holders of the Superior
Debt to receive distributions applicable to the Superior Debt, in each case
until this Note shall have been paid in full in cash or such other
consideration acceptable to the Holder of this Note in its sole discretion. If
any holder of this Note has been subrogated to the rights of the holders of
Superior Debt due to the operation of this Section 3(j), the Company agrees to
take all such reasonable actions as are requested by such holder of this Note
in order to cause such holder to be able to obtain payments from the Company
with respect to such subrogation rights as soon as possible.
(k) The provisions of this Section 3 are solely for the purpose of
defining the relative rights of the holders of Superior Debt, on the one hand,
and the holder of this Note on the other, against the Company and its assets,
and nothing herein is intended to or shall impair, as between the Company and
the holder of this Note, the obligations of this Company which are
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<PAGE> 6
absolute and unconditional, to pay to the holder the principal and interest on
this Note as and when they become due and payable in accordance with their
terms, or is intended to or will affect the relative rights of the holder of
this Note and creditors of the Company other than the holders of the Superior
Debt, nor, except as provided in this Section 3, will anything herein or
therein prevent the holder of this Note from exercising all remedies otherwise
permitted by applicable law upon default under this Note subject to the rights,
if any, under this Section 3 of the holders of Superior Debt in respect of
cash, property or securities of the Company received upon the exercise of any
such remedy and subject to this Section 3.
4. Events of Default.
(a) Definition. For purposes of this Note, an Event of Default shall be
deemed to have occurred if
(i) the Company fails to pay when due and payable (whether at
maturity or otherwise) the full amount of interest then accrued on
any Note or the full amount of any principal payment on any Note,
and such failure to pay is not cured within five business days
after the occurrence thereof; or
(ii) an Insolvency Event occurs.
The foregoing shall constitute Events of Default whatever the reason or cause
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body.
(b) Consequences of Events of Default. Subject to Section 3:
(i) If any Event of Default of the type described in Section
4(a)(i) has occurred and is continuing, the holder of this Note
may declare all or any portion of the outstanding principal amount
of this Note (together with all accrued interest thereon and all
other amounts due and payable with respect thereto) to be
immediately due and payable and may demand immediate payment of
all or any portion of the outstanding principal amount of this
Note (together with all such other amounts then due and payable).
If the holder of this Note demands immediate payment of all or any
portion of this Note, the Company shall immediately pay to such
holder all amounts due and payable with respect to this Note.
(ii) If an Event of Default of the type described in Section
4(a)(ii) has occurred, the aggregate principal amount of this Note
(together with all accrued interest thereon and all other amounts
due and payable with respect thereto) shall become immediately due
and payable without any action on the part of the holder of this
Note, and the Company shall immediately pay to the holder of this
Note all amounts due and payable with respect to this Note.
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<PAGE> 7
(iii) The holder of this Note shall also have any other
rights which such holder may have been afforded under any contract
or agreement at any time and any other rights which such holder
may have pursuant to applicable law.
(iv) The Company hereby waives diligence, presentment,
protest and demand and notice of protest and demand, dishonor and
nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that
the holder hereof may accept security for this Note or release
security for this Note, all without in any way affecting the
liability of the Company hereunder.
5. Right of Set-off. In the event that the Company or any other Purchaser
Party (as defined in the Purchase Agreement) is entitled to indemnification or
other payment under Section 9.2 of the Purchase Agreement for so long as this
Note has not been paid in full and canceled, such indemnification or other
payment may, at the option of the Company, be discharged by the Company by
setting off the amount of such indemnification or other payment against the
principal amount of, and interest on, this Note; provided, however, that in the
event the holder reasonably and in good faith disputes the amount of such
indemnification or other payment, the Company shall not set-off such
indemnification or other payment against this Note until such dispute has been
resolved in the manner set forth in the Purchase Agreement.
6. Restrictions on Dividends. Without the prior written consent of the
holder of this Note, the Company shall not directly or indirectly declare or
pay any dividends or make any distributions upon any of its capital stock,
except for dividends payable in shares of its common stock issued upon the
outstanding shares of its common stock.
7. Amendment and Waiver. Except as otherwise expressly provided herein,
the provisions of this Note 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 has obtained the written consent of the holder of
this Note.
8. Definitions. For purposes of this Note, the following capitalized
terms have the following meaning.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a
majority of the partnership or other similar ownership interest thereof is at
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<PAGE> 8
the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that Person or a combination thereof. For purposes
hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control any managing director or general partner
of such limited liability company, partnership, association or other business
entity.
"Superior Debt" means all (i) principal of, and interest and premium (if
any) on, indebtedness for borrowed money of the Company (including, without
limitation, guarantees and other contingent obligations with respect to
indebtedness for borrowed money of its Subsidiaries) owing to commercial banks,
investment banks, insurance companies and other recognized lending institutions
or entities, whether now outstanding or hereafter created, incurred, assumed or
guaranteed and (ii) renewals, extensions, refundings, refinancings, deferrals,
restructurings, amendments and modifications of the items described in (i)
above.
9. Cancellation. After all principal and accrued interest at any time
owed on this Note has been paid in full, this Note shall be surrendered to the
Company for cancellation and shall not be reissued.
10. Payments. All payments to be made to the holder of this Note shall be
made in the lawful money of the United States of America in immediately
available funds.
11. Place of Payment. Payments of principal and interest shall be
delivered to the holder of this Note at such address as is specified by prior
written notice by the holder to the Company.
* * * * *
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<PAGE> 9
IN WITNESS WHEREOF, the Company has executed and delivered this Junior
Subordinated Promissory Note on the date first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Dennis O'Connor
-----------------------
Its: Chief Financial Officer
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<PAGE> 1
EXHIBIT 10.34
LEASE
THIS LEASE (this "Lease") is made and entered into this 1st day of April,
1997, by and between BAT Rentals, Inc., a Nevada corporation (hereinafter called
"Landlord"), and BAT Acquisition Corp., a Delaware corporation (hereinafter
called "Tenant").
W I T N E S S E T H:
Landlord, for and in consideration of the covenants and agreements
hereinafter set forth to be kept and performed by both parties, does hereby
demise and lease to Tenant (for the term hereinafter stipulated) the Premises
(hereinafter called the "Demised Premises") commonly known as 2735 South
Industrial Road, Las Vegas, Nevada 89109 and 2771 South Industrial Road, Las
Vegas, Nevada 89109, together consisting of an area approximately 183,000 square
feet; provided that the most northernmost portion of 2735 South Industrial Road
outside the fenced yard used by BAT Rentals and consisting of an area
approximately 14,430 square feet, which property is leased to a third party,
shall not be considered to be part of the Demised Premises.
Landlord hereby leases the Demised Premises to Tenant and hereby grants to
Tenant its guests, invitees and licensees all easements, rights and privileges
appurtenant thereto, including the right to use adjoining parking areas,
driveways, roads, alleys and means of ingress and egress.
1. TERM: RENEWAL AND USE.
A. The original term ("Term") of this Lease shall begin on April 1, 1997
(the "Commencement Date") and shall expire on October 1, 1998. Tenant may renew
the Term of the Lease for an additional eighteen (18) month period by providing
Landlord with notice of such renewal 90 days prior to the expiration of the
Term. The "Term" shall include the original Term and any renewals thereof.
B. The Demised Premises may be used and occupied for any lawful purpose.
2. RENTAL.
A. Tenant does hereby covenant and agree to pay to Landlord, for the use
and occupancy of the Demised Premises, at the times and in the manner
hereinafter provided, $20,833.33 a month during the original Term and any
renewal Term ("Base Rent"); provided that the Base Rent during any renewal Term
shall be increased to reflect the change in the Consumer Price Index for the
Western Region (as measured on the first day of the renewal Term) during the
prior Term. Such Base Rent shall be paid in advance, without notice or invoice
from Landlord, on the first day of each and every month during the Term hereof.
In the event such Base Rent shall be determined under the
<PAGE> 2
provisions of Article 2 hereof to commence on a day other than the first day of
a month or the term shall end on other than the last day of a month, then Base
Rent shall be prorated accordingly.
B. In order to secure the performance of the provisions of this Lease to be
performed by the Tenant, Tenant has deposited with Landlord cash in the sum of
$20,833.33 (the "Security Deposit"). In the event a default occurs of the type
described in Article 17 hereof, Landlord may use or apply all or any part of the
Security Deposit to remedy any such default and upon ten (10) days notice,
Tenant shall remit to Landlord the amount of the Security Deposit so used or
applied. The Security Deposit may be applied to the last monthly Base Rent
payment. Any balance of the Security Deposit remaining at the expiration of the
Term or termination of the Lease shall be returned to Tenant within thirty (30)
days after the expiration of the Term. The terms of this Article 2 shall
survive expiration of the Term or termination of the Lease.
3. TAXES. Landlord agrees to pay on or before the date when due, all real
estate property taxes, general and special assessments which may be levied or
assessed against the Demised Premises.
4. COMPLIANCE WITH LAWS. Tenant and Landlord agree to comply with all laws,
ordinances, orders and regulations regarding the use and occupancy of the
Demised Premises and the cleanliness, safety or operation thereof. Tenant
agrees to comply with the reasonable regulations and requirements of any
insurance underwriter, inspection bureau or similar agency with respect to
improvements installed by Tenant. Tenant agrees to permit Landlord to comply
with such recommendations and requirements with respect to that portion of the
Demised Premises for which Landlord is responsible to repair and maintain.
5. CONDITION OF PREMISES. Tenant shall, during the Term of this Lease, have the
right to report to Landlord any defects or condition which are in need of repair
based upon the obligations of Landlords under this Lease. In connection
therewith, Landlord shall be obligated within a reasonable amount of time, not
to exceed thirty (30) days, to cure and correct such defects and conditions.
Landlord warrants that upon delivery of the Demised Premises to Tenant the
interior and exterior of the Demised Premises will meet with all present codes
required at the time by regulations of governing authorities. If at any time
the Demised Premises does not meet with codes as required by regulations of
governing authorities, then, except for work that is specifically performed by
Tenant for Tenant's use and occupancy, the Demised Premises will be brought up
to the proper standards at Landlord's expense. If Landlord fails to prosecute
such diligently and continuously until completion then Tenant may prosecute such
repairs itself and apply the cost of same against the next Base Rent obligation
due hereunder. Landlord shall also be responsible for paying any and all fines
or penalties assessed by any governmental authority if the Demised Premises
fails to meet codes and regulations of governmental authorities during the Term
of this Lease with respect to items for which Landlord is responsible to repair
and maintain as set forth in Article 6 of this Lease. Tenant shall be
responsible for paying any or all fines or penalties for noncompliance or
violation of codes and
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<PAGE> 3
regulations of governmental authorities during the Term of this Lease with
respect to items for which Tenant is responsible to repair and maintain as set
forth in this Lease.
6. REPAIRS AND MAINTENANCE. Landlord covenants and agrees, at its expense
without reimbursement or contribution by Tenant, to keep, maintain and replace,
if necessary, the foundations, the exterior paint, the HVAC system, the plumbing
system, the electrical system, the utility lines and connections to and other
systems servicing the Demised Premises, the sprinkler mains, if any, structural
elements including, without limitations the roof, roof membrane, roof covering
(including interior ceiling), load-bearing walls, floors and masonry walls in
good condition and repair. Tenant covenants and agrees to keep and maintain the
Demised Premises in the same condition as existed at the Commencement Date,
normal wear and tear, damage from casualty and condemnation excepted. In the
event the Demised Premises become or are out of repair and condition due to the
failure of Landlord or Tenant to comply with the terms of this Article 6, then
the non-defaulting party shall have the right to perform or cause to be
performed any and all repairs necessary to restore and repair the Demised
Premises.
7. ALTERATIONS. Tenant shall not make any structural alterations to the Demised
Premises without, in each instance, first obtaining the written consent of
Landlord, which consent shall not be unreasonably withheld or delayed. Tenant
shall be permitted to make interior nonstructural alterations, additions and
improvements without Landlord's prior consent.
8. FIXTURES AND PERSONAL PROPERTY. Any trade fixtures, business equipment,
inventory, trademarked items, signs, and other removable personal property
installed in or on the Demised Premises ("Tenant's Property"), shall remain the
property of the Tenant. Landlord agrees that Tenant shall have the right, at
any time or from time to time, to remove any and all of Tenant's Property.
Tenant, at its expense, shall immediately repair any damage occasioned by the
removal of Tenant's Property and upon expiration or earlier termination of this
Lease, shall leave the Demised Premises in a neat and clean condition, free of
debris, normal wear and tear and damage from casualty and condemnation excepted.
9. LIENS. Neither Landlord nor Tenant shall permit to be created nor to remain
undischarged any lien, encumbrance or charge arising out of any work or work
claim of any contractor, mechanic or laborer of Tenant or material supplied by a
materialman to, Landlord or Tenant which might be, or become, a lien or
encumbrance or charge upon the Demised Premises. If any lien or notice of lien
on account of an alleged debt of Landlord or Tenant or any notice of contract by
a party engaged by Landlord or Tenant or Landlord's or Tenant's contractor to
work in the Demised Premises shall be filed against the Demised Premises, the
responsible party shall, within forty-five (45) days after notice of the filing
thereof, cause the same to be discharged of record by payment, deposit or bond.
10. ACCESS TO PREMISES. Upon reasonable prior written notice, but in no event
less than twenty-four (24) hours (except in the case of an emergency), Landlord
may enter the Demised Premises during Tenant's business hours for purposes of
inspection, to show the Demised Premises
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<PAGE> 4
to prospective purchasers and lenders, or to perform maintenance and repair
obligations imposed upon Landlord by this Lease.
11. SERVICES.
A. Landlord agrees to cause the necessary mains, conduits and other
facilities to be provided to make water, sewer, gas, phone and electricity
available to the Demised Premises and to make available to Tenant water, sewer,
gas, phone and electrical services prior to the Commencement Date at Landlord's
expense.
B. Tenant shall be solely responsible for and promptly pay all charges for
the use and consumption of sewer, gas, electricity, water, phone and all other
utility services used within the Demised Premises.
C. If the said utilities or services are interrupted or terminated because
of necessary repairs, installations, or improvements, or any cause beyond the
Landlord's reasonable control and if Tenant is unable to operate its business,
there shall be an abatement of all Base Rent and all other charges and items
payable under this Lease during such time period and if such interruption shall
continue for a period of more than seven (7) days, then Tenant may terminate the
Lease.
12. DAMAGE TO PREMISES. In the event the Demised Premises is damaged or
destroyed or rendered totally or partially untenantable for its accustomed use,
by fire or other casualty, then Landlord shall, within sixty (60) days after
such casualty, commence repair of said Demised Premises and within one hundred
twenty (120) days after commencement of such repair, restore the Demised
Premises to substantially the same condition in which it was immediately prior
to the occurrence of the casualty, except as otherwise provided in this Article
12. From the date of such casualty until the Demised Premises is so repaired
and restored all Base Rent and all other charges and items payable under this
Lease shall abate in such proportion as the part of the Demised Premises thus
damaged, destroyed or rendered untenantable bears to the total Demised Premises.
If the Demised Premises cannot be repaired within 120 days, then Landlord or
Tenant shall have right to terminate this Lease effective as of the date of such
casualty, by giving one to the other within thirty (30) days of such casualty,
written notice of termination. Tenant may also terminate this Lease upon thirty
(30) days notice if Landlord fails to commence or complete such restoration and
repairs within the time period specified in this Article 12. If notice of
termination is given within the applicable thirty (30) day period, this Lease
shall terminate and Base Rent and all other charges shall abate as aforesaid
from the date of such casualty, and Landlord shall promptly repay to Tenant any
Base Rent paid in advance which has not been earned as of the date of such
casualty.
13. INSURANCE.
A. Landlord also agrees to carry, during the Term hereof, all risk property
insurance (hereinafter, "Landlord's Property Insurance") covering fire and
extended coverage, vandalism and malicious mischief, sprinkler leakage and all
other perils of direct physical loss or damage insuring
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<PAGE> 5
the improvements and betterments located in the Demised Premises, including the
Demised Premises and all appurtenances thereto (excluding Tenant's Property) for
the full replacement value thereof. Landlord, upon request, shall furnish
Tenant a certificate of such Landlord's Property Insurance. During the Term of
this Lease, Tenant agrees to reimburse to Landlord, for Tenant's proportionate
share of Landlord's annual total costs for the premiums for Landlord's Property
Insurance.
B. Tenant agrees to carry, during the Term hereof, Commercial General
Liability insurance on the Demised Premises, naming Landlord as an additional
insured, covering both Tenant and Landlord as their interest may appear, with
companies reasonably satisfactory to Landlord and giving Landlord and Tenant a
minimum of ten (10) days' written notice by the insurance company prior to
cancellation or termination of such insurance. Such insurance shall be for
limits of not less than One Million Dollars ($1,000,000.00) combined Bodily
Injury and Property Damage Liability.
C. Landlord and Tenant and all parties claiming under them, mutually
release and discharge each other from all claims and liabilities arising from or
caused by any casualty or hazard, covered or required hereunder to be covered in
whole or in part by insurance on the Demised Premises or in connection with
property on or activities conducted on the Demised Premises, and waive any right
of subrogation which might otherwise exist in or accrue to any person on account
thereof. This waiver shall not be required if the insurance carrier charges an
additional premium in order to provide such waiver and the party benefitting
from the waiver does not agree to pay the additional premium.
14. INDEMNIFICATION.
A. Tenant hereby indemnifies and holds Landlord harmless from and against
any and all claims, demands, liabilities and expenses, including attorneys,
fees, arising from Tenant's use of the Demised Premises or from any act
permitted, or any omission to act, in or about the Demised Premises by Tenant or
its agents, employees or contractors, or from any breach or default by Tenant of
this Lease, except to the extent caused by Landlord's negligence or willful
misconduct. In the event any action or proceeding shall be brought against
Landlord by reason of any such claim, Tenant shall defend the same at Tenant's
expense by counsel reasonably satisfactory to Landlord.
B. Landlord hereby indemnifies and holds Tenant harmless from and against
any and all claims, demands, liabilities and expenses, including attorneys'
fees, arising from Landlord's obligations, actions or from any act permitted, or
any omission to act, in or about the Demised Premises by Landlord or its agents,
employees, contractors or invitees, or from any breach or default by Landlord of
this Lease, except to the extent caused by Tenant's negligence or willful
misconduct. In the event any action or proceeding shall be brought against
Tenant by reason of any such claim, Landlord shall defend the same at Landlord's
expense by counsel reasonably satisfactory to Tenant.
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<PAGE> 6
15. ASSIGNMENT, SUBLETTING AND OWNERSHIP.
A. Tenant shall have the right to sublet, assign or otherwise transfer its
interest in this Lease to any parent, affiliate, or operating subsidiary of
Tenant, subsidiary of Tenant's parent, or to a corporation with which it may
merge or consolidate or to a company, entity or individual that purchases all or
substantially all of the assets or common stock of Tenant either in one
transaction or a series of transactions, without Landlord's approval, written or
otherwise; provided that no such assignment or sublet shall be permitted nor
valid unless the assignee or sublessee is sufficiently financially solvent at
the time of the assignment or sublet to satisfy all obligations assigned to it
by Tenant, including all obligations with respect to this Lease assigned to it.
In the event of any such subletting, assignment or other transfer, Tenant shall
automatically be released from all liability upon such assignment or sublease
with respect to that portion of the Tenant's leasehold estate so assigned or
subleased.
B. The consent by Landlord to any other transfer, assignment, subletting,
encumbrance, license or concession agreement, change of ownership or
hypothecation shall not be unreasonably withheld, conditioned or delayed;
provided, however, if Landlord fails to respond to any request by Tenant for
Landlord's consent or approval within thirty (30) days of such request, the
consent or approval of Landlord shall be deemed given.
C. Landlord shall have the right to transfer, assign and convey, in whole
or in part, any or all of the right, title and interest to the Demised Premises,
provided such transferee or assignee shall be bound by the terms, covenants and
agreements herein contained, and shall expressly assume and agree to perform the
covenants and agreements of Landlord herein contained.
16. NON-DISTURBANCE AND ATTORNMENT.
A. Upon written request of Landlord, or any mortgagee or beneficiary of
Landlord, Tenant will, in writing, subordinate its right hereunder to the
interest of any ground lessor of the land upon which the Demised Premises is
situated and to the lien of any mortgage or deed of trust now or hereafter in
force against the land and building of which the Demised Premises is a part, and
upon any building hereafter placed upon the land of which the Demised Premises
is a part and to all advances made or hereafter to be made upon the security
thereof, provided, however, that the ground lessor, or the mortgagee or trustee
named in said mortgage or deed of trust shall agree that Tenant's peaceable
possession of the Demised Premises or its rights under this Lease will not be
disturbed on account thereof.
B. In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deeds of trust,
upon any such foreclosure or sale Tenant agrees to recognize such beneficiary or
purchaser as the Landlord under this Lease, provided Tenant's rights under this
Lease continue unabated and its tenancy shall not be disturbed.
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<PAGE> 7
17. DEFAULTS BY TENANT.
A. The occurrence of any of the following shall constitute a material
default and breach of this Lease by Tenant:
(i) Any failure by Tenant to pay Base Rent or make any other payment
required to be made by Tenant hereunder within ten (10) days after receipt
of written notice from the Landlord; and
(ii) A failure by Tenant to observe and perform any other material
provision of this Lease to be observed or performed by the Tenant, where
such failure continues for thirty (30) days after written notice thereof by
Landlord to Tenant, except that this thirty (30) day period shall be
extended for a reasonable period of time if the alleged default is not
reasonably capable of cure within said thirty (30) day period and Tenant
proceeds to diligently cure the default.
B. In the event of any breach of this Lease by Tenant, the Landlord,
besides other rights or remedies Landlord may have, shall have the immediate
right of re-entry and may remove all persons and property from the Premises;
such property may be removed and stored in a public warehouse or elsewhere at
the cost of, and for the account of Tenant. Should Landlord elect to re-enter,
as herein provided, or should he take possession pursuant to legal proceedings,
or pursuant to any notice provided for by law, Landlord may either terminate
this Lease or Landlord may from time to time, without terminating this Lease,
re-let said Premises, or any part thereof, for such term or terms (which may be
for a term extending beyond the term of this Lease) and at such rental or
rentals and upon such other fair market terms and conditions as Landlord in his
sole reasonable discretion may deem advisable. Upon each such re-letting (a)
Tenant shall be immediately liable to pay to Landlord, in addition to any
indebtedness other than rent due hereunder, the reasonable cost and expenses of
such re-letting, and the present value (using an 8.5% discount rate) of the
amount, if any, by which the rent reserved in this Lease for the period of such
reletting (up to but not beyond the term of this Lease) exceed the amount agreed
to be paid as rent for the demised Premises for such period on such re-letting;
or (b) at the option of Landlord rents received by such Landlord from such
re-letting shall be applied; first, to the payment of any indebtedness, other
than rent due hereunder from Tenant to Landlord; second, to the payment of any
reasonable costs and expenses of such re-letting; third, to the payment of rent
due and unpaid hereunder and the residue, if any, shall be held by the Landlord
and applied in payment of future rent as the same may become due and payable
hereunder. If Tenant has been credited any amount of the rent to be received by
such re-letting under option (a), and such rent shall not be promptly paid to
Landlord by the new Tenant, or, if such rentals received from such re-letting
under option (b) during any month be less than that to be paid during that month
by Tenant hereunder, Tenant shall pay any such deficiency to Landlord. Such
deficiency shall be calculated and paid monthly. No such re-entry or taking
possession of said Premises by Landlord shall be construed as an election on his
part to terminate this Lease unless a written notice of such intention be given
to Tenant or unless the termination thereof be decreed by a Court of competent
jurisdiction. Notwithstanding any such re-letting without termination, Landlord
may at
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<PAGE> 8
any time thereafter elect to terminate this Lease for such previous breach.
Should Landlord at any time terminate this Lease for any breach, in addition to
any other remedy he may have, he may recover from Tenant all damages he may
incur by reason of such breach, including the cost of recovering the Premises,
and including the present value (using an 8.5% discount rate) of the worth at
the time of such termination of the excess, if any, of the amount of rent and
charges equivalent to rent reserved in this Lease for the remainder of the
stated term over the then reasonable rental value of the Premises for the
remainder of the stated term, all of which amounts shall immediately be due and
payable from Tenant to Landlord.
18. DEFAULT BY LANDLORD. If Landlord should be in default in the performance of
any of its obligations under this Lease, which default continues for a period of
more than thirty (30) days after receipt of written notice from Tenant
specifying such default, or if such default is of a nature to require more than
thirty (30) days for remedy and continues beyond the time reasonably necessary
to cure (and Landlord has not undertaken procedures to cure the default within
such thirty (30) day period and diligently pursued such efforts to complete such
cure), Tenant may, in addition to any other remedy available at law or in
equity, at its option, upon written notice, terminate this Lease, or may incur
any expense necessary to perform the obligation of Landlord specified in such
notice and deduct such expense from the Base Rent or other charges and payments
due under the Lease.
19. SURRENDER OF PREMISES. Tenant shall, upon the expiration of the Term
granted herein, or any earlier termination of this Lease for any cause,
surrender to Landlord the Demised Premises, and all alterations, improvements
and other additions which may be made or installed by either party to, in, upon
or about the Demised Premises, other than Tenant's Property which shall remain
the property of Tenant as provided in Article 8 hereof.
20. EMINENT DOMAIN.
A. In the event that any material portion of the Demised Premises shall be
appropriated or taken under the power of eminent domain by any public or quasi
public authority, then at the election of Tenant, this Lease shall terminate and
expire as of the date of such taking, and both Landlord and Tenant shall
thereupon be released from any liability thereafter accruing under the Lease.
Notice of any termination relating to such eminent domain proceeding must be
made by Tenant to Landlord within sixty (60) days after receipt of written
notice of such taking.
B. If Tenant elects not to so terminate this Lease, Landlord shall promptly
repair and restore the Demised Premises to the condition that existed, as near
as possible, prior to such appropriation or taking, and Tenant may remain in
that portion of the Demised Premises which shall not have been appropriated or
taken, and thereafter all Base Rent and a other payments and charges under this
Lease of Tenant shall be adjusted on an equitable basis, taking into account the
relative value of the portion taken as compared to the portion remaining.
C. Tenant shall have the right to pursue a claim for damages with the
public or quasi public authority in connection with any eminent domain
proceeding.
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<PAGE> 9
21. ATTORNEYS' FEES. In the event that at any time during the Term of this
Lease either Landlord or Tenant shall institute any action or proceeding against
the other relating to the provisions of this Lease, or any default hereunder,
the unsuccessful party in such action or proceeding agrees to reimburse the
successful party for the reasonable expenses of attorneys' fees and paralegal
fees and disbursements incurred therein by the successful party. Such
reimbursement shall include all legal expenses incurred prior to trial, at trial
and at all levels of appeal and postjudgment proceedings.
22. NOTICES. Notices and demands required, or permitted, to be sent to those
listed hereunder shall be sent by certified mail, return receipt requested,
postage prepaid, or by Federal Express or other reputable overnight courier
service and shall be deemed to have been given upon the date the same is
postmarked if sent by certified mail or the day deposited with Federal Express
or such other reputable overnight courier service, but shall not be deemed
received until one (1) business day following deposit with Federal Express or
other reputable overnight courier service or three (3) days following deposit in
the United States Mail if sent by certified mail to address shown below, and
addressed to:
<TABLE>
<S> <C>
LANDLORD: TENANT:
BAT Rentals, Inc. BAT Acquisition Corp.
c/o Paul Bronken c/o National Equipment Services, Inc.
1066 Vegas Valley Drive 6100 Sears Tower
Las Vegas, Nevada 89109 Chicago, Illinois 60606
Attn: Kevin P. Rodgers
</TABLE>
or at such other address requested in writing by either party upon thirty (30)
days' notice to the other party.
23. REMEDIES. All rights and remedies of Landlord and Tenant herein created or
otherwise extending at law are cumulative, and the exercise of one or more
rights or remedies may be exercised and enforced concurrently or consecutively
and whenever and as often as deemed desirable.
24. SUCCESSORS AND ASSIGNS. All covenants, promises, conditions,
representations and agreements herein contained shall be binding upon, apply and
inure to the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
25. WAIVER. The failure of either Landlord or Tenant to insist upon strict
performance by the other of any of the covenants, conditions, and agreements of
this Lease shall not be deemed a waiver of any subsequent breach or default in
any of the covenants, conditions and agreements of this Lease.
26. HOLDING OVER. If Tenant or any party claiming under Tenant remains in
possession of the Demised Premises or any part thereof after any termination or
expiration of this Lease, Landlord,
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<PAGE> 10
in Landlord's sole discretion, may treat such holdover as an automatic renewal
of this Lease for a month-to-month tenancy subject to all the terms and
conditions provided herein.
27. INTERPRETATION. The parties hereto agree that it is their intention hereby
to create only the relationship of Landlord and Tenant, and no provision hereof,
or act of either party hereunder, shall ever be construed as creating the
relationship of principal and agent, or a partnership, or a joint venture or
enterprise between the parties hereto.
28. COVENANT OF TITLE AND QUIET ENJOYMENT. Landlord covenants that it has full
right, power and authority to make this Lease, and that Tenant or any permitted
assignee or sublessee of Tenant, upon the payment of the Base Rent and
performance of the covenants hereunder, shall and may peaceably and quietly
have, hold and enjoy the Demised Premises and improvements thereon during the
Term or any renewal or extension thereof.
29. ESTOPPEL. At any time and from time to time either party, upon request of
the other party, will execute, acknowledge and deliver an instrument, stating,
if the same be true, that the Lease identified in said instrument is a true and
exact copy of this Lease between the parties hereto, that there are no
amendments hereof (or stating what amendments there may be), that the Lease is
then in full force and effect and that, to the best of its knowledge, there are
no offsets, defenses or counterclaims with respect to the payment of Base Rent
reserved under the Lease or in the performance of the other terms, covenants and
conditions under the Lease on the part of Tenant or Landlord, as the case may
be, to be performed, and that as of such date no default has been declared under
the Lease by either party or if not specifying the same. Such instrument will
be executed by the other party and delivered to the requesting party within
fifteen (15) days of receipt, or else the statements made in the proposed
estoppel request shall be deemed to be correct.
30. CONSENT. Wherever in this Lease Landlord or Tenant is required to give its
consent or approval, such consent or approval shall not be unreasonably
withheld, conditioned or delayed. Except as otherwise provided in this Lease,
if no written response to a consent or request for approval is provided within
thirty (30) days from the receipt of the request, then the consent shall be
presumed to have been given.
31. WAIVER OF LANDLORD'S LIEN. Landlord hereby waives any contractual,
statutory or other Landlord's lien on Tenant's furniture, fixtures, supplies,
equipment, inventory and Tenant's Property.
32. SEVERABILITY. Any provision of this Lease which shall prove to be invalid,
void or illegal shall in no way affect, impair or invalidate any other
provisions hereof and such other provisions shall remain in full force and
effect.
33. GOVERNING LAW AND VENUE. This Lease shall be governed by the laws of the
state in which the Demised Premises is located.
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<PAGE> 11
34. BROKERS. Landlord and Tenant represent and warrant one to the other that
they have not had any dealing with any real estate brokers or agents in
connection with the negotiation of this Lease. Landlord and Tenant indemnify
and hold each other harmless from and against any and all liability and cost
which Landlord or Tenant may suffer in connection with real estate brokers
claiming by, through or under either party seeking any commission, fee or
payment in connection with this Lease.
35. TENANT'S CONDUCT OF BUSINESS. Notwithstanding anything herein to the
contrary, nothing herein shall be construed as an obligation for Tenant to open
or operate its business in the Demised Premises. Tenant shall have the right to
remove Tenant's Property and cease operations in the Demised Premises at any
time and at Tenant's sole discretion.
36. TIME OF THE ESSENCE. Time shall be of the essence in interpreting the
provisions of this Lease.
37. ENTIRE AGREEMENT. This Lease contains all of the agreements of the parties
hereto with respect to matters covered or mentioned in this Lease and no prior
agreement, letters, representations, warranties, promises or understandings
pertaining to any such matters shall be effective for any such purpose. This
Lease may be amended or added to only by an agreement in writing signed by the
parties hereto or their respective successors in interest.
38. AUTHORIZATION. Landlord and Tenant each represent and warrant to the other,
that it has full power and authority to enter into this Lease and to perform all
of its obligations hereunder and that the execution and delivery of this Lease
does not and will not violate or conflict with any provision of any law,
contract, mortgage, lien, lease, instrument, agreement or judgment to which it
is a party or which is binding on such party. If Landlord or Tenant is a
corporation, limited liability company or partnership or other organization, the
person executing this Lease on behalf of such organization represents and
warrants that they have been duly authorized to execute this Lease on behalf of
such organization.
39. RIGHT OF FIRST REFUSAL. Throughout the term of this Lease, in the event
Landlord shall receive a bona fide offer for the purchase of all or any part of
the Demised Premises, and which offer Landlord desires to accept, Landlord shall
send notice thereof to Tenant as herein provided, setting forth the name and
address of the offeror and the terms of the offer. Tenant shall have fourteen
(14) days after receipt of such notice in which to elect to purchase the Demised
Premises, or the part thereof subject to the offer, as the case may be, on the
same terms and conditions as contained in the offer, such election to be
exercised by notice in writing to Landlord as hereinafter provided, sent within
such fourteen-day period. In the event Tenant shall elect to purchase such
property, such notice of election to purchase shall designate a date for the
closing of the transaction not less than thirty (30) days nor more than ninety
(90) days after the exercise of such option, and the closing shall be held on
the closing date so designated. In the event Tenant shall not elect to purchase
such property, then Landlord shall be permitted to consummate the sale thereof
to the offeror on the terms and conditions set forth in the notice of such offer
to Tenant. In the event,
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<PAGE> 12
however, that Landlord shall not consummate such sale to the offeror on such
terms and conditions within ninety (90) days from the date of the sending of
notice of such offer to Tenant, then the provisions hereof shall be fully
reinstated and the rights of Tenant hereunder shall be restored with respect to
any subsequent sale of the Demised Premises, or any portion thereof. In any
event, this right of first refusal shall remain in full force and effect during
the Term of this Lease as to any part of the Demised Premises not subject to
such offer. Tenant's right of first refusal shall be applicable throughout the
entire term of the Lease, notwithstanding any transfers or sale of the Demised
Premises or portion thereof.
40. MEMORANDUM OF LEASE. The Parties hereto agree to enter into a Memorandum of
Lease in the form attached hereto and agree that such Memorandum of Lease shall
be recorded in the public records of the jurisdiction in which the Demised
Premises is located.
* * * * *
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<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the day
and year first mentioned.
TENANT:
BAT ACQUISITION CORP.,
a Delaware corporation
By: /s/ Kevin Rodgers
----------------------------
Name: Kevin Rodgers
Title: CEO
LANDLORD:
BAT Rentals, Inc.,
a Nevada corporation
By: /s/ Paul B. Bronken
----------------------------
Name: Paul B. Bronken
Title: President
<PAGE> 1
Exhibit 10.36
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered into as of July 1,
1997, by and between Joseph B. Swinbank ("Consultant") and NES Acquisition
Corp., a Delaware corporation (the "Company"). The Company and Consultant are
sometimes collectively referred to herein as the "Parties" and individually as a
"Party."
WHEREAS, Consultant has been an employee, officer, director and stockholder
of Sprint Industrial Services, Inc., a Texas corporation ("Sprint"), and as
such, possesses special knowledge, abilities and experience regarding the
business of Sprint. The Company, Sprint and the stockholders of Sprint are
parties to an Asset Purchase Agreement, dated as of July 1, 1997 (the "Purchase
Agreement"), whereby the Company shall purchase substantially all of the assets
of the Sprintank division of Sprint ("Sprintank"). The Company desires to
obtain the services of Consultant to consult with and perform services as an
independent contractor for the Company with respect to its businesses, and
Consultant desires to provide services to the Company upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:
1. Consulting Services. The Company hereby engages Consultant as an
independent contractor, and not as an employee, to render consulting services to
the Company as hereinafter provided, and Consultant hereby accepts such
engagement, for a period commencing on the date hereof and terminating on the
second anniversary of the date hereof (the "Consulting Period"). Consultant
shall not have any authority to bind or act on behalf of the Company. During
the Consulting Period, Consultant shall render such consulting services to the
Company in connection with the Company's business as the Company from time to
time reasonably requests and which shall be consistent with Consultant's past
services for Sprintank; provided that during the Consulting Period, Consultant
shall not be required to perform such services for more than ten working days
out of every month.
2. Compensation; Reimbursement. As long as Consultant does not materially
breach the provisions of this Agreement or the Noncompetition Agreement, dated
as of the date hereof, between the Company and Consultant, in consideration of
Consultant's consulting services set forth in paragraph 1 above, during the
Consulting Period the Company shall pay to Consultant $10,000 on the first day
of each month. Consultant shall not be entitled to any fringe benefits or
perquisites from the Company. However, the Company shall reimburse Consultant
for reasonable expenses incurred by Consultant in the course of performing the
duties specified in this Agreement, subject to the Company's policies with
respect to reporting and documentation of such expenses.
<PAGE> 2
3. Confidential Information. Consultant acknowledges that all information
concerning the business and affairs of Sprintank and/or the Company or any of
its affiliates which (i) is confidential and proprietary to Sprintank and/or the
Company or any of its affiliates, (ii) confers a competitive advantage on
Sprintank and/or the Company or any of its affiliates, or (iii) would be
detrimental or embarrassing to Sprintank and/or the Company or any of its
affiliates if disclosed (collectively, "Confidential Information") is the
property of the Company or such affiliate. Therefore, Consultant agrees that
Consultant shall not disclose to any unauthorized person or use for Consultant's
own purposes any Confidential Information without the prior written consent of
the Chief Executive Officer of the Company (the "CEO"), unless and to the extent
that the aforementioned matters (i) become generally known to and available for
use by the public (other than by reason of any disclosure by Consultant), (ii)
are independently developed by a person or entity that is not a party to this
Agreement (other than as a result of any disclosure by Consultant), or (iii) are
required by law or by the order of any court of competent jurisdiction or
government agency to be disclosed, in which case, (A) Consultant will use
reasonable best efforts to notify the Company promptly of such request or
requirement so that the Company may seek an appropriate protective order or
waive compliance with the provisions of this Section 1, and (B) if, in the
absence of such a protective order or waiver, Consultant is compelled to
disclose any Confidential Information, Consultant will use reasonable best
efforts to limit such disclosure to Confidential Information which is so
required to be disclosed and to obtain an order or other assurance that
confidential treatment will be accorded to any Confidential Information
disclosed. Consultant shall deliver to the Company at the end of the Consulting
Period, or at any other time the Company may request, all memoranda, notes,
plans, records, reports, computer tapes, printouts and software and other
documentation (and copies thereof) relating to the business of Sprintank or the
Company and its affiliates which Consultant may then possess or have under
Consultant's control.
4. Inventions and Patents. Consultant acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether patentable or not) which
primarily relate to the actual or anticipated business, research and development
or existing or future products or services of the Company and its subsidiaries
and which are conceived, developed or made by Consultant during the Consulting
Period ("Work Product") belong to the Company. Consultant shall promptly
disclose such Work Product to the CEO and perform all actions reasonably
requested by the CEO (whether during or after the Consulting Period) to
establish and confirm such ownership (including, without limitation,
assignments, powers of attorney and other instruments).
5. Tax Returns. Consultant shall file all tax returns and reports required
to be filed by him on the basis that Consultant is an independent contractor,
rather than an employee, as defined in Treasury Regulation Section
31.3121(d)-1(c)(2).
6. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company and its affiliates, successors and assigns and
shall be binding upon and inure to the benefit of Consultant and Consultant's
legal representatives and assigns; provided that in no event shall Consultant's
obligations to perform future services for the Company be delegated
- 2 -
<PAGE> 3
or transferred by Consultant without the prior written consent of the Company
(which consent may be withheld in the Company's sole discretion). The Company
may assign or transfer its rights hereunder to any of its affiliates or to a
successor entity in the event of merger, consolidation or transfer or sale of
all or substantially all of the assets of Sprintank or the Company.
7. Modification or Waiver. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the Party against which enforcement of such amendment,
modification or waiver is sought. No course of dealing between the Parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of the Company or
Consultant in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by the Company or
Consultant of any such right or remedy shall preclude other or further exercises
thereof. A waiver of right or remedy on any one occasion shall not be construed
as a bar to or waiver of any such right or remedy on any other occasion.
8. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Texas, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Texas or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Texas.
9. Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or term of this Agreement shall be held to
be prohibited by or invalid under such applicable law, then such provision or
term shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement.
10. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
11. Consultant's Representations. Consultant represents and warrants to
the Company that (i) Consultant's execution, delivery and performance of this
Agreement does not and shall not conflict with, or result in the breach of or
violation of, any other agreement, instrument, order, judgment or decree to
which Consultant is a party or by which Consultant is bound, (ii) Consultant is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any person or entity (other than the Company) and
(iii) upon the execution and delivery of this Agreement, this Agreement shall be
the valid and binding obligation of Consultant, enforceable in accordance with
its terms.
12. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or one day
after being sent by Federal
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<PAGE> 4
Express or other reputable overnight carrier or five days after being sent by
certified or registered mail addressed to the other Party hereto at such Party's
address shown below:
If to the Company:
NES Acquisition Corp.
c/o National Equipment Services
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
If to Consultant:
Joseph B. Swinbank
1041 Conrad Sauer
Houston, TX 77043
or at such other address as such Party may designate by written notice to the
other Party.
13. Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, any one
of which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same instrument.
* * * *
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the undersigned have executed this Consulting Agreement
as of the date first above written.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
------------------------------
Its: CEO
/s/ Joseph B. Swinbank
-----------------------------------
JOSEPH B. SWINBANK
<PAGE> 1
Exhibit 10.37
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
July 1, 1997, between NES Acquisition Corp., a Delaware corporation (the
"Company"), and James O'Neil ("Executive").
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive hereby
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in paragraph 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the Executive
Vice President of the Sprintank Division of the Company and shall have the
normal duties, responsibilities and authority of an Executive Vice President,
subject to the overall direction and authority of the Company's Chief Executive
Officer and the Company's board of directors (the "Board").
(b) Executive shall report to the Company's Chief Executive Officer (or to
such other person as the Company's Chief Executive Officer may reasonably
designate), and Executive shall devote his best efforts and his full business
time and attention to the business and affairs of the Company and its
Subsidiaries. For purposes of this Agreement, "Subsidiaries" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one or more Subsidiaries.
3. Base Salary and Benefits.
(a) During the Employment Period, Executive's base salary shall be at least
$100,000 per annum and shall be subject to review by the Board on an annual
basis commencing January 1, 1998 (the "Base Salary"), which salary shall be
payable in regular installments in accordance with the Company's general payroll
practices and shall be subject to customary withholding. In addition, during
the Employment Period, Executive shall be entitled to participate in all of the
Company's employee benefit programs for which senior executive employees of the
Company and its Subsidiaries are generally eligible.
(b) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other
<PAGE> 2
business expenses, subject to the Company's requirements with respect to
reporting and documentation of such expenses.
(c) In addition to the Base Salary, Executive will be eligible to earn a
bonus for the 12-month period ending June 30, 1998 as described on Schedule I
attached hereto.
4. Term.
(a) The Employment Period shall terminate upon the fourth anniversary of
the date hereof, unless earlier terminated (i) by Executive's resignation or
death, (ii) by Executive's disability, (iii) by the Company for Cause or (iv) by
the Company other than for Cause.
(b) If the Employment Period is terminated pursuant to clause (a)(i) or
clause (a)(ii) above, Executive shall be entitled to receive his Base Salary
through the date of termination. If the Employment Period is terminated
pursuant to clause (a)(iii) above, Executive shall be entitled to receive his
Base Salary through the date which is six months after the date of termination;
provided that such Base Salary shall be reduced dollar for dollar by the amount
of any other payment received by Executive with respect to his disability. If
the Employment Period is terminated pursuant to clause (a)(iv) above, Executive
shall be entitled to receive his Base Salary through the date which is six
months after the date of termination.
(c) Notwithstanding anything in this Agreement to the contrary, the Company
shall have no obligation to pay any amounts payable under this Agreement from
and after any such time as Executive is in breach of the Noncompetition
Agreement, dated as of the date hereof, by and between Executive and the
Company.
(d) All of Executive's rights to fringe benefits and bonuses hereunder (if
any) which accrue or become payable after the termination of the Employment
Period shall cease upon such termination.
(e) For purposes of this Agreement, "Cause" shall mean (i) the commission
of a felony or any other act or omission involving dishonesty, disloyalty or
fraud with respect to the Company or any of its Subsidiaries or any of their
customers or suppliers, (ii) conduct that brings the Company or any of its
Subsidiaries into substantial public disgrace or disrepute, (iii) substantial
failure to perform duties as reasonably directed by the Board (provided that the
Company has given Executive prior written notice of such failure to perform
duties and Executive fails to cure such failure to perform duties within ten
(10) days of such notice), (iv) gross negligence or willful misconduct with
respect to the Company or any of its Subsidiaries or (v) any other material
breach of this Agreement.
5. Other Businesses. As long as Executive is employed by the Company or
any of its Subsidiaries, Executive agrees that he will not, except with the
express written consent of the Board, become engaged in, or render services for,
any business other than the business of the Company, any of its Subsidiaries or
any entity in which the Company or any of its Subsidiaries have an equity
interest.
- 2 -
<PAGE> 3
6. Executive's Representations. Executive hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms. Executive hereby acknowledges and represents that he has consulted
with independent legal counsel regarding his rights and obligations under this
Agreement and that he fully understands the terms and conditions contained
herein.
7. Indemnification. The Company shall indemnify and hold harmless
Executive from and against any and all liabilities and obligations related to,
resulting from or attributable to the acts or omissions of the Company (other
than liabilities or obligations related to, resulting from or attributable to
Executive's gross negligence or willful misconduct) during the term of this
Agreement.
8. Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
Notices to Executive:
James O'Neil
28 Champions Bend Cir.
Houston, TX 77069
Notices to the Company:
NES Acquisition Corp.
c/o National Equipment Services
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be
- 3 -
<PAGE> 4
deemed to have been given when so delivered or sent or, if mailed, five days
after deposit in the U.S. mail.
9. Severability. 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 is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
10. Complete Agreement. This Agreement, those documents expressly referred
to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
11. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
12. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
13. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
his rights or delegate his obligations hereunder without the prior written
consent of the Company.
14. Choice of Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Texas, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
15. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
* * * * *
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
--------------------------------
Its: CEO
/s/ James O'Neil
-------------------------------------
JAMES O'NEIL
<PAGE> 1
Exhibit 10.38
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
July 1, 1997, between NES Acquisition Corp., a Delaware corporation (the
"Company"), and Sammy Sorsby ("Executive").
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive hereby
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in paragraph 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the Vice
President, Operations of the Sprintank Division of the Company and shall have
the normal duties, responsibilities and authority of a Vice President, subject
to the overall direction and authority of the Company's Chief Executive Officer
and the Company's board of directors (the "Board").
(b) Executive shall report to the Company's Chief Executive Officer (or to
such other person as the Company's Chief Executive Officer may reasonably
designate), and Executive shall devote his best efforts and his full business
time and attention to the business and affairs of the Company and its
Subsidiaries. For purposes of this Agreement, "Subsidiaries" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one or more Subsidiaries.
3. Base Salary and Benefits.
(a) During the Employment Period, Executive's base salary shall be at least
$82,000 per annum and shall be subject to review by the Board on an annual basis
commencing January 1, 1998 (the "Base Salary"), which salary shall be payable in
regular installments in accordance with the Company's general payroll practices
and shall be subject to customary withholding. In addition, during the
Employment Period, Executive shall be entitled to participate in all of the
Company's employee benefit programs for which senior executive employees of the
Company and its Subsidiaries are generally eligible.
(b) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other
<PAGE> 2
business expenses, subject to the Company's requirements with respect to
reporting and documentation of such expenses.
(c) In addition to the Base Salary, for the year ending December 31, 1997
Executive will receive a bonus pursuant to the bonus plan established for
Executive by Sprint Industrial Services, Inc., and for the year ending December
31, 1998 Executive will be eligible to receive a bonus pursuant to a new bonus
plan to be established by the Board.
4. Term.
(a) The Employment Period shall terminate upon the third anniversary of the
date hereof, unless earlier terminated (i) by Executive's resignation, death or
disability, (ii) by the Company for Cause or (iii) by the Company other than for
Cause.
(b) If the Employment Period is terminated pursuant to clause (a)(i) or
clause (a)(ii) above, Executive shall be entitled to receive his Base Salary
through the date of termination. If the Employment Period is terminated
pursuant to clause (a)(iii) above, Executive shall be entitled to receive his
Base Salary through the earlier of (i) the date which is six months after the
date of termination or (ii) the third anniversary of the date hereof.
(c) Notwithstanding anything in this Agreement to the contrary, the Company
shall have no obligation to pay any amounts payable under this Agreement from
and after any such time as Executive is in breach of the Noncompetition
Agreement, dated as of the date hereof, by and between Executive and the
Company.
(d) All of Executive's rights to fringe benefits and bonuses hereunder (if
any) which accrue or become payable after the termination of the Employment
Period shall cease upon such termination.
(e) For purposes of this Agreement, "Cause" shall mean (i) the commission
of a felony or any other act or omission involving dishonesty, disloyalty or
fraud with respect to the Company or any of its Subsidiaries or any of their
customers or suppliers, (ii) conduct that brings the Company or any of its
Subsidiaries into substantial public disgrace or disrepute, (iii) substantial
failure to perform duties as reasonably directed by the Board (provided that the
Company has given Executive prior written notice of such failure to perform
duties and Executive fails to cure such failure to perform duties within ten
(10) days of such notice), (iv) gross negligence or willful misconduct with
respect to the Company or any of its Subsidiaries or (v) any other material
breach of this Agreement.
5. Other Businesses. As long as Executive is employed by the Company or
any of its Subsidiaries, Executive agrees that he will not, except with the
express written consent of the Board, become engaged in, or render services for,
any business other than the business of the Company, any of its Subsidiaries or
any entity in which the Company or any of its Subsidiaries have an equity
interest.
- 2 -
<PAGE> 3
6. Executive's Representations. Executive hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms. Executive hereby acknowledges and represents that he has
consulted with independent legal counsel regarding his rights and obligations
under this Agreement and that he fully understands the terms and conditions
contained herein.
7. Indemnification. The Company shall indemnify and hold harmless
Executive from and against any and all liabilities and obligations related to,
resulting from or attributable to the acts or omissions of the Company (other
than liabilities or obligations related to, resulting from or attributable to
Executive's gross negligence or willful misconduct) during the term of this
Agreement.
8. Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
Notices to Executive:
Sammy Sorsby
22118 #1 Tomball Cemetary Rd.
Tomball, TX 77375
Notices to the Company:
NES Acquisition Corp.
c/o National Equipment Services
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be
- 3 -
<PAGE> 4
deemed to have been given when so delivered or sent or, if mailed, five days
after deposit in the U.S. mail.
9. Severability. 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 is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
10. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way.
11. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
12. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
13. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
his rights or delegate his obligations hereunder without the prior written
consent of the Company.
14. Choice of Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Texas, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
15. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
* * * * *
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
------------------
Its: CEO
/s/ Sammy Sorsby
---------------------
SAMMY SORSBY
<PAGE> 1
Exhibit 10.39
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of July 1, 1997, between NES Acquisition Corp., a Delaware corporation (the
"Company"), and J. D. Cox ("Executive").
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ Executive, and Executive hereby
accepts employment with the Company, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in paragraph 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the Vice
President, Sales of the Sprintank Division of the Company and shall have the
normal duties, responsibilities and authority of a Vice President, subject to
the overall direction and authority of the Company's Chief Executive Officer
and the Company's board of directors (the "Board").
(b) Executive shall report to the Company's Chief Executive Officer (or to
such other person as the Company's Chief Executive Officer may reasonably
designate), and Executive shall devote his best efforts and his full business
time and attention to the business and affairs of the Company and its
Subsidiaries. For purposes of this Agreement, "Subsidiaries" shall mean any
corporation of which the securities having a majority of the voting power in
electing directors are, at the time of determination, owned by the Company,
directly or through one or more Subsidiaries.
3. Base Salary and Benefits.
(a) During the Employment Period, Executive's base salary shall be at
least $82,000 per annum and shall be subject to review by the Board on an
annual basis commencing January 1, 1998 (the "Base Salary"), which salary shall
be payable in regular installments in accordance with the Company's general
payroll practices and shall be subject to customary withholding. In addition,
during the Employment Period, Executive shall be entitled to participate in all
of the Company's employee benefit programs for which senior executive employees
of the Company and its Subsidiaries are generally eligible.
(b) The Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other
<PAGE> 2
business expenses, subject to the Company's requirements with respect to
reporting and documentation of such expenses.
(c) In addition to the Base Salary, for the year ending December 31, 1997
Executive will receive a bonus pursuant to the bonus plan established for
Executive by Sprint Industrial Services, Inc., and for the year ending December
31, 1998 Executive will be eligible to receive a bonus pursuant to a new bonus
plan to be established by the Board.
4. Term.
(a) The Employment Period shall terminate upon the third anniversary of
the date hereof, unless earlier terminated (i) by Executive's resignation,
death or disability, (ii) by the Company for Cause or (iii) by the Company
other than for Cause.
(b) If the Employment Period is terminated pursuant to clause (a)(i) or
clause (a)(ii) above, Executive shall be entitled to receive his Base Salary
through the date of termination. If the Employment Period is terminated
pursuant to clause (a)(iii) above, Executive shall be entitled to receive his
Base Salary through the earlier of (i) the date which is six months after the
date of termination or (ii) the third anniversary of the date hereof.
(c) Notwithstanding anything in this Agreement to the contrary, the
Company shall have no obligation to pay any amounts payable under this
Agreement from and after any such time as Executive is in breach of the
Noncompetition Agreement, dated as of the date hereof, by and between Executive
and the Company.
(d) All of Executive's rights to fringe benefits and bonuses hereunder (if
any) which accrue or become payable after the termination of the Employment
Period shall cease upon such termination.
(e) For purposes of this Agreement, "Cause" shall mean (i) the commission
of a felony or any other act or omission involving dishonesty, disloyalty or
fraud with respect to the Company or any of its Subsidiaries or any of their
customers or suppliers, (ii) conduct that brings the Company or any of its
Subsidiaries into substantial public disgrace or disrepute, (iii) substantial
failure to perform duties as reasonably directed by the Board (provided that
the Company has given Executive prior written notice of such failure to perform
duties and Executive fails to cure such failure to perform duties within ten
(10) days of such notice), (iv) gross negligence or willful misconduct with
respect to the Company or any of its Subsidiaries or (v) any other material
breach of this Agreement.
5. Other Businesses. As long as Executive is employed by the Company or
any of its Subsidiaries, Executive agrees that he will not, except with the
express written consent of the Board, become engaged in, or render services
for, any business other than the business of the Company, any of its
Subsidiaries or any entity in which the Company or any of its Subsidiaries have
an equity interest.
- 2 -
<PAGE> 3
6. Executive's Representations. Executive hereby represents and warrants
to the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms. Executive hereby acknowledges and represents that he has
consulted with independent legal counsel regarding his rights and obligations
under this Agreement and that he fully understands the terms and conditions
contained herein.
7. Indemnification. The Company shall indemnify and hold harmless
Executive from and against any and all liabilities and obligations related to,
resulting from or attributable to the acts or omissions of the Company (other
than liabilities or obligations related to, resulting from or attributable to
Executive's gross negligence or willful misconduct) during the term of this
Agreement.
8. Notices. Any notice provided for in this Agreement must be in writing
and must be either personally delivered, mailed by first class mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated:
Notices to Executive:
J. D. Cox
4403 Windsail Court
Missouri City, TX 77459
Notices to the Company:
NES Acquisition Corp.
c/o National Equipment Services
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be
- 3 -
<PAGE> 4
deemed to have been given when so delivered or sent or, if mailed, five days
after deposit in the U.S. mail.
9. Severability. 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 is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
10. Complete Agreement. This Agreement, those documents expressly
referred to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof
in any way.
11. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
12. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
13. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
his rights or delegate his obligations hereunder without the prior written
consent of the Company.
14. Choice of Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Texas, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Texas or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Texas.
15. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall affect the validity, binding effect or enforceability of this
Agreement.
* * * * *
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
-----------------
Its: CEO
/s/ J.D. Cox
-----------------
J. D. COX
<PAGE> 1
Exhibit 10.40
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
July 1, 1997, by and between J. D. Cox ("Executive") and NES Acquisition Corp.,
a Delaware corporation (the "Company"). The Company and Executive are
sometimes collectively referred to herein as the "Parties" and individually as
a "Party."
Executive has been an employee, officer, director and/or stockholder of
Sprint Industrial Services, Inc., a Texas corporation ("Sprint"), and as such,
possesses special knowledge, abilities and experience regarding the business of
Sprint. The Company, Sprint and the stockholders of Sprint are parties to an
Asset Purchase Agreement, dated as of July 1, 1997 (the "Purchase Agreement"),
whereby the Company shall purchase substantially all of the assets of the
Sprintank division of Sprint ("Sprintank"). As a condition to the consummation
of the transactions contemplated by the Purchase Agreement, the Company desires
to obtain, and, subject to the terms and conditions hereof, Executive agrees to
provide certain representations, warranties and covenants as more fully set
forth below.
In consideration of the mutual covenants and agreements set forth herein,
the Parties agree as follows:
1. Confidential Information. Executive acknowledges that all information
concerning the business and affairs of Sprintank and/or the Company or any of
its affiliates which (i) is confidential and proprietary to Sprintank and/or
the Company or any of its affiliates, (ii) confers a competitive advantage on
Sprintank and/or the Company or any of its affiliates, or (iii) would be
detrimental or embarrassing to Sprintank and/or the Company or any of its
affiliates if disclosed (collectively, "Confidential Information") is the
property of the Company or such affiliate. Therefore, Executive agrees that
Executive shall not disclose to any unauthorized person or use for Executive's
own purposes any Confidential Information without the prior written consent of
the Chief Executive Officer of the Company (the "CEO"), unless and to the
extent that the aforementioned matters (i) become generally known to and
available for use by the public (other than by reason of any disclosure by
Executive), (ii) are independently developed by a person or entity that is not
a party to this Agreement (other than as a result of any disclosure by
Executive), or (iii) are required by law or by the order of any court of
competent jurisdiction or government agency to be disclosed, in which case, (A)
Executive will use reasonable best efforts to notify the Company promptly of
such request or requirement so that the Company may seek an appropriate
protective order or waive compliance with the provisions of this Section 1, and
(B) if, in the absence of such a protective order or waiver, Executive is
compelled to disclose any Confidential Information, Executive will use
reasonable best efforts to limit such disclosure to Confidential Information
which is so required to be disclosed and to obtain an order or other assurance
that confidential treatment will be accorded to any Confidential Information
disclosed. Executive shall deliver to the Company at any time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or
the business of
<PAGE> 2
Sprintank and/or the Company or any of its affiliates which Executive may then
possess or have under Executive's control.
2. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable)
which primarily relate to Sprintank's or the Company's or any of its
affiliates' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive while employed by Sprint or the Company or any of its
affiliates ("Work Product") belong to the Company or such affiliate. Executive
shall promptly disclose such Work Product to the CEO and perform all actions
reasonably requested by the CEO (regardless of when requested) to establish and
confirm such ownership (including, without limitation, assignments, consents,
powers of attorney and other instruments).
3. Non-Compete, Non-Solicitation.
(a) In consideration of the Noncompete Payment (as defined below) to be
paid to Executive hereunder, Executive acknowledges that in the course of
Executive's employment with Sprint Executive has become familiar with, and in
the course of Executive's employment with the Company Executive shall become
familiar with, Sprintank's and the Company's trade secrets and with other
Confidential Information concerning Sprintank and the Company and its
affiliates and that Executive's services have been and shall be of special,
unique and extraordinary value to Sprintank and/or the Company and its
affiliates. Therefore, in order to induce the Company to consummate the
transaction contemplated by the Purchase Agreement, Executive agrees that,
during the two-year period commencing on the date of Executive's termination of
employment with the Company (the "Noncompete Period"), Executive shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with or render services for any industrial tank or mobile storage box
rental business in any state or country in which the Company conducts such
business on the date of Executive's termination of employment with the Company
(other than on behalf of, and at the direction of, the Company). Nothing
herein shall prohibit Executive from being a passive owner of not more than 2%
of the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the business of
such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any of its affiliates to leave the employ of the Company or
such affiliate, or in any way interfere with the relationship between the
Company or any of its affiliates and any employee thereof, or (ii) induce or
attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company or any of its affiliates to cease doing
business with the Company or such affiliate, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any of its affiliates (including, without limitation, making
any negative statements or communications about the Company or its affiliates).
- 2 -
<PAGE> 3
4. Noncompete Payment. As a condition to Executive's obligations
hereunder, the Company shall deliver to Executive on the date hereof $200,000
(the "Noncompete Payment") in immediately available funds.
5. Enforcement. If, at the time of enforcement of paragraph 1, 2 or 3 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services have been and/or are unique and because Executive
has access to Confidential Information and Work Product, the parties hereto
agree that money damages would not be an adequate remedy for any breach of this
Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce, or prevent any violations of, the provisions hereof (without
posting a bond or other security). In addition, in the event of an alleged
breach or violation by Executive of paragraph 3 of this Agreement, the
Noncompete Period shall be tolled until such breach or violation has been duly
cured. Executive agrees that the restrictions contained in paragraph 3 of this
Agreement are reasonable.
6. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company and its affiliates, successors and assigns and
shall be binding upon and inure to the benefit of Executive and Executive's
legal representatives and assigns. The Company may assign or transfer its
rights hereunder to any of its affiliates or to a successor entity in the event
of merger, consolidation or transfer or sale of all or substantially all of the
assets of Sprintank or the Company.
7. Modification of Waiver. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the Party against which enforcement of such amendment,
modification or waiver is sought. No course of dealing between the Parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of the Company or
Executive in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by the Company
or Executive of any such right or remedy shall preclude other or further
exercises thereof. A waiver of right or remedy on any one occasion shall not
be construed as a bar to or waiver of any such right or remedy on any other
occasion.
8. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
- 3 -
<PAGE> 4
9. Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement.
10. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
11. Executive's Representations. Executive represents and warrants to the
Company that (i) Executive's execution, delivery and performance of this
Agreement does not and shall not conflict with, or result in the breach of or
violation of, any other agreement, instrument, order, judgment or decree to
which Executive is a party or by which Executive is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any person or entity other than the Company and
(iii) upon the execution and delivery of this Agreement, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms.
12. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or one day
after being sent by Federal Express or other reputable overnight carrier or
five days after being sent by certified or registered mail addressed to the
other Party hereto at such Party's address shown below:
If to the Company:
NES Acquisition Corp.
c/o National Equipment Services
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
If to Executive:
J. D. Cox
- 4 -
<PAGE> 5
4403 Windsail Court
Missouri City, TX 77459
or at such other address as such Party may designate by written notice to the
other Party.
13. Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, any one
of which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same instrument.
* * * *
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Noncompetition
Agreement as of the date first above written.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
------------------
Its: CEO
/s/ J. D. Cox
---------------------
J. D. COX
<PAGE> 1
Exhibit 10.41
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
July 1, 1997, by and between Melissa Henry ("Executive") and NES Acquisition
Corp., a Delaware corporation (the "Company"). The Company and Executive are
sometimes collectively referred to herein as the "Parties" and individually as
a "Party."
Executive has been an employee, officer, director and/or stockholder of
Sprint Industrial Services, Inc., a Texas corporation ("Sprint"), and as such,
possesses special knowledge, abilities and experience regarding the business of
Sprint. The Company, Sprint and the stockholders of Sprint are parties to an
Asset Purchase Agreement, dated as of July 1, 1997 (the "Purchase Agreement"),
whereby the Company shall purchase substantially all of the assets of the
Sprintank division of Sprint ("Sprintank"). As a condition to the consummation
of the transactions contemplated by the Purchase Agreement, the Company desires
to obtain, and, subject to the terms and conditions hereof, Executive agrees to
provide certain representations, warranties and covenants as more fully set
forth below.
In consideration of the mutual covenants and agreements set forth herein,
the Parties agree as follows:
1. Confidential Information. Executive acknowledges that all information
concerning the business and affairs of Sprintank and/or the Company or any of
its affiliates which (i) is confidential and proprietary to Sprintank and/or
the Company or any of its affiliates, (ii) confers a competitive advantage on
Sprintank and/or the Company or any of its affiliates, or (iii) would be
detrimental or embarrassing to Sprintank and/or the Company or any of its
affiliates if disclosed (collectively, "Confidential Information") is the
property of the Company or such affiliate. Therefore, Executive agrees that
Executive shall not disclose to any unauthorized person or use for Executive's
own purposes any Confidential Information without the prior written consent of
the Chief Executive Officer of the Company (the "CEO"), unless and to the
extent that the aforementioned matters (i) become generally known to and
available for use by the public (other than by reason of any disclosure by
Executive), (ii) are independently developed by a person or entity that is not
a party to this Agreement (other than as a result of any disclosure by
Executive), or (iii) are required by law or by the order of any court of
competent jurisdiction or government agency to be disclosed, in which case, (A)
Executive will use reasonable best efforts to notify the Company promptly of
such request or requirement so that the Company may seek an appropriate
protective order or waive compliance with the provisions of this Section 1, and
(B) if, in the absence of such a protective order or waiver, Executive is
compelled to disclose any Confidential Information, Executive will use
reasonable best efforts to limit such disclosure to Confidential Information
which is so required to be disclosed and to obtain an order or other assurance
that confidential treatment will be accorded to any Confidential Information
disclosed. Executive shall deliver to the Company at any time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or
the business of
<PAGE> 2
Sprintank and/or the Company or any of its affiliates which Executive may then
possess or have under Executive's control.
2. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable) which
primarily relate to Sprintank's or the Company's or any of its affiliates'
actual or anticipated business, research and development or existing or future
products or services and which are conceived, developed or made by Executive
while employed by Sprint or the Company or any of its affiliates ("Work
Product") belong to the Company or such affiliate. Executive shall promptly
disclose such Work Product to the CEO and perform all actions reasonably
requested by the CEO (regardless of when requested) to establish and confirm
such ownership (including, without limitation, assignments, consents, powers of
attorney and other instruments).
3. Non-Compete, Non-Solicitation.
(a) In consideration of the Noncompete Payment (as defined below) to be
paid to Executive hereunder, Executive acknowledges that in the course of
Executive's employment with Sprint Executive has become familiar with, and in
the course of Executive's employment with the Company Executive shall become
familiar with, Sprintank's and the Company's trade secrets and with other
Confidential Information concerning Sprintank and the Company and its affiliates
and that Executive's services have been and shall be of special, unique and
extraordinary value to Sprintank and/or the Company and its affiliates.
Therefore, in order to induce the Company to consummate the transaction
contemplated by the Purchase Agreement, Executive agrees that, during the
two-year period commencing on the date of Executive's termination of employment
with the Company (the "Noncompete Period"), Executive shall not directly or
indirectly own any interest in, manage, control, participate in, consult with or
render services for any industrial tank or mobile storage box rental business in
any state or country in which the Company conducts such business on the date of
Executive's termination of employment with the Company (other than on behalf of,
and at the direction of, the Company). Nothing herein shall prohibit Executive
from being a passive owner of not more than 2% of the outstanding stock of any
class of a corporation which is publicly traded, so long as Executive has no
active participation in the business of such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any of its affiliates to leave the employ of the Company or
such affiliate, or in any way interfere with the relationship between the
Company or any of its affiliates and any employee thereof, or (ii) induce or
attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company or any of its affiliates to cease doing
business with the Company or such affiliate, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any of its affiliates (including, without limitation, making
any negative statements or communications about the Company or its affiliates).
- 2 -
<PAGE> 3
4. Noncompete Payment. As a condition to Executive's obligations
hereunder, the Company shall deliver to Executive on the date hereof $50,000
(the "Noncompete Payment") in immediately available funds.
5. Enforcement. If, at the time of enforcement of paragraph 1, 2 or 3 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services have been and/or are unique and because Executive
has access to Confidential Information and Work Product, the parties hereto
agree that money damages would not be an adequate remedy for any breach of this
Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce, or prevent any violations of, the provisions hereof (without
posting a bond or other security). In addition, in the event of an alleged
breach or violation by Executive of paragraph 3 of this Agreement, the
Noncompete Period shall be tolled until such breach or violation has been duly
cured. Executive agrees that the restrictions contained in paragraph 3 of this
Agreement are reasonable.
6. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company and its affiliates, successors and assigns and
shall be binding upon and inure to the benefit of Executive and Executive's
legal representatives and assigns. The Company may assign or transfer its
rights hereunder to any of its affiliates or to a successor entity in the event
of merger, consolidation or transfer or sale of all or substantially all of the
assets of Sprintank or the Company.
7. Modification of Waiver. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the Party against which enforcement of such amendment,
modification or waiver is sought. No course of dealing between the Parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of the Company or
Executive in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by the Company
or Executive of any such right or remedy shall preclude other or further
exercises thereof. A waiver of right or remedy on any one occasion shall not
be construed as a bar to or waiver of any such right or remedy on any other
occasion.
8. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
- 3 -
<PAGE> 4
9. Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or term of this Agreement shall be held to
be prohibited by or invalid under such applicable law, then such provision or
term shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating or affecting in any manner whatsoever the remainder of such
provision or term or the remaining provisions or terms of this Agreement.
10. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
11. Executive's Representations. Executive represents and warrants to the
Company that (i) Executive's execution, delivery and performance of this
Agreement does not and shall not conflict with, or result in the breach of or
violation of, any other agreement, instrument, order, judgment or decree to
which Executive is a party or by which Executive is bound, (ii) Executive is not
a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any person or entity other than the Company and
(iii) upon the execution and delivery of this Agreement, this Agreement shall be
the valid and binding obligation of Executive, enforceable in accordance with
its terms.
12. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or one day
after being sent by Federal Express or other reputable overnight carrier or five
days after being sent by certified or registered mail addressed to the other
Party hereto at such Party's address shown below:
If to the Company:
NES Acquisition Corp.
c/o National Equipment Services
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
If to Executive:
Melissa Henry
- 4 -
<PAGE> 5
4210 Young Road #108
Pasadena, TX 77504
or at such other address as such Party may designate by written notice to the
other Party.
13. Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, any one
of which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same instrument.
* * * *
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Noncompetition
Agreement as of the date first above written.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
-----------------
Its: CEO
/s/ Melissa Henry
---------------------
MELISSA HENRY
<PAGE> 1
Exhibit 10.42
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
July 1, 1997, by and between Jake Davis ("Executive") and NES Acquisition
Corp., a Delaware corporation (the "Company"). The Company and Executive are
sometimes collectively referred to herein as the "Parties" and individually as
a "Party."
Executive has been an employee, officer, director and/or stockholder of
Sprint Industrial Services, Inc., a Texas corporation ("Sprint"), and as such,
possesses special knowledge, abilities and experience regarding the business of
Sprint. The Company, Sprint and the stockholders of Sprint are parties to an
Asset Purchase Agreement, dated as of July 1, 1997 (the "Purchase Agreement"),
whereby the Company shall purchase substantially all of the assets of the
Sprintank division of Sprint ("Sprintank"). As a condition to the consummation
of the transactions contemplated by the Purchase Agreement, the Company desires
to obtain, and, subject to the terms and conditions hereof, Executive agrees to
provide certain representations, warranties and covenants as more fully set
forth below.
In consideration of the mutual covenants and agreements set forth herein,
the Parties agree as follows:
1. Confidential Information. Executive acknowledges that all information
concerning the business and affairs of Sprintank and/or the Company or any of
its affiliates which (i) is confidential and proprietary to Sprintank and/or
the Company or any of its affiliates, (ii) confers a competitive advantage on
Sprintank and/or the Company or any of its affiliates, or (iii) would be
detrimental or embarrassing to Sprintank and/or the Company or any of its
affiliates if disclosed (collectively, "Confidential Information") is the
property of the Company or such affiliate. Therefore, Executive agrees that
Executive shall not disclose to any unauthorized person or use for Executive's
own purposes any Confidential Information without the prior written consent of
the Chief Executive Officer of the Company (the "CEO"), unless and to the
extent that the aforementioned matters (i) become generally known to and
available for use by the public (other than by reason of any disclosure by
Executive), (ii) are independently developed by a person or entity that is not
a party to this Agreement (other than as a result of any disclosure by
Executive), or (iii) are required by law or by the order of any court of
competent jurisdiction or government agency to be disclosed, in which case, (A)
Executive will use reasonable best efforts to notify the Company promptly of
such request or requirement so that the Company may seek an appropriate
protective order or waive compliance with the provisions of this Section 1, and
(B) if, in the absence of such a protective order or waiver, Executive is
compelled to disclose any Confidential Information, Executive will use
reasonable best efforts to limit such disclosure to Confidential Information
which is so required to be disclosed and to obtain an order or other assurance
that confidential treatment will be accorded to any Confidential Information
disclosed. Executive shall deliver to the Company at any time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or
the business of
<PAGE> 2
Sprintank and/or the Company or any of its affiliates which Executive may then
possess or have under Executive's control.
2. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable)
which primarily relate to Sprintank's or the Company's or any of its
affiliates' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive while employed by Sprint or the Company or any of its
affiliates ("Work Product") belong to the Company or such affiliate. Executive
shall promptly disclose such Work Product to the CEO and perform all actions
reasonably requested by the CEO (regardless of when requested) to establish and
confirm such ownership (including, without limitation, assignments, consents,
powers of attorney and other instruments).
3. Non-Compete, Non-Solicitation.
(a) In consideration of the Noncompete Payment (as defined below) to be
paid to Executive hereunder, Executive acknowledges that in the course of
Executive's employment with Sprint Executive has become familiar with, and in
the course of Executive's employment with the Company Executive shall become
familiar with, Sprintank's and the Company's trade secrets and with other
Confidential Information concerning Sprintank and the Company and its
affiliates and that Executive's services have been and shall be of special,
unique and extraordinary value to Sprintank and/or the Company and its
affiliates. Therefore, in order to induce the Company to consummate the
transaction contemplated by the Purchase Agreement, Executive agrees that,
during the two-year period commencing on the date of Executive's termination of
employment with the Company (the "Noncompete Period"), Executive shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with or render services for any industrial tank or mobile storage box
rental business in any state or country in which the Company conducts such
business on the date of Executive's termination of employment with the Company
(other than on behalf of, and at the direction of, the Company). Nothing
herein shall prohibit Executive from being a passive owner of not more than 2%
of the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the business of
such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any of its affiliates to leave the employ of the Company or
such affiliate, or in any way interfere with the relationship between the
Company or any of its affiliates and any employee thereof, or (ii) induce or
attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company or any of its affiliates to cease doing
business with the Company or such affiliate, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any of its affiliates (including, without limitation, making
any negative statements or communications about the Company or its affiliates).
- 2 -
<PAGE> 3
4. Noncompete Payment. As a condition to Executive's obligations
hereunder, the Company shall deliver to Executive on the date hereof $50,000
(the "Noncompete Payment") in immediately available funds.
5. Enforcement. If, at the time of enforcement of paragraph 1, 2 or 3 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services have been and/or are unique and because Executive
has access to Confidential Information and Work Product, the parties hereto
agree that money damages would not be an adequate remedy for any breach of this
Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce, or prevent any violations of, the provisions hereof (without
posting a bond or other security). In addition, in the event of an alleged
breach or violation by Executive of paragraph 3 of this Agreement, the
Noncompete Period shall be tolled until such breach or violation has been duly
cured. Executive agrees that the restrictions contained in paragraph 3 of this
Agreement are reasonable.
6. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company and its affiliates, successors and assigns and
shall be binding upon and inure to the benefit of Executive and Executive's
legal representatives and assigns. The Company may assign or transfer its
rights hereunder to any of its affiliates or to a successor entity in the event
of merger, consolidation or transfer or sale of all or substantially all of the
assets of Sprintank or the Company.
7. Modification of Waiver. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the Party against which enforcement of such amendment,
modification or waiver is sought. No course of dealing between the Parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of the Company or
Executive in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by the Company
or Executive of any such right or remedy shall preclude other or further
exercises thereof. A waiver of right or remedy on any one occasion shall not
be construed as a bar to or waiver of any such right or remedy on any other
occasion.
8. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
- 3 -
<PAGE> 4
9. Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement.
10. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
11. Executive's Representations. Executive represents and warrants to the
Company that (i) Executive's execution, delivery and performance of this
Agreement does not and shall not conflict with, or result in the breach of or
violation of, any other agreement, instrument, order, judgment or decree to
which Executive is a party or by which Executive is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any person or entity other than the Company and
(iii) upon the execution and delivery of this Agreement, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms.
12. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or one day
after being sent by Federal Express or other reputable overnight carrier or
five days after being sent by certified or registered mail addressed to the
other Party hereto at such Party's address shown below:
If to the Company:
NES Acquisition Corp.
c/o National Equipment Services
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
If to Executive:
Jake Davis
- 4 -
<PAGE> 5
7100 Almeda #1603
Houston, TX 77054
or at such other address as such Party may designate by written notice to the
other Party.
13. Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, any one
of which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same instrument.
* * * *
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Noncompetition
Agreement as of the date first above written.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
------------------
Its: CEO
------------------
/s/ Jake Davis
-----------------------
JAKE DAVIS
<PAGE> 1
Exhibit 10.43
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
July 1, 1997, by and between Chris Swinbank ("Executive") and NES Acquisition
Corp., a Delaware corporation (the "Company"). The Company and Executive are
sometimes collectively referred to herein as the "Parties" and individually as
a "Party."
Executive has been an employee, officer, director and/or stockholder of
Sprint Industrial Services, Inc., a Texas corporation ("Sprint"), and as such,
possesses special knowledge, abilities and experience regarding the business of
Sprint. The Company, Sprint and the stockholders of Sprint are parties to an
Asset Purchase Agreement, dated as of July 1, 1997 (the "Purchase Agreement"),
whereby the Company shall purchase substantially all of the assets of the
Sprintank division of Sprint ("Sprintank"). As a condition to the consummation
of the transactions contemplated by the Purchase Agreement, the Company desires
to obtain, and, subject to the terms and conditions hereof, Executive agrees to
provide certain representations, warranties and covenants as more fully set
forth below.
In consideration of the mutual covenants and agreements set forth herein,
the Parties agree as follows:
1. Confidential Information. Executive acknowledges that all information
concerning the business and affairs of Sprintank and/or the Company or any of
its affiliates which (i) is confidential and proprietary to Sprintank and/or
the Company or any of its affiliates, (ii) confers a competitive advantage on
Sprintank and/or the Company or any of its affiliates, or (iii) would be
detrimental or embarrassing to Sprintank and/or the Company or any of its
affiliates if disclosed (collectively, "Confidential Information") is the
property of the Company or such affiliate. Therefore, Executive agrees that
Executive shall not disclose to any unauthorized person or use for Executive's
own purposes any Confidential Information without the prior written consent of
the Chief Executive Officer of the Company (the "CEO"), unless and to the
extent that the aforementioned matters (i) become generally known to and
available for use by the public (other than by reason of any disclosure by
Executive), (ii) are independently developed by a person or entity that is not
a party to this Agreement (other than as a result of any disclosure by
Executive), or (iii) are required by law or by the order of any court of
competent jurisdiction or government agency to be disclosed, in which case, (A)
Executive will use reasonable best efforts to notify the Company promptly of
such request or requirement so that the Company may seek an appropriate
protective order or waive compliance with the provisions of this Section 1, and
(B) if, in the absence of such a protective order or waiver, Executive is
compelled to disclose any Confidential Information, Executive will use
reasonable best efforts to limit such disclosure to Confidential Information
which is so required to be disclosed and to obtain an order or other assurance
that confidential treatment will be accorded to any Confidential Information
disclosed. Executive shall deliver to the Company at any time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or
the business of
<PAGE> 2
Sprintank and/or the Company or any of its affiliates which Executive may then
possess or have under Executive's control.
2. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable)
which primarily relate to Sprintank's or the Company's or any of its
affiliates' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive while employed by Sprint or the Company or any of its
affiliates ("Work Product") belong to the Company or such affiliate. Executive
shall promptly disclose such Work Product to the CEO and perform all actions
reasonably requested by the CEO (regardless of when requested) to establish and
confirm such ownership (including, without limitation, assignments, consents,
powers of attorney and other instruments).
3. Non-Compete, Non-Solicitation.
(a) In consideration of the Noncompete Payment (as defined below) to be
paid to Executive hereunder, Executive acknowledges that in the course of
Executive's employment with Sprint Executive has become familiar with, and in
the course of Executive's employment with the Company Executive shall become
familiar with, Sprintank's and the Company's trade secrets and with other
Confidential Information concerning Sprintank and the Company and its
affiliates and that Executive's services have been and shall be of special,
unique and extraordinary value to Sprintank and/or the Company and its
affiliates. Therefore, in order to induce the Company to consummate the
transaction contemplated by the Purchase Agreement, Executive agrees that,
during the two-year period commencing on the date of Executive's termination of
employment with the Company (the "Noncompete Period"), Executive shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with or render services for any industrial tank or mobile storage box
rental business in any state or country in which the Company conducts such
business on the date of Executive's termination of employment with the Company
(other than on behalf of, and at the direction of, the Company). Nothing
herein shall prohibit Executive from being a passive owner of not more than 2%
of the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the business of
such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any of its affiliates to leave the employ of the Company or
such affiliate, or in any way interfere with the relationship between the
Company or any of its affiliates and any employee thereof, or (ii) induce or
attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company or any of its affiliates to cease doing
business with the Company or such affiliate, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any of its affiliates (including, without limitation, making
any negative statements or communications about the Company or its affiliates).
- 2 -
<PAGE> 3
4. Noncompete Payment. As a condition to Executive's obligations
hereunder, the Company shall deliver to Executive on the date hereof $50,000
(the "Noncompete Payment") in immediately available funds.
5. Enforcement. If, at the time of enforcement of paragraph 1, 2 or 3 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services have been and/or are unique and because Executive
has access to Confidential Information and Work Product, the parties hereto
agree that money damages would not be an adequate remedy for any breach of this
Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce, or prevent any violations of, the provisions hereof (without
posting a bond or other security). In addition, in the event of an alleged
breach or violation by Executive of paragraph 3 of this Agreement, the
Noncompete Period shall be tolled until such breach or violation has been duly
cured. Executive agrees that the restrictions contained in paragraph 3 of this
Agreement are reasonable.
6. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company and its affiliates, successors and assigns and
shall be binding upon and inure to the benefit of Executive and Executive's
legal representatives and assigns. The Company may assign or transfer its
rights hereunder to any of its affiliates or to a successor entity in the event
of merger, consolidation or transfer or sale of all or substantially all of the
assets of Sprintank or the Company.
7. Modification of Waiver. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the Party against which enforcement of such amendment,
modification or waiver is sought. No course of dealing between the Parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of the Company or
Executive in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by the Company
or Executive of any such right or remedy shall preclude other or further
exercises thereof. A waiver of right or remedy on any one occasion shall not
be construed as a bar to or waiver of any such right or remedy on any other
occasion.
8. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
- 3 -
<PAGE> 4
9. Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement.
10. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
11. Executive's Representations. Executive represents and warrants to the
Company that (i) Executive's execution, delivery and performance of this
Agreement does not and shall not conflict with, or result in the breach of or
violation of, any other agreement, instrument, order, judgment or decree to
which Executive is a party or by which Executive is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any person or entity other than the Company and
(iii) upon the execution and delivery of this Agreement, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms.
12. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or one day
after being sent by Federal Express or other reputable overnight carrier or
five days after being sent by certified or registered mail addressed to the
other Party hereto at such Party's address shown below:
If to the Company:
NES Acquisition Corp.
c/o National Equipment Services
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
If to Executive:
Chris Swinbank
- 4 -
<PAGE> 5
1001 N. Ave. J #206
Freeport, TX 77541
or at such other address as such Party may designate by written notice to the
other Party.
13. Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, any one
of which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same instrument.
* * * *
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Noncompetition
Agreement as of the date first above written.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
----------------------
Its: CEO
----------------------
/s/ Chris Swinbank
----------------------------
CHRIS SWINBANK
<PAGE> 1
Exhibit 10.44
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
July 1, 1997, by and between Donald Treichel ("Executive") and NES Acquisition
Corp., a Delaware corporation (the "Company"). The Company and Executive are
sometimes collectively referred to herein as the "Parties" and individually as
a "Party."
Executive has been an employee, officer, director and/or stockholder of
Sprint Industrial Services, Inc., a Texas corporation ("Sprint"), and as such,
possesses special knowledge, abilities and experience regarding the business of
Sprint. The Company, Sprint and the stockholders of Sprint are parties to an
Asset Purchase Agreement, dated as of July 1, 1997 (the "Purchase Agreement"),
whereby the Company shall purchase substantially all of the assets of the
Sprintank division of Sprint ("Sprintank"). As a condition to the consummation
of the transactions contemplated by the Purchase Agreement, the Company desires
to obtain, and, subject to the terms and conditions hereof, Executive agrees to
provide certain representations, warranties and covenants as more fully set
forth below.
In consideration of the mutual covenants and agreements set forth herein,
the Parties agree as follows:
1. Confidential Information. Executive acknowledges that all information
concerning the business and affairs of Sprintank and/or the Company or any of
its affiliates which (i) is confidential and proprietary to Sprintank and/or
the Company or any of its affiliates, (ii) confers a competitive advantage on
Sprintank and/or the Company or any of its affiliates, or (iii) would be
detrimental or embarrassing to Sprintank and/or the Company or any of its
affiliates if disclosed (collectively, "Confidential Information") is the
property of the Company or such affiliate. Therefore, Executive agrees that
Executive shall not disclose to any unauthorized person or use for Executive's
own purposes any Confidential Information without the prior written consent of
the Chief Executive Officer of the Company (the "CEO"), unless and to the
extent that the aforementioned matters (i) become generally known to and
available for use by the public (other than by reason of any disclosure by
Executive), (ii) are independently developed by a person or entity that is not
a party to this Agreement (other than as a result of any disclosure by
Executive), or (iii) are required by law or by the order of any court of
competent jurisdiction or government agency to be disclosed, in which case, (A)
Executive will use reasonable best efforts to notify the Company promptly of
such request or requirement so that the Company may seek an appropriate
protective order or waive compliance with the provisions of this Section 1, and
(B) if, in the absence of such a protective order or waiver, Executive is
compelled to disclose any Confidential Information, Executive will use
reasonable best efforts to limit such disclosure to Confidential Information
which is so required to be disclosed and to obtain an order or other assurance
that confidential treatment will be accorded to any Confidential Information
disclosed. Executive shall deliver to the Company at any time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or
the business of
<PAGE> 2
Sprintank and/or the Company or any of its affiliates which Executive may then
possess or have under Executive's control.
2. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable)
which primarily relate to Sprintank's or the Company's or any of its
affiliates' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive while employed by Sprint or the Company or any of its
affiliates ("Work Product") belong to the Company or such affiliate. Executive
shall promptly disclose such Work Product to the CEO and perform all actions
reasonably requested by the CEO (regardless of when requested) to establish and
confirm such ownership (including, without limitation, assignments, consents,
powers of attorney and other instruments).
3. Non-Compete, Non-Solicitation.
(a) In consideration of the Noncompete Payment (as defined below) to be
paid to Executive hereunder, Executive acknowledges that in the course of
Executive's employment with Sprint Executive has become familiar with, and in
the course of Executive's employment with the Company Executive shall become
familiar with, Sprintank's and the Company's trade secrets and with other
Confidential Information concerning Sprintank and the Company and its
affiliates and that Executive's services have been and shall be of special,
unique and extraordinary value to Sprintank and/or the Company and its
affiliates. Therefore, in order to induce the Company to consummate the
transaction contemplated by the Purchase Agreement, Executive agrees that,
during the two-year period commencing on the date of Executive's termination of
employment with the Company (the "Noncompete Period"), Executive shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with or render services for any industrial tank or mobile storage box
rental business in any state or country in which the Company conducts such
business on the date of Executive's termination of employment with the Company
(other than on behalf of, and at the direction of, the Company). Nothing
herein shall prohibit Executive from being a passive owner of not more than 2%
of the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the business of
such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any of its affiliates to leave the employ of the Company or
such affiliate, or in any way interfere with the relationship between the
Company or any of its affiliates and any employee thereof, or (ii) induce or
attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company or any of its affiliates to cease doing
business with the Company or such affiliate, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any of its affiliates (including, without limitation, making
any negative statements or communications about the Company or its affiliates).
- 2 -
<PAGE> 3
4. Noncompete Payment. As a condition to Executive's obligations
hereunder, the Company shall deliver to Executive on the date hereof $50,000
(the "Noncompete Payment") in immediately available funds.
5. Enforcement. If, at the time of enforcement of paragraph 1, 2 or 3 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services have been and/or are unique and because Executive
has access to Confidential Information and Work Product, the parties hereto
agree that money damages would not be an adequate remedy for any breach of this
Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce, or prevent any violations of, the provisions hereof (without
posting a bond or other security). In addition, in the event of an alleged
breach or violation by Executive of paragraph 3 of this Agreement, the
Noncompete Period shall be tolled until such breach or violation has been duly
cured. Executive agrees that the restrictions contained in paragraph 3 of this
Agreement are reasonable.
6. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company and its affiliates, successors and assigns and
shall be binding upon and inure to the benefit of Executive and Executive's
legal representatives and assigns. The Company may assign or transfer its
rights hereunder to any of its affiliates or to a successor entity in the event
of merger, consolidation or transfer or sale of all or substantially all of the
assets of Sprintank or the Company.
7. Modification of Waiver. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the Party against which enforcement of such amendment,
modification or waiver is sought. No course of dealing between the Parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of the Company or
Executive in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by the Company
or Executive of any such right or remedy shall preclude other or further
exercises thereof. A waiver of right or remedy on any one occasion shall not
be construed as a bar to or waiver of any such right or remedy on any other
occasion.
8. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
- 3 -
<PAGE> 4
9. Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement.
10. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
11. Executive's Representations. Executive represents and warrants to the
Company that (i) Executive's execution, delivery and performance of this
Agreement does not and shall not conflict with, or result in the breach of or
violation of, any other agreement, instrument, order, judgment or decree to
which Executive is a party or by which Executive is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any person or entity other than the Company and
(iii) upon the execution and delivery of this Agreement, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms.
12. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or one day
after being sent by Federal Express or other reputable overnight carrier or
five days after being sent by certified or registered mail addressed to the
other Party hereto at such Party's address shown below:
If to the Company:
NES Acquisition Corp.
c/o National Equipment Services
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
If to Executive:
Donald Treichel
- 4 -
<PAGE> 5
16411 Cypress Rosehill
Cypress, TX 77429
or at such other address as such Party may designate by written notice to the
other Party.
13. Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, any one
of which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same instrument.
* * * *
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Noncompetition
Agreement as of the date first above written.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
-------------------------------
Its: CEO
-------------------------------
/s/ Donald Treichel
------------------------------------
DONALD TREICHEL
<PAGE> 1
Exhibit 10.45
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
July 1, 1997, by and between Greg Gabriele ("Executive") and NES Acquisition
Corp., a Delaware corporation (the "Company"). The Company and Executive are
sometimes collectively referred to herein as the "Parties" and individually as
a "Party."
Executive has been an employee, officer, director and/or stockholder of
Sprint Industrial Services, Inc., a Texas corporation ("Sprint"), and as such,
possesses special knowledge, abilities and experience regarding the business of
Sprint. The Company, Sprint and the stockholders of Sprint are parties to an
Asset Purchase Agreement, dated as of July 1, 1997 (the "Purchase Agreement"),
whereby the Company shall purchase substantially all of the assets of the
Sprintank division of Sprint ("Sprintank"). As a condition to the consummation
of the transactions contemplated by the Purchase Agreement, the Company desires
to obtain, and, subject to the terms and conditions hereof, Executive agrees to
provide certain representations, warranties and covenants as more fully set
forth below.
In consideration of the mutual covenants and agreements set forth herein,
the Parties agree as follows:
1. Confidential Information. Executive acknowledges that all information
concerning the business and affairs of Sprintank and/or the Company or any of
its affiliates which (i) is confidential and proprietary to Sprintank and/or
the Company or any of its affiliates, (ii) confers a competitive advantage on
Sprintank and/or the Company or any of its affiliates, or (iii) would be
detrimental or embarrassing to Sprintank and/or the Company or any of its
affiliates if disclosed (collectively, "Confidential Information") is the
property of the Company or such affiliate. Therefore, Executive agrees that
Executive shall not disclose to any unauthorized person or use for Executive's
own purposes any Confidential Information without the prior written consent of
the Chief Executive Officer of the Company (the "CEO"), unless and to the
extent that the aforementioned matters (i) become generally known to and
available for use by the public (other than by reason of any disclosure by
Executive), (ii) are independently developed by a person or entity that is not
a party to this Agreement (other than as a result of any disclosure by
Executive), or (iii) are required by law or by the order of any court of
competent jurisdiction or government agency to be disclosed, in which case, (A)
Executive will use reasonable best efforts to notify the Company promptly of
such request or requirement so that the Company may seek an appropriate
protective order or waive compliance with the provisions of this Section 1, and
(B) if, in the absence of such a protective order or waiver, Executive is
compelled to disclose any Confidential Information, Executive will use
reasonable best efforts to limit such disclosure to Confidential Information
which is so required to be disclosed and to obtain an order or other assurance
that confidential treatment will be accorded to any Confidential Information
disclosed. Executive shall deliver to the Company at any time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or
the business of
<PAGE> 2
Sprintank and/or the Company or any of its affiliates which Executive may then
possess or have under Executive's control.
2. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable)
which primarily relate to Sprintank's or the Company's or any of its
affiliates' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive while employed by Sprint or the Company or any of its
affiliates ("Work Product") belong to the Company or such affiliate. Executive
shall promptly disclose such Work Product to the CEO and perform all actions
reasonably requested by the CEO (regardless of when requested) to establish and
confirm such ownership (including, without limitation, assignments, consents,
powers of attorney and other instruments).
3. Non-Compete, Non-Solicitation.
(a) In consideration of the Noncompete Payment (as defined below) to be
paid to Executive hereunder, Executive acknowledges that in the course of
Executive's employment with Sprint Executive has become familiar with, and in
the course of Executive's employment with the Company Executive shall become
familiar with, Sprintank's and the Company's trade secrets and with other
Confidential Information concerning Sprintank and the Company and its
affiliates and that Executive's services have been and shall be of special,
unique and extraordinary value to Sprintank and/or the Company and its
affiliates. Therefore, in order to induce the Company to consummate the
transaction contemplated by the Purchase Agreement, Executive agrees that,
during the two-year period commencing on the date of Executive's termination of
employment with the Company (the "Noncompete Period"), Executive shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with or render services for any industrial tank or mobile storage box
rental business in any state or country in which the Company conducts such
business on the date of Executive's termination of employment with the Company
(other than on behalf of, and at the direction of, the Company). Nothing
herein shall prohibit Executive from being a passive owner of not more than 2%
of the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the business of
such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any of its affiliates to leave the employ of the Company or
such affiliate, or in any way interfere with the relationship between the
Company or any of its affiliates and any employee thereof, or (ii) induce or
attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company or any of its affiliates to cease doing
business with the Company or such affiliate, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any of its affiliates (including, without limitation, making
any negative statements or communications about the Company or its affiliates).
- 2 -
<PAGE> 3
4. Noncompete Payment. As a condition to Executive's obligations
hereunder, the Company shall deliver to Executive on the date hereof $50,000
(the "Noncompete Payment") in immediately available funds.
5. Enforcement. If, at the time of enforcement of paragraph 1, 2 or 3 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services have been and/or are unique and because Executive
has access to Confidential Information and Work Product, the parties hereto
agree that money damages would not be an adequate remedy for any breach of this
Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce, or prevent any violations of, the provisions hereof (without
posting a bond or other security). In addition, in the event of an alleged
breach or violation by Executive of paragraph 3 of this Agreement, the
Noncompete Period shall be tolled until such breach or violation has been duly
cured. Executive agrees that the restrictions contained in paragraph 3 of this
Agreement are reasonable.
6. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company and its affiliates, successors and assigns and
shall be binding upon and inure to the benefit of Executive and Executive's
legal representatives and assigns. The Company may assign or transfer its
rights hereunder to any of its affiliates or to a successor entity in the event
of merger, consolidation or transfer or sale of all or substantially all of the
assets of Sprintank or the Company.
7. Modification of Waiver. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the Party against which enforcement of such amendment,
modification or waiver is sought. No course of dealing between the Parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of the Company or
Executive in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by the Company
or Executive of any such right or remedy shall preclude other or further
exercises thereof. A waiver of right or remedy on any one occasion shall not
be construed as a bar to or waiver of any such right or remedy on any other
occasion.
8. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
- 3 -
<PAGE> 4
9. Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement.
10. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
11. Executive's Representations. Executive represents and warrants to the
Company that (i) Executive's execution, delivery and performance of this
Agreement does not and shall not conflict with, or result in the breach of or
violation of, any other agreement, instrument, order, judgment or decree to
which Executive is a party or by which Executive is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any person or entity other than the Company and
(iii) upon the execution and delivery of this Agreement, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms.
12. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or one day
after being sent by Federal Express or other reputable overnight carrier or
five days after being sent by certified or registered mail addressed to the
other Party hereto at such Party's address shown below:
If to the Company:
NES Acquisition Corp.
c/o National Equipment Services
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
If to Executive:
Greg Gabriele
- 4 -
<PAGE> 5
5455 Hwy. 12
Vidor, TX 77662
or at such other address as such Party may designate by written notice to the
other Party.
13. Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, any one
of which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same instrument.
* * * *
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Noncompetition
Agreement as of the date first above written.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
----------------------
Its: CEO
----------------------
/s/ Greg Gabriele
----------------------------
GREG GABRIELE
<PAGE> 1
Exhibit 10.46
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
July 1, 1997, by and between Brian Speight ("Executive") and NES Acquisition
Corp., a Delaware corporation (the "Company"). The Company and Executive are
sometimes collectively referred to herein as the "Parties" and individually as
a "Party."
Executive has been an employee, officer, director and/or stockholder of
Sprint Industrial Services, Inc., a Texas corporation ("Sprint"), and as such,
possesses special knowledge, abilities and experience regarding the business of
Sprint. The Company, Sprint and the stockholders of Sprint are parties to an
Asset Purchase Agreement, dated as of July 1, 1997 (the "Purchase Agreement"),
whereby the Company shall purchase substantially all of the assets of the
Sprintank division of Sprint ("Sprintank"). As a condition to the consummation
of the transactions contemplated by the Purchase Agreement, the Company desires
to obtain, and, subject to the terms and conditions hereof, Executive agrees to
provide certain representations, warranties and covenants as more fully set
forth below.
In consideration of the mutual covenants and agreements set forth herein,
the Parties agree as follows:
1. Confidential Information. Executive acknowledges that all information
concerning the business and affairs of Sprintank and/or the Company or any of
its affiliates which (i) is confidential and proprietary to Sprintank and/or
the Company or any of its affiliates, (ii) confers a competitive advantage on
Sprintank and/or the Company or any of its affiliates, or (iii) would be
detrimental or embarrassing to Sprintank and/or the Company or any of its
affiliates if disclosed (collectively, "Confidential Information") is the
property of the Company or such affiliate. Therefore, Executive agrees that
Executive shall not disclose to any unauthorized person or use for Executive's
own purposes any Confidential Information without the prior written consent of
the Chief Executive Officer of the Company (the "CEO"), unless and to the
extent that the aforementioned matters (i) become generally known to and
available for use by the public (other than by reason of any disclosure by
Executive), (ii) are independently developed by a person or entity that is not
a party to this Agreement (other than as a result of any disclosure by
Executive), or (iii) are required by law or by the order of any court of
competent jurisdiction or government agency to be disclosed, in which case, (A)
Executive will use reasonable best efforts to notify the Company promptly of
such request or requirement so that the Company may seek an appropriate
protective order or waive compliance with the provisions of this Section 1, and
(B) if, in the absence of such a protective order or waiver, Executive is
compelled to disclose any Confidential Information, Executive will use
reasonable best efforts to limit such disclosure to Confidential Information
which is so required to be disclosed and to obtain an order or other assurance
that confidential treatment will be accorded to any Confidential Information
disclosed. Executive shall deliver to the Company at any time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or
the business of
<PAGE> 2
Sprintank and/or the Company or any of its affiliates which Executive may then
possess or have under Executive's control.
2. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable)
which primarily relate to Sprintank's or the Company's or any of its
affiliates' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive while employed by Sprint or the Company or any of its
affiliates ("Work Product") belong to the Company or such affiliate. Executive
shall promptly disclose such Work Product to the CEO and perform all actions
reasonably requested by the CEO (regardless of when requested) to establish and
confirm such ownership (including, without limitation, assignments, consents,
powers of attorney and other instruments).
3. Non-Compete, Non-Solicitation.
(a) In consideration of the Noncompete Payment (as defined below) to be
paid to Executive hereunder, Executive acknowledges that in the course of
Executive's employment with Sprint Executive has become familiar with, and in
the course of Executive's employment with the Company Executive shall become
familiar with, Sprintank's and the Company's trade secrets and with other
Confidential Information concerning Sprintank and the Company and its
affiliates and that Executive's services have been and shall be of special,
unique and extraordinary value to Sprintank and/or the Company and its
affiliates. Therefore, in order to induce the Company to consummate the
transaction contemplated by the Purchase Agreement, Executive agrees that,
during the two-year period commencing on the date of Executive's termination of
employment with the Company (the "Noncompete Period"), Executive shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with or render services for any industrial tank or mobile storage box
rental business in any state or country in which the Company conducts such
business on the date of Executive's termination of employment with the Company
(other than on behalf of, and at the direction of, the Company). Nothing
herein shall prohibit Executive from being a passive owner of not more than 2%
of the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the business of
such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any of its affiliates to leave the employ of the Company or
such affiliate, or in any way interfere with the relationship between the
Company or any of its affiliates and any employee thereof, or (ii) induce or
attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company or any of its affiliates to cease doing
business with the Company or such affiliate, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any of its affiliates (including, without limitation, making
any negative statements or communications about the Company or its affiliates).
- 2 -
<PAGE> 3
4. Noncompete Payment. As a condition to Executive's obligations
hereunder, the Company shall deliver to Executive on the date hereof $20,000
(the "Noncompete Payment") in immediately available funds.
5. Enforcement. If, at the time of enforcement of paragraph 1, 2 or 3 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services have been and/or are unique and because Executive
has access to Confidential Information and Work Product, the parties hereto
agree that money damages would not be an adequate remedy for any breach of this
Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce, or prevent any violations of, the provisions hereof (without
posting a bond or other security). In addition, in the event of an alleged
breach or violation by Executive of paragraph 3 of this Agreement, the
Noncompete Period shall be tolled until such breach or violation has been duly
cured. Executive agrees that the restrictions contained in paragraph 3 of this
Agreement are reasonable.
6. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company and its affiliates, successors and assigns and
shall be binding upon and inure to the benefit of Executive and Executive's
legal representatives and assigns. The Company may assign or transfer its
rights hereunder to any of its affiliates or to a successor entity in the event
of merger, consolidation or transfer or sale of all or substantially all of the
assets of Sprintank or the Company.
7. Modification of Waiver. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the Party against which enforcement of such amendment,
modification or waiver is sought. No course of dealing between the Parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of the Company or
Executive in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by the Company
or Executive of any such right or remedy shall preclude other or further
exercises thereof. A waiver of right or remedy on any one occasion shall not
be construed as a bar to or waiver of any such right or remedy on any other
occasion.
8. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
- 3 -
<PAGE> 4
9. Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement.
10. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
11. Executive's Representations. Executive represents and warrants to the
Company that (i) Executive's execution, delivery and performance of this
Agreement does not and shall not conflict with, or result in the breach of or
violation of, any other agreement, instrument, order, judgment or decree to
which Executive is a party or by which Executive is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any person or entity other than the Company and
(iii) upon the execution and delivery of this Agreement, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms.
12. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or one day
after being sent by Federal Express or other reputable overnight carrier or
five days after being sent by certified or registered mail addressed to the
other Party hereto at such Party's address shown below:
If to the Company:
NES Acquisition Corp.
c/o National Equipment Services
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
If to Executive:
Brian Speight
- 4 -
<PAGE> 5
P. O. Box 1311
Sulphur, LA 70664
or at such other address as such Party may designate by written notice to the
other Party.
13. Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, any one
of which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same instrument.
* * * *
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Noncompetition
Agreement as of the date first above written.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
-------------------
Its: CEO
-------------------
/s/ Brian Speight
------------------------
BRIAN SPEIGHT
<PAGE> 1
Exhibit 10.47
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
July 1, 1997, by and between Jill Harris ("Executive") and NES Acquisition
Corp., a Delaware corporation (the "Company"). The Company and Executive are
sometimes collectively referred to herein as the "Parties" and individually as
a "Party."
Executive has been an employee, officer, director and/or stockholder of
Sprint Industrial Services, Inc., a Texas corporation ("Sprint"), and as such,
possesses special knowledge, abilities and experience regarding the business of
Sprint. The Company, Sprint and the stockholders of Sprint are parties to an
Asset Purchase Agreement, dated as of July 1, 1997 (the "Purchase Agreement"),
whereby the Company shall purchase substantially all of the assets of the
Sprintank division of Sprint ("Sprintank"). As a condition to the consummation
of the transactions contemplated by the Purchase Agreement, the Company desires
to obtain, and, subject to the terms and conditions hereof, Executive agrees to
provide certain representations, warranties and covenants as more fully set
forth below.
In consideration of the mutual covenants and agreements set forth herein,
the Parties agree as follows:
1. Confidential Information. Executive acknowledges that all information
concerning the business and affairs of Sprintank and/or the Company or any of
its affiliates which (i) is confidential and proprietary to Sprintank and/or
the Company or any of its affiliates, (ii) confers a competitive advantage on
Sprintank and/or the Company or any of its affiliates, or (iii) would be
detrimental or embarrassing to Sprintank and/or the Company or any of its
affiliates if disclosed (collectively, "Confidential Information") is the
property of the Company or such affiliate. Therefore, Executive agrees that
Executive shall not disclose to any unauthorized person or use for Executive's
own purposes any Confidential Information without the prior written consent of
the Chief Executive Officer of the Company (the "CEO"), unless and to the
extent that the aforementioned matters (i) become generally known to and
available for use by the public (other than by reason of any disclosure by
Executive), (ii) are independently developed by a person or entity that is not
a party to this Agreement (other than as a result of any disclosure by
Executive), or (iii) are required by law or by the order of any court of
competent jurisdiction or government agency to be disclosed, in which case, (A)
Executive will use reasonable best efforts to notify the Company promptly of
such request or requirement so that the Company may seek an appropriate
protective order or waive compliance with the provisions of this Section 1, and
(B) if, in the absence of such a protective order or waiver, Executive is
compelled to disclose any Confidential Information, Executive will use
reasonable best efforts to limit such disclosure to Confidential Information
which is so required to be disclosed and to obtain an order or other assurance
that confidential treatment will be accorded to any Confidential Information
disclosed. Executive shall deliver to the Company at any time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or
the business of
<PAGE> 2
Sprintank and/or the Company or any of its affiliates which Executive may then
possess or have under Executive's control.
2. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable)
which primarily relate to Sprintank's or the Company's or any of its
affiliates' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive while employed by Sprint or the Company or any of its
affiliates ("Work Product") belong to the Company or such affiliate. Executive
shall promptly disclose such Work Product to the CEO and perform all actions
reasonably requested by the CEO (regardless of when requested) to establish and
confirm such ownership (including, without limitation, assignments, consents,
powers of attorney and other instruments).
3. Non-Compete, Non-Solicitation.
(a) In consideration of the Noncompete Payment (as defined below) to be
paid to Executive hereunder, Executive acknowledges that in the course of
Executive's employment with Sprint Executive has become familiar with, and in
the course of Executive's employment with the Company Executive shall become
familiar with, Sprintank's and the Company's trade secrets and with other
Confidential Information concerning Sprintank and the Company and its
affiliates and that Executive's services have been and shall be of special,
unique and extraordinary value to Sprintank and/or the Company and its
affiliates. Therefore, in order to induce the Company to consummate the
transaction contemplated by the Purchase Agreement, Executive agrees that,
during the two-year period commencing on the date of Executive's termination of
employment with the Company (the "Noncompete Period"), Executive shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with or render services for any industrial tank or mobile storage box
rental business in any state or country in which the Company conducts such
business on the date of Executive's termination of employment with the Company
(other than on behalf of, and at the direction of, the Company). Nothing
herein shall prohibit Executive from being a passive owner of not more than 2%
of the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the business of
such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any of its affiliates to leave the employ of the Company or
such affiliate, or in any way interfere with the relationship between the
Company or any of its affiliates and any employee thereof, or (ii) induce or
attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company or any of its affiliates to cease doing
business with the Company or such affiliate, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any of its affiliates (including, without limitation, making
any negative statements or communications about the Company or its affiliates).
- 2 -
<PAGE> 3
4. Noncompete Payment. As a condition to Executive's obligations
hereunder, the Company shall deliver to Executive on the date hereof $15,000
(the "Noncompete Payment") in immediately available funds.
5. Enforcement. If, at the time of enforcement of paragraph 1, 2 or 3 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services have been and/or are unique and because Executive
has access to Confidential Information and Work Product, the parties hereto
agree that money damages would not be an adequate remedy for any breach of this
Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce, or prevent any violations of, the provisions hereof (without
posting a bond or other security). In addition, in the event of an alleged
breach or violation by Executive of paragraph 3 of this Agreement, the
Noncompete Period shall be tolled until such breach or violation has been duly
cured. Executive agrees that the restrictions contained in paragraph 3 of this
Agreement are reasonable.
6. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company and its affiliates, successors and assigns and
shall be binding upon and inure to the benefit of Executive and Executive's
legal representatives and assigns. The Company may assign or transfer its
rights hereunder to any of its affiliates or to a successor entity in the event
of merger, consolidation or transfer or sale of all or substantially all of the
assets of Sprintank or the Company.
7. Modification of Waiver. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the Party against which enforcement of such amendment,
modification or waiver is sought. No course of dealing between the Parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of the Company or
Executive in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by the Company
or Executive of any such right or remedy shall preclude other or further
exercises thereof. A waiver of right or remedy on any one occasion shall not
be construed as a bar to or waiver of any such right or remedy on any other
occasion.
8. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
- 3 -
<PAGE> 4
9. Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement.
10. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
11. Executive's Representations. Executive represents and warrants to the
Company that (i) Executive's execution, delivery and performance of this
Agreement does not and shall not conflict with, or result in the breach of or
violation of, any other agreement, instrument, order, judgment or decree to
which Executive is a party or by which Executive is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any person or entity other than the Company and
(iii) upon the execution and delivery of this Agreement, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms.
12. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or one day
after being sent by Federal Express or other reputable overnight carrier or
five days after being sent by certified or registered mail addressed to the
other Party hereto at such Party's address shown below:
If to the Company:
NES Acquisition Corp.
c/o National Equipment Services
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
If to Executive:
Jill Harris
- 4 -
<PAGE> 5
14206 Chadbourne
Houston, TX 77079
or at such other address as such Party may designate by written notice to the
other Party.
13. Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, any one
of which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same instrument.
* * * *
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Noncompetition
Agreement as of the date first above written.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
-------------------------------
Its: CEO
-------------------------------
/s/ Jill Harris
------------------------------------
JILL HARRIS
<PAGE> 1
Exhibit 10.48
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
July 1, 1997, by and between Jim Heath ("Executive") and NES Acquisition Corp.,
a Delaware corporation (the "Company"). The Company and Executive are
sometimes collectively referred to herein as the "Parties" and individually as
a "Party."
Executive has been an employee, officer, director and/or stockholder of
Sprint Industrial Services, Inc., a Texas corporation ("Sprint"), and as such,
possesses special knowledge, abilities and experience regarding the business of
Sprint. The Company, Sprint and the stockholders of Sprint are parties to an
Asset Purchase Agreement, dated as of July 1, 1997 (the "Purchase Agreement"),
whereby the Company shall purchase substantially all of the assets of the
Sprintank division of Sprint ("Sprintank"). As a condition to the consummation
of the transactions contemplated by the Purchase Agreement, the Company desires
to obtain, and, subject to the terms and conditions hereof, Executive agrees to
provide certain representations, warranties and covenants as more fully set
forth below.
In consideration of the mutual covenants and agreements set forth herein,
the Parties agree as follows:
1. Confidential Information. Executive acknowledges that all information
concerning the business and affairs of Sprintank and/or the Company or any of
its affiliates which (i) is confidential and proprietary to Sprintank and/or
the Company or any of its affiliates, (ii) confers a competitive advantage on
Sprintank and/or the Company or any of its affiliates, or (iii) would be
detrimental or embarrassing to Sprintank and/or the Company or any of its
affiliates if disclosed (collectively, "Confidential Information") is the
property of the Company or such affiliate. Therefore, Executive agrees that
Executive shall not disclose to any unauthorized person or use for Executive's
own purposes any Confidential Information without the prior written consent of
the Chief Executive Officer of the Company (the "CEO"), unless and to the
extent that the aforementioned matters (i) become generally known to and
available for use by the public (other than by reason of any disclosure by
Executive), (ii) are independently developed by a person or entity that is not
a party to this Agreement (other than as a result of any disclosure by
Executive), or (iii) are required by law or by the order of any court of
competent jurisdiction or government agency to be disclosed, in which case, (A)
Executive will use reasonable best efforts to notify the Company promptly of
such request or requirement so that the Company may seek an appropriate
protective order or waive compliance with the provisions of this Section 1, and
(B) if, in the absence of such a protective order or waiver, Executive is
compelled to disclose any Confidential Information, Executive will use
reasonable best efforts to limit such disclosure to Confidential Information
which is so required to be disclosed and to obtain an order or other assurance
that confidential treatment will be accorded to any Confidential Information
disclosed. Executive shall deliver to the Company at any time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or
the business of
<PAGE> 2
Sprintank and/or the Company or any of its affiliates which Executive may then
possess or have under Executive's control.
2. Inventions and Patents. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, designs, analyses, drawings,
reports and all similar or related information (whether or not patentable)
which primarily relate to Sprintank's or the Company's or any of its
affiliates' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive while employed by Sprint or the Company or any of its
affiliates ("Work Product") belong to the Company or such affiliate. Executive
shall promptly disclose such Work Product to the CEO and perform all actions
reasonably requested by the CEO (regardless of when requested) to establish and
confirm such ownership (including, without limitation, assignments, consents,
powers of attorney and other instruments).
3. Non-Compete, Non-Solicitation.
(a) In consideration of the Noncompete Payment (as defined below) to be
paid to Executive hereunder, Executive acknowledges that in the course of
Executive's employment with Sprint Executive has become familiar with, and in
the course of Executive's employment with the Company Executive shall become
familiar with, Sprintank's and the Company's trade secrets and with other
Confidential Information concerning Sprintank and the Company and its
affiliates and that Executive's services have been and shall be of special,
unique and extraordinary value to Sprintank and/or the Company and its
affiliates. Therefore, in order to induce the Company to consummate the
transaction contemplated by the Purchase Agreement, Executive agrees that,
during the two-year period commencing on the date of Executive's termination of
employment with the Company (the "Noncompete Period"), Executive shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with or render services for any industrial tank or mobile storage box
rental business in any state or country in which the Company conducts such
business on the date of Executive's termination of employment with the Company
(other than on behalf of, and at the direction of, the Company). Nothing
herein shall prohibit Executive from being a passive owner of not more than 2%
of the outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the business of
such corporation.
(b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce any employee
of the Company or any of its affiliates to leave the employ of the Company or
such affiliate, or in any way interfere with the relationship between the
Company or any of its affiliates and any employee thereof, or (ii) induce or
attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company or any of its affiliates to cease doing
business with the Company or such affiliate, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any of its affiliates (including, without limitation, making
any negative statements or communications about the Company or its affiliates).
- 2 -
<PAGE> 3
4. Noncompete Payment. As a condition to Executive's obligations
hereunder, the Company shall deliver to Executive on the date hereof $15,000
(the "Noncompete Payment") in immediately available funds.
5. Enforcement. If, at the time of enforcement of paragraph 1, 2 or 3 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because Executive's services have been and/or are unique and because Executive
has access to Confidential Information and Work Product, the parties hereto
agree that money damages would not be an adequate remedy for any breach of this
Agreement. Therefore, in the event a breach or threatened breach of this
Agreement, the Company or its successors or assigns may, in addition to other
rights and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance and/or injunctive or other relief in
order to enforce, or prevent any violations of, the provisions hereof (without
posting a bond or other security). In addition, in the event of an alleged
breach or violation by Executive of paragraph 3 of this Agreement, the
Noncompete Period shall be tolled until such breach or violation has been duly
cured. Executive agrees that the restrictions contained in paragraph 3 of this
Agreement are reasonable.
6. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company and its affiliates, successors and assigns and
shall be binding upon and inure to the benefit of Executive and Executive's
legal representatives and assigns. The Company may assign or transfer its
rights hereunder to any of its affiliates or to a successor entity in the event
of merger, consolidation or transfer or sale of all or substantially all of the
assets of Sprintank or the Company.
7. Modification of Waiver. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the Party against which enforcement of such amendment,
modification or waiver is sought. No course of dealing between the Parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of the Company or
Executive in the exercise of any of their respective rights or remedies shall
operate as a waiver thereof, and no single or partial exercise by the Company
or Executive of any such right or remedy shall preclude other or further
exercises thereof. A waiver of right or remedy on any one occasion shall not
be construed as a bar to or waiver of any such right or remedy on any other
occasion.
8. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Texas or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Texas.
- 3 -
<PAGE> 4
9. Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement.
10. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
11. Executive's Representations. Executive represents and warrants to the
Company that (i) Executive's execution, delivery and performance of this
Agreement does not and shall not conflict with, or result in the breach of or
violation of, any other agreement, instrument, order, judgment or decree to
which Executive is a party or by which Executive is bound, (ii) Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any person or entity other than the Company and
(iii) upon the execution and delivery of this Agreement, this Agreement shall
be the valid and binding obligation of Executive, enforceable in accordance
with its terms.
12. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or one day
after being sent by Federal Express or other reputable overnight carrier or
five days after being sent by certified or registered mail addressed to the
other Party hereto at such Party's address shown below:
If to the Company:
NES Acquisition Corp.
c/o National Equipment Services
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
If to Executive:
Jim Heath
- 4 -
<PAGE> 5
1611 Crescent Green
Houston, TX 77094
or at such other address as such Party may designate by written notice to the
other Party.
13. Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
14. Counterparts. This Agreement may be executed in counterparts, any one
of which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same instrument.
* * * *
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the undersigned have executed this Noncompetition
Agreement as of the date first above written.
NES ACQUISITION CORP.
By: /s/ Kevin Rodgers
------------------
Its: CEO
-----------------
/s/ Jim Heath
---------------------
JIM HEATH
<PAGE> 1
Exhibit 10.49
INDUSTRIAL LEASE
SPRINT INDUSTRIAL SERVICES, INC.,
A TEXAS CORPORATION
LANDLORD
AND
NES ACQUISITION CORP.,
A DELAWARE CORPORATION
TENANT
<PAGE> 2
LEASE
THIS LEASE made and entered into as of the first day of July, 1997,
between Sprint Industrial Services, Inc., a Texas corporation (hereinafter
called "Landlord") and NES Acquisition Corp., a Delaware corporation
(hereinafter called "Tenant").
W I T N E S S E T H:
Landlord, for and in consideration of the covenants and agreements
hereinafter set forth to be kept and performed by both parties, does hereby
demise and lease to Tenant (for the term hereinafter stipulated) the premises
(hereinafter called the "Demised Premises") being eight (8) acres of that
certain eleven (11) acre tract of land described on Exhibit "A" attached hereto
and made a part hereof along with that certain trailer and equipment barn
thereon, located at 2199 Highway 77 North, Robstown, Texas. The three (3)
acres not included in the Demised Premises is that certain area currently being
used as a trailer park (the "Trailer Park").
Landlord hereby leases the Demised Premises to Tenant and hereby grants to
Tenant its guests, invitees and licensees all easements, rights and privileges
appurtenant thereto, including the right to use adjoining parking areas,
driveways, roads, alleys and means of ingress and egress.
ARTICLE 1
TERM AND USE
A. The Primary Term (herein so called) of this Lease shall begin on the
date (the "Commencement Date") July 1, 1997 and shall expire on June 30, 2002.
For purposes of this Lease, a "Lease Month" shall be defined as those
successive calendar month periods beginning with the Commencement Date and
continuing through the Primary Term or any Renewal Term of this Lease;
provided, however, if the Commencement Date is a day other than the first day
of a calendar month, then the first Lease Month shall include that period of
time from the Commencement Date up to the first day of the next calendar month,
and each subsequent Lease Month shall be a calendar month period beginning on
the first day of such month. The Primary Term and any Renewal Terms
(hereinafter defined) are sometimes collectively referred to herein as the
"Term."
B. Provided Tenant is not in default of any material term, condition or
covenant contained in this Lease and no event has occurred which with the
notice or the passage of time would constitute a default under any material
term, condition or covenant contained in this Lease at the time of exercise of
an option to renew the Primary Term beyond any period for curing same, Tenant
shall have the option of renewing this Lease for two (2) additional terms of
five (5) years each (hereinafter, collectively referred to as "Renewal Terms,"
or individually as "Renewal Term"). Each Renewal Term will be on the same
terms and conditions as provided herein except for the Base Rent which shall be
as shown on "Exhibit D" attached hereto and made a part hereof. Notice of the
exercise of such options shall be given by Tenant to Landlord in writing not
later than one hundred and eighty days prior to expiration of the Primary Term
or the previous Renewal Term.
C. The Demised Premises may be used for the operation of an equipment
rental business and any other lawful purpose provided that Landlord consents,
which consent shall not be unreasonably withheld, conditioned or delayed.
<PAGE> 3
ARTICLE 2
EXHIBITS AND ORIGINAL CONSTRUCTION
A. The exhibits listed below and attached to this Lease are incorporated
herein by reference:
EXHIBIT "A" - Legal Description of the Demised Premises
EXHIBIT "B" - Non-Disturbance and Attornment Agreement
EXHIBIT "C" - Memorandum of Lease
EXHIBIT "D" - Renewal Term Rent Schedule
B. Landlord will deliver the Demised Premises to Tenant no later than the
date of execution of this Lease (the "Delivery Date").
ARTICLE 3
DATE ON WHICH RENT BEGINS
A. The Base Rent (as defined herein) and all Additional Rent (as herein
defined) (Base Rent and Additional Rent are sometimes collectively referred to
herein as "Rent") shall begin to accrue on the date (the "Rent Commencement
Date") which is the Commencement Date.
B. Tenant does hereby covenant and agree to pay to Landlord, for the use
and occupancy of the Demised Premises, at the times and in the manner
hereinafter provided, the following sums of money:
<TABLE>
<CAPTION>
Lease
Years Base Rent
------- --------------
<S> <C>
1-10 $2,000/month
</TABLE>
to be paid in U.S. Dollars, in advance, without notice or invoice from
Landlord, on the first day of each and every month during the Term hereof,
commencing upon the date on which Base Rent is determined to commence under the
provisions of Article 3 hereof and ending upon the termination date of this
Lease. In the event such Base Rent shall be determined under the provisions of
Article 3 hereof to commence on a day other than the first (1st) day of a
month, then the Base Rent for the period from such Rent Commencement Date until
the first day of the month next following shall be prorated accordingly. All
payments in this Lease provided for (those hereinafter stipulated as well as
Base Rent) shall be paid or mailed to:
Sprint Industrial Services, Inc.
1041 Conrad Sauer
Houston, Texas 77043
Attn: President
or to such other payee or address as Landlord may designate in writing to
Tenant.
- 2 -
<PAGE> 4
ARTICLE 4
TAXES
In addition to the Base Rent provided for in Article 3 hereof, Tenant
agrees to pay the additional payments as follows:
A. Tenant shall be responsible for all real property taxes and assessments
(hereinafter, "Real Estate Taxes") which may be levied or assessed against the
Demised Premises by any lawful authority for each calendar year or portion
during the Term of this Lease. As the Demised Premises is only eight (8) acres
of an eleven (11) acre tax parcel, Tenant shall only be responsible for its pro
rata share of Real Estate Taxes, which pro rata share shall be determined by
the parties taking into account the relative acreage of each parcel and the
value of the improvements thereon. As the lease years under this Lease do not
coincide with a calender year, Real Estate Taxes for such partial years shall
be prorated accordingly based on the number of days which this Lease was in
full force and effect during such calender year.
B. Tenant's proportionate share of all Real Estate Taxes during the Term
hereof shall be paid annually or semiannually to the appropriate taxing
authority, but no more frequently than Landlord is required to make payment.
Upon receipt of all tax bills and assessment bills attributed to any calendar
year during the Term hereof, Landlord shall furnish Tenant with a written
statement of the actual amount of Tenant's proportionate share of the Real
Estate Taxes for such year or part thereof, together with a copy of such tax
bills, and Tenant shall pay such actual amount within thirty (30) days of such
statement from Landlord but no more than ten (10) days prior to the date
Landlord is required to pay said Real Estate Taxes. A copy of a tax bill or
assessment bill submitted by Landlord to Tenant shall at all times be
sufficient evidence of the amount of Real Estate Taxes levied or assessed
against the property to which such bill relates. Landlord's and Tenant's
obligations under this Article 4 shall survive the expiration of the Term of
this Lease. No Real Estate Taxes, assessments, fees or charges referred to in
this paragraph shall be considered as taxes under the provisions of Article 10
hereof.
C. Tenant may, upon the receipt of prior written approval of Landlord,
such approval not to be unreasonably withheld, contest any Real Estate Taxes
against the Demised Premises and attempt to obtain a reduction in the assessed
valuation upon the Demised Premises for the purpose of reducing any such
taxment. In the event Landlord approves and upon the request of Tenant but
without expense or liability to Landlord, Landlord shall cooperate with Tenant
and execute any document which may be reasonably necessary and proper for any
proceeding. If a tax reduction is obtained there shall be a subsequent
reduction in Tenant's total Real Estate Taxes for such year, and any excess
payments by Tenant shall be refunded by Landlord, without interest, when all
refunds to which Landlord is entitled from the taxing authority with respect to
such year have been received by Landlord. In the event Landlord desires to
contest any Real Estate Taxes, Tenant agrees to cooperate with Landlord and
execute any document which may be reasonably necessary and proper for any
proceeding at no cost to Tenant.
D. Tenant shall not be liable for increases in Real Estate Taxes
attributable to additional improvements to the Demised Premises that are
constructed after the first tax year included within the terms of this Lease,
unless the additional improvements are constructed for Tenant's sole benefit.
E. There shall be excluded from the tax bill to which Tenant contributes,
for the purposes of computing Real Estate Taxes income, excess profits,
estate, single business, inheritance, succession, transfer or franchise tax
assessments upon Landlord or the Rent payable under this Lease. Landlord
hereby represents and warrants that Landlord has no actual knowledge (without
independent investigation) of current or future special assessments.
- 3 -
<PAGE> 5
ARTICLE 5
NON-DISTURBANCE AND ATTORNMENT
A. Upon written request of Landlord, or any mortgagee or beneficiary of
Landlord, Tenant will, in writing, subordinate its right hereunder to the
interest of any ground lessor of the land upon which the Demised Premises is
situated and to the lien of any mortgage or deed of trust now or hereafter in
force against the land and building of which the Demised Premises is a part,
and upon any building hereafter placed upon the land of which the Demised
Premises is a part and to all advances made or hereafter to be made upon the
security thereof; provided, however, that the ground lessor, or the mortgagee
or trustee named in said mortgage or trust deed shall agree that Tenant's
peaceable possession of the Demised Premises or its rights under this Lease
will not be disturbed on account thereof.
B. In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deeds of
trust, upon any such foreclosure or sale Tenant agrees to recognize such
beneficiary or purchaser as the Landlord under this Lease, provided Tenant's
rights under this Lease continue unabated.
C. Landlord agrees to obtain a Non-Disturbance and Attornment Agreement
from its current lender(s) and the ground lessor, if any, and deliver same to
Tenant on or before the date hereof and from any future lender on or before
obtaining financing from such lender, substantially in accordance with the form
attached hereto as Exhibit "B". The delivery of a fully executed
Non-Disturbance and Attornment Agreement shall be a condition precedent to the
effectiveness of this Lease and if said Non-Disturbance and Attornment is not
so delivered, Tenant may at its option terminate this Lease by written notice
to Landlord.
ARTICLE 6
CONDITION OF PREMISES
Landlord warrants that upon completion of the construction of the building
currently being undertaken on the Demised Premises, the interior and exterior
of the building being constructed will meet with all present codes required at
the time by regulations of governing authorities for use and occupancy by
Tenant. Such construction shall be completed in a good, workmanlike and timely
manner. Except for the warranty and representation set forth in the preceding
sentence, Tenant accepts the Demised Premises and all improvements thereon AS
IS, AND WITHOUT ALL FAULTS AND DEFECTS, BOTH PATENT AND LATENT, KNOWN OR
UNKNOWN. Tenant acknowledges that it has been given the opportunity to inspect
the Demised Premises prior to its execution of this Lease.
ARTICLE 7
REPAIRS AND MAINTENANCE
Tenant covenants and agrees, at its expense without reimbursement or
contribution by Landlord, to keep and maintain all improvements on the Demised
Premises, including, without limitation, the foundations, exterior paint,
plumbing system, electrical system, utility lines and connections to the
Demised Premises, sprinkler mains, if any, structural systems (including,
without limitation, the roof, roof membrane roof covering [including interior
ceiling if damaged by leakage] and load-bearing walls and floor slabs and
masonry walls) in good condition and repair. In addition, Tenant will be
responsible for mowing the grass for the entire eleven (11) acre parcel
including the trailer park. In the event the Demised Premises become or are
out of repair and not in good condition due to the failure of Tenant to comply
with the terms of this Article 7 and if any and all
- 4 -
<PAGE> 6
repairs necessary to restore the Demised Premises to a state of good condition
and repair are not completed within ten (10) days after Tenant has received
written notice of such state of disrepair or if such repairs cannot reasonably
be completed within such ten (10) day period and Tenant shall fail to commence
such repairs within ten (10) days after notice and proceed diligently
thereafter, then Landlord may either (i) terminate this Lease immediately upon
delivery of written notice to Tenant or (ii) prosecute such repairs itself and
add the reasonable cost of such repairs to the next maturing monthly
installment of Rent due hereunder. Notwithstanding the foregoing in the case
of an emergency, Landlord shall have the right to prosecute immediately any and
all necessary repairs and shall deliver contemporaneous notification to Tenant
of the emergency and related repairs and add the reasonable cost of such
repairs to the next maturing monthly installment of Rent due hereunder;
provided further that if contemporaneous notice is not practicable, as
determined by Landlord in its sole judgment, then Landlord shall provide such
notice as soon thereafter as reasonably practicable. Upon termination of this
Lease for any reason, Tenant shall return the Demised Premises to Landlord in
substantially the same condition it is in on the date hereof, ordinary wear and
tear excepted.
ARTICLE 8
ENVIRONMENTAL MATTERS
Landlord represents and warrants that to the best of Landlord's knowledge
any handling, transportation, storage, treatment or usage of hazardous or toxic
substances that has occurred on the Demised Premises has been in compliance
with all applicable federal, state and local laws, regulations and ordinances.
Landlord further represents and warrants to the best of Landlord's knowledge
that no leak, spill, discharge, emission or disposal of hazardous or toxic
substances has occurred on the Demised Premises and that the soil, groundwater,
soil vapor on or under the Demised Premises are free of toxic or hazardous
substances as of the date hereof. Landlord agrees to indemnify, defend and
hold Tenant and its officers, employees and agents harmless from any claims,
judgments, damages, fines, penalties, costs, liabilities (including sums paid
in settlement of claims) or loss, including attorneys, fees, consultants fees,
and expert fees, which arise during or after the Primary Term or any Renewal
Term, or in connection with the presence or suspected presence of toxic or
hazardous substances in the soil, groundwater, or soil vapor on or under the
Demised Premises, unless such toxic or hazardous substances are present solely
as the result of the negligence or wilful misconduct of Tenant, its officers,
employees or agents. This indemnification shall also specifically cover costs
in connection with:
(a) Toxic or hazardous substances present or suspected to be present in
the soil, ground water or soil vapor on or under the Demised
Premises before the date hereof;
(b) Toxic or hazardous substances that migrate, flow, percolate, diffuse
or in any way move onto or under the Demised Premises after date
hereof; or
(c) Toxic or hazardous substances present on or under the Demised
Premises as a result of any discharge, dumping, spilling (accidental
or otherwise) onto the Demised Premises during or after the Primary
Term or any Renewal Term by any person or entity.
Tenant agrees to indemnify and hold harmless Landlord and its officers,
employees and agents from any claims, judgments, damages, fines, penalties,
costs, liabilities (including sums paid in settlement of claims) or loss,
including, without limitation, attorneys' fees, consultants' fees, and expert
fees, which arise during or after the Primary Term or any Renewal Term, or in
connection with the presence or suspected presence of toxic or hazardous
substances in the soil, groundwater, or soil vapor on or under the Demised
Premises, except to the extent that such toxic or hazardous substances are
present (i) on the Commencement Date of this Lease or (ii) due to Landlord or
Landlord's agents, invitees, contractors or employees.
- 5 -
<PAGE> 7
ARTICLE 9
ALTERATIONS
Tenant shall not make any exterior or structural alterations in any
portion of the Demised Premises nor any alterations in the interior or the
exterior of the Demised Premises without, in each instance, first obtaining the
written consent of Landlord, which consent shall not be unreasonably withheld.
Tenant shall be permitted to make interior nonstructural alterations, additions
and improvements costing less than $75,000 without Landlord's prior consent.
ARTICLE 10
FIXTURES AND PERSONAL PROPERTY
Any trade fixtures, business equipment, inventory, trademarked items,
signs, and other removable personal property installed in or on the Demised
Premises by Tenant at its expense ("Tenant's Property"), shall remain the
property of the Tenant. Landlord agrees that Tenant shall have the right, at
any time or from time to time, to remove any and all of Tenant's Property.
Tenant, at its expense, shall immediately repair any damage occasioned by the
removal of Tenant's Property and upon expiration or earlier termination of this
Lease, shall leave the Demised Premises in a neat and clean condition, free of
debris, normal wear and tear excepted.
ARTICLE 11
LIENS
Neither Landlord nor Tenant shall permit to be created nor to remain
undischarged any lien, encumbrance or charge arising out of any work or work
claim of any contractor, mechanic or laborer of Tenant or material supplied by
a materialman to, Landlord or Tenant which might be, or become, a lien or
encumbrance or charge upon the Demised Premises. If any lien or notice of lien
on account of an alleged debt of Landlord or Tenant or any notice of contract
by a party engaged by Landlord or Tenant or Landlord's or Tenant's contractor
to work in the Demised Premises shall be filed against the Demised Premises,
the responsible party shall, within thirty (30) days after notice of the filing
thereof, cause the same to be discharged of record by payment, deposit or bond.
ARTICLE 12
LAWS AND ORDINANCES
A. Tenant and Landlord agree to comply with all laws, ordinances, orders
and regulations regarding the use and occupancy of the Demised Premises and the
cleanliness, safety or operation thereof. Tenant agrees to comply with the
reasonable regulations and requirements of any insurance underwriter,
inspection bureau or similar agency with respect to that portion of the Demised
Premises installed by Tenant.
B. In connection with the installation of any electrical equipment not
included within the Demised Premises, Tenant shall, at Tenant's own expense,
make from time to time whatever changes are necessary to comply with the
requirements of the insurance inspectors, underwriters, government authorities
and codes.
- 6 -
<PAGE> 8
ARTICLE 13
SERVICES
A. Landlord warrants that the necessary mains, conduits and other
facilities have been provided to make water, sewer, gas, phone and electricity
available to the Demised Premises.
B. Tenant shall be solely responsible for and promptly pay all charges for
the use and consumption of sewer, gas, electricity, water, phone and all other
utility services used within the Demised Premises.
C. Landlord shall not be liable to Tenant for damages or otherwise if the
said utilities or services are interrupted or terminated because of necessary
repairs, installations, or improvements, or any cause beyond the Landlord's
reasonable control, nor shall any such interruption or termination relieve
Tenant of the performance of any of its obligations hereunder; provided,
however, if such interruption shall be due to the Landlord's or Landlord's
agent's, employee's, contractor's or invitee's negligent or willful misconduct
and Tenant is unable to operate its business there shall be an abatement of all
Rent hereunder during such time period and if such interruption shall continue
for a period of more than thirty (30) days, then Tenant may terminate this
Lease.
D. Tenant shall not install any equipment which could exceed the capacity
of any utility facilities servicing the Demised Premises of which capacity
Tenant has notice, and if any equipment installed by Tenant requires additional
utility facilities the same shall be installed by Tenant in compliance with all
code requirements.
ARTICLE 14
DAMAGE TO PREMISES
In the event the Demised Premises is hereafter damaged or destroyed or
rendered partially untenable for their accustomed use, by fire or other
casualty insured or which should have been insured under the coverage which
Tenant is obligated to carry pursuant to Article 15 hereof, then Tenant shall,
within sixty (60) days after such casualty, commence repair of said Demised
Premises and within one hundred twenty (120) days after commencement of such
repair, restore the Demised Premises to substantially the same condition in
which it was immediately prior to the occurrence of the casualty, except as
otherwise provided in this Article 14. From the date of such casualty until
the Demised Premises is so repaired and restored Rent and all other charges and
items payable hereunder shall abate in such proportion as the part of the
Demised Premises thus destroyed or rendered untenable bears to the total
Demised Premises. Notwithstanding the foregoing, in the event the Demised
Premises is rendered untenable, in the reasonable opinion of the parties,
Tenant and Landlord shall have the right to terminate this Lease upon thirty
(30) days notice to the other and all insurance proceeds attributable to the
impairment shall be remitted to Landlord immediately upon receipt.
ARTICLE 15
INSURANCE
A. Landlord agrees to carry, or cause to be carried, during the Term
hereof, Commercial General Liability Insurance (hereinafter, "Landlord's
Liability Insurance") providing coverage of not less than One Million Dollars
($1,000,000.00), combined Bodily Injury and Property Damage Liability in
separate limits for each of the following: General Aggregate,
Products-Completed Operations Aggregate, Each Occurrence,
- 7 -
<PAGE> 9
Personal & Advertising Injury and Fire Damage, limits of Fifty Thousand Dollars
($50,000.00). Landlord, upon written request by Tenant, shall promptly deliver
to Tenant a certificate of Landlord's Liability Insurance.
B. Tenant agrees to carry Commercial General Liability insurance on the
Demised Premises during the Term hereof covering both Tenant and Landlord as
their interest may appear, with companies reasonably satisfactory to Landlord
and giving Landlord and Tenant a minimum of ten (10) days written notice by the
insurance company prior to cancellation, termination or change in such
insurance. Such insurance shall be for limits of not less than One Million
Dollars ($1,000,000.00) combined Bodily Injury and Property Damage Liability in
separate limits for each of the following: General Aggregate,
Products-Completed Operations Aggregate, Each Occurrence, Personal &
Advertising Injury, and Fire Damage, limits of Two Hundred Fifty Thousand
Dollars ($250,000.00).
Tenant also agrees to carry, during the Term hereof, all risk property
insurance (hereinafter, "Tenant's Property Insurance") covering fire and
extended coverage, vandalism and malicious mischief, sprinkler leakage and all
other perils of direct physical loss or damage insuring the improvements and
betterments located in the Demised Premises, including the Demised Premises and
all appurtenances thereto for the full replacement value thereof. Landlord
shall be named as an additional insured under Tenant's Property Insurance to the
extent its interest shall appear. Tenant, upon request, shall furnish Landlord
a certificate of such Tenant's Property Insurance.
Landlord agrees that it shall not have any right, title or interest in
and to Tenant's property insurance covering Tenant's Property located on or
within the Demised Premises or any proceeds therefrom.
C. Landlord and Tenant and all parties claiming under them, mutually
release and discharge each other from all claims and liabilities arising from
or caused by any casualty or hazard, to the extent covered by insurance on the
Demised Premises and waive any right of subrogation which might otherwise exist
in or accrue to any person on account thereof. This waiver shall not be
required if the insurance carrier charges an additional premium in order to
provide such waiver and the party benefitting from the waiver does not agree to
pay the additional premium.
ARTICLE 16
INDEMNIFICATION
A. Tenant hereby indemnifies and holds Landlord harmless from and against
any and all claims, demands, liabilities and expenses, including attorneys'
fees, arising from Tenant's use of the Demised Premises or from any act, or any
omission to act, in or about the Demised Premises by Tenant or its agents,
employees or contractors, or from any breach or default by Tenant of this
Lease, except to the extent caused by Landlord's negligence or willful
misconduct. In the event any action or proceeding shall be brought against
Landlord by reason of any such claim, Tenant shall defend the same at Tenant's
expense by counsel reasonably satisfactory to Landlord.
B. Landlord hereby indemnifies and holds Tenant harmless from and against
any and all claims, demands, liabilities and expenses, including attorneys'
fees, arising from Landlord's obligations, actions or from any act, or any
omission to act, in or about the Demised Premises by Landlord or its agents,
employees, contractors or invitees, or from any breach or default by Landlord
of this Lease, except to the extent caused by Tenant's negligence or willful
misconduct. In the event any action or proceeding shall be brought against
Tenant by reason of any such claim, Landlord shall defend the same at
Landlord's expense by counsel reasonably satisfactory to Tenant.
- 8 -
<PAGE> 10
ARTICLE 17
ASSIGNMENT, SUBLETTING AND OWNERSHIP
A. Tenant shall have the absolute right to sublet, assign or otherwise
transfer its interest in this Lease to any parent or operating subsidiary of
Tenant, subsidiary of Tenant's parent, or to a corporation with which it may
merge or consolidate or to a Company, entity or individual that purchases all
or substantially all of the assets or common stock of Tenant either in one
transaction or a series of transactions, without Landlord's approval, written
or otherwise. In the event of any such subletting, assignment or other
transfer, Tenant shall not be released from any liability upon such assignment
or sublease with respect to that portion of the Tenant's leasehold estate so
assigned or subleased.
B. The consent by Landlord to any other transfer, assignment, subletting,
license or concession agreement, or hypothecation shall not be unreasonably
withheld, conditioned or delayed.
C. Landlord shall have the right to transfer, assign and convey, in whole
or in part, any or all of the right, title and interest to the Demised
Premises, provided such transferee or assignee shall be bound by the terms,
covenants and agreements herein contained, and shall expressly assume and agree
to perform the covenants and agreements of Landlord herein contained as
performance of such covenants and agreements becomes due after any such
assignment.
ARTICLE 18
ACCESS TO PREMISES
Upon reasonable prior written notice, but in no event less than
twenty-four (24) hours (except in the case of an emergency), Landlord may enter
the Demised Premises during Tenant's business hours for purposes of inspection,
to show the Demised Premises to prospective purchasers and lenders, or to
perform maintenance and repairs in accordance with Article 7 hereof. Landlord
shall use Landlord's best efforts to minimize interference with Tenant's
business.
ARTICLE 19
DEFAULTS BY TENANT
A. The occurrence of any of the following shall constitute a material
default and breach of this Lease by Tenant:
(i) Any failure by Tenant to pay Rent or make any other payment required
to be made by Tenant hereunder within seven (7) days after receipt of
written notice from the Landlord; and
(ii) A failure by Tenant to observe and perform any other material
provision of this Lease to be observed or performed by the Tenant, where
such failure continues for thirty (30) days after written notice thereof by
Landlord to Tenant, except that this thirty (30) day period shall be
extended for a reasonable period of time if the alleged default is not
reasonably capable of cure within said thirty (30) day period and Tenant
proceeds to diligently cure the default.
B. In the event of any such default by Tenant, then Landlord shall be
entitled to terminate this Lease by giving written notice of termination to
Tenant, in which event Tenant shall immediately surrender the Demised Premises
to Landlord. If Tenant fails to so surrender the Demised Premises, then
Landlord may,
- 9 -
<PAGE> 11
without prejudice to any other remedy it has for possession of the Demised
Premises or arrearages in Rent or other damages, re-enter and take possession
of the Demised Premises and expel or remove Tenant and any other person
occupying the Demised Premises or any part thereof, in accordance with
applicable law.
C. Notwithstanding anything to the contrary contained in this Lease: (i)
Landlord shall not have any right to accelerate the Rent and other amounts
payable hereunder and (ii) in the event of any default by Tenant under this
Lease Landlord shall, in each case, use its reasonable efforts to mitigate its
damages.
ARTICLE 20
DEFAULTS BY LANDLORD
If Landlord should be in default in the performance of any of its
obligations under this Lease, which default continues for a period of more than
thirty (30) days after receipt of written notice from Tenant specifying such
default, or if such default is of a nature to require more than thirty (30)
days for remedy and continues beyond the time reasonably necessary to cure (and
Landlord has not undertaken procedures to cure the default within such thirty
(30) day period and diligently pursued such efforts to complete such cure),
Tenant may, in addition to any other remedy available at law or in equity, at
its option, upon written notice, terminate this Lease, or may incur any expense
necessary to perform the obligation of Landlord specified in such notice and
deduct such expense from the Rent or other charges next becoming due.
ARTICLE 21
SURRENDER OF PREMISES
Tenant shall, upon the expiration of the Term granted herein, or any
earlier termination of this Lease for any cause, surrender to Landlord the
Demised Premises, and all alterations, improvements and other additions which
may be made or installed by either party to, in, upon or about the Demised
Premises, other than Tenant's Property which shall remain the property of
Tenant as provided in Article 10 hereof, without any damage, injury or
disturbance thereto, or payment therefor.
ARTICLE 22
EMINENT DOMAIN
A. (i) In the event that any portion of the Demised Premises shall be
appropriated or taken under the power of eminent domain by any public or
quasipublic authority and such appropriation or taking renders the Demised
Premises unfit for the conduct of Tenant's business thereon in the reasonable
opinion of the parties, then at the election of Tenant, this Lease shall
terminate and expire as of the date of such taking, and both Landlord and
Tenant shall thereupon be released from any liability thereafter accruing
hereunder.
(ii) Notice of any termination relating to such eminent domain proceeding
must be made by Tenant to Landlord within sixty (60) days after receipt of
written notice of such taking.
(iii) In the event of such termination, both Landlord and Tenant shall
thereupon be released from any liability thereafter accruing hereunder.
- 10 -
<PAGE> 12
B. Whether or not this Lease is terminated, nothing herein shall be deemed
to affect Tenant's right to receive compensation for damages to Tenant's
Property. If this Lease is terminated as hereinabove provided, all items of
Rent and other charges for the last month of Tenant's occupancy shall be
prorated and Landlord agrees to refund to Tenant any Rent, or other charges
paid in advance.
C. In the event of any such appropriation or taking that does not render
the Demised Premises unfit for the conduct of Tenant's business thereon in the
reasonable opinion of the parties, or if Tenant otherwise elects not to so
terminate this Lease, Tenant shall remain in that portion of the Demised
Premises which shall not have been appropriated or taken as herein provided,
and Landlord agrees, at Landlord's cost and expense, to, as soon as reasonably
possible, restore the remaining portion of the Demised Premises to a complete
unit of like quality and character as existed prior to such appropriation or
taking, and thereafter all Rent and payment obligations of Tenant shall be
adjusted on an equitable basis, taking into account the relative value of the
portion taken as compared to the portion remaining. For the purpose of this
Article 22, a voluntary sale or conveyance in lieu of condemnation, but under
threat of condemnation shall be deemed an appropriation or taking under the
power of eminent domain.
D. Tenant shall have the right to pursue its claim for damages in
connection with any eminent domain proceeding.
ARTICLE 23
ATTORNEYS' FEES
In the event that at any time during the Term of this Lease either
Landlord or Tenant shall institute any action or proceeding against the other
relating to the provisions of this Lease, or any default hereunder, the
unsuccessful party in such action or proceeding agrees to reimburse the
successful party for the reasonable expenses of attorneys' fees and paralegal
fees and disbursements incurred therein by the successful party. Such
reimbursement shall include all legal expenses incurred prior to trial, at
trial and at all levels of appeal and post-judgment proceedings.
ARTICLE 24
NOTICES
Notices and demands required, or permitted, to be sent to those listed
hereunder shall be sent by certified mail, return receipt requested, postage
prepaid, or by Federal Express or other reputable overnight courier service and
shall be deemed to have been given upon the date the same is postmarked if sent
by certified mail or the day deposited with Federal Express or such other
reputable overnight courier service, but shall not be deemed received until one
(1) business day following deposit with Federal Express or other reputable
overnight courier service or three (3) days following deposit in the United
States Mail if sent by certified mail to address shown below, and addressed to:
<TABLE>
<CAPTION>
LANDLORD: TENANT:
- --------- -------
<S> <C>
Sprint Industrial Services, Inc. NES Acquisition Corp.
1041 Conrad Sauer c/o National Equipment Services, Inc.
Houston, Texas 77043 1800 Sherman, Suite 100
Attn: President Evanston, Illinois 60201
Attn: Kevin P. Rodgers
</TABLE>
- 11 -
<PAGE> 13
or at such other address requested in writing by either party upon thirty (30)
days' notice to the other party.
ARTICLE 25
REMEDIES
All rights and remedies of Landlord and Tenant herein created or otherwise
extending at law are cumulative, and the exercise of one or more rights or
remedies may be exercised and enforced concurrently or consecutively and
whenever and as often as deemed desirable.
ARTICLE 26
SUCCESSORS AND ASSIGNS
All covenants, promises, conditions, representations and agreements herein
contained shall be binding upon, apply and inure to the parties hereto and
their respective heirs, executors, administrators, successors and assigns; it
being understood and agreed, however, that the provisions of Article 20 are in
nowise impaired by this Article 26.
ARTICLE 27
WAIVER
The failure of either Landlord or Tenant to insist upon strict performance
by the other of any of the covenants, conditions, and agreements of this Lease
shall not be deemed a waiver of any subsequent breach or default in any of the
covenants, conditions and agreements of this Lease. No surrender of the
Demised Premises by Tenant shall be affected by Landlord's acceptance of Rent
or by other means whatsoever unless the same is evidenced by Landlord's written
acceptance of the surrender.
ARTICLE 28
HOLDING OVER
If Tenant or any party claiming under Tenant remains in possession of the
Demised Premises or any part thereof after any termination or expiration of
this Lease, Landlord, in Landlord's sole discretion, may treat such holdover as
an automatic renewal of this Lease for a month-to-month tenancy subject to all
the terms and conditions provided herein.
ARTICLE 29
INTERPRETATION
The parties hereto agree that it is their intention hereby to create only
the relationship of Landlord and Tenant, and no provision hereof, or act of
either party hereunder, shall ever be construed as creating the relationship of
principal and agent, or a partnership, or a joint venture or enterprise between
the parties hereto.
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<PAGE> 14
ARTICLE 30
COVENANT OF TITLE AND QUIET ENJOYMENT
Landlord covenants that it has full right, power and authority to make
this Lease, subject only to the Permitted Liens (as defined in Article 37), and
that Tenant or any permitted assignee or sublessee of Tenant, upon the payment
of the Rent and performance of the covenants hereunder, shall and may peaceably
and quietly have, hold and enjoy the Demised Premises and improvements thereon
during the Term or any renewal or extension thereof.
Additionally, except as provided in this Lease or by law, Landlord shall
take no action that will interfere with Tenant's intended usage of the Demised
Premises.
ARTICLE 31
ESTOPPEL
At any time and from time to time either party, upon request of the other
party, will execute, acknowledge and deliver an instrument, stating, if the
same be true, that this Lease is a true and exact copy of this Lease between
the parties hereto, that there are no amendments hereof (or stating what
amendments there may be), that the same is then in full force and effect and
that, to the best of its knowledge, there are no offsets, defenses or
counterclaims with respect to the payment of Rent reserved hereunder or in the
performance of the other terms, covenants and conditions hereof on the part of
Tenant or Landlord, as the case may be, to be performed, and that as of such
date no default has been declared hereunder by either party or if not
specifying the same. Such instrument will be executed by the other party and
delivered to the requesting party within fifteen (15) days of receipt.
ARTICLE 32
RECORDING
Neither Landlord nor Tenant shall record this Lease. The parties shall
join in the execution of a memorandum or so-called "short-form" of this Lease
for the purposes of recordation in accordance with the form attached hereto as
Exhibit "C" and made a part hereof. Any recording costs associated with the
memorandum or short form of this Lease shall be borne by the party requesting
recordation.
ARTICLE 33
FORCE MAJEURE
In the event that either party hereto shall be delayed or hindered in or
prevented from the performance required hereunder by reason of strikes,
lockouts, labor troubles, failure of power, riots, insurrection, war, acts of
God, or other reasons of like nature not the fault of the party delayed in
performing work or doing acts (hereinafter, "Permitted Delay" or "Permitted
Delays"), such party shall be excused for the period of time equivalent to the
delay caused by such Permitted Delay. Notwithstanding the foregoing, (i) any
extension of time for a Permitted Delay shall be conditioned upon the party
seeking an extension of time delivering written notice of such Permitted Delay
to the other party within ten (10) days of the event causing the Permitted
Delay, (ii) the maximum period of time which Landlord may delay any act or
performance of work due to a
- 13 -
<PAGE> 15
Permitted Delay shall be sixty (60) days, and (iii) no Permitted Delay or
Permitted Delays shall have the effect of extending the time for payments of
rent as required under this Lease.
ARTICLE 34
CONSENT
Wherever in this Lease Landlord or Tenant is required to give its consent
or approval, such consent or approval shall not be unreasonably withheld,
conditioned or delayed.
ARTICLE 35
WAIVER OF LANDLORD'S LIENS
Landlord hereby waives any contractual, statutory or other Landlord's lien
on Tenant's furniture, fixtures, supplies, equipment, inventory and Tenant's
Property.
ARTICLE 36
Intentionally omitted.
ARTICLE 37
TITLE
Landlord hereby represents and warrants to Tenant that (i) there are no
mortgages, deeds of trust, liens, covenants, restrictions or easements
affecting the Demised Premises except those matters which will not interfere
with Tenant's use of the Demised Premises and those mortgages or deeds of trust
from such lenders that have delivered non-disturbance and attornment agreements
to Tenant in accordance with the requirements of Article 5 of this Lease
(collectively the "Permitted Liens") and (ii) to the best of Landlord's
knowledge, there are no zoning laws, ordinances or regulations of public
authorities that will materially interfere with Tenant's use of the Demised
Premises.
ARTICLE 38
ZONING, DEED RESTRICTIONS, ETC.
Landlord represents and warrants that the Demised Premises can be used by
Tenant for conduct of the business it is acquiring from Landlord on the date
hereof and Tenant's ability to so use the Demised Premises is a condition
precedent to this Lease. Landlord covenants, warrants, represents and agrees
to reasonably cooperate and provide assistance in obtaining any necessary
certificates of occupancy, building permits, sign permits and any variances
necessary for the conduct of such business. Notwithstanding the foregoing,
Tenant's sole remedy for breach of the representation and warranty set forth in
this Article 38 shall be termination of this Lease after notice to Landlord and
providing an opportunity to cure as required by Article 20 hereof.
- 14 -
<PAGE> 16
ARTICLE 39
SEVERABILITY
Any provision of this Lease which shall prove to be invalid, void or
illegal shall in no way affect, impair or invalidate any other provisions
hereof and such other provisions shall remain in full force and effect.
ARTICLE 40
GOVERNING LAW AND VENUE
This Lease shall be governed by the laws of the state in which the Demised
Premises is located.
ARTICLE 41
TENANT FINANCING
Tenant shall have the absolute right from time to time during the Term
hereof and without Landlord's further approval, written or otherwise, to grant
and assign a mortgage or other security interest in Tenant's interest in this
Lease and all of Tenant's Property to Tenant's lenders in connection with
Tenant's financing arrangements. Landlord agrees to execute such amendments,
confirmation, certificates and other documents as Tenant's lenders may
reasonably request in connection with any such financing.
ARTICLE 42
BROKERS
Landlord and Tenant represent and warrant one to the other that they have
not had any dealing with any real estate brokers or agents in connection with
the negotiation of this Lease. Landlord and Tenant indemnify and hold each
other harmless from and against any and all liability and cost which Landlord
or Tenant may suffer in connection with real estate brokers claiming by,
through or under either party seeking any commission, fee or payment in
connection with this Lease.
ARTICLE 43
TENANT'S CONDUCT OF BUSINESS
Notwithstanding anything herein to the contrary, nothing herein shall be
construed as an obligation for Tenant to open or operate its business in the
Demised Premises. Tenant shall have the right to remove Tenant's Property and
cease operations in the Demised Premises at any time and at Tenant's sole
discretion. Tenant shall operate its business on the Demised Premises at all
times during the Term of this Lease or any Renewal Term in accordance with all
laws, rules, regulations or court orders governing or applicable to its
operations thereon. Under no circumstances shall Tenant move the trailer
located on the Demised Premises.
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<PAGE> 17
ARTICLE 44
TIME OF THE ESSENCE
Time shall be of the essence in interpreting the provisions of this Lease.
ARTICLE 45
ENTIRE AGREEMENT
This Lease contains all of the agreements of the parties hereto with
respect to the lease of the Demised Premises and no prior agreement, letters,
representations, warranties, promises or understandings pertaining to any such
matters shall be effective for any such purpose. This Lease may be amended or
added to only by an agreement in writing signed by the parties hereto or their
respective successors in interest.
ARTICLE 46
PRELIMINARY NEGOTIATIONS
The submission of this lease form by Tenant for examination does not
constitute an offer to lease or a reservation of an option to lease. In
addition, Landlord and Tenant acknowledge that neither of them shall be bound
by the representations, promises or preliminary negotiations with respect to
the Demised Premises made by their respective employees or agents. It is their
intention that neither party be legally bound in any way until this Lease has
been fully executed by both Landlord and Tenant.
- 16 -
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the day
and year first mentioned, the corporate party or parties by its or their proper
officers thereto duly authorized.
TENANT:
NES ACQUISITION CORP.,
A DELAWARE CORPORATION
By: /s/ Paul R. Ingersoll
--------------------------------
Name: Paul R. Ingersoll
--------------------------------
Title: Vice President
--------------------------------
LANDLORD:
SPRINT INDUSTRIAL SERVICES, INC.,
A TEXAS CORPORATION
By: /s/ J. W. O'Neil
--------------------------------
Name: J. W. O'Neil
--------------------------------
Title: President
--------------------------------
- 17 -
<PAGE> 19
State of __________ )
)SS:
County of _________ )
On this _____ day of ___________________, 1997, before me, the undersigned
Notary Public in and for said County and State, personally appeared
_______________________, ____________________ of NES Acquisition Corp., a
Delaware corporation, who executed the foregoing instrument on behalf of said
corporation for the purposes therein expressed. In witness whereof, I have
hereunto set my hand and official seal the day and year last above written.
-------------------------------------------
Notary Public
My commission expires:
---------------------
State of ___________ )
) SS:
County of __________ )
On this _____ day of ___________________, 1997, before me, the undersigned
Notary Public in and for said County and State, personally appeared
_______________________, ____________________ of Sprint Industrial Services,
Inc., a Texas corporation, who executed the foregoing instrument on behalf of
said corporation for the purposes therein expressed. In witness whereof, I
have hereunto set my hand and official seal the day and year last above
written.
------------------------------------------
Notary Public
My commission expires:
--------------------
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<PAGE> 20
EXHIBIT "A"
LEGAL DESCRIPTION OF THE DEMISED PREMISES
[to be furnished]
A-1
<PAGE> 21
EXHIBIT "B"
RECORDING REQUESTED BY,
AND WHEN RECORDED RETURN TO:
________________________________
________________________________
________________________________
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this "Agreement") is made
and entered into this the _______ day of 19___ by and between NES Acquisition
Corp., a Delaware corporation ("Tenant") and ____________________, a _________
____________________ ("Lender") and Sprint Industrial Services, Inc., a Texas
corporation ("Landlord").
R E C I T A L S:
WHEREAS, Landlord has executed a Lease dated as of July 1, 1997 in favor
of Tenant, a memorandum of which may be recorded simultaneously herewith,
covering a certain Demised Premises therein described located on a parcel of
real estate, a legal description of which is attached hereto and incorporated
herein by this reference as Exhibit "A" (said parcel of real estate and the
Demised Premises being sometimes collectively referred to herein as the
"Property");
WHEREAS, Landlord has executed a ________________ (the "Mortgage") dated
________________, 19____ and recorded on _______________ 19 ____ at Volume
________, Page ________, on the _____________ Records of __________ County,
_________________ in favor of Lender, payable upon the terms and conditions
described therein;
WHEREAS, it is a condition to said loan that said Mortgage shall
unconditionally be and remain at all times a lien or charge upon the Property,
prior and superior to this Lease and to the leasehold estate created thereby;
and
WHEREAS, the parties hereto desire to assure Tenant's possession and
control of the Property under this Lease upon the terms and conditions therein
contained.
NOW, THEREFORE, for and in consideration of the mutual covenants and
premises herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and confessed by the parties
hereto, the parties hereto do hereby agree as follows:
A G R E E M E N T:
1. The Lease is and shall be subject and subordinate to the Mortgage, and
to all renewals, modifications, consolidations, replacements and extensions
thereof, and to all future advances made thereunder.
B-1
<PAGE> 22
2. Should Lender become the owner of the Property, or should the Property
be sold by reason of foreclosure, or other proceedings brought to enforce the
Mortgage which encumbers the Property, or should the Property be transferred by
deed in lieu of foreclosure, or should any portion of the Property be sold
under a trustee's sale, this Lease shall continue in full force and effect as a
direct lease between the then owner of the Property covered by the Mortgage and
Tenant, upon, and subject to, all of the terms, covenants and conditions of
this Lease for the balance of the term thereof remaining, including any
extensions therein provided. Tenant does hereby agree to attorn to Lender or
to any such owner as its landlord, and Lender hereby agrees that it will accept
such attornment.
3. Notwithstanding any other provision of this Agreement, Lender shall not
be (a) liable for any default of any landlord under the Lease (including
Landlord), except that Lender agrees to cure any default of Landlord that is
continuing as of the date Lender forecloses the Property within thirty (30)
days from the date Tenant delivers written notice to Lender of such continuing
default, unless such default is of such a nature to reasonably require more
than thirty (30) days to cure and then Lender shall be permitted such
additional time as is reasonably necessary to effect such cure, provided
Landlord diligently and continuously proceeds to cure such default; (b) bound
by any Rent that Tenant may have paid under the Lease more than one month in
advance; (c) bound by any amendment or modification of the lease hereafter made
without Lender's prior written consent; (d) responsible for the return of any
security deposit delivered to Landlord under the Lease and not subsequently
received by Lender.
4. If Lender sends written notice to Tenant to direct its Rent payments
under the Lease to Lender instead of Landlord, then Tenant agrees to follow the
instructions set forth in such written instructions and deliver Rent payments
to Lender; however, Landlord and Lender agree that Tenant shall be credited
under the Lease for any Rent payments sent to Lender pursuant to such written
notice.
5. All notices which may or are required to be sent under this Agreement
shall be in writing and shall be sent by first-class certified U.S. mail,
postage prepaid, return receipt requested, and sent to the party at the address
appearing below or such other address as any party shall hereafter inform the
other party by written notice given as set forth below:
<TABLE>
<CAPTION>
LANDLORD: TENANT:
--------- -------
<S> <C>
Sprint Industrial Services, Inc. NES Acquisition Corp.
1041 Conrad Sauer c/o National Equipment Services, Inc.
Houston, Texas 77043 1800 Sherman, Suite 100
Attn: President Evanston, Illinois 60201
Attn: Kevin P. Rodgers
</TABLE>
All notices delivered as set forth above shall be deemed effective three (3)
days from the date deposited in the U.S. mail.
6. Said Mortgage shall not cover or encumber and shall not be construed as
subjecting in any manner to the lien thereof any of Tenant's trade fixtures,
furniture, equipment or other personal property at any time placed or installed
in the Premises. In the event the Property or any part thereof shall be taken
for public purposes by condemnation or transfer in lieu thereof or the same are
damaged or destroyed, the rights of the parties to any condemnation award or
insurance proceeds shall be determined and controlled by the applicable
provisions of this Lease.
B-2
<PAGE> 23
7. This Non-Disturbance Agreement shall inure to the benefit of and be
binding upon the parties hereto, their successors in interest, heirs and
assigns and any subsequent owner of the Property secured by the Mortgage.
8. Should any action or proceeding be commenced to enforce any of the
provisions of this Non-Disturbance Agreement or in connection with its meaning,
the prevailing party in such action shall be awarded, in addition to any other
relief it may obtain, its reasonable costs and expenses, not limited to taxable
costs, and reasonable attorneys' fees.
9. Tenant shall not be enjoined as a party/defendant in any action or
proceeding which may be instituted or taken by reason or under any default by
Landlord in the performance of the terms, covenants, conditions and agreements
set forth in the Mortgage.
IN WITNESS WHEREOF, the parties hereto have caused this Non-Disturbance
Agreement to be executed as of the day and year first above written.
LENDER:
--------------------------------------
a
------------------------------------
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
TENANT:
NES ACQUISITION CORP.,
A DELAWARE CORPORATION
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
LANDLORD:
SPRINT INDUSTRIAL SERVICES, INC.,
A TEXAS CORPORATION
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
B-3
<PAGE> 24
STATE OF ______________ )
) SS:
COUNTY OF _____________ )
[Acknowledgment of Lender]
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ________________________ of ____________
___________________________________________________ and he/she executed the
foregoing for and on behalf of said Corporation by authority of its Board of
Directors for the uses and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
----------------------------------
Notary Public in and for the State
and County aforesaid
----------------------------------
(Printed Name of Notary)
My Commission Expires:
- ----------------------------------
B-4
<PAGE> 25
[Acknowledgement of Tenant)
STATE OF ______________ )
) SS:
COUNTY OF _____________ )
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ____________________ of NES Acquisition
Corp., a Delaware corporation, and he/she executed the foregoing for and on
behalf of said Corporation by authority of its Board of Directors for the uses
and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
----------------------------------
Notary Public in and for the State
and County aforesaid
My Commission Expires:
- ---------------------------------
B-5
<PAGE> 26
STATE OF ______________ )
) SS:
COUNTY OF______________ )
[Acknowledgment of Landlord]
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ____________________ of Sprint Industrial
Services, Inc., a Texas corporation, and he/she executed the foregoing for and
on behalf of said Corporation by authority of its Board of Directors for the
uses and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
-----------------------------------
Notary Public in and for the State
and County aforesaid
-----------------------------------
(Printed Name of Notary)
My Commission Expires:
_________________________
B-6
<PAGE> 27
EXHIBIT "C"
WHEN RECORDED MAIL TO:
- -------------------------------------------------------------------------------
SPACE ABOVE THIS LINE FOR RECORDER'S USE
MEMORANDUM OF LEASE
This is a Memorandum of Lease by and between Sprint Industrial Services,
Inc., a Texas corporation (hereinafter called Landlord) and NES Acquisition
Corp., a Delaware corporation (hereinafter called Tenant) upon the following
terms:
Date of Lease: July 1, 1997
Description of Demised Premises: See Exhibit "A" attached hereto
Date of Commencement: July 1, 1997
Term: Five (5) years
Renewal Option(s): Two (2) five (5) year options
The purpose of this Memorandum of Lease is to give record notice of the
lease and of the rights created thereby, all of which are hereby confirmed.
IN WITNESS WHEREOF the parties have executed this Memorandum of Lease as
of the dates set forth in their respective acknowledgements.
(SEAL) LANDLORD:
SPRINT INDUSTRIAL SERVICES, INC.,
A TEXAS CORPORATION
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
(SEAL) TENANT:
NES ACQUISITION CORP.,
A DELAWARE CORPORATION
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
C-1
<PAGE> 28
C-2
<PAGE> 29
STATE OF _______________ )
) SS:
COUNTY OF_______________ )
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ___________________ of Sprint Industrial
Services, Inc., a Texas corporation, and he/she executed the foregoing for and
on behalf of said Corporation by authority of its Board of Directors for the
uses and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
----------------------------------
Notary Public in and for the State
and County aforesaid
----------------------------------
(Printed Name of Notary)
My Commission Expires:
________________________
STATE OF _______________ )
) SS:
COUNTY OF ______________ )
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ____________________ of NES Acquisition
Corp., a Delaware corporation, and he/she executed the foregoing for and on
behalf of said Corporation by authority of its Board of Directors for the uses
and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
----------------------------------
Notary Public in and for the State
and County aforesaid
----------------------------------
(Printed Name of Notary)
My Commission Expires:
_________________________
C-3
<PAGE> 30
EXHIBIT "D"
RENEWAL TERM RENT SCHEDULE
BASE RENT FOR ______________YEAR RENEWAL TERM:
The Base Rent during the _______ Renewal Term shall be the "Market Rent,"
as hereinafter defined.
(a) The term "Market Rent" shall mean the Base Rent for the Demised
Premises at the time in question which Landlord sets forth in a notice
(hereinafter referred to as the "Market Rent Notice") to Tenant. No later than
thirty (30) days after Tenant may exercise Tenant's option to extend this Lease
for the Renewal Term, Landlord shall send the Market Rent Notice to Tenant for
said Renewal Term and shall specify in the Market Rent Notice for the period
contained in the Renewal Term as applicable. In the event that Tenant shall,
in good faith, disagree with the Market Rent set forth in the Market Rent
Notice established by Landlord for the Demised Premises, Tenant shall, within
ten (10) days after receipt of the Market Rent Notice, furnish Landlord with a
written explanation in reasonable detail of the basis for Tenant's good faith
disagreement, the amount which, in Tenant's good faith opinion, is the Market
Rent for the period contained in the Renewal Term (hereinafter referred to as
the "Tenant's Notice"). If Tenant's Notice is not received by Landlord within
said ten (10) day period, the Market Rent shall be the Market Rent set forth in
the Market Rent Notice to Tenant. If Tenant's notice is received by Landlord
within said ten (10) day period, the Market Rent for the Demised Premises shall
be established as follows:
(i) No later than twenty (20) days following the receipt of the
Market Rent Notice from Landlord, Tenant shall select an individual as an
appraiser of its choice and give Landlord written notice of such
appraiser's name, address and telephone number.
(ii) Within ten (10) days after receipt of such notice by Landlord,
Landlord shall select an appraiser of its choice and give Tenant written
notice of such appraiser's name, address and telephone number.
(iii) The two appraisers so selected by Landlord and Tenant shall
then select an individual as a third appraiser within fifteen (15) days
after receipt by Tenant of Landlord's notification as to its selection of
an appraiser, and furnish Landlord and Tenant written notice of such
appraiser's name, address and telephone number.
(iv) All appraisers selected pursuant to this provision shall be
M.A.I. appraisers, unless Landlord and Tenant shall otherwise agree in
writing, each having at least ten (10) years experience with commercial
property in the state of the location of the Demised Premises. Each of
the three (3) selected appraisers shall then determine the fair rental
value of the Demised Premises for each applicable period of the Renewal
Term and the Market Rent hereunder for each Renewal Term, as applicable,
shall be determined to be the average of the three (3) appraisals for
each such years.
(b) If the procedure set forth in above in (a)(i) through and including
(a)(iv) is implemented, and if for any reason whatsoever (including, without
limitation, the institution of any judicial or other legal proceedings), the
Market Rent for any Renewal Term has not been finally determined prior to the
first day of said Renewal Term, then the amount of the Market Rent set forth by
Landlord in good faith in the Market Rent Notice shall be the Rent for all
purposes under this Lease until such time as the Market Rent is
D-1
<PAGE> 31
finally determined as set forth above, and Landlord and Tenant shall, by
appropriate payments to the other, correct any overpayment or underpayment
which may have been made prior to such final determination.
(c) If Landlord fails to select its appraiser in the manner and within the
time specified in (a)(ii) above, then the Market Rent for the Renewal Term
shall be the Market Rent set forth in Tenant's Notice.
(d) If Tenant fails to select its appraiser in the manner and within the
time specified in (a)(i) above, then the Market Rent for the Renewal Term shall
be the Market Rent set forth in the Market Rent Notice.
(e) If the appraisers selected by Landlord and Tenant fail to appoint the
third appraiser within the time and in the manner prescribed in (a)(iii)
above, then Landlord and/or Tenant shall promptly apply to the local office of
the American Arbitration Association for the appointment of the third
appraiser.
(f) All fees, costs and expenses incurred in connection with obtaining the
appraisals and the arbitration procedure set forth in this section shall be
shared equally by Landlord and Tenant; however, Landlord and Tenant shall each
bear their own attorneys' fees incurred with respect to this procedure.
(g) Notwithstanding the provisions of this Exhibit "D", in no event shall
the rental during the Renewal Term be less than the rental specified for the
Initial Term.
D-2
<PAGE> 1
Exhibit 10.50
INDUSTRIAL LEASE
SPRINT INDUSTRIAL SERVICES, INC.,
A TEXAS CORPORATION
LANDLORD
AND
NES ACQUISITION CORP.,
A DELAWARE CORPORATION
TENANT
<PAGE> 2
LEASE
THIS LEASE made and entered into as of the first day of July, 1997,
between Sprint Industrial Services, Inc., a Texas corporation (hereinafter
called "Landlord") and NES Acquisition Corp., a Delaware corporation
(hereinafter called "Tenant").
W I T N E S S E T H:
Landlord, for and in consideration of the covenants and agreements
hereinafter set forth to be kept and performed by both parties, does hereby
demise and lease to Tenant (for the term hereinafter stipulated) the premises
(hereinafter called the "Demised Premises") being that land described on
Exhibit "A" attached hereto and made a part hereof, located at 3915 Highway,
St. Gabriel, Louisiana.
The Demised Premises shall consist of an area approximately five (5)
acres.
Landlord hereby leases the Demised Premises to Tenant and hereby grants to
Tenant its guests, invitees and licensees all easements, rights and privileges
appurtenant thereto, including the right to use adjoining parking areas,
driveways, roads, alleys and means of ingress and egress.
ARTICLE 1
TERM AND USE
A. The Primary Term (herein so called) of this Lease shall begin on the
date (the "Commencement Date") July 1, 1997 and shall expire on June 30, 2007.
For purposes of this Lease, a "Lease Month" shall be defined as those
successive calendar month periods beginning with the Commencement Date and
continuing through the Primary Term or any Renewal Term of this Lease;
provided, however, if the Commencement Date is a day other than the first day
of a calendar month, then the first Lease Month shall include that period of
time from the Commencement Date up to the first day of the next calendar month,
and each subsequent Lease Month shall be a calendar month period beginning on
the first day of such month. The Primary Term and any Renewal Terms
(hereinafter defined) are sometimes collectively referred to herein as
the "Term."
B. Provided Tenant is not in default of any material term, condition or
covenant contained in this Lease and no event has occurred which with the
notice or the passage of time would constitute a default under any material
term, condition or covenant contained in this Lease at the time of exercise of
an option to renew the Primary Term beyond any period for curing same, Tenant
shall have the option of renewing this Lease for two (2) additional terms of
five (5) years each (hereinafter, collectively referred to as "Renewal Terms,"
or individually as "Renewal Term"). Each Renewal Term will be on the same
terms and conditions as provided herein except for the Base Rent which shall be
as shown on "Exhibit D" attached hereto and made a part hereof. Notice of the
exercise of such options shall be given by Tenant to Landlord in writing not
later than one hundred and eighty days prior to expiration of the Primary Term
or the previous Renewal Term.
C. The Demised Premises may be used for the operation of an equipment
rental business and any other lawful purpose provided that Landlord consents,
which consent shall not be unreasonably withheld, conditioned or delayed.
<PAGE> 3
ARTICLE 2
EXHIBITS AND ORIGINAL CONSTRUCTION
A. The exhibits listed below and attached to this Lease are incorporated
herein by reference:
EXHIBIT "A" - Legal Description of the Demised Premises
EXHIBIT "B" - Non-Disturbance and Attornment Agreement
EXHIBIT "C" - Memorandum of Lease
EXHIBIT "D" - Renewal Term Rent Schedule
B. Landlord will deliver the Demised Premises to Tenant no later than the
date of execution of this Lease (the "Delivery Date").
ARTICLE 3
DATE ON WHICH RENT BEGINS
A. The Base Rent (as defined herein) and all Additional Rent (as herein
defined) (Base Rent and Additional Rent are sometimes collectively referred to
herein as "Rent") shall begin to accrue on the date (the "Rent Commencement
Date") which is the Commencement Date.
B. Tenant does hereby covenant and agree to pay to Landlord, for the use
and occupancy of the Demised Premises, at the times and in the manner
hereinafter provided, the following sums of money:
<TABLE>
<CAPTION>
Lease
Years Base Rent
------ ----------
<S> <C>
1-10 $4,166/month
</TABLE>
to be paid in U.S. Dollars, in advance, without notice or invoice from
Landlord, on the first day of each and every month during the Term hereof,
commencing upon the date on which Base Rent is determined to commence under the
provisions of Article 3 hereof and ending upon the termination date of this
Lease. In the event such Base Rent shall be determined under the provisions of
Article 3 hereof to commence on a day other than the first (1st) day of a
month, then the Base Rent for the period from such Rent Commencement Date until
the first day of the month next following shall be prorated accordingly. All
payments in this Lease provided for (those hereinafter stipulated as well as
Base Rent) shall be paid or mailed to:
Sprint Industrial Services, Inc.
1041 Conrad Sauer
Houston, Texas 77043
Attn: President
or to such other payee or address as Landlord may designate in writing to
Tenant.
- 2 -
<PAGE> 4
ARTICLE 4
TAXES
In addition to the Base Rent provided for in Article 3 hereof, Tenant
agrees to pay the additional payments as follows:
A. Tenant shall be responsible for all real property taxes and assessments
(hereinafter, "Real Estate Taxes") which may be levied or assessed against the
Demised Premises by any lawful authority for each calendar year or portion
during the Term of this Lease. As the lease years under this Lease do not
coincide with a calender year, Real Estate Taxes for such partial years shall
be prorated accordingly based on the number of days which this Lease was in
full force and effect during such calender year.
B. Tenant's proportionate share of all Real Estate Taxes during the Term
hereof shall be paid annually or semiannually to the appropriate taxing
authority, but no more frequently than Landlord is required to make payment.
Upon receipt of all tax bills and assessment bills attributed to any calendar
year during the Term hereof, Landlord shall furnish Tenant with a written
statement of the actual amount of Tenant's proportionate share of the Real
Estate Taxes for such year or part thereof, together with a copy of such tax
bills, and Tenant shall pay such actual amount within thirty (30) days of such
statement from Landlord but no more than ten (10) days prior to the date
Landlord is required to pay said Real Estate Taxes. A copy of a tax bill or
assessment bill submitted by Landlord to Tenant shall at all times be
sufficient evidence of the amount of Real Estate Taxes levied or assessed
against the property to which such bill relates. Landlord's and Tenant's
obligations under this Article 4 shall survive the expiration of the Term of
this Lease. No Real Estate Taxes, assessments, fees or charges referred to in
this paragraph shall be considered as taxes under the provisions of Article 10
hereof.
C. Tenant may, upon the receipt of prior written approval of Landlord,
such approval not to be unreasonably withheld, contest any Real Estate Taxes
against the Demised Premises and attempt to obtain a reduction in the assessed
valuation upon the Demised Premises for the purpose of reducing any such
taxment. In the event Landlord approves and upon the request of Tenant but
without expense or liability to Landlord, Landlord shall cooperate with Tenant
and execute any document which may be reasonably necessary and proper for any
proceeding. If a tax reduction is obtained there shall be a subsequent
reduction in Tenant's total Real Estate Taxes for such year, and any excess
payments by Tenant shall be refunded by Landlord, without interest, when all
refunds to which Landlord is entitled from the taxing authority with respect to
such year have been received by Landlord. In the event Landlord desires to
contest any Real Estate Taxes, Tenant agrees to cooperate with Landlord and
execute any document which may be reasonably necessary and proper for any
proceeding at no cost to Tenant.
D. Tenant shall not be liable for increases in Real Estate Taxes
attributable to additional improvements to the Demised Premises that are
constructed after the first tax year included within the terms of this Lease,
unless the additional improvements are constructed for Tenant's sole benefit.
E. There shall be excluded from the tax bill to which Tenant contributes,
for the purposes of computing Real Estate Taxes income, excess profits,
estate, single business, inheritance, succession, transfer or franchise tax
assessments upon Landlord or the Rent payable under this Lease. Landlord
hereby represents and warrants that Landlord has no actual knowledge (without
independent investigation) of current or future special assessments.
- 3 -
<PAGE> 5
ARTICLE 5
NON-DISTURBANCE AND ATTORNMENT
A. Upon written request of Landlord, or any mortgagee or beneficiary of
Landlord, Tenant will, in writing, subordinate its right hereunder to the
interest of any ground lessor of the land upon which the Demised Premises is
situated and to the lien of any mortgage or deed of trust now or hereafter in
force against the land and building of which the Demised Premises is a part,
and upon any building hereafter placed upon the land of which the Demised
Premises is a part and to all advances made or hereafter to be made upon the
security thereof; provided, however, that the ground lessor, or the mortgagee
or trustee named in said mortgage or trust deed shall agree that Tenant's
peaceable possession of the Demised Premises or its rights under this Lease
will not be disturbed on account thereof.
B. In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deeds of
trust, upon any such foreclosure or sale Tenant agrees to recognize such
beneficiary or purchaser as the Landlord under this Lease, provided Tenant's
rights under this Lease continue unabated.
C. Landlord agrees to obtain a Non-Disturbance and Attornment Agreement
from its current lender(s) and the ground lessor, if any, and deliver same to
Tenant on or before the date hereof and from any future lender on or before
obtaining financing from such lender, substantially in accordance with the form
attached hereto as Exhibit "B". The delivery of a fully executed
Non-Disturbance and Attornment Agreement shall be a condition precedent to the
effectiveness of this Lease and if said Non-Disturbance and Attornment is not
so delivered, Tenant may at its option terminate this Lease by written notice
to Landlord.
ARTICLE 6
CONDITION OF PREMISES
Landlord warrants that upon completion of the construction of the building
currently being undertaken on the Demised Premises, the interior and exterior
of the building being constructed will meet with all present codes required at
the time by regulations of governing authorities for use and occupancy by
Tenant. Such construction shall be completed in a good, workmanlike and timely
manner. Except for the warranty and representation set forth in the preceding
sentence, Tenant accepts the Demised Premises and all improvements thereon AS
IS, AND WITHOUT ALL FAULTS AND DEFECTS, BOTH PATENT AND LATENT, KNOWN OR
UNKNOWN. Tenant acknowledges that it has been given the opportunity to inspect
the Demised Premises prior to its execution of this Lease.
ARTICLE 7
REPAIRS AND MAINTENANCE
Tenant covenants and agrees, at its expense without reimbursement or
contribution by Landlord, to keep and maintain all improvements on the Demised
Premises, including, without limitation, the foundations, exterior paint,
plumbing system, electrical system, utility lines and connections to the
Demised Premises, sprinkler mains, if any, structural systems (including,
without limitation, the roof, roof membrane roof covering [including interior
ceiling if damaged by leakage] and load-bearing walls and floor slabs and
masonry walls) in good condition and repair. In the event the Demised Premises
become or are out of repair and not in good condition due to the failure of
Tenant to comply with the terms of this Article 7 and if any and all repairs
necessary to restore the Demised Premises to a state of good condition and
repair are not completed within
- 4 -
<PAGE> 6
ten (10) days after Tenant has received written notice of such state of
disrepair or if such repairs cannot reasonably be completed within such ten
(10) day period and Tenant shall fail to commence such repairs within ten (10)
days after notice and proceed diligently thereafter, then Landlord may either
(i) terminate this Lease immediately upon delivery of written notice to Tenant
or (ii) prosecute such repairs itself and add the reasonable cost of such
repairs to the next maturing monthly installment of Rent due hereunder.
Notwithstanding the foregoing in the case of an emergency, Landlord shall have
the right to prosecute immediately any and all necessary repairs and shall
deliver contemporaneous notification to Tenant of the emergency and related
repairs and add the reasonable cost of such repairs to the next maturing
monthly installment of Rent due hereunder; provided further that if
contemporaneous notice is not practicable, as determined by Landlord in its
sole judgment, then Landlord shall provide such notice as soon thereafter as
reasonably practicable. Upon termination of this Lease for any reason, Tenant
shall return the Demised Premises to Landlord in substantially the same
condition it is in on the date hereof, ordinary wear and tear excepted.
ARTICLE 8
ENVIRONMENTAL MATTERS
Landlord represents and warrants that to the best of Landlord's knowledge
any handling, transportation, storage, treatment or usage of hazardous or toxic
substances that has occurred on the Demised Premises has been in compliance
with all applicable federal, state and local laws, regulations and ordinances.
Landlord further represents and warrants to the best of Landlord's knowledge
that no leak, spill, discharge, emission or disposal of hazardous or toxic
substances has occurred on the Demised Premises and that the soil, groundwater,
soil vapor on or under the Demised Premises are free of toxic or hazardous
substances as of the date hereof. Landlord agrees to indemnify, defend and
hold Tenant and its officers, employees and agents harmless from any claims,
judgments, damages, fines, penalties, costs, liabilities (including sums paid
in settlement of claims) or loss, including attorneys, fees, consultants fees,
and expert fees, which arise during or after the Primary Term or any Renewal
Term, or in connection with the presence or suspected presence of toxic or
hazardous substances in the soil, groundwater, or soil vapor on or under the
Demised Premises, unless such toxic or hazardous substances are present solely
as the result of the negligence or wilful misconduct of Tenant, its officers,
employees or agents. This indemnification shall also specifically cover costs
in connection with:
(a) Toxic or hazardous substances present or suspected to be present in
the soil, ground water or soil vapor on or under the Demised Premises
before the date hereof;
(b) Toxic or hazardous substances that migrate, flow, percolate, diffuse
or in any way move onto or under the Demised Premises after date
hereof; or
(c) Toxic or hazardous substances present on or under the Demised
Premises as a result of any discharge, dumping, spilling (accidental
or otherwise) onto the Demised Premises during or after the Primary
Term or any Renewal Term by any person or entity.
Tenant agrees to indemnify and hold harmless Landlord and its officers,
employees and agents from any claims, judgments, damages, fines, penalties,
costs, liabilities (including sums paid in settlement of claims) or loss,
including, without limitation, attorneys' fees, consultants' fees, and expert
fees, which arise during or after the Primary Term or any Renewal Term, or in
connection with the presence or suspected presence of toxic or hazardous
substances in the soil, groundwater, or soil vapor on or under the Demised
Premises, except to the extent that such toxic or hazardous substances are
present (i) on the Commencement Date of this Lease or (ii) due to Landlord or
Landlord's agents, invitees, contractors or employees.
- 5 -
<PAGE> 7
ARTICLE 9
ALTERATIONS
Tenant shall not make any exterior or structural alterations in any
portion of the Demised Premises nor any alterations in the interior or the
exterior of the Demised Premises without, in each instance, first obtaining the
written consent of Landlord, which consent shall not be unreasonably withheld.
Tenant shall be permitted to make interior nonstructural alterations, additions
and improvements costing less than $75,000 without Landlord's prior consent.
ARTICLE 10
FIXTURES AND PERSONAL PROPERTY
Any trade fixtures, business equipment, inventory, trademarked items,
signs, and other removable personal property installed in or on the Demised
Premises by Tenant at its expense ("Tenant's Property"), shall remain the
property of the Tenant. Landlord agrees that Tenant shall have the right, at
any time or from time to time, to remove any and all of Tenant's Property.
Tenant, at its expense, shall immediately repair any damage occasioned by the
removal of Tenant's Property and upon expiration or earlier termination of this
Lease, shall leave the Demised Premises in a neat and clean condition, free of
debris, normal wear and tear excepted.
ARTICLE 11
LIENS
Neither Landlord nor Tenant shall permit to be created nor to remain
undischarged any lien, encumbrance or charge arising out of any work or work
claim of any contractor, mechanic or laborer of Tenant or material supplied by
a materialman to, Landlord or Tenant which might be, or become, a lien or
encumbrance or charge upon the Demised Premises. If any lien or notice of lien
on account of an alleged debt of Landlord or Tenant or any notice of contract
by a party engaged by Landlord or Tenant or Landlord's or Tenant's contractor
to work in the Demised Premises shall be filed against the Demised Premises,
the responsible party shall, within thirty (30) days after notice of the filing
thereof, cause the same to be discharged of record by payment, deposit or bond.
ARTICLE 12
LAWS AND ORDINANCES
A. Tenant and Landlord agree to comply with all laws, ordinances, orders
and regulations regarding the use and occupancy of the Demised Premises and the
cleanliness, safety or operation thereof. Tenant agrees to comply with the
reasonable regulations and requirements of any insurance underwriter,
inspection bureau or similar agency with respect to that portion of the
Demised Premises installed by Tenant.
B. In connection with the installation of any electrical equipment not
included within the Demised Premises, Tenant shall, at Tenant's own expense,
make from time to time whatever changes are necessary to comply with the
requirements of the insurance inspectors, underwriters, government authorities
and codes.
- 6 -
<PAGE> 8
ARTICLE 13
SERVICES
A. Landlord warrants that the necessary mains, conduits and other
facilities have been provided to make water, sewer, gas, phone and electricity
available to the Demised Premises.
B. Tenant shall be solely responsible for and promptly pay all charges for
the use and consumption of sewer, gas, electricity, water, phone and all other
utility services used within the Demised Premises.
C. Landlord shall not be liable to Tenant for damages or otherwise if the
said utilities or services are interrupted or terminated because of necessary
repairs, installations, or improvements, or any cause beyond the Landlord's
reasonable control, nor shall any such interruption or termination relieve
Tenant of the performance of any of its obligations hereunder; provided,
however, if such interruption shall be due to the Landlord's or Landlord's
agent's, employee's, contractor's or invitee's negligent or willful misconduct
and Tenant is unable to operate its business there shall be an abatement of all
Rent hereunder during such time period and if such interruption shall continue
for a period of more than thirty (30) days, then Tenant may terminate this
Lease.
D. Tenant shall not install any equipment which could exceed the capacity
of any utility facilities servicing the Demised Premises of which capacity
Tenant has notice, and if any equipment installed by Tenant requires additional
utility facilities the same shall be installed by Tenant in compliance with all
code requirements.
ARTICLE 14
DAMAGE TO PREMISES
In the event the Demised Premises is hereafter damaged or destroyed or
rendered partially untenable for their accustomed use, by fire or other
casualty insured or which should have been insured under the coverage which
Tenant is obligated to carry pursuant to Article 15 hereof, then Tenant shall,
within sixty (60) days after such casualty, commence repair of said Demised
Premises and within one hundred twenty (120) days after commencement of such
repair, restore the Demised Premises to substantially the same condition in
which it was immediately prior to the occurrence of the casualty, except as
otherwise provided in this Article 14. From the date of such casualty until
the Demised Premises is so repaired and restored Rent and all other charges and
items payable hereunder shall abate in such proportion as the part of the
Demised Premises thus destroyed or rendered untenable bears to the total
Demised Premises. Notwithstanding the foregoing, in the event the Demised
Premises is rendered untenable, in the reasonable opinion of the parties,
Tenant and Landlord shall have the right to terminate this Lease upon thirty
(30) days notice to the other and all insurance proceeds attributable to the
impairment shall be remitted to Landlord immediately upon receipt.
ARTICLE 15
INSURANCE
A. Landlord agrees to carry, or cause to be carried, during the Term
hereof, Commercial General Liability Insurance (hereinafter, "Landlord's
Liability Insurance") providing coverage of not less than One Million Dollars
($1,000,000.00), combined Bodily Injury and Property Damage Liability in
separate limits for each of the following: General Aggregate,
Products-Completed Operations Aggregate, Each Occurrence,
- 7 -
<PAGE> 9
Personal & Advertising Injury and Fire Damage, limits of Fifty Thousand Dollars
($50,000.00). Landlord, upon written request by Tenant, shall promptly deliver
to Tenant a certificate of Landlord's Liability Insurance.
B. Tenant agrees to carry Commercial General Liability insurance on the
Demised Premises during the Term hereof covering both Tenant and Landlord as
their interest may appear, with companies reasonably satisfactory to Landlord
and giving Landlord and Tenant a minimum of ten (10) days written notice by the
insurance company prior to cancellation, termination or change in such
insurance. Such insurance shall be for limits of not less than One Million
Dollars ($1,000,000.00) combined Bodily Injury and Property Damage Liability in
separate limits for each of the following: General Aggregate,
Products-Completed Operations Aggregate, Each Occurrence, Personal &
Advertising Injury, and Fire Damage, limits of Two Hundred Fifty Thousand
Dollars ($250,000.00).
Tenant also agrees to carry, during the Term hereof, all risk property
insurance (hereinafter, "Tenant's Property Insurance") covering fire and
extended coverage, vandalism and malicious mischief, sprinkler leakage and all
other perils of direct physical loss or damage insuring the improvements and
betterments located in the Demised Premises, including the Demised Premises and
all appurtenances thereto for the full replacement value thereof. Landlord
shall be named as an additional insured under Tenant's Property Insurance to
the extent its interest shall appear. Tenant, upon request, shall furnish
Landlord a certificate of such Tenant's Property Insurance.
Landlord agrees that it shall not have any right, title or interest in and
to Tenant's property insurance covering Tenant's Property located on or within
the Demised Premises or any proceeds therefrom.
C. Landlord and Tenant and all parties claiming under them, mutually
release and discharge each other from all claims and liabilities arising from
or caused by any casualty or hazard, to the extent covered by insurance on the
Demised Premises and waive any right of subrogation which might otherwise exist
in or accrue to any person on account thereof. This waiver shall not be
required if the insurance carrier charges an additional premium in order to
provide such waiver and the party benefitting from the waiver does not agree to
pay the additional premium.
ARTICLE 16
INDEMNIFICATION
A. Tenant hereby indemnifies and holds Landlord harmless from and against
any and all claims, demands, liabilities and expenses, including attorneys'
fees, arising from Tenant's use of the Demised Premises or from any act, or any
omission to act, in or about the Demised Premises by Tenant or its agents,
employees or contractors, or from any breach or default by Tenant of this
Lease, except to the extent caused by Landlord's negligence or willful
misconduct. In the event any action or proceeding shall be brought
against Landlord by reason of any such claim, Tenant shall defend the same at
Tenant's expense by counsel reasonably satisfactory to Landlord.
B. Landlord hereby indemnifies and holds Tenant harmless from and against
any and all claims, demands, liabilities and expenses, including attorneys'
fees, arising from Landlord's obligations, actions or from any act, or any
omission to act, in or about the Demised Premises by Landlord or its agents,
employees, contractors or invitees, or from any breach or default by Landlord
of this Lease, except to the extent caused by Tenant's negligence or willful
misconduct. In the event any action or proceeding shall be brought against
Tenant by reason of any such claim, Landlord shall defend the same at
Landlord's expense by counsel reasonably satisfactory to Tenant.
- 8 -
<PAGE> 10
ARTICLE 17
ASSIGNMENT, SUBLETTING AND OWNERSHIP
A. Tenant shall have the absolute right to sublet, assign or otherwise
transfer its interest in this Lease to any parent or operating subsidiary of
Tenant, subsidiary of Tenant's parent, or to a corporation with which it may
merge or consolidate or to a Company, entity or individual that purchases all
or substantially all of the assets or common stock of Tenant either in one
transaction or a series of transactions, without Landlord's approval, written
or otherwise. In the event of any such subletting, assignment or other
transfer, Tenant shall not be released from any liability upon such assignment
or sublease with respect to that portion of the Tenant's leasehold estate so
assigned or subleased.
B. The consent by Landlord to any other transfer, assignment, subletting,
license or concession agreement, or hypothecation shall not be unreasonably
withheld, conditioned or delayed.
C. Landlord shall have the right to transfer, assign and convey, in whole
or in part, any or all of the right, title and interest to the Demised
Premises, provided such transferee or assignee shall be bound by the terms,
covenants and agreements herein contained, and shall expressly assume and agree
to perform the covenants and agreements of Landlord herein contained as
performance of such covenants and agreements becomes due after any such
assignment.
ARTICLE 18
ACCESS TO PREMISES
Upon reasonable prior written notice, but in no event less than
twenty-four (24) hours (except in the case of an emergency), Landlord may enter
the Demised Premises during Tenant's business hours for purposes of inspection,
to show the Demised Premises to prospective purchasers and lenders, or to
perform maintenance and repairs in accordance with Article 7 hereof. Landlord
shall use Landlord's best efforts to minimize interference with Tenant's
business.
ARTICLE 19
DEFAULTS BY TENANT
A. The occurrence of any of the following shall constitute a material
default and breach of this Lease by Tenant:
(i) Any failure by Tenant to pay Rent or make any other payment
required to be made by Tenant hereunder within seven (7) days after
receipt of written notice from the Landlord; and
(ii) A failure by Tenant to observe and perform any other material
provision of this Lease to be observed or performed by the Tenant, where
such failure continues for thirty (30) days after written notice thereof
by Landlord to Tenant, except that this thirty (30) day period shall be
extended for a reasonable period of time if the alleged default is not
reasonably capable of cure within said thirty (30) day period and Tenant
proceeds to diligently cure the default.
B. In the event of any such default by Tenant, then Landlord shall be
entitled to terminate this Lease by giving written notice of termination to
Tenant, in which event Tenant shall immediately surrender the Demised Premises
to Landlord. If Tenant fails to so surrender the Demised Premises, then
Landlord may,
- 9 -
<PAGE> 11
without prejudice to any other remedy it has for possession of the Demised
Premises or arrearages in Rent or other damages, re-enter and take possession
of the Demised Premises and expel or remove Tenant and any other person
occupying the Demised Premises or any part thereof, in accordance with
applicable law.
C. Notwithstanding anything to the contrary contained in this Lease: (i)
Landlord shall not have any right to accelerate the Rent and other amounts
payable hereunder and (ii) in the event of any default by Tenant under this
Lease Landlord shall, in each case, use its reasonable efforts to mitigate its
damages.
ARTICLE 20
DEFAULTS BY LANDLORD
If Landlord should be in default in the performance of any of its
obligations under this Lease, which default continues for a period of more than
thirty (30) days after receipt of written notice from Tenant specifying such
default, or if such default is of a nature to require more than thirty (30)
days for remedy and continues beyond the time reasonably necessary to cure (and
Landlord has not undertaken procedures to cure the default within such thirty
(30) day period and diligently pursued such efforts to complete such cure),
Tenant may, in addition to any other remedy available at law or in equity, at
its option, upon written notice, terminate this Lease, or may incur any expense
necessary to perform the obligation of Landlord specified in such notice and
deduct such expense from the Rent or other charges next becoming due.
ARTICLE 21
SURRENDER OF PREMISES
Tenant shall, upon the expiration of the Term granted herein, or any
earlier termination of this Lease for any cause, surrender to Landlord the
Demised Premises, and all alterations, improvements and other additions which
may be made or installed by either party to, in, upon or about the Demised
Premises, other than Tenant's Property which shall remain the property of
Tenant as provided in Article 10 hereof, without any damage, injury or
disturbance thereto, or payment therefor.
ARTICLE 22
EMINENT DOMAIN
A. (i) In the event that any portion of the Demised Premises shall be
appropriated or taken under the power of eminent domain by any public or
quasipublic authority and such appropriation or taking renders the Demised
Premises unfit for the conduct of Tenant's business thereon in the reasonable
opinion of the parties, then at the election of Tenant, this Lease shall
terminate and expire as of the date of such taking, and both Landlord and
Tenant shall thereupon be released from any liability thereafter accruing
hereunder.
(ii) Notice of any termination relating to such eminent domain proceeding
must be made by Tenant to Landlord within sixty (60) days after receipt of
written notice of such taking.
(iii) In the event of such termination, both Landlord and Tenant shall
thereupon be released from any liability thereafter accruing hereunder.
- 10 -
<PAGE> 12
B. Whether or not this Lease is terminated, nothing herein shall be deemed
to affect Tenant's right to receive compensation for damages to Tenant's
Property. If this Lease is terminated as hereinabove provided, all items of
Rent and other charges for the last month of Tenant's occupancy shall be
prorated and Landlord agrees to refund to Tenant any Rent, or other charges
paid in advance.
C. In the event of any such appropriation or taking that does not render
the Demised Premises unfit for the conduct of Tenant's business thereon in the
reasonable opinion of the parties, or if Tenant otherwise elects not to so
terminate this Lease, Tenant shall remain in that portion of the Demised
Premises which shall not have been appropriated or taken as herein provided,
and Landlord agrees, at Landlord's cost and expense, to, as soon as reasonably
possible, restore the remaining portion of the Demised Premises to a complete
unit of like quality and character as existed prior to such appropriation or
taking, and thereafter all Rent and payment obligations of Tenant shall be
adjusted on an equitable basis, taking into account the relative value of the
portion taken as compared to the portion remaining. For the purpose of this
Article 22, a voluntary sale or conveyance in lieu of condemnation, but under
threat of condemnation shall be deemed an appropriation or taking under the
power of eminent domain.
D. Tenant shall have the right to pursue its claim for damages in
connection with any eminent domain proceeding.
ARTICLE 23
ATTORNEYS' FEES
In the event that at any time during the Term of this Lease either
Landlord or Tenant shall institute any action or proceeding against the other
relating to the provisions of this Lease, or any default hereunder, the
unsuccessful party in such action or proceeding agrees to reimburse the
successful party for the reasonable expenses of attorneys' fees and paralegal
fees and disbursements incurred therein by the successful party. Such
reimbursement shall include all legal expenses incurred prior to trial, at
trial and at all levels of appeal and post-judgment proceedings.
ARTICLE 24
NOTICES
Notices and demands required, or permitted, to be sent to those listed
hereunder shall be sent by certified mail, return receipt requested, postage
prepaid, or by Federal Express or other reputable overnight courier service and
shall be deemed to have been given upon the date the same is postmarked if sent
by certified mail or the day deposited with Federal Express or such other
reputable overnight courier service, but shall not be deemed received until one
(1) business day following deposit with Federal Express or other reputable
overnight courier service or three (3) days following deposit in the United
States Mail if sent by certified mail to address shown below, and addressed to:
<TABLE>
<CAPTION>
LANDLORD: TENANT:
--------- -------
<S> <C>
Sprint Industrial Services, Inc. NES Acquisition Corp.
1041 Conrad Sauer c/o National Equipment Services,
Inc. Houston, Texas 77043 1800 Sherman, Suite 100
Attn: President Evanston, Illinois 60201
Attn: Kevin P. Rodgers
</TABLE>
- 11 -
<PAGE> 13
or at such other address requested in writing by either party upon thirty (30)
days' notice to the other party.
ARTICLE 25
REMEDIES
All rights and remedies of Landlord and Tenant herein created or otherwise
extending at law are cumulative, and the exercise of one or more rights or
remedies may be exercised and enforced concurrently or consecutively and
whenever and as often as deemed desirable.
ARTICLE 26
SUCCESSORS AND ASSIGNS
All covenants, promises, conditions, representations and agreements herein
contained shall be binding upon, apply and inure to the parties hereto and
their respective heirs, executors, administrators, successors and assigns; it
being understood and agreed, however, that the provisions of Article 20 are in
nowise impaired by this Article 26.
ARTICLE 27
WAIVER
The failure of either Landlord or Tenant to insist upon strict performance
by the other of any of the covenants, conditions, and agreements of this Lease
shall not be deemed a waiver of any subsequent breach or default in any of the
covenants, conditions and agreements of this Lease. No surrender of the
Demised Premises by Tenant shall be affected by Landlord's acceptance of Rent
or by other means whatsoever unless the same is evidenced by Landlord's written
acceptance of the surrender.
ARTICLE 28
HOLDING OVER
If Tenant or any party claiming under Tenant remains in possession of the
Demised Premises or any part thereof after any termination or expiration of
this Lease, Landlord, in Landlord's sole discretion, may treat such holdover as
an automatic renewal of this Lease for a month-to-month tenancy subject to all
the terms and conditions provided herein.
ARTICLE 29
INTERPRETATION
The parties hereto agree that it is their intention hereby to create only
the relationship of Landlord and Tenant, and no provision hereof, or act of
either party hereunder, shall ever be construed as creating the relationship of
principal and agent, or a partnership, or a joint venture or enterprise between
the parties hereto.
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<PAGE> 14
ARTICLE 30
COVENANT OF TITLE AND QUIET ENJOYMENT
Landlord covenants that it has full right, power and authority to make
this Lease, subject only to the Permitted Liens (as defined in Article 37), and
that Tenant or any permitted assignee or sublessee of Tenant, upon the payment
of the Rent and performance of the covenants hereunder, shall and may peaceably
and quietly have, hold and enjoy the Demised Premises and improvements thereon
during the Term or any renewal or extension thereof.
Additionally, except as provided in this Lease or by law, Landlord shall
take no action that will interfere with Tenant's intended usage of the Demised
Premises.
ARTICLE 31
ESTOPPEL
At any time and from time to time either party, upon request of the other
party, will execute, acknowledge and deliver an instrument, stating, if the
same be true, that this Lease is a true and exact copy of this Lease between
the parties hereto, that there are no amendments hereof (or stating what
amendments there may be), that the same is then in full force and effect and
that, to the best of its knowledge, there are no offsets, defenses or
counterclaims with respect to the payment of Rent reserved hereunder or in the
performance of the other terms, covenants and conditions hereof on the part of
Tenant or Landlord, as the case may be, to be performed, and that as of such
date no default has been declared hereunder by either party or if not
specifying the same. Such instrument will be executed by the other party and
delivered to the requesting party within fifteen (15) days of receipt.
ARTICLE 32
RECORDING
Neither Landlord nor Tenant shall record this Lease. The parties shall
join in the execution of a memorandum or so-called "short-form" of this Lease
for the purposes of recordation in accordance with the form attached hereto as
Exhibit "C" and made a part hereof. Any recording costs associated with the
memorandum or short form of this Lease shall be borne by the party requesting
recordation.
ARTICLE 33
FORCE MAJEURE
In the event that either party hereto shall be delayed or hindered in or
prevented from the performance required hereunder by reason of strikes,
lockouts, labor troubles, failure of power, riots, insurrection, war, acts of
God, or other reasons of like nature not the fault of the party delayed in
performing work or doing acts (hereinafter, "Permitted Delay" or "Permitted
Delays"), such party shall be excused for the period of time equivalent to the
delay caused by such Permitted Delay. Notwithstanding the foregoing, (i) any
extension of time for a Permitted Delay shall be conditioned upon the party
seeking an extension of time delivering written notice of such Permitted Delay
to the other party within ten (10) days of the event causing the Permitted
Delay, (ii) the maximum period of time which Landlord may delay any act or
performance of work due to a
- 13 -
<PAGE> 15
Permitted Delay shall be sixty (60) days, and (iii) no Permitted Delay or
Permitted Delays shall have the effect of extending the time for payments of
rent as required under this Lease.
ARTICLE 34
CONSENT
Wherever in this Lease Landlord or Tenant is required to give its consent
or approval, such consent or approval shall not be unreasonably withheld,
conditioned or delayed.
ARTICLE 35
WAIVER OF LANDLORD'S LIENS
Landlord hereby waives any contractual, statutory or other Landlord's lien
on Tenant's furniture, fixtures, supplies, equipment, inventory and Tenant's
Property.
ARTICLE 36
Intentionally omitted.
ARTICLE 37
TITLE
Landlord hereby represents and warrants to Tenant that (i) there are no
mortgages, deeds of trust, liens, covenants, restrictions or easements
affecting the Demised Premises except those matters which will not interfere
with Tenant's use of the Demised Premises and those mortgages or deeds of trust
from such lenders that have delivered non-disturbance and attornment agreements
to Tenant in accordance with the requirements of Article 5 of this Lease
(collectively the "Permitted Liens") and (ii) to the best of Landlord's
knowledge, there are no zoning laws, ordinances or regulations of public
authorities that will materially interfere with Tenant's use of the Demised
Premises.
ARTICLE 38
ZONING, DEED RESTRICTIONS, ETC.
Landlord represents and warrants that the Demised Premises can be used by
Tenant for conduct of the business it is acquiring from Landlord on the date
hereof and Tenant's ability to so use the Demised Premises is a condition
precedent to this Lease. Landlord covenants, warrants, represents and agrees
to reasonably cooperate and provide assistance in obtaining any necessary
certificates of occupancy, building permits, sign permits and any variances
necessary for the conduct of such business. Notwithstanding the foregoing,
Tenant's sole remedy for breach of the representation and warranty set forth
in this Article 38 shall be termination of this Lease after notice to Landlord
and providing an opportunity to cure as required by Article 20 hereof.
- 14 -
<PAGE> 16
ARTICLE 39
SEVERABILITY
Any provision of this Lease which shall prove to be invalid, void or
illegal shall in no way affect, impair or invalidate any other provisions
hereof and such other provisions shall remain in full force and effect.
ARTICLE 40
GOVERNING LAW AND VENUE
This Lease shall be governed by the laws of the state in which the Demised
Premises is located.
ARTICLE 41
TENANT FINANCING
Tenant shall have the absolute right from time to time during the Term
hereof and without Landlord's further approval, written or otherwise, to grant
and assign a mortgage or other security interest in Tenant's interest in this
Lease and all of Tenant's Property to Tenant's lenders in connection with
Tenant's financing arrangements. Landlord agrees to execute such amendments,
confirmation, certificates and other documents as Tenant's lenders may
reasonably request in connection with any such financing.
ARTICLE 42
BROKERS
Landlord and Tenant represent and warrant one to the other that they have
not had any dealing with any real estate brokers or agents in connection with
the negotiation of this Lease. Landlord and Tenant indemnify and hold each
other harmless from and against any and all liability and cost which Landlord
or Tenant may suffer in connection with real estate brokers claiming by,
through or under either party seeking any commission, fee or payment in
connection with this Lease.
ARTICLE 43
TENANT'S CONDUCT OF BUSINESS
Notwithstanding anything herein to the contrary, nothing herein shall be
construed as an obligation for Tenant to open or operate its business in the
Demised Premises. Tenant shall have the right to remove Tenant's Property and
cease operations in the Demised Premises at any time and at Tenant's sole
discretion. Tenant shall operate its business on the Demised Premises at all
times during the Term of this Lease or any Renewal Term in accordance with all
laws, rules, regulations or court orders governing or applicable to its
operations thereon.
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<PAGE> 17
ARTICLE 44
TIME OF THE ESSENCE
Time shall be of the essence in interpreting the provisions of this Lease.
ARTICLE 45
ENTIRE AGREEMENT
This Lease contains all of the agreements of the parties hereto with
respect to the lease of the Demised Premises and no prior agreement, letters,
representations, warranties, promises or understandings pertaining to any such
matters shall be effective for any such purpose. This Lease may be amended or
added to only by an agreement in writing signed by the parties hereto or their
respective successors in interest.
ARTICLE 46
PRELIMINARY NEGOTIATIONS
The submission of this lease form by Tenant for examination does not
constitute an offer to lease or a reservation of an option to lease. In
addition, Landlord and Tenant acknowledge that neither of them shall be bound
by the representations, promises or preliminary negotiations with respect to
the Demised Premises made by their respective employees or agents. It is their
intention that neither party be legally bound in any way until this Lease has
been fully executed by both Landlord and Tenant.
- 16 -
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the day
and year first mentioned, the corporate party or parties by its or their proper
officers thereto duly authorized.
TENANT:
NES ACQUISITION CORP.,
A DELAWARE CORPORATION
By: /s/ Paul R. Ingersoll
-------------------------------
Name: Paul R. Ingersoll
-------------------------------
Title: Vice President
-------------------------------
LANDLORD:
SPRINT INDUSTRIAL SERVICES, INC.,
A TEXAS CORPORATION
By: /s/ J. W. O'Neil
-------------------------------
Name: J. W. O'Neil
-------------------------------
Title: President
-------------------------------
- 17 -
<PAGE> 19
State of __________ )
) SS:
County of _________ )
On this _____ day of ___________________, 1997, before me, the undersigned
Notary Public in and for said County and State, personally appeared
_______________________, ____________________ of NES Acquisition Corp., a
Delaware corporation, who executed the foregoing instrument on behalf of said
corporation for the purposes therein expressed. In witness whereof, I have
hereunto set my hand and official seal the day and year last above written.
------------------------------------------
Notary Public
My commission expires:
-------------------
State of ___________ )
) SS:
County of __________ )
On this _____ day of ___________________, 1997, before me, the undersigned
Notary Public in and for said County and State, personally appeared
_______________________, ____________________ of Sprint Industrial Services,
Inc., a Texas corporation, who executed the foregoing instrument on behalf of
said corporation for the purposes therein expressed. In witness whereof, I
have hereunto set my hand and official seal the day and year last above
written.
------------------------------------------
Notary Public
My commission expires:
-------------------
- 18 -
<PAGE> 20
EXHIBIT "A"
LEGAL DESCRIPTION OF THE DEMISED PREMISES
[to be furnished]
A-1
<PAGE> 21
EXHIBIT "B"
RECORDING REQUESTED BY,
AND WHEN RECORDED RETURN TO:
________________________________
________________________________
________________________________
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this "Agreement") is made
and entered into this the _______ day of 19___ by and between NES Acquisition
Corp., a Delaware corporation ("Tenant") and ____________________, a __________
____________________ ("Lender") and Sprint Industrial Services, Inc., a Texas
corporation ("Landlord").
R E C I T A L S:
WHEREAS, Landlord has executed a Lease dated as of July 1, 1997 in favor
of Tenant, a memorandum of which may be recorded simultaneously herewith,
covering a certain Demised Premises therein described located on a parcel of
real estate, a legal description of which is attached hereto and incorporated
herein by this reference as Exhibit "A" (said parcel of real estate and the
Demised Premises being sometimes collectively referred to herein as the
"Property");
WHEREAS, Landlord has executed a ________________ (the "Mortgage") dated
________________, 19____ and recorded on _______________ 19 ____ at Volume
________, Page ________, on the _____________ Records of __________ County,
_________________ in favor of Lender, payable upon the terms and conditions
described therein;
WHEREAS, it is a condition to said loan that said Mortgage shall
unconditionally be and remain at all times a lien or charge upon the Property,
prior and superior to this Lease and to the leasehold estate created thereby;
and
WHEREAS, the parties hereto desire to assure Tenant's possession and
control of the Property under this Lease upon the terms and conditions therein
contained.
NOW, THEREFORE, for and in consideration of the mutual covenants and
premises herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and confessed by the parties
hereto, the parties hereto do hereby agree as follows:
A G R E E M E N T:
1. The Lease is and shall be subject and subordinate to the Mortgage, and
to all renewals, modifications, consolidations, replacements and extensions
thereof, and to all future advances made thereunder.
B-1
<PAGE> 22
2. Should Lender become the owner of the Property, or should the Property
be sold by reason of foreclosure, or other proceedings brought to enforce the
Mortgage which encumbers the Property, or should the Property be transferred by
deed in lieu of foreclosure, or should any portion of the Property be sold
under a trustee's sale, this Lease shall continue in full force and effect as a
direct lease between the then owner of the Property covered by the Mortgage and
Tenant, upon, and subject to, all of the terms, covenants and conditions of
this Lease for the balance of the term thereof remaining, including any
extensions therein provided. Tenant does hereby agree to attorn to Lender or
to any such owner as its landlord, and Lender hereby agrees that it will accept
such attornment.
3. Notwithstanding any other provision of this Agreement, Lender shall not
be (a) liable for any default of any landlord under the Lease (including
Landlord), except that Lender agrees to cure any default of Landlord that is
continuing as of the date Lender forecloses the Property within thirty (30)
days from the date Tenant delivers written notice to Lender of such continuing
default, unless such default is of such a nature to reasonably require more
than thirty (30) days to cure and then Lender shall be permitted such
additional time as is reasonably necessary to effect such cure, provided
Landlord diligently and continuously proceeds to cure such default; (b) bound
by any Rent that Tenant may have paid under the Lease more than one month in
advance; (c) bound by any amendment or modification of the lease hereafter made
without Lender's prior written consent; (d) responsible for the return of any
security deposit delivered to Landlord under the Lease and not subsequently
received by Lender.
4. If Lender sends written notice to Tenant to direct its Rent payments
under the Lease to Lender instead of Landlord, then Tenant agrees to follow the
instructions set forth in such written instructions and deliver Rent payments
to Lender; however, Landlord and Lender agree that Tenant shall be credited
under the Lease for any Rent payments sent to Lender pursuant to such written
notice.
5. All notices which may or are required to be sent under this Agreement
shall be in writing and shall be sent by first-class certified U.S. mail,
postage prepaid, return receipt requested, and sent to the party at the address
appearing below or such other address as any party shall hereafter inform the
other party by written notice given as set forth below:
LANDLORD: TENANT:
--------- -------
Sprint Industrial Services, Inc. NES Acquisition Corp.
1041 Conrad Sauer c/o National Equipment Services,
Inc. Houston, Texas 77043 1800 Sherman, Suite 100
Attn: President Evanston, Illinois 60201
Attn: Kevin P. Rodgers
All notices delivered as set forth above shall be deemed effective three (3)
days from the date deposited in the U.S. mail.
6. Said Mortgage shall not cover or encumber and shall not be construed as
subjecting in any manner to the lien thereof any of Tenant's trade fixtures,
furniture, equipment or other personal property at any time placed or installed
in the Premises. In the event the Property or any part thereof shall be taken
for public purposes by condemnation or transfer in lieu thereof or the same are
damaged or destroyed, the rights of the parties to any condemnation award or
insurance proceeds shall be determined and controlled by the applicable
provisions of this Lease.
B-2
<PAGE> 23
7. This Non-Disturbance Agreement shall inure to the benefit of and be
binding upon the parties hereto, their successors in interest, heirs and
assigns and any subsequent owner of the Property secured by the Mortgage.
8. Should any action or proceeding be commenced to enforce any of the
provisions of this Non-Disturbance Agreement or in connection with its meaning,
the prevailing party in such action shall be awarded, in addition to any other
relief it may obtain, its reasonable costs and expenses, not limited to taxable
costs, and reasonable attorneys' fees.
9. Tenant shall not be enjoined as a party/defendant in any action or
proceeding which may be instituted or taken by reason or under any default by
Landlord in the performance of the terms, covenants, conditions and agreements
set forth in the Mortgage.
IN WITNESS WHEREOF, the parties hereto have caused this Non-Disturbance
Agreement to be executed as of the day and year first above written.
LENDER:
---------------------------------
a
--------------------------------
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
TENANT:
NES ACQUISITION CORP.,
A DELAWARE CORPORATION
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
LANDLORD:
SPRINT INDUSTRIAL SERVICES, INC.,
A TEXAS CORPORATION
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
B-3
<PAGE> 24
STATE OF ______________ )
) SS:
COUNTY OF _____________ )
[Acknowledgment of Lender]
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ________________________ of _____________
___________________________________________________ and he/she executed the
foregoing for and on behalf of said Corporation by authority of its Board of
Directors for the uses and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
------------------------------------------
Notary Public in and for the State
and County aforesaid
------------------------------------------
(Printed Name of Notary)
My Commission Expires:
- ---------------------------
B-4
<PAGE> 25
[Acknowledgement of Tenant)
STATE OF ______________ )
) SS:
COUNTY OF _____________ )
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ____________________ of NES Acquisition
Corp., a Delaware corporation, and he/she executed the foregoing for and on
behalf of said Corporation by authority of its Board of Directors for the uses
and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
----------------------------------------
Notary Public in and for the State
and County aforesaid
My Commission Expires:
- ----------------------------
B-5
<PAGE> 26
STATE OF ______________ )
) SS:
COUNTY OF______________ )
[Acknowledgment of Landlord]
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ____________________ of Sprint Industrial
Services, Inc., a Texas corporation, and he/she executed the foregoing for and
on behalf of said Corporation by authority of its Board of Directors for the
uses and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
----------------------------------
Notary Public in and for the State
and County aforesaid
----------------------------------
(Printed Name of Notary)
My Commission Expires:
- -------------------------------
B-6
<PAGE> 27
EXHIBIT "C"
WHEN RECORDED MAIL TO:
- ----------------------------------------------------------------------------
SPACE ABOVE THIS LINE FOR RECORDER'S USE
MEMORANDUM OF LEASE
This is a Memorandum of Lease by and between Sprint Industrial Services,
Inc., a Texas corporation (hereinafter called Landlord) and NES Acquisition
Corp., a Delaware corporation (hereinafter called Tenant) upon the following
terms:
Date of Lease: July 1, 1997
Description of Demised Premises: See Exhibit "A" attached hereto
Date of Commencement: July 1, 1997
Term: Five (5) years
Renewal Option(s): Two (2) five (5) year options
The purpose of this Memorandum of Lease is to give record notice of the
lease and of the rights created thereby, all of which are hereby confirmed.
IN WITNESS WHEREOF the parties have executed this Memorandum of Lease as
of the dates set forth in their respective acknowledgements.
(SEAL) LANDLORD:
SPRINT INDUSTRIAL SERVICES, INC., A
TEXAS CORPORATION
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
(SEAL) TENANT:
NES ACQUISITION CORP., A
DELAWARE CORPORATION
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
C-1
<PAGE> 28
C-2
<PAGE> 29
STATE OF _______________ )
) SS:
COUNTY OF_______________ )
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ___________________ of Sprint Industrial
Services, Inc., a Texas corporation, and he/she executed the foregoing for and
on behalf of said Corporation by authority of its Board of Directors for the
uses and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
----------------------------------------
Notary Public in and for the State
and County aforesaid
----------------------------------------
(Printed Name of Notary)
My Commission Expires:
- ------------------------
STATE OF _______________ )
) SS:
COUNTY OF ______________ )
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ____________________ of NES Acquisition
Corp., a Delaware corporation, and he/she executed the foregoing for and on
behalf of said Corporation by authority of its Board of Directors for the uses
and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
----------------------------------------
Notary Public in and for the State
and County aforesaid
----------------------------------------
(Printed Name of Notary)
My Commission Expires:
- ----------------------------
C-3
<PAGE> 30
EXHIBIT "D"
RENEWAL TERM RENT SCHEDULE
BASE RENT FOR ______________YEAR RENEWAL TERM:
The Base Rent during the _______ Renewal Term shall be the "Market Rent,"
as hereinafter defined.
(a) The term "Market Rent" shall mean the Base Rent for the Demised
Premises at the time in question which Landlord sets forth in a notice
(hereinafter referred to as the "Market Rent Notice") to Tenant. No later than
thirty (30) days after Tenant may exercise Tenant's option to extend this Lease
for the Renewal Term, Landlord shall send the Market Rent Notice to Tenant for
said Renewal Term and shall specify in the Market Rent Notice for the period
contained in the Renewal Term as applicable. In the event that Tenant shall,
in good faith, disagree with the Market Rent set forth in the Market Rent
Notice established by Landlord for the Demised Premises, Tenant shall, within
ten (10) days after receipt of the Market Rent Notice, furnish Landlord with a
written explanation in reasonable detail of the basis for Tenant's good faith
disagreement, the amount which, in Tenant's good faith opinion, is the Market
Rent for the period contained in the Renewal Term (hereinafter referred to as
the "Tenant's Notice"). If Tenant's Notice is not received by Landlord within
said ten (10) day period, the Market Rent shall be the Market Rent set forth in
the Market Rent Notice to Tenant. If Tenant's notice is received by Landlord
within said ten (10) day period, the Market Rent for the Demised Premises shall
be established as follows:
(i) No later than twenty (20) days following the receipt of the
Market Rent Notice from Landlord, Tenant shall select an individual as an
appraiser of its choice and give Landlord written notice of such
appraiser's name, address and telephone number.
(ii) Within ten (10) days after receipt of such notice by Landlord,
Landlord shall select an appraiser of its choice and give Tenant written
notice of such appraiser's name, address and telephone number.
(iii) The two appraisers so selected by Landlord and Tenant shall
then select an individual as a third appraiser within fifteen (15) days
after receipt by Tenant of Landlord's notification as to its selection of
an appraiser, and furnish Landlord and Tenant written notice of such
appraiser's name, address and telephone number.
(iv) All appraisers selected pursuant to this provision shall be
M.A.I. appraisers, unless Landlord and Tenant shall otherwise agree in
writing, each having at least ten (10) years experience with commercial
property in the state of the location of the Demised Premises. Each of
the three (3) selected appraisers shall then determine the fair rental
value of the Demised Premises for each applicable period of the Renewal
Term and the Market Rent hereunder for each Renewal Term, as applicable,
shall be determined to be the average of the three (3) appraisals for
each such years.
(b) If the procedure set forth in above in (a)(i) through and including
(a)(iv) is implemented, and if for any reason whatsoever (including, without
limitation, the institution of any judicial or other legal proceedings), the
Market Rent for any Renewal Term has not been finally determined prior to the
first day of said Renewal Term, then the amount of the Market Rent set forth by
Landlord in good faith in the Market Rent Notice shall be the Rent for all
purposes under this Lease until such time as the Market Rent is
D-1
<PAGE> 31
finally determined as set forth above, and Landlord and Tenant shall, by
appropriate payments to the other, correct any overpayment or underpayment
which may have been made prior to such final determination.
(c) If Landlord fails to select its appraiser in the manner and within the
time specified in (a)(ii) above, then the Market Rent for the Renewal Term
shall be the Market Rent set forth in Tenant's Notice.
(d) If Tenant fails to select its appraiser in the manner and within the
time specified in (a)(i) above, then the Market Rent for the Renewal Term shall
be the Market Rent set forth in the Market Rent Notice.
(e) If the appraisers selected by Landlord and Tenant fail to appoint the
third appraiser within the time and in the manner prescribed in (a)(iii)
above, then Landlord and/or Tenant shall promptly apply to the local office of
the American Arbitration Association for the appointment of the third
appraiser.
(f) All fees, costs and expenses incurred in connection with obtaining the
appraisals and the arbitration procedure set forth in this section shall be
shared equally by Landlord and Tenant; however, Landlord and Tenant shall each
bear their own attorneys' fees incurred with respect to this procedure.
(g) Notwithstanding the provisions of this Exhibit "D", in no event shall
the rental during the Renewal Term be less than the rental specified for the
Initial Term.
D-2
<PAGE> 1
Exhibit 10.51
LEASE
THIS LEASE (this "Lease") is made and entered into this 1st day of July,
1997, by and between Conrad Sauer, Ltd. a Texas limited partnership
(hereinafter called "Landlord"), and NES Acquisition Corp., a Delaware
corporation (hereinafter called "Tenant").
Capitalized terms used in this Lease not otherwise defined herein shall
have the meaning set forth in the Asset Purchase Agreement of even date
herewith by and among Tenant, Landlord, Joseph P Swinbank and Donald L. Poarch.
W I T N E S S E T H:
Landlord, for and in consideration of the covenants and agreements
hereinafter set forth to be kept and performed by both parties, does hereby
demise and lease to Tenant (for the term hereinafter stipulated) the premises
(hereinafter called the "Demised Premises") located at 1041 Conrad Sauer,
Houston, Texas 77043, as more particularly described on Exhibit "A" attached
hereto and incorporated herein by reference. The Demised Premises shall not
include that portion of the premises set forth on Exhibit "B" attached hereto
and incorporated herein by reference, which shall remain separate and not
subject to the terms of this Lease.
Landlord hereby leases the Demised Premises to Tenant and hereby grants to
Tenant its guests, invitees and licensees all easements, rights and privileges
appurtenant thereto, including the right to use adjoining parking areas,
driveways, roads, alleys and means of ingress and egress.
1. TERM; RENEWAL AND USE.
A. The term ("Term") of this Lease shall begin on July 1, 1997 (the
"Commencement Date") and shall continue on a month to month basis and may be
terminated by Tenant upon thirty (30) days prior written notice to Landlord,
but Landlord may terminate only upon six (6) months prior written notice to
Tenant.
B. The Demised Premises may be used and occupied by Tenant for the
operation of a general equipment business and all related uses thereto and for
any other lawful purpose provided that Landlord consents, which consent shall
not be unreasonably withheld conditioned or delayed.
2. RENTAL.
A. Tenant does hereby covenant and agree to pay to Landlord
$___________a month, for the use and occupancy of the Demised Premises, at the
times and in the manner hereinafter provided ("Base Rent"). Such Base Rent
shall be paid in advance, without notice or invoice from Landlord, on the first
day of each and every month during the Term hereof beginning on the
Commencement Date.
3. TAXES. Landlord agrees to pay on or before the date when due, all real
estate property taxes, general and special assessments which may be levied or
assessed against the Demised Premises.
4. COMPLIANCE WITH LAWS. Tenant and Landlord agree to comply with all laws,
ordinances, orders and regulations, including all state and federal
environmental laws and regulations, regarding the use and occupancy of the
Demised Premises and the cleanliness, safety or operation thereof. Tenant
agrees to comply with the reasonable regulations and requirements of any
insurance underwriter, inspection bureau
<PAGE> 2
or similar agency with respect to improvements installed by Tenant. Tenant
agrees to permit Landlord to comply with such recommendations and requirements
with respect to that portion of the Demised Premises for which Landlord is
responsible to repair and maintain.
5. CONDITION OF PREMISES. Tenant shall, during the Term of this Lease, have
the right to report to Landlord any defects or condition which are in need of
repair based upon the obligations of Landlord under this Lease. In connection
therewith, Landlord shall be obligated within a reasonable amount of time, not
to exceed thirty (30) days, to cure and correct such defects and conditions.
Landlord warrants that upon delivery of the Demised Premises to Tenant the
interior and exterior of the Demised Premises will meet with all present codes
required at the time by regulations of governing authorities.
6. REPAIRS AND MAINTENANCE. Landlord covenants and agrees, at its expense
without reimbursement or contribution by Tenant, to keep, maintain and replace,
if necessary, the foundations, the exterior paint, the HVAC system, the
plumbing system, the electrical system, the utility lines and connections to
and other systems servicing the Demised Premises, the sprinkler mains, if any,
structural elements including, without limitation, the roof, roof membrane,
roof covering (including interior ceiling), load-bearing walls, floors and
masonry walls in good condition and repair. Tenant covenants and agrees to
keep and maintain the Demised Premises in the same condition as existed at the
Commencement Date, normal wear and tear, damage from casualty and condemnation
excepted. In the event the Demised Premises become or are out of repair and
condition due to the failure of Landlord or Tenant to comply with the terms of
this Article 6, then the non-defaulting party shall have the right to perform
or cause to be performed any and all repairs necessary to restore and repair
the Demised Premises.
7. ALTERATIONS. Tenant shall not make any exterior or structural alterations
in any portion of the Demised Premises nor any alterations in the interior or
the exterior of the Demised Premises without, in each instance, first obtaining
the written consent of Landlord, which consent shall not be unreasonably
withheld. Tenant shall be permitted to make interior nonstructural
alterations, additions and improvements without Landlord's prior consent.
8. FIXTURES AND PERSONAL PROPERTY. Any of Tenant's trade fixtures, business
equipment, inventory, trademarked items, signs, and other removable personal
property installed in or on the Demised Premises ("Tenant's Property"), shall
remain the property of the Tenant. Landlord agrees that Tenant shall have the
right, at any time or from time to time, to remove any and all of Tenant's
Property. Tenant, at its expense, shall immediately repair any damage
occasioned by the removal of Tenant's Property and upon expiration or earlier
termination of this Lease, shall leave the Demised Premises in the same
condition as existed prior to the Commencement Date.
9. LIENS. Tenant shall not permit to be created nor to remain undischarged any
lien, encumbrance or charge arising out of any work or work claim of any
contractor, mechanic or laborer of Tenant or material supplied by a materialman
to Tenant which might be, or become, a lien or encumbrance or charge upon the
Demised Premises. If any lien or notice of lien on account of an alleged debt
of Tenant or any notice of contract by a party engaged by Tenant or Tenant's
contractor to work in the Demised Premises shall be filed against the Demised
Premises, the responsible party shall, within thirty (30) days after notice of
the filing thereof, cause the same to be discharged of record by payment,
deposit or bond.
10. Intentionally Omitted
- 2 -
<PAGE> 3
11. SERVICES.
A. Landlord agrees to cause the necessary mains, conduits and other
facilities to be provided to make water, sewer, gas, phone and electricity
available to the Demised Premises and to make available to Tenant water, sewer,
gas, phone and electrical services prior to the Commencement Date at Landlord's
expense.
B. Tenant shall be solely responsible for and promptly pay all charges
for the use and consumption of sewer, gas, electricity, water, phone and all
other utility services used within the Demised Premises.
C. Tenant shall be solely responsible for any necessary upgrading of
mains, conduits and other facilities in connection with Tenant's election to
upgrade water, sewer, gas, phone and electricity services to the Demised
Premises for Tenant's own use; provided however, any such upgrades shall
require the prior written consent of Landlord, which consent shall not be
unreasonably withheld conditioned or delayed.
D. Landlord shall not be liable to Tenant for damages or otherwise if
the said utilities or services are interrupted or terminated because of
necessary repairs, installations, or improvements, or any cause beyond the
Landlord's reasonable control, nor shall any such interruption or termination
relieve Tenant of the performance of any of its obligations hereunder, except
that if Tenant is unable to operate its business, there shall be an abatement
of all Base Rent and all other charges and items payable under this Lease
during such time period and if such interruption shall continue for a period of
more than seven (7) days, then Tenant may terminate the Lease.
12. DAMAGE TO PREMISES. In the event the Demised Premises is damaged or
destroyed or rendered totally or partially untenantable for its accustomed use,
by fire or other casualty, then Landlord shall, within sixty (60) days after
such casualty, commence repair of said Demised Premises and within one hundred
twenty (120) days after commencement of such repair, restore the Demised
Premises to substantially the same condition in which it was immediately prior
to the occurrence of the casualty, except as otherwise provided in this Article
12. From the date of such casualty until the Demised Premises is so repaired
and restored all Base Rent and all other charges and items payable under this
Lease shall abate in such proportion as the part of the Demised Premises thus
damaged, destroyed or rendered untenantable bears to the total Demised
Premises. If the Demised Premises cannot be repaired within 120 days, then
Landlord or Tenant shall have right to terminate this Lease effective as of the
date of such casualty, by giving one to the other within thirty (30) days of
such casualty, written notice of termination. Tenant may also terminate this
Lease upon thirty (30) days notice if Landlord fails to commence or complete
such restoration and repairs within the time period specified in this Article
12. If notice of termination is given within the applicable thirty (30) day
period, this Lease shall terminate and Base Rent and all other charges shall
abate as aforesaid from the date of such casualty.
13. INSURANCE.
A. Landlord agrees to carry, during the Term hereof, all risk property
insurance (hereinafter, "Landlord's Property Insurance") covering fire and
extended coverage, vandalism and malicious mischief, sprinkler leakage and all
other perils of direct physical loss or damage insuring the improvements and
betterments located in the Demised Premises, including the Demised Premises and
all appurtenances thereto (excluding Tenant's Property) for the full
replacement value thereof. Landlord, upon request, shall furnish Tenant a
certificate of such Landlord's Property Insurance. During the Term of this
Lease, Tenant agrees to reimburse to Landlord, for Tenant's proportionate share
of Landlord's annual total costs for the premiums for Landlord's Property
Insurance.
- 3 -
<PAGE> 4
B. Tenant agrees to carry, during the Term hereof, Commercial General
Liability insurance on the Demised Premises, naming Landlord as an additional
insured, covering both Tenant and Landlord as their interest may appear, with
companies reasonably satisfactory to Landlord and giving Landlord and Tenant a
minimum of ten (10) days' written notice by the insurance company prior to
cancellation or termination of such insurance. Such insurance shall be for
limits of not less than $1,000,000 combined Bodily Injury and Property Damage
Liability.
C. Landlord and Tenant and all parties claiming under them, mutually
release and discharge each other from all claims and liabilities arising from
or caused by any casualty or hazard, covered or required hereunder to be
covered in whole or in part by insurance on the Demised Premises or in
connection with property on or activities conducted on the Demised Premises,
and waive any right of subrogation which might otherwise exist in or accrue to
any person on account thereof. This waiver shall not be required if the
insurance carrier charges an additional premium in order to provide such waiver
and the party benefitting from the waiver does not agree to pay the additional
premium.
14. INDEMNIFICATION.
A. Tenant hereby indemnifies and holds Landlord harmless from and
against any and all claims, demands, liabilities and expenses, including
attorneys' fees, arising from Tenant's use of the Demised Premises or from any
act permitted, or any omission to act, in or about the Demised Premises by
Tenant or its agents, employees, contractors or invitees or from any breach or
default by Tenant of this Lease, except to the extent caused by Landlord's
negligence or willful misconduct. In the event any action or proceeding shall
be brought against Landlord by reason of any such claim, Tenant shall defend
the same at Tenant's expense by counsel reasonably satisfactory to Landlord.
B. Landlord hereby indemnifies and holds Tenant harmless from and
against any and all claims, demands, liabilities and expenses, including
attorneys' fees, arising from Landlord's obligations, actions or from any act
permitted, or any omission to act, in or about the Demised Premises by Landlord
or its agents, employees, contractors or invitees, or from any breach or
default by Landlord of this Lease, except to the extent caused by Tenant's
negligence or willful misconduct. In the event any action or proceeding shall
be brought against Tenant by reason of any such claim, Landlord shall defend
the same at Landlord's expense by counsel reasonably satisfactory to Tenant.
15. ASSIGNMENT, SUBLETTING AND OWNERSHIP.
A. Tenant shall not assign this Lease or sublet the Demised Premises
without Landlord's prior written approval, which approval shall not be
unreasonably withheld, conditioned or delayed.
B. Landlord shall have the right to transfer, assign and convey, in
whole or in part, any or all of the right, title and interest to the Demised
Premises, provided such transferee or assignee shall be bound by the terms,
covenants and agreements herein contained, and shall expressly assume and
agree to perform the covenants and agreements of Landlord herein contained.
16. NON-DISTURBANCE AND ATTORNMENT.
A. Upon written request of Landlord, or any mortgagee or beneficiary of
Landlord, Tenant will, in writing, subordinate its right hereunder to the
interest of any ground lessor of the land upon which the Demised Premises is
situated and to the lien of any mortgage or deed of trust now or hereafter in
force against the land and building of which the Demised Premises is a part,
and upon any building hereafter
- 4 -
<PAGE> 5
placed upon the land of which the Demised Premises is a part and to all
advances made or hereafter to be made upon the security thereof; provided,
however, that the ground lessor, or the mortgagee or trustee named in said
mortgage or trust deed shall agree that Tenant's peaceable possession of the
Demised Premises or its rights under this Lease will not be disturbed on
account thereof.
B. In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deeds of
trust, upon any such foreclosure or sale Tenant agrees to recognize such
beneficiary or purchaser as the Landlord under this Lease, provided Tenant's
rights under this Lease continue unabated and its tenancy shall not be
disturbed.
17. DEFAULTS BY TENANT.
A. The occurrence of any of the following shall constitute a material
default and breach of this Lease by Tenant:
(i) Any failure by Tenant to pay Base Rent or make any other payment
required to be made by Tenant hereunder within seven (7) days after
receipt of written notice from the Landlord; and
(ii) A failure by Tenant to observe and perform any other material
provision of this Lease to be observed or performed by the Tenant.
B. In the event of any such default by Tenant, then Landlord shall be
entitled to terminate this Lease by giving written notice of termination to
Tenant, in which event Tenant shall immediately surrender the Demised Premises
to Landlord. If Tenant fails to so surrender the Demised Premises, then
Landlord may, without prejudice to any other remedy it has for possession of
the Demised Premises or arrearages in Base Rent or other damages, re-enter and
take possession of the Demised Premises and expel or remove Tenant and any
other person occupying the Demised Premises or any part thereof, in accordance
with applicable law.
18. DEFAULTS BY LANDLORD. If Landlord should be in default in the performance
of any of its obligations under this Lease, which default continues for a
period of more than thirty (30) days after receipt of written notice from
Tenant, Tenant may terminate this Lease.
19. SURRENDER OF PREMISES. Tenant shall, upon the expiration of the Term
granted herein, or any earlier termination of this Lease for any cause,
surrender to Landlord the Demised Premises, and all alterations, improvements
and other additions which may be made or installed by either party to, in, upon
or about the Demised Premises, other than Tenant's Property which shall remain
the property of Tenant as provided in Article 8 hereof.
20. EMINENT DOMAIN.
A. In the event that any portion of the Demised Premises shall be
appropriated or taken under the power of eminent domain by any public or
quasipublic authority, then at the election of Tenant, this Lease shall
terminate and expire as of the date of such taking, and both Landlord and
Tenant shall thereupon be released from any liability thereafter accruing
hereunder. Notice of any termination relating to such eminent domain
proceeding must be made by Tenant to Landlord within forty-five (45) days after
receipt of written notice of such taking.
- 5 -
<PAGE> 6
B. If Tenant elects not to so terminate this Lease, Landlord shall
promptly repair and restore the Demised Premises to the condition that existed,
as near as possible, prior to such appropriation or taking, and Tenant may
remain in that portion of the Demised Premises which shall not have been
appropriated or taken, and thereafter all Base Rent and all other payments and
charges under this Lease of Tenant shall be adjusted on an equitable basis,
taking into account the relative value of the portion taken as compared to the
portion remaining.
C. Tenant shall have the right to pursue a claim for damages with respect
to Tenant's Property with the public or quasipublic authority in connection
with any eminent domain proceeding.
21. ATTORNEYS' FEES. In the event that at any time during the Term of this
Lease either Landlord or Tenant shall institute any action or proceeding
against the other relating to the provisions of this Lease, or any default
hereunder, the unsuccessful party in such action or proceeding agrees to
reimburse the successful party for the reasonable expenses of attorneys' fees
and paralegal fees and disbursements incurred therein by the successful party.
Such reimbursement shall include all legal expenses incurred prior to trial, at
trial and at all levels of appeal and post-judgment proceedings.
22. NOTICES. Notices and demands required, or permitted, to be sent to those
listed hereunder shall be sent by certified mail, return receipt requested,
postage prepaid, or by Federal Express or other reputable overnight courier
service and shall be deemed to have been given upon the date the same is
postmarked if sent by certified mail or the day deposited with Federal Express
or such other reputable overnight courier service, but shall not be deemed
received until one (1) business day following deposit with Federal Express or
other reputable overnight courier service or three (3) days following deposit
in the United States Mail if sent by certified mail to address shown below, and
addressed to:
<TABLE>
<S> <C>
LANDLORD: TENANT:
- --------- -------
Conrad Sauer, Ltd. NES Acquisition Corp.
1041 Conrad Sauer c/o National Equipment Services, Inc.
Houston, Texas 77043 1800 Sherman, Suite 100
Attn: Joseph B. Swinbank Evanston, Illinois 60201
Attn: Kevin P. Rodgers
</TABLE>
or at such other address requested in writing by either party upon thirty (30)
days' notice to the other party.
23. REMEDIES. All rights and remedies of Landlord and Tenant herein created or
otherwise extending at law are cumulative, and the exercise of one or more
rights or remedies may be exercised and enforced concurrently or consecutively
and whenever and as often as deemed desirable.
24. SUCCESSORS AND ASSIGNS. All covenants, promises, conditions,
representations and agreements herein contained shall be binding upon, apply
and inure to the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
25. WAIVER. The failure of either Landlord or Tenant to insist upon strict
performance by the other of any of the covenants, conditions, and agreements of
this Lease shall not be deemed a waiver of any subsequent breach or default in
any of the covenants, conditions and agreements of this Lease.
26. Intentionally Omitted
- 6 -
<PAGE> 7
27. INTERPRETATION. The parties hereto agree that it is their intention hereby
to create only the relationship of Landlord and Tenant, and no provision
hereof, or act of either party hereunder, shall ever be construed as creating
the relationship of principal and agent, or a partnership, or a joint venture
or enterprise between the parties hereto.
28. COVENANT OF TITLE AND QUIET ENJOYMENT. Landlord covenants that it has full
right, power and authority to make this Lease, and that Tenant or any permitted
assignee or sublessee of Tenant, if any, upon the payment of the Base Rent and
performance of the covenants hereunder, shall and may peaceably and quietly
have, hold and enjoy the Demised Premises and improvements thereon during the
Term or any renewal or extension thereof.
29. ESTOPPEL. At any time and from time to time either party, upon request of
the other party, will execute, acknowledge and deliver an instrument, stating,
if the same be true, that this Lease is a true and exact copy of this Lease
between the parties hereto, that there are no amendments hereof (or stating
what amendments there may be), that the same is then in full force and effect
and that, to the best of its knowledge, there are no offsets, defenses or
counterclaims with respect to the payment of Base Rent reserved hereunder or in
the performance of the other terms, covenants and conditions hereof on the part
of Tenant or Landlord, as the case may be, to be performed, and that as of such
date no default has been declared hereunder by either party or if not
specifying the same. Such instrument will be executed by the other party and
delivered to the requesting party within fifteen (15) days of receipt, or else
the statements made in the proposed estoppel request shall be deemed to be
correct.
30. CONSENT. Wherever in this Lease Landlord or Tenant is required to give its
consent or approval, such consent or approval shall not be unreasonably
withheld, conditioned or delayed.
31. WAIVER OF LANDLORD'S LIEN. Landlord hereby waives any contractual,
statutory or other Landlord's lien on Tenant's furniture, fixtures, supplies,
equipment, inventory and Tenant's Property.
32. SEVERABILITY. Any provision of this Lease which shall prove to be invalid,
void or illegal shall in no way affect, impair or invalidate any other
provisions hereof and such other provisions shall remain in full force and
effect.
33. GOVERNING LAW AND VENUE. This Lease shall be governed by the laws of the
state in which the Demised Premises is located.
34. BROKERS. Landlord and Tenant represent and warrant one to the other that
they have not had any dealing with any real estate brokers or agents in
connection with the negotiation of this Lease. Landlord and Tenant indemnify
and hold each other harmless from and against any and all liability and cost
which Landlord or Tenant may suffer in connection with real estate brokers
claiming by, through or under either party seeking any commission, fee or
payment in connection with this Lease.
35. TENANT'S CONDUCT OF BUSINESS. Notwithstanding anything herein to the
contrary, nothing herein shall be construed as an obligation for Tenant to open
or operate its business in the Demised Premises. Tenant shall have the right
to remove Tenant's Property and cease operations in the Demised Premises at any
time and at Tenant's sole discretion, upon thirty (30) days prior written
notice to Landlord.
36. TIME OF THE ESSENCE. Time shall be of the essence in interpreting the
provisions of this Lease.
- 7 -
<PAGE> 8
37. ENTIRE AGREEMENT. This Lease contains all of the agreements of the parties
hereto with respect to matters covered or mentioned in this Lease and no prior
agreement, letters, representations, warranties, promises or understandings
pertaining to any such matters shall be effective for any such purpose. This
Lease may be amended or added to only by an agreement in writing signed by the
parties hereto or their respective successors in interest.
- 8 -
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the day
and year first mentioned.
TENANT:
NES ACQUISITION CORP.,
a Delaware corporation
By: /s/ Paul R. Ingersoll
-----------------------------------
Name: Paul R. Ingersoll
---------------------------------
Title: Vice President
--------------------------------
LANDLORD:
CONRAD SAUER, LTD.
a Texas limited partnership
By: /s/ J. B. Swinbank
-----------------------------------
Name: J. B. Swinbank
---------------------------------
Title: Partner
--------------------------------
<PAGE> 1
Exhibit 10.52
STATE OF LOUISIANA
PARISH OF CALCASIEU
LEASE AGREEMENT
BEFORE ME, the undersigned Notary and the undersigned competent witnesses,
on this 14th day of August, 1994, at Sulphur, Louisiana, personally came and
appeared:
DWAINE ALLEN ELLENDER, resident of Calcasieu Parish, Louisiana,
hereinafter referred to as LESSOR, and Sprintank, resident of Beaumont, TX,
hereinafter referred to as LESSEE.
1. LESSOR hereby leases to LESSEE that certain parcel of property situated
in the Parish of Calcasieu, State of Louisiana, and described more particularly
as follows, to wit:
See Exhibit A attached hereto and make a part hereof.
2. The amount of rent and consideration to be paid by LESSEE to LESSOR
shall be $1,100.00 per month. The rental shall be paid in advance on the 1st
day of each month and increasing at a rate of 0 per cent each at, to wit:
a.
3. The primary term of this lease shall be 3 years commencing on the 14th
day of August, 1994, and ending at midnight on the 14th day of August, 1997.
4. LESSEE agrees to deposit with the LESSOR, as security for the full and
faithful performance by the LESSEE of all the covenants, terms and conditions
of this indenture of lease to be performed by it, the sum of $1,000.00. The
sum so deposited shall be retained by LESSOR until the termination of this
lease, if the LESSEE is not in default in any of the terms hereof, such shall
be returned to the LESSEE at the expiration of the term thereof. The parties
hereto acknowledge that said sum will be deposited in LESSOR'S general funds.
5. LESSEE shall have the option to renew the lease for an additional term
of three year (3) upon new agreement of terms and conditions. Should LESSEE
desire to exercise the option to renew the lease for an additional term, or
cancel, he shall notify the LESSOR in writing thirty (30) days prior to the end
of the primary term.
6. LESSOR shall be responsible for the maintenance and repair for
structure defects to roof and exterior walls only. LESSEE is responsible for
all other upkeep and damages to property caused by customers, employees, and
all other associated with LESSEE's business. LESSEE shall be responsible for
any necessary repairs or maintenance to the interior of the premises occupied
by LESSEE. LESSEE agrees to allow LESSOR access to the demised
<PAGE> 2
premises at any reasonable hour in order for LESSOR to make necessary repairs.
LESSEE shall be responsible for all repairs and maintenance to the furnace,
heating-ventilation, and air conditioning equipment. Any warranties on air
conditioning and furnace will aid LESSEE's maintenance during warranty period.
LESSEE is to be responsible for upkeep of fence, gates, and grounds.
7. LESSEE shall, during the term of this lease, keep the interior or said
premises in good repair and will replace all broken glass, including plate
glass. In addition, LESSEE will maintain all heating and air conditioning
system, plumbing and electrical equipment and systems, water, sewer, gas pipes
and telephone systems. If LESSEE does not make necessary repair or does not
perform the necessary maintenance, the LESSOR may upon written notice to the
LESSEE, make such repairs and perform such maintenance and charge the cost
thereof to LESSEE.
8. LESSEE shall use the demised premises for any lawful purpose and will
not directly or indirectly permit the demised premises to be occupied or used
in whole or in part by any other person, firm, or corporation, and will not
sublet the same nor any part thereof, nor assign this lease without in each
case first obtaining the written consent of the LESSOR, except to a subsidiary
corporation which LESSEE controls. LESSOR agrees not to unreasonably withhold
their consent to any assignment or subletting. In the event such consent is
given, LESSEE shall remain liable to LESSOR for the payment of rent than due or
to be come due, and the performance of all other obligations of LESSEE
hereunder for the balance of the demised term.
9. LESSEE shall fully comply with all statutes, orders, regulations,
ordinances and requirements of law now in effect of the Federal Government, the
State of Louisiana, and any other municipal or public authority with
jurisdiction over the premises, including the Local Board of Fire Underwriters,
the Building, Fire and Health Departments, and any other similar body.
10. LESSEE will pay, in addition to the rent, all sewer rents, gas, water,
electric light and power bills taxed, levied or charged against the said
premises.
LESSEE agrees to pay any and all personal property taxes assessed upon the
merchandise, fixtures, or other property maintained by LESSEE on the premises.
11. LESSEE will allow LESSOR and its agents free access to the premises at
reasonable times and upon reasonable notice for the purpose of inspecting the
same or making such repairs which LESSOR may see fit to make.
12. That is mutually agreed between the parties hereto:
-2-
<PAGE> 3
(a) If the leased premises shall be damaged by fire, the elements,
unavoidable accident caused by LESSOR'S fault or negligence, LESSOR shall
be its own expense cause the damage to be repaired, and the fixed rent
meanwhile shall be abated proportionately as to the portion of the
premises rendered untenantable. If the entire lease premises shall be
rendered untenantable by reason of such casualty, LESSOR shall have the
option, at his sole and uncontrolled discretion, either (1) cause such
damage to be repaired at his own expense, and the fixed rent meanwhile
shall abate until the leased premises having been repaired by LESSOR, or
(2) terminate this lease and tenancy hereby created as of the date of such
casualty by giving to the LESSEE within sixty (60) days following the date
of said casualty, written notice of election to do so and in the event of
such termination, rent shall be adjusted as of such date. LESSOR's
obligation hereunder to repair the leased premises shall be only to repair
and restore any damage, if any, to the structural portions of the building
and those additional improvements furnished by LESSOR pursuant to the
provisions of this lease. LESSEE'S improvements shall be insured and
repaired by LESSEE. Upon completion of LESSOR's repairs or prior thereto
upon receipt from LESSOR of written notice that LESSOR's repairs are
substantially completed, LESSEE shall proceed with reasonable promptness
with such additional repairs and restoration as are necessary to restore
the premises to substantially their condition prior to such casualty and
to re-open the damaged premises for business as speedily as possible.
(b) In connection with any such repair or restoration of the premises
by reason for such casualty or damage, LESSOR shall not be liable for any
delays occasioned by strikes, riots, Acts of God, national emergency, or
other causes beyond LESSOR's control.
(c) As between the parties hereto, the same rule shall apply to a
legal condemnation of the leased premises by the United States Government,
or any instrumentality thereof, or by any governmental body or public
service corporation.
(d) Nothing herein shall be construed as to relieve LESSEE for any
liability for his negligence or otherwise which contributed to such
casualty.
13. LESSOR agrees to pay all real estate taxes assessed against said
premises.
LESSEE will procure and maintain fire insurance with extended coverage
covering all of its equipment, fixtures, merchandise and other property located
within said premises, and public liability insurance against injury to person
limits of at least One Hundred Thousand and No/100ths ($100,000.00) Dollars for
one person and Three Hundred Thousand and No/100ths ($300,000.00) Dollars for
any number of persons injured or killed in one accident, and One Hundred
Thousand and No/100ths ($100,000.00) Dollars for property damage. LESSEE shall
deposit with LESSOR proof of the existence and maintenance of the said
insurance policies. LESSEE will procure and maintain fire insurance in the
amount of One
-3-
<PAGE> 4
Hundred Twenty Five Thousand and No/100ths ($125,000.00) Dollars. LESSOR shall
be named as an additional insured under the terms of all of LESSEE's policies
enumerated in this lease by LESSEE.
14. Upon terminating or cancellation of this lease at any time and for any
reason LESSEE will peacefully surrender possession of the premises and LESSEE
further agrees to return the premises in the same condition as they existed at
the date of LESSEE'S occupancy except for ordinary wear and tear, subject to
the other provisions of this lease. At termination, LESSEE must return all
keys to LESSOR; the yard shall be leveled and limestone added where necessary.
15. Upon the termination or cancellation of this lease, LESSEE shall have
the right and privilege to remove from the premises all movable furniture,
fixtures and other property placed thereon by LESSEE. LESSEE agrees that it
will at his own expense, repair any damage to the building caused by such
removal. At termination of this lease, whether at the end of its term or as
hereinabove specified in the event of nonpayment of rental, or upon termination
for any other cause, LESSOR shall be vested with full title to all immovable
improvements made by LESSEE or otherwise on the leased premises, free and clear
of any claims, rights, title or ownership of LESSEE. LESSEE shall then leave
the premises in a clean and orderly fashion and appearance.
16. LESSOR and LESSEE agree that in the event LESSEE fails to comply with
the provisions of Paragraph 7, Paragraph 10, or Paragraph 13, LESSOR may make
such expenditures, pay such utility charges, and effect such insurance and pay
the premiums therefore and any amounts so paid by LESSOR shall immediately due
and payable by LESSEE. Any notices necessary or required under this agreement
shall be in writing and addressed to the parties at the following addresses:
LESSOR: LESSEE:
Ellender's Portable Buildings Sprint Tank
3624 E. Napoleon St. 2170 W. Cardinal
Sulphur, LA 70663 Beaumont, TX 77705
17. LESSEE shall make no modifications, additions and/or improvements to
the premises except with the prior written consent of LESSOR. Any such
modifications, additions or improvements will remain with the premises and
become the property of LESSOR at the expiration of the lease term. Any
immovable property shall be conclusively presumed to be that of the LESSOR and
shall remain with the building. Immovable property for purposes of this lease,
specifically Paragraphs 15, and 17, herein shall be all property that is
designated as immovable property by operation of law or that is in any way
attached to the building or land. LESSEE shall not suffer or permit any
Mechanic's Liens to be filed against the fee of the
- 4 -
<PAGE> 5
premises by reason or work, labor, services or materials supplied or claimed to
have been supplied to LESSEE or anyone holding the premises or any part thereof
or under LESSEE.
18. Upon any failure by LESSEE to pay the rent as provided herein, or to
company with any provisions of this lease, the rent for the unexpired term
shall immediately become due, and LESSOR may either cancel the lease or
re-enter or re-let the property for such price and such terms as may be
immediately obtainable, and apply the net amount realized to the amount due by
LESSEE.
19.
(a) All of the covenants, agreements, conditions, and undertakings in
this lease shall extend and inure to and be binding upon the parties
hereto and their respective heirs, executors, administrators, successors
and/or assigns.
(b) If any term or provision of this agreement shall to any extent,
be held invalid or unenforceable, the remaining terms and provisions
hereof shall not be affected thereby, but shall be valid and enforced to
the fullest extent permitted by law.
(c) This agreement shall be construed and enforced in accordance with
the laws of the State of Louisiana.
20. This lease and Exhibits and Rider, if any, attached hereto and forming
a part hereof, set forth all of the covenants, premises, agreements,
conditions, and understandings, either oral or written, between them other than
those herein set forth. Except as herein provided, no subsequent alterations,
amendments, changes or additions to this lease shall be binding upon the LESSOR
or LESSEE unless and until reduced to writing and signed by both parties. This
lease shall become effective only upon the execution by LESSOR and delivery
thereof to LESSEE.
21. This agreement is made upon the express condition that the LESSOR
shall be free from all liabilities and claims for damages and/or suits for or
by reason of any injury or injuries to any person or persons or property of any
kind whatsoever, whether the person or property of LESSEE, its agents, or
employees, or third persons, from any cause, or causes whatsoever while in or
upon said premises or any part thereof during the term of this agreement or
occasioned by any occupancy or use of said premises or any activity carried on
by LESSEE in connection therewith, and LESSEE hereby covenants and agrees to
indemnify and save harmless the LESSOR from all liabilities, charges, expenses,
(including counsel fees) and costs on account of or by reason of any such
injuries, liabilities, claims, suits or losses however occurring or damages
growing out of same.
22. The non-prevailing party shall pay all damages and attorney's fees,
court costs and other reasonable costs incurred by the prevailing party in any
action arising under this lease particularly in the cancellation or enforcement
of this lease, the eviction of LESSEE and/or
-5-
<PAGE> 6
collection of damages or rent due from LESSEE. All rental and other amounts
owed by LESSEE or LESSOR shall bear simple interest from due date until paid at
the maximum rate allowed by law.
23. LESSEE shall not rent, sublet or rant use or possession of the
premises to any other party without, the prior written consent of LESSOR, which
discretion LESSOR shall exercise in his sole and absolute discretion. Any such
sublease shall be bound by, the terms of this lease agreement.
THUS DONE AND SIGNED before me, the undersigned authority, and the
undersigned competent witnesses on the __ day of _____________, 19__, at,
Sulphur, Louisiana.
WITNESSES:
- ----------------------------- ------------------------------
DWAINE ALLEN ELLENDER
- -----------------------------
-----------------------------
NOTARY PUBLIC
THUS DONE AND SIGNED before me, the undersigned authority, and the
undersigned competent witnesses on the __ day of ____________, 19__, at,
Sulphur, Louisiana.
- ----------------------------- ------------------------------
COMPANY
- ----------------------------- ------------------------------
By
-----------------------------
NOTARY PUBLIC
-6-
<PAGE> 7
Addendum to Lease Agreement
As part of the lease agreement between Sprint Industrial Services, Inc.
(Lessee) and Dwaine Allen Ellender (Lessor), the following guarantee is made.
Sprint Industrial Services, Inc. will maintain, repair and/or replace the
Ellender portable building provided to them at the leased property. All
damages caused by fire, vandalism, flood or any acts of good will be the
responsibility of Sprint Industrial Services, Inc. Total replacement value of
this structure is not to exceed four thousand dollars ($4,000.00) as previously
agreed. This agreement will be in effect for the full term of lease agreement
between lessor and lessee mentioned herein.
/s/ Dwaine Allen Ellender /s/ Gregory S. Gabriel
- ------------------------ -------------------------------
Dwaine Allen Ellender Sprint Industrial Services, Inc.
Lessor Lessee
7/20/94
<PAGE> 1
EXHIBIT 10.53
TEXAS ASSOCIATION OF REALTORS(R)
COMMERCIAL LEASE
This lease agreement is made and entered into by and between J.R. Plake,
Inc. (Landlord) and Sprint Industrial Ser. Tank Leasing (Tenant), Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord that certain
property with the improvements thereon, containing approximately 87,000 (plus or
minus) square feet, hereinafter called the "leased premises", known as 2170 W.
Cardinal Dr., Beaumont, Texas 77705 (Address), Lot 8, Block 9, Annie T. Warren
Addition, City of Beaumont, Jefferson County, Texas; or as more particularly
described below or on attached exhibit:
The primary term of this lease shall be 12 months commencing on the 1st
day of November, 1991, and ending on the 31st day of October, 1992, upon the
following terms, conditions, and covenants:
1. TAXES. Each year during the term of this lease, Landlord shall pay real
estate taxes assessed against the leased premises in an amount equal to
the total real estate taxes assessed against the leased premises in the
base year.
2. UTILITIES. Tenant shall pay all charges for utility services to the
leased premises.
3. HOLDING OVER. Failure of Tenant to surrender the leased premises at the
expiration of the lease constitutes a holding over which shall be
construed as a tenancy from month to month at a rental of $770.00 per
month.
4. RENT. Tenant agrees to and shall pay Landlord at 2666 Calder-Bmt., County
of Jefferson, Texas, or at such other place Landlord shall designate from
time to time in writing, as rent for the leased premises, the total sum of
48,400.00, payable without demand in equal monthly payments of $700.00
each in advance on or before the 1st day of each month, commencing on
11/1, 1991, and continuing thereafter until the total sum shall be paid.
Adjustment to the rent, if any, for rent escalators, for percentage of net
rent, or for increases in building operation costs (including but not
limited to insurance, custodial services, maintenance and utilities) shall
be as set forth in an attached addendum. Rent received after the first
day of the month shall be deemed delinquent. If rent is not received by
Landlord by the 5th of each month, Tenant shall pay a late charge of $7.00
plus a penalty of $1.00 per day until rent is received in full. Tenant
shall pay $20.00 for each returned check.
<PAGE> 2
5. USE. Tenant shall use the leased premises for the following purposes and
no other: Tank Leasing Business.
6. SECURITY DEPOSIT. Tenant shall pay to Landlord a security deposit in the
sum of $700.00, payable on or before the commencement of this lease for
Tenant's faithful performance hereunder. Refund thereof shall be made
upon performance of this lease agreement by Tenant, minus any assessments
or damages unless Landlord and Tenant provide otherwise in Special
Provisions.
7. INSURANCE. Tenant shall pay for fire and extended coverage insurance on
the building and other improvements on the leased premises in an amount
not less than $adequate, which amount shall be increased yearly in
proportion to the increase in market value of the premises. If Landlord
provides any insurance herein, Tenant shall pay to Landlord, during the
term hereof, the amount of any increase in premiums for the insurance
required over and above such premiums paid during the first year of this
lease. Tenant shall provide public liability and property damage
insurance for its business operations on the leased premises in the amount
of $100/300 which policy shall cover the Landlord as well as the Tenant.
Said insurance policies required to be provided by Tenant herein shall
name Landlord as an insured and evidencing the coverage required herein.
Tenant shall be solely responsible for fire and casualty insurance on
Tenant's property on or about the leased premises. If Tenant does not
maintain such insurance in full force and effect, Landlord may notify
Tenant of such failure and if Tenant does not deliver to Landlord within
30 days after such notice certification showing all such insurance to be
in full force and effect, Landlord may at his option, take out the
necessary insurance to comply with the provision hereof and pay the
premiums on the items specified in such notice, and Tenant covenants
thereupon on demand to reimburse and pay Landlord any amount so paid or
expended in the payment of the insurance premiums required hereby and
specified in the notice, with interest thereon at the rate of 10% percent
per annum from the date of such payment by Landlord until repaid by
Tenant.
8. CONDITION OF PREMISES. Tenant has examined and accepts the leased
premises in its present as is condition as suitable for the purposes for
which the same are leased, and does hereby accept the leased premises
regardless of reasonable deterioration between the date of this lease and
the date Tenant begins occupying the leased premises unless Landlord and
Tenant agree to repairs or refurbishment as noted in Special Provisions.
9. MAINTENANCE AND REPAIRS. Tenant shall keep the foundation, the exterior
walls (except glass; windows; doors; door closure devices; window and door
frames, molding, locks, and hardware; and interior painting or other
treatment of exterior walls), and the roof of the leased premises in good
repair except that Landlord shall not be required to make any repairs
occasioned by the act or negligence of Tenant, its employees, subtenants,
licensees and concessionaires. Tenant is responsible for maintenance of
the common area and common area equipment. If Landlord is responsible for
any such repair and maintenance,
- 2 -
<PAGE> 3
Tenant agrees to give Landlord written notice of need repairs. Landlord
shall make such repairs within a reasonable time. Tenant shall notify
Landlord immediately of any emergency repairs. Tenant shall keep the
leased premises in good, clean condition and shall at its sole cost and
expense, make all needed repairs and replacements, including replacement
of cracked or broken glass, except for repairs and replacements required
to be made by Landlord under this section. If any repairs required to be
made by Tenant hereunder are not made within ten (10) days after written
notice delivered to Tenant by Landlord, Landlord may at its option make
such repairs without liability to Tenant for any loss or damage which may
result by reason of such repairs, and Tenant shall pay to Landlord upon
demand as additional rent hereunder the cost of such repairs plus
interest. At the termination of this lease. Tenant shall deliver the
leased premises in good order and condition, reasonable wear and tear
excepted.
10. ALTERATIONS. All alterations, additions and improvements, except trade
fixtures, installed at expense of Tenant, shall become the property of
Landlord and shall remain upon and be surrendered with the leased premises
as a part thereof on the termination of this lease. Such alterations,
additions, and improvements may only be made with the prior written
consent of Landlord, which consent shall not be unreasonably withheld. If
consent is granted for the making of improvements or alterations to the
leased premises, such improvements and alterations shall not commence
until Tenant has furnished to Landlord a certificate of insurance showing
coverage in an amount satisfactory to Landlord protecting Landlord from
liability for injury to any person and damage to any personal property, on
or off the leased premises, in connection with the making of such
improvements or alterations. No cooling tower, equipment, or structure
temporarily, so that repairs to the roof can be made. Tenant shall
promptly remove and reinstall the cooling tower, equipment or structure at
Tenant's expense and repair at Tenant's expense any damage resulting from
such removal or reinstallation. Upon termination of this lease, Tenant
shall remove or cause to be removed from the roof any such cooling tower,
equipment or structure if directed to do so by Landlord. Tenant shall
promptly repair at its expense any damages resulting from such removal.
At the termination of this lease, Tenant shall deliver the leased premises
in good order and condition, natural deterioration only excepted. Any
damage caused by the installation or removal of trade fixtures shall be
repaired at Tenant's expense prior to the expiration of the lease term.
All alterations, improvements, additions, and repairs made by Tenant shall
be made in good and workmanlike manner.
11. COMPLIANCE WITH LAWS AND REGULATIONS. Tenant shall, at its own expense,
comply with all laws, orders, and requirements of all governmental
entities with reference to the use and occupancy of the leased premises,
Tenant and Tenant's agents, employees and invitees shall fully comply with
any rules and regulations governing the use of the buildings or other
improvements to the leased premises as required by Landlord, Landlord may
make reasonable changes in such rules and regulations from time to time as
deemed advisable for the safety, care and cleanliness of the leased
premises, provided same are in writing and are not in conflict with this
lease.
- 3 -
<PAGE> 4
12. ASSIGNMENT AND SUBLETTING. Tenant shall not assign this lease nor sublet
the leased premises or any interest therein without first obtaining the
written consent of Landlord. An assignment or subletting without the
written consent of Landlord shall be void and shall, at the option of
Landlord, terminate this lease.
13. DESTRUCTION. In the event the leased premises is partially damaged or
destroyed or rendered partially unfit for occupancy by fire or other
casualty, Tenant shall give immediate notice to Landlord. Landlord may
repair the damage and restore the leased premises to substantially the
same condition as immediately prior to the occurrence of the casualty.
Such repairs shall be made at Landlord's expense unless due to Tenant's
negligence, Landlord shall allow Tenant a fair reduction of rent during
the time the leased premises are partially unfit for occupancy. If the
leased premises are totally destroyed or deemed by the Landlord to be
rendered unfit for occupancy by fire or other casualty, or if Landlord
shall decide not to repair or rebuild, this lease shall terminate and the
rent shall be paid to the time of such casualty.
14. TENANT DEFAULT. If Tenant abandons the premises or otherwise defaults in
the performance of any obligations or covenants herein, Landlord may
enforce the performance of this lease in any manner provided by law. This
lease may be terminated at Landlord's discretion if such abandonment or
default continues for a period of 10 days after Landlord notifies Tenant
of such abandonment or default and of Landlord's intention to declare this
lease terminated. Such notice shall be sent by Landlord to Tenant at the
leased premises by certified mail or otherwise. If Tenant has not
completely removed or cured default within the 10 day period, this lease
shall terminate. Thereafter, Landlord or its agents shall have the right,
without further notice or demand, to enter the leased premises and remove
all persons and property without being deemed guilty of trespass and
without waiving any other remedies for arrears of rent or breach of
covenant. Upon abandonment or default by the Tenant, the remaining unpaid
portion of the rental from paragraph 4 herein, shall become due and
payable.
15. LIEN. Landlord is granted an express contractual lien, in addition to any
lien provided by law, and a security interest in all property of Tenant
found on the leased premises to secure the compliance by Tenant with all
terms of this lease. In the event of default, Landlord or its agents may
peaceably enter the leased premises and remove all property and dispose of
same as Landlord shall see fit.
16. SUBORDINATION. Landlord is hereby irrevocably vested with full power and
authority to subordinate this lease to any mortgage, deed of Trust, or
other lien hereafter placed on the demised premised and Tenant agrees on
demand to execute such further instruments subordinating this lease as
Landlord may request, provided such subordination shall be on the express
condition that this lease shall be recognized by the mortgagee, and the
rights of Tenant shall remain in full force and effect during the term of
this lease so long as Tenant shall continue to perform all of the
covenants and conditions of this lease.
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<PAGE> 5
17. INDEMNITY. Landlord and its employees and agents shall not be liable to
Tenant or to Tenant's employees, patrons, visitors, invitees, or any other
persons for any injury to any such persons or for any damage to personal
property caused by an act, omission, or neglect of Tenant or Tenant's
agents or of any other tenant of the premises of which the leased premises
is a part. Tenant agrees to indemnify and hold Landlord and its employees
and agents harmless from any and all claims for such injury and damages,
whether the injury occurs on or off the leased premises.
18. SIGNS. Tenant shall not post or paint any signs at, on, or about the
leased premises or paint the exterior walls of the building except with
the prior written consent of the Landlord, Landlord shall have the right
to remove any sign or signs in order to maintain the leased premises or to
make any repairs or alterations thereto.
19. TENANT BANKRUPTCY. If Tenant becomes bankrupt or makes voluntary
assignment for the benefit of creditors or if a receiver is appointed for
Tenant, Landlord may terminate this lease by giving five (5) days written
notice to Tenant of Landlord's intention to do so.
20. CONDEMNATION. If the whole or any substantial part of the leased premises
is taken for any public or quasi-public use under any governmental law,
ordinance or regulation or by right of eminent domain or should the leased
premises be sold to a condemning authority under threat of condemnation,
this lease shall terminate and the rent shall be abated during the
unexpired portion of the lease effective from the date of the physical
taking of the leased premises.
21. BROKER'S FEE, Prudential duPerier R.E. Broker and ____________________
Co-Broker, as Real Estate Broker (the Broker), has negotiated this lease
and Landlord agrees to pay Broker in Jefferson County, Texas, upon
commencement of this lease, a negotiated fee of $_______ or 5% of the
total rental provided for in this lease to be divided as follows: 100%
Prudential duPerier . In the event this lease is extended, expanded or
renewed, Landlord agrees to pay Broker an additional negotiated fee of
$_________ or 5% of the total rental for such extension, expansion or
renewal period, payable at the time of commencement of such extension,
expansion or renewal, said fee to be divided as follows: 100% Prudential
duPerier, Tenant warrants that it has had o dealings with any real estate
broker or agents in connection with the negotiation of this lease
excepting only Prudential duPerier and it knows of no other real estate
broker or agent who is entitled to a commission in connection with this
Lease. If Tenant during the term of this Lease, or any extension,
expansion or renewal period thereof, or within 365 days of the expiration
of this Lease, or any extension, expansion or renewal period thereof
purchases the property herein leased, Landlord agrees to pay Broker,
Prudential duPerier Real Estate in Jefferson County, Texas, a negotiated
fee of $________ or 6% of the sales price upon closing of the sale of this
property.
22. NOTICES. Notices to Tenant shall be by certified mail or other delivery
to the leased premises. Notices to Landlord shall be by certified mail to
the place where rent is payable.
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<PAGE> 6
23. DEFAULT BY LANDLORD. In the event of breach by Landlord or any covenant,
warranty, term or obligation of this lease, then Landlord's failure to
cure same or commence a good faith effort to cure same within 10 days
after written notice thereof by Tenant shall be considered a default and
shall entitle Tenant either to terminate this lease or cure the default
and make the necessary repairs and any expense incurred by Tenant shall be
reimbursed by the Landlord after reasonable notice of the repairs and
expenses incurred. If any utility services furnished by Landlord are
interrupted and continue to be interrupted despite the good faith efforts
of Landlord to remedy same, Landlord shall not be liable in any respect
for damages to the person or property of Tenant or Tenant's employees,
agents, or guests, and same shall not be construed as grounds for
constructive eviction or abatement of rent, Landlord shall use reasonable
diligence to repair and remedy such interruption promptly.
24. SIGNS. During the last 30 days of this lease, a "For Sale" sign and/or a
"For Lease" sign may be displayed on the leased premises and the leased
premises may be shown at reasonable times to prospective purchasers or
tenants.
25. RIGHT OF ENTRY. Landlord shall have the right during normal business
hours to enter the demised premises; a) to inspect the general condition
and state of repair thereof, b) to make repairs required or permitted
under this lease, or c) for any other reasonable purpose.
26. WAIVER OF BREACH. The waiver by Landlord of any breach of any provision
of this lease shall not constitute a continuing waiver or a waiver of any
subsequent breach of the same or a different provision of this lease.
27. TIME OF ESSENCE. Time is expressly declared to be of the essence in this
lease.
28. BINDING OF HEIRS AND ASSIGNS. Subject to the provisions of this lease
pertaining to assignment of the Tenant's interest, all provisions of this
lease shall extend to and bind, or inure to the benefit not only of the
parties to this lease but to each and every one of the heirs, executors,
representatives, successors, and assigns of Landlord or Tenant.
29. RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies by this lease
agreement are cumulative and the use of any one right or remedy by either
party shall not preclude or waive its right to use any or all other
remedies. Said rights and remedies are given in addition to any other
rights the parties may have by law, statute, ordinance, or otherwise.
30. TEXAS LAW TO APPLY. This agreement shall be construed under and in
accordance with the laws of the State of Texas.
31. LEGAL CONSTRUCTION. In case any one or more of the provisions contained
in this agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect,
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<PAGE> 7
such invalidity, illegality, or unenforceability shall not affect any
other provision hereof and this agreement shall be construed as if such
invalid, illegal, or unenforceable provision had never been contained
herein.
32. PRIOR AGREEMENTS SUPERSEDED. This agreement constitute the sole and only
agreement of the parties to this lease and supersedes any prior
understandings or written or oral agreements between the parties
respecting the subject matter of this lease.
33. AMENDMENT. No amendment, modification, or alteration of the terms hereof
shall be binding unless it is in writing, dated subsequent to the date
hereof, and duly executed by the parties.
34. ATTORNEY'S FEES. Any signatory to this lease agreement who is the
prevailing party in any legal proceeding against any other signatory
brought under or with relation to this lease agreement or this
transaction shall be additionally entitled to recover court costs,
reasonable attorney fees, and all other out-of-pocket costs of litigation,
including deposition, travel and witness costs, from the nonprevailing
party.
35. SPECIAL PROVISIONS. (This section to include additional factual data not
included above.)
1. This lease executed by the undersigned Parties acknowledge and agree
that this lease is a "ground lease"; and,
2. That Tenant at Tenant's sole expense is to install a mobil or modular
office structure on said premises. All utility expense such as
electric, water, sewer, etc. are to be born by Tenant; and,
3. Upon termination, Tenant agrees to remove said structure and to
disengage all utilities in a proper manner. This paragraph
supersedes paragraph 10.
EXECUTED this ____ day of October, 1991.
TENANT or TENANTS LANDLORD
Sprint Industrial Services Tank J.R. Plake, Inc.
- ------------------------------- ----------------
Leasing
By: /s/ Joe Swinbank By: /s/ H. N. Plake
----------------------- ---------------
Joe Swinbank, President H.N. Plake
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<PAGE> 8
REAL ESTATE BROKER REAL ESTATE BROKER
Prudential duPerier Real Estate
- ------------------------------- --------------------------------
LICENSE NO. LICENSE NO.
By: /s/ James E. Shaw By:
- ------------------------------- ----------------------------
James E. Shaw
- ----------
[Note: This form has been prepared by Babb & Hanna, P.C., attorneys for the
Texas Association of REALTORS (TAR), Babb & Hanna, P.C. has approved this form
for use by TAR member brokers and salespersons for the purpose of leasing
improved commercial real property for business purposes. This form has not
been drafted for a specific transaction, therefore, the parties are advised to
consult an attorney of their choice before signing.)
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<PAGE> 1
Exhbibit 10.54
LEASE
STATE OF ALABAMA
COUNTY OF MOBILE
This Lease made this 30th day of April, 1997, between Augustine Meaher,
Jr., Robert H. Meaher, individually and as Executor of the Estate of R. Lloyd
Hill, Joseph L. Meaher, and Augustine Meaher, III, hereinafter called Lessor
and SPRINT INDUSTRIAL SERVICES, INC., hereinafter called Lessee.
Lessee's address: P.O. BOX 19129
HOUSTON, TX 77224
All Lessors are married persons except Joseph L. Meaher, unmarried.
WITNESSETH: That the Lessor hereby leases to the Lessee and the Lessee
hereby rents from the Lessor the following described land in the County of
Mobile, Alabama, to-wit:
Commencing at the intersection of the East right-of-way line of
Telegraph Road with the North right-of-way line of Woodland Avenue as
established by Alabama Highway Department Project No. HES 7530 (9);
thence N-89 degree 09'26"-E and along the North right-of-way line of
Woodland Avenue, projected Westwardly, 33.56 feet to a point being
marked by a 6" x 6" concrete monument; thence continue N-89 degree
09'26"-E and along the North right-of-way line of Woodland Avenue,
146.08 feet; thence N-10 degree 45'19"-W 354.49 feet to the POINT OF
BEGINNING, said point being the Southwest corner of Lot 10, Block 2,
"PLAT (NO. 1) ONE OF WOODLAND PARK", as recorded in Deed Book 107,
Page 282 in the Office of the Judge of Probate, Mobile County,
Alabama; thence continue N-10 degree 45'19"-W and along the West line
of Lots 10, 11 and 12, Block 2 of said "WOODLAND PARK", 330.00 feet to
the Northwest corner of said Lot 12, Block 2; thence N-89 degree
03'35"-E and along the North line of said Lot 12 and an eastward
projection thereof, 197.59 feet to a point; thence S-10 degree
45'19"-E, 330.00 feet; thence S-89 degree 03'35"-W, 197.59 feet to the
Point of Beginning. Containing 1.48 acres more or less and being ALL
of LOTS 10, 11 and 12, BLOCK 2 and that portion of the West 1/2 of
First Avenue (22.50 feet) lying East of and adjacent to said LOTS 10,
11 and 12, BLOCK 2 of said "WOODLAND PARK"; and as more particularly
shown as Parcel
<PAGE> 2
"B" on plat by Bedsole Surveying Company dated 9/9/91 and which is
marked Exhibit "A" and attached hereto for reference;
for occupation for any legitimate purpose, for and during the term of 24
months, to-wit from the lst day of May, 1997, to the 30th day of April, 1999.
The Lessee agrees to pay a monthly rental of $600.00 per month for said
land, payable in advance on the first day of each month, said rental to be paid
at the office of Gloria Davis, P.O. Box 245, Satsuma, AL 36572, or at such
other place as may be designated in writing by the Lessor. In the event Lessee
fails to pay said rent within ten days after the due date, then Lessee shall
pay Lessor a late fee of 10% of the monthly rent. TIME IS OF THE ESSENCE.
Lessor shall assess and pay all ad valorem taxes levied or assessed
against said property and Lessee shall reimburse Lessor for all taxes,
assessments and charges of every kind or nature levied or assessed against said
property and the improvements thereon, specifically including public
improvement assessments and Lessee shall likewise reimburse Lessor for any rent
tax or gross proceeds tax applicable to the rent payable hereunder; it is the
intent of the parties that the rental set forth herein be the NET rental to the
Lessor. After payment of any such tax or assessment, Lessor shall promptly
submit to Lessee a statement showing the amount of each such tax and assessment
and Lessee shall reimburse Lessor within thirty (30) days of receipt of such
statement.
All such taxes and assessments for both the initial and final year of this
lease shall be prorated so that Lessee shall reimburse Lessor only for those
taxes and assessments attributable to the period of time that this lease is in
full force and effect.
Lessee agrees to obtain insurance commonly known as Commercial General
Liability Insurance in the sum of at least $500,000.00 on the leased premises
and which policy shall name Lessors herein as additional insured; Lessee shall
promptly furnish to Lessor a Certificate of Insurance confirming the aforesaid
insurance coverage and shall maintain said insurance in full force and effect
during the entire lease term.
Lessor agrees to furnish to Lessee no later than May 1, 1997 a report of
an environmental survey of the property confirming that the above-described
property contains no underground storage tanks and in all ways complies with
the regulations of the Environmental Protection Agency and the Alabama
Department of Environmental Management. Lessee agrees that no later than 7
days prior to the expiration of this lease that Lessee shall furnish to Lessor
an environmental survey made no sooner than 30 days prior to the expiration of
this lease showing that the above-described property contains no underground
storage tanks and in all ways complies with the regulations of the
Environmental Protection Agency and the Alabama Department of Environmental
Management.
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<PAGE> 3
Lessee has made a visual inspection of the property prior to the first day
of the term of this lease and acknowledges that said property is leased in its
"as is" condition without any warranty by Lessor of any kind or nature with
respect to the condition of the property.
Lessee, at its expense, will make improvements upon said property. Lessor
shall have a lien for all rent which shall become due during the term of this
lease and upon said improvements. Lessee shall have no right to remove any
improvement made by Lessee on said property.
Lessee further covenants and agrees that if a petition in bankruptcy be
filed by or against the said Lessee or an assignment be made for the benefit of
Lessee's creditors, or a receiver be appointed, or should the Lessee violate
any other condition of this lease, then in such case, or upon the happening of
any one or more of such cases, the whole rent for the whole term of this lease
shall at once become due and payable, and the Lessor may proceed by attachment,
suit or otherwise to collect the whole rent in the same manner, as if by the
terms of this lease the whole rent for the entire term were payable in advance.
Should the Lessee fail to pay rents as they fall due as aforesaid, or
violate any of the conditions of this lease, or should the Lessee be adjudged
bankrupt, or should a receiver be appointed or should execution or other
process be levied upon the interest of the Lessee in this lease or the property
of the Lessee upon the leased premises, the Lessor shall have the right at
Lessor's option, to re-enter said premises and terminate this lease. Such
re-entry shall not bar the recovery of rent or damages for breach of covenant,
nor shall the receipt of rent after conditions broken be deemed a waiver of
forfeiture. And in order to entitle the Lessor to re-enter it shall not be
necessary to give notice of rent being due and unpaid, or of other conditions
broken, nor to make demand for rent, the execution of this lease, signed by the
parties thereto, which signing is hereby acknowledged, being sufficient notice
of the rents being due and a demand for the same, and shall be so construed,
any law, usage or custom to the contrary, notwithstanding.
Should Lessor elect to terminate this lease for breach thereof by the
Lessee, then Lessor or Lessor's agent shall give a fourteen day written notice
of termination to Lessee which notice shall terminate this lease and likewise
terminate Lessee's right to occupy the demised premises and Lessee shall be
entitled to no further notice from Lessor; such written notice of termination
may be given to Lessee by mail, by personal delivery to Lessee, by delivery to
a member of Lessee's household on said premises, by delivery to an employee or
agent of Lessee on said premises, or by conspicuously posting such notice of
termination on the premises leased herein.
Nothing contained herein shall be construed as a warranty that said
premises are fit or suitable for the use and purpose for which they are leased.
The Lessee further covenants with the Lessor that the furniture, goods and
effects which will be brought upon said premises shall be owned by the Lessee.
If the Lessee vacates these premises before the end of the said term, without
written consent of the Lessor, the Lessor has the right at the Lessor's option
to re-enter and let said premises
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<PAGE> 4
as the agent of the Lessee herein named, and such re-entry and re-letting shall
not discharge this Lessee from liability for rent nor from any other covenant
herein contained and to be kept by this Lessee.
In the event of employment of any attorney for the collection of any
amount due hereunder, or for the institution of any suit for possession of said
property, or for advice or service incident to the breach of any other
condition of this lease by the Lessee, or on account of bankruptcy proceedings
by or against Lessee, or legal process being issued against the furniture and
effects of the Lessee, located upon the leased premises, or the leasehold
interest of the Lessee, the Lessee agrees to pay and shall be taxed with a
reasonable attorney's fee, which fee shall be a part of the debt evidenced and
secured by this lease.
And as a part of the consideration of this lease, and for the purpose of
securing to the Lessor prompt payment of said rent as hereby stipulated or any
costs or fees or damages that the Lessor may suffer, either by the failure to
surrender quiet and peaceable possession of said premises as aforesaid, or for
any damages whatsoever which may be awarded the Lessor under this lease, the
Lessee hereby waives all rights which Lessee may have under the Constitution
and Laws of the State of Alabama or any other State of the United States, to
have any personal property of the Lessee exempt from levy or sale or other
legal process.
Where the rent under this lease is payable in Monthly, or other
installments, in advance, and there is a default by the Lessee entitling the
Lessor to repossess said property amicably or by legal proceedings, the rent
for the unexpired term of said installment period, shall be due and payable as
liquidated damages for the breach of the conditions of this lease.
It is understood and agreed that no part of said premises shall be used
for any illegal purposes. Lessee covenants and agrees to leave the leased
premises near and free of debris, toxic or hazardous substances or underground
storage tanks of any type upon the termination of this lease and agrees that
this land shall not be used for the storage of trash, junk or disabled motor
vehicles. Any property left upon the demised premises at the termination of
this lease shall be deemed abandoned property. Should Lessee fail to leave the
demised premises free of junk and debris, toxic or hazardous substances or
underground storage tanks of any type, then Lessee shall pay Lessor the
reasonable cost of cleaning up the leased premises.
Lessee shall not commit or suffer to be committed on the leased premises
the discharge of any "Hazardous Substances" or "Hazardous Wastes" as defined by
the Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"), 42 U.S.C. 9601(14), pollutants or contaminants as defined in
CERCLA, 42 U.S.C. 9604(a)(2), or hazardous wastes as defined in the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6903(5), or other
similar applicable federal or state laws and regulations, including, but not
limited to, asbestos, PCBs and urea formaldehyde, and such hazardous substances
or hazardous wastes will
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<PAGE> 5
not be released or discharged over, beneath, or on the leased premises, or on
or in any structures located on the leased premises from any source whatsoever
by Lessee, its successors or assigns in the leased premises or any other
person, including subtenants of Lessee. Lessee shall not construct or permit
to be constructed on the property any underground tanks or vessels.
Lessee acknowledges that it is Lessee's responsibility to make certain
that Lessee's use of the above-described property is strictly in accord with
the provisions of 42 U.S.C.A. 12101, et seq., being entitled as an act for
"Equal Opportunity for Individuals with Disabilities."
Lessee hereby agrees to defend, indemnify and hold Lessor harmless of and
from any and all losses, damages, claims, costs, fees, penalties, charges,
taxes, fines or expenses including attorney's fees and legal assistants' fees,
arising out of any claim asserted by any person, entity, agency, organization
or body against Lessor, as a result of breach of Lessee's covenants, warranties
and representations contained in this Lease with regard to "Hazardous
Substances" or Hazardous Wastes. This indemnity includes, but is not limited
to, any losses, damages, claims, costs, fees, penalties, charges, assessments,
taxes, fines or expenses, including reasonable attorney's fees under CERCLA,
under RCRA, or under RRMA. This indemnity is in addition to and is not to be
construed as a limitation of any other indemnity under this lease. Provided,
however, Lessee shall not be responsible for any losses, damages or claims
associated with preexisting Hazardous Substances or Hazardous Wastes located on
the leased premises.
Lessee agrees to indemnify the Lessor against and hold Lessor harmless
from any and all claims, demands, liabilities, lawsuits and expenses for or on
account of any injury to any person, or any death at any time resulting from
such injury to any person, or any death at any time resulting from such injury,
or any damage to any property, which may arise (or which may be alleged to have
arisen) cut of or in connection with the use or occupancy of the demised
promises by Lessee, Lessee's guest, agents, servants and employees, even though
such injury, death or damage may be (or may be alleged to be) attributable to
the negligence or other fault on the part of the Lessor or Lessor's agents or
employees.
If the whole of the demised premises shall be taken by Federal, State,
County, City, public utility, or other authority for public use or under any
statute, or by right of eminent domain, then when possession shall be taken
thereunder of said premises, the term hereby granted and all rights of the
Lessee hereunder shall immediately cease and terminate, and the Lessee shall
not be entitled to any part of any award that may be made for such taking, nor
to any damages therefor except that the rent shall be adjusted as of the date
of such termination of the lease. If but a part of the demised premises be
taken by right of eminent domain, this lease shall continue in full force and
effect, as to the property remaining, and provided such property remaining is
capable of continued enjoyment by the Lessee for the uses and purposes provided
for hereunder, and the Lessee shall not be entitled to any award that may be
made for such taking; nor shall such taking constitute a termination of this
- 5 -
<PAGE> 6
lease, or a constructive eviction of Lessee. However, the rent payable
hereunder shall be adjusted as the time of such taking to equitably reflect the
change in the size said remaining property.
The terms of this lease have been between the parties hereto and are
understood by both Lessor and Lessee. No Assignment by Lessee of any of
Lessee's rights hereunder shall be valid without the express, written consent
of Lessor, which consent Lessor agrees shall not be unreasonably withheld.
Lessee acknowledges that in the event of any Assignment by Lessee that Lessee
shall remain secondarily liable for all obligations of Lessee under the of this
lease.
All rents having been paid during the term of this lease and all
conditions of this lease having been compiled with the Lessee shall have the
option to renew lease for an additional term of sixty (60) months from the
first day of May, 1999 to the 30th day of April, 2004 upon giving Lessor at
least ninety (90) days written notice in advance of Lessee's intention to so
renew; all terms and conditions of the renewal shall be the same as herein
provided except the monthly rental during said renewal shall be the Rent for
the previous term multiplied by the "CPI Multiplier" as defined below.
DETERMINATION OF CPI MULTIPLIER:
A. The "CPI Multiplier" shall be based upon the "CPI," which is the
Consumer Price Index for All Urban Consumers, U.S. City Average for
All Items (Index period: 1982-84 = 100), as published without
seasonal adjustment by the United States Department of Labor, Bureau
of Labor Statistic ("Bureau"). If, from time to time at any time
after the date of this Lease, the Bureau of Labor Statistics changes
it procedure for calculating the CPI or the index period for the CPI,
all CPI's used herein shall be determined using the Bureau's revised
CPI.
B. The CPI Multiplier shall equal the CPI for the month immediately
preceding the First month of the renewal term divided by the CPI for
the first month of the preceding term.
Lessor shall calculate the amount of any such increase promptly after the
CPI for said period is published, at which point Lessee shall have thirty (30)
days in which to verify Lessor's calculation and promptly thereafter Lessee
shall either supplement its rental payment said calculation or shall furnish
Lessor the Lessee's calculation of the rental adjustment and the parties shall
attempt to reconcile their calculations among themselves, but if unable to do
so, then Lessor and Lessee shall each employ a Certified Public Accountant to
calculate the correct annual adjustment and the two Accountants shall jointly
calculate the disputed annual adjustment. This renewal term shall be known as
the Second Term of Lease.
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<PAGE> 7
This lease shall inure to the benefit of and bind the heirs, executors,
administrators, successors and assigns of the Lessors and shall inure to the
benefit of and bind the heirs, executors, administrators and assigns of the
Lessee.
IN TESTIMONY WHEREOF, we have hereunder set our hands in duplicate each of
which shall be considered an original, the day and year first above written.
LESSEE:
SPRINT INDUSTRIAL SERVICES, INC.
By: /s/ J. W. O'Neil
----------------------------
J.W. O'NEIL
Its: President
/s/ Augustine Meaher, Jr. /s/ Robert H. Meaher
- -------------------------------- ---------------------------------
AUGUSTINE MEAHER, JR. Lessor ROBERT H. MEAHER, individually
and as Executor of the Estate
of R. Lloyd Hill
Lessor
/s/ Joseph L. Meaher /s/ Augustine Meaher, III
- -------------------------------- ---------------------------------
JOSEPH L. MEAHER Lessor AUGUSTINE MEAHER, III Lessor
THE INSTRUMENT PREPARED BY:
AUGUSTINE MEAHER, III
2118 FIRST NATIONAL BANK BLDG.
MOBILE, ALABAMA 36602
(334) 432-9971
AMIII FILE #1115.33 (19-1)
- 7 -
<PAGE> 1
Exhibit 10.55
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is made and executed by and between the Moller
Family members, specifically, C. A. Moller, individually, Mary Clive Munson,
individually, and Elizabeth Frances Moller Brewer, individually, ("Landlord"),
whose address is 612 Catalpa, Angleton, Texas 77515 and SPRINT INDUSTRIAL
SERVICES, INC. ("Tenant"), whose address for purposes of notice shall be P.O.
Box 19129 Houston, Texas 77224, effective the lst day of August, 1995
("Effective Date").
1. PREMISES. Landlord agrees to lease to Tenant, and Tenant agrees to lease
form Landlord the property more particularly described by the area marked in
blue which is shown on the Flood Insurance Rate Map dated June 5, 1989. (See
Attachment "A"), The Tenant shall use and occupy the Premises for general
business purposes only.
2. TERM. The term of this lease shall commence on the Effective Date and shall
continue thereafter for a period of sixty (60) months, Tenant shall provide the
Landlord with written notice thirty days' (30) prior to the Termination Date
(August 1, 1999) stating its intention to vacate the property or continue
leasing the Premises on a month-to-month basis at a rental rate to be
negotiated at that time. If the Tenant fails to surrender the Premises in the
condition set forth below upon their termination of its right of possession,
Tenant shall be deemed a Tenant-at-sufferance and shall pay double the Rent set
forth below.
3. RENT. Tenant agrees to pay Landlord rent of $500.00 per month on or before
the fifth day of each month commencing on the Effective Date. Rent shall be
paid to Landlord without notice, offset, deduction, abatement or demand, All
late payments shall bear interest from the date due until paid at 1 0% per
annum.
4. CONDITION OF PREMISES. Tenant shall not make any alterations, additions or
Improvements to the Premises without prior written consent of Landlord. Tenant
shall maintain the Promises in good order and repair, Tenant agrees to return
said Premises to its original condition upon termination of the lease, normal
wear and tear excluded. The original condition of the Premises is described in
Attachment "B", being a copy of a Polaroid photograph taken as of the date
shown on the photograph. Landlord agrees that tenant may stabilize the
Premises with concrete wash-out, limestone or other stabilization material for
the purpose of establishing a hard driving surface. In addition, Landlord
agrees that the Tenant may fence the perimeter of the Promises, provide
electrical power to the Premises, install a septic system and establish
manufactured offices (mobile office trailers) on the Premises for use by its
employees.
5. ENTRY. Landlord shall have the right to enter the Premises at any time
during regular business hours (8:00 A.M. to 5:00 P.M. Monday through Friday)
for any purpose that Landlord may reasonably deem necessary, Landlord may enter
the Premises without being doomed guilty of an eviction of Tenant, without
abatement of rent, and without liability, which Tenant hereby waives.
<PAGE> 2
6. DEFAULT. Tenant shall be deemed in default under this lease if Tenant fails
to pay rent when due, Tenant abandons the Premises by vacating the Premises for
twenty consecutive days, or Tenant fails to comply with any of the obligations
set forth in this lease, In the Event of default by Tenant, Landlord shall
provide Tenant with a Notice of Default and allow Tenant the opportunity to
cure said default within 20 days from receipt of Notice. Notice to be sent by
Landlord, Return Receipt Requested, to the address written below, In the Event
of Default by Tenant and after Landlord has provided Tenant with 20 days to
cure said default and after Tenant has failed to do so, Landlord shall have the
option to pursue any one or more of the following remedies:
a. Landlord may, without notice, re-enter and repossess the Promises, save
and except any equipment owned by Tenant and the manufactured offices, not
owned by Tenant.
b. Landlord may terminate the lease and treat the default as an entire
breach of this lease; Tenant shall immediately become liable to Landlord for
damages equal to the total of all unpaid rent through the Date of Termination.
In addition, the improvements described in Paragraph 4 including the
stabilization material, fencing, septic system electrical connections and any
other fixtures that may run with the Promises, but not including the
manufactured offices or any equipment owned by Tenant, will become the property
of the Landlord as mitigating damages for any other payments required under the
original term of the lease.
c. Landlord may terminate Tenant's rights to possession of the Premises
without terminating the Lease and Landlord may do any one of the following: (1)
recover from tenant all unpaid rent through the date that possession is
terminated and other amounts earned or due through such termination; (ii) take
possession to the improvements detailed in Paragraph 4, but not including the
manufactured offices or any equipment owned by Tenant. Waiver of Landlord of
any event of default shall not be deemed a waiver of any subsequent Event of
Default.
7. PROPERTY TAXES. Landlord shall be solely responsible for the timely payment
of all real property taxes assessed on the Premises. Landlord will provide
Tenant with sufficient proof of payment of said taxes upon delivery of the
executed lease agreement and prior to the Effective Date, including copies of
those payments to be made in future years, when paid.
8. INSURANCE. Tenant will obtain General Liability and Workers Compensation
Insurance in amounts it deems reasonable and will provide Landlord with
sufficient proof of insurance prior to the Effective Date.
9. SURRENDER. Upon termination of Tenant's right of possession to the
Premises, Tenant shall peaceably quit and surrender the Premises to Landlord
within 20 days of Notice.
10. INDEMNITY AND WAIVER OF LIABILITY. Tenant shall indemnify and hold
harmless Landlord from and against any and all liabilities, claims, costs and
actions of any kind arising from Tenant's occupation of the Premises. Landlord
shall not be liable to Tenant for any
- 2 -
<PAGE> 3
injuries or damages to Tenant or Tenant's property, In no event shall Landlord
be liable for any acts or omissions of Tenant.
11. MISCELLANEOUS. This lease may not be amended or modified unless in writing
and signed by all parties. Time is of the essence of this Agreement. To the
extent any provision is held to be unenforceable or invalid, the remainder
shall not be affected thereby, but shall be construed to the extent possible to
maintain the intent of the parties. Tenant shall observe and comply strictly
with the terms of this lease. All notices, statements, payments and
communications between parties hereto shall be deemed to have been sufficiently
given and delivered if deposited in the United States Mail, certified or
registered mail, return receipt requested, directed as follows:
If to Sprint Industrial Services, Inc.:
Donald L. Poarch
P.O. Box 19129
Houston, Texas 77224
If to the Moller Family members:
C.A. Moller
Mary Clive Munson
Elizabeth Frances Moller Brewer
612 Catalpa
Angleton, Texas 77515
Such notice shall be deemed effective upon delivery.
12. GOVERNING LAW. The validity, effect and construction of this Agreement
shall be governed by the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the 21st day of July, 1995.
TENANT:
Sprint Industrial Services, Inc.
/s/ Donald L. Poarch
- --------------------------------
Donald L. Poarch, Vice President
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<PAGE> 4
LANDLORD:
C.A. Moller, Individually
Mary Clive Munson, Individually
Elizabeth Frances Moller Brewer, Individually
/s/ C.A. Moller
- -----------------------------------
C.A. Moller
/s/ Mary Clive Munson
- -----------------------------------
Mary Clive Munson
/s/ Elizabeth Frances Moller Brewer
- -----------------------------------
Elizabeth Frances Moller Brewer
- 4 -
<PAGE> 1
Exhibit 10.56
INDUSTRIAL LEASE
SPRINT INDUSTRIAL SERVICES, INC.,
A TEXAS CORPORATION
LANDLORD
AND
NES ACQUISITION CORP.,
A DELAWARE CORPORATION
TENANT
<PAGE> 2
LEASE
THIS LEASE made and entered into as of the 1st day of December, 1997,
between Sprint Industrial Services, Inc., a Texas corporation (hereinafter
called "Landlord") and NES Acquisition Corp., a Delaware corporation
(hereinafter called "Tenant").
W I T N E S S E T H:
Landlord, for and in consideration of the covenants and agreements
hereinafter set forth to be kept and performed by both parties, does hereby
demise and lease to Tenant (for the term hereinafter stipulated) the premises
(hereinafter called the "Premises") being that real property and improvements
described on Exhibit "A" attached hereto and made a part hereof, located at
2101 Lee Drive, Baytown, Texas.
The Premises shall consist of an area approximately five (5) acres and
shall contain an office building of approximately 2,000 square feet, a 75,000
square foot warehouse together with a two (2) bay maintenance facility
("Warehouse Space").
Landlord hereby leases the Premises to Tenant and hereby grants to Tenant
its guests, invitees and licensees all easements, rights and privileges
appurtenant thereto, including the right to use adjoining parking areas,
driveways, roads, alleys and means of ingress and egress.
ARTICLE 1
TERM AND USE
A. The Primary Term (herein so called) of this Lease shall begin on the
date (the "Commencement Date") December 1, 1997 and shall expire on November
11, 2007. For purposes of this Lease, a "Lease Month" shall be defined as
those successive calendar month periods beginning with the Commencement Date
and continuing through the Primary Term or any Renewal Term of this Lease;
provided, however, if the Commencement Date is a day other than the first day
of a calendar month, then the first Lease Month shall include that period of
time from the Commencement Date up to the first day of the next calendar month,
and each subsequent Lease Month shall be a calendar month period beginning on
the first day of such month. The Primary Term and any Renewal Terms
(hereinafter defined) are sometimes collectively referred to herein as the
"Term."
B. Provided Tenant is not in default of any material term, condition or
covenant contained in this Lease and no event has occurred which with the
notice or the passage of time would constitute a default under any material
term, condition or covenant contained in this Lease at the time of exercise of
an option to renew the Primary Term beyond any period for curing same, Tenant
shall have the option of renewing this Lease for two (2) additional terms of
five (5) years each (hereinafter, collectively referred to as "Renewal Terms,"
or individually as "Renewal Term"). Each Renewal Term will be on the same
terms and conditions as provided herein except for the Base Rent which shall be
as shown on "Exhibit D" attached hereto and made a part hereof. Notice of the
exercise of such options shall be given by Tenant to Landlord in writing not
later than one hundred and eighty days prior to expiration of the Primary Term
or the previous Renewal Term.
C. The Premises may be used for the operation of an equipment rental
business and any other lawful purpose provided that Landlord consents, which
consent shall not be unreasonably withheld, conditioned or delayed.
<PAGE> 3
ARTICLE 2
EXHIBITS AND ORIGINAL CONSTRUCTION
A. The exhibits listed below and attached to this Lease are incorporated
herein by reference:
EXHIBIT "A" - Legal Description of the Premises
EXHIBIT "B" - Non-Disturbance and Attornment Agreement
EXHIBIT "C" - Memorandum of Lease
EXHIBIT "D" - Renewal Term Rent Schedule
B. Landlord will deliver the Premises to Tenant no later than the date of
execution of this Lease (the "Delivery Date").
ARTICLE 3
DATE ON WHICH RENT BEGINS
A. The Base Rent (as defined herein) and all Additional Rent (as herein
defined) (Base Rent and Additional Rent are sometimes collectively referred to
herein as "Rent") shall begin to accrue on the date (the "Rent Commencement
Date") which is the Commencement Date.
B. Tenant does hereby covenant and agree to pay to Landlord, for the use
and occupancy of the Premises, at the times and in the manner hereinafter
provided, the following sums of money:
<TABLE>
<CAPTION>
Lease
Years Base Rent
----- ----------
<S> <C>
1-10 $4,500/month
</TABLE>
to be paid in U.S. Dollars, in advance, without notice or invoice from
Landlord, on the first day of each and every month during the Term hereof,
commencing upon the date on which Base Rent is determined to commence under the
provisions of Article 3 hereof and ending upon the termination date of this
Lease. In the event such Base Rent shall be determined under the provisions of
Article 3 hereof to commence on a day other than the first (1st) day of a
month, then the Base Rent for the period from such Rent Commencement Date until
the first day of the month next following shall be prorated accordingly. All
payments in this Lease provided for (those hereinafter stipulated as well as
Base Rent) shall be paid or mailed to:
Sprint Industrial Services, Inc.
1041 Conrad Sauer
Houston, Texas 77043
Attn: President
or to such other payee or address as Landlord may designate in writing to
Tenant.
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<PAGE> 4
ARTICLE 4
TAXES
In addition to the Base Rent provided for in Article 3 hereof, Tenant
agrees to pay the additional payments as follows:
A. Tenant shall be responsible for all real property taxes and assessments
(hereinafter, "Real Estate Taxes") which may be levied or assessed against the
Premises by any lawful authority for each calendar year or portion during the
Term of this Lease. As the lease years under this Lease do not coincide with a
calender year, Real Estate Taxes for such partial years shall be prorated
accordingly based on the number of days which this Lease was in full force and
effect during such calender year.
B. Tenant's proportionate share of all Real Estate Taxes during the Term
hereof shall be paid annually or semiannually to the appropriate taxing
authority, but no more frequently than Landlord is required to make payment.
Upon receipt of all tax bills and assessment bills attributed to any calendar
year during the Term hereof, Landlord shall furnish Tenant with a written
statement of the actual amount of Tenant's proportionate share of the Real
Estate Taxes for such year or part thereof, together with a copy of such tax
bills, and Tenant shall pay such actual amount within thirty (30) days of such
statement from Landlord but no more than ten (10) days prior to the date
Landlord is required to pay said Real Estate Taxes. A copy of a tax bill or
assessment bill submitted by Landlord to Tenant shall at all times be
sufficient evidence of the amount of Real Estate Taxes levied or assessed
against the property to which such bill relates. Landlord's and Tenant's
obligations under this Article 4 shall survive the expiration of the Term of
this Lease. No Real Estate Taxes, assessments, fees or charges referred to in
this paragraph shall be considered as taxes under the provisions of Article 10
hereof.
C. Tenant may, upon the receipt of prior written approval of Landlord,
such approval not to be unreasonably withheld, contest any Real Estate Taxes
against the Premises and attempt to obtain a reduction in the assessed
valuation upon the Premises for the purpose of reducing any such taxment. In
the event Landlord approves and upon the request of Tenant but without expense
or liability to Landlord, Landlord shall cooperate with Tenant and execute any
document which may be reasonably necessary and proper for any proceeding. If a
tax reduction is obtained there shall be a subsequent reduction in Tenant's
total Real Estate Taxes for such year, and any excess payments by Tenant shall
be refunded by Landlord, without interest, when all refunds to which Landlord
is entitled from the taxing authority with respect to such year have been
received by Landlord. In the event Landlord desires to contest any Real Estate
Taxes, Tenant agrees to cooperate with Landlord and execute any document which
may be reasonably necessary and proper for any proceeding at no cost to Tenant.
D. Tenant shall not be liable for increases in Real Estate Taxes
attributable to additional improvements to the Premises that are constructed
after the first tax year included within the terms of this Lease, unless the
additional improvements are constructed for Tenant's sole benefit.
E. There shall be excluded from the tax bill to which Tenant contributes,
for the purposes of computing Real Estate Taxes income, excess profits,
estate, single business, inheritance, succession, transfer or franchise tax
assessments upon Landlord or the Rent payable under this Lease. Landlord
hereby represents and warrants that Landlord has no actual knowledge (without
independent investigation) of current or future special assessments.
- 3 -
<PAGE> 5
ARTICLE 5
NON-DISTURBANCE AND ATTORNMENT
A. Upon written request of Landlord, or any mortgagee or beneficiary of
Landlord, Tenant will, in writing, subordinate its right hereunder to the
interest of any ground lessor of the land upon which the Premises is situated
and to the lien of any mortgage or deed of trust now or hereafter in force
against the land and building of which the Premises is a part, and upon any
building hereafter placed upon the land of which the Premises is a part and to
all advances made or hereafter to be made upon the security thereof; provided,
however, that the ground lessor, or the mortgagee or trustee named in said
mortgage or trust deed shall agree that Tenant's peaceable possession of the
Premises or its rights under this Lease will not be disturbed on account
thereof.
B. In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deeds of
trust, upon any such foreclosure or sale Tenant agrees to recognize such
beneficiary or purchaser as the Landlord under this Lease, provided Tenant's
rights under this Lease continue unabated.
C. Landlord agrees to obtain a Non-Disturbance and Attornment Agreement
from its current lender(s) and the ground lessor, if any, and deliver same to
Tenant on or before the date hereof and from any future lender on or before
obtaining financing from such lender, substantially in accordance with the form
attached hereto as Exhibit "B". The delivery of a fully executed
Non-Disturbance and Attornment Agreement shall be a condition precedent to the
effectiveness of this Lease and if said Non-Disturbance and Attornment is not
so delivered, Tenant may at its option terminate this Lease by written notice
to Landlord.
ARTICLE 6
CONDITION OF PREMISES
Landlord warrants that the improvements located on the Premises, meet with
all present codes required at the time by regulations of governing authorities
for use and occupancy by Tenant. Except for the construction in progress,
delivery of the Warehouse Space no later than January 15, 1998 and construction
of fence between adjacent property and except as otherwise provided herein,
Tenant accepts the Premises and all improvements thereon AS IS, HEREIN AND
WITHOUT ALL FAULTS AND DEFECTS, BOTH PATENT AND LATENT, KNOWN OR UNKNOWN.
Tenant acknowledges that it has been given the opportunity to inspect the
Premises prior to its execution of this Lease.
ARTICLE 7
REPAIRS AND MAINTENANCE
Tenant covenants and agrees, at its expense without reimbursement or
contribution by Landlord, to keep and maintain all improvements on the
Premises, including, without limitation, the foundations, exterior paint,
plumbing system, electrical system, utility lines and connections to the
Premises, sprinkler mains, if any, structural systems (including, without
limitation, the roof, roof membrane roof covering [including interior ceiling
if damaged by leakage] and load-bearing walls and floor slabs and masonry
walls) in good condition and repair. In the event the Premises become or are
out of repair and not in good condition due to the failure of Tenant to comply
with the terms of this Article 7 and if any and all repairs necessary to
restore the Premises to a state of good condition and repair are not completed
within ten (10) days after Tenant has received written notice of such state of
disrepair or if such repairs cannot reasonably be completed within such ten
(10) day
-4-
<PAGE> 6
period and Tenant shall fail to commence such repairs within ten (10) days
after notice and proceed diligently thereafter, then Landlord may either (i)
terminate this Lease immediately upon delivery of written notice to Tenant or
(ii) prosecute such repairs itself and add the reasonable cost of such repairs
to the next maturing monthly installment of Rent due hereunder.
Notwithstanding the foregoing in the case of an emergency, Landlord shall have
the right to prosecute immediately any and all necessary repairs and shall
deliver contemporaneous notification to Tenant of the emergency and related
repairs and add the reasonable cost of such repairs to the next maturing
monthly installment of Rent due hereunder; provided further that if
contemporaneous notice is not practicable, as determined by Landlord in its
sole judgment, then Landlord shall provide such notice as soon thereafter as
reasonably practicable. Upon termination of this Lease for any reason, Tenant
shall return the Premises to Landlord in substantially the same condition it is
in on the date hereof, ordinary wear and tear excepted. Notwithstanding the
foregoing, Landlord shall be responsible, at Landlord's sole cost and expense,
for maintaining the landscaping of the Premises in a neat and orderly
condition.
ARTICLE 8
ENVIRONMENTAL MATTERS
Landlord represents and warrants that to the best of Landlord's knowledge
any handling, transportation, storage, treatment or usage of hazardous or toxic
substances that has occurred on the Premises has been in compliance with all
applicable federal, state and local laws, regulations and ordinances. Landlord
further represents and warrants to the best of Landlord's knowledge that no
leak, spill, discharge, emission or disposal of hazardous or toxic substances
has occurred on the Premises and that the soil, groundwater, soil vapor on or
under the Premises are free of toxic or hazardous substances as of the date
hereof. Landlord agrees to indemnify, defend and hold Tenant and its officers,
employees and agents harmless from any claims, judgments, damages, fines,
penalties, costs, liabilities (including sums paid in settlement of claims) or
loss, including attorneys, fees, consultants fees, and expert fees, which arise
during or after the Primary Term or any Renewal Term, or in connection with the
presence or suspected presence of toxic or hazardous substances in the soil,
groundwater, or soil vapor on or under the Premises, unless such toxic or
hazardous substances are present solely as the result of the negligence or
wilful misconduct of Tenant, its officers, employees or agents. This
indemnification shall also specifically cover costs in connection with:
(a) Toxic or hazardous substances present or suspected to be present in
the soil, ground water or soil vapor on or under the Premises before
the date hereof;
(b) Toxic or hazardous substances that migrate, flow, percolate, diffuse
or in any way move onto or under the Premises after date hereof; or
(c) Toxic or hazardous substances present on or under the Premises as a
result of any discharge, dumping, spilling (accidental or otherwise)
onto the Premises during or after the Primary Term or any Renewal
Term by any person or entity.
Tenant agrees to indemnify and hold harmless Landlord and its officers,
employees and agents from any claims, judgments, damages, fines, penalties,
costs, liabilities (including sums paid in settlement of claims) or loss,
including, without limitation, attorneys' fees, consultants' fees, and expert
fees, which arise during or after the Primary Term or any Renewal Term, or in
connection with the presence or suspected presence of toxic or hazardous
substances in the soil, groundwater, or soil vapor on or under the Premises,
except to the extent that such toxic or hazardous substances are present (i) on
the Commencement Date of this Lease or (ii) due to Landlord or Landlord's
agents, invitees, contractors or employees.
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<PAGE> 7
ARTICLE 9
ALTERATIONS
Tenant shall not make any exterior or structural alterations in any
portion of the Premises nor any alterations in the interior or the exterior of
the Premises without, in each instance, first obtaining the written consent of
Landlord, which consent shall not be unreasonably withheld. Tenant shall be
permitted to make interior nonstructural alterations, additions and
improvements costing less than $75,000 without Landlord's prior consent.
ARTICLE 10
FIXTURES AND PERSONAL PROPERTY
Any trade fixtures, business equipment, inventory, trademarked items,
signs, and other removable personal property installed in or on the Premises by
Tenant at its expense ("Tenant's Property"), shall remain the property of the
Tenant. Landlord agrees that Tenant shall have the right, at any time or from
time to time, to remove any and all of Tenant's Property. Tenant, at its
expense, shall immediately repair any damage occasioned by the removal of
Tenant's Property and upon expiration or earlier termination of this Lease,
shall leave the Premises in a neat and clean condition, free of debris, normal
wear and tear excepted.
ARTICLE 11
LIENS
Neither Landlord nor Tenant shall permit to be created nor to remain
undischarged any lien, encumbrance or charge arising out of any work or work
claim of any contractor, mechanic or laborer of Tenant or material supplied by
a materialman to, Landlord or Tenant which might be, or become, a lien or
encumbrance or charge upon the Premises. If any lien or notice of lien on
account of an alleged debt of Landlord or Tenant or any notice of contract by a
party engaged by Landlord or Tenant or Landlord's or Tenant's contractor to
work in the Premises shall be filed against the Premises, the responsible party
shall, within thirty (30) days after notice of the filing thereof, cause the
same to be discharged of record by payment, deposit or bond.
ARTICLE 12
LAWS AND ORDINANCES
A. Tenant and Landlord agree to comply with all laws, ordinances, orders
and regulations regarding the use and occupancy of the Premises and the
cleanliness, safety or operation thereof. Tenant agrees to comply with
the reasonable regulations and requirements of any insurance underwriter,
inspection bureau or similar agency with respect to that portion of the
Premises installed by Tenant.
B. In connection with the installation of any electrical equipment not
included within the Premises, Tenant shall, at Tenant's own expense, make from
time to time whatever changes are necessary to comply with the requirements of
the insurance inspectors, underwriters, government authorities and codes.
- 6 -
<PAGE> 8
ARTICLE 13
SERVICES
A. Landlord warrants that the necessary mains, conduits and other
facilities have been provided to make water, sewer, gas, phone and electricity
available to the Premises.
B. Tenant shall be solely responsible for and promptly pay all charges for
the use and consumption of sewer, gas, electricity, water, phone and all other
utility services used within the Premises.
C. Landlord shall not be liable to Tenant for damages or otherwise if the
said utilities or services are interrupted or terminated because of necessary
repairs, installations, or improvements, or any cause beyond the Landlord's
reasonable control, nor shall any such interruption or termination relieve
Tenant of the performance of any of its obligations hereunder; provided,
however, if such interruption shall be due to the Landlord's or Landlord's
agent's, employee's, contractor's or invitee's negligent or willful misconduct
and Tenant is unable to operate its business there shall be an abatement of all
Rent hereunder during such time period and if such interruption shall continue
for a period of more than thirty (30) days, then Tenant may terminate this
Lease.
D. Tenant shall not install any equipment which could exceed the capacity
of any utility facilities servicing the Premises of which capacity Tenant has
notice, and if any equipment installed by Tenant requires additional utility
facilities the same shall be installed by Tenant in compliance with all code
requirements.
ARTICLE 14
DAMAGE TO PREMISES
In the event the Premises is hereafter damaged or destroyed or rendered
partially untenable for their accustomed use, by fire or other casualty insured
or which should have been insured under the coverage which Tenant is obligated
to carry pursuant to Article 15 hereof, then Tenant shall, within sixty (60)
days after such casualty, commence repair of said Premises and within one
hundred twenty (120) days after commencement of such repair, restore the
Premises to substantially the same condition in which it was immediately prior
to the occurrence of the casualty, except as otherwise provided in this Article
14. From the date of such casualty until the Premises is so repaired and
restored Rent and all other charges and items payable hereunder shall abate in
such proportion as the part of the Premises thus destroyed or rendered
untenable bears to the total Premises. Notwithstanding the foregoing, in the
event the Premises is rendered untenable, in the reasonable opinion of the
parties, Tenant and Landlord shall have the right to terminate this Lease upon
thirty (30) days notice to the other and all insurance proceeds attributable to
the impairment shall be remitted to Landlord immediately upon receipt.
ARTICLE 15
INSURANCE
A. Landlord agrees to carry, or cause to be carried, during the Term
hereof, Commercial General Liability Insurance (hereinafter, "Landlord's
Liability Insurance") providing coverage of not less than One Million Dollars
($1,000,000.00), combined Bodily Injury and Property Damage Liability in
separate limits for each of the following: General Aggregate,
Products-Completed Operations Aggregate, Each Occurrence, Personal &
Advertising Injury and Fire Damage, limits of Fifty Thousand Dollars
($50,000.00). Landlord, upon written request by Tenant, shall promptly deliver
to Tenant a certificate of Landlord's Liability Insurance.
- 7 -
<PAGE> 9
B. Tenant agrees to carry Commercial General Liability insurance on the
Premises during the Term hereof covering both Tenant and Landlord as their
interest may appear, with companies reasonably satisfactory to Landlord and
giving Landlord and Tenant a minimum of ten (10) days written notice by the
insurance company prior to cancellation, termination or change in such
insurance. Such insurance shall be for limits of not less than One Million
Dollars ($1,000,000.00) combined Bodily Injury and Property Damage Liability in
separate limits for each of the following: General Aggregate,
Products-Completed Operations Aggregate, Each Occurrence, Personal &
Advertising Injury, and Fire Damage, limits of Two Hundred Fifty Thousand
Dollars ($250,000.00).
Tenant also agrees to carry, during the Term hereof, all risk property
insurance (hereinafter, "Tenant's Property Insurance") covering fire and
extended coverage, vandalism and malicious mischief, sprinkler leakage and all
other perils of direct physical loss or damage insuring the improvements and
betterments located in the Premises, including the Premises and all
appurtenances thereto for the full replacement value thereof. Landlord shall
be named as an additional insured under Tenant's Property Insurance to the
extent its interest shall appear. Tenant, upon request, shall furnish Landlord
a certificate of such Tenant's Property Insurance.
Landlord agrees that it shall not have any right, title or interest in and
to Tenant's property insurance covering Tenant's Property located on or within
the Premises or any proceeds therefrom.
C. Landlord and Tenant and all parties claiming under them, mutually
release and discharge each other from all claims and liabilities arising from
or caused by any casualty or hazard, to the extent covered by insurance on the
Premises and waive any right of subrogation which might otherwise exist in or
accrue to any person on account thereof. This waiver shall not be required if
the insurance carrier charges an additional premium in order to provide such
waiver and the party benefitting from the waiver does not agree to pay the
additional premium.
ARTICLE 16
INDEMNIFICATION
A. Tenant hereby indemnifies and holds Landlord harmless from and against
any and all claims, demands, liabilities and expenses, including attorneys'
fees, arising from Tenant's use of the Premises or from any act, or any
omission to act, in or about the Premises by Tenant or its agents, employees or
contractors, or from any breach or default by Tenant of this Lease, except to
the extent caused by Landlord's negligence or willful misconduct. In the event
any action or proceeding shall be brought against Landlord by reason of any
such claim, Tenant shall defend the same at Tenant's expense by counsel
reasonably satisfactory to Landlord.
B. Landlord hereby indemnifies and holds Tenant harmless from and against
any and all claims, demands, liabilities and expenses, including attorneys'
fees, arising from Landlord's obligations, actions or from any act, or any
omission to act, in or about the Premises by Landlord or its agents, employees,
contractors or invitees, or from any breach or default by Landlord of this
Lease, except to the extent caused by Tenant's negligence or willful
misconduct. In the event any action or proceeding shall be brought against
Tenant by reason of any such claim, Landlord shall defend the same at
Landlord's expense by counsel reasonably satisfactory to Tenant.
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<PAGE> 10
ARTICLE 17
ASSIGNMENT, SUBLETTING AND OWNERSHIP
A. Tenant shall have the absolute right to sublet, assign or otherwise
transfer its interest in this Lease to any parent or operating subsidiary of
Tenant, subsidiary of Tenant's parent, or to a corporation with which it may
merge or consolidate or to a Company, entity or individual that purchases all
or substantially all of the assets or common stock of Tenant either in one
transaction or a series of transactions, without Landlord's approval, written
or otherwise. In the event of any such subletting, assignment or other
transfer, Tenant shall not be released from any liability upon such assignment
or sublease with respect to that portion of the Tenant's leasehold estate so
assigned or subleased.
B. The consent by Landlord to any other transfer, assignment, subletting,
license or concession agreement, or hypothecation shall not be unreasonably
withheld, conditioned or delayed.
C. Landlord shall have the right to transfer, assign and convey, in whole
or in part, any or all of the right, title and interest to the Premises,
provided such transferee or assignee shall be bound by the terms, covenants and
agreements herein contained, and shall expressly assume and agree to perform
the covenants and agreements of Landlord herein contained as performance of
such covenants and agreements becomes due after any such assignment.
ARTICLE 18
ACCESS TO PREMISES
Upon reasonable prior written notice, but in no event less than
twenty-four (24) hours (except in the case of an emergency), Landlord may enter
the Premises during Tenant's business hours for purposes of inspection, to show
the Premises to prospective purchasers and lenders, or to perform maintenance
and repairs in accordance with Article 7 hereof. Landlord shall use Landlord's
best efforts to minimize interference with Tenant's business.
ARTICLE 19
DEFAULTS BY TENANT
A. The occurrence of any of the following shall constitute a material
default and breach of this Lease by Tenant:
(i) Any failure by Tenant to pay Rent or make any other payment
required to be made by Tenant hereunder within seven (7) days after
receipt of written notice from the Landlord; and
(ii) A failure by Tenant to observe and perform any other material
provision of this Lease to be observed or performed by the Tenant, where
such failure continues for thirty (30) days after written notice thereof
by Landlord to Tenant, except that this thirty (30) day period shall be
extended for a reasonable period of time if the alleged default is not
reasonably capable of cure within said thirty (30) day period and Tenant
proceeds to diligently cure the default.
B. In the event of any such default by Tenant, then Landlord shall be
entitled to terminate this Lease by giving written notice of termination to
Tenant, in which event Tenant shall immediately surrender the Premises to
Landlord. If Tenant fails to so surrender the Premises, then Landlord may,
without prejudice to
- 9 -
<PAGE> 11
any other remedy it has for possession of the Premises or arrearages in Rent or
other damages, re-enter and take possession of the Premises and expel or remove
Tenant and any other person occupying the Premises or any part thereof, in
accordance with applicable law.
C. Notwithstanding anything to the contrary contained in this Lease: (i)
Landlord shall not have any right to accelerate the Rent and other amounts
payable hereunder and (ii) in the event of any default by Tenant under this
Lease Landlord shall, in each case, use its reasonable efforts to mitigate its
damages.
ARTICLE 20
DEFAULTS BY LANDLORD
If Landlord should be in default in the performance of any of its
obligations under this Lease, which default continues for a period of more than
thirty (30) days after receipt of written notice from Tenant specifying such
default, or if such default is of a nature to require more than thirty (30)
days for remedy and continues beyond the time reasonably necessary to cure (and
Landlord has not undertaken procedures to cure the default within such thirty
(30) day period and diligently pursued such efforts to complete such cure),
Tenant may, in addition to any other remedy available at law or in equity, at
its option, upon written notice, terminate this Lease, or may incur any expense
necessary to perform the obligation of Landlord specified in such notice and
deduct such expense from the Rent or other charges next becoming due.
ARTICLE 21
SURRENDER OF PREMISES
Tenant shall, upon the expiration of the Term granted herein, or any
earlier termination of this Lease for any cause, surrender to Landlord the
Premises, and all alterations, improvements and other additions which may be
made or installed by either party to, in, upon or about the Premises, other
than Tenant's Property which shall remain the property of Tenant as provided in
Article 10 hereof, without any damage, injury or disturbance thereto, or
payment therefor.
ARTICLE 22
EMINENT DOMAIN
A. (i) In the event that any portion of the Premises shall be appropriated
or taken under the power of eminent domain by any public or quasipublic
authority and such appropriation or taking renders the Premises unfit for the
conduct of Tenant's business thereon in the reasonable opinion of the parties,
then at the election of Tenant, this Lease shall terminate and expire as of the
date of such taking, and both Landlord and Tenant shall thereupon be released
from any liability thereafter accruing hereunder.
(ii) Notice of any termination relating to such eminent domain proceeding
must be made by Tenant to Landlord within sixty (60) days after receipt of
written notice of such taking.
(iii) In the event of such termination, both Landlord and Tenant shall
thereupon be released from any liability thereafter accruing hereunder.
B. Whether or not this Lease is terminated, nothing herein shall be deemed
to affect Tenant's right to receive compensation for damages to Tenant's
Property. If this Lease is terminated as hereinabove
- 10 -
<PAGE> 12
provided, all items of Rent and other charges for the last month of Tenant's
occupancy shall be prorated and Landlord agrees to refund to Tenant any Rent,
or other charges paid in advance.
C. In the event of any such appropriation or taking that does not render
the Premises unfit for the conduct of Tenant's business thereon in the
reasonable opinion of the parties, or if Tenant otherwise elects not to so
terminate this Lease, Tenant shall remain in that portion of the Premises which
shall not have been appropriated or taken as herein provided, and Landlord
agrees, at Landlord's cost and expense, to, as soon as reasonably possible,
restore the remaining portion of the Premises to a complete unit of like
quality and character as existed prior to such appropriation or taking, and
thereafter all Rent and payment obligations of Tenant shall be adjusted on an
equitable basis, taking into account the relative value of the portion taken as
compared to the portion remaining. For the purpose of this Article 22, a
voluntary sale or conveyance in lieu of condemnation, but under threat of
condemnation shall be deemed an appropriation or taking under the power of
eminent domain.
D. Tenant shall have the right to pursue its claim for damages in
connection with any eminent domain proceeding.
ARTICLE 23
ATTORNEYS' FEES
In the event that at any time during the Term of this Lease either
Landlord or Tenant shall institute any action or proceeding against the other
relating to the provisions of this Lease, or any default hereunder, the
unsuccessful party in such action or proceeding agrees to reimburse the
successful party for the reasonable expenses of attorneys' fees and paralegal
fees and disbursements incurred therein by the successful party. Such
reimbursement shall include all legal expenses incurred prior to trial, at
trial and at all levels of appeal and post-judgment proceedings.
ARTICLE 24
NOTICES
Notices and demands required, or permitted, to be sent to those listed
hereunder shall be sent by certified mail, return receipt requested, postage
prepaid, or by Federal Express or other reputable overnight courier service and
shall be deemed to have been given upon the date the same is postmarked if sent
by certified mail or the day deposited with Federal Express or such other
reputable overnight courier service, but shall not be deemed received until one
(1) business day following deposit with Federal Express or other reputable
overnight courier service or three (3) days following deposit in the United
States Mail if sent by certified mail to address shown below, and addressed to:
LANDLORD: TENANT:
--------- -------
Sprint Industrial Services, Inc. NES Acquisition Corp.
1041 Conrad Sauer c/o National Equipment Services,Inc.
Houston, Texas 77043 1800 Sherman, Suite 100
Attn: President Evanston, Illinois 60201
Attn: Kevin P. Rodgers
or at such other address requested in writing by either party upon thirty (30)
days' notice to the other party.
- 11 -
<PAGE> 13
ARTICLE 25
REMEDIES
All rights and remedies of Landlord and Tenant herein created or otherwise
extending at law are cumulative, and the exercise of one or more rights or
remedies may be exercised and enforced concurrently or consecutively and
whenever and as often as deemed desirable.
ARTICLE 26
SUCCESSORS AND ASSIGNS
All covenants, promises, conditions, representations and agreements herein
contained shall be binding upon, apply and inure to the parties hereto and
their respective heirs, executors, administrators, successors and assigns; it
being understood and agreed, however, that the provisions of Article 20 are in
nowise impaired by this Article 26.
ARTICLE 27
WAIVER
The failure of either Landlord or Tenant to insist upon strict performance
by the other of any of the covenants, conditions, and agreements of this Lease
shall not be deemed a waiver of any subsequent breach or default in any of the
covenants, conditions and agreements of this Lease. No surrender of the
Premises by Tenant shall be affected by Landlord's acceptance of Rent or by
other means whatsoever unless the same is evidenced by Landlord's written
acceptance of the surrender.
ARTICLE 28
HOLDING OVER
If Tenant or any party claiming under Tenant remains in possession of the
Premises or any part thereof after any termination or expiration of this Lease,
Landlord, in Landlord's sole discretion, may treat such holdover as an
automatic renewal of this Lease for a month-to-month tenancy subject to all the
terms and conditions provided herein.
ARTICLE 29
INTERPRETATION
The parties hereto agree that it is their intention hereby to create only
the relationship of Landlord and Tenant, and no provision hereof, or act of
either party hereunder, shall ever be construed as creating the relationship of
principal and agent, or a partnership, or a joint venture or enterprise between
the parties hereto.
-12-
<PAGE> 14
ARTICLE 30
COVENANT OF TITLE AND QUIET ENJOYMENT
Landlord covenants that it has full right, power and authority to make
this Lease, subject only to the Permitted Liens (as defined in Article 37), and
that Tenant or any permitted assignee or sublessee of Tenant, upon the payment
of the Rent and performance of the covenants hereunder, shall and may peaceably
and quietly have, hold and enjoy the Premises and improvements thereon during
the Term or any renewal or extension thereof.
Additionally, except as provided in this Lease or by law, Landlord shall
take no action that will interfere with Tenant's intended usage of the
Premises.
ARTICLE 31
ESTOPPEL
At any time and from time to time either party, upon request of the other
party, will execute, acknowledge and deliver an instrument, stating, if the
same be true, that this Lease is a true and exact copy of this Lease between
the parties hereto, that there are no amendments hereof (or stating what
amendments there may be), that the same is then in full force and effect and
that, to the best of its knowledge, there are no offsets, defenses or
counterclaims with respect to the payment of Rent reserved hereunder or in the
performance of the other terms, covenants and conditions hereof on the part of
Tenant or Landlord, as the case may be, to be performed, and that as of such
date no default has been declared hereunder by either party or if not
specifying the same. Such instrument will be executed by the other party and
delivered to the requesting party within fifteen (15) days of receipt.
ARTICLE 32
RECORDING
Neither Landlord nor Tenant shall record this Lease. The parties shall
join in the execution of a memorandum or so-called "short-form" of this Lease
for the purposes of recordation in accordance with the form attached hereto as
Exhibit "C" and made a part hereof. Any recording costs associated with the
memorandum or short form of this Lease shall be borne by the party requesting
recordation.
ARTICLE 33
FORCE MAJEURE
In the event that either party hereto shall be delayed or hindered in or
prevented from the performance required hereunder by reason of strikes,
lockouts, labor troubles, failure of power, riots, insurrection, war, acts of
God, or other reasons of like nature not the fault of the party delayed in
performing work or doing acts (hereinafter, "Permitted Delay" or "Permitted
Delays"), such party shall be excused for the period of time equivalent to the
delay caused by such Permitted Delay. Notwithstanding the foregoing, (i) any
extension of time for a Permitted Delay shall be conditioned upon the party
seeking an extension of time delivering written notice of such Permitted Delay
to the other party within ten (10) days of the event causing the Permitted
Delay, (ii) the maximum period of time which Landlord may delay any act or
performance of work due to a
-13-
<PAGE> 15
Permitted Delay shall be sixty (60) days, and (iii) no Permitted Delay or
Permitted Delays shall have the effect of extending the time for payments of
rent as required under this Lease.
ARTICLE 34
CONSENT
Wherever in this Lease Landlord or Tenant is required to give its consent
or approval, such consent or approval shall not be unreasonably withheld,
conditioned or delayed.
ARTICLE 35
WAIVER OF LANDLORD'S LIENS
Landlord hereby waives any contractual, statutory or other Landlord's lien
on Tenant's furniture, fixtures, supplies, equipment, inventory and Tenant's
Property.
ARTICLE 36
Intentionally omitted.
ARTICLE 37
TITLE
Landlord hereby represents and warrants to Tenant that (i) there are no
mortgages, deeds of trust, liens, covenants, restrictions or easements
affecting the Premises except those matters which will not interfere with
Tenant's use of the Premises and those mortgages or deeds of trust from such
lenders that have delivered non-disturbance and attornment agreements to Tenant
in accordance with the requirements of Article 5 of this Lease (collectively
the "Permitted Liens") and (ii) to the best of Landlord's knowledge, there are
no zoning laws, ordinances or regulations of public authorities that will
materially interfere with Tenant's use of the Premises.
ARTICLE 38
ZONING, DEED RESTRICTIONS, ETC.
Landlord represents and warrants that the Premises can be used by Tenant
for conduct of an equipment rental business it is acquiring from Landlord on
the date hereof and Tenant's ability to so use the Premises is a condition
precedent to this Lease. Landlord covenants, warrants, represents and agrees
to reasonably cooperate and provide assistance in obtaining any necessary
certificates of occupancy, building permits, sign permits and any variances
necessary for the conduct of such business. Notwithstanding the foregoing,
Tenant's sole remedy for breach of the representation and warranty set forth in
this Article 38 shall be termination of this Lease after notice to Landlord and
providing an opportunity to cure as required by Article 20 hereof.
- 14 -
<PAGE> 16
ARTICLE 39
SEVERABILITY
Any provision of this Lease which shall prove to be invalid, void or
illegal shall in no way affect, impair or invalidate any other provisions
hereof and such other provisions shall remain in full force and effect.
ARTICLE 40
GOVERNING LAW AND VENUE
This Lease shall be governed by the laws of the state in which the
Premises is located.
ARTICLE 41
TENANT FINANCING
Tenant shall have the absolute right from time to time during the Term
hereof and without Landlord's further approval, written or otherwise, to grant
and assign a mortgage or other security interest in Tenant's interest in this
Lease and all of Tenant's Property to Tenant's lenders in connection with
Tenant's financing arrangements. Landlord agrees to execute such amendments,
confirmation, certificates and other documents as Tenant's lenders may
reasonably request in connection with any such financing.
ARTICLE 42
BROKERS
Landlord and Tenant represent and warrant one to the other that they have
not had any dealing with any real estate brokers or agents in connection with
the negotiation of this Lease. Landlord and Tenant indemnify and hold each
other harmless from and against any and all liability and cost which Landlord
or Tenant may suffer in connection with real estate brokers claiming by,
through or under either party seeking any commission, fee or payment in
connection with this Lease.
ARTICLE 43
TENANT'S CONDUCT OF BUSINESS
Notwithstanding anything herein to the contrary, nothing herein shall be
construed as an obligation for Tenant to open or operate its business in the
Premises. Tenant shall have the right to remove Tenant's Property and cease
operations in the Premises at any time and at Tenant's sole discretion. Tenant
shall operate its business on the Premises at all times during the Term of this
Lease or any Renewal Term in accordance with all laws, rules, regulations or
court orders governing or applicable to its operations thereon.
- 15 -
<PAGE> 17
ARTICLE 44
TIME OF THE ESSENCE
Time shall be of the essence in interpreting the provisions of this Lease.
ARTICLE 45
ENTIRE AGREEMENT
This Lease contains all of the agreements of the parties hereto with
respect to the lease of the Premises and no prior agreement, letters,
representations, warranties, promises or understandings pertaining to any such
matters shall be effective for any such purpose. This Lease may be amended or
added to only by an agreement in writing signed by the parties hereto or their
respective successors in interest.
ARTICLE 46
PRELIMINARY NEGOTIATIONS
The submission of this lease form by Tenant for examination does not
constitute an offer to lease or a reservation of an option to lease. In
addition, Landlord and Tenant acknowledge that neither of them shall be bound
by the representations, promises or preliminary negotiations with respect to
the Premises made by their respective employees or agents. It is their
intention that neither party be legally bound in any way until this Lease has
been fully executed by both Landlord and Tenant.
- 16 -
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Lease on the day
and year first mentioned, the corporate party or parties by its or their proper
officers thereto duly authorized.
TENANT:
NES ACQUISITION CORP.,
A DELAWARE CORPORATION
By: /s/ Paul R. Ingersoll
---------------------------
Name: Paul R. Ingersoll
---------------------------
Title: Vice President
---------------------------
LANDLORD:
SPRINT INDUSTRIAL SERVICES, INC.,
A TEXAS CORPORATION
By: /s/ J. W. O'Neil
--------------------------
Name: J. W. O'Neil
--------------------------
Title: President
--------------------------
- 17 -
<PAGE> 19
State of __________ )
)SS:
County of _________ )
On this _____ day of ___________________, 1997, before me, the undersigned
Notary Public in and for said County and State, personally appeared
_______________________, ____________________ of NES Acquisition Corp., a
Delaware corporation, who executed the foregoing instrument on behalf of said
corporation for the purposes therein expressed. In witness whereof, I have
hereunto set my hand and official seal the day and year last above written.
--------------------------------
Notary Public
My commission expires:
----------
State of __________ )
)SS:
County of _________ )
On this _____ day of ___________________, 1997, before me, the undersigned
Notary Public in and for said County and State, personally appeared
_______________________, ____________________ of Sprint Industrial Services,
Inc., a Texas corporation, who executed the foregoing instrument on behalf of
said corporation for the purposes therein expressed. In witness whereof, I
have hereunto set my hand and official seal the day and year last above
written.
--------------------------------
Notary Public
My commission expires:
----------
- 18 -
<PAGE> 20
EXHIBIT "A"
LEGAL DESCRIPTION OF THE PREMISES
[to be furnished]
A-1
<PAGE> 21
EXHIBIT "B"
RECORDING REQUESTED BY,
AND WHEN RECORDED RETURN TO:
________________________________
________________________________
________________________________
NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this "Agreement") is made
and entered into this the _______ day of 19___ by and between NES Acquisition
Corp., a Delaware corporation ("Tenant") and ____________________, a ________
____________________ ("Lender") and Sprint Industrial Services, Inc., a Texas
corporation ("Landlord").
R E C I T A L S:
WHEREAS, Landlord has executed a Lease dated as of July 1, 1997 in favor
of Tenant, a memorandum of which may be recorded simultaneously herewith,
covering a certain Premises therein described located on a parcel of real
estate, a legal description of which is attached hereto and incorporated herein
by this reference as Exhibit "A" (said parcel of real estate and the Premises
being sometimes collectively referred to herein as the "Property");
WHEREAS, Landlord has executed a ________________ (the "Mortgage") dated
________________, 19____ and recorded on _______________ 19 ____ at Volume
________, Page ________, on the _____________ Records of __________ County,
_________________ in favor of Lender, payable upon the terms and conditions
described therein;
WHEREAS, it is a condition to said loan that said Mortgage shall
unconditionally be and remain at all times a lien or charge upon the Property,
prior and superior to this Lease and to the leasehold estate created thereby;
and
WHEREAS, the parties hereto desire to assure Tenant's possession and
control of the Property under this Lease upon the terms and conditions therein
contained.
NOW, THEREFORE, for and in consideration of the mutual covenants and
premises herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and confessed by the parties
hereto, the parties hereto do hereby agree as follows:
A G R E E M E N T:
1. The Lease is and shall be subject and subordinate to the Mortgage, and
to all renewals, modifications, consolidations, replacements and extensions
thereof, and to all future advances made thereunder.
B-1
<PAGE> 22
2. Should Lender become the owner of the Property, or should the Property
be sold by reason of foreclosure, or other proceedings brought to enforce the
Mortgage which encumbers the Property, or should the Property be transferred by
deed in lieu of foreclosure, or should any portion of the Property be sold
under a trustee's sale, this Lease shall continue in full force and effect as a
direct lease between the then owner of the Property covered by the Mortgage and
Tenant, upon, and subject to, all of the terms, covenants and conditions of
this Lease for the balance of the term thereof remaining, including any
extensions therein provided. Tenant does hereby agree to attorn to Lender or
to any such owner as its landlord, and Lender hereby agrees that it will accept
such attornment.
3. Notwithstanding any other provision of this Agreement, Lender shall not
be (a) liable for any default of any landlord under the Lease (including
Landlord), except that Lender agrees to cure any default of Landlord that is
continuing as of the date Lender forecloses the Property within thirty (30)
days from the date Tenant delivers written notice to Lender of such continuing
default, unless such default is of such a nature to reasonably require more
than thirty (30) days to cure and then Lender shall be permitted such
additional time as is reasonably necessary to effect such cure, provided
Landlord diligently and continuously proceeds to cure such default; (b) bound
by any Rent that Tenant may have paid under the Lease more than one month in
advance; (c) bound by any amendment or modification of the lease hereafter made
without Lender's prior written consent; (d) responsible for the return of any
security deposit delivered to Landlord under the Lease and not subsequently
received by Lender.
4. If Lender sends written notice to Tenant to direct its Rent payments
under the Lease to Lender instead of Landlord, then Tenant agrees to follow the
instructions set forth in such written instructions and deliver Rent payments
to Lender; however, Landlord and Lender agree that Tenant shall be credited
under the Lease for any Rent payments sent to Lender pursuant to such written
notice.
5. All notices which may or are required to be sent under this Agreement
shall be in writing and shall be sent by first-class certified U.S. mail,
postage prepaid, return receipt requested, and sent to the party at the address
appearing below or such other address as any party shall hereafter inform the
other party by written notice given as set forth below:
LANDLORD: TENANT:
--------- -------
Sprint Industrial Services, Inc. NES Acquisition Corp.
1041 Conrad Sauer c/o National Equipment Services, Inc.
Houston, Texas 77043 1800 Sherman, Suite 100
Attn: President Evanston, Illinois 60201
Attn: Kevin P. Rodgers
All notices delivered as set forth above shall be deemed effective three (3)
days from the date deposited in the U.S. mail.
6. Said Mortgage shall not cover or encumber and shall not be construed as
subjecting in any manner to the lien thereof any of Tenant's trade fixtures,
furniture, equipment or other personal property at any time placed or installed
in the Premises. In the event the Property or any part thereof shall be taken
for public purposes by condemnation or transfer in lieu thereof or the same are
damaged or destroyed, the rights of the parties to any condemnation award or
insurance proceeds shall be determined and controlled by the applicable
provisions of this Lease.
B-2
<PAGE> 23
7. This Non-Disturbance Agreement shall inure to the benefit of and be
binding upon the parties hereto, their successors in interest, heirs and
assigns and any subsequent owner of the Property secured by the Mortgage.
8. Should any action or proceeding be commenced to enforce any of the
provisions of this Non-Disturbance Agreement or in connection with its meaning,
the prevailing party in such action shall be awarded, in addition to any other
relief it may obtain, its reasonable costs and expenses, not limited to taxable
costs, and reasonable attorneys' fees.
9. Tenant shall not be enjoined as a party/defendant in any action or
proceeding which may be instituted or taken by reason or under any default by
Landlord in the performance of the terms, covenants, conditions and agreements
set forth in the Mortgage.
IN WITNESS WHEREOF, the parties hereto have caused this Non-Disturbance
Agreement to be executed as of the day and year first above written.
LENDER:
-----------------------------------
a
---------------------------------
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
TENANT:
NES ACQUISITION CORP.,
A DELAWARE CORPORATION
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
LANDLORD:
SPRINT INDUSTRIAL SERVICES, INC.,
A TEXAS CORPORATION
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
B-3
<PAGE> 24
State of __________ )
)SS:
County of _________ )
[Acknowledgment of Lender]
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ________________________ of ____________
___________________________________________________ and he/she executed the
foregoing for and on behalf of said Corporation by authority of its Board of
Directors for the uses and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
------------------------------------------
Notary Public in and for the State
and County aforesaid
-------------------------------------------
(Printed Name of Notary)
My Commission Expires:
_________________________
B - 4
<PAGE> 25
[Acknowledgement of Tenant)
STATE OF __________ )
) SS:
COUNTY OF _________ )
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ____________________ of NES Acquisition
Corp., a Delaware corporation, and he/she executed the foregoing for and on
behalf of said Corporation by authority of its Board of Directors for the uses
and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
----------------------------------------
Notary Public in and for the State
and County aforesaid
My Commission Expires:
_________________________
B-5
<PAGE> 26
STATE OF __________ )
) SS:
COUNTY OF _________ )
[Acknowledgment of Landlord]
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ____________________ of Sprint Industrial
Services, Inc., a Texas corporation, and he/she executed the foregoing for and
on behalf of said Corporation by authority of its Board of Directors for the
uses and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
-----------------------------------------
Notary Public in and for the State
and County aforesaid
-----------------------------------------
(Printed Name of Notary)
My Commission Expires:
_________________________
B-6
<PAGE> 27
EXHIBIT "C"
WHEN RECORDED MAIL TO:
- ----------------------------------------------------------------------------
SPACE ABOVE THIS LINE FOR RECORDER'S USE
MEMORANDUM OF LEASE
This is a Memorandum of Lease by and between Sprint Industrial Services,
Inc., a Texas corporation (hereinafter called Landlord) and NES Acquisition
Corp., a Delaware corporation (hereinafter called Tenant) upon the following
terms:
Date of Lease: December 1, 1997
Description of Premises: See Exhibit "A" attached hereto
Date of Commencement: December 1, 1997
Term: Ten (10) years
Renewal Option(s): Two (2) five (5) year options
The purpose of this Memorandum of Lease is to give record notice of the
lease and of the rights created thereby, all of which are hereby confirmed.
IN WITNESS WHEREOF the parties have executed this Memorandum of Lease as
of the dates set forth in their respective acknowledgements.
(SEAL) LANDLORD:
SPRINT INDUSTRIAL SERVICES, INC., A
TEXAS CORPORATION
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
(SEAL) TENANT:
NES ACQUISITION CORP., A
DELAWARE CORPORATION
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
C-1
<PAGE> 28
C-2
<PAGE> 29
STATE OF __________ )
)SS:
COUNTY OF ________ )
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ___________________ of Sprint Industrial
Services, Inc., a Texas corporation, and he/she executed the foregoing for and
on behalf of said Corporation by authority of its Board of Directors for the
uses and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
-----------------------------------------
Notary Public in and for the State
and County aforesaid
------------------------------------------
(Printed Name of Notary)
My Commission Expires:
_________________________
STATE OF __________ )
)SS:
COUNTY OF ________ )
Personally appeared before me, a Notary Public in and for the above County
and State, ___________________________ known personally by me and acknowledged
by me to be on the date of execution, ____________________ of NES Acquisition
Corp., a Delaware corporation, and he/she executed the foregoing for and on
behalf of said Corporation by authority of its Board of Directors for the uses
and purposes therein set forth.
Witnessed by hand and this notarial seal, this _____ day of ____________,
1997.
------------------------------------------
Notary Public in and for the State
and County aforesaid
------------------------------------------
(Printed Name of Notary)
My Commission Expires:
_________________________
C - 3
<PAGE> 30
EXHIBIT "D"
RENEWAL TERM RENT SCHEDULE
BASE RENT FOR ______________YEAR RENEWAL TERM:
The Base Rent during the _______ Renewal Term shall be the "Market Rent,"
as hereinafter defined.
(a) The term "Market Rent" shall mean the Base Rent for the Premises at
the time in question which Landlord sets forth in a notice (hereinafter
referred to as the "Market Rent Notice") to Tenant. No later than thirty (30)
days after Tenant may exercise Tenant's option to extend this Lease for the
Renewal Term, Landlord shall send the Market Rent Notice to Tenant for said
Renewal Term and shall specify in the Market Rent Notice for the period
contained in the Renewal Term as applicable. In the event that Tenant shall,
in good faith, disagree with the Market Rent set forth in the Market Rent
Notice established by Landlord for the Premises, Tenant shall, within ten (10)
days after receipt of the Market Rent Notice, furnish Landlord with a written
explanation in reasonable detail of the basis for Tenant's good faith
disagreement, the amount which, in Tenant's good faith opinion, is the Market
Rent for the period contained in the Renewal Term (hereinafter referred to as
the "Tenant's Notice"). If Tenant's Notice is not received by Landlord within
said ten (10) day period, the Market Rent shall be the Market Rent set forth in
the Market Rent Notice to Tenant. If Tenant's notice is received by Landlord
within said ten (10) day period, the Market Rent for the Premises shall be
established as follows:
(i) No later than twenty (20) days following the receipt of the
Market Rent Notice from Landlord, Tenant shall select an individual as an
appraiser of its choice and give Landlord written notice of such
appraiser's name, address and telephone number.
(ii) Within ten (10) days after receipt of such notice by Landlord,
Landlord shall select an appraiser of its choice and give Tenant written
notice of such appraiser's name, address and telephone number.
(iii) The two appraisers so selected by Landlord and Tenant shall
then select an individual as a third appraiser within fifteen (15) days
after receipt by Tenant of Landlord's notification as to its selection of
an appraiser, and furnish Landlord and Tenant written notice of such
appraiser's name, address and telephone number.
(iv) All appraisers selected pursuant to this provision shall be
M.A.I. appraisers, unless Landlord and Tenant shall otherwise agree in
writing, each having at least ten (10) years experience with commercial
property in the state of the location of the Premises. Each of the three
(3) selected appraisers shall then determine the fair rental value of the
Premises for each applicable period of the Renewal Term and the Market
Rent hereunder for each Renewal Term, as applicable, shall be determined
to be the average of the three (3) appraisals for each such years.
(b) If the procedure set forth in above in (a)(i) through and including
(a)(iv) is implemented, and if for any reason whatsoever (including, without
limitation, the institution of any judicial or other legal proceedings), the
Market Rent for any Renewal Term has not been finally determined prior to the
first day of said Renewal Term, then the amount of the Market Rent set forth by
Landlord in good faith in the Market Rent Notice shall be the Rent for all
purposes under this Lease until such time as the Market Rent is
D-1
<PAGE> 31
finally determined as set forth above, and Landlord and Tenant shall, by
appropriate payments to the other, correct any overpayment or underpayment
which may have been made prior to such final determination.
(c) If Landlord fails to select its appraiser in the manner and within the
time specified in (a)(ii) above, then the Market Rent for the Renewal Term
shall be the Market Rent set forth in Tenant's Notice.
(d) If Tenant fails to select its appraiser in the manner and within the
time specified in (a)(i) above, then the Market Rent for the Renewal Term shall
be the Market Rent set forth in the Market Rent Notice.
(e) If the appraisers selected by Landlord and Tenant fail to appoint the
third appraiser within the time and in the manner prescribed in (a)(iii)
above, then Landlord and/or Tenant shall promptly apply to the local office of
the American Arbitration Association for the appointment of the third
appraiser.
(f) All fees, costs and expenses incurred in connection with obtaining the
appraisals and the arbitration procedure set forth in this section shall be
shared equally by Landlord and Tenant; however, Landlord and Tenant shall each
bear their own attorneys' fees incurred with respect to this procedure.
(g) Notwithstanding the provisions of this Exhibit "D", in no event shall
the rental during the Renewal Term be less than the rental specified for the
Initial Term.
D-2
<PAGE> 1
Exhibit 10.57
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of July 1, 1997 (this
"Agreement"), is made by and among National Equipment Services, Inc., a
Delaware corporation (the "Company"), Golder, Thoma, Cressey, Rauner Fund V,
L.P., a Delaware limited partnership ("GTCR"), Kevin Rodgers ("Rodgers"),
Dennis O'Connor ("O'Connor") and Paul Ingersoll ("Ingersoll," and together with
GTCR, Rodgers and O'Connor referred to herein as the "Existing Stockholders")
and Joseph Swinbank ("Swinbank"), Donald Poarch ("Poarch"), James O'Neil
("O'Neil"), Sammy Sorsby ("Sorsby") and J. D. Cox ("Cox," and together with
Swinbank, Poarch, O'Neil and Sorsby referred to herein as the "Purchasers").
Except as otherwise indicated, capitalized terms used herein are defined in
Section 9 hereof.
WHEREAS, pursuant to an Asset Purchase Agreement, dated as of July 1, 1997
(the "Acquisition Agreement"), by and among NES Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of the Company ("NES"), Sprint
Industrial Services, Inc., a Texas corporation ("Sprint"), Swinbank and Poarch,
NES will purchase (the "Acquisition") substantially all of the assets of the
Sprintank division ("Sprintank") of Sprint.
WHEREAS, the purchase and sale of stock contemplated by this Agreement
will be consummated contemporaneously with the consummation of the Acquisition
pursuant to the terms of the Acquisition Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Authorization of Stock. The Company will authorize the issuance and
sale to the Purchasers of 485 shares of the Company's Class A Common Stock,
par value $.01 per share (the "Class A Common Stock") at a purchase price of
$1,000.00 per share, and 1,500 shares of the Company's Class B Common Stock,
par value $.01 per share (the "Class B Common Stock") at a purchase price of
$10.00 per share, each having the rights described in the Company's Certificate
of Incorporation (as amended, the "Certificate of Incorporation"). The shares
of Class A Common Stock and Class B Common Stock being purchased by the
Purchasers hereunder are collectively referred to herein as the "Shares."
2. Purchase and Sale of Shares.
(a) Purchase and Sale. The Company will sell to each Purchaser, and, on
the terms and subject to the conditions set forth herein, each Purchaser will
purchase from the Company, the number and class of Shares set forth below such
Purchaser's name on the signature pages hereto, at the purchase price per Share
as set forth in Section 1 above.
<PAGE> 2
(b) The Closing. The closing of the sale and purchase of the Shares (the
"Closing") will take place at the offices of Kirkland & Ellis, 200 East
Randolph Drive, Chicago, Illinois 60601 on the date hereof. At the Closing,
the Company will deliver to each Purchaser certificates evidencing the number
and class of Shares to be purchased by such Purchaser, issued in the name of
such Purchaser, upon payment by such Purchaser of the purchase price therefor
by wire transfer of immediately available funds to the bank account designated
by the Company.
3. Joinder. The Company, the Purchasers and the Existing Stockholders
hereby agree that the Stockholders Agreement and the Registration Agreement are
hereby amended by adding each Purchaser as a party thereto and as a Stockholder
under the Stockholders Agreement. Each Purchaser hereby agrees to be subject
to all of the rights and obligations and to be bound by all of the terms and
conditions set forth in the Stockholders Agreement and the Registration
Agreement to the same extent as if such Purchaser was originally a party
thereto. The Company and the Existing Stockholders hereby waive any and all
requirements and/or breaches arising under the Stockholders Agreement, the
Registration Agreement and any agreements mentioned therein resulting from the
consummation of the transactions contemplated herein.
4. Restrictions on Transfer of Shares. In addition to the restrictions on
transfer set forth in the Stockholders Agreement, the holders of the Shares
shall not sell, transfer, assign pledge or otherwise dispose of (a "Transfer")
any interest in any of the Shares except pursuant to the following provisions:
(a) Retention of Shares. Until the fifth anniversary of the date of this
Agreement, each holder of Shares shall not Transfer any interest in any of the
Shares, except for Exempt Transfers (as defined in Section 4(b) below).
(b) Transfer of Shares. Subject to Section 4(a) above and to any other
restrictions set forth in the Stockholders Agreement, each holder of Shares
shall not Transfer any interest in any of the Shares, except pursuant to (i)
the provisions of Section 5 below or the provisions of Section 5 or 7 of the
Stockholders Agreement ("Exempt Transfers") or (ii) the provisions of this
Section 4; provided that in no event shall any Transfer of Shares pursuant to
this Section 4 be made for any consideration other than cash payable upon
consummation of such Transfer or in installments over time. Prior to making
any Transfer other than an Exempt Transfer, each holder of Shares proposing to
Transfer Shares (a "Selling Holder") will give written notice (the "Sale
Notice") to the Company and GTCR. The Sale Notice will disclose in reasonable
detail the identity of the prospective transferee(s), the number and class of
Shares to be transferred and the terms and conditions of the proposed Transfer.
The Selling Holder will not consummate any Transfer until 95 days after the
Sale Notice has been given to the Company and to GTCR, unless the parties to
the Transfer have been finally determined pursuant to this Section 4 prior to
the expiration of such 95-day period (the date of the first to occur of such
events is referred to herein as the "Authorization Date").
- 2 -
<PAGE> 3
(c) First Refusal Rights. The Company may elect to purchase all (but not
less than all) of the Shares to be transferred upon the same terms and
conditions as those set forth in the Sale Notice by delivering a written notice
of such election to the Selling Holder and GTCR within 60 days after the Sale
Notice has been given to the Company. If the Company has not elected to
purchase all of the Shares to be Transferred, GTCR may elect to purchase all
(but not less than all) of the Shares to be transferred upon the same terms and
conditions as those set forth in the Sale Notice by giving written notice of
such election to the Selling Holder within 90 days after the Sale Notice has
been given to GTCR. If neither the Company nor GTCR elect to purchase all of
the Shares specified in the Sale Notice, the Selling Holder may Transfer the
Shares specified in the Sale Notice at a price and on terms no more favorable
to the transferee(s) thereof than specified in the Sale Notice during the
60-day period immediately following the Authorization Date. Any Shares not
transferred within such 60-day period will be subject to the provisions of this
Section 4(c) upon subsequent Transfer. The Company may pay the purchase price
for such shares by offsetting amounts outstanding under any bona fide debts
owed by the Selling Holder to the Company.
(d) Certain Permitted Transfers. The restrictions contained in this
Section 4 will not apply with respect to transfers of Shares pursuant to
applicable laws of descent and distribution; provided that such restrictions
will continue to be applicable to the Shares after any such transfer and the
transferees of such Shares have agreed in writing to be bound by the provisions
of this Agreement.
(e) Termination of Restrictions. The restrictions on the Transfer of
Shares set forth in this Section 4 will continue with respect to each Share
until the date on which such Share has been transferred in a transaction
permitted by this Section 4 (except in a transaction contemplated by Section
4(d)); provided that in any event such restrictions will terminate on the first
to occur of a Sale of the Company or a Public Offering.
5. Repurchase of Shares.
(a) In the event a Purchaser (i) in the case of O'Neil, Sorsby or Cox,
ceases to be employed by the Company or its subsidiaries for any reason, or
(ii) in the case of Swinbank or Poarch, materially breaches the terms or
conditions of the Noncompetition Agreement, dated as of the date hereof,
between NES and such Purchaser (the "Noncompetition Agreement"), and such
breach remains uncured for a period of 10 days following delivery of a notice
by NES or the Company to such Purchaser notifying such Purchaser of the breach
(each of the events described in clauses (i) or (ii) above are referred to
herein as a "Termination"), the Shares purchased by such Purchaser hereunder
(the "Repurchased Shares") (whether held by such Purchaser or one or more of
such Person's permitted transferees, other than the Company, GTCR or an
affiliate of the Company or GTCR) will be subject to repurchase by the Company
and GTCR pursuant to the terms and conditions set forth in this Section 5 (the
"Repurchase Option"). In the event of a Termination, the purchase price for
each Repurchased Share will be the Fair Market Value for such share.
- 3 -
<PAGE> 4
(b) In the event of a Termination, the Company's board of directors (the
"Board") may elect to purchase all or any portion of the Repurchased Shares by
delivering written notice (the "Repurchase Notice") to the holder or holders of
the Repurchased Shares within 90 days after such Termination. The Repurchase
Notice will set forth the number of Repurchased Shares to be acquired from each
holder, the aggregate consideration to be paid for such shares and the time and
place for the closing of the transaction.
(c) In the event of a Termination, if for any reason the Company does not
elect to purchase all of the Repurchased Shares pursuant to the Repurchase
Option, GTCR shall be entitled to exercise the Repurchase Option for the
Repurchased Shares the Company has not elected to purchase (the "Available
Shares"). As soon as practicable after the Company has determined that there
will be Available Shares, but in any event within 45 days after such
Termination, the Company shall give written notice (the "Option Notice") to
GTCR setting forth the number of Available Shares and the purchase price for
the Available Shares. GTCR may elect to purchase any or all of the Available
Shares by giving written notice to the Company within one month after the
Option Notice has been given by the Company. As soon as practicable, and in
any event within ten days after the expiration of the one-month period set
forth above, the Company shall notify each holder of Repurchased Shares as to
the number of Repurchased Shares being purchased from such holder by GTCR (the
"Supplemental Repurchase Notice"). At the time the Company delivers the
Supplemental Repurchase Notice to the holder(s) of Repurchased Shares, the
Company shall also deliver written notice to GTCR setting forth the number of
shares GTCR is entitled to purchase, the aggregate purchase price and the time
and place of the closing of the transaction.
(d) The closing of the purchase of the Repurchased Shares pursuant to the
Repurchase Option shall take place on the date designated by the Company in the
Repurchase Notice or Supplemental Repurchase Notice, which date shall not be
more than one month nor less than five days after the delivery of the later of
either such notice to be delivered. The Company and/or GTCR will pay for the
Repurchased Shares to be purchased pursuant to the Repurchase Option by
delivery of a check or wire transfer of funds in the aggregate amount of the
purchase price for such shares. In addition, the Company may pay the purchase
price for such shares by offsetting amounts outstanding under any bona fide
debts owed by the holder of such Repurchased Shares to the Company. The
Company and GTCR will be entitled to receive representations and warranties
from the sellers as to their title to the Repurchased Shares being sold and to
require all sellers' signatures be guaranteed.
(e) The right of the Company and GTCR to repurchase Shares pursuant to
this Section 5 shall terminate upon the occurrence of a Public Offering.
6. Legend. The certificates representing the Shares will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS
OF JULY 1, 1997, HAVE NOT BEEN REGISTERED
- 4 -
<PAGE> 5
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER, CERTAIN RIGHTS OF FIRST REFUSAL AND CERTAIN
OTHER AGREEMENTS SET FORTH IN A STOCK PURCHASE AGREEMENT BETWEEN THE
COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY DATED AS OF JULY 1, 1997.
A COPY OF SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE
COMPANY'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
No holder of Shares may Transfer any Shares (except pursuant to an effective
registration statement under the Securities Act) without first delivering to
the Company an opinion of counsel (reasonably acceptable in form and substance
to the Company) that neither registration nor qualification under the
Securities Act and applicable state securities laws is required in connection
with such transfer.
7. Purchasers' Representations and Warranties. Each Purchaser hereby
represents and warrants to and covenants and agrees with the Company that:
(a) such Purchaser is acquiring the Restricted Securities purchased
hereunder or acquired pursuant hereto for his own account with the present
intention of holding such securities for investment purposes and that he has no
intention of selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities laws;
(b) such Purchaser has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the securities purchased
hereunder and has had full access to such other information concerning the
Company as such Purchaser may have requested and that in making his decision to
invest in the securities being purchased hereunder he is not in any way relying
on the fact that any other Person has decided to invest in the securities;
(c) such Purchaser (i) is an "accredited investor" as defined in Rule
501(a) under the Securities Act or (ii) by reason of his business and financial
experience, and the business and financial experience of those retained by him
to advise him with respect to his investment in the securities being purchased
hereunder, he, together with such advisors, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of
evaluating the merits and risks of his prospective investment in such
securities, is able to bear the economic risk of such investment and, at the
present time, is able to afford a complete loss of such investment; and
(d) such Purchaser (i) understands that the Shares have not been, and will
not be, registered under the Securities Act, or under any state securities
laws, and are being offered and sold in reliance upon federal and state
exemptions for transactions not involving any public offering, (ii)
- 5 -
<PAGE> 6
understands that the Shares are not transferable, and (iii) is able to bear the
economic risk and lack of liquidity inherent in holding the Shares.
8. Company's Representations and Warranties. The Company represents and
warrants to each of the Purchasers that:
(a) 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 conduct its business as presently conducted;
(b) the authorized capital stock of the Company consists of 25,000 shares
of Class A Common Stock, par value $0.01 per share (the "Class A Common"), and
150,000 shares of Class B Common Stock, par value $0.01 per share (the "Class B
Common"). As of immediately following the consummation of the transactions
contemplated hereby and by the Acquisition Agreement, there will be [21,526]
shares of Class A Common and 88,400 shares of Class B Common issued and
outstanding, and all such shares will at such time be validly issued, fully
paid and nonassessable;
(c) As of the Closing, the Company shall not have outstanding any stock or
securities convertible or exchangeable for any shares of its capital stock or
containing any profit participation features, nor shall it have outstanding any
rights or options to subscribe for or to purchase any stock or securities
convertible into or exchangeable for its capital stock or any stock
appreciation rights or phantom stock plans;
(d) the Company has full power and authority to enter into and perform
this Agreement in accordance with its terms and to carry out its obligations
hereunder; and
(e) the execution, delivery and performance of this Agreement do not and
will not contravene or constitute a default under the Company's certificate of
incorporation or by-laws.
9. Definitions.
"Fair Market Value" of each Share means the value agreed upon by the
holder thereof and the Board; provided that if the holder thereof and the Board
are unable to agree upon such value, then the holder thereof and the Company
will share the cost, on an equal basis, of a mutually acceptable business
appraiser whose determination will be binding.
"Person" means an individual, a partnership, a limited liability company,
a joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"Public Offering" means the sale in an underwritten public offering
registered under the Securities Act of 1933, as amended from time to time, of
shares of the Company's capital stock approved by the Board.
- 6 -
<PAGE> 7
"Registration Agreement" means that certain Registration Agreement, dated
as of June 4, 1996, among the Company and others, as the same may be amended,
supplemented, restated, modified from time to time.
"Restricted Securities" means the Shares issued hereunder and any
securities issued with respect to the Shares by way of a dividend or split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. Restricted Securities will continue as
such in the hands of any transferee; provided that, as to any particular
Restricted Securities, such securities will cease to be Restricted Securities
when they have (a) been effectively registered under the Securities Act and
disposed of in accordance with the registration statement covering them, (b)
become eligible for sale pursuant to Rule 144 or Rule 144A of the Securities
and Exchange Commission (or any similar rule then in force) and disposed of in
accordance therewith or (c) been otherwise transferred and new securities for
them not bearing the Securities Act Legend set forth in Section 6 have been
delivered by the Company. Whenever any particular securities cease to be
Restricted Securities, the holder thereof will be entitled to receive from the
Company, without expense, new securities of like tenor not bearing a Securities
Act Legend of the character set forth in Section 6.
"Rule 144" means Rule 144 promulgated by the Securities and Exchange
Commission under the Securities Act as such rule may be amended from time to
time, or any similar rule then in force.
"Rule 144A" means Rule 144A promulgated by the Securities and Exchange
Commission under the Securities Act as such rule may be amended from time to
time, or any similar rule then in force.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body or
agency succeeding to the functions thereof.
"Stockholders Agreement" means that certain Stockholders Agreement, dated
as of June 4, 1996, among the Company and others, as the same may be amended,
supplemented, restated, modified from time to time.
10. Miscellaneous.
(a) Remedies. The holders of Shares acquired hereunder (directly or
indirectly) will have all of the rights and remedies set forth in this
Agreement, the Certificate of Incorporation, and all of the rights and remedies
which such holders have been granted at any time under any other agreement or
contract, and all of the rights and remedies which such holders have under any
law. Any Person having any rights under any provision of this Agreement will
be entitled to enforce such
- 7 -
<PAGE> 8
rights specifically, to recover damages by reason of any breach of any
provision of this Agreement, and to exercise all other rights granted by law.
(b) Amendments and Waivers. Except as otherwise provided herein, no
modification, amendment or waiver of any provision hereof will be effective
against any party hereto unless such modification, amendment or waiver is
approved in writing by such party. The failure of any party to enforce any
provision of this Agreement or under any agreement contemplated hereby or under
the Certificate of Incorporation or the Company's bylaws will in no way be
construed as a waiver of such provisions and will not affect the right of such
party thereafter to enforce each and every provision of this Agreement, any
agreement referred to herein, the Certificate of Incorporation, or the
Company's bylaws in accordance with their terms.
(c) Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by any party in connection
herewith will survive the execution and delivery of this Agreement, regardless
of any investigation made by the Company or the Purchasers or on any of their
behalves.
(d) Successors and Assigns.
(i) Except as otherwise expressly provided herein, all covenants and
agreements contained in this Agreement by or on behalf of any of the
parties hereto will bind and inure to the benefit of the respective
successors and assigns of such parties whether so expressed or not. In
addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Purchasers' benefit as the
purchasers or holders of Shares, as the case may be, are also for the
benefit of and enforceable by any subsequent holder(s) of the Purchasers'
Shares.
(ii) If a sale, transfer, assignment or other disposition of any
Shares is made in accordance with the provisions of this Agreement to any
Person and such securities remain Restricted Securities immediately after
such disposition, such Person shall, at or prior to the time such
securities are acquired, execute a counterpart of this Agreement with such
modifications thereto as may be necessary to reflect such acquisition, and
such other documents as are necessary to confirm such Person's agreement
to become a party to, and to be bound by, all covenants, terms and
conditions of this Agreement, the Stockholders Agreement and the
Registration Agreement, each as theretofore amended.
(e) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable under any applicable law or rule in any jurisdiction,
such provision will be ineffective only to the extent of such invalidity,
illegality or unenforceability in such jurisdiction, without invalidating the
remainder of this Agreement in such jurisdiction or any provision hereof in any
other jurisdiction.
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<PAGE> 9
(f) Counterparts. This Agreement may be executed simultaneously in
separate counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one
and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
(h) Governing Law. The corporate laws of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
securityholders. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in
accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
(i) Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
received by certified mail, return receipt requested, or sent by guaranteed
overnight courier service. Notices, demands and communications will be sent to
parties hereto at the addresses indicated below:
Notices to the Company:
National Equipment Services, Inc.
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attention: Chief Executive Officer
With a copy to:
Kirkland and Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Sanford E. Perl
Notices to a Purchaser:
To the address set forth below
such Purchaser's name on the
signature pages hereto
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
- 9 -
<PAGE> 10
* * * * *
- 10 -
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement on the day and year first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
----------------------------------------
Its: CEO
----------------------------------------
GOLDER, THOMA, CRESSEY, RAUNER
FUND V, L.P.
By: GTCR V, L.P.
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
Its: General Partner
By: /s/ Carl D. Thoma
----------------------------------------
Its: Principal
/s/ Kevin Rodgers
----------------------------------------
KEVIN RODGERS
/s/ Dennis O'Connor
----------------------------------------
DENNIS O'CONNOR
/s/ Paul R. Ingersoll
----------------------------------------
PAUL INGERSOLL
<PAGE> 12
/s/ Joseph Swinbank
JOSEPH SWINBANK
----------------------------------------
Address:
1041 Conrad Sauer
----------------------------------------
Houston, TX 77043
----------------------------------------
----------------------------------------
194 shares of Class A Common
600 shares of Class B Common
/s/ Donald Poarch
----------------------------------------
DONALD POARCH
Address:
1041 Conrad Sauer
----------------------------------------
Houston, TX 77043
----------------------------------------
----------------------------------------
194 shares of Class A Common
600 shares of Class B Common
/s/ James O'Neil
----------------------------------------
JAMES O'NEIL
Address:
28 Champions Bend Cir.
----------------------------------------
Houston, TX 77069
----------------------------------------
----------------------------------------
48.5 shares of Class A Common
150 shares of Class B Common
/s/ Sammy Sorsby
----------------------------------------
SAMMY SORSBY
Address:
22118 #1 Tomball Cemetary Rd.
----------------------------------------
Tomball, TX 77375
----------------------------------------
----------------------------------------
24.25 shares of Class A Common
75 shares of Class B Common
/s/ J. D. Cox
----------------------------------------
J. D. COX
Address:
4403 Windsail Court
----------------------------------------
Missouri City, TX 77459
----------------------------------------
----------------------------------------
24.25 shares of Class A Common
75 shares of Class B Common
<PAGE> 13
[SECOND SIGNATURE PAGE TO THE STOCK PURCHASE AGREEMENT]
CONSENT
The undersigned spouse of /s/ Sammy Sorsby hereby acknowledges that I
---------------------
have read the foregoing Stock Purchase Agreement (this "Agreement") and that I
understand its contents. I am aware that this Agreement provides for the
repurchase of my spouse's shares of capital stock of National Equipment
Services, Inc. (the "Shares") under certain circumstances and imposes other
restrictions on the transfer of such Shares. I agree that my spouse's interest
in the Shares is subject to this Agreement and that any interest I may have in
such Shares shall be irrevocably bound by this Agreement and further that my
community property interest, if any, shall be similarly bound by this
Agreement.
I am aware that the legal, financial and other matters contained in this
Agreement are complex and I am free to seek advice with respect thereto from
independent counsel. I have either sought such advice or determined after
carefully reviewing this Agreement that I will waive such right.
Name (signature): /s/ Brenda Sorsby
-----------------------
Name (printed): Brenda Sorsby
-----------------------
Witness (signature): /s/ Chris Womack
-------------------
Witness (printed): Chris Womack
-------------------
<PAGE> 1
Exhibit 10.59
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as
of July 18, 1997, by and between MST Enterprises, Inc. (d/b/a Equipco Sales &
Rentals), a Virginia corporation (the "Company") and Marc S. Trubitz (the
"Executive").
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. The Company shall employ the Executive, and the Executive
hereby accepts employment with the Company, upon the terms and conditions set
forth in this Agreement for the period beginning on the date hereof and ending
as provided in Section 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, the Executive shall serve as the
President of the Company and shall have the normal duties, responsibilities and
authority of a President, subject to the overall direction and authority of the
Company's Chief Executive Officer and the Company's board of directors (the
"Board"). Executive shall perform the services hereunder primarily within a
100-mile radius of the Company's current business premises in Harrisonburg,
Virginia, which shall be Executive's principal office and Executive shall not
be required to move such principal office outside of Harrisonburg, Virginia
without his consent.
(b) The Executive shall report to the Company's Chief Executive Officer
(or to such other person as the Company's Chief Executive Officer may
reasonably designate), and the Executive shall devote his best efforts and
substantially all of his business time and attention to the business and
affairs of the Company; provided, that Executive may make and manage personal
investments, engage in outside noncompetitive business activities, act as a
director and engage in other activities for any charitable, educational, or
other non-profit institution, if such investments and activities do not
interfere with the performance of Executive's duties hereunder. It is
acknowledged by the Company that Executive has disclosed that Executive is a
legal resident of the state of Florida and travels there frequently.
Therefore, the Company acknowledges that Executive's work schedule shall be
flexible and that Executive shall be required to be at the business premises
during regular working hours no more frequently than was Executive's practice
in calendar year 1996, all as previously discussed and agreed to by and between
Executive and Kevin Rodgers, all without reduction of Executive's Base Salary,
benefits, bonus, or other compensation and Executive's time away from the
business premises shall be taken when reasonably deemed appropriate by
Executive. The Executive shall perform his duties and responsibilities to the
best of his abilities in a diligent, trustworthy, businesslike and efficient
manner.
<PAGE> 2
3. Base Salary and Benefits.
(a) During the Employment Period, the Executive's base salary shall be
$100,000 per annum (the "Base Salary"), which salary shall be payable in
regular installments in accordance with the Company's general payroll
practices, but in no event less frequently than monthly, and shall be subject
to customary withholding. In addition, during the Employment Period, the
Executive shall be entitled to participate in all of the Company's employee
benefit programs for which the senior executive employees of the Company are
generally eligible. The Company agrees that, during the Employment Period, the
health and hospitalization benefits provided by the Company to which Executive
shall be entitled to participate shall be no less favorable, and the expense to
Executive shall be no greater, than were available to Executive immediately
prior to the date hereof.
(b) The Company shall reimburse the Executive for all reasonable expenses
incurred by him in the course of performing his duties under this Agreement
which are consistent with the Company's policies in effect from time to time
with respect to travel, entertainment and other business expenses, subject to
the Company's normal requirements with respect to reporting and documentation
of such expenses.
(c) In addition to the Base Salary, the Executive will be eligible to earn
an annual bonus of up to 45% of his Base Salary to be calculated in the manner
set forth on Exhibit A attached hereto.
4. Term.
(a) The Employment Period shall terminate upon the first anniversary of
the date hereof, unless earlier terminated (i) by the Executive's death or
Total Disability, (ii) by the Executive's resignation in the absence of a
Constructive Termination Event, or by the Company for Cause or (iii) by the
Company other than for Cause or by the Executive resigning as a result of a
Constructive Termination Event.
(b) If the Employment Period is terminated pursuant to clause (a)(i)
above, the Executive shall be entitled to receive his Base Salary through the
date of termination plus any bonus awarded, earned, which accrues or becomes
payable or which would have been earned prior to the first anniversary of the
date hereof but for such termination, prorated to the date of termination. If
the Employment Period is terminated pursuant to clause (a)(ii) above, the
Executive shall be entitled to receive his Base Salary through the date of
termination and all of the Executive's right to fringe benefits and bonuses
hereunder (if any) which accrue or become payable after the termination of the
Employment Period shall cease upon such termination pursuant to clause (a)(ii).
If the Employment Period is terminated pursuant to clause (a)(iii) above, the
Executive shall be entitled to receive his Base Salary through the first
anniversary of the date hereof, plus any bonus awarded, earned, which accrues
or becomes payable or which would have been earned prior to the first
anniversary of the date hereof but for such termination.
(c) For purposes of this Agreement, "Cause" shall mean (i) the commission
of a felony or any other material act or omission involving dishonesty or fraud
with respect to the
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<PAGE> 3
Company or any of its subsidiaries or any of their customers or suppliers, (ii)
any willful or wanton misconduct which brings the Company or any of its
subsidiaries into substantial public disgrace or disrepute, (iii) willful,
substantial and repeated failure to perform duties as reasonably directed by
the Board, (iv) breach by Executive of the Noncompetition Agreement, dated as
of the date hereof, by and among National Equipment Services, Inc., the
Executive and others, or (v) any other knowing and material breach of this
Agreement.
(d) For purposes of this Agreement, "Total Disability" shall mean the
inability of Executive, by reason of illness or physical or mental disability,
to perform any of the customary duties of his employment for either (i) one
continuous period of two months, or (ii) a total of three months out of any six
consecutive months, in which event the Company shall have the right to
terminate Executive's employment hereunder by giving Executive thirty (30)
days' written notice to that effect. The determination of Executive's Total
Disability shall be made by Executive's regular treating physician. If the
Company disagrees with the conclusion of said physician, it may engage a second
physician to examine Executive. If these physicians disagree, then the parties
shall select a third physician to examine Executive, in which event their
majority opinion shall be conclusive. In such a case, the termination of
employment shall be effective on the date specified in such notice.
(e) For purposes of this Agreement, "Constructive Termination Event" shall
mean a material breach by the Company of the terms of this Agreement which is
not cured by the Company within fifteen (15) days after receipt of written
notice from Executive of such breach, action by the Company which is directed
at the Executive specifically and not at all employees generally and which has
the effect of significantly reducing the Executive's employment
responsibilities, authority, or the accommodations in which the Executive
performs his job, or the nonpayment by the Company of compensation due and
owing to Executive under this Agreement, which has not been cured by the
Company within fifteen (15) days of receipt of written notice from the
Executive that such nonpayment has occurred.
5. Executive's Representations. The Executive hereby represents and
warrants to the Company that (i) the execution, delivery and performance of
this Agreement by the Executive do not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order,
judgment or decree to which the Executive is a party or by which he is bound,
(ii) the Executive is not a party to or bound by any employment agreement,
noncompete agreement or confidentiality agreement with any other person or
entity and (iii) upon the execution and delivery of this Agreement by the
Company, this Agreement shall be the valid and binding obligation of the
Executive, enforceable in accordance with its terms. The Executive hereby
acknowledges and represents that he has consulted with independent legal
counsel regarding his rights and obligations under this Agreement and that he
fully understands the terms and conditions contained herein.
6. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
received by certified mail, return receipt requested, or sent by guaranteed
overnight courier service. Notices, demands and communications will be sent to
parties hereto at the addresses indicated below:
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<PAGE> 4
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<PAGE> 5
Notices to the Executive:
Marc E. Trubitz
110 Pleasant Valley Road
Harrisonburg, Virginia 22801
With a Copy to:
James L. Turner, Esquire
Williams, Parker, Harrison, Dietz & Getzen
200 South Orange Avenue
Sarasota, Florida 34236
Notices to the Company:
MST Enterprises, Inc.
c/o National Equipment Services, Inc.
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attn.: Kevin P. Rodgers
With a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attn.: Sanford E. Perl
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.
7. Severability. 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 is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
8. Complete Agreement. This Agreement, those documents expressly referred
to herein and other documents of even date herewith embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any
way.
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<PAGE> 6
9. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party.
10. Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
11. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of and be enforceable by the Executive, the Company and their
respective heirs, successors and assigns, except that the Executive may not
assign his rights or delegate his obligations hereunder without the prior
written consent of the Company.
12. Choice of Law; Venue; Attorneys' Fees. All issues and questions
concerning the construction, validity, enforcement and interpretation of this
Agreement and the exhibits and schedules hereto shall be governed by, and
construed in accordance with, the laws of the State of Virginia, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Virginia or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Virginia.
The parties agree that any controversy, claim, or dispute arising out of or
relating to the terms and conditions of this Agreement shall be settled by
litigation initiated in a federal or state court having a situs in the county
for Harrisonburg, Virginia. The parties consent to the jurisdiction of these
courts for this purpose. The prevailing party shall be entitled to all costs
(including reasonable attorneys' fees and expenses) resulting from such dispute
or controversy.
13. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and the Executive,
and no course of conduct or failure or delay in enforcing the provisions of
this Agreement shall affect the validity, binding effect or enforceability of
this Agreement.
* * * * *
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first written above.
MST ENTERPRISES, INC. (d/b/a EQUIPCO SALES
& RENTALS)
By: /s/ Kevin Rodgers
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Its: CEO
----------------------
/s/ Marc S. Trubitz
-----------------------------
Marc S. Trubitz
<PAGE> 8
EXHIBIT A
July 17, 1997
Mark Trubitz
President
EQUIPCO
110 Pleasant Valley Road
Harrisonburg, VA 22801
RE: BONUS PLAN FOR 12 MONTHS ENDING AUGUST 31, 1998
Set forth below is your bonus plan for the 12 month period beginning August 1,
1997 and ending July 31, 1998. The plan assumes that NES' acquisition of
EQUIPCO is concluded sometime during July 1997.
The bonus plan has three levels of probability: MAXIMUM; TARGET; and THRESHOLD.
The thought behind the plan is to set a MAXIMUM goal that has a reasonable
probability of being earned in 3 out of 10 years. The TARGET goal should be
earned in 6 out of 10 years and the THRESHOLD goal should be earned in 8 out of
10 years.
Your MAXIMUM bonus will be 45% of base salary with a TARGET of 30% and a
THRESHOLD of 15%. The bonus will be based on EBITDA (earnings before income
taxes, depreciation and amortization) growth calculated over the trailing 12
months for the period ending July 31, 1997, based on OCBOA consistently
applied. The MAXIMUM, TARGET and THRESHOLD amounts would be as follows based
on a base pay of $100,000.
<TABLE>
<S> <C>
MAXIMUM bonus at 45% $45,000
TARGET bonus at 30% $30,000
THRESHOLD bonus at 15% $15,000
</TABLE>
The bonus for performance falling anywhere among the three levels will be
adjusted on a pro rata basis. Of course, the budget will be flexed for new
acquisitions and significant, unbudgeted projects, i.e., approved start ups.
An amount representing the estimated bonus payable under this plan (as well as
any others affecting EQUIPCO employees) must be accrued just like any other
expense. For example, in order for the MAXIMUM bonus level to be achieved, the
EBITDA target must be met or exceeded after the proper accrual is made for any
amounts earned under EQUIPCO's bonus plans.
The bonus will be paid within thirty (30) days of the close of the 12 month
period ending July 31, 1998.
EBITDA BUDGET
The bonus will be determined based on the EBITDA achieved from existing
operations for the 12 month period ending July 31, 1998. The MAXIMUM bonus for
this component shall be paid upon achieving an EBITDA equal to the trailing 12
month EBITDA (for the period ending July 31, 1997)
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<PAGE> 9
plus 20%; TARGET bonus at EBITDA plus 15% and THRESHOLD bonus at EBITDA plus
10%. The EBITDA shall be measured before head office charges or fees, if any,
from NES.
Based on your base pay of $100,000, your bonus for EBITDA performance would be
determined as follows:
<TABLE>
<S> <C>
MAXIMUM bonus if EBITDA for $45,000
8/1/97-7/31/98 equals or exceeds 120%
of EBITDA for 8/1/96-7/31/97
TARGET bonus if EBITDA for 8/1/97- $30,000
7/31/98 equals or exceeds 115% of
EBITDA for 8/1/96-7/31/97
THRESHOLD bonus if EBITDA for $15,000
8/1/97-7/31/98 equals or exceeds
100% of EBITDA for 8/1/96-7/31/97
</TABLE>
We all are looking forward to a long lasting and mutually beneficial
relationship
Very truly yours,
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<PAGE> 1
Exhibit 10.60
STOCK TRANSFER AGREEMENT
THIS STOCK TRANSFER AGREEMENT, dated as of July 18, 1997 (this
"Agreement"), is made by and among National Equipment Services, Inc., a
Delaware corporation (the "Company"), Golder, Thoma, Cressey, Rauner Fund V,
L.P., a Delaware limited partnership ("GTCR"), Kevin Rodgers ("Rodgers"),
Dennis O'Connor ("O'Connor") and Paul Ingersoll ("Ingersoll," and together with
GTCR, Rodgers and O'Connor referred to herein as the "Existing Stockholders")
and Marc S. Trubitz ("M. Trubitz"), Suellen Trubitz ("S. Trubitz, and together
with M. Trubitz, the "Founders"), Douglas Randall Brevard, Linda Sue Hughes,
and Donald Stewart (collectively with the Founders, the "Executives" and
individually, an "Executive"). Except as otherwise indicated, capitalized
terms used herein are defined in Section 6 hereof.
WHEREAS, pursuant to a Stock Purchase Agreement, dated as of July 18, 1997
(the "Acquisition Agreement"), by and among the Company, the Founders and MST
Enterprises, Inc. (d/b/a Equipco Sales & Rentals) ("Equipco"), the Company will
purchase (the "Acquisition") all of the outstanding stock of Equipco.
WHEREAS, pursuant to a Noncompetition Agreement, dated as of the date
hereof (the "Noncompetition Agreement"), by and among the Company and the
Executives, the Company agreed to issue to the Executives an aggregate of 145.5
shares of its Class A Common Stock, par value $.01 per share and 450 shares of
its Class B Common Stock, par value $.01 per share (collectively, the
"Shares").
WHEREAS, the execution and delivery of the this Agreement is a condition
to the obligation of the Company to consummate the Acquisition pursuant to the
Acquisition Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties to this Agreement hereby agree as follows:
1. Joinder. The Company, the Executives and the Existing Stockholders
hereby agree that the Stockholders Agreement and the Registration Agreement are
hereby amended by adding each Executive as a party thereto and as a Stockholder
under the Stockholders Agreement. Each Executive hereby agrees to be subject
to all of the rights and obligations and to be bound by all of the terms and
conditions set forth in the Stockholders Agreement and the Registration
Agreement to the same extent as if such Executive was originally a party
thereto. The Company and the Existing Stockholders hereby waive any and all
requirements and/or breaches arising under the Stockholders Agreement, the
Registration Agreement and any agreements mentioned therein resulting from the
consummation of the transactions contemplated herein.
2. Restrictions on Transfer of Shares. In addition to the restrictions on
transfer set forth in the Stockholders Agreement, the holders of the Shares
shall not sell, transfer, assign
<PAGE> 2
pledge or otherwise dispose of (a "Transfer") any interest in any of the Shares
except pursuant to the following provisions:
(a) Retention of Shares. Until the fifth anniversary of the date of this
Agreement, each holder of Shares shall not Transfer any interest in any of the
Shares, except for Exempt Transfers (as defined in Section 2(b) below).
(b) Transfer of Shares. Subject to Section 2(a) above and subject to any
other restrictions set forth in the Stockholders Agreement, each holder of
Shares shall not Transfer any interest in any of the Shares, except pursuant to
(i) the provisions of Section 3 below or the provisions of Section 5 or 7 of
the Stockholders Agreement ("Exempt Transfers") or (ii) the provisions of this
Section 2; provided that in no event shall any Transfer of Shares pursuant to
this Section 2 be made for any consideration other than cash payable upon
consummation of such Transfer or in installments over time. Prior to making
any Transfer other than an Exempt Transfer, each holder of Shares proposing to
Transfer Shares (a "Selling Holder") will give written notice (the "Sale
Notice") to the Company and GTCR. The Sale Notice will disclose in reasonable
detail the identity of the prospective transferee(s), the number and class of
Shares to be transferred and the terms and conditions of the proposed Transfer.
The Selling Holder will not consummate any Transfer until 110 days after the
Sale Notice has been given to the Company and to GTCR, unless the parties to
the Transfer have been finally determined pursuant to this Section 2 prior to
the expiration of such 110-day period (the date of the first to occur of such
events is referred to herein as the "Authorization Date").
(c) First Refusal Rights. The Company may elect to purchase all (but not
less than all) of the Shares to be transferred upon the same terms and
conditions as those set forth in the Sale Notice by delivering a written notice
of such election to the Selling Holder and GTCR within 60 days after the Sale
Notice has been given to the Company. If the Company has not elected to
purchase all of the Shares to be Transferred, GTCR may elect to purchase all
(but not less than all) of the Shares to be transferred upon the same terms and
conditions as those set forth in the Sale Notice by giving written notice of
such election to the Selling Holder within 90 days after the Sale Notice has
been given to GTCR. If neither the Company nor GTCR elect to purchase all of
the Shares specified in the Sale Notice, the Selling Holder may Transfer the
Shares specified in the Sale Notice at a price and on terms no more favorable
to the transferee(s) thereof than specified in the Sale Notice during the
60-day period immediately following the Authorization Date. Any Shares not
transferred within such 60-day period will be subject to the provisions of this
Section 2(c) upon subsequent Transfer. The Company may pay the purchase price
for such shares by offsetting amounts outstanding under any bona fide debts
owed by the Selling Holder to the Company.
(d) Certain Permitted Transfers. The restrictions contained in this
Section 2 will not apply with respect to transfers of Shares pursuant to
applicable laws of descent and distribution; provided that such restrictions
will continue to be applicable to the Shares after any such transfer and the
transferees of such Shares have agreed in writing to be bound by the provisions
of this Agreement.
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<PAGE> 3
(e) Termination of Restrictions. The restrictions on the Transfer of
Shares set forth in this Section 2 will continue with respect to each Share
until the date on which such Share has been transferred in a transaction
permitted by this Section 2 (except in a transaction contemplated by Section
2(d)); provided that in any event such restrictions will terminate on the first
to occur of a Sale of the Company or a Public Offering.
3. Repurchase of Shares.
(a) In the event an Executive ceases to be employed by the Company or its
subsidiaries for any reason (the "Termination"), the Shares purchased by such
Executive hereunder (the "Repurchased Shares") (whether held by such Executive
or one or more of such Person's permitted transferees, other than the Company,
GTCR or an affiliate of the Company or GTCR) will be subject to repurchase by
the Company and GTCR pursuant to the terms and conditions set forth in this
Section 3 (the "Repurchase Option"); provided that with respect to the Shares
purchased hereunder by the Founders, a "Termination" shall be deemed to have
occurred only if either Founder breaches his or her obligations under the
Noncompetition Agreement, in which case the "Repurchased Shares" shall be the
Shares purchased hereunder by both Founders (whether held by either or them or
one or more of their permitted transferees, other than the Company, GTCR or an
affiliate of the Company or GTCR).
(b) Upon exercise of the Repurchase Option, the purchase price for the
Repurchased Shares shall be as follows:
(i) in the case of each Executive other than the Founders, (A) if the
Termination occurs on or prior to the fifth anniversary of the date
hereof, then the purchase price for each Repurchased Share shall be the
Original Cost for such share, and (B) if the Termination occurs after the
fifth anniversary of the date hereof, then the purchase price for each
Repurchased Share shall be the greater of the Original Cost or Fair Market
Value for such share; and
(ii) in the case of the Founders, the purchase price for each
Repurchased Share shall be the Original Cost for such share.
(c) The Company's board of directors (the "Board") may elect to purchase
all or any portion of the Repurchased Shares by delivering written notice (the
"Repurchase Notice") to the holder or holders of the Repurchased Shares within
90 days after the Termination. The Repurchase Notice will set forth the number
of Repurchased Shares to be acquired from each holder, the aggregate
consideration to be paid for such shares and the time and place for the closing
of the transaction.
(d) If for any reason the Company does not elect to purchase all of the
Repurchased Shares pursuant to the Repurchase Option, GTCR shall be entitled to
exercise the Repurchase Option for the Repurchased Shares the Company has not
elected to purchase (the "Avail-
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<PAGE> 4
able Shares"). As soon as practicable after the Company has determined that
there will be Available Shares, but in any event within 45 days after the
Termination, the Company shall give written notice (the "Option Notice") to
GTCR setting forth the number of Available Shares and the purchase price for
the Available Shares. GTCR may elect to purchase any or all of the Available
Shares by giving written notice to the Company within one month after the
Option Notice has been given by the Company. As soon as practicable, and in
any event within ten days after the expiration of the one-month period set
forth above, the Company shall notify each holder of Repurchased Shares as to
the number of Repurchased Shares being purchased from such holder by GTCR (the
"Supplemental Repurchase Notice"). At the time the Company delivers the
Supplemental Repurchase Notice to the holder(s) of Repurchased Shares, the
Company shall also deliver written notice to GTCR setting forth the number of
shares GTCR is entitled to purchase, the aggregate purchase price and the time
and place of the closing of the transaction.
(e) The closing of the purchase of the Repurchased Shares pursuant to the
Repurchase Option shall take place on the date designated by the Company in the
Repurchase Notice or Supplemental Repurchase Notice, which date shall not be
more than one month nor less than five days after the delivery of the later of
either such notice to be delivered. The Company and/or GTCR will pay for the
Repurchased Shares to be purchased pursuant to the Repurchase Option by
delivery of a check or wire transfer of funds in the aggregate amount of the
purchase price for such shares. With respect to any purchase of Repurchased
Shares on or prior to the fifth anniversary of the date hereof from an
Executive (other than the Founders), (i) a fraction of the purchase price for
the Repurchased Shares will be paid to the holders of the Repurchased Shares,
the numerator of which is the number of days which elapsed between the date
hereof and the date of the Termination, and the denominator of which is 1,825,
and (ii) the balance of the purchase price for the Repurchased Shares will be
paid to the Founders (50% to each Founder). In all other cases, the purchase
price for the Repurchased Shares will be paid to the holders of such shares.
In any event, the Company may pay the purchase price for such shares by
offsetting amounts outstanding under any bona fide debts owed by the holder of
such Repurchased Shares to the Company. The Company and GTCR will be entitled
to receive representations and warranties from the sellers as to their title to
the Repurchased Shares being sold and to require all sellers' signatures be
guaranteed.
4. Section 83(b) Elections. Within 30 days after the date hereof, each
Executive will make an effective election with the Internal Revenue Service
under Section 83(b) of the Internal Revenue Code and the regulations
promulgated thereunder in the form of Exhibit A attached hereto.
5. Legend. The certificates representing the Shares will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, CERTAIN RIGHTS OF FIRST REFUSAL AND CERTAIN
OTHER AGREEMENTS SET FORTH IN A STOCK TRANSFER AGREEMENT BETWEEN THE
COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY DATED AS OF JULY 18, 1997.
A COPY OF SUCH
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<PAGE> 5
AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL
PLACE OF BUSINESS WITHOUT CHARGE."
6. Definitions.
"Fair Market Value" of each Share means the value agreed upon by the
holder thereof and the Board; provided that if the holder thereof and the Board
are unable to agree upon such value, then the holder thereof and the Company
will share the cost, on an equal basis, of a mutually acceptable business
appraiser whose determination will be binding.
"Original Cost" means with respect to each share of Class A Common Stock,
$1,000 (as proportionately adjusted for all subsequent stock splits, stock
dividends and other recapitalizations) and means with respect to each share of
Class B Common Stock, $10 (as proportionately adjusted for all subsequent stock
splits, stock dividends and other recapitalizations).
"Person" means an individual, a partnership, a limited liability company,
a joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"Public Offering" means the sale in an underwritten public offering
registered under the Securities Act of 1933, as amended from time to time, of
shares of the Company's capital stock approved by the Board.
"Registration Agreement" means that certain Registration Agreement, dated
as of June 4, 1996, among the Company and others, as the same may be amended,
supplemented, restated, modified from time to time.
"Sale of the Company" means any transaction or series of transactions
pursuant to which any independent third party or group of independent third
parties in the aggregate acquire(s) (i) capital stock of the Company possessing
the voting power (other than voting rights accruing only in the event of a
default, breach or event of noncompliance) to elect a majority of the Company's
board of directors (whether by merger, consolidation, reorganization,
combination, sale or transfer of the Company's capital stock, shareholder or
voting agreement, proxy, power of attorney or otherwise) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis.
"Stockholders Agreement" means that certain Stockholders Agreement, dated
as of June 4, 1996, among the Company and others, as the same may be amended,
supplemented, restated, modified from time to time.
7. Miscellaneous.
(a) Remedies. The holders of Shares acquired hereunder (directly or
indirectly) will have all of the rights and remedies set forth in this
Agreement, the Certificate of Incorporation,
- 5 -
<PAGE> 6
and all of the rights and remedies which such holders have been granted at any
time under any other agreement or contract, and all of the rights and remedies
which such holders have under any law. Any Person having any rights under any
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages by reason of any breach of any provision of
this Agreement, and to exercise all other rights granted by law.
(b) Amendments and Waivers. Except as otherwise provided herein, no
modification, amendment or waiver of any provision hereof will be effective
against the Company or the Executives unless such modification, amendment or
waiver is approved in writing by each of the Company and the Executives. The
failure of any party to enforce any provision of this Agreement or under any
agreement contemplated hereby or under the Certificate of Incorporation or the
Company's bylaws will in no way be construed as a waiver of such provisions and
will not affect the right of such party thereafter to enforce each and every
provision of this Agreement, any agreement referred to herein, the Certificate
of Incorporation, or the Company's bylaws in accordance with their terms.
(c) Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by any party in connection
herewith will survive the execution and delivery of this Agreement, regardless
of any investigation made by the Company or the Executives or on any of their
behalves.
(d) Successors and Assigns.
(i) Except as otherwise expressly provided herein, all covenants and
agreements contained in this Agreement by or on behalf of any of the
parties hereto will bind and inure to the benefit of the respective
successors and assigns of such parties whether so expressed or not. In
addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Executives' benefit as the
Executives or holders of Shares, as the case may be, are also for the
benefit of and enforceable by any subsequent holder(s) of the Executives'
Shares.
(ii) If a sale, transfer, assignment or other disposition of any
Shares is made in accordance with the provisions of this Agreement to any
Person, such Person shall, at or prior to the time such securities are
acquired, execute a counterpart of this Agreement with such modifications
thereto as may be necessary to reflect such acquisition, and such other
documents as are necessary to confirm such Person's agreement to become a
party to, and to be bound by, all covenants, terms and conditions of this
Agreement, the Stockholders Agreement and the Registration Agreement, each
as theretofore amended.
(e) Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable under any applicable law or rule in any jurisdiction,
such provision will be ineffective only to the extent of such invalidity,
illegality or
- 6 -
<PAGE> 7
unenforceability in such jurisdiction, without invalidating the remainder of
this Agreement in such jurisdiction or any provision hereof in any other
jurisdiction.
(f) Counterparts. This Agreement may be executed simultaneously in
separate counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one
and the same Agreement.
(g) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
(h) Governing Law. The corporate laws of the State of Delaware will
govern all questions concerning the relative rights of the Company and its
securityholders. All other questions concerning the construction, validity and
interpretation of this Agreement will be governed by and construed in
accordance with the domestic laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Illinois or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Illinois.
(i) Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
received by certified mail, return receipt requested, or sent by guaranteed
overnight courier service. Notices, demands and communications will be sent to
parties hereto at the addresses indicated below:
Notices to the Company:
National Equipment Services, Inc.
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attention: Chief Executive Officer
- 7 -
<PAGE> 8
With a copy to:
Kirkland and Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Sanford E. Perl
Notices to an Executive or
Existing Stockholder:
To the address set forth on the
Company's books and records
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
* * * * *
- 8 -
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Stock Transfer
Agreement on the day and year first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
-----------------------------------
Its: CEO
-----------------------------------
/s/ Marc S. Trubitz
-----------------------------------------
MARC S. TRUBITZ
/s/ Suellen Trubitz
-----------------------------------------
SUELLEN TRUBITZ
/s/ Douglas Randall Brevard
-----------------------------------------
DOUGLAS RANDALL BREVARD
/s/ Linda Sue Hughes
-----------------------------------------
LINDA SUE HUGHES
/s/ Donald Stewart
-----------------------------------------
DONALD STEWART
GOLDER, THOMA, CRESSEY, RAUNER
FUND V, L.P.
By: GTCR V, L.P.
Its: General Partner
By: Golder, Thoma, Cressey, Rauner, Inc.
Its: General Partner
By: /s/ Carl D. Thoma
----------------------------------
Its: Principal
/s/ Kevin Rodgers
-----------------------------------------
KEVIN RODGERS
/s/ Dennis O'Connor
-----------------------------------------
DENNIS O'CONNOR
/s/ Paul R. Ingersoll
-----------------------------------------
PAUL INGERSOLL
<PAGE> 10
EXHIBIT A
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(B) OF THE
INTERNAL REVENUE CODE
The undersigned was granted shares of Class A Common Stock, par value $.01
per share and shares of Class B Common Stock, par value $.01 per share (the
"Shares"), of National Equipment Services, Inc. (the "Company") on July 18,
1997. Under certain circumstances, the Company has the right to repurchase the
Shares at $1,000 per share for the Class A Common Stock and $10.00 per share
for the Class B Common Stock from the undersigned (or from the holder of the
Shares, if different from the undersigned) should the undersigned cease to be
employed by the Company and its subsidiaries. Hence, the Shares are subject to
a substantial risk of forfeiture and are nontransferable. The undersigned
desires to make an election to have the Shares taxed under the provision of
Code Section 83(b) at the time he or she was granted the Shares.
Therefore, pursuant to Code Section 83(b) and Treasury Regulation Section
1.83-2 promulgated thereunder, the undersigned hereby makes an election, with
respect to the Shares (described below), to report as taxable income for
calendar year 1997 the Shares' fair market value on July 18, 1997.
The following information is supplied in accordance with Treasury
Regulation Section 1.83-2(e):
1. The name, address and social security number of the undersigned:
______________________
______________________
______________________
ss#: _________________
2. A description of the property with respect to which the election is
being made: 16.167 shares of Class A Common Stock, par value $.01 per share and
50 shares of Class B Common Stock, par value $.01 per share, of National
Equipment Services, Inc.
3. The date on which the property was transferred: July 18, 1997. The
taxable year for which such election is made: calendar 1997.
4. The restrictions to which the property is subject: If during the first
five years after the grant of the Shares the undersigned ceases to be employed
by the Company or any of its subsidiaries, the Shares shall be subject to
repurchase by the Company at $1,000 per share for the Class A Common Stock and
$10.00 per share for the Class B Common Stock.
5. The fair market value on July 18, 1997 of the property with respect to
which the election is being made, determined without regard to any lapse
restrictions: $1,000 per share of Class A Common Stock and $10 per share of
Class B Common Stock.
6. The amount paid for such property: $0.
A copy of this election has been furnished to the Secretary of the Company
pursuant to Treasury Regulations Section 1.83-2(e)(7).
Dated: July 18, 1997 ______________________________
[Executive]
<PAGE> 11
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(B) OF THE
INTERNAL REVENUE CODE
The undersigned was granted shares of Class A Common Stock, par value $.01
per share and shares of Class B Common Stock, par value $.01 per share (the
"Shares"), of National Equipment Services, Inc. (the "Company") on July 18,
1997. Under certain circumstances, the Company has the right to repurchase the
Shares at $1,000 per share for the Class A Common Stock and $10.00 per share
for the Class B Common Stock from the undersigned (or from the holder of the
Shares, if different from the undersigned) should the undersigned cease to be
employed by the Company and its subsidiaries. Hence, the Shares are subject to
a substantial risk of forfeiture and are nontransferable. The undersigned
desires to make an election to have the Shares taxed under the provision of
Code Section 83(b) at the time he or she was granted the Shares.
Therefore, pursuant to Code Section 83(b) and Treasury Regulation Section
1.83-2 promulgated thereunder, the undersigned hereby makes an election, with
respect to the Shares (described below), to report as taxable income for
calendar year 1997 the Shares' fair market value on July 18, 1997.
The following information is supplied in accordance with Treasury
Regulation Section 1.83-2(e):
1. The name, address and social security number of the undersigned:
Douglas Randall Brevard
840 Canterbury Court
Harrisonburg, Virginia 22801
ss#: ###-##-####
2. A description of the property with respect to which the election is
being made: 16.167 shares of Class A Common Stock, par value $.01 per share and
50 shares of Class B Common Stock, par value $.01 per share, of National
Equipment Services, Inc.
3. The date on which the property was transferred: July 18, 1997. The
taxable year for which such election is made: calendar 1997.
4. The restrictions to which the property is subject: If during the first
five years after the grant of the Shares the undersigned ceases to be employed
by the Company or any of its subsidiaries, the Shares shall be subject to
repurchase by the Company at $1,000 per share for the Class A Common Stock and
$10.00 per share for the Class B Common Stock.
5. The fair market value on July 18, 1997 of the property with respect to
which the election is being made, determined without regard to any lapse
restrictions: $1,000 per share of Class A Common Stock and $10 per share of
Class B Common Stock.
6. The amount paid for such property: $0.
A copy of this election has been furnished to the Secretary of the Company
pursuant to Treasury Regulations Section 1.83-2(e)(7).
Dated: July 18, 1997 ______________________________
Douglas Randall Brevard
<PAGE> 12
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(B) OF THE
INTERNAL REVENUE CODE
The undersigned was granted shares of Class A Common Stock, par value $.01
per share and shares of Class B Common Stock, par value $.01 per share (the
"Shares"), of National Equipment Services, Inc. (the "Company") on July 18,
1997. Under certain circumstances, the Company has the right to repurchase the
Shares at $1,000 per share for the Class A Common Stock and $10.00 per share
for the Class B Common Stock from the undersigned (or from the holder of the
Shares, if different from the undersigned) should the undersigned cease to be
employed by the Company and its subsidiaries. Hence, the Shares are subject to
a substantial risk of forfeiture and are nontransferable. The undersigned
desires to make an election to have the Shares taxed under the provision of
Code Section 83(b) at the time he or she was granted the Shares.
Therefore, pursuant to Code Section 83(b) and Treasury Regulation Section
1.83-2 promulgated thereunder, the undersigned hereby makes an election, with
respect to the Shares (described below), to report as taxable income for
calendar year 1997 the Shares' fair market value on July 18, 1997.
The following information is supplied in accordance with Treasury
Regulation Section 1.83-2(e):
1 The name, address and social security number of the undersigned:
Linda Sue Hughes
Route 2, Box 172A
Harrisonburg, Virginia 22801
ss#: ###-##-####
2 A description of the property with respect to which the election is
being made: 16.167 shares of Class A Common Stock, par value $.01 per share and
50 shares of Class B Common Stock, par value $.01 per share, of National
Equipment Services, Inc.
3 The date on which the property was transferred: July 18, 1997. The
taxable year for which such election is made: calendar 1997.
4 The restrictions to which the property is subject: If during the first
five years after the grant of the Shares the undersigned ceases to be employed
by the Company or any of its subsidiaries, the Shares shall be subject to
repurchase by the Company at $1,000 per share for the Class A Common Stock and
$10.00 per share for the Class B Common Stock.
5 The fair market value on July 18, 1997 of the property with respect to
which the election is being made, determined without regard to any lapse
restrictions: $1,000 per share of Class A Common Stock and $10 per share of
Class B Common Stock.
6 The amount paid for such property: $0.
A copy of this election has been furnished to the Secretary of the Company
pursuant to Treasury Regulations Section 1.83-2(e)(7).
Dated: July 18, 1997 ______________________________
Linda Sue Hughes
<PAGE> 13
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(B) OF THE
INTERNAL REVENUE CODE
The undersigned was granted shares of Class A Common Stock, par value $.01
per share and shares of Class B Common Stock, par value $.01 per share (the
"Shares"), of National Equipment Services, Inc. (the "Company") on July 18,
1997. Under certain circumstances, the Company has the right to repurchase the
Shares at $1,000 per share for the Class A Common Stock and $10.00 per share
for the Class B Common Stock from the undersigned (or from the holder of the
Shares, if different from the undersigned) should the undersigned cease to be
employed by the Company and its subsidiaries. Hence, the Shares are subject to
a substantial risk of forfeiture and are nontransferable. The undersigned
desires to make an election to have the Shares taxed under the provision of
Code Section 83(b) at the time he or she was granted the Shares.
Therefore, pursuant to Code Section 83(b) and Treasury Regulation Section
1.83-2 promulgated thereunder, the undersigned hereby makes an election, with
respect to the Shares (described below), to report as taxable income for
calendar year 1997 the Shares' fair market value on July 18, 1997.
The following information is supplied in accordance with Treasury
Regulation Section 1.83-2(e):
1. The name, address and social security number of the undersigned:
Donald Stewart
982 Misty Court
Harrisonburg, Virginia 22801
ss#: ###-##-####
2. A description of the property with respect to which the election is
being made: 16.166 shares of Class A Common Stock, par value $.01 per share and
50 shares of Class B Common Stock, par value $.01 per share, of National
Equipment Services, Inc.
3. The date on which the property was transferred: July 18, 1997. The
taxable year for which such election is made: calendar 1997.
4. The restrictions to which the property is subject: If during the first
five years after the grant of the Shares the undersigned ceases to be employed
by the Company or any of its subsidiaries, the Shares shall be subject to
repurchase by the Company at $1,000 per share for the Class A Common Stock and
$10.00 per share for the Class B Common Stock.
5. The fair market value on July 18, 1997 of the property with respect to
which the election is being made, determined without regard to any lapse
restrictions: $1,000 per share of Class A Common Stock and $10 per share of
Class B Common Stock.
6. The amount paid for such property: $0.
A copy of this election has been furnished to the Secretary of the Company
pursuant to Treasury Regulations Section 1.83-2(e)(7).
Dated: July 18, 1997 ______________________________
Donald Stewart
<PAGE> 14
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(B) OF THE
INTERNAL REVENUE CODE
The undersigned was granted shares of Class A Common Stock, par value $.01
per share and shares of Class B Common Stock, par value $.01 per share (the
"Shares"), of National Equipment Services, Inc. (the "Company") on July 18,
1997. Under certain circumstances, the Company has the right to repurchase the
Shares at $1,000 per share for the Class A Common Stock and $10.00 per share
for the Class B Common Stock from the undersigned (or from the holder of the
Shares, if different from the undersigned) should the undersigned breaches her
obligations under the noncompetition agreement pursuant to which such Shares
were originally issued. Hence, the Shares are subject to a substantial risk of
forfeiture and are nontransferable. The undersigned desires to make an
election to have the Shares taxed under the provision of Code Section 83(b) at
the time he or she was granted the Shares.
Therefore, pursuant to Code Section 83(b) and Treasury Regulation Section
1.83-2 promulgated thereunder, the undersigned hereby makes an election, with
respect to the Shares (described below), to report as taxable income for
calendar year 1997 the Shares' fair market value on July 18, 1997.
The following information is supplied in accordance with Treasury
Regulation Section 1.83-2(e):
1. The name, address and social security number of the undersigned:
Suellen Trubitz
5070 Gulf of Mexico Drive
Longboat Key, Florida 34228
ss#: ###-##-####
2. A description of the property with respect to which the election is
being made: 48.50 shares of Class A Common Stock, par value $.01 per share and
150 shares of Class B Common Stock, par value $.01 per share, of National
Equipment Services, Inc.
3. The date on which the property was transferred: July 18, 1997. The
taxable year for which such election is made: calendar 1997.
4. The restrictions to which the property is subject: If the undersigned
breaches her obligations under the noncompetition agreement pursuant to which
such Shares were originally issued,the Shares shall be subject to repurchase by
the Company at $1,000 per share for the Class A Common Stock and $10.00 per
share for the Class B Common Stock.
5. The fair market value on July 18, 1997 of the property with respect to
which the election is being made, determined without regard to any lapse
restrictions: $1,000 per share of Class A Common Stock and $10 per share of
Class B Common Stock.
6. The amount paid for such property: $0.
A copy of this election has been furnished to the Secretary of the Company
pursuant to Treasury Regulations Section 1.83-2(e)(7).
Dated: July 18, 1997 ______________________________
Suellen Trubitz
<PAGE> 15
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(B) OF THE
INTERNAL REVENUE CODE
The undersigned was granted shares of Class A Common Stock , par value
$.01 per share and shares of Class B Common Stock, par value $.01 per share
(the "Shares"), of National Equipment Services, Inc. (the "Company") on July
18, 1997. Under certain circumstances, the Company has the right to repurchase
the Shares at $1,000 per share for the Class A Common Stock and $10.00 per
share for the Class B Common Stock from the undersigned (or from the holder of
the Shares, if different from the undersigned) should the undersigned breaches
her obligations under the noncompetition agreement pursuant to which such
Shares were originally issued. Hence, the Shares are subject to a substantial
risk of forfeiture and are nontransferable. The undersigned desires to make an
election to have the Shares taxed under the provision of Code Section 83(b) at
the time he or she was granted the Shares.
Therefore, pursuant to Code Section 83(b) and Treasury Regulation Section
1.83-2 promulgated thereunder, the undersigned hereby makes an election, with
respect to the Shares (described below), to report as taxable income for
calendar year 1997 the Shares' fair market value on July 18, 1997.
The following information is supplied in accordance with Treasury
Regulation Section 1.83-2(e):
1. The name, address and social security number of the undersigned:
Marc S. Trubitz
5070 Gulf of Mexico Drive
Longboat Key, Florida 34228
ss#: ###-##-####
2. A description of the property with respect to which the election is
being made: 48.50 shares of Class A Common Stock, par value $.01 per share and
150 shares of Class B Common Stock, par value $.01 per share, of National
Equipment Services, Inc.
3. The date on which the property was transferred: July 18, 1997. The
taxable year for which such election is made: calendar 1997.
4. The restrictions to which the property is subject: If the undersigned
breaches her obligations under the noncompetition agreement pursuant to which
such Shares were originally issued,the Shares shall be subject to repurchase by
the Company at $1,000 per share for the Class A Common Stock and $10.00 per
share for the Class B Common Stock.
5. The fair market value on July 18, 1997 of the property with respect to
which the election is being made, determined without regard to any lapse
restrictions: $1,000 per share of Class A Common Stock and $10 per share of
Class B Common Stock.
6. The amount paid for such property: $0.
A copy of this election has been furnished to the Secretary of the Company
pursuant to Treasury Regulations Section 1.83-2(e)(7).
Dated: July 18, 1997 ______________________________
Marc S. Trubitz
<PAGE> 1
Exhibit 10.61
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
July 18, 1997, by and among Marc S. Trubitz ("M. Trubitz"), Suellen Trubitz
("S. Trubitz"), Douglas Randall Brevard ("Brevard"), Linda Sue Hughes
("Hughes"), and Donald Stewart ("Stewart," collectively with Brevard, Hughes,
M. Trubitz and S. Trubitz, the "Executives" and individually, an "Executive")
and National Equipment Services, Inc., a Delaware corporation (the "Company").
The Company and the Executives are sometimes collectively referred to herein as
the "Parties" and individually as a "Party."
WHEREAS, each Executive has been an employee, officer, director and/or
stockholder of MST Enterprises, Inc. (d/b/a Equipco Sales & Rentals), a
Virginia corporation ("Equipco"), and as such, possesses special knowledge,
abilities and experience regarding the business of Equipco.
WHEREAS, the Company, Equipco and the stockholders of Equipco are parties
to a Stock Purchase Agreement, dated as of July 18, 1997 (the "Purchase
Agreement"), whereby the Company shall purchase all of the outstanding stock of
Equipco.
WHEREAS, as a condition to the consummation of the transactions
contemplated by the Purchase Agreement, the Company desires to obtain, and,
subject to the terms and conditions hereof, the Executives agree to provide,
certain representations, warranties and covenants as more fully set forth
below.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, the Parties agree as follows:
1. Noncompete Payment; Authorization of Stock. As a condition to the
Executives' obligations hereunder, the Company shall pay to the Executives an
aggregate of $50,001 in cash and authorize the issuance to the Executives of
145.5 shares of the Company's Class A Common Stock, par value $.01 per share
(the "Class A Common Stock") (which Class A Common Stock, for purposes of this
Agreement, shall be deemed to have a fair market value of $1,000 per share and
$145,500 in the aggregate) and 450 shares of the Company's Class B Common
Stock, par value $.01 per share (the "Class B Common Stock") (which Class B
Common Stock, for purposes of this Agreement, shall be deemed to have a fair
market value of $10 per share and $4,500 in the aggregate). The shares of
Class A Common Stock and Class B Common Stock being issued to the Executives
hereunder are collectively referred to herein as the "Shares." On the date
hereof, the Company shall deliver to each Executive (i) the amount of cash set
forth next to such Executive's name on the Noncompete Payment Schedule attached
hereto and (ii) the number of each class of Shares set forth next to such
Executive's name on the Noncompete Payment Schedule attached hereto
(collectively, the "Noncompete Payment"). The closing of the cash payments
hereunder and the issuance of the Shares hereunder (the "Closing") will take
place at the offices of Kirkland &
<PAGE> 2
Ellis, 200 East Randolph Drive, Chicago, Illinois 60601 on the date hereof.
At the Closing, the Company will deliver to each Executive (i) the cash portion
of such Executive's Noncompete Payment by company check and (ii) the stock
portion of such Executive's Noncompete Payment by delivery of certificates
evidencing the number and class of Shares to be issued to such Executive,
issued in the name of such Executive.
2. Confidential Information. Each Executive acknowledges that the
information, observations and data obtained by him or her while employed by
Equipco or the Company and its affiliates concerning the business or affairs of
Equipco and/or the Company or any of its affiliates ("Confidential
Information") are the property of the Company or such affiliate. Therefore,
each Executive agrees that he or she shall not disclose to any unauthorized
person or use for his or her own purposes, except in connection with the
Purchase Agreement, any Confidential Information without the prior written
consent of the Chief Executive Officer of the Company (the "CEO"), unless and
to the extent that (i) the aforementioned matters are publicly available other
than as a result of such Executive's acts or omissions, (ii) are readily
ascertainable by proper means by the public, or (iii) any Executive is required
by law to disclose such information. Each Executive shall deliver to the
Company at any time the Company may request, all memoranda, notes, plans,
records, reports, computer tapes, printouts and software and other documents
and data (and copies thereof) relating to the Confidential Information, Work
Product (as defined below) or the business of Equipco and/or the Company or any
of its affiliates which he or she may then possess or have under his control;
provided, however, that the Company shall continue to comply with Section 11.9
of the Purchase Agreement with regard to such documents and data. Officers,
directors, stockholders, employees, affiliates, agents, and representatives of
Equipco or of the Company shall not be deemed "unauthorized persons" for
purposes of this Agreement.
3. Inventions and Patents. Each Executive acknowledges that all
inventions, innovations, improvements, developments, methods, designs,
analyses, drawings, reports and all similar or related information (whether or
not patentable) which relate to Equipco's or the Company's or any of its
affiliates' actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by such Executive while employed by Equipco or the Company or any of its
affiliates ("Work Product") belong to the Company or such affiliate. Each
Executive shall promptly disclose such Work Product to the CEO and perform all
actions reasonably requested by the CEO (regardless of when requested) to
establish and confirm such ownership (including, without limitation,
assignments, consents, powers of attorney and other instruments).
4. Non-Compete, Non-Solicitation.
(a) In consideration of the Noncompete Payment to be paid to each
Executive hereunder, such Executive acknowledges that in the course of his or
her employment with Equipco he or she has become familiar with, and in the
course of his or her employment with the Company he or she shall become
familiar with, Equipco's and the Company's trade secrets and with other
Confidential Information concerning Equipco and the Company and its affiliates
and that his or her
- 2 -
<PAGE> 3
services have been and shall be of special, unique and extraordinary value to
Equipco and/or the Company and its affiliates. Therefore, in order to induce
the Company to consummate the transaction contemplated by the Purchase
Agreement, each Executive agrees that, during the five-year period commencing
on the date hereof (the "Noncompete Period"), he or she shall not directly or
indirectly own any interest in, manage, control, participate in, consult with
or render services for any equipment rental or maintenance business within a
100-mile radius of Equipco's business premises at 110 Pleasant Valley Road,
Harrisonburg, Virginia (other than on behalf of, and at the direction of, the
Company). Nothing herein shall prohibit any Executive from being a passive
owner of not more than five percent (5%) of the outstanding stock of any class
of a corporation which is publicly traded, so long as such Executive has no
active participation in the business of such corporation.
(b) During the Noncompete Period, each Executive shall not directly or
indirectly through another entity (i) knowingly induce or attempt to induce any
employee of the Company or any of its affiliates to leave the employ of the
Company or such affiliate when the Company or any of its affiliates desire to
retain that person's services or (ii) knowingly induce or attempt to induce any
customer, supplier, licensee, licensor, franchisee or other business relation
of the Company or any of its affiliates to cease doing business with the
Company or such affiliate, or in any way interfere intentionally or in bad
faith with the relationship between any such customer, supplier, licensee or
business relation and the Company or any of its affiliates (including, without
limitation, making any negative statements or communications about the Company
or its affiliates intentionally or in bad faith).
(c) If, upon or in contemplation of a Sale of the Company (as defined in
the Stock Transfer Agreement, dated as of the date hereof, among the Company,
the Executives, and others signatories thereto) with respect to the Company or
Equipco, the employment of Brevard, Hughes or Stewart by Equipco is terminated
or, if after such Sale of the Company, the employment of Brevard, Hughes or
Stewart is terminated in connection with a refusal to relocate from
Harrisonburg, then, for such terminated Executive, the Noncompete Period shall
also terminate at the time of such termination of employment.
5. Securities Act Legend. The certificates representing the Shares
will bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY
ISSUED AS OF JULY 18, 1997, HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER."
- 3 -
<PAGE> 4
No holder of Shares may sell, transfer, assign pledge or otherwise dispose of
any interest in any Shares (except pursuant to an effective registration
statement under the Securities Act of 1933, as amended) without first
delivering to the Company an opinion of counsel (reasonably acceptable in form
and substance to the Company) that neither registration nor qualification under
the Securities Act of 1933, as amended and applicable state securities laws is
required in connection with such transfer.
6. Executives' Representations and Warranties. Each Executive hereby
represents and warrants to and covenants and agrees with the Company that:
(a) such Executive is acquiring the Shares issued hereunder or acquired
pursuant hereto for his or her own account with the present intention of
holding such securities for investment purposes and that he or she has no
intention of selling such securities in a public distribution in violation of
the federal securities laws or any applicable state securities laws;
(b) such Executive has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the securities issued hereunder
and has had full access to such other information concerning the Company as
such Executive may have requested and that in making his or her decision to
invest in the securities being issued hereunder he or she is not in any way
relying on the fact that any other Person has decided to invest in the
securities;
(c) such Executive (i) is an "accredited investor" as defined in Rule
501(a) under the Securities Act of 1933, as amended or (ii) by reason of his
or her business and financial experience, and the business and financial
experience of those retained by him or her to advise him or her with respect to
his or her investment in the securities being issued hereunder, he or she,
together with such advisors, has such knowledge, sophistication and experience
in business and financial matters so as to be capable of evaluating the merits
and risks of his or her prospective investment in such securities, is able to
bear the economic risk of such investment and, at the present time, is able to
afford a complete loss of such investment;
(d) such Executive (i) understands that the Shares have not been, and will
not be, registered under the Securities Act of 1933, as amended, or under any
state securities laws, and are being offered and sold in reliance upon federal
and state exemptions for transactions not involving any public offering, (ii)
understands that the Shares are not transferable, and (iii) is able to bear the
economic risk and lack of liquidity inherent in holding the Shares; and
(e) such Executive's execution, delivery and performance of this Agreement
does not and shall not conflict with, or result in the breach of or violation
of, any other agreement, instrument, order, judgment or decree to which such
Executive is a party or by which such Executive is bound, such Executive is not
a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any person or entity other than the Company, and
upon the execution and delivery of this Agreement, this Agreement shall be the
valid and binding obligation of such Executive, enforceable in accordance with
its terms.
- 4 -
<PAGE> 5
7. Enforcement. If, at the time of enforcement of Section 2, 3 or 4 of
this Agreement, a court holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or area.
Because each Executive's services have been and/or are unique and because each
Executive has access to Confidential Information and Work Product, the parties
hereto agree that money damages would not be an adequate remedy for any breach
of this Agreement. Therefore, in the event a breach or threatened breach of
this Agreement, the Company or its successors or assigns may, in addition to
other rights and remedies existing in their favor, apply to any court of
competent jurisdiction for specific performance and/or injunctive or other
relief in order to enforce, or prevent any violations of, the provisions hereof
as may be reasonably necessary to protect the interests of the Company in this
Agreement. Each Executive agrees that the restrictions contained in Section 4
of this Agreement are reasonable.
8. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company and its affiliates, successors and assigns and
shall be binding upon and inure to the benefit of each Executive and such
Executive's legal representatives and assigns. The Company may assign or
transfer its rights hereunder to any of its affiliates or to a successor entity
in the event of merger, consolidation or transfer or sale of all or
substantially all of the stock or assets of Equipco or the Company.
9. Modification of Waiver. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the Party against which enforcement of such amendment,
modification or waiver is sought. No course of dealing between the Parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of the Company or
any Executive in the exercise of any of their respective rights or remedies
shall operate as a waiver thereof, and no single or partial exercise by the
Company or such Executive of any such right or remedy shall preclude other or
further exercises thereof. A waiver of right or remedy on any one occasion
shall not be construed as a bar to or waiver of any such right or remedy on any
other occasion.
10. Governing Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by, and construed in accordance with, the laws of the State of Illinois,
without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Illinois or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
State of Illinois.
11. Severability. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision or term of this Agreement shall be
held to be prohibited by or invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such prohibition
- 5 -
<PAGE> 6
or invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of
this Agreement.
12. No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
13. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or
received by certified mail, return receipt requested, or sent by guaranteed
overnight courier service. Notices, demands and communications will be sent to
parties hereto at the addresses indicated below:
Notices to the Company:
National Equipment Services, Inc.
1800 Sherman, Suite 100
Evanston, Illinois 60201
Attention: Chief Executive Officer
With a copy to:
Kirkland and Ellis
200 E. Randolph Drive
Chicago, Illinois 60601
Attention: Sanford E. Perl
Notices to an Executive:
To the address set forth below
such Executive's name on the
signature pages hereto
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
14. Captions. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and shall not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement shall be enforced and construed
as if no caption had been used in this Agreement.
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<PAGE> 7
15. Counterparts. This Agreement may be executed in counterparts, any one
of which need not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same agreement.
16. Attorney's Fees. In the event of any litigation between the parties
arising out of this Agreement, the prevailing party shall be entitled to
recover all costs incurred and a reasonable attorneys' fee, including
attorneys' fees on appeal.
* * * *
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<PAGE> 8
IN WITNESS WHEREOF, the undersigned have executed this Noncompetition
Agreement as of the date first above written.
NATIONAL EQUIPMENT SERVICES, INC.
By: /s/ Kevin Rodgers
-----------------------------------
Its: CEO
-----------------------------------
/s/ Marc S. Trubitz
-----------------------------------------
MARC S. TRUBITZ
Address: 5070 Gulf of Mexico Drive
Longboat Key, Florida 34228
/s/ Suellen Trubitz
-----------------------------------------
SUELLEN TRUBITZ
Address: 5070 Gulf of Mexico Drive
Longboat Key, Florida 34228
/s/ Douglas Randall Brevard
-----------------------------------------
Douglas Randall Brevard
Address: 840 Canterbury Court
Harrisonburg, Virginia 22801
/s/ Linda Sue Hughes
-----------------------------------------
Linda Sue Hughes
Address: Route 2, Box 172A
Harrisonburg, Virginia 22801
/s/ Donald Stewart
-----------------------------------------
Donald Stewart
Address: 982 Misty Court
Harrisonburg, Virginia 22801
<PAGE> 9
NONCOMPETE PAYMENT SCHEDULE
<TABLE>
<CAPTION>
SHARES
CLASS A COMMON CLASS B COMMON
EXECUTIVE CASH NUMBER VALUE NUMBER VALUE TOTAL VALUE
<S> <C> <C> <C> <C> <C> <C>
Marc S. Trubitz $ 0 48.500 $ 48,500 150 $1,500 $50,000
Suellen Trubitz 0 48.500 48,500 150 1,500 50,000
Douglas Randall Brevard 16,667 16.167 16,167 50 500 33,334
Linda Sue Hughes 16,667 16.167 16,167 50 500 33,333
Donald Stewart 16,667 16.166 16,166 50 500 33,333
TOTAL $50,001 145.500 $145,500 450 $4,500 $200,000
</TABLE>
- 9 -
<PAGE> 1
Exhibit 10.62
LEASE AGREEMENT
THIS LEASE, made and entered into this 18th day of July 1997 by and
between MARC S. TRUBITZ & SUELLEN TRUBITZ, as Landlord, and MST ENTERPRISES,
INC. (D/B/A EQUIPCO SALES & RENTALS), a Virginia corporation, as Tenant;
W I T N E S S E T H:
In consideration of the mutual covenants and agreement hereinafter set
forth, and the rent reserved by Landlord to be paid by Tenant, Landlord hereby
leases and demises unto Tenant, and Tenant hereby does lease from Landlord that
certain real property commonly known as 110 Pleasant Valley Road, Harrisonburg,
Virginia, hereinafter more specifically described, for the terms, and at the
rentals, and upon the terms and conditions, hereinafter set forth:
1. PREMISES. The legal description of the real property leased and
demised by Landlord unto Tenant (hereinafter ("Premises") is attached as
Exhibit "A," is leased and demised together with all easements, rights and
privileges appurtenant thereto, including the right to use adjoining parking
areas, driveways, road, alleys and means for ingress and egress.
Except as specifically provided herein, the Premises is being rented to
Tenant in an "as is" condition.
2. TERM. The original (the "Original Term") of this Lease, and the
accrual of rents hereunder, shall commence on the following date: July 18,
1997 (hereinafter referred to as the "Commencement Date") and the term shall
extend for a period of five (5) years thereafter, ending at 11:59 p.m. on the
following date: July 17, 2002 ("Expiration Date"). Tenant may renew the term
of this Lease for an additional period of five (5) years (the "Renewal Term"
and together with Original Term, the "Term") by providing Landlord with notice
of such renewal one hundred eighty (180) days prior to the expiration of the
Original Term.
3. USE. The Premises may be used and occupied for any lawful purpose.
Except as specifically provided herein, Tenant, at Tenant's expense, shall
comply with all laws, ordinances, rules and regulations of governmental
authorities, now in force or which may hereafter be in force, which shall
impose any duty upon Landlord or Tenant with respect to the use, occupation or
alteration of the Premises.
4. RENT. Tenant does hereby covenant and agree to pay to Landlord, for
the use and occupancy of the Premises, without demand, set-off, or deduction,
at the times and in the manner hereinafter provided, $10,000.00 per month
during the Original Term and any renewal Term ("Base Rent"); provided that,
upon each anniversary of the date hereof during the Original Term and any
Renewal Term, the Base Rent shall be increased by three percent (3%) of the
prior year's Base Rent such that the Base Rent for each year of the Original
Term and any Renewal Term shall be as set forth in the Rental Rider attached
hereto and made a part hereof. Such Base Rent, as increase, shall be paid in
advance, without notice or invoice from Landlord, on the first day of each and
every
<PAGE> 2
month during the Term hereof. In the event such Base Rent shall be determined
under the provisions of paragraph 2 hereof to commence on a day other than the
first day of a month or the Term shall end on other than the last day of a
month, then Base Rent shall be prorated accordingly.
In addition to the Base Rent herein reserved, Tenant shall also pay the
amount of any use or sales tax on said rental imposed by the State of Virginia
and any federal or local government, which taxes and other assessments shall be
paid at the same time and in the same manner as each payment of rent.
5. INTENTIONALLY OMITTED.
6. TAXES AND ASSESSMENTS. During the Term, Tenant shall pay any and all
ad valorem taxes and assessments for Tenant's personalty and business equipment
on the Premises. Tenant shall also pay as additional rent all ad valorem real
property taxes and general and special assessments levied or assessed against
the Premises. Upon receipt of each bill for any tax or assessment against the
Premises, Landlord shall advise Tenant in writing of the amount of such tax or
assessment, and Tenant shall pay such tax or assessment to Landlord together
with an in addition to and as a part of the monthly installment of Base Rent
next becoming due. Tenant's share of any tax or assessment for the year in
which the Lease Term commences shall be prorated from the Commencement Date,
and Tenant's share of any such tax or assessment for the year in which the
Lease Term ends shall be prorated from the Commencement Date, and Tenant's
share of any such tax or assessment for the year in which the Lease Term ends
shall be prorated to the date upon which the Lease term ends. Landlord
represents and warrants that Landlord has no knowledge of any present or future
general or special assessments which are or will be levied against the
Premises, provided that Tenant acknowledges that general or special assessments
may be levied against the Premises in the future.
Tenant shall not be liable for increases in real estate taxes attributable
to additional improvements to the Premises that are constructed by or at the
request of Landlord after the first tax year included within the terms of this
Lease, unless the additional improvements are constructed for Tenant's sole
benefit.
There shall be excluded from the tax bill to which Tenant contributes
income, excess profits, estate, single business, inheritance, succession,
transfer, franchise, capital or other tax assessments upon Landlord or the Base
Rent payable under this Lease.
7. MAINTENANCE. Landlord shall not be called upon and shall have no
obligation to make any repairs, improvements or alterations whatsoever to the
Premises except that during the term of this Lease, Landlord shall at
Landlord's sole cost and expense, repair and maintain the exterior walls (but
not storefronts, glass, plate glass, doors), foundations, roof, roof membrane,
load bearing walls and floor slabs in good structural repair; provided,
however, that Landlord shall not be required to make any repairs to any part of
the Premises until written notice of the need for such repairs is given to
Landlord by Tenant. If Landlord fails to prosecute such maintenance and
repairs diligently and continuously until completion, Tenant may prosecute such
maintenance and repairs itself and Landlord shall reimburse Tenant for the
reasonable cost of such repairs within seven (7) days of receiving written
notice of the same. It is further provided that Landlord shall not be liable
- 2 -
<PAGE> 3
for or required to make any repairs, or perform any maintenance, to or upon the
Premises which are required by, related to or which arise out of negligence or
willful misconduct of and by Tenant, its employees, agent, invitees, licensees
or customers, in which event Tenant shall be solely responsible therefor; and
if such repairs are undertaken by Landlord, it shall be solely at the expense
of Tenant and Tenant shall pay said amounts within thirty (30) days of receipt
of billing therefor, or in the alternative shall be considered in default under
the terms of this Lease.
Except to the extent caused by the negligence or willful misconduct of
Landlord, Landlord's employees, agents, contractors, invitees or licensees,
Tenant shall repair, service, keep and maintain the remaining portions of the
Premises in good condition and repair and shall replace all glass in the
windows and doors broken during the Lease term. Tenant agrees to make repairs
promptly as they may be needed at Tenant's expense. If Tenant fails to
prosecute such maintenance and repairs diligently and continuously until
completion, Landlord may prosecute such maintenance and repairs itself and
Tenant shall reimburse Landlord for the reasonable cost of such repairs within
seven (7) days of receiving written notice of the same.
8. ALTERATIONS. Tenant shall not make any exterior or structural
alterations in any portion of the Premises, nor any alterations in the interior
of the Premises without, in each instance, first obtaining the written consent
of Landlord, which consent shall not be unreasonably withheld. Tenant shall be
permitted to make interior nonstructural alterations, additions and
improvements costing less than $50,000.00 without Landlord's prior consent.
All alterations or additions made by Tenant shall comply with all laws, codes,
rules and regulations of governmental authorities. Any plans, specifications
or work drawings approved by Landlord shall create no responsibility or
liability on the part of Landlord for their completeness, design sufficiency,
or compliance with all laws, codes, rules and regulations of governmental
authorities. Upon expiration and termination of this Lease all installations,
improvements and alterations made by Tenant, including electric lighting
fixtures installed by Tenant, and all other improvements, replacements, repairs
and alterations to the Premises made by Tenant during the term of this Lease,
shall remain a part of the Premises as the property of Landlord.
9. SURRENDER OF PREMISES. Tenant shall, upon expiration of the Term
hereof, or any earlier termination of this lease for any cause, surrender to
Landlord the Premises in good condition and repair with all glass and all
windows and doors intact, ordinary wear and tear excepted. Any trade fixtures,
business equipment, inventory, trademarked items, signs, and other removable
personal property installed in or on the Premises by Tenant at its expense
("Tenant's Property"), shall remain the property of the Tenant. Landlord
agrees that Tenant shall have the right at any time or from time to time, to
remove any and all of Tenant's Property. Tenant, at its expense, shall
immediately repair any damage occasioned by the removal of Tenant's Property
upon expiration or earlier termination of this Lease. At Landlord's request
upon expiration or termination of the Lease Term, Tenant shall be required to
remove any of Tenant's property as Landlord may designate, including but not
limited to floor coverings, trade and non-trade fixtures, and Tenant shall
repair and correct any damage caused by such removal. Tenant agrees that upon
the end of the Term or upon termination of this Lease, Tenant shall deliver up
the Premises to Landlord.
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<PAGE> 4
10. QUIET ENJOYMENT. Landlord covenants that so long as Tenant pays the
rent reserved in this Lease and performs its agreements hereunder, Tenant shall
have the right to quietly enjoy and use the Premises for the Term hereof,
subject only to the provisions of the agreement.
11. LIENS. Tenant agrees that it will make full and prompt payment of all
sums necessary to pay for the cost of repairs, alterations, improvements,
changes or other work done by Tenant to the Premises and further agrees to
indemnify and hold harmless Landlord from and against any and all such costs
and liabilities incurred by Tenant, and against any and all mechanic's,
materialman's or laborer's liens arising out of or from such work or the cost
thereof which may be asserted, claimed or charged against the Premises.
Notwithstanding anything to the contrary in this Lease, the interest of
Landlord in the Premises shall not be subject to liens for improvements made by
or for Tenant whether or not the same shall be made or done in accordance with
an agreement between Landlord and Tenant, and it is specifically understood and
agreed that in no event shall Landlord or the interest of Landlord in the
Premises be liable for or subjected to any mechanic's, materialman's or
laborer's liens for improvements or work made by or for Tenant; and this Lease
specifically prohibits the subjecting of Landlord's interest in the Premises to
any mechanic's, materialman's, or laborer's liens for improvements made by
Tenant or for which Tenant is responsible for payment under the terms of this
Agreement. In the event any notice or claim of lien shall be asserted of
record against the interest of Landlord in the Premises on account of or
growing out of any improvement or work done by or for Tenant, or any person
claiming by, through or under Tenant, or for improvements or work the cost of
which is the responsibility of Tenant, Tenant agrees to have such notice or
claim of lien canceled and discharged of record as a claim against the interest
of Landlord in the Premises (either by payment and satisfaction or by removal
by transfer to bond or deposit as permitted by law) within ten (10) days after
notice to Tenant by Landlord, and in the event Tenant shall fail to do so
Tenant shall be considered in default under this Lease. Any fees and costs
incurred by Landlord resulting from a lien as described in this paragraph shall
be paid by Tenant, including reasonable attorneys' fees.
12. INSPECTION AND REPAIR. Landlord or its representatives shall have the
right during regular business hours to enter upon the Premises for the purpose
of inspection, to show the Premises to prospective purchasers, prospective
tenants and lenders, or for the purpose of making or causing to be made any
repairs or otherwise to protect its interest, but the right of Landlord to
enter, repair or do anything else to protect its interest, or the exercise or
failure to exercise said right, shall in no way diminish Tenant's obligations
or enlarge Landlord's obligations under this Lease, or affect any right of
Landlord, or create any duty or liability by Landlord to Tenant or any third
party. In the event Landlord does enter the Premises for any reason
whatsoever, Landlord shall use Landlord's best effort to minimize interference
with the operation of Tenant's business.
13. UTILITIES. Tenant shall pay all costs and expenses for gas, water,
electricity, heat, cooling, sewerage, phone, garbage and trash, and any and all
other utilities furnished to or used in connection with the Premises for any
purpose whatsoever during the Term of this Lease, promptly as each thereof
shall become due and payable; Tenant's failure to so pay utilities costs and
expenses shall constitute an event of default hereunder.
- 4 -
<PAGE> 5
14. DAMAGE TO PREMISES. In the event the Premises or a portion thereof
are rendered untenantable by fire or other casualty, Landlord shall have the
option of terminating this Lease or rebuilding the Premises, and in event of
such casualty written notice of the election by Landlord shall be given to
Tenant within thirty (30) days after the occurrence of such casualty. In the
event Landlord elects to rebuild the Premises, the Premises shall be restored
to its former condition within one hundred sixty (160) days, during which time
Base Rent and all other charges payable hereunder shall be payable only for the
portion of the Premises which remains tenantable (on a pro rata square footage
basis). In the event the repair and/or rebuilding of the Premises shall not be
substantially completed within such one hundred sixty (160) day period, Tenant
may elect to terminate this Lease upon five (5) days written notice. In the
event Landlord or Tenant elect to terminate this Lease, the rent shall be paid
to and adjusted as of the date of such casualty, and the Term of this Lease
shall then expire and this Lease shall be of no further force or effect and
Landlord shall be entitled to sole possession of the Premises.
15. INSURANCE. Tenant agrees to carry, or cause to be carried, at its
expense, during the Term hereof workmen's compensation insurance and public
liability insurance on the Premises and any adjacent parking or common areas,
providing coverage of not less than $1,000,000 for personal injury or death
arising out of any one occurrence, and for property damage insurance in an
amount of not less than $1,000,000 for damage to property arising out of any
one occurrence.
Tenant further agrees to carry, or cause to be carried, at its expense,
during the Term hereof insurance for fire, extended coverage, vandalism and
malicious mischief, sprinkler leakage and all other perils of direct physical
loss or damage, insuring the improvements constituting the Premises and all
appurtenances thereto (excluding Tenant's Property) for the full insurable
value thereof in the reasonable opinion of the parties, naming Landlord as the
insured.
Tenant further agrees to carry at its expense public liability insurance
on the leased Premises during the Term hereof, covering both Landlord and
Tenant as insureds, with terms and company satisfactory to Landlord, for limits
of not less than $1,000,000 combined single limit for personal injury or death
arising out of any one occurrence including property damage.
As to any policy to be carried by Tenant hereunder, said policy shall
provide that Landlord and Tenant shall be given a minimum of thirty (30) days
written notice by registered mail by the insurance company prior to
cancellation, termination or change in such insurance. As to any policy to be
carried by Tenant hereunder, Tenant shall provide Landlord with copies of the
policies or certificates evidencing that such insurance is in full force and
effect and stating the terms thereof. If Tenant fails to comply with this
sub-paragraph, Landlord shall have the right but not the obligation to obtain
any such insurance and to pay the premiums therefor, and in such event the
entire amount of such premiums shall be immediately due and payable by Tenant
to Landlord.
16. INDEMNIFICATION. Tenant hereby indemnifies and holds Landlord
harmless from and against any and all claims, demands, liabilities and
expenses, including attorneys' fees, arising from, or in connection with, or in
any way related to Tenant's use of the Premises or from, or in connection with,
or in any way related to any act, or any omission to act, in or about the
Premises by Tenant or its agents, customers, invitees, employees or
contractors, or from any breach or default by Tenant
- 5 -
<PAGE> 6
of this Lease (including a breach of any of Tenant's representations and
warranties contained hereto, except to the extent caused by Landlord's
negligence or willful misconduct in the event any action or proceeding shall be
brought against Landlord by reason of any such claim, Tenant shall defend the
same at Tenant's expense by counsel reasonably satisfactory to Landlord.
Landlord hereby indemnities and holds Tenant harmless from and against any
and all claims, demands, liabilities and expenses, including attorneys' fees,
arising from, or in connection with, or in any way related to Landlord's
obligations, actions or from, or in connection with, or in any way related to
any act, or any omission to act (where such a duty to act exists), in or about
the Premises by Landlord or its agents, employees, contractors or invitees, or
from any breach or default by Landlord of this Lease (including a breach of any
of Landlord's representations and warranties contained hereof), except to the
extent caused by Tenant's negligent or willful misconduct. In the event any
action or proceeding shall be brought against Tenant by reason of any such
claim, Landlord shall defend the same at Landlord's expense by counsel
reasonably satisfactory to Tenant. Notwithstanding the foregoing, Landlord
shall not be liable for injury or damage caused to any person or property by
reason of the failure of Tenant to perform any of its covenants or agreements
hereunder, nor for such damages or injury caused by reason of any defect in
the Premises now or in the future existing, or for any damages or injury caused
by reason of any present or future defect in the plumbing, wiring or piping of
the Premises except to the extent such defects (i) are caused by the willful or
grossly negligent conduct of Landlord, its agents, contractors, invitees and
employees, or (ii) exist in elements of the Premises which Landlord has the
obligation to maintain and repair pursuant to Section 7.
The parties' obligations to indemnify shall include reasonable
investigation costs and all other reasonable costs, expenses and liabilities
from the first notice that any claim or demand is to be made or may be made.
The parties acknowledge that the foregoing provisions of this paragraph shall
apply and become effective from and after the date Tenant or its agents enter
the leased Premises to undertake activities, including but not limited to
installation of interior improvements, permitted hereunder, even if such
activities are prior to the Commencement Date.
17. ASSIGNMENT Tenant acknowledges that Tenant's agreement to operate in
the leased Premises was a primary inducement and precondition to Landlord's
agreement to lease the Premises to Tenant. Accordingly, Tenant shall not
assign the Lease nor any right hereunder, nor let or sublet all or any part of
the Premises, nor suffer or permit any person or corporation to use any part of
the Premises, without first obtaining the express prior written consent of
Landlord, which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, however, Tenant shall have the right to sublet, assign, or
otherwise transfer its interest in this Lease to any parent, affiliate, or
operating subsidiary of Tenant, subsidiary of Tenant's parent, or to a
corporation with which it may merge or consolidate or to a company, entity or
individual that purchases all or substantially all of the assets or common
stock of Tenant either in one transaction or a series of transactions, without
Landlord's approval, written or otherwise; provided no such assignment or
sublet, in Landlord's reasonable opinion, shall be permitted nor valid unless
the assignee or sublessee is sufficiently financially solvent at the time of
the assignment or sublet to satisfy all obligations assigned to it by Tenant,
including all obligations with respect to this Lease assigned to it; and
provided further that, in the event of any such subletting, assignment or other
transfer, Tenant shall not be released from any
- 6 -
<PAGE> 7
liability hereunder and shall remain liable hereunder notwithstanding such
subletting, assignment, or other transfer.
Notwithstanding any portion of the foregoing to the contrary, in the event
that this Lease is attempted to be assumed under federal bankruptcy law by a
trustee in bankruptcy for Tenant or by Tenant as debtor in possession
(hereinafter collectively referred to as "Trustee") and there exists a default
as defined under this Lease or such state of facts which with the giving of
notice and the passage of time would constitute a default (such state of facts
being hereinafter referred to as "default"), such attempted assumption shall
not be effective unless Trustee; (i) cures, or provides adequate assurance that
it will promptly cure such default, and (ii) compensates, or provides adequate
assurance that it will promptly compensate Landlord for any actual pecuniary
loss to Landlord resulting from such default, and (iii) provides adequate
assurance of future performance of Tenant's obligations and covenants under
this Lease. For purposes of this provision, "adequate assurance of feature
performance" shall be deemed to include, without limitation, assurance of
source of rental and other consideration due under this Lease, and that
assumption or assignment of this Lease shall not breach any provision in any
other lease or financing agreement relating to the Premises.
If Landlord shall not be permitted to terminate this Lease as provided
herein because of the provisions of the Federal Bankruptcy code (currently
Title II of the United States Code), the Trustee agrees promptly, within no
more than fifteen (15) days upon request by Landlord to the bankruptcy court,
to assume or reject this Lease, and Tenant on behalf of itself and any Trustee
agrees not to seek or request any extension or adjournment of such time
requirement In no event after the assumption of this Lease by Trustee shall any
existing default remain uncured for a period in excess of ten (10) days.
Landlord shall have no obligation to provide Trustee with any service or
utilities unless Trustee shall have paid and is current on all payments and
obligations under the Lease Agreement, including but not limited to rental
obligations.
18. SUBORDINATION, NON-DISTURBANCE, RIGHTS OF SECURITY INSTRUMENT HOLDER.
18.1 Subordination. All rights and interests of Tenant hereunder are and
shall be and remain subject, subordinate and inferior to all mortgages, trust
deeds, ground leases or security instruments (all of which shall be referred to
herein as "Security Instrument"), heretofore or hereafter given and encumbering
the Premises, or any part thereof, and shall likewise be subordinate and
inferior to all renewals, modifications, consolidations, replacements and
extensions of any such Security Instrument and the right of the holder of any
such Security Instrument shall at all times be and remain prior and superior to
all-rights and interests of Tenant. This provision shall operate as a
subordination agreement with respect to all such Security Instruments and all
renewals, modifications, consolidations, replacements and extensions thereof.
If the holder of any such Security Instrument or any person, firm or
corporation agreeing to make a loan secured by a Security Instrument on the
Premises shall require confirmation of any subordination for which provision is
herein made or a separate subordination agreement with respect to any
transaction, Tenant shall execute such confirmation, estoppel certificate or
subordination agreement in the form required by such Security Instrument holder
or other person, firm or corporation agreeing or proposing to make a loan
secured by a Security Instrument on the Premises, and the execution of the same
shall not
- 7 -
<PAGE> 8
diminish or affect the liability of Tenant hereunder or any other party
responsible for or guaranteeing the obligations of Tenant under this Lease.
Failure of Tenant to execute such documentation upon request of Landlord shall
constitute an event of default under this Lease. In the event any proceedings
are brought for foreclosure, or in the event of the exercise of the power of
sale under any Security Instrument, made by Landlord covering the Premises,
Tenant shall attorn to the Security Instrument Holder or purchaser upon any
such foreclosure or sale and recognize such purchaser as the Landlord under
this Lease, provided that Tenant's peaceable possession of the Premises or its
rights under the Lease will not be disturbed on account thereof.
18.2 Non-Disturbance. Notwithstanding the provisions of subparagraph
18.1, Landlord agrees to obtain a Non-Disturbance and Attornment Agreement from
its current Security Interest Holders, if any, and deliver same to Tenant
within thirty (30) days of the date hereof and from any future tender on or
before obtaining financing from such lender in a form reasonably satisfactory
to Tenant. The delivery of a fully executed Non-Disturbance and Attornment
Agreement shall be a condition precedent to the effectiveness of this Lease and
if said Non-Disturbance and Attornment is not so delivered within the thirty
(30) day period, Tenant may at its option terminate this Lease by written
notice to Landlord. Tenant agrees to cooperate with Landlord in Landlord's
efforts to obtain the Non-Disturbance and Attornment Agreement.
19. DEFAULT. In the event Tenant shall (a) fail to make any rental or
other payment due hereunder (all of such payment obligations being referred to
as "monetary obligation") within five (5) days after written notice that the
same is due, or (b) be adjudged bankrupt, or (c) make an assignment for the
benefit of its creditors, or (d) have its leasehold estate taken upon execution
against Tenant, or (e) abandon the Premises during the Term hereof, or
(f) breach or fail to perform any of the agreements herein (other than a
monetary obligation), and shall fail to cure such non-monetary obligation breach
within thirty (30) days after written notice from Landlord, except that this
thirty (30) day period shall be extended for a reasonable period of time if the
alleged default is not reasonably capable of cure within such thirty (30) day
period and Tenant proceeds to diligently cure the default, such event shall
constitute an event of default and may, at Landlord's option, constitute a
premature termination. Tenant hereby waives any requirement for written notice
of monetary obligation default.
Upon the occurrence and continuance of any one or more events of default
specified herein, Tenant shall become a tenant at sufferance, and Landlord, at
its option and at any time thereafter, may pursue, exercise and enforce either
remedy 19.1 or 19.2 below, without notice or demand except as hereinafter
provided:
19.1 Enter upon and take possession of the leased Premises, using such
force or means as may be necessary and legally permitted, and dispossess and
remove all persons. Upon said entry by Landlord, Tenant shall at once
surrender possession of the Premises and shall be liable in damages and abject
to equitable action for failure to do so. Surrender of the Premises shall not
in and of itself constitute a termination of this Lease nor relieve Tenant from
any of the terms, covenants, and conditions hereof. After resuming possession
of the Premises, Landlord may:
- 8 -
<PAGE> 9
19.1.1 Relet, as Tenant's agent and without terminating this Lease, the
Premises for such amounts and upon such terms and conditions as Landlord may
deem best under the circumstances, whereupon Tenant shall be liable to Landlord
in general damages for the difference between the rentals and other charges
stipulated to be paid by Tenant and what Landlord is able to recover from a
re-letting, after, deducting any attorney's fees, commissions and other
reasonable expenses paid by Landlord with respect to such re-letting; or
19.1.2 Terminate this Lease, whether or not the leased Premises or any
part thereof shall have been relet, by written notice to Tenant, whereupon this
Lease shall end; provided, however, that no such termination of this Lease
shall relieve Tenant of its liability and obligations under this Lease incurred
prior to such termination. Upon such termination, Tenant shall be immediately
liable for the damages, present and prospective, which were the necessary and
direct result of Tenant's breach, as well as for any special damages as may
have resulted from such breach. All amounts and averages due and payable to
Landlord by Tenant shall bear interest at fifteen percent (15%) per annum.
19.2 Treat the Lease as remaining in existence, curing Tenant's default by
performing or paying the obligation which Tenant has breached, all sums paid or
expenses incurred by Landlord directly or indirectly incurring Tenant's
default, which amounts shall become immediately due and payable and shall bear
interest at the highest rate permitted by law from the date of disbursement b
Landlord until paid by Tenant. If the breach consists of a failure to pay the
rent stipulated in this Lease and Landlord elects to treat the Lease as
remaining in existence, Landlord can take such action as is necessary to
recover the rent due as each installment matures or for the whole amount at the
end of the Term.
Furthermore, Landlord may exercise any and all rights and privileges and
pursue any additional remedies that Landlord may have under the laws of either
the State of Virginia or the United States of America that are available in
conjunction with whichever of the above described remedies is chosen, except
that under no circumstances, may Landlord accelerate rent or exercise the right
of distrain with respect to Tenant's furniture, fixtures, supplies, equipment,
inventory and Tenant's property.
The remedies for which provision is made in this paragraph shall not be
exclusive and in addition thereto Landlord may pursue such other remedies as
are provided by law in the event of any breach, default or abandonment by
Tenant. In any event, and irrespective of any option exercised by Landlord,
Tenant agrees to pay and the Landlord shall be entitled to recover all costs
and expenses incurred by Landlord, including reasonable attorneys' fees, in
connection with collection of rent or damages or enforcing other rights of
Landlord in the event of a breach of default or abandonment by Tenant,
irrespective of whether or not Landlord elects to terminate this Lease by
reason of such a breach, default or abandonment. Tenant hereby expressly
waives any and all rights of redemption, if any, granted by or under any
present or future law in the event Tenant shall be evicted or dispossessed for
any cause, or in the event Landlord shall obtain possession of the Premises by
virtue of the provisions of this Lease, or otherwise.
- 9 -
<PAGE> 10
Any and all sums due under this Agreement from Tenant to Landlord and not
paid on the date due shall bear interest at the rate of fifteen percent (15%)
per annum; and if any payment of rent is not received within thirty (30) days
after the date due, Tenant shall be assessed an amount of not more than $100.00
per month for each month of delinquency, in addition to other sums owing
hereunder.
20. WAIVER OR ESTOPPEL. The failure of Landlord to insist, in any one or
more instances, upon strict performance of any covenants or agreements of this
Lease, or exercise any option of Landlord herein contained, shall not be
construed as a waiver or relinquishment of any right or remedy of Landlord
hereunder and she not be deemed a waiver of any subsequent breach or default by
Tenant of the covenants or conditions herein. Receipt of rent by Landlord,
with knowledge of the breach of any covenant or agreement hereof, shall not be
deemed a waiver of such breach and no waiver by Landlord of any provision
hereof shall be deemed to have been made unless expressed in writing and signed
by Landlord.
21. CONDEMNATION.
21.1 In the event a part of the Premises be (i) taken by reason of the
exercise of the right of eminent domain by any public or quasi-public
authority, (ii) subject to mandatory environmental remediation measures or
(iii) conveyed in settlement of threatened eminent domain proceedings
(collectively hereinafter referred to as a "taking"), there shall be an
equitable abatement of the rental herein provided. Said equitable abatement
shall result in the decrease of rental payable by the percentage decrease in
the square footage of the Premises resulting from the taking. If the
proceeding shall result in the taking of all of the Premises or such a
substantial and material portion of the Premises as will in the reasonable
judgment of the parties preclude Tenant from operating Tenant's business from
the Premises, then this Lease and the terms hereof shall cease and expire and
both parties hereto shall hereinafter be released from any obligation
hereunder.
21.2 Landlord reserves unto itself, and Tenant assigns to Landlord, all
right to damages accruing on account of any taking or condemnation of any part
of the Premises, or by reason of any act of any public or quasi-public
authority for which damages are payable; provided, however, that Tenant may
recover from the condemning authority an amount payable for business damages.
Tenant agrees to execute such instruments of assignment as may be required by
Landlord, to join with Landlord in any petition for the recovery of damages, if
requested by Landlord, and to turn over to Landlord any such damages that may
be recovered in any such proceeding. Landlord does not reserve to itself, and
Tenant does not assign to Landlord, any damages payable for Tenant's Property
installed by Tenant at its cost and expense and which are not to remain part of
the realty.
22. DEPOSITS AND ADVANCES. Any funds transferred by Tenant to Landlord as
a deposit or advance pursuant to the terms of this Lease, or any exhibit,
addendum or modification hereto, may be commingled with other funds of Landlord
and need not be placed in trust, deposited in escrow or otherwise held in a
segregated account. In addition, if any sum or sums of money shall become
payable by Tenant to Landlord pursuant to the terms of this Lease, or any
exhibit, addendum or modification hereto, or by any law, ordinance or
regulation affecting this Lease, Landlord shall
- 10 -
<PAGE> 11
have the right to apply any deposits or advances theretofore made by Tenant
against such sums due by Tenant to Landlord.
23. LIEN WAIVER. Landlord hereby waives any contractual, statutory or
other Landlord's lien on Tenant's furniture, fixtures, supplies, equipment,
inventory and Tenant's Property and Landlord shall agree to execute a Landlord
Waiver of Lien Agreement for Tenant's future and current lenders (the
"Lenders") in a form reasonably satisfactory to Landlord and Lenders.
24. ENVIRONMENTAL LAWS.
24.1 Notwithstanding any other provision of this Agreement, and in
addition to any and all other Agreement requirements, and any other covenants
and warranties of Tenant, Tenant hereby expressly warrants, guarantees, and
represents to Landlord, upon which Landlord expressly relies, that Tenant is
knowledgeable of any and all Federal, State, regional, and local governmental
laws, ordinances, regulations, orders and rules, without limitation, that are
now or may hereafter come into being, which govern or which in any way, apply
to the direct or indirect results and impacts to the environment and natural
resources due to, or in any way resulting from, the conduct by Tenant of its
operations pursuant to or upon the Premises. Tenant expressly represents,
covenants, warrants, guarantees, and agrees that it shall comply with all
applicable Federal, State, regional, and local laws, regulations and ordinances
protecting the environment and natural resources including, but not limited to,
the Federal Clean Water Act, Safe Drinking Water Act Clean Air Act, Resource
Conservation Recovery Act, Comprehensive Environmental Response, Compensation
and Liability Act of 1980 ("Superfund"), and all rules and regulations
promulgated or adopted thereunder as same may from time to time be amended.
Tenant further expressly represents, covenants, warrants, guarantees, and
agrees that it shall fully comply with all State and local laws, ordinances,
rules, and regulations protecting the environment.
24.2 Tenant hereby expressly assumes and accepts full responsibility and
liability for compliance with all such governmental laws and regulations in the
handling and disposal of any and all hazardous waste and/or toxic materials,
and all pollutants or contaminants of any kind, resulting from or arising out
of Tenant operations conducted on the Premises, and Tenant shall, prior to
commencement of any such operations pursuant to this Agreement, secure any and
all permits, and properly make all necessary notifications as may be required
by any and all governmental agencies having jurisdiction over parties or the
subject matter hereof. Tenant further represents, warrants, guarantees, and
covenants to Landlord, upon which Landlord hereby expressly relies, that
Tenant, its employees, agents, contractors, and all persons working for, or on
behalf of, Tenant have been fully and properly trained in the handling of all
such hazardous and toxic waste materials, and other pollutants and
contaminants, and that such training, complies with any and all applicable
Federal, State and local laws, ordinances, regulations, rulings, orders, and
standards which are now or are hereafter promulgated.
24.3 Tenant hereby expressly agrees to indemnify and hold Landlord
harmless from and against any and all liability for fines and physical damage
to property or injury or deaths to persons, including reasonable expense and
attorney's fees, arising from or resulting out of, or in any way caused by,
Tenant's failure to comply with any and all applicable Federal, State, and
local
- 11 -
<PAGE> 12
laws, ordinances, regulations, rulings, orders and standards, now or hereafter,
promulgated for the purpose of protecting the environment. Tenant understands
that this indemnification is in addition to and is a supplement of Tenant's
indemnification agreement set forth in paragraph 16 of this Agreement and
Tenant in full understanding of the broad extent of this indemnification hereby
expressly acknowledges that it has received full and adequate consideration
from Landlord to legally support this indemnification agreement. This clause
shall survive termination of this Agreement; provided, however, that Tenant's
obligations hereunder shall not apply to (i) any matter not arising out of,
incident to or in connection with Tenant's activities under this Agreement and
(ii) any condition existing on the Premises prior to the date hereof.
24.4 Violation of any part of the foregoing provisions or disposition by
Tenant of any sanitary waste, pollutants, contaminants, hazardous waste, toxic
waste, industrial cooling water, sewage or any other materials in violation of
the provisions of this section of this Agreement shall be deemed to be a
default under this Agreement and, unless cured within ten (10) days of receipt
of this notice from Landlord or, if said default cannot be completely cured
within that period and uses its best efforts to completely cure said default as
expeditiously as possible, shall be deemed to be a material breach as provided
for under this Agreement, and shall be grounds for termination of this
Agreement, and shall also provide Landlord grounds for taking whatever other
action it may have in addition to termination based upon default as provided
for under this Agreement. Tenant shall be strictly liable for, and hereby
expressly assumes all responsibility for all citations, fines, environmental
controls and monitoring, clean-up and disposal, restoration and collective
measures resulting from or in any way connected with the improper use,
handling, storage, and/or disposal of all pollutants or contaminated materials,
as same are defined by law, by Tenant or by Tenant's employees, invitees,
suppliers or service or furnishers of materials or any other person whomsoever,
regardless of whether or not a default notice has been issued and
notwithstanding any other obligations imposed upon Tenant pursuant to the terms
of this Agreement. All such remedies of Landlord with regard to environmental
requirements as set forth herein shall be deemed cumulative in nature and shall
survive termination of this Agreement.
24.5 With respect to the Premises, Landlord hereby adopts the
environmental representations and warranties of the Company (as defined in the
Purchase Agreement) made in Section 5.22 of that certain Stock Purchase
Agreement dated July 17, 1997 ("Purchase Agreement"), between Marc S. Trubitz
and Suellen Trubitz, as Sellers, and National Equipment Services, Inc., as
Purchaser, which representations and warranties shall survive for the term
stated in the Purchase Agreement.
25. PUBLIC ACCOMMODATION. Tenant acknowledges that the Premises may
constitute a place of public accommodation or a commercial facility under Title
III of the Americans with Disabilities Act (the "ADA") and that the ADA is
applicable to both an owner and lessee of a place of public accommodation or
commercial facility. Tenant further acknowledges that, under the ADA, any
structural alteration to the Premises must comply with accessibility standards
set forth in the rules promulgated by the Department of Justice, 28 C.F.R.
Section 36. 101, et. seq. In the event Tenant makes any structural alteration
to the Premises which would require compliance with Title III of the ADA and
the accessibility standards promulgated by the Department of Justice, Tenant
agrees to design and build such structural alterations and to make any other
changes to any portion of the
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<PAGE> 13
building common area or parking area in which the Premises are located or which
are affiliated with the Premises which are necessitated by such structural
alterations, so as to comply with the ADA and the accessibility standards.
Tenant hereby agrees to indemnify and hold Landlord harmless from and against
any and all liabilities, claims, demands, damages, expenses, fees, fines,
penalties, Suits, proceedings, actions, and causes of action of any and every
kind and nature arising or growing out of or in any way connected with any
structural alteration of the Premises by Tenant.
26. ATTORNEYS' FEES. In the event that at any time during the Term of
this Lease either Landlord or Tenant shall institute any action or proceeding
against the other relating to the provisions of this Lease, or any default
hereunder, the unsuccessful party in such action or proceeding agrees to
reimburse the successful party for the reasonable expenses of attorneys' fees
and paralegal fees and disbursements incurred therein by the successful party.
Such reimbursement shall include all legal expenses incurred prior to trial, at
trial, and at all levels of appeal and post-judgment proceedings.
27. NOTICES. Notices and demands required, or permitted, to be sent to
those listed hereunder shall be sent by certified mail, return receipt
requested, postage prepaid, or by Federal Express or other reputable overnight
courier service and shall be deemed to have been given upon the date the same
is postmarked if sent by certified mail or the day deposited with Federal
Express or such other reputable overnight courier service, but shall not be
deemed received until one (1) business day following deposit with Federal
Express or other reputable overnight courier service or three (3) days
following deposit in the United States Mail if sent by certified mail to
address shown below, and addressed to:
<TABLE>
<S> <C>
LANDLORD: TENANT:
c/o Marc Trubitz MST Enterprises, Inc.
5070 Gulf of Mexico Drive c/o National Equipment Services, Inc.
Longboat Key, FL 34228 1800 Sherman Avenue, Suite 100
Evanston, Illinois 60201
Attn: Kevin P. Rodgers
</TABLE>
or at such other address requested in writing by either party upon thirty (30)
days notice to the other party.
28. REMEDIES. All rights and remedies of Landlord and Tenant herein
created or otherwise extending at law are cumulative, and the exercise of one
or more rights or remedies may be exercised and enforced concurrently or
consecutively and whenever and as often as deemed desirable.
29. SUCCESSORS AND ASSIGNS. All covenants, promises, conditions,
representations and agreements herein contained shall be binding upon, apply
and inure to the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
- 13 -
<PAGE> 14
30. HOLDING OVER. If Tenant or any party claiming under Tenant remains in
possession of the Premises or any part thereof after any termination or
expiration of this Lease, Landlord, in Landlord's sole discretion, may treat
such holdover as an automatic renewal of this Lease for a month-to-month
tenancy subject to all the terms and conditions provided herein.
31. INTERPRETATION. The parties hereto agree that it is their intention
hereby to create only the relationship of Landlord and Tenant, and no provision
hereof, or act of either party hereunder, shall ever be construed as creating
the relationship of principal and agent, or a partnership, or a joint venture
or enterprise between the parties hereto.
32. ESTOPPEL. At any time and from time to time, either party, upon
request of the other party, will execute, acknowledge and deliver an
instrument, stating, if the same be true, that the Lease identified in said
instrument is a true and exact copy of this Lease between the parties hereto,
that there are no amendments hereof (or stating what amendments there may be),
that the Lease is then in full force and effect and that, to the best of its
knowledge, there are no offsets, defenses or counterclaims with respect to the
payment of Base Rent reserved under the Lease or in the performance of the
other terms, covenants and conditions under the Lease on the part of Tenant or
Landlord, as the case may be, to be performed, and that as of such date no
default has been declared under the Lease by either party or if not specifying
the same. Such instrument will be executed by the other party and delivered to
the requesting party within fifteen (15) days of receipt, or else the
statements made in the proposed estoppel request shall be deemed to be correct.
33. CONSENT. Except as otherwise expressly stated, wherever in this Lease
Landlord is required to give its consent or approval, such consent shall mean a
consent in Landlord's sole discretion.
34. SEVERABILITY. Any provision of this Lease which shall prove to be
invalid, void or illegal shall in no way affect, impair or invalidate any other
provisions hereof and such other provisions shall remain in full force and
effect.
35. GOVERNING LAW AND VENUE. This Lease shall be governed by the laws of
the state in which the Premises is located. The venue of any action or suit
brought in connection herewith shall be in the county wherein the Premises are
located.
36. BROKERS. Landlord and Tenant represent and warrant one to the other
that they have not had any dealing with any real estate brokers or agents in
connection with the negotiation of this Lease. Landlord and Tenant indemnify
and hold each other harmless from and against any and all liability and cost
which Landlord or Tenant may suffer in connection with real estate brokers
claiming by, through or under either party seeking any commission, fee, or
payment in connection with this Lease.
37. TIME OF THE ESSENCE. Time shall be of the essence in interpreting the
provisions of this Lease.
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<PAGE> 15
38. ENTIRE AGREEMENT. This Lease contains all of the agreements of the
parties hereto with respect to matters covered or mentioned in this Lease and
no prior agreement, letters, representations, warranties, promises or
understandings pertaining to any such matters shall be effective for any such
purpose. This Lease may be amended or added to only by an agreement in writing
signed by the parties hereto or their respective successors-in-interest.
39. AUTHORIZATION. Landlord and Tenant each represent and warrant to the
other, that it has full power and authority to enter into this Lease and to
perform all of its obligations hereunder and that the execution and delivery of
this Lease does not and will not violate or conflict with any provision of any
law, contract, mortgage, lien, lease, instrument, agreement, or judgment to
which it is a party or which is binding on such party. The person executing
this Lease on behalf of Tenant represents and warrants that they have been duly
authorized to execute this Lease on behalf of such organization.
40. RIGHT OF FIRST REFUSAL. Throughout the term of this Lease, in the
event Landlord shall receive a bona fide offer for the purchase of all or any
part of the Premises, and which offer Landlord desires to accept, Landlord
shall send notice thereof to Tenant as herein provided, setting forth the name
and address of the offeror and the terms of the offer. Tenant shall have
fourteen (14) days after receipt of such notice in which to elect to purchase
the Premises, or the part thereof subject to the offer, as the case may be, on
the same terms and conditions as contained in the offer, such election to be
exercised by notice in writing to Landlord as herein provided, sent within such
fourteen (14) day period. In the event Tenant shall elect to purchase such
property, such notice of election to purchase shall designate a date for the
closing of the transaction not less than thirty (30) days nor more than sixty
(60) days after the exercise of such option, and the closing shall be held on
the closing date so designated. In the event Tenant shall not elect to
purchase such property, then Landlord shall be permitted to consummate the sale
thereof to the offeror on the terms and conditions set forth in the notice of
such offer to Tenant, and in such event this right of first refusal shall
terminate and shall no longer be binding on the Premises or on the offeror and
Tenant shall record in the public records of the jurisdiction in which the
Premises are located a Notice of Termination of the right of first refusal. In
the event, however, that Landlord shall not consummate such sale to the offeror
on such terms and conditions, then the provisions hereof shall be fully
reinstated and the rights of Tenant hereunder shall be restored with respect to
any subsequent sale of the Premises, or any portion thereof.
41. MEMORANDUM OF LEASE. The Parties hereto agree to enter into a
Memorandum of Lease in the form attached hereto and agree that such Memorandum
of Lease shall be recorded in the public records of the jurisdiction in which
the Premises are located.
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<PAGE> 16
IN WITNESS WHEREOF, the parties have executed this Lease on the day and
year first above mentioned.
TENANT:
MST Enterprises, Inc., a Virginia corporation
By: /s/ Kevin Rodgers
___________________________
Name: Kevin Rodgers
___________________________
Title: CEO
___________________________
LANDLORD:
/s/ Marc Trubitz
___________________________
Marc Trubitz
/s/ Suellen Trubitz
___________________________
Suellen Trubitz
- 16 -
<PAGE> 17
GUARANTEE
The undersigned Guarantor does hereby guarantee the full and faithful
performance by Tenant of all the terms, covenants and conditions of the
foregoing Lease.
NATIONAL EQUIPMENT SERVICES, INC., a Delaware
corporation
By: /s/ Kevin Rodgers
_________________________________
Name: Kevin Rodgers
_________________________________
Title: CEO
_________________________________
GUARANTOR
<PAGE> 18
RENTAL RIDER
<TABLE>
<CAPTION>
LEASE YEAR MONTHLY BASE RENT
- ----------------------------- -----------------
ORIGINAL TERM
- -----------------------------
<S> <C>
July __, 1997 - July __, 1998 $ 10,000
July __, 1998 - July __, 1999 $ 10,300
July __, 1999 - July __, 2000 $ 10,609
July __, 2000 - July __, 2001 $10,927.27
July __, 2001 - July __, 2002 $11,225.09
RENEWAL TERM #1 (IF RENEWED):
- -----------------------------
July __, 2002 - July __, 2003 $11,592.74
July __, 2003 - July __, 2004 $11,940.52
July __, 2004 - July __, 2005 $12,298.74
July __, 2005 - July __, 2006 $12,667.70
July __, 2006 - July __, 2007 $13,047.73
</TABLE>
<PAGE> 1
EXHIBIT 12.1
NATIONAL EQUIPMENT SERVICES, INC. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Amounts in thousands of dollars, except ratios)
<TABLE>
<CAPTION>
For the Period Pro Forma
From Inception Combined
(June 4, 1996) For the Nine For the Nine
Through Months ended Months Ended
December 31, 1996 September 30, 1997 September 30, 1997
----------------- ------------------ ------------------
<S> <C> <C> <C>
Pre-tax income (loss) $(332) $1,330 $1,020
Fixed charges:
Interest expense
on all indebtedness 0 2,439 7,350
Rental expense
representative of
an interest factor 0 168 225
----- ------ ------
Total fixed charges 0 2,607 7,575
----- ------ ------
Earnings before
income taxes
and fixed charges $(332) $3,937 $8,595
===== ====== ======
Ratio of earnings
to fixed charges (A) 1.51 1.41
===== ====== ======
</TABLE>
(A) The company's operations during the period from inception (June 4, 1996)
through December 31, 1996 were limited to organizational and start-up activities
while no revenues were generated; accordingly, presentation of this rate is not
considered meaningful.
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES
<TABLE>
<CAPTION>
STATE OR
OTHER JURISDICTION
OF INCORPORATION
REGISTRANT SUBSIDIARY OR ORGANIZATION
<S> <C> <C>
National Equipment NES Acquisition Corp., dba Lone Star Delaware
Services, Inc. Rentals; Industrial Hoist Services Delaware
Sprintank Georgia
BAT Acquisition Corp., dba BAT Virginia
Rentals
Aerial Platforms, Inc.
MST Enterprises, Inc., dba Equipco
Rentals & Sales
</TABLE>
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of our reports relating to the respective
financial statements which appear in such Prospectus.
Financial Statements Date
National Equipment Services, Inc. and Subsidiaries November 4, 1997
Aerial Platforms, Inc. November 4, 1997
Lone Star Rentals, Inc. November 4, 1997
BAT Rentals, Inc. November 4, 1997
Sprintank and Sprintank Mobile Storage
(divisions of Spring Industrial Services, Inc.) November 4, 1997
MST Enterprises, Inc. d/b/a Equipco Rental and Sales November 4, 1997
We also consent to the application of the National Equipment Services, Inc. and
Subsidiaries report to the Financial Statement Schedule for the period from
inception (June 4, 1996) through September 30, 1997 listed under Item 21(b) of
this Registration Statement when such schedule is read in conjunction with the
financial statements referred to in our report. The audits referred to in such
report also included this schedule. We also consent to the reference to us
under the heading "Experts."
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Chicago, Illinois
December 30, 1997
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
NATIONAL EQUIPMENT SERVICES, INC.
KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears below
constitutes and appoints Kevin P. Rodgers, Dennis J. O'Connor and Paul R.
Ingersoll and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for and in his name, place
and stead, in any and all capacities which such person serves or may serve with
respect to National Equipment Services, Inc., to sign the Registration
Statement on Form S-4 of (i) National Equipment Services, Inc. and (ii) Aerial
Platforms, Inc., BAT Acquisition Corp., MST Enterprises, Inc. and NES
Acquisition Corp. (collectively, the "Subsidiary Guarantors") relating to the
registration of $100,000,000 aggregate principal amount of 10% Senior
Subordinated Notes due 2007, Series B (the "Exchange Notes") to be issued by
National Equipment Services, Inc. and the related guarantees of the Subsidiary
Guarantors, and any or all amendments to such registration statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitutes, may
lawfully do or cause to be done by virtue hereof.
This power of attorney has been signed as of the 10th day of December,
1997, by the following persons:
<TABLE>
<S> <C>
/s/ Kevin P. Rodgers /s/ Dennis J. O'Connor
___________________________ ___________________________
Kevin P. Rodgers, Dennis J. O'Connor,
President, Chief Executive Officer and Chief Financial Officer
Director
/s/ Carl D. Thoma /s/ William C. Kessinger
___________________________ ___________________________
Carl D. Thoma, William C. Kessinger,
Director Director
/s/ Ronald St. Clair
___________________________
Ronald St. Clair,
Director
</TABLE>
<PAGE> 2
POWER OF ATTORNEY
AERIAL PLATFORMS, INC.
KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears below
constitutes and appoints Kevin P. Rodgers, Dennis J. O'Connor and Paul R.
Ingersoll and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for and in his name, place
and stead, in any and all capacities which such person serves or may serve with
respect to Aerial Platforms, Inc., to sign the Registration Statement on Form
S-4 of (i) National Equipment Services, Inc. and (ii) Aerial Platforms, Inc.,
BAT Acquisition Corp., MST Enterprises, Inc. and NES Acquisition Corp.
(collectively, the "Subsidiary Guarantors") relating to the registration of
$100,000,000 aggregate principal amount of 10% Senior Subordinated Notes due
2007, Series B (the "Exchange Notes") to be issued by National Equipment
Services, Inc. and the related guarantees of the Subsidiary Guarantors, and any
or all amendments to such registration statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitutes, may lawfully do or cause to
be done by virtue hereof.
This power of attorney has been signed as of the 10th day of December,
1997, by the following persons:
<TABLE>
<S> <C>
/s/ Kevin P. Rodgers /s/ Dennis J. O'Connor
- ---------------------------------- ----------------------------------
Kevin P. Rodgers, Dennis J. O'Connor,
President, Chief Executive Officer Chief Financial Officer
and Director
/s/ Carl D. Thoma /s/ William C. Kessinger
- ------------------------------------ ----------------------------------
Carl D. Thoma, William C. Kessinger,
Director Director
</TABLE>
<PAGE> 3
POWER OF ATTORNEY
BAT ACQUISITION CORP.
KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears below
constitutes and appoints Kevin P. Rodgers, Dennis J. O'Connor and Paul R.
Ingersoll and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for and in his name, place
and stead, in any and all capacities which such person serves or may serve with
respect to BAT Acquisition Corp., to sign the Registration Statement on Form
S-4 of (i) National Equipment Services, Inc. and (ii) Aerial Platforms, Inc.,
BAT Acquisition Corp., MST Enterprises, Inc. and NES Acquisition Corp.
(collectively, the "Subsidiary Guarantors") relating to the registration of
$100,000,000 aggregate principal amount of 10% Senior Subordinated Notes due
2007, Series B (the "Exchange Notes") to be issued by National Equipment
Services, Inc. and the related guarantees of the Subsidiary Guarantors, and any
or all amendments to such registration statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitutes, may lawfully do or cause to
be done by virtue hereof.
This power of attorney has been signed as of the 10th day of December,
1997, by the following persons:
/s/ Kevin P. Rodgers /s/ Dennis J. O'Connor
- ---------------------------------- ---------------------------------
Kevin P. Rodgers, Dennis J. O'Connor,
President, Chief Executive Officer Chief Financial Officer
and Director
/s/ Carl D. Thoma /s/ William C. Kessinger
- ---------------------------------- ---------------------------------
Carl D. Thoma, William C. Kessinger,
Director Director
<PAGE> 4
POWER OF ATTORNEY
MST ENTERPRISES, INC.
KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears below
constitutes and appoints Kevin P. Rodgers, Dennis J. O'Connor and Paul R.
Ingersoll and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for and in his name, place
and stead, in any and all capacities which such person serves or may serve with
respect to MST Enterprises, Inc., to sign the Registration Statement on Form
S-4 of (i) National Equipment Services, Inc. and (ii) Aerial Platforms, Inc.,
BAT Acquisition Corp., MST Enterprises, Inc. and NES Acquisition Corp.
(collectively, the "Subsidiary Guarantors") relating to the registration of
$100,000,000 aggregate principal amount of 10% Senior Subordinated Notes due
2007, Series B (the "Exchange Notes") to be issued by National Equipment
Services, Inc. and the related guarantees of the Subsidiary Guarantors, and any
or all amendments to such registration statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitutes, may lawfully do or cause to
be done by virtue hereof.
This power of attorney has been signed as of the 10th day of December,
1997, by the following persons:
<TABLE>
<S> <C>
/s/ Kevin P. Rodgers /s/ Dennis J. O'Connor
- ---------------------------------- ---------------------------------
Kevin P. Rodgers, Dennis J. O'Connor,
Chief Executive Officer and Chief Financial Officer
Director
/s/ Carl D. Thoma /s/ William C. Kessinger
- ---------------------------------- ---------------------------------
Carl D. Thoma, William C. Kessinger,
Director Director
</TABLE>
<PAGE> 5
POWER OF ATTORNEY
NES ACQUISITION CORP.
KNOW ALL MEN BY THESE PRESENTS, that each person whose name appears below
constitutes and appoints Kevin P. Rodgers, Dennis J. O'Connor and Paul R.
Ingersoll and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for and in his name, place
and stead, in any and all capacities which such person serves or may serve with
respect to NES Acquisition Corp., to sign the Registration Statement on Form
S-4 of (i) National Equipment Services, Inc. and (ii) Aerial Platforms, Inc.,
BAT Acquisition Corp., MST Enterprises, Inc. and NES Acquisition Corp.
(collectively, the "Subsidiary Guarantors") relating to the registration of
$100,000,000 aggregate principal amount of 10% Senior Subordinated Notes due
2007, Series B (the "Exchange Notes") to be issued by National Equipment
Services, Inc. and the related guarantees of the Subsidiary Guarantors, and any
or all amendments to such registration statement, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitutes, may lawfully do or cause to
be done by virtue hereof.
This power of attorney has been signed as of the 10th day of December,
1997, by the following persons:
<TABLE>
<S> <C>
/s/ Kevin P. Rodgers /s/ Dennis J. O'Connor
- ---------------------------------- ---------------------------------
Kevin P. Rodgers, Dennis J. O'Connor,
Chief Executive Officer and Chief Financial Officer
Director
/s/ Carl D. Thoma /s/ William C. Kessinger
- ---------------------------------- ---------------------------------
Carl D. Thoma, William C. Kessinger,
Director Director
</TABLE>
<PAGE> 1
Exhibit 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
Statement of Eligibility
Under the Trust Indenture Act of 1939
of a Corporation Designated to Act as Trustee
Check if an Application to Determine Eligibility
of a Trustee Pursuant to Section 305(b)(2) ______
HARRIS TRUST AND SAVINGS BANK
(Name of Trustee)
<TABLE>
<S> <C>
ILLINOIS 36-1194448
(State of Incorporation) (I.R.S. Employer Identification No.)
</TABLE>
111 WEST MONROE STREET, CHICAGO, ILLINOIS 60603
(Address of principal executive offices)
CAROLYN POTTER, HARRIS TRUST AND SAVINGS BANK,
311 WEST MONROE STREET, CHICAGO, ILLINOIS, 60606
312-461-2531 TELEPHONE S 312-461-3525 FACSIMILE
(Name, address and telephone number for agent for service)
NATIONAL EQUIPMENT SERVICES, INC.
(Name of obligor)
<TABLE>
<S> <C>
DELAWARE 36-4087016
(State of Incorporation) (I.R.S. Employer Identification No.)
</TABLE>
NES ACQUISITION CORP.
BAT ACQUISITION CORP.
AERIAL PLATFORMS, INC.
MST ENTERPRISES, INC.
(Name of Guarantor)
<TABLE>
<S> <C>
DELAWARE 76-0522698
DELAWARE 86-0857699
GEORGIA 58-1553416
VIRGINIA 54-1190435
(State of Incorporation) (I.R.S. Employer Identification No.)
</TABLE>
1800 SHERMAN AVENUE
EVANSTON, ILLINOIS 60201
(Address of principal executive offices)
10% SENIOR SUBORDINATED NOTES DUE 2004, SERIES B
(Title of indenture securities)
<PAGE> 2
1. GENERAL INFORMATION. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Commissioner of Banks and Trust Companies, State of Illinois,
Springfield, Illinois; Chicago Clearing House Association, 164 West
Jackson Boulevard, Chicago, Illinois; Federal Deposit Insurance
Corporation, Washington, D.C.; The Board of Governors of the Federal
Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Harris Trust and Savings Bank is authorized to exercise corporate
trust powers.
2. AFFILIATIONS WITH OBLIGOR. If the Obligor is an affiliate of the
Trustee, describe each such affiliation.
The Obligor is not an affiliate of the Trustee.
3. thru 15.
NO RESPONSE NECESSARY
16. LIST OF EXHIBITS.
1. A copy of the articles of association of the Trustee is now in effect
which includes the authority of the trustee to commence business and
to exercise corporate trust powers.
A copy of the Certificate of Merger dated April 1, 1972 between Harris
Trust and Savings Bank, HTS Bank and Harris Bankcorp, Inc. which
constitutes the articles of association of the Trustee as now in effect
and includes the authority of the Trustee to commence business and to
exercise corporate trust powers was filed in connection with the
Registration Statement of Louisville Gas and Electric Company, File No.
2-44295, and is incorporated herein by reference.
2. A copy of the existing by-laws of the Trustee.
A copy of the existing by-laws of the Trustee was filed in connection
with the Registration Statement of Commercial Federal Corporation, File
No. 333-20711, and is incorporated herein by reference.
3. The consents of the Trustee required by Section 321(b) of the Act.
(included as Exhibit A on page 2 of this statement)
4. A copy of the latest report of condition of the Trustee published
pursuant to law or the requirements of its supervising or examining
authority.
(included as Exhibit B on page 3 of this statement)
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
HARRIS TRUST AND SAVINGS BANK, a corporation organized and existing under the
laws of the State of Illinois, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of Chicago, and State of Illinois, on the 11TH day of DECEMBER, 1997.
HARRIS TRUST AND SAVINGS BANK
By: /S/ C. Potter
C. Potter
------------------------
Vice President
EXHIBIT A
The consents of the trustee required by Section 321(b) of the Act.
Harris Trust and Savings Bank, as the Trustee herein named, hereby consents
that reports of examinations of said trustee by Federal and State authorities
may be furnished by such authorities to the Securities and Exchange Commission
upon request therefor.
HARRIS TRUST AND SAVINGS BANK
By: /S/ C. Potter
C. Potter
------------------------
Vice President
2
<PAGE> 4
EXHIBIT B
Attached is a true and correct copy of the statement of condition of Harris
Trust and Savings Bank as of September 30, 1997, as published in accordance
with a call made by the State Banking Authority and by the Federal Reserve Bank
of the Seventh Reserve District.
[LOGO] HARRIS BANK
HARRIS TRUST AND SAVINGS BANK
111 WEST MONROE STREET
CHICAGO, ILLINOIS 60603
OF CHICAGO, ILLINOIS, AND FOREIGN AND DOMESTIC SUBSIDIARIES, AT THE CLOSE OF
BUSINESS ON SEPTEMBER 30, 1997, A STATE BANKING INSTITUTION ORGANIZED AND
OPERATING UNDER THE BANKING LAWS OF THIS STATE AND A MEMBER OF THE FEDERAL
RESERVE SYSTEM. PUBLISHED IN ACCORDANCE WITH A CALL MADE BY THE COMMISSIONER OF
BANKS AND TRUST COMPANIES OF THE STATE OF ILLINOIS AND BY THE FEDERAL RESERVE
BANK OF THIS DISTRICT.
BANK'S TRANSIT NUMBER 71000288
<TABLE>
<CAPTION>
THOUSANDS
ASSETS OF DOLLARS
<S> <C>
Cash and balances due from depository institutions:
Non-interest bearing balances and currency and coin....................... $ 1,188,709
Interest bearing balances................................................. $ 550,173
Securities:....................................................................
a. Held-to-maturity securities $ 0
b. Available-for-sale securities $ 3,685,983
Federal funds sold and securities purchased under agreements to resell i $ 396,400
Loans and lease financing receivables:
Loans and leases, net of unearned income.................................. $ 8,401,048
LESS: Allowance for loan and lease losses................................ $ 107,180
-----------
Loans and leases, net of unearned income, allowance, and reserve
(item 4.a minus 4.b)...................................................... $ 8,293,868
Assets held in trading accounts................................................ $ 98,368
Premises and fixed assets (including capitalized leases)....................... $ 213,612
Other real estate owned........................................................ $ 778
Investments in unconsolidated subsidiaries and associated companies............ $ 86
Customer's liability to this bank on acceptances outstanding................... $ 41,205
Intangible assets.............................................................. $ 283,839
Other assets................................................................... $ 603,886
-----------
TOTAL ASSETS $15,356,907
===========
</TABLE>
3
<PAGE> 5
<TABLE>
<S> <C> <C>
LIABILITIES
Deposits:
In domestic offices........................................................................ $ 8,374,055
Non-interest bearing....................................................................... $ 2,770,029
Interest bearing........................................................................... $ 5,604,026
In foreign offices, Edge and Agreement subsidiaries, and IBF's............................. $ 1,991,659
Non-interest bearing....................................................................... $ 27,364
Interest bearing........................................................................... $ 1,964,295
Federal funds purchased and securities sold under agreements to repurchase in domestic
offices of the bank and of its Edge and Agreement subsidiaries, and in IBF's:
Federal funds purchased.& securites sold under agreements to repurchase.................... $ 2,549,328
Trading Liabilities........................................................................ 62,186
Other borrowed money:
a. With remaining maturity of one year or less............................................ 630,911
b. With remaining maturity of more than one year.......................................... $ 0
Bank's liability on acceptances executed and outstanding................................... $ 41,205
Subordinated notes and debentures.......................................................... $ 325,000
Other liabilities.......................................................................... $ 132,188
----------- -----------
TOTAL LIABILITIES.......................................................................... $14,106,532
=========== ===========
EQUITY CAPITAL
Common stock............................................................................... $ 100,000
Surplus.................................................................................... $ 600,853
a. Undivided profits and capital reserves................................................. $ 553,257
b. Net unrealized holding gains (losses) on available-for-sale securities................. ($3,735)
TOTAL EQUITY CAPITAL....................................................................... $ 1,250,375
=========== ===========
Total liabilities, limited-life preferred stock, and equity capital........................ $15,356,907
=========== ===========
</TABLE>
I, Pamela Piarowski, Vice President of the above-named bank, do hereby
declare that this Report of Condition has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
PAMELA PIAROWSKI
10/29/97
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and, to the best of our
knowledge and belief, has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and the
Commissioner of Banks and Trust Companies of the State of Illinois and is true
and correct.
EDWARD W. LYMAN,
ALAN G. McNALLY,
JAMES J. GLASSER
Directors.
4
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF NATIONAL EQUIPMENT SERVICES, INC. AND
SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> SEP-30-1997 DEC-31-1996
<CASH> 1,604 12
<SECURITIES> 0 0
<RECEIVABLES> 7,921 0
<ALLOWANCES> 277 0
<INVENTORY> 2,675 0
<CURRENT-ASSETS> 0 0
<PP&E> 51,357 20
<DEPRECIATION> 3,343 3
<TOTAL-ASSETS> 92,219 216
<CURRENT-LIABILITIES> 0 0
<BONDS> 58,144 0
0 0
0 0
<COMMON> 2 1
<OTHER-SE> 26,029 105
<TOTAL-LIABILITY-AND-EQUITY> 92,219 216
<SALES> 7,514 0
<TOTAL-REVENUES> 25,575 0
<CGS> 5,532 0
<TOTAL-COSTS> 15,990 0
<OTHER-EXPENSES> 5,797 336
<LOSS-PROVISION> 323 0
<INTEREST-EXPENSE> 2,439 (4)
<INCOME-PRETAX> 1,330 (332)
<INCOME-TAX> 519 (137)
<INCOME-CONTINUING> 811 (195)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 811 (195)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<PAGE> 1
Exhibit 99.1
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
10% SENIOR SUBORDINATED NOTES DUE 2004
OF
NATIONAL EQUIPMENT SERVICES, INC.
Pursuant to the Prospectus dated _________, 1998
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON __________________, 1998 UNLESS EXTENDED (THE "EXPIRATION DATE").
PLEASE READ CAREFULLY THE ATTACHED INSTRUCTIONS
If you desire to accept the Exchange Offer, this Letter of Transmittal
should be completed, signed,
and submitted to the Exchange Agent:
HARRIS TRUST AND SAVINGS BANK
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
c/o Harris Trust Company of New York c/o Harris Trust Company of New York c/o Harris Trust Company of New York
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1023 New York, NY 10005 Water Street, 5th Floor
New York, NY 10268-1023 Attn: Reorganization Dept. New York, NY 10005
Attn: Reorganization Dept. Attn: Reorganization Dept.
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION VIA
FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
FOR ANY QUESTIONS REGARDING THIS LETTER OF TRANSMITTAL OR FOR ANY
ADDITIONAL INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT.
The undersigned hereby acknowledges receipt of the Prospectus dated
__________, 1998 (as it may be supplemented and amended from time to time, the
"Prospectus") of National Equipment Services, Inc., a Delaware corporation
("Company"), and this Letter of Transmittal (the "Letter of Transmittal"), that
together constitute the Company's offer (the "Exchange Offer") to exchange
$1,000 in principal amount of its 10% Senior Subordinated Notes due 2004,
Series B (the "Exchange Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement, for each $1,000 in principal amount of its outstanding
10% Senior Subordinated Notes due 2004 (the "Notes"), of which $100,000,000
aggregate principal amount is outstanding. Capitalized terms used but not
defined herein have the meanings ascribed to them in the Prospectus.
The undersigned hereby tenders the Notes described in Box 1 below (the
"Tendered Notes") pursuant to the terms and conditions described in the
Prospectus and this Letter of Transmittal. The undersigned is the registered
owner of all the Tendered Notes and the undersigned represents that it has
received from each beneficial owner of the Tendered Notes ("Beneficial Owners")
a duly completed and executed form of "Instruction to Registered Holder and/or
Book-Entry Transfer Facility Participant from Beneficial Owner" accompanying
this Letter of Transmittal, instructing the undersigned to take the action
described in this Letter of Transmittal.
<PAGE> 2
Subject to, and effective upon, the acceptance for exchange of the
Tendered Notes, the undersigned hereby exchanges, assigns and transfers to, or
upon the order of, the Company all right, title, and interest in, to and under
the Tendered Notes.
Please issue the Exchange Notes exchanged for Tendered Notes in the
name(s) of the undersigned. Similarly, unless otherwise indicated under
"SPECIAL DELIVERY INSTRUCTIONS" below (see Box 3), please send or cause to be
sent the certificates for the Exchange Notes (and accompanying documents, as
appropriate) to the undersigned at the address shown below in Box 1.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent as the true and lawful agent and attorney in fact of the undersigned with
respect to the Tendered Notes, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(i) deliver the Tendered Notes to the Company or cause ownership of the
Tendered Notes to be transferred to, or upon the order of, the Company, on the
books of the registrar for the Notes and deliver all accompanying evidences of
transfer and authenticity to, or upon the order of, the Company upon receipt by
the Exchange Agent, as the undersigned's agent, of the Exchange Notes to which
the undersigned is entitled upon acceptance by the Company of the Tendered
Notes pursuant to the Exchange Offer, and (ii) receive all benefits and
otherwise exercise all rights of beneficial ownership of the Tendered Notes,
all in accordance with the terms of the Exchange Offer.
The undersigned understands that tenders of Notes pursuant to the
procedures described under the caption "The Exchange Offer" in the Prospectus
and in the instructions hereto will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of the
Exchange Offer, subject only to withdrawal of such tenders on the terms set
forth in the Prospectus under the caption "The Exchange Offer-- Withdrawal of
Tenders." All authority herein conferred or agreed to be conferred shall
survive the death or incapacity of the undersigned and any Beneficial Owner(s),
and every obligation of the undersigned or any Beneficial Owner(s) hereunder
shall be binding upon the heirs, representatives, successors, and assigns of
the undersigned and such Beneficial Owner(s).
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, assign, and transfer the Tendered
Notes and that the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges, encumbrances, and adverse
claims when the Tendered Notes are acquired by the Company as contemplated
herein. The undersigned and each Beneficial Owner will, upon request, execute
and deliver any additional documents reasonably requested by the Company or the
Exchange Agent as necessary or desirable to complete and give effect to the
transactions contemplated hereby.
The undersigned hereby represents and warrants that the information set
forth in Box 2 is true and correct.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) the Exchange Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being acquired by
the undersigned and any Beneficial Owner(s) in the ordinary course of business
of the undersigned and any Beneficial Owner(s), (ii) the undersigned and each
Beneficial Owner are not participating, do not intend to participate, and have
no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes, (iii) except as otherwise disclosed in
writing herewith, neither the undersigned nor any Beneficial Owner is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company,
and (iv) the undersigned and each Beneficial Owner acknowledge and agree that
any person participating in the Exchange Offer with the intention or for the
purpose of distributing the Exchange Notes must comply with the registration
and prospectus delivery requirements of the Securities Act of 1933, as amended
(together with the rules and regulations promulgated thereunder, the
"Securities Act"), in connection with a secondary resale of the Exchange Notes
acquired by such person and cannot rely on the position of the Staff of the
Securities and Exchange Commission (the "Commission") set forth in the
no-action letters that are discussed in the section of the Prospectus entitled
"The Exchange Offer." In addition, by accepting the Exchange Offer, the
undersigned hereby (i) represents and warrants that, if the undersigned or any
Beneficial Owner of the Notes is a Participating Broker-Dealer, such
Participating Broker-Dealer acquired the Notes for its own account as a result
of market-making activities or other trading activities and has not entered
into any arrangement or understanding with the Company or any "affiliate" of
the Company (within the meaning of Rule 405 under the
-2-
<PAGE> 3
Securities Act) to distribute the Exchange Notes to be received in the Exchange
Offer, and (ii) acknowledges that, by receiving Exchange Notes for its own
account in exchange for Notes, where such Notes were acquired as a result of
market-making activities or other trading activities, such Participating
Broker-Dealer will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Notes.
Holders of Notes that are tendering by book-entry transfer to the Exchange
Agent's account at DTC can execute the tender through the DTC Automated Tender
Offer Program ("ATOP"), for which the transaction will be eligible. DTC
participants that are accepting the Exchange Offer must transmit their
acceptance to DTC, which will verify the acceptance and execute a book-entry
delivery to the Exchange Agent's DTC account. DTC will then send an Agent's
Message to the Exchange Agent for its acceptance. DTC participants may also
accept the Exchange Offer prior to the Expiration Date by submitting a Notice
of Guaranteed Delivery or Agent's Message relating thereto as described herein
under Instruction 2, "Guaranteed Delivery Procedures."
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED HEREWITH.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND
COMPLETE "USE OF GUARANTEED DELIVERY" BELOW (Box 4).
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE "USE OF BOOK-ENTRY TRANSFER" BELOW (Box 5).
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING THE BOXES
BOX 1
DESCRIPTION OF NOTES TENDERED
(Attach additional signed pages, if necessary)
<TABLE>
<CAPTION>
Name(s) and Address(es) Aggregate Principal
of Registered Note Holder(s), exactly as Certificate Amount Aggregate
name(s) appear(s) on Note Certificate(s) Number(s) of Represented by Principal Amount
(Please fill in, if blank) Notes* Certificates(s) Tendered**
- ---------------------------------------- ------------ ------------------- ----------------
<S> <C> <C> <C>
TOTAL
</TABLE>
* Need not be completed by persons tendering by book-entry transfer.
** The minimum permitted tender is $1,000 in principal amount of Notes. All
other tenders must be in integral multiples of $1,000 of principal
amount. Unless otherwise indicated in this column, the principal
amount of all Note Certificates identified in this Box 1 or delivered
to the Exchange Agent herewith shall be deemed tendered. See
Instruction 4.
-3-
<PAGE> 4
BOX 2
BENEFICIAL OWNER(S)
<TABLE>
<CAPTION>
STATE OF PRINCIPAL RESIDENCE OF EACH PRINCIPAL AMOUNT OF TENDERED NOTES
BENEFICIAL OWNER OF TENDERED NOTES HELD FOR ACCOUNT OF BENEFICIAL OWNER
<S> <C>
</TABLE>
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
TO BE COMPLETED ONLY IF EXCHANGE NOTES EXCHANGED FOR NOTES AND UNTENDERED NOTES
ARE TO BE SENT TO SOMEONE OTHER THAN THE UNDERSIGNED, OR TO THE UNDERSIGNED AT
AN ADDRESS OTHER THAN THAT SHOWN ABOVE.
Mail Exchange Note(s) and any untendered Notes to:
Name(s):
_______________________________________________________________________________
(please print)
Address:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(include Zip Code)
Tax Identification or
Social Security No.:
-4-
<PAGE> 5
BOX 4
USE OF GUARANTEED DELIVERY
(SEE INSTRUCTION 2)
TO BE COMPLETED ONLY IF NOTES ARE BEING TENDERED BY MEANS OF A NOTICE OF
GUARANTEED DELIVERY.
Name(s) of Registered Holder(s): ______________________________________________
Window Ticket No. (if any): _______________________________________________
Date of Execution of Notice of Guaranteed Delivery: ___________________________
Name of Institution that Guaranteed Delivery: _________________________________
If Delivered by Book-Entry Transfer:
Account Number with DTC: ______________________________________________
Transaction Code Number: ______________________________________________
BOX 5
USE OF BOOK-ENTRY TRANSFER
(SEE INSTRUCTION 1)
TO BE COMPLETED ONLY IF DELIVERY OF TENDERED NOTES IS TO BE MADE BY BOOK-ENTRY
TRANSFER.
Name of Tendering Institution: ________________________________________________
Account Number: _______________________________________________________________
Transaction Code Number: ______________________________________________________
-5-
<PAGE> 6
BOX 6
TENDERING HOLDER SIGNATURE
(SEE INSTRUCTIONS 1 AND 5)
IN ADDITION, COMPLETE SUBSTITUTE FORM W-9
X ________________________________________
X ________________________________________
(Signature of Registered Holder(s)
or Authorized Signatory)
Note: The above lines must be signed by the registered holder(s) of Notes as
their name(s) appear(s) on the Notes or by persons(s) authorized to become
registered holder(s) (evidence of such authorization must be transmitted with
this Letter of Transmittal). If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer, or other person acting in a
fiduciary or representative capacity, such person must set forth his or her
full title below. See Instruction 5.
Name(s): __________________________________
Capacity: _________________________________
Street Address: ___________________________
___________________________
(Zip Code)
Area Code and Telephone Number:
____________________________
Tax Identification or Social Security Number:
____________________________
Signature Guarantee
(If required by Instruction 5)
Authorized Signature
X ______________________________________
Name: ___________________________________________
(please print)
Title: _________________________________
Name of Firm:______________________________________
(Must be an Eligible Institution as
defined in Instruction 2)
Address:
________________________________________
________________________________________
________________________________________
(Zip Code)
Area Code and Telephone Number:
___________________________________
Dated: ___________________________________
<PAGE> 7
BOX 7
BROKER-DEALER STATUS
[ ] Check this box if the Beneficial Owner of the Notes is a
Participating Broker-Dealer and such Participating
Broker-Dealer acquired the Notes for its own account as a
result of market-making activities or other trading activities.
IF THIS BOX IS CHECKED, REGARDLESS OF WHETHER YOU ARE
TENDERING BY BOOK-ENTRY TRANSFER THROUGH ATOP, AN EXECUTED COPY
OF THIS LETTER OF TRANSMITTAL MUST BE RECEIVED WITHIN THREE
NYSE TRADING DAYS AFTER THE EXPIRATION DATE BY NATIONAL
EQUIPMENT SERVICES, INC., ATTENTION PAUL R. INGERSOLL,
FACSIMILE (847) 733-1087.
-6-
<PAGE> 8
PAYORS' NAME: HARRIS TRUST & SAVINGS BANK
<TABLE>
<S> <C> <C>
Name (if joint names, list first and circle the name of the person or entity whose number you
enter in Part 1 below. See instructions if your name has changed.)
Address
SUBSTITUTE
City, State and ZIP Code
FORM W-9 List account number(s) here (optional)
Department of the Treasury PART 1--PLEASE PROVIDE YOUR TAXPAYER IDENTIFICATION NUMBER Social Security Number
("TIN") IN THE BOX AT RIGHT AND CERTIFY BY SIGNING AND or TIN
Internal Revenue Service DATING BELOW
PART 2--Check the box if you are NOT subject to backup withholding under the provisions of
section 3406(a)(1)(C) of the Internal Revenue Code because (1) you have not been notified
that you are subject to backup withholding as a result of failure to report all interest or
dividends or (2) the Internal Revenue Service has notified you that you are no longer subject
to backup withholding. [ ]
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY PART 3--
THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT Awaiting TIN [ ]
AND COMPLETE.
SIGNATURE ______________________ DATE ____________________
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
-7-
<PAGE> 9
NATIONAL EQUIPMENT SERVICES, INC.
INSTRUCTIONS TO LETTER OF TRANSMITTAL
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND NOTES. This Letter of
Transmittal is to be completed by registered Holders of Notes if certificates
representing such Notes are to be forwarded herewith pursuant to the procedures
set forth in the Prospectus under "The Exchange Offer -- Procedures for
Tendering," unless delivery of such certificates is to be made by book-entry
transfer to the Exchange Agent's account maintained by DTC through ATOP. For a
holder to properly tender Notes pursuant to the Exchange Offer, a properly
completed and duly executed copy of this Letter of Transmittal, including
Substitute Form W-9, and any other documents required by this Letter of
Transmittal must be received by the Exchange Agent at its address set forth
herein, and either (i) certificates for Tendered Notes must be received by the
Exchange Agent at its address set forth herein, or (ii) such Tendered Notes
must be transferred pursuant to the procedures for book-entry transfer
described in the Prospectus under the caption "The Exchange Offer--Procedures
for Tendering" (and a confirmation of such transfer received by the Exchange
Agent), in each case prior to 5:00 p.m., New York City time, on the Expiration
Date. The method of delivery of certificates for Tendered Notes, this Letter
of Transmittal and all other required documents to the Exchange Agent is at the
election and risk of the tendering holder and the delivery will be deemed made
only when actually received by the Exchange Agent. If delivery is by mail,
registered mail with return receipt requested, properly insured, is
recommended. Instead of delivery by mail, it is recommended that the Holder
use an overnight or hand delivery service. In all cases, sufficient time
should be allowed to assure timely delivery. No Letter of Transmittal or
Tendered Notes should be sent to the Company. Neither the Company nor the
Exchange Agent is under any obligation to notify any tendering holder of the
Company's acceptance of tendered Notes prior to the closing of the Exchange
Offer.
2. GUARANTEED DELIVERY PROCEDURES. If a registered Holder desires to
tender Notes pursuant to the Exchange Offer and (a) certificates representing
such tendered Notes are not immediately available, (b) time will not permit
such Holder's Letter of Transmittal, certificates representing such tendered
Notes and all other required documents to reach the Exchange Agent on or prior
to the Expiration Date, or (c) the procedures for book-entry transfer cannot be
completed on or prior to the Expiration Date, such Holder may nevertheless
tender such tendered Notes with the effect that such tender will be deemed to
have been received on or prior to the Expiration Date if the procedures set
forth below and in the Statement under "The Exchange Offer -- Guaranteed
Delivery Procedures" (including the completion of Box 4 above) are followed.
Pursuant to such procedures, (i) the tender must be made by or through an
Eligible Institution (as defined), (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by the
Company herewith, or an Agent's Message with respect to a guaranteed delivery
that is accepted by the Company, must be received by the Exchange Agent on or
prior to the Expiration Date, and (iii) the certificates for the tendered
Notes, in proper form for transfer (or a Book-Entry Confirmation of the
transfer of such tendered Notes to the Exchange Agent's account at DTC as
described in the Prospectus), together with a Letter of Transmittal (or
manually signed facsimile thereof) properly completed and duly executed, with
any required signature guarantees and any other documents required by the
Letter of Transmittal or a properly transmitted Agent's Message, must be
received by the Exchange Agent within three New York Stock Exchange trading
days after the date of execution of the Notice of Guaranteed Delivery. Any
holder who wishes to tender Notes pursuant to the guaranteed delivery
procedures described above must ensure that the Exchange Agent receives the
Notice of Guaranteed Delivery relating to such tendered Notes prior to 5:00
p.m., New York City time, on the Expiration Date. Failure to complete the
guaranteed delivery procedures outlined above will not, of itself, affect the
validity or effect a revocation of any Letter of Transmittal form properly
completed and executed by an Eligible Holder who attempted to use the
guaranteed delivery process.
3. BENEFICIAL OWNER INSTRUCTIONS TO REGISTERED HOLDERS. Only a holder in
whose name Tendered Notes are registered on the books of the registrar (or the
legal representative or attorney-in-fact of such registered holder) may execute
and deliver this Letter of Transmittal. Any Beneficial Owner of Tendered Notes
who is not the registered holder must arrange promptly with the registered
holder
-8-
<PAGE> 10
must arrange promptly with the registered holder to execute and deliver this
Letter of Transmittal on his or her behalf through the execution and delivery to
the registered holder of the "Instructions to Registered Holder and/or
Book-Entry Transfer Facility Participant from Beneficial Owner" form
accompanying this Letter of Transmittal.
4. PARTIAL TENDERS. Tenders of Notes will be accepted only in integral
multiples of $1,000 in principal amount. If less than the entire principal
amount of Notes held by the holder is tendered, the tendering holder should
fill in the principal amount tendered in the column labeled "Aggregate
Principal Amount Tendered" of the box entitled "Description of Notes Tendered"
(see Box 1) above. The entire principal amount of Notes delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
If the entire principal amount of all Notes held by the holder is not tendered,
then Notes for the principal amount of Notes not tendered and Exchange Notes
issued in exchange for any Notes tendered and accepted will be sent to the
Holder at his or her registered address, unless a different address is provided
in the appropriate box on this Letter of Transmittal, as soon as practicable
following the Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
registered holder(s) of the Tendered Notes, the signature must correspond with
the name(s) as written on the face of the Tendered Notes without alteration,
enlargement or any change whatsoever.
If any of the Tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any Tendered
Notes are held in different names, it will be necessary to complete, sign and
submit as many separate copies of the Letter of Transmittal as there are
different names in which Tendered Notes are held.
If this Letter of Transmittal is signed by the registered holder(s) of
Tendered Notes, and Exchange Notes issued in exchange therefor are to be issued
(and any untendered principal amount of Notes is to be reissued) in the name of
the registered holder(s), then such registered holder(s) need not and should
not endorse any Tendered Notes, nor provide a separate bond power. In any
other case, such registered holder(s) must either properly endorse the Tendered
Notes or transmit a properly completed separate bond power with this Letter of
Transmittal, with the signature(s) on the endorsement or bond power guaranteed
by a Medallion Signature Guarantor (as defined below).
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of any Tendered Notes, such Tendered Notes must be
endorsed or accompanied by appropriate bond powers, in each case, signed as the
name(s) of the registered holder(s) appear(s) on the Tendered Notes, with the
signature(s) on the endorsement or bond power guaranteed by a Medallion
Signature Guarantor.
If this Letter of Transmittal or any Tendered Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by
the Company, evidence satisfactory to the Company of their authority to so act
must be submitted with this Letter of Transmittal.
Signatures on this Letter of Transmittal must be guaranteed by a
recognized participant in the Securities Transfer Agents Medallion Program, the
New York Stock Exchange Medallion Signature Program or the Stock Exchange
Medallion Program (each a "Medallion Signature Guarantor"), unless the Tendered
Notes are tendered (i) by a registered Holder of Tendered Notes (or by a
participant in DTC whose name appears on a security position listing as the
owner of such Tendered Notes) who has not completed Box 3 ("Special Delivery
Instructions") on this Letter of Transmittal, or (ii) for the account of a
member firm of a registered national securities exchange, a member of the
National Association of Securities Dealers, Inc. ("NASD") or a commercial bank
or trust company having an office or correspondent in the United States (each
of the foregoing being referred to as an "Eligible Institution"). If the
Tendered Notes are registered in the name of a person other than the signor of
the Letter of Transmittal or if Notes not tendered are to be returned to a
person other than the registered Holder, then the signature on this Letter of
Transmittal accompanying the Tendered Notes must be guaranteed by a Medallion
Signature Guarantor as described above. Beneficial owners whose Notes are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if they desire to tender such Notes.
-9-
<PAGE> 11
6. SPECIAL DELIVERY INSTRUCTIONS. Tendering holders should indicate in
Box 3 the name and address to which the Exchange Notes and/or substitute Notes
for principal amounts not tendered or not accepted for exchange are to be sent,
if different from the name and address of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the taxpayer
identification or social security number of the person named must also be
indicated.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Tendered Notes pursuant to the Exchange Offer.
If, however, a transfer tax is imposed for any reason other than the transfer
and exchange of Tendered Notes pursuant to the Exchange Offer, then the amount
of any such transfer taxes (whether imposed on the registered holder or on any
other person) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
this Letter of Transmittal, the amount of such transfer taxes will be billed
directly to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Tendered Notes listed in this Letter
of Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law requires that the
holder(s) of any Tendered Notes which are accepted for exchange must provide
the Exchange Agent (as payor) with its correct taxpayer identification number
("TIN"), which, in the case of a holder who is an individual, is his or her
social security number. If the Exchange Agent is not provided with the correct
TIN, the Holder may be subject to backup withholding and a $50 penalty imposed
by the Internal Revenue Service. (If withholding results in an over-payment of
taxes, a refund may be obtained.) Certain holders (including, among others,
all corporations and certain foreign individuals) are not subject to these
backup withholding and reporting requirements. See the enclosed "Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
To prevent backup withholding, each holder of Tendered Notes must provide
such holder's correct TIN by completing the Substitute Form W-9 set forth
herein, certifying that the TIN provided is correct (or that such holder is
awaiting a TIN), and that (i) the holder has not been notified by the Internal
Revenue Service that such holder is subject to backup withholding as a result
of failure to report all interest or dividends or (ii) if previously so
notified, the Internal Revenue Service has notified the holder that such holder
is no longer subject to backup withholding. If the Tendered Notes are
registered in more than one name or are not in the name of the actual owner,
consult the "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for information on which TIN to report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form,
eligibility (including time of receipt), acceptance and withdrawal of Tendered
Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the right to
reject any and all Notes not validly tendered or any Notes the Company's
acceptance of which would, in the opinion of the Company or its counsel, be
unlawful. The Company also reserves the right to waive any conditions of the
Exchange Offer or defects or irregularities in tenders of Notes as to any
ineligibility of any holder who seeks to tender Notes in the Exchange Offer.
The interpretation of the terms and conditions of the Exchange Offer (including
this Letter of Transmittal and the instructions hereto) by the Company shall be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of Notes must be cured within such time as the
Company shall determine. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of defects or
irregularities with respect to tenders of Notes, nor shall any of them incur
any liability for failure to give such notification. Tenders of Notes will not
be deemed to have been made until such defects or irregularities have been
cured or waived. Any Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering
holders, unless otherwise provided in this Letter of Transmittal, as soon as
practicable following the Expiration Date.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to
amend, waive or modify any of the conditions in the Exchange Offer in the case
of any Tendered Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular, or
contingent tender of Notes or transmittal of this Letter of Transmittal will be
accepted.
-10-
<PAGE> 12
12. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any tendering Holder
whose Notes have been mutilated, lost, stolen or destroyed should contact the
Exchange Agent at the address indicated herein for further instructions.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance and requests for additional copies of the Prospectus or this
Letter of Transmittal may be directed to the Exchange Agent at the address
indicated herein. Holders may also contact their broker, dealer, commercial
bank, trust company or other nominee for assistance concerning the Exchange
Offer.
14. ACCEPTANCE OF TENDERED NOTES AND ISSUANCE OF EXCHANGE NOTES; RETURN OF
NOTES. Subject to the terms and conditions of the Exchange Offer, the Company
will accept for exchange all validly tendered Notes as soon as practicable
after the Expiration Date and will issue Exchange Notes therefor as soon as
practicable thereafter. For purposes of the Exchange Offer, the Company shall
be deemed to have accepted Tendered Notes when, as and if the Company has given
written or oral notice (immediately followed in writing) thereof to the
Exchange Agent. If any Tendered Notes are not exchanged pursuant to the
Exchange Offer for any reason, such unexchanged Notes will be returned, without
expense, to the undersigned at the address shown in Box 1 or at a different
address as may be indicated herein under "Special Delivery Instructions" (Box
3).
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the procedures
set forth in the Prospectus under the caption "The Exchange Offer--Withdrawal
of Tenders."
-11-
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
IN RESPECT OF
10% SENIOR SUBORDINATED NOTES DUE 2004
OF
NATIONAL EQUIPMENT SERVICES, INC.
PURSUANT TO THE PROSPECTUS DATED __________, 1998
The Exchange Agent for the Exchange Offer is:
HARRIS TRUST AND SAVINGS BANK
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
c/o Harris Trust Company of New York c/o Harris Trust Company of New York c/o Harris Trust Company of New York
Wall Street Station 77 Water Street, 4th Floor Receive Window
P.O. Box 1023 New York, NY 10005 77 Water Street, 5th Floor
New York, NY 10268-1023 Attn: Reorganization Dept. New York, NY 10005
Attn: Reorganization Dept. Attn: Reorganization Dept.
</TABLE>
By Facsimile Transmission:
(for Eligible Institutions Only)
(212) 701-7636 or 7637
For Information Telephone (call collect):
(212) 701-7624
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR
TRANSMISSION VIA FACSIMILE TO A NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE VALID DELIVERY.
As set forth in the Prospectus dated __________, 1998 (as it may be
supplemented and amended from time to time, the "Prospectus") of Polymer Group,
Inc. (the "Company") under "The Exchange Offer -- Guaranteed Delivery
Procedures," and in the Instructions to the related Letter of Transmittal (the
"Letter of Transmittal"), this form, or one substantially equivalent hereto, or
an Agent's Message relating to the guaranteed delivery procedures, must be used
to accept the Company's offer (the "Exchange Offer") to exchange any and all of
its outstanding 10% Senior Subordinated Notes due 2004 (the "Notes"), for new
10% Senior Subordinated Notes due 2004, Series B (the "Exchange Notes"), if
time will not permit the Letter of Transmittal, certificates representing such
Notes and other required documents to reach the Exchange Agent, or the
procedures for book-entry transfer cannot be completed, on or prior to the
Expiration Date (as defined).
This form must be delivered by an Eligible Institution (as defined
herein) by mail or hand delivery or transmitted via facsimile to the Exchange
Agent as set forth above. If a signature on the Letter of Transmittal is
required to be guaranteed by a Medallion Signature Guarantor under the
instructions thereto, such signature guarantee must appear in the applicable
space provided in the Letter of Transmittal. This form is not to be used to
guarantee signatures.
Questions and requests for assistance and requests for additional copies
of the Prospectus may be directed to the Exchange Agent at the address above.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON __________, 1998, UNLESS EXTENDED ("THE EXPIRATION DATE").
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tender(s) to the Company, upon the terms and
subject to the conditions set forth in the Prospectus and the related Letter of
Transmittal (receipt of which is hereby acknowledged), the principal amount of
the Notes specified below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under "The Exchange Offer -- Guaranteed Delivery
Procedures" and in Instruction 2 to the Letter of Transmittal. The
undersigned hereby authorizes the Exchange Agent to deliver this Notice of
Guaranteed Delivery to the Company with respect to the Notes tendered pursuant
to the Exchange Offer.
The undersigned understands that Notes will be exchanged only after
timely receipt by the Exchange Agent of (i) such Notes, or a Book-Entry
Confirmation, and (ii) a Letter of Transmittal (or a manually signed facsimile
thereof), including by means of an Agent's Message, of the transfer of such
Notes into the Exchange Agent's account at the Book-Entry Transfer Facility,
with respect to such Notes, properly completed and duly executed, with any
signature guarantees and any other documents required by the Letter of
Transmittal within three New York Stock Exchange, Inc. trading days after the
execution hereof. The undersigned also understands that the method of delivery
of this Notice of Guaranteed Delivery and any other required documents to the
Exchange Agent is at the election and sole risk of the holder, and the delivery
will be deemed made only when actually received by the Exchange Agent.
The undersigned understands that tenders of Notes will be accepted only
in principal amounts equal to $1,000 or integral multiples thereof. The
undersigned also understands that tenders of Notes may be withdrawn at any time
prior to the Expiration Date.
All authority conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall not be affected by, and shall survive, the death or
incapacity of the undersigned, and every obligation of the undersigned under
this Notice of Guaranteed Delivery shall be binding upon the heirs, executors,
administrators, trustees in bankruptcy, personal and legal representatives,
successors and assigns of the undersigned.
All capitalized terms used herein but not defined herein shall have the
meanings ascribed to them in the Prospectus.
- 2 -
<PAGE> 3
PLEASE SIGN AND COMPLETE
<TABLE>
<S> <C>
Signature(s) of Registered Holder(s) or Date:____________________________________________
Authorized Signatory: __________________________
________________________________________________ Address:_________________________________________
________________________________________________ _________________________________________________
Name(s) of Registered
Holder(s):______________________________________ Area Code and Telephone No._____________________
________________________________________________ If Notes will be delivered by book-entry transfer,
check book-entry transfer facility below:
________________________________________________
[ ] The Depository Trust Company
Principal Amount of Notes
Tendered:_______________________________________
________________________________________________
Certificate No.(s) of Notes Depository
(if available)__________________________________ Account No.______________________________________
</TABLE>
This Notice of Guaranteed Delivery must be signed by the holder(s) exactly as
their name(s) appear(s) on certificate(s) for Notes or on a security position
listing as the owner of Notes, or by person(s) authorized to become Holder(s)
by endorsements and documents transmitted with this Notice of Guaranteed
Delivery without alteration, enlargement or any change whatsoever. If
signature is by a trustee, executor, administrator, guardian, attorney-in-fact,
officer or other person acting in a fiduciary or representative capacity, such
person must provide the following information.
Please print name(s) and address(es)
Name(s):________________________________________________________________________
________________________________________________________________________________
Capacity:_______________________________________________________________________
Address(es):____________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
DO NOT SEND NOTES WITH THIS FORM. NOTES SHOULD BE SENT TO THE
EXCHANGE AGENT TOGETHER WITH A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL.
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<PAGE> 4
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of the Securities Transfer Agents Medallion
Program, the Stock Exchange Medallion Program or the New York Stock Exchange,
Inc. Medallion Signature Program (each, an "Eligible Institution"), hereby (i)
represents that the above-named persons are deemed to own the Notes tendered
hereby within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), (ii) represents that such
tender of Notes complies with Rule 14e-4 and (iii) guarantees that the Notes
tendered hereby are in proper form for transfer (pursuant to the procedures set
forth in the Prospectus under "The Exchange Offer -- Guaranteed Delivery
Procedures"), and that the Exchange Agent will receive (a) such Notes, or a
Book-Entry Confirmation of the transfer of such Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility and (b) a properly completed and
duly executed Letter of Transmittal or facsimile thereof (or Agent's message)
with any required signature guarantees and any other documents required by the
Letter of Transmittal within three New York Stock Exchange, Inc. trading days
after the date of execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Exchange Agent and must deliver the Letter of Transmittal and
Notes to the Exchange Agent within the time period shown herein. Failure to do
so could result in a financial loss to such Eligible Institution.
Name of Firm:___________________________________________________________________
Authorized Signature:___________________________________________________________
Title:__________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(Zip Code)
Area Code and Telephone Number:_________________________________________________
Dated: _____________________________, 1998
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<PAGE> 1
EXHIBIT 99.3
INSTRUCTIONS TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
NATIONAL EQUIPMENT SERVICES, INC.
10% SENIOR SUBORDINATED NOTES DUE 2004
To Registered Holder and/or Participant of the Book-Entry Transfer
Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated
________, 1998 (as the same may be amended or supplemented from time to time,
the "Prospectus") of National Equipment Services, Inc., a Delaware corporation
(the "Company"), and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Company's offer (the "Exchange
Offer"). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry
transfer facility participant, as to action to be taken by you relating to the
Exchange Offer with respect to the 10% Senior Subordinated Notes due 2004 (the
"Notes") held by you for the account of the undersigned.
The aggregate face amount of the Notes held by you for the account of
the undersigned is (FILL IN AMOUNT):
$ of the 10% Senior Subordinated Notes due 2004
With respect to the Exchange Offer, the undersigned hereby instructs
you (CHECK APPROPRIATE BOX):
[ ] TO TENDER the following Notes held by you for the account of
the undersigned (INSERT PRINCIPAL AMOUNT OF NOTES TO BE
TENDERED, IF ANY): $
[ ] NOT TO TENDER any Notes held by you for the account of the
undersigned.
If the undersigned instruct you to tender the Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representation and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations that (i) the
undersigned's principal residence is in the state of (FILL IN STATE) ,
(ii) the undersigned is acquiring the Exchange Notes in the ordinary course of
business of the undersigned, (iii) the undersigned is not participating, does
not participate, and has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, (iv) the undersigned
acknowledges that any person participating in the Exchange Offer for the
purpose of distributing the Exchange Notes must comply with the registration
and prospectus delivery requirements of the Securities Act of 1933, as amended
(the "Act"), in connection with a secondary resale transaction of the Exchange
Notes acquired by such person and cannot rely on the position of the Staff of
the Securities and Exchange Commission set forth in no-action letters that are
discussed in the section of the Prospectus entitled "The Exchange Offer--Resale
of the Exchange Notes," and (v) the undersigned is not an "affiliate," as
defined in Rule 405 under the Act, of the Company or any Guarantor; (b) to
agree, on behalf of the undersigned, as set forth in the Letter of Transmittal;
and (c) to take such other action as necessary under the Prospectus or the
Letter of Transmittal to effect the valid tender of such Notes.
Check this box if the Beneficial Owner of the Notes is a
Participating Broker-Dealer and such Participating Broker-Dealer
acquired the Notes for its own account as a result of market-making
[ ] activities or other trading activities. IF THIS BOX IS CHECKED,
A COPY OF THESE INSTRUCTIONS MUST BE RECEIVED WITHIN THREE
NEW YORK STOCK EXCHANGE TRADING DAYS AFTER THE EXPIRATION DATE BY
NATIONAL EQUIPMENT SERVICES, INC., ATTENTION PAUL R. INGERSOLL,
FACSIMILE (847) 733-1087.
SIGN HERE
Name of beneficial owner(s): __________________________________________________
Signature(s): _________________________________________________________________
Name (please print): __________________________________________________________
Address: ______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
Telephone number: _____________________________________________________________
Taxpayer Identification or Social Security Number: ____________________________
Date: _________________________________________________________________________
