<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 001-14299
NATIONSRENT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 31-1570069
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
450 E. LAS OLAS BLVD., FORT LAUDERDALE, FL 33301
(Address of principal executive offices) (Zip Code)
(954) 760-6550
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares of Common Stock, par value $0.01 per share,
outstanding on October 31, 1998 was 44,360,334.
<PAGE> 2
NATIONSRENT, INC.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
PART I
FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
Consolidated Balance Sheets as of September 30, 1998
and December 31, 1997 ................................................................. 1
Consolidated Statements of Income for the Three and Nine Months Ended
September 30, 1998 and the period from August 14, 1997 (Inception)
through September 30, 1997 ............................................................ 2
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1998 and the period from August 14, 1997 (Inception)
through September 30, 1997 ............................................................ 3
Notes to Consolidated Financial Statements .............................................. 4
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ... 8
PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds ............................................... 14
Item 4. Submission of Matters to a Vote of Security Holders ..................................... 14
Item 6. Exhibits and Reports on Form 8-K ........................................................ 14
Signatures ....................................................................................... 15
</TABLE>
<PAGE> 3
PART I -- FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
NATIONSRENT, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 9,231 $ 1,493
Accounts receivable, net of allowance for doubtful
accounts of $2,742 and $587 at September 30, 1998 and
December 31, 1997, respectively 48,115 5,008
Inventories 12,406 1,840
Prepaid expenses and other assets 11,424 755
Rental equipment, net 316,824 30,619
Property and equipment, net 19,416 2,334
Intangible assets related to acquired businesses, net 245,434 37,108
-------- --------
Total Assets $662,850 $ 79,157
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 44,117 $ 2,303
Accrued repair and maintenance expenses 4,681 950
Accrued compensation and related taxes 3,520 328
Accrued expenses and other liabilities 23,852 2,579
Debt 389,841 42,928
Income taxes payable 638 1,523
Deferred income taxes 7,442 2,545
-------- --------
Total liabilities 474,091 53,156
-------- --------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock - $0.01 par value, 5,000,000 shares authorized,
no shares issued and outstanding -- --
Common stock - $0.01 par value, 100,000,000
shares authorized, 44,360,334 shares and 25,000,000
shares issued and outstanding at September 30, 1998 and
December 31, 1997, respectively 444 250
Additional paid-in capital 180,460 24,750
Retained earnings 7,855 1,001
-------- --------
Total stockholders' equity 188,759 26,001
-------- --------
Total Liabilities and Stockholders' Equity $662,850 $ 79,157
======== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
1
<PAGE> 4
NATIONSRENT, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
From
August 14,
1997
Three Months Nine Months (Inception)
Ended Ended Through
September 30, September 30, September 30,
1998 1998 1997
------------- ------------- ------------
<S> <C> <C> <C>
Revenue:
Equipment rentals $ 49,625 $ 73,644 $ 2,643
Sales of equipment, parts and supplies 18,705 39,084 198
--------- --------- ---------
Total revenue 68,330 112,728 2,841
--------- --------- ---------
Cost of revenue:
Cost of equipment rentals, excluding depreciation 15,711 25,195 577
Rental equipment depreciation 8,437 13,555 326
Cost of sales of equipment, parts and supplies 13,611 28,090 78
--------- --------- ---------
Total cost of revenue 37,759 66,840 981
--------- --------- ---------
Gross profit 30,571 45,888 1,860
Operating expenses:
Selling, general and administrative expenses 13,435 22,287 286
Non-rental equipment depreciation and
amortization 1,865 2,931 64
--------- --------- ---------
Operating income 15,271 20,670 1,510
--------- --------- ---------
Other (income)/expense:
Interest expense 5,948 9,391 104
Interest income (102) (143) (12)
Other, net (162) (395) (2)
--------- --------- ---------
5,684 8,853 90
--------- --------- ---------
Income before provision for income taxes 9,587 11,817 1,420
Provision for income taxes 4,026 4,963 614
--------- --------- ---------
Net income $ 5,561 $ 6,854 $ 806
========= ========= =========
Net income per share:
Basic $ 0.15 $ 0.23 $ 0.03
========= ========= =========
Diluted $ 0.14 $ 0.23 $ 0.03
========= ========= =========
Weighted average common shares outstanding:
Basic 37,909 29,894 25,000
========= ========= =========
Diluted 44,271 33,501 25,000
========= ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE> 5
NATIONSRENT, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
From
August 14,
1997
Nine Months (Inception)
Ended Through
September 30, September 30,
1998 1997
------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,854 $ 806
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 16,742 390
Gain on sale of rental equipment (2,910) (14)
Deferred income tax provision 3,580 382
Changes in operating assets and liabilities:
Accounts receivable (14,175) (662)
Inventories 917 (40)
Prepaid expenses and other assets (3,666) 53
Accounts payable 32,588 496
Accrued expenses and other liabilities 270 (63)
Income taxes payable (903) 231
--------- ---------
Net cash provided by operating activities 39,297 1,579
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of businesses, net of cash acquired (207,967) (11,900)
Purchases of rental equipment (76,816) (250)
Purchases of property and equipment (6,004) (2)
Decreases in notes receivable affiliates -- 1,358
Proceeds from sale of rental equipment 12,808 71
--------- ---------
Net cash used in investing activities (277,979) (10,723)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 123,277 15,000
Capital contribution 23,400 --
Proceeds from debt 560,173 1,547
Repayments of debt (456,885) (994)
Debt issuance costs (3,545) --
--------- ---------
Net cash provided by financing activities 246,420 15,553
--------- ---------
Net increase in cash and cash equivalents 7,738 6,409
Cash and cash equivalents, beginning of period 1,493 --
--------- ---------
Cash and cash equivalents, end of period $ 9,231 $ 6,409
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 7,416 $ 155
========= =========
Cash paid for income taxes $ 1,791 $ 98
========= =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
The Company acquired the net assets and assumed certain liabilities
of certain businesses as follows:
Total assets, net of cash acquired $ 497,008 $ 47,804
Total liabilities assumed (229,760) (24,123)
Amount paid with common stock and warrants (9,227) --
Amount paid through the issuance of debt and future payments (50,054) (11,781)
--------- ---------
Net cash paid $ 207,967 $ 11,900
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF
THESE CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE> 6
NATIONSRENT, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements
have been prepared by NationsRent, Inc. (the "Company") and reflect all
adjustments of a normal recurring nature which are, in the opinion of
management, necessary for a fair presentation of financial results for the three
and nine months ended September 30, 1998 and for the period from August 14, 1997
(Inception) through September 30, 1997, in accordance with generally accepted
accounting principles for interim financial reporting and pursuant to Article 10
of Regulation S-X. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. These unaudited
interim consolidated financial statements should be read in conjunction with the
consolidated financial statements for the period ended December 31, 1997
appearing in the Company's Registration Statement on Form S-1, as amended
(Commission File No. 333-56233), filed with the Securities and Exchange
Commission. The results of operations for the three and nine months ended
September 30, 1998 are not necessarily indicative of the results which may be
reported for the year ending December 31, 1998.
The unaudited interim consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All material
intercompany transactions and balances have been eliminated in consolidation.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Company adopted SFAS No. 130 during the
quarter ended June 30, 1998. SFAS No. 130 establishes standards for the
reporting and display of comprehensive income and its components in a full set
of financial statements. The objective of SFAS No. 130 is to report a measure
(comprehensive income) of all changes in equity of an enterprise that result
from transactions and other economic events in a period other than transactions
with owners. The adoption of SFAS 130 did not have a material impact on the
Company's consolidated financial statements, as comprehensive income was equal
to net income for all periods presented. The Company is currently evaluating the
reporting formats recommended under this Statement. SFAS No. 131 establishes a
new method by which companies will report operating segment information. This
method requires disclosure of information which is based on the manner in which
management organizes the segments within a company for making operating
decisions and assessing performance. The Company continues to evaluate the
provisions of SFAS No. 131 and, upon adoption, the Company may report operating
segments.
In March 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." SOP 98-1 establishes criteria for determining which
costs of developing or obtaining internal-use computer software should be
charged to expense and which should be capitalized. SOP 98-1 is effective for
all transactions entered into in fiscal years beginning after December 15, 1998.
The Company does not believe that the adoption of SOP 98-1 will have a material
effect on the Company's financial position or results of operations.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position No. 98-5. SOP 98-5 requires that all
non-governmental entities expense costs of start-up activities, including
pre-operating, pre-opening and organization activities, as those costs are
incurred. In the opinion of management, the adoption of this Statement will not
have a material effect on the Company's financial position or results of
operations.
4
<PAGE> 7
NATIONSRENT, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
SEPTEMBER 30, 1998
NOTE 2 - ACQUISITIONS
The Company is building a nationally branded network of equipment
rental locations. Pursuant to this strategy, the Company made 22 acquisitions of
equipment rental businesses during the nine months ended September 30, 1998. The
aggregate consideration for these acquisitions was $272,099,000 and consisted
of, (i) $212,818,000 of cash, (ii) $44,350,000 of subordinated convertible debt,
(iii) $1,409,000 of subordinated debt, (iv) $4,295,000 of future contractual
cash payments, (v) 1,241,640 shares of the Company's common stock, $0.01 par
value per share ("Common Stock"), and (vi) warrants to purchase 100,000 shares
of Common Stock. In addition, in connection with seven of the acquisitions, the
Company has agreed to make up to an aggregate $4,113,000 of future payments to
the former owners based on the achievement of certain future operating results.
Such payments will be made at various times through July 2001. The cash portion
of the consideration was funded through borrowings under the Company's revolving
credit facility (the "Credit Facility"), capital contributions by the founders
of the Company and a private placement of Common Stock. In addition, the Company
repaid or assumed outstanding indebtedness of the acquired companies in the
aggregate amount of $196,386,000. The acquisitions have been accounted for using
the purchase method and, accordingly, the acquired assets and assumed
liabilities, including goodwill, have been recorded at their estimated fair
values as of the date of acquisition. Purchase accounting values for all
acquisitions have been assigned on a preliminary basis, and are subject to
adjustment when final information as to the fair values of the net assets
acquired is available. The operations of the acquired businesses have been
included in the Company's consolidated statements of income since the date of
each respective acquisition.
The following table sets forth the estimated fair value of the assets
acquired and liabilities assumed for the aforementioned acquisitions (in
thousands):
Assets, including cash $292,488
Goodwill 208,982
Other intangibles 389
Liabilities 229,760
The following table sets forth the unaudited pro forma consolidated
results of operations for the nine months ended September 30, 1998 giving effect
to the aforementioned acquisitions as if such acquisitions had occurred on
January 1, 1998 (in thousands, except per share data):
Revenue $ 231,044
Net income 11,763
Earnings per share:
Basic $ 0.27
Diluted $ 0.26
NOTE 3 - COMMON STOCK
During the first nine months of 1998, the founding stockholders of the
Company made an additional capital contribution of $23,400,000. In June 1998,
the Company sold an aggregate of 5,118,694 shares of Common Stock in a private
placement for aggregate proceeds of $27,600,000. Investors in the private
placement included Company employees and associates of the founding stockholders
of the Company.
In August 1998, the Company consummated its initial public offering of
13,000,000 shares of Common Stock at $8.00 per share. The Company received net
proceeds of approximately $95,677,000 after deducting underwriting discounts and
commissions and offering expenses. The Company used all of the net proceeds to
repay a portion of the outstanding borrowings of the Company under its Credit
Facility.
5
<PAGE> 8
NATIONSRENT, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
SEPTEMBER 30, 1998
NOTE 4 - SEASONALITY
The Company's initial acquisitions have been primarily in the Midwest
region of the United States. The Company's revenue and income are dependent upon
the activity in the construction industry in the markets served by the Company.
Construction activity is dependent upon weather and the traditional seasons for
construction work. Because of this variability in demand, the Company's
quarterly revenue may fluctuate, and revenue for the first quarter of each year
can be expected to be lower than the remaining quarters. Although the Company
believes that the historical trend in quarterly revenue for the second, third
and fourth quarters of each year is generally higher than the first quarter,
there can be no assurance that this will occur in future periods. Accordingly,
quarterly or other interim results should not be considered indicative of
results to be expected for any quarter or for the full year.
NOTE 5 - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
From
August 14,
1997
Three Months Nine Months (Inception)
Ended Ended Through
September 30, September 30, September 30,
1998 1998 1997
-------------- ------------- -------------
(In Thousands, Except Per Share Data)
<S> <C> <C> <C>
Numerator:
Net income - basic earnings per share $ 5,561 $ 6,854 $ 806
Interest expense on convertible
subordinated debt, net of income taxes 488 821 --
------- ------- -------
Numerator - diluted earnings per share $ 6,049 $ 7,675 $ 806
======= ======= =======
Denominator:
Denominator for basic earnings per share -
weighted-average shares 37,909 29,894 25,000
Effect of dilutive securities:
Convertible subordinated debt 6,083 3,430 --
Employee stock options 279 177 --
------- ------- -------
Denominator for diluted earnings per share -
adjusted weighted-average shares 44,271 33,501 25,000
======= ======= =======
Basic earnings per share $ 0.15 $ 0.23 $ 0.03
======= ======= =======
Diluted earnings per share $ 0.14 $ 0.23 $ 0.03
======= ======= =======
</TABLE>
NOTE 6 - DEBT
In September 1998, the Company amended its Credit Facility to increase
the facility to include a term loan of $175,000,000 (the "Term Loan") in
addition to its existing revolving credit facility of up to $260,000,000 (the
"Revolver"). Recently, the Credit Facility was amended further to allow the
administrative agent to reallocate the aggregate dollar amounts of the bank
commitments between the Revolver and the Term Loan, provided that the aggregate
commitment may not be less than $435,000,000 and the aggregate commitment under
the Revolver may not be less than $260,000,000. The Revolver has a three-year
term scheduled to expire in September 2001 and the Term Loan has a six-year term
scheduled to expire in September 2004. The Credit Facility can be used to
complete permitted acquisitions, make capital expenditures, enter into standby
letters of credit, or for working capital and other general corporate purposes.
Borrowings under the Revolver bear interest at either the BankBoston base rate
plus a percentage ranging from 0.0% to 0.50% or, at the Company's option, the
Eurodollar market rate plus a percentage ranging from 2.00% to 2.75%. The Term
Loan bears interest ranging from 3.00% to 3.25% over the Eurodollar market rate.
The percentage over
6
<PAGE> 9
NATIONSRENT, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
SEPTEMBER 30, 1998
the BankBoston base rate or the Eurodollar market rate is based on the Company's
financial performance as measured by the total funded debt ratio. The Credit
Facility is secured by a security interest in substantially all of the assets of
the Company. The Credit Facility also imposes, among other covenants, a tangible
assets to senior debt covenant, a restriction on all of the Company's retained
earnings including the declaration and payment of cash dividends, consent
requirements on certain acquisitions and a restriction on the ratio of total
funded debt to earnings before interest, income taxes, depreciation and
amortization.
NOTE 7 - SUBSEQUENT EVENTS
The Company has completed three acquisitions of rental equipment
businesses since September 30, 1998 for aggregate consideration of $187,946,000.
Such consideration consisted of, (i) $108,076,000 of cash, (ii) $51,770,000 of
subordinated convertible debt, and (iii) $28,100,000 of subordinated debt. Also,
upon the satisfaction of certain post-closing earnings targets, the Company
shall pay additional consideration of $10,000,000 in cash and $10,000,000 in
shares of the Company's Common Stock. The cash portion of the consideration was
funded through borrowings under the Credit Facility. Each of the acquisitions
has been accounted for using the purchase method.
7
<PAGE> 10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of the Company's consolidated
results of operations and financial condition should be read in conjunction with
the unaudited interim consolidated financial statements and notes thereto,
included herein and the consolidated financial statements for the year ended
December 31, 1997 appearing in the Company's Registration Statement on Form S-1,
as amended (Commission File No. 333-56233), filed with the Securities and
Exchange Commission.
GENERAL
The Company was formed on August 14, 1997 for the purpose of creating a
nationally branded network of equipment rental locations offering a broad
selection of equipment primarily to the construction and industrial segments of
the equipment rental industry in the United States.
The Company is building a nationally branded network of equipment
rental locations. Pursuant to this strategy, the Company made 22 acquisitions of
equipment rental businesses during the nine months ended September 30, 1998. The
aggregate consideration for these acquisitions consisted of $212,818,000 of
cash, $50,054,000 of subordinated debt payable to former owners, 1,241,640
shares of Common Stock and warrants to purchase 100,000 shares of Common Stock.
The cash portion of the consideration was funded through borrowings under the
Company's Credit Facility, capital contributions by the founders of the Company
and a private placement of Common Stock. In addition, the Company repaid or
assumed outstanding indebtedness of the acquired companies in the aggregate
amount of $196,386,000. The acquisitions have been accounted for using the
purchase method and, accordingly, the acquired assets and assumed liabilities,
including goodwill, have been recorded at their estimated fair values as of the
date of acquisition. Purchase accounting values for all acquisitions have been
assigned on a preliminary basis, and are subject to adjustment when final
information as to the fair values of the net assets acquired is available. The
operations of the acquired businesses have been included in the Company's
consolidated statements of income since the date of each respective acquisition.
The Company derives its revenue from (i) equipment rental, (ii) sale of
used equipment, (iii) sale of new equipment and (iv) sale of spare parts and
supplies, maintenance and repair services. The growth of rental revenue 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. Revenue generated from the sale of used equipment is affected by
price, general economic conditions and the condition of the equipment. Revenue
from the sale of new equipment is affected by price and general economic
conditions. Revenue from the sale of spare parts and supplies, maintenance and
repair services is primarily affected by equipment rental and sales volume.
The principal components of the Company's cost of revenue include
depreciation of rental equipment, costs of new and used equipment sold,
personnel costs, occupancy costs, repair and maintenance costs and vehicle
operations. Rental equipment depreciation is calculated using the straight-line
method over the estimated useful life of such equipment. The range of useful
lives estimated by management for rental equipment is two to eight years and is
depreciated to a salvage value of zero to ten percent of original cost. Certain
lift equipment is depreciated over a ten-year period.
Selling, general and administrative expense includes management
salaries, advertising and marketing, travel, administrative and clerical
salaries and data processing.
Non-rental equipment depreciation and amortization includes the
depreciation of fixed assets that are not offered for rent, amortization of
leasehold improvements and amortization of intangible assets related to the
acquired businesses.
Since the Company was only in operation for approximately one month
during the third quarter of 1997, meaningful comparison to the prior year
results can not be made. As such, the following discussion of the results of
operations does not set forth any prior year comparisons.
8
<PAGE> 11
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998
REVENUE. The following table sets forth the Company's revenue by type
for the three and nine months ended September 30, 1998 (in thousands, except
percentages):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, 1998 September 30, 1998
----------------------- -----------------------
<S> <C> <C> <C> <C>
Equipment rentals $ 49,625 73% $ 73,644 65%
Sales of equipment, parts, and supplies 18,705 27 39,084 35
-------- -------- -------- --------
$ 68,330 100% $112,728 100%
======== ======== ======== ========
</TABLE>
Equipment rental revenue as a percentage of total revenue was 65% for
the nine month ended September 30, 1998. The amount for the three months ended
September 30, 1998 exceeded the nine month amounts primarily due to the deferral
of used equipment sales scheduled for the end of the third quarter to the fourth
quarter of 1998. The Company continues to expand its rental equipment inventory
at its current locations and has targeted equipment rental revenue as a
percentage of total revenue to be greater than 60%.
GROSS PROFIT. Gross profit for the three and nine months ended
September 30, 1998 was $30,571,000 or 44.7% of revenue and $45,888,000 or 40.7%
of revenue, respectively.
OPERATING EXPENSES. Selling, general and administrative expenses for
the three and nine months ended September 30, 1998 were $13,435,000 or 19.7% of
revenue and $22,287,000 or 19.8% of revenue, respectively. Non- rental equipment
depreciation and amortization for the three and nine months ended September 30,
1998 was $1,865,000 or 2.7% of revenue and $2,931,000 or 2.6% of revenue,
respectively.
OTHER INCOME AND EXPENSE. Interest expense for the three and nine
months ended September 30, 1998 was $5,948,000 or 8.7% of revenue and $9,391,000
or 8.3% of revenue, respectively. Interest expense is primarily attributable to
the Company's Credit Facility and subordinated notes issued for acquisitions.
INCOME TAXES. The Company's effective income tax rate for the three and
nine months ended September 30, 1998 was 42%. The amount above statutory income
tax rates is attributable to non-deductible goodwill amortization for federal
income tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary uses of cash have been the funding of
acquisitions and capital expenditures. To date, the Company has funded its cash
requirements with (i) borrowings under its Credit Facility, (ii) $48,400,000 of
equity contributions from the founders of the Company, (iii) $27,600,000 of
proceeds from a private placement of Common Stock, (iv) $95,677,000 (after
deducting underwriting discounts and commissions and offering expenses) from an
initial public offering of 13,000,000 shares of Common Stock at $8.00 per share,
and (v) the use of equipment leases.
The Company's net cash provided by operations was $39,297,000 for the
nine months ended September 30, 1998. Net cash used in investing activities was
$277,979,000 for the nine months ended September 30, 1998. Cash used in
investing activities in the first nine months of 1998 was primarily a result of
cash consideration of $207,967,000 for the acquisition of businesses, net of
cash acquired and $76,816,000 for purchases of rental equipment. Cash provided
by financing activities during this period was $246,420,000 for the nine months
ended September 30, 1998. Cash provided by financing activities was primarily a
result of (i) $23,400,000 of additional equity contributions from the Company's
founders, (ii) $27,600,000 in proceeds from a private placement of Common Stock,
(iii) $95,677,000 (after deducting underwriting discounts and commissions and
offering expenses) from an initial public offering of 13,000,000 shares of
Common Stock at $8.00 per share, and (iv) borrowings under the Company's Credit
Facility.
9
<PAGE> 12
In September 1998, the Company amended its Credit Facility to increase
the facility to include a term loan of $175,000,000 (the "Term Loan") in
addition to its existing revolving credit facility of up to $260,000,000 (the
"Revolver"). Recently, the Credit Facility was amended further to allow the
administrative agent to reallocate the aggregate dollar amounts of the bank
commitments between the Revolver and the Term Loan, provided that the aggregate
commitment may not be less than $435,000,000 and the aggregate commitment under
the Revolver may not be less than $260,000,000. The Revolver has a three-year
term scheduled to expire in September 2001 and the Term Loan has a six-year term
scheduled to expire in September 2004. The Credit Facility can be used to
complete permitted acquisitions, make capital expenditures, enter into standby
letters of credit, or for working capital and other general corporate purposes.
Borrowings under the Revolver bear interest at either the BankBoston base rate
plus a percentage ranging from 0.0% to 0.50% or, at the Company's option, the
Eurodollar market rate plus a percentage ranging from 2.00% to 2.75%. The Term
Loan bears interest ranging from 3.00% to 3.25% over the Eurodollar market rate.
The percentage over the BankBoston base rate or the Eurodollar market rate is
based on the Company's financial performance as measured by the total funded
debt ratio. The Credit Facility is secured by a security interest in
substantially all of the assets of the Company. The Credit Facility also
imposes, among other covenants, a tangible assets to senior debt covenant, a
restriction on all of the Company's retained earnings including the declaration
and payment of cash dividends, consent requirements on certain acquisitions and
a restriction on the ratio of total funded debt to earnings before interest,
income taxes, depreciation and amortization. On September 30, 1998, $87,500,000
and $175,000,000 of cash borrowings were outstanding under the Revolver and Term
Loan, respectively.
The Company's short-term cash requirements for its existing operations
consist of (i) capital expenditures to maintain, modernize and expand its rental
equipment inventory, (ii) working capital requirements, and (iii) operating
activities such as repair and maintenance of rental equipment, purchase of
merchandise inventory and other operating activities. The Company estimates that
equipment expenditures for its existing locations will be in the range of
$90,000,000 to $100,000,000, net of proceeds from used equipment sales, over the
next 12 months. In addition, the Company believes that it will be required to
make equipment expenditures in connection with new acquisitions. The Company
believes that it will be able to finance its short-term cash needs through
borrowings under the Credit Facility, the use of equipment leases and cash
generated from operations. The Company estimates that such sources will be
sufficient to fund the cash required for the Company's existing operations for
at least 12 months.
During the nine months ended September 30, 1998, the Company has opened
six new locations within identified "clusters." The Company estimates that the
aggregate capital costs associated with each such new location will be in the
range of $2,000,000 to $4,500,000. The Company believes that cash generated from
operations and borrowings under the Credit Facility will be sufficient to fund
these costs without additional debt or equity financings.
The Company has customized a management information system that became
operational in the fourth quarter of 1998. The Company estimates the total cost
of installation of such system at the Company's existing locations will range
between $5,000,000 and $7,000,000 and believes cash generated from operations
and borrowings under the Credit Facility will be sufficient to fund these costs.
The Company expects that the incremental costs of installation of such system at
additional locations will not be significant on a per location basis.
The Company plans to continue its acquisition strategy and expects to
finance future acquisitions using cash, capital stock, notes and/or assumption
of indebtedness. To fully implement its growth strategy and meet the resulting
capital requirements, the Company will be required to increase amounts available
under the Credit Facility, issue future debt instruments or raise additional
capital through equity financings. There can be no assurance that any such
increase to the Credit Facility will be available or, if available, will be on
terms satisfactory to the Company, or that the Company will be able to
successfully complete any future debt or equity financings.
SEASONALITY AND FLUCTUATIONS IN OPERATING RESULTS
The Company's revenue and income are dependent upon activity in the
construction industry in the markets served by the Company. Construction
activity is dependent upon weather and other seasonal factors affecting
construction in the geographic areas where the Company has operations,
particularly in the Midwest. Because of this variability in demand, the
Company's quarterly revenue may fluctuate, and revenue for the first quarter of
each year can be expected to be lower than the remaining quarters. Although the
Company believes that the historical trend in quarterly revenue for the second,
third and fourth quarters of each year is generally higher than the first
quarter, there can be no assurance that this will occur in future periods.
Accordingly, quarterly or other interim results should not be considered
indicative of results to be expected for any other quarter or for a full year.
10
<PAGE> 13
Operating results may fluctuate due to other factors including, but not
limited to (i) changes in general economic conditions including changes in
national, regional and local construction or industrial activities, (ii) the
timing of acquisitions and opening of new locations, (iii) the timing of
expenditures for new rental equipment and the disposition of used equipment,
(iv) competitive pricing pressures and (v) increases in interest rates.
The Company will incur significant expenses in opening new locations,
such as employee training, marketing and facility set-up costs. Initially, new
locations may generate lower operating margins than established locations and
may operate at a loss. In addition, when the Company purchases new rental
equipment, the depreciation related to such equipment may contribute to
near-term margin decline, because such equipment may not initially generate
revenue at a rate that is sufficient to match such increased depreciation
expense. As such, the opening of new rental locations and the purchase of new
equipment to expand the Company's current rental equipment inventory may reduce
the Company's operating margins during a start-up period.
INFLATION
The Company does not believe that inflation has been a significant
factor to the cost of its operations or the operations of the Company's
predecessor, Sam's Equipment Rental, Inc.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." The Company adopted SFAS No. 130 during the
quarter ended June 30, 1998. SFAS No. 130 establishes standards for the
reporting and display of comprehensive income and its components in a full set
of financial statements. The objective of SFAS No. 130 is to report a measure
(comprehensive income) of all changes in equity of an enterprise that result
from transactions and other economic events in a period other than transactions
with owners. The adoption of SFAS 130 did not have a material impact on the
Company's consolidated financial statements, as comprehensive income was equal
to net income for all periods presented. The Company is currently evaluating the
reporting formats recommended under this Statement. SFAS No. 131 establishes a
new method by which companies will report operating segment information. This
method requires disclosure of information which is based on the manner in which
management organizes the segments within a company for making operating
decisions and assessing performance. The Company continues to evaluate the
provisions of SFAS No. 131 and, upon adoption, the Company may report operating
segments.
In March 1998, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
("SOP") 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use." SOP 98-1 establishes criteria for determining which
costs of developing or obtaining internal-use computer software should be
charged to expense and which should be capitalized. SOP 98-1 is effective for
all transactions entered into in fiscal years beginning after December 15, 1998.
The Company does not believe that the adoption of SOP 98-1 will have a material
effect on the Company's financial position or results of operations.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position No. 98-5. SOP 98-5 requires that all
non-governmental entities expense costs of start-up activities, including
pre-operating, pre-opening and organization activities, as those costs are
incurred. In the opinion of management, the adoption of this Statement will not
have a material effect on the Company's financial position or results of
operations.
YEAR 2000
Since many computer systems and other equipment with embedded chips or
processors use only two digits to represent the year, these systems may be
unable to process accurately certain data before, during or after the year 2000.
As a result, business and governmental entities are at risk for possible
miscalculations or systems failures causing disruptions in their business
operations. This is commonly known as the Year 2000 issue.
The Company began developing its own management information system (the
"System") during the second quarter of 1998. The Company's System has been
developed to ensure that it is Year 2000 compliant. In October 1998,
11
<PAGE> 14
the Company began converting its operations to the new System and has converted
8 of its locations. The Company expects to have all of its current operations
converted to the new System by the end of the second quarter of 1999.
Although the Company does not believe it will suffer any material
effects from the Year 2000 issue in its current operations, there can be no
assurance that the Company will be able to convert the systems of future
acquisitions in a timely manner to avoid any Year 2000 issues. The Company
intends to convert all of the systems of the businesses it acquires to the
Company's System as soon as practicable after each acquisition is completed.
There can be no assurance, however, that all such systems will be converted
prior to December 31, 1999.
The Company relies on third-party suppliers for operating supplies,
merchandise for resale, utilities, transportation, equipment for rent and retail
sales and other key services. Interruption of any such third-party's operations
due to Year 2000 issues could have a material adverse effect on the Company's
operations. The Company has begun efforts to evaluate the progress of the
Company's critical third-party suppliers relative to their Year 2000 issues.
This evaluation process is scheduled for completion by the end of the second
quarter in 1999. These activities are intended to provide a means of managing
risk, but cannot eliminate the potential for disruption due to third-party
failure.
The Company is also dependent upon its customers for revenue and cash
flow. Year 2000 interruptions in the Company's customers' operations could
result in reduced revenue, decreased utilization of rental equipment, increased
inventory levels of merchandise, increased accounts receivable levels and cash
flow reductions. The Company has a very broad customer base which should
minimize the impact of isolated failures of its customers' systems. The Company
has begun efforts to evaluate the progress of its critical customers relative
to their Year 2000 issues. This evaluation process is scheduled for completion
by the end of the second quarter in 1999.
Contingency plans for Year 2000-related interruptions are being
developed and will include, but not be limited to, the development of emergency
backup and recovery procedures for lost data, development of plans as a result
the Company's assessment of customer Year 2000 issues, identification of
alternate suppliers, acceleration of the time it takes to convert newly acquired
locations from their systems to the Company's System and increasing inventory
levels of critical supplies and rental equipment. All plans are expected to be
completed by the end of the second quarter in 1999.
Although the Company does not expect to incur significant expense to
address the Year 2000 issue beyond its capital investment in its System, Year
2000 problems might require the Company to incur unanticipated expenses which
could have a material adverse effect on the Company's business, financial
condition, results of operations or prospects.
The Company's Year 2000 efforts are ongoing and its overall plan, as
well as the consideration of contingency plans, will continue to evolve as new
information becomes available. While the Company anticipates no material
interruption of its business activities, the failure to correct a material Year
2000 problem could result in an interruption in, or a failure of, certain normal
business activities or operations. Such failures could materially and adversely
affect the Company's results of operations, liquidity and financial condition.
Due to the general uncertainty inherent in the Year 2000 problem, resulting in
part from the uncertainty of the Year 2000 readiness of third-party suppliers
and customers, the Company is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact on the Company's
results of operations, liquidity or financial condition.
FORWARD-LOOKING STATEMENTS
Certain statements and information included herein constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance, or achievements of the Company to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. Such factors include, among other
things: the ability to develop and implement operational and financial systems
to manage rapidly growing operations; competition in the Company's lines of
business; the ability to integrate and successfully operate acquired businesses
and the risks associated with such businesses; the ability to obtain financing
on acceptable terms to finance the Company's operations and growth strategy and
for the Company to operate within the limitations imposed by financing
arrangements; the possibility of unfavorable changes to the cost or financing of
the Company's equipment rental fleet; the Company's dependence on key personnel;
and other factors contained in the Company's filings with the Securities and
Exchange Commission.
12
<PAGE> 15
PART II -- OTHER INFORMATION
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) Recent Sales of Unregistered Securities
During the period covered by this report (July 1, 1998 through
September 30, 1998), the Company has issued securities in the transactions set
forth below. Each of these transactions was intended to be exempt from the
registration requirements of the Securities Act of 1933, as amended, by virtue
of Section 4(2) thereunder based on being issued in a transaction not involving
a public offering.
In September 1998, in connection with the acquisition of Agstar, Inc.
and Lightnin' Truck Rental, Inc. (collectively, the "Lightnin Companies"), the
Company issued an aggregate of 827,827 shares of Common Stock to the
shareholders of the Lightnin Companies.
In September 1998, in connection with the acquisition of Gold Coast
Aerial Lift, Inc. and Villella Holding Company (collectively, the "Gold Coast
Companies"), the Company issued an aggregate of 413,814 shares of Common Stock
to the shareholders of the Gold Coast Companies.
In September 1998, in connection with the acquisition of the assets of
Reliable Rental & Supply Co., Inc. ("Reliable"), the Company issued to Reliable
an unsecured convertible promissory note in the principal amount of $2,500,000,
which is convertible into shares of Common Stock at a conversion price of $9.43
per share.
In September 1998, in connection with the acquisition of the assets of
Sheffield Equipment Co., Inc. ("Sheffield"), the Company issued to Sheffield an
unsecured convertible promissory note in the principal amount of $850,000, which
is convertible into shares of Common Stock at a conversion price of $7.76 per
share.
In September 1998, in connection with the acquisition of Tennessee Tool
and Supply, Inc. ("Tennessee"), the Company issued to the shareholders of
Tennessee an unsecured convertible promissory note in the principal amount of
$3,100,000, which is convertible into shares of Common Stock at a conversion
price of $8.21 per share.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
In August 1998, in anticipation of the Company's initial public
offering, the stockholders of the Company, by unanimous written consent in lieu
of a special meeting, approved and adopted the Company's 1998 Stock Option Plan
and the amendment of the Certificate of Incorporation of the Company.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
NUMBER DESCRIPTION
- - ------- -----------
3.1* Amended and Restated Certificate of Incorporation of the Company.
3.2** Amended and Restated By-Laws of the Company.
4.1** Form of Certificate of Common Stock.
4.2 Second Amended and Restated Revolving Credit Agreement and Term Loan,
dated as of September 24, 1998, by and among the Company, BankBoston,
N.A., LaSalle National Bank, Fleet Bank N.A., NationsBank, N.A.,
BancBoston Securities, Inc. and other lending institutions named
therein.
4.3** Security Agreement, dated as of March 18, 1998, between the Company
and Bank Boston, N.A.
4.4** Omnibus Amendment to Security Documents, dated as of June 29, 1998,
among the Company, its subsidiaries and Bank Boston, N.A.
4.5 Omnibus Amendment No. 2 to Security Documents, dated as of September
24, 1998, among the Company, its subsidiaries and Bank Boston N.A.
13
<PAGE> 16
Exhibit
NUMBER DESCRIPTION
- - ------- -----------
10.1** Stock Purchase Agreement dated March 24, 1998 among the Company,
Bode-Finn and the shareholders of Bode- Finn, together with Amendment
No. I dated April 6, 1998 and Amendment No. 2 dated April 17, 1998.
10.2** Form of Unsecured Convertible Subordinated Promissory Notes - Bode-Finn
10.3** Form of Warrant - Bode-Finn
10.4** Registration Rights Agreement dated May 5, 1998 among the Company,
Bode-Finn, L.P. and Raymond E. Mason Foundation
10.5** Asset Purchase Agreement dated March 25, 1998 among NationsRent of
Indiana, Inc., R.F.L. Enterprises, Inc. ("RFL") and the shareholder of
RFL
10.6** Asset Purchase Agreement dated April 21, 1998 among NationsRent of
Florida, Inc. and Naples
10.7** Form of Unsecured Convertible Subordinated Promissory Note - Naples
10.8** Stock Purchase Agreement dated May 7, 1998 among the Company, Jobs and
the shareholders of Jobs
10.9** Form of Unsecured Subordinated Promissory Notes - Jobs
10.10** Form of Unsecured Convertible Subordinated Promissory Note - Jobs
10.11** Asset Purchase Agreement dated May 14, 1998 among the Company and
General Rental, Inc.
10.12** Stock Purchase Agreement dated May 30, 1998 among the Company, The J.
Kelly Co. ("J. Kelly") and the shareholders of J. Kelly
10.13** Form of Unsecured Convertible Subordinated Promissory Note - J. Kelly
10.14** Form of Registration Rights Agreement among the Company and the
shareholders of J. Kelly
10.15** Asset Purchase Agreement dated June 7, 1998 among the Company,
Associated Rental Equipment Management Company, Inc. ("Associated") and
the sole shareholder of Associated
10.16** Form of Unsecured Convertible Subordinated Promissory Note - Associated
10.17** Form of Registration Rights Agreement - Associated
10.18** Form of Subscription Agreement, dated May 1998, between the Company and
certain subscribers
10.19* NationsRent 1998 Stock Option Plan
10.20** Form of Stock Option Agreement
10.21*** Amended and Restated Asset Purchase Agreement dated as of September 9,
1998 by and among the Company, Ray L. O'Neal, Inc., Arenco LLC, Don R.
O'Neal, Elizabeth M. O'Neal and the O'Neal Revocable Trust dated
December 29, 1987
10.22*** Unsecured Convertible Promissory Note issued to Ray L. O'Neal
27.1 Financial data schedule
- - ----------
* Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the period ending June 30, 1998
** Incorporated by reference to the Registrant's Registration Statement on
Form S-1, SEC File No. 333-56233
*** Incorporated by reference to the Registrant's Current Report on Form 8-K
dated October 23, 1998
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
30, 1998.
14
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONSRENT, INC.
Date: November 16, 1998 By /s/ James L. Kirk
--------------------------------
James L. Kirk
Chairman of the Board and
Chief Executive Officer
(Duly Authorized Officer)
Date: November 16, 1998 By /s/ Gene J. Ostrow
--------------------------------
Gene J. Ostrow
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
Date: November 16, 1998 By /s/ Kris E. Hansel
--------------------------------
Kris E. Hansel
Vice President and Controller
(Principal Accounting Officer)
15
<PAGE> 18
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
EXHIBITS TO
FORM 10-Q
SEPTEMBER 30, 1998
------------------------------------
NATIONSRENT, INC.
================================================================================
<PAGE> 19
Exhibit
NUMBER DESCRIPTION
- - ------- -----------
3.1* Amended and Restated Certificate of Incorporation of the Company.
3.2** Amended and Restated By-Laws of the Company.
4.1** Form of Certificate of Common Stock.
4.2 Second Amended and Restated Revolving Credit Agreement and Term Loan,
dated as of September 24, 1998, by and among the Company, BankBoston,
N.A., LaSalle National Bank, Fleet Bank N.A., NationsBank, N.A.,
BancBoston Securities, Inc. and other lending institutions named
therein.
4.3** Security Agreement, dated as of March 18, 1998, between the Company and
Bank Boston, N.A.
4.4** Omnibus Amendment to Security Documents, dated as of June 29, 1998,
among the Company, its subsidiaries and Bank Boston, N.A.
4.5 Omnibus Amendment No. 2 to Security Documents, dated as of September
24, 1998, among the Company, its subsidiaries and Bank Boston N.A.
10.1** Stock Purchase Agreement dated March 24, 1998 among the Company,
Bode-Finn and the shareholders of Bode- Finn, together with Amendment
No. 1 dated April 6, 1998 and Amendment No. 2 dated April 17, 1998.
10.2** Form of Unsecured Convertible Subordinated Promissory Notes - Bode-Finn
10.3** Form of Warrant - Bode-Finn
10.4** Registration Rights Agreement dated May 5, 1998 among the Company,
Bode-Finn, L.P. and Raymond E. Mason Foundation
10.5** Asset Purchase Agreement dated March 25, 1998 among NationsRent of
Indiana, Inc., R.F.L. Enterprises, Inc. ("RFL") and the shareholder of
RFL
10.6** Asset Purchase Agreement dated April 21, 1998 among NationsRent of
Florida, Inc. and Naples
10.7** Form of Unsecured Convertible Subordinated Promissory Note - Naples
10.8** Stock Purchase Agreement dated May 7, 1998 among the Company, Jobs and
the shareholders of Jobs
10.9** Form of Unsecured Subordinated Promissory Notes - Jobs
10.10** Form of Unsecured Convertible Subordinated Promissory Note - Jobs
10.11** Asset Purchase Agreement dated May 14, 1998 among the Company and
General Rental, Inc.
10.12** Stock Purchase Agreement dated May 30, 1998 among the Company, The J.
Kelly Co. ("J. Kelly") and the shareholders of J. Kelly
10.13** Form of Unsecured Convertible Subordinated Promissory Note - J. Kelly
10.14** Form of Registration Rights Agreement among the Company and the
shareholders of J. Kelly
10.15** Asset Purchase Agreement dated June 7, 1998 among the Company,
Associated Rental Equipment Management Company, Inc. ("Associated") and
the sole shareholder of Associated
10.16** Form of Unsecured Convertible Subordinated Promissory Note - Associated
10.17** Form of Registration Rights Agreement - Associated
10.18** Form of Subscription Agreement, dated May 1998, between the Company and
certain subscribers
10.19* NationsRent 1998 Stock Option Plan
10.20** Form of Stock Option Agreement
10.21*** Amended and Restated Asset Purchase Agreement dated as of September 9,
1998 by and among the Company, Ray L. O'Neal, Inc., Arenco LLC, Don R.
O'Neal, Elizabeth M. O'Neal and the O'Neal Revocable Trust dated
December 29, 1987
10.22*** Unsecured Convertible Promissory Note issued to Ray L. O'Neal
27.1 Financial data schedule
- - ----------
* Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the period ending June 30, 1998
** Incorporated by reference to the Registrant's Registration Statement on
Form S-1, SEC File No. 333-56233
*** Incorporated by reference to the Registrant's Current Report on Form 8-K
dated October 23, 1998
<PAGE> 1
EXHIBIT 4.2
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
Dated as of September 24, 1998
by and among
NATIONSRENT, INC.
AND ITS SUBSIDIARIES
(the "Borrowers"),
BANKBOSTON, N.A., AS ADMINISTRATIVE AGENT
LASALLE NATIONAL BANK, AS
DOCUMENTATION AGENT
FLEET BANK, N.A., AS CO-AGENT
NATIONSBANK, N.A., AS CO-AGENT
and
THE LENDING INSTITUTIONS PARTY HERETO
(the "Lenders"),
WITH
BANCBOSTON ROBERTSON STEPHENS INC., AS ARRANGER
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION.......................................................1
SECTION 1.1. DEFINITIONS........................................................................1
SECTION 1.2. RULES OF INTERPRETATION............................................................19
SECTION 2. THE REVOLVING CREDIT FACILITY.................................................................20
SECTION 2.1. COMMITMENT TO LEND.................................................................20
SECTION 2.2. REDUCTION AND INCREASE OF TOTAL COMMITMENT.........................................20
SECTION 2.2.1. REDUCTION OF TOTAL COMMITMENT...........................................20
SECTION 2.2.2. INCREASE OF TOTAL COMMITMENT............................................21
SECTION 2.3. THE REVOLVING CREDIT NOTES.........................................................21
SECTION 2.4. INTEREST ON REVOLVING CREDIT LOANS AND SWING LINE LOANS............................22
SECTION 2.5. ELECTION OF EURODOLLAR RATE; NOTICE OF ELECTION; INTEREST
PERIODS; MINIMUM AMOUNTS...........................................................22
SECTION 2.6. REQUESTS FOR REVOLVING CREDIT LOANS AND SWING LINE LOANS...........................23
SECTION 2.7. FUNDS FOR REVOLVING CREDIT LOANS...................................................24
SECTION 2.8. SWING LINE LOANS; SETTLEMENTS......................................................25
SECTION 2.9. MATURITY OF THE REVOLVING CREDIT LOANS.............................................27
SECTION 2.10. MANDATORY REPAYMENTS OF THE REVOLVING CREDIT LOANS AND SWING LINE LOANS AND
REIMBURSEMENT OBLIGATIONS........................................................................27
SECTION 2.11. OPTIONAL PREPAYMENTS OF REVOLVING CREDIT LOANS AND SWING LINE LOANS...............27
3. THE TERM LOAN........................................................................................28
3.1. COMMITMENT TO LEND........................................................................28
3.2. THE TERM NOTES............................................................................28
3.3. SCHEDULE OF INSTALLMENT PAYMENTS OF PRINCIPAL OF TERM LOAN................................28
3.4. MANDATORY PREPAYMENTS.....................................................................29
3.5. OPTIONAL PREPAYMENT OF TERM LOAN..........................................................29
3.6. INTEREST ON TERM LOAN.....................................................................29
3.6.1. INTEREST RATES.................................................................29
3.6.2. NOTIFICATION BY BORROWERS......................................................29
3.6.3. AMOUNTS, ETC...................................................................30
SECTION 4. LETTERS OF CREDIT.............................................................................30
SECTION 4.1. LETTER OF CREDIT COMMITMENTS.......................................................30
SECTION 4.2. REIMBURSEMENT OBLIGATION OF THE BORROWERS..........................................31
SECTION 4.3. LETTER OF CREDIT PAYMENTS..........................................................32
SECTION 4.4. OBLIGATIONS ABSOLUTE...............................................................32
SECTION 4.5. RELIANCE BY ADMINISTRATIVE AGENT...................................................33
SECTION 5. CERTAIN GENERAL PROVISIONS.....................................................................33
SECTION 5.1. FEES...............................................................................33
SECTION 5.2. PAYMENTS...........................................................................34
SECTION 5.3. COMPUTATIONS.......................................................................35
SECTION 5.4. CAPITAL ADEQUACY...................................................................35
SECTION 5.5. CERTIFICATE........................................................................36
SECTION 5.6. INTEREST AFTER DEFAULT.............................................................36
</TABLE>
<PAGE> 3
-ii-
<TABLE>
<CAPTION>
<S> <C>
SECTION 5.7. INTEREST LIMITATION..................................................................36
SECTION 5.8. EURODOLLAR INDEMNITY.................................................................36
SECTION 5.9. ILLEGALITY; INABILITY TO DETERMINE EURODOLLAR RATE...................................37
SECTION 5.10. ADDITIONAL COSTS, ETC...............................................................38
SECTION 5.11. REPLACEMENT OF LENDERS..............................................................39
SECTION 5.12. CONCERNING JOINT AND SEVERAL LIABILITY OF THE BORROWERS.............................40
SECTION 6. REPRESENTATIONS AND WARRANTIES................................................................42
SECTION 6.1. CORPORATE AUTHORITY..................................................................43
SECTION 6.2. GOVERNMENTAL APPROVALS...............................................................43
SECTION 6.3. TITLE TO PROPERTIES; LEASES..........................................................43
SECTION 6.4. FINANCIAL STATEMENTS; SOLVENCY.......................................................44
SECTION 6.5. NO MATERIAL CHANGES, ETC.............................................................44
SECTION 6.6. PERMITS, FRANCHISES, PATENTS, COPYRIGHTS, ETC........................................44
SECTION 6.7. LITIGATION...........................................................................44
SECTION 6.8. NO MATERIALLY ADVERSE CONTRACTS, ETC.................................................45
SECTION 6.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC.........................................45
SECTION 6.10. TAXSTATUS...........................................................................45
SECTION 6.11. NO EVENT OF DEFAULT.................................................................45
SECTION 6.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS.........................................45
SECTION 6.13. ABSENCE OF FINANCING STATEMENTS, ETC................................................46
SECTION 6.14. EMPLOYEE BENEFIT PLANS..............................................................46
SECTION 6.15. USE OF PROCEEDS.....................................................................47
SECTION 6.15.1. GENERAL................................................................47
SECTION 6.15.2. REGULATIONS U AND X....................................................47
SECTION 6.15.3. INELIGIBLE SECURITIES..................................................47
SECTION 6.16. ENVIRONMENTAL COMPLIANCE............................................................47
SECTION 6.17. PERFECTION OF SECURITY INTERESTS....................................................49
SECTION 6.18. TRANSACTIONS WITH AFFILIATES........................................................49
SECTION 6.19. SUBSIDIARIES........................................................................49
SECTION 6.20. TRUE COPIES OF CHARTER AND OTHER DOCUMENTS..........................................50
SECTION 6.21. DISCLOSURE..........................................................................50
SECTION 6.22. CAPITALIZATION......................................................................50
SECTION 6.23. YEAR 2000 COMPLIANCE................................................................50
SECTION 6.24. SUBORDINATED DEBT...................................................................50
SECTION 7. AFFIRMATIVE COVENANTS OF THE BORROWERS.........................................................51
SECTION 7.1. PUNCTUAL PAYMENT.....................................................................51
SECTION 7.2. MAINTENANCE OF OFFICES...............................................................51
SECTION 7.3. RECORDS AND ACCOUNTS.................................................................51
SECTION 7.4. FINANCIAL STATEMENTS,CERTIFICATES AND INFORMATION....................................51
SECTION 7.5. CORPORATE EXISTENCE AND CONDUCT OF BUSINESECTION ....................................52
SECTION 7.6. MAINTENANCE OF PROPERTIES............................................................53
SECTION 7.7. INSURANCE............................................................................53
SECTION 7.8. TAXES................................................................................53
SECTION 7.9. INSPECTION OF PROPERTIES, BOOKS, AND CONTRACTS.......................................54
SECTION 7.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS; MAINTENANCE OF MATERIAL
LICENSES AND PERMITS................................................................54
SECTION 7.11. ENVIRONMENTAL INDEMNIFICATION.......................................................55
SECTION 7.12. FURTHER ASSURANCES..................................................................55
SECTION 7.13. NOTICE OF POTENTIAL CLAIMS OR LITIGATION............................................55
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SECTION 7.14. NOTICE OF CERTAIN EVENTS CONCERNING INSURANCE AND ENVIRONMENTAL CLAIMS..............56
SECTION 7.15. NOTICE OF DEFAULT...................................................................56
SECTION 7.16. NEW SUBSIDIARIES....................................................................57
SECTION 7.17. EMPLOYEE BENEFIT PLANS..............................................................57
SECTION 7.18. USE OF PROCEEDS.....................................................................57
SECTION 7.19. TITLE AND REGISTRATION..............................................................57
SECTION 7.20. INTEREST RATE PROTECTION............................................................58
SECTION 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS...................................................58
SECTION 8.1. RESTRICTIONS ON INDEBTEDNESECTION ...................................................58
SECTION 8.2. RESTRICTIONS ON LIENS................................................................59
SECTION 8.3. RESTRICTIONS ON INVESTMENTS..........................................................61
SECTION 8.4. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS......................................62
SECTION 8.4.1. MERGERS AND ACQUISITIONS................................................62
SECTION 8.4.2. DISPOSITION OF ASSETS...................................................64
SECTION 8.5. SALE AND LEASEBACK...................................................................64
SECTION 8.6. RESTRICTED DISTRIBUTIONS AND REDEMPTIONS.............................................64
SECTION 8.7. EMPLOYEE BENEFIT PLANS...............................................................64
SECTION 8.8. NEGATIVE PLEDGES.....................................................................65
SECTION 8.9. BUSINESS ACTIVITIES..................................................................65
SECTION 8.10. TRANSACTIONS WITH AFFILIATES........................................................65
SECTION 8.11. SUBORDINATEDDEBT....................................................................65
SECTION 8.12. FISCALYEAR..........................................................................66
SECTION 9. FINANCIAL COVENANTS...........................................................................66
SECTION 9.1. LEVERAGE RATIO.......................................................................66
SECTION 9.2. SENIOR FUNDED DEBT TO EBITDA.........................................................66
SECTION 9.3. INTEREST COVERAGE RATIO..............................................................66
SECTION 9.4. TANGIBLEASSETSTOSENIORDEBT...........................................................67
SECTION 9.5. CONSOLIDATED NET WORTH...............................................................67
SECTION 9.6. CAPITAL EXPENDITURES.................................................................67
SECTION 10. CLOSING CONDITIONS...........................................................................67
SECTION 10.1. LOAN DOCUMENTS, ETC.................................................................68
SECTION 10.2. CORPORATE ACTION....................................................................68
SECTION 10.3. CERTIFICATE OF SECRETARY; GOOD STANDING CERTIFICATES................................68
SECTION 10.4. VALIDITY OF LIENS...................................................................68
SECTION 10.5. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS......................................69
SECTION 10.6. CERTIFICATES OF INSURANCE...........................................................69
SECTION 10.7. LEGALOPINIONS.......................................................................69
SECTION 10.8. PAYMENT OF FEES.....................................................................69
SECTION 10.9. CLOSING CERTIFICATE.................................................................69
SECTION 10.10. CONSENTS...........................................................................69
SECTION 10.11. SUBORDINATED DEBT DOCUMENTS........................................................69
SECTION 10.12. COMPLIANCE CERTIFICATE.............................................................70
SECTION 11. CONDITIONS OF ALL LOANS......................................................................70
SECTION 11.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT...........................................70
SECTION 11.2. PERFORMANCE; NO EVENT OF DEFAULT....................................................70
SECTION 11.3. NO LEGAL IMPEDIMENT.................................................................70
SECTION 11.4. GOVERNMENTAL REGULATION.............................................................70
SECTION 11.5. PROCEEDINGS AND DOCUMENTS...........................................................71
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SECTION 12. COLLATERAL SECURITY..........................................................................71
SECTION 13. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT...................................71
SECTION 13.1. EVENTS OF DEFAULT AND ACCELERATION................................................71
SECTION 13.2. TERMINATION OF COMMITMENTS........................................................74
SECTION 13.3. REMEDIES..........................................................................75
SECTION 13.4. DISTRIBUTION OF COLLATERAL PROCEEDS...............................................75
SECTION 14. SETOFF.......................................................................................76
SECTION 15. THE ADMINISTRATIVE AGENT.....................................................................76
SECTION 15.1. AUTHORIZATION.......................................................................77
SECTION 15.2. EMPLOYEES AND AGENTS................................................................77
SECTION 15.3. NO LIABILITY........................................................................77
SECTION 15.4. NON-RELIANCE ON AGENT AND OTHER BANKS...............................................78
SECTION 15.5. NO REPRESENTATIONS..................................................................78
SECTION 15.5.1. GENERAL................................................................78
SECTION 15.5.2. CLOSING DOCUMENTATION, ETC.............................................79
SECTION 15.6. PAYMENTS............................................................................79
SECTION 15.6.1. PAYMENTS TO ADMINISTRATIVE AGENT.......................................79
SECTION 15.6.2. DISTRIBUTION BY ADMINISTRATIVE AGENT...................................79
SECTION 15.6.3. DELINQUENT LENDERS.....................................................80
SECTION 15.7. HOLDERS OF NOTES..................................................................80
SECTION 15.8. INDEMNITY.........................................................................80
SECTION 15.9. ADMINISTRATIVE AGENT AS LENDER....................................................81
SECTION 15.10. RESIGNATION......................................................................81
SECTION 15.11. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT...................................82
SECTION 15.12. DUTIES IN THE CASE OF ENFORCEMENT................................................82
SECTION 15.13. DUTIES OF DOCUMENTATION AGENT AND CO-AGENTS......................................82
SECTION 16. EXPENSES AND INDEMNIFICATION.................................................................82
SECTION 16.1. EXPENSES..........................................................................82
SECTION 16.2. INDEMNIFICATION...................................................................83
SECTION 16.3. SURVIVAL..........................................................................84
SECTION 17. SURVIVAL OF COVENANTS, ETC...................................................................84
SECTION 18. ASSIGNMENT AND PARTICIPATION.................................................................84
SECTION 18.1. CONDITIONS TO ASSIGNMENT BY LENDERS...............................................84
SECTION 18.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS....................85
SECTION 18.3. REGISTER..........................................................................86
SECTION 18.4. NEW NOTES.........................................................................86
SECTION 18.5. PARTICIPATIONS....................................................................87
SECTION 18.6. DISCLOSURE........................................................................87
SECTION 18.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH A BORROWER................................87
SECTION 18.8. MISCELLANEOUS ASSIGNMENT PROVISIONS...............................................88
SECTION 18.9. ASSIGNMENT BY BORROWERS...........................................................88
SECTION 19. PARTIES IN INTEREST..........................................................................88
SECTION 20. NOTICES, ETC.................................................................................88
SECTION 21. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION................................................89
SECTION 21.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY.................................89
SECTION 21.2. CONFIDENTIALITY...................................................................90
SECTION 21.3. PRIOR NOTIFICATION................................................................90
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SECTION 21.4. OTHER...........................................................................90
SECTION 22. MISCELLANEOUS..................................................................................90
SECTION 23. ENTIRE AGREEMENT, ETC..........................................................................91
SECTION 24. WAIVER OF JURY TRIAL...........................................................................91
SECTION 25. GOVERNING LAW..................................................................................91
SECTION 26. SEVERABILITY...................................................................................92
SECTION 27. CONSENTS, AMENDMENTS, WAIVERS, ETC.............................................................92
SECTION 28. TRANSITIONAL ARRANGEMENTS......................................................................93
SECTION 28.1. PRIOR LOAN AGREEMENT SUPERSEDED.....................................................93
SECTION 28.2. CONTINUATION OF REVOLVING CREDIT NOTES AND SWING LINE NOTES.........................93
SECTION 28.3. REFERENCE TO AGENT..................................................................93
SECTION 28.4. INTEREST AND FEES UNDER SUPERSEDED AGREEMENT........................................93
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SCHEDULES & EXHIBITS
Exhibit A-1 Form of Revolving Credit Note
Exhibit A-2 Form of Swing Line Note
Exhibit B Form of Term Note
Exhibit C Form of Loan and Letter of Credit Request
Exhibit D Form of Compliance Certificate
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Joinder Agreement
Exhibit G Terms of Subordinated Debt
Schedule 1 Lenders; Addresses; Commitment Percentages
Schedule 2 Subsidiaries
Schedule 4.1(d) Letters of Credit Outstanding
Schedule 6.7 Litigation
Schedule 6.16 Environmental Matters
Schedule 6.18 Transactions with Affiliates
Schedule 8.1 Existing Indebtedness
Schedule 8.2 Existing Liens
Schedule 8.3 Existing Investments
Schedule 13.1(m) Rule 13d-3 Shareholders
<PAGE> 8
SECOND AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This SECOND AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN
AGREEMENT is made as of September 24, 1998 (the "Credit Agreement"), by and
among (a) NATIONSRENT, INC., a Delaware corporation (the "Parent"), and its
Subsidiaries (collectively with the Parent, the "Borrowers"), (b) BANKBOSTON,
N.A., a national banking association having its principal place of business at
100 Federal Street, Boston, Massachusetts 02110 (acting in its individual
capacity, "BKB"), LASALLE NATIONAL BANK, a national banking association having
its principal place of business at 135 South LaSalle Street, Chicago, Illinois
60603 (acting in its individual capacity "LaSalle"), the other lending
institutions which become parties hereto (collectively, the "Lenders"), (c)
BANKBOSTON, N.A., as administrative agent and syndication agent for the Lenders
(the "Administrative Agent"), (d) LASALLE NATIONAL BANK, as documentation agent
for the Lenders (the "Documentation Agent") (e) FLEET BANK, N.A. and
NATIONSBANK, N.A., as co-agents (the "Co-Agents") and (f) BANCBOSTON ROBERTSON
STEPHENS INC. as arranger (the "Arranger").
WHEREAS, pursuant to that certain Amended and Restated Credit Agreement
dated as of June 29, 1998 (as heretofore amended, the "Prior Credit Agreement"),
certain of the Revolving Credit Lenders have made revolving credit loans and
otherwise extended credit to the Borrowers for the purpose described therein;
and
WHEREAS, the Borrowers, the Lenders and the Administrative Agent wish
to amend and restate the Prior Credit Agreement in order to add new Lenders and
a term loan facility and to make certain other changes to the terms and
provisions of the Prior Credit Agreement.
NOW THEREFORE, the Borrowers, the Lenders and the Administrative Agent
hereby agree that the Prior Credit Agreement is hereby amended and restated in
its entirety and remains in force and effect only as set forth herein and the
Revolving Credit Loans, the Swing Line Loans and Letters of Credit (as defined
in the Prior Credit Agreement) shall constitute Revolving Credit Loans, Swing
Line Loans and Letters of Credit respectively, hereunder.
SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION.
SECTION 1.1. DEFINITIONS. The following terms shall have the meanings
set forth in this SECTION 1 or elsewhere in the provisions of this Credit
Agreement referred to below:
ACCOUNTANTS. Any independent accounting firm of national standing, or
in connection with acquisitions permitted by SECTION 8.4 hereof, regional
accounting firms, reasonably acceptable to the Administrative Agent.
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AFFECTED LENDER. See SECTION 5.11.
AFFILIATE. Any Person that would be considered to be an affiliate of
any of the Borrowers under Rule 144 (a) of the Rules and Regulations of the
Securities and Exchange Commission, as in effect on the date hereof if such
Borrower were issuing securities.
ADMINISTRATIVE AGENT. See Preamble.
ADMINISTRATIVE AGENT'S HEAD OFFICE. The Administrative Agent's head
office located at 100 Federal Street, Boston, Massachusetts 02110, or such other
location as the Administrative Agent may designate from time to time.
APPLICABLE COMMITMENT RATE. The applicable rate with respect to the
Commitment Fee as set forth in the Pricing Table.
APPLICABLE LAWS. See SECTION 7.10.
APPLICABLE L/C MARGIN. The applicable margin with respect to the Letter
of Credit Fee as set forth in the Pricing Table.
APPLICABLE BASE RATE MARGIN. The applicable margin with respect to
Loans made at the Base Rate as set forth in the Pricing Table.
APPLICABLE REVOLVER EURODOLLAR MARGIN. The applicable margin with
respect to Revolving Credit Loans made at the Eurodollar Rate as set forth in
the Pricing Table.
APPLICABLE TERM LOAN EURODOLLAR MARGIN. The applicable margin with
respect to a Term Loan made at the Eurodollar Rate as set forth in the Pricing
Table.
ARRANGER. BancBoston Robertson Stephens Inc.
ASSIGNMENT AND ACCEPTANCE. See SECTION 18.
BALANCE SHEET DATE. December 31, 1997.
BASE RATE. The higher of (a) the annual rate of interest announced from
time to time by the Administrative Agent at the Administrative Agent's Head
Office as its "base rate" (it being understood that such rate is a reference
rate and not necessarily the lowest rate of interest charged by the
Administrative Agent) or (b) one percent (1%) above the overnight federal funds
effective rate, as published by the Board of Governors of the Federal Reserve
System, as in effect from time to time.
BASE RATE LOANS. Loans bearing interest calculated by reference to the
Base Rate.
BKB. See Preamble.
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BORROWERS. See Preamble.
BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts, New York, New York and Ft. Lauderdale, Florida are open for the
transaction of banking busineSECTION
CAPITAL ASSETS. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and goodwill); PROVIDED THAT Capital Assets shall not
include (a) any item customarily charged directly to expense or depreciated over
a useful life of twelve (12) months or less in accordance with GAAP, or (b) any
item obtained through an acquisition permitted by SECTION 8.4 hereof.
CAPITAL EXPENDITURES. Amounts paid or Indebtedness incurred by the
Borrowers in connection with (i) the purchase or lease of Capital Assets that
would be required to be capitalized and shown on the balance sheet of such
Person in accordance with GAAP or (ii) the lease of any assets by any Borrower
as lessee under any Synthetic Lease to the extent that such assets would have
been Capital Assets had the Synthetic Lease been treated for accounting purposes
as a Capitalized Lease.
CAPITALIZED LEASES. Leases under which any Borrower is the lessee or
obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the lessee or obligor in
accordance with GAAP.
CERCLA. See definition of Release.
CERTIFIED. With respect to the financial statements of any Person, such
statements as audited by a firm of independent auditors, whose report expresses
the opinion, without qualification, that such financial statements present
fairly the financial position of such Person.
CFO. See SECTION 7.4(b).
CLOSING DATE. The date on which the conditions precedent set forth in
SECTION 10 are satisfied.
CO-AGENTS. See Preamble.
CODE. The Internal Revenue Code of 1986, as amended and in effect from
time to time.
COLLATERAL. All of the property, rights and interests of the Borrowers
that are or are intended to be subject to the security interests created by the
Security Documents.
COMMITMENT. With respect to each Revolving Credit Lender, the amount
determined by multiplying such Lender's Commitment Percentage
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by the Total Commitment specified in SECTION 2.1 hereof as the amount of such
Revolving Credit Lender's commitment to make Revolving Credit Loans to, to
participate in the making of Swing Line Loans to and to participate in the
issuance, extension and renewal of Letters of Credit for the account of the
Borrowers, as the same may be reduced or increased in accordance with the terms
hereof from time to time; or if such commitment is terminated pursuant to the
provisions hereby, zero.
COMMITMENT FEE. See SECTION 5.1.
COMMITMENT PERCENTAGE. With respect to each Revolving Credit Lender,
the percentage set forth beside its name on SCHEDULE 1 (subject to adjustment in
accordance with SECTION SECTION 2.2.2 and 18) as such Revolving Credit Lender's
percentage of the aggregate Commitments of all of the Revolving Credit Lenders.
COMPLIANCE CERTIFICATE. See SECTION 7.4(c).
CONSOLIDATED or CONSOLIDATED. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrowers,
consolidated in accordance with GAAP.
CONSOLIDATED EARNINGS BEFORE INTEREST AND TAXES OR EBIT. For any
period, the actual reported Consolidated Net Income (or Deficit) of the
Borrowers, PLUS (a) interest expense for such period and (b) income taxes for
such period, to the extent that each was deducted in determining Consolidated
Net Income (or Deficit), determined in accordance with GAAP, PROVIDED THAT, EBIT
(PLUS nonrecurring private company expenses that are (A) discontinued or
adjusted upon acquisition by the Parent or its Subsidiaries, such as owner
compensation and adjustments to depreciation to conform to the Parent's
accounting treatment, and (B) approved by the Administrative Agent) of the
Subsidiaries of the Parent acquired during the period reported in the most
recent financial statements delivered to the Lenders pursuant to SECTION 7.4
shall be included in the calculation of EBIT if (i) the financial statements of
such acquired Subsidiaries have been audited, or with the consent of the
Administrative Agent, reviewed, by Accountants for the most recent fiscal year
ended of such acquired Subsidiaries, a portion of which fiscal year is sought to
be included in the calculation of EBIT, or (ii) the Administrative Agent
consents to such inclusion after being furnished with other acceptable financial
statements, (such statements accepted under (i) and (ii) hereof are referred to
as "Acceptable Financials") and (iii) a Compliance Certificate and other
appropriate documentation, in form and substance satisfactory to the
Administrative Agent, certifying the historical operating results and balance
sheet of the acquired companies are provided to the Administrative Agent.
CONSOLIDATED EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND
AMORTIZATION OR EBITDA. For any period, EBIT PLUS (a) depreciation expense for
such period and (b) amortization expense relating to intangible assets for
<PAGE> 12
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such period, to the extent that each was deducted in determining Consolidated
Net Income (or Deficit), determined in accordance with GAAP, PROVIDED THAT,
EBITDA of the Subsidiaries of the Parent acquired during the period reported in
the most recent financial statements delivered to the Lenders pursuant to
SECTION 7.4 (plus adjustments approved by the Administrative Agent as set forth
in the definition of EBIT) shall be included in the calculation of EBITDA
(without duplication).
CONSOLIDATED NET INCOME (OR DEFICIT). The consolidated net income (or
deficit) of the Borrowers after deduction of all expenses, taxes, and other
proper charges, determined in accordance with GAAP.
CONSOLIDATED NET WORTH. The excess of Consolidated Total Assets over
Consolidated Total Liabilities, LESS, to the extent otherwise includable in the
computation of Consolidated Net Worth, any subscriptions receivable.
CONSOLIDATED TANGIBLE ASSETS. All accounts receivable, inventory
(including rental inventory), property, plants and equipment, (including titled
equipment) of the Borrowers on which the Administrative Agent for the benefit of
the Lenders and the Administrative Agent has a first priority perfected security
interest (other than perfection of titled equipment unless required by SECTION
7.19), and which in any case are subject to no other liens, encumbrances,
restrictions or other security interests of any kind, determined on a
consolidated basis in accordance with GAAP.
CONSOLIDATED TOTAL ASSETS. The sum of (i) all assets ("consolidated
balance sheet assets") of the Borrowers determined on a consolidated basis in
accordance with GAAP, PLUS (ii) without duplication, all assets leased by
Borrowers as lessee under any Synthetic Lease to the extent that such assets
would have been consolidated balance sheet assets had the Synthetic Lease been
treated for accounting purposes as a Capitalized Lease, PLUS (iii) without
duplication, all sold receivables referred to in clause (vii) of the definition
of the term "Indebtedness" to the extent that such receivables would have been
consolidated balance sheet assets had they not been sold.
CONSOLIDATED TOTAL INTEREST EXPENSE. For any period, the aggregate
amount of interest required to be paid or accrued by the Borrowers during such
period on all Indebtedness of the Borrowers outstanding during all or any part
of such period, whether such interest was or is required to be reflected as an
item of expense or capitalized, including payments consisting of interest in
respect of any Capitalized Lease or any Synthetic Lease and including commitment
fees, agency fees, facility fees, balance deficiency fees and similar fees or
expenses in connection with the borrowing of money.
CONSOLIDATED TOTAL LIABILITIES. All liabilities of the Borrowers
determined on a consolidated basis in accordance with GAAP and classified
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as such on the consolidated balance sheet of the Borrowers and all other
Indebtedness of the Borrowers, whether or not so classified.
CREDIT AGREEMENT. This Second Amended and Restated Revolving Credit and
Term Loan Agreement, including the Schedules and Exhibits hereto, as amended and
in effect from time to time.
DEFAULT. See SECTION 13.
DELINQUENT LENDER. See SECTION 15.6.3.
DISPOSAL (or DISPOSED). See definition of Release.
DISTRIBUTION. The declaration or payment of any dividend or
distribution on or in respect of any shares of any class of capital stock, any
partnership interests or any membership interests of any Person (other than
dividends or other distributions payable solely in shares of common stock,
partnership interests or membership units of such Person, as the case may be);
the purchase, redemption, or other retirement of any shares of any class of
capital stock, partnership interests or membership units of such Person,
directly or indirectly through a Subsidiary or otherwise; the return of equity
capital by any Person to its shareholders, partners or members as such; or any
other distribution on or in respect of any shares of any class of capital stock,
partnership interest or membership unit of such Person.
DOCUMENTATION AGENT. See Preamble.
DOLLARS or $. Dollars in lawful currency of the United States of
America.
DRAWDOWN DATE. The date on which any Loan is made or is to be made, and
the date on which any Loan is converted or continued in accordance with SECTION
SECTION 2.5 or 3.6.2 or the date that any draft or other form of demand for
payment is honored with respect to a Letter of Credit.
EBIT. See definition of Consolidated Earnings Before Interest and
Taxes.
EBITDA. See definition of Consolidated Earnings Before Interest, Taxes,
Depreciation and Amortization.
ELIGIBLE ASSIGNEE. Any of (i) a commercial bank organized under the
laws of the United States, or any State thereof or the District of Columbia, and
having total assets in excess of $1,000,000,000; (ii) a savings and loan
association or savings bank organized under the laws of the United States, or
any State thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with generally accepted accounting
principles; (iii) an Eligible Foreign Bank; and (iv) any other bank, insurance
company, commercial finance company or other financial
<PAGE> 14
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institution approved by the Administrative Agent, such approval not to be
unreasonably withheld.
ELIGIBLE FOREIGN BANK. (a) Any commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, PROVIDED THAT such bank is acting through a branch or agency located in
the Cayman Islands, in the country in which it is organized or another country
which is also a member of the OECD; or (b) the central bank of any country which
is a member of the OECD.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
SECTION 3(3) of ERISA maintained or contributed to by any Borrower or any ERISA
Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.
ENVIRONMENTAL LAWS. See SECTION 6.16(a).
EPA. See SECTION 6.16(b).
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA AFFILIATE. Any Person which is treated as a single employer with
any Borrower under SECTION 414 of the Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of SECTION 4043 of ERISA and the regulations
promulgated thereunder.
EURODOLLAR BUSINESS DAY. Any Business Day on which dealings in foreign
currency and exchange are carried on among banks in London, England or such
other eurodollar interbank market as may be selected by the Administrative Agent
and approved by the Majority Lenders.
EURODOLLAR INTEREST DETERMINATION DATE. For any Interest Period, the
date two Eurodollar Business Days prior to the first day of such Interest
Period.
EURODOLLAR LOANS. Loans bearing interest calculated by reference to the
Eurodollar Rate.
EURODOLLAR OFFERED RATE. The rate per annum at which deposits of
dollars are offered to the Administrative Agent by prime banks in the London
interbank market or other eurodollar market as may be selected by the
Administrative Agent and approved by the Majority Lenders, at or about 11:00
a.m. local time in such interbank market, on the Eurodollar Interest
Determination Date, for a period equal to the requested Interest Period in an
amount substantially equal to the principal amount requested to be loaned at or
converted to a rate based on the Eurodollar Rate.
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EURODOLLAR RATE. The rate per annum, rounded upwards to the nearest
1/16 of 1%, determined by the Administrative Agent with respect to an Interest
Period in accordance with the following formula:
Eurodollar Rate = Eurodollar Offered Rate
-----------------------
1-Reserve Rate
EVENT OF DEFAULT. See SECTION 13.
FEE LETTER. See SECTION 10.8.
FUNDED DEBT. Consolidated Indebtedness of the Borrowers for borrowed
money, every obligation of such Person issued or assumed as the deferred
purchase price of assets or services (including securities repurchase agreements
but excluding trade accounts payable or accrued liabilities arising in the
ordinary course of business which are not overdue in accordance with their terms
or the Borrowers' normal trade practices as applicable, or which are being
contested in good faith), and guarantees of such Indebtedness, recorded on the
consolidated balance sheet of the Borrowers, including reimbursement obligations
of the Borrowers with respect to letters of credit which are due and owing and
the amount of any Indebtedness of such Persons for Capitalized Leases which
corresponds to principal.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES OR GAAP. (i) When used in
SECTION 9, whether directly or indirectly through reference to a capitalized
term used therein, means (A) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and
(B) to the extent consistent with such principles, the accounting practice of
the Borrowers reflected in their financial statements for the year ended on the
Balance Sheet Date, and (ii) when used in general, other than as provided above,
means principles that are (A) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (B) consistently applied with past financial
statements of the Borrowers adopting the same principles, provided that in each
case referred to in this definition of "generally accepted accounting
principles" a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied.
GUARANTEED PENSION PLAN. Any employee pension benefit plan within the
meaning of SECTION 3(2) of ERISA maintained or contributed to by any Borrower or
any ERISA Affiliate, the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
<PAGE> 16
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HAZARDOUS SUBSTANCES. See SECTION 6.16(b).
INDEBTEDNESECTION As to any Person and whether recourse is secured by
or is otherwise available against all or only a portion of the assets of such
Person and whether or not contingent, but without duplication:
(i) every obligation of such Person for money borrowed,
(ii) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including obligations
incurred in connection with the acquisition of property, assets or
businesses,
(iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar
facilities issued for the account of such Person,
(iv) every obligation of such Person issued or assumed as the
deferred purchase price of property or services (including securities
repurchase agreements but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business which are not
overdue or which are being contested in good faith),
(v) every obligation of such Person under any Capitalized
Lease,
(vi) every obligation of such Person under any Synthetic
Lease,
(vii) all sales by such Person of (A) accounts or general
intangibles for money due or to become due, (B) chattel paper,
instruments or documents creating or evidencing a right to payment of
money or (C) other receivables (collectively, "receivables"), whether
pursuant to a purchase facility or otherwise, other than in connection
with the disposition of the business operations of such Person relating
thereto or a disposition of defaulted receivables for collection and
not as a financing arrangement, and together with any obligation of
such Person to pay any discount, interest, fees, indemnities,
penalties, recourse, expenses or other amounts in connection therewith,
(viii) every obligation of such Person (an "equity related
purchase obligation") to purchase, redeem, retire or otherwise acquire
for value any shares of capital stock of any class issued by such
Person, any warrants, options or other rights to acquire any such
shares, or any rights measured by the value of such shares, warrants,
options or other rights which obligations may be required to be
exercised prior to the Term Loan Maturity Date,
(ix) every obligation of such Person under any forward
contract, futures contract, swap, option or other financing agreement
<PAGE> 17
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or arrangement (including, without limitation, caps, floors, collars
and similar agreements), the value of which is dependent upon interest
rates, currency exchange rates, commodities or other indices,
(x) every obligation in respect of Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent that such Person is liable therefor as a result
of such Person's ownership interest in or other relationship with such
entity, except to the extent that the terms of such Indebtedness
provide that such Person is not liable therefor and such terms are
enforceable under applicable law,
(xi) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise
acting as surety for, any obligation of a type described in any of
clauses (i) through (x) (the "primary obligation") of another Person
(the "primary obligor"), in any manner, whether directly or indirectly,
and including, without limitation, any obligation of such Person (A) to
purchase or pay (or advance or supply funds for the purchase of) any
security for the payment of such primary obligation, (B) to purchase
property, securities or services for the purpose of assuring the
payment of such primary obligation, or (C) to maintain working capital,
equity capital or other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay such
primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (v) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with GAAP, (w) any
Capitalized Lease shall be the principal component of the aggregate of the
rentals obligation under such Capitalized Lease payable over the term thereof
that is not subject to termination by the lessee, (x) any sale of receivables
shall be the amount of unrecovered capital or principal investment of the
purchaser (other than the Borrowers) thereof, excluding amounts representative
of yield or interest earned on such investment, (y) any Synthetic Lease shall be
the stipulated loss value, termination value or other equivalent amount and (z)
any equity related purchase obligation shall be the maximum fixed redemption or
purchase price thereof inclusive of any accrued and unpaid dividends to be
comprised in such redemption or purchase price.
INELIGIBLE SECURITIES. Securities which may not be underwritten or
dealt in by member banks of the Federal Reserve System under Section 16 of the
Banking Act of 1993 (12 U.S.C. SECTION 24, Seventh), as amended.
INTEREST PERIOD. With respect to each Eurodollar Loan:
<PAGE> 18
-11-
(a) initially, the period commencing on the date of the making
of a Eurodollar Loan or the conversion from a Base Rate Loan into a Eurodollar
Loan and ending one (1), two (2), three (3), or six (6) months thereafter, as
selected by the Borrowers in a Loan and Letter of Credit Request; and
(b) thereafter, each subsequent Interest Period shall begin on
the last day of the preceding Interest Period and shall end one (1), two (2),
three (3), or six (6) months thereafter, as selected by the Borrowers in a Loan
and Letter of Credit Request;
PROVIDED, HOWEVER, that whenever the first day of any Interest
Period occurs on a day of an initial calendar month for which there is no
numerically corresponding day in the calendar month that succeeds such initial
calendar month by the number of months equal to the number of months in such
Interest Period, such Interest Period shall end on the last Business Day of such
succeeding calendar month.
ISSUANCE FEE. See SECTION 5.1(b).
JOINDER AGREEMENT. See SECTION 7.16(a).
LASALLE. See Preamble.
LEASE. Any lease, master lease, sublease, chattel paper, installment
sales agreement or rental agreement (including progress payment authorizations),
including any and all schedules, supplements and amendments thereto and
modifications thereof.
LENDERS. The Revolving Credit Lenders and/or Term Loan Lenders, as
applicable.
LESSEE. The lessee under a Lease.
LETTER OF CREDIT APPLICATIONS. Letter of Credit Applications in such
form as may be agreed upon by the Borrowers and the Administrative Agent from
time to time which are entered into pursuant to SECTION 4 hereof, as such Letter
of Credit Applications are amended, varied or supplemented from time to time;
provided, however, in the event of any conflict or inconsistency between the
terms of any Letter of Credit Application and this Agreement, the terms of this
Agreement shall control.
LETTER OF CREDIT FEE. See SECTION 5.1(b).
LETTER OF CREDIT PARTICIPATION. See SECTION 4.1(b).
LETTERS OF CREDIT. Standby Letters of Credit issued or to be issued by
the Administrative Agent under SECTION 4 hereof or under the Prior Credit
Agreement for the account of the Borrowers.
<PAGE> 19
-12-
LOAN AND LETTER OF CREDIT REQUEST. See SECTION 2.6.
LOAN DOCUMENTS. This Credit Agreement, the Joinder Agreement(s), the
Notes, the Letter of Credit Applications, the Letters of Credit, the Security
Documents and Fee Letter, each as amended and in effect from time to time.
LOANS. Revolving Credit Loans, Swing Line Loans and the Term Loan made
or to be made by the Lenders to the Borrowers hereunder.
LOAN PERCENTAGE. With respect to each Lender, such Lender's portion of
and participating interests in (calculated as a percentage) the sum of (i) the
outstanding principal amount of the Revolving Credit Loans on such date, (ii)
the outstanding principal amount of the Term Loan on such date, (iii) the
outstanding principal amount of the Swing Line Loans on such date, (iv) the
Maximum Drawing Amount of Letters of Credit and any unpaid Reimbursement
Obligations on such date and, (v) with respect to the definition of Majority
Lenders and SECTION 15.8 only, the unused Commitments on such date.
MAJORITY LENDERS. As of any date, the Lenders whose aggregate
percentages constitute at least fifty-one percent (51%) of the Loan Percentage,
PROVIDED that for purposes of this definition "Lender" shall not include any
Delinquent Lender until such Delinquent Lender is no longer deemed a Delinquent
Lender under SECTION 15.6.3.
MAXIMUM DRAWING AMOUNT. The maximum aggregate amount from time to time
that the beneficiaries may draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to terms of the
Letters of Credit.
MAXIMUM RATE. With respect to each Lender, the maximum lawful
nonusurious rate of interest (if any) which under Applicable Law such Lender may
charge the Borrowers on the Loans and other Obligations from time to time.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of
SECTION 3(37) of ERISA maintained or contributed to by any Borrower or any ERISA
Affiliate.
NOTES. The Revolving Credit Notes, Swing Line Note and Term Notes.
OBLIGATIONS. All indebtedness, obligations and liabilities of the
Borrowers to any of the Lenders or the Administrative Agent, individually or
collectively, existing on the date of this Credit Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Credit Agreement or any of the other Loan Documents, or under any Swap Contract
between the Borrowers and any Lender, or in respect of any
<PAGE> 20
-13-
of the Loans made or Reimbursement Obligations incurred or any of the Letter of
Credit Applications, the Letters of Credit, the Notes or any other instrument at
any time evidencing any thereof.
OMNIBUS SECURITY AMENDMENT. The Omnibus Amendment to Security Documents
dated as of the date hereof, among the Borrowers and the Administrative Agent.
OUTSTANDING. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by SECTION 4002
of ERISA and any successor entity or entities having similar responsibilities.
PERFECTION CERTIFICATES. The Perfection Certificates as defined in the
Security Agreement.
PERMITTED LIENS. See SECTION 8.2.
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
PRICING RATIO. As of the end of any fiscal quarter of the Borrowers
commencing with the fiscal quarter ending June 30, 1998, the ratio of (a) Funded
Debt as at the end of such quarter to (b) EBITDA for the period of four (4)
consecutive fiscal quarters ending on such date.
<PAGE> 21
-14-
PRICING TABLE:
<TABLE>
<CAPTION>
APPLICABLE APPLICABLE APPLICABLE APPLICABLE APPLICABLE
LEVEL PRICING RATIO EURODOLLAR BASE RATE L/C MARGIN COMMITMENT RATE EURODOLLAR
REVOLVER MARGIN (PER ANNUM) (PER ANNUM) TERM LOAN
MARGIN (PER ANNUM) MARGIN
(PER ANNUM) (PER ANNUM)
<S> <C> <C> <C> <C> <C> <C> <C>
1 Less than 2.75:1 1.75% 0.00% 1.75% 0.375% 2.25%
2 Greater than or equal to 2.00% 0.00% 2.00% 0.375% 2.50%
2.75:1 but less than
3.25:1
3 Greater than or equal to 2.25% 0.00% 2.25% 0.375% 2.75%
3.25:1 but less than
4.25:1
4 Greater than or equal to 2.50% 0.25% 2.50% 0.375% 2.75%
4.25:1
</TABLE>
Any change in the applicable margin shall become effective on the first day
after receipt by the Lenders of financial statements delivered pursuant to
SECTION 7.4(a) or (b) which indicate a change in the Pricing Ratio or, with
respect to the Eurodollar Applicable Margin, on the first day of each Interest
Period which begins three (3) or more days after receipt of such financial
statements. If at any time such financial statements are not delivered within
the time periods specified in SECTION 7.4(a) or (b), the applicable margin shall
be the highest rate set forth in the respective column of the Pricing Table,
subject to adjustment prospectively upon actual receipt of such financial
statements.
Notwithstanding the above, the initial pricing set forth in Level 3 of
the Pricing Table above shall be effective from the Closing Date until the
delivery to the Agent of a Compliance Certificate for the fiscal quarter ending
September 30, 1998.
PRIOR CLOSING DATE. June 29, 1998.
PRIOR CREDIT AGREEMENT. See Preamble.
RCRA. See definition of Release.
REAL PROPERTY. All real property heretofore, now, or hereafter owned or
leased (as lessee or sublessee) by any Borrowers.
REGISTER. See SECTION 18.3.
REIMBURSEMENT OBLIGATION. The Borrowers' joint and several obligations
to reimburse the Administrative Agent and the Revolving Credit Lenders on
account of any drawing under any Letter of Credit as provided in SECTION 4.2.
<PAGE> 22
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RELEASE. Shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. SECTION SECTION 9601 ET seq. ("CERCLA") and the terM "DISPosal" (oR
"DISPosed") shall have the meaning specified in the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. SECTION SECTION 6901 ET seq. ("RCRA") and
regulations promulgated thereunder; PROVIDED THAT in the event either CERCLA or
RCRA is amended so as to amend the meaning of any term defined thereby, such
amended meaning shall apply as of the effective date of such amendment and
PROVIDED FURTHER, to the extent that the laws of a state wherein the property
lies establishes a meaning for "Release" or "Disposal" which is broader than
specified in either CERCLA or RCRA, such broader meaning shall apply.
REQUIRED REVOLVING CREDIT LENDERS. As of any date, the Revolving Credit
Lenders whose aggregate Commitments constitute at least fifty-one percent (51%)
of the Total Commitment, or if the Commitments have been terminated, at least
fifty-one percent (51%) of the sum of the Revolving Credit Loans outstanding
PLUS participating interests in the Maximum Drawing Amounts of Letters of Credit
outstanding PLUS Swing Line Loans outstanding PLUS unpaid Reimbursement
Obligations in respect of Letters of Credit outstanding.
REPLACEMENT LENDER. See SECTION 5.11.
REPLACEMENT NOTICE. See SECTION 5.11.
RESERVE RATE. The rate, expressed as a decimal, at which the Lenders
would be required to maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System (or any subsequent or similar regulation
relating to such reserve requirements) against "Eurocurrency Liabilities" (as
such term is defined in Regulation D), or against any other category of
liabilities which might be incurred by the Lenders to fund Eurodollar Loans, if
such liabilities were outstanding. The Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve Rate.
REVOLVING CREDIT LENDERS. Each of the Lenders holding a Commitment as
set forth on SCHEDULE 1 hereto and any other Person who becomes an assignee of
any rights and obligations of a Revolving Credit Lender pursuant to SECTION 18.
REVOLVING CREDIT LOANS. Revolving credit loans converted, made or to be
made by the Revolving Credit Lenders to the Borrowers pursuant to SECTION 2.
REVOLVING CREDIT MATURITY DATE. June 29, 2001, or such earlier date on
which the Obligations become due and owing.
REVOLVING CREDIT NOTES. Collectively, the amended and restated
promissory notes of the Borrowers executed and delivered to the Revolving
<PAGE> 23
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Credit Lenders pursuant to the Prior Credit Agreement (except with respect to
the Revolving Credit Note issued by the Borrowers to NationsBank, N.A., which
shall be dated as of the Closing Date), evidencing the Revolving Credit Loans
hereunder and the promissory notes of the Borrowers executed and delivered to
any Person who becomes an assignee of any rights and obligations of a Revolving
Credit Lender pursuant to SECTION 18, in each case in substantially the form of
EXHIBiT A-1 hereto. All references in the Revolving Credit Notes to the Prior
Credit Agreement shall be deemed to refer to this Credit Agreement.
SEC. The Securities and Exchange Commission or any successor thereto.
SECTION 20 SUBSIDIARY. A Subsidiary of the bank holding company
controlling any Lender, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
SECURITIES ACT. The Securities Act of 1933, as amended.
SECURITY AGREEMENT. The Security Agreement, dated as of March 18, 1998,
among the Borrowers and the Administrative Agent, as supplemented, amended and
effective from time to time.
SECURITY DOCUMENTS. The Security Agreement, the Stock Pledge
Agreements, the Omnibus Security Amendment, the notices to banks of the
Administrative Agent's security interest for the benefit of the Lenders and the
Administrative Agent in the Borrowers' bank accounts and any other instruments
and documents, including, without limitation, Uniform Commercial Code financing
statements, required to be executed or delivered pursuant to any Security
Document or evidencing or perfecting the Administrative Agent's lien on the
assets of the Borrowers for the benefit of the Lenders.
SENIOR FUNDED DEBT. At any time of determination, the result of Funded
Debt MINUS the aggregate principal amount of Subordinated Debt outstanding as of
such date.
SETTLEMENT. The making or receiving of payments, in immediately
available funds, by the Revolving Credit Lenders to or from the Administrative
Agent in accordance with SECTION 2.8 hereof to the extent necessary to cause
each such Lender's actual share of the outstanding amount of the Revolving
Credit Loans to be equal to such Lender's Commitment Percentage of the
outstanding amount of such Revolving Credit Loans, in any case when, prior to
such action, the actual share is not so equal.
SETTLEMENT AMOUNT. See SECTION 2.8(b).
SETTLEMENT DATE. See SECTION 2.8(b).
<PAGE> 24
-17-
SETTLING LENDER. See SECTION 2.8(b).
SKYREACH ACQUISITION. The acquisition by the Parent of certain stock or
assets of Sky Reach Equipment, Ltd. pursuant to the Sky Reach Documents.
SKYREACH DOCUMENTS. The purchase agreement to be entered among the
Parent and certain sellers thereto, including all exhibits and schedules
thereto, and all other agreements and documents required to be entered into or
delivered pursuant thereto or in connection with the SkyReach Acquisition, each
in form and substance satisfactory to the Administrative Agent.
STOCK PLEDGE AGREEMENTS. The several Stock Pledge Agreements between
the Parent and/or certain of its Subsidiaries and the Administrative Agent in
form and substance satisfactory to the Administrative Agent, as amended and in
effect from time to time, pursuant to which 100% of the capital stock of each
such Subsidiary of the Parent is pledged to the Administrative Agent for the
benefit of the Lenders.
SUBORDINATED DEBT. Collectively (1) the Subordinated Debt Offering and
(2) other unsecured Indebtedness of the Parent that is expressly subordinated
and made junior to the payment and performance in full of the Obligations with
all principal payments amortizing after the Revolving Credit Maturity Date, and
evidenced as such by Subordinated Debt Documents.
SUBORDINATED DEBT DOCUMENTS. Collectively, (1) the Subordinated Debt
Offering Documents, (2) the Unsecured Convertible Subordinated Promissory Notes
issued by the Parent to Bode-Finn Limited Partnership and Raymond E. Mason
Foundation in connection with the Parent's acquisition of The Bode-Finn Company,
dated April 30, 1998 in the aggregate principal amount of $8,080,000 and
$1,920,000 respectively (the "Bode-Finn Notes"), and (3) other written
agreements containing subordination provisions substantially similar to those
attached hereto as EXHIBIT G.
SUBORDINATED DEBT OFFERING. The unsecured Indebtedness of the Parent
issued or to be issued pursuant to a high-yield debt offering, either pursuant
to a public offering of debt securities or a private placement of debt
securities on terms no less favorable to the Lenders than terms of "market"
public debt, in each case with all principal payments amortizing after the Term
Loan Maturity Date and on other terms acceptable to the Administrative Agent and
made junior to the payment and performance in full of the Loans on terms
satisfactory to the Administrative Agent.
SUBORDINATED DEBT OFFERING DOCUMENTS. The documents evidencing a
Subordinated Debt Offering, each in form and substance satisfactory to the
Administrative Agent.
<PAGE> 25
-18-
SUBSIDIARY. Any corporation, association, trust, partnership, limited
liability company or other business entity of which the designated parent shall
at any time own directly, or indirectly through a Subsidiary or Subsidiaries, at
least a majority (by number of votes) of the outstanding capital stock or other
interest entitled to vote generally.
SWAP CONTRACTS. Any agreement (including any master agreement and any
agreement, whether or not in writing, relating to any single transaction) that
is an interest rate swap agreement, basis swap, forward rate agreement,
commodity swap, commodity option, equity or equity index swap or option, bond
option, interest rate option, forward foreign exchange agreement, rate cap,
collar or floor agreement, currency swap agreement, cross-currency rate swap
agreement, swaption, currency option or other similar agreement (including any
option to enter into any of the foregoing).
SWING LINE LOANS. Loans converted or made by BKB to the Borrowers
pursuant to SECTION 2.8.
SWING LINE NOTE. The promissory note of the Borrowers executed and
delivered to BKB pursuant to the Prior Credit Agreement which shall evidence the
Swing Line Loans hereunder, in substantially the form of EXHIBIT A-2. All
references in the Swing Line Note to the Prior Credit Agreement shall be deemed
to refer to this Credit Agreement.
SYNTHETIC LEASE. Any lease treated as an operating lease under
generally accepted accounting principles and as a loan or financing for U.S.
income tax purposes.
TERM LOAN. The term loan made or to be made by the Term Loan Lenders to
the Borrowers on the Closing Date in the aggregate principal amount of
$50,000,000 pursuant to SECTION 2.1.
TERM LOAN LENDERS. Each of the Lenders holding a portion of the Term
Loan as set forth on SCHEDULE 1 hereto and any other Person who becomes an
assignee of any rights and obligations of a Term Loan Lender pursuant to SECTION
18.
TERM LOAN MATURITY DATE. September 24, 2004, or such earlier date on
which the Obligations become due and owing.
TERM LOAN PERCENTAGE. With respect to each Term Loan Lender, the
percentage set forth on SCHEDULE 1 (subject to adjustment in accordance with
SECTION 18 hereof) as such Lender's percentage of the Term Loan.
TERM NOTES. See SECTION 3.2.
TERM NOTE RECORD. A record with respect to a Term Note.
TOTAL COMMITMENT. See SECTION 2.1.
<PAGE> 26
-19-
UNIFORM CUSTOMS. With respect to any Letter of Credit, the Uniform
Customs and Practices for Documentary Credits (1993 Revisions), International
Chamber of Commerce Publication No. 500 or any successor version thereto adopted
by the Administrative Agent in the ordinary course of its business as a letter
of credit issuer and in effect at the time of issuance of such Letter of Credit.
YEAR 2000 COMPLIANCE. The risk that computer applications used by the
Borrowers may be unable to recognize and properly perform date-sensitive
functions involving certain dates prior to, and any date after, December 31,
1999.
SECTION 1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms capitalized but not otherwise defined
herein have the meanings assigned to them by generally accepted accounting
principles applied on a consistent basis by the accounting entity to which they
refer.
(f) The words "include," "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have the
meanings assigned to them therein.
(h) Reference to a particular "SECTION " refers to that
section of this Credit Agreement unless otherwise indicated.
(i) The words "herein," "hereof," "hereunder" and words of
like import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the computation
of periods of time from a specified date to a later specified date, the word
<PAGE> 27
-20-
"from" means "from and including," the words "to" and "until" each mean "to but
excluding," and the word "through" means "to and including."
(k) This Credit Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are, however,
cumulative and are to be performed in accordance with the terms thereof.
(l) This Credit Agreement and the other Loan Documents are the
result of negotiation among, and have been reviewed by counsel to, among others,
the Administrative Agent and the Borrowers and are the product of discussions
and negotiations among all parties. Accordingly, this Credit Agreement and the
other Loan Documents are not intended to be considered against the
Administrative Agent or any of the Lenders merely on account of the
Administrative Agent's or any Lender's involvement in the preparation of such
documents.
SECTION 2. THE REVOLVING CREDIT FACILITY.
SECTION 2.1. COMMITMENT TO LEND. Subject to the terms and conditions
set forth in this Credit Agreement, each of the Revolving Credit Lenders
severally agrees (i) on the Closing Date, to convert the revolving credit loans
outstanding and owed under the Prior Credit Agreement into Revolving Credit
Loans under this Credit Agreement and (ii) to lend to the Borrowers and the
Borrowers may borrow, repay, and reborrow from time to time from the Closing
Date to the Revolving Credit Maturity Date, upon notice by the Borrowers to the
Administrative Agent given in accordance with SECTION 2.6, its Commitment
Percentage of the Revolving Credit Loans as are requested by the Parent on
behalf of the Borrowers, PROVIDED THAT the outstanding amount of Revolving
Credit Loans (after giving effect to all amounts requested), Swing Line Loans,
unpaid Reimbursement Obligations, and the Maximum Drawing Amount shall not
exceed a maximum aggregate amount outstanding of $260,000,000 at any time, as
such amount may be reduced or increased, as the case may be, pursuant to SECTION
2.2 hereof (the "Total Commitment"). The Revolving Credit Loans shall be made
PRO RATA in accordance with each Revolving Credit Lender's Commitment
Percentage. Each request for a Revolving Credit Loan hereunder shall constitute
a representation and warranty by the Borrowers that the conditions set forth in
SECTION 10 and SECTION 11, as the case may be, have been satisfied on the date
of such request.
SECTION 2.2. REDUCTION AND INCREASE OF TOTAL COMMITMENT.
SECTION 2.2.1. REDUCTION OF TOTAL COMMITMENT.
(a) The Borrowers shall have the right at any time and from
time to time upon five (5) Business Days' prior written notice to the
Administrative Agent to reduce by $1,000,000 or an integral multiple of
<PAGE> 28
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$500,000 in excess thereof, or terminate entirely, the Total Commitment,
whereupon the Commitments of the Revolving Credit Lenders shall be reduced PRO
RATA in accordance with their respective Commitment Percentages of the amount
specified in such notice or, as the case may be, terminated. The Administrative
Agent will notify the Revolving Credit Lenders promptly after receiving any
notice of the Borrowers delivered pursuant to this SECTION 2.2.1. BKB will, on
the Closing Date, convert all outstanding Swing Line Loans under the Prior
Credit Agreement into Swing Line Loans hereunder.
(b) No reduction or termination of the Commitments once made
may be revoked; the portion of the Commitments reduced or terminated may not be
reinstated; and amounts in respect of such reduced or terminated portion may not
be reborrowed.
SECTION 2.2.2. INCREASE OF TOTAL COMMITMENT.
Unless a Default or Event of Default has occurred and is
continuing, the Borrowers may request that the Total Commitment be
increased by an aggregate amount of up to $5,000,000 provided that the
Total Commitment shall not in any event exceed $265,000,000 hereunder,
subject to the approval of the Administrative Agent, PROVIDED, HOWEVER,
that (i) any Revolving Credit Lender which is a party to this Credit
Agreement prior to such increase shall have the first option, and may
elect, to fund its PRO RATA share of the increase, thereby increasing
its Commitment hereunder, but no Revolving Credit Lender shall be
required to do so, (ii) in the event that it becomes necessary to
include a new Revolving Credit Lender to provide additional funding
under this SECTION 2.2.2, such new Revolving Credit Lender must be
reasonably acceptable to the Administrative Agent and the Borrowers,
and (iii) the Revolving Credit Lenders' Commitment Percentages shall be
correspondingly adjusted, as necessary, to reflect any increase in the
Total Commitment and SCHEDULE 1 shall be amended to reflect such
adjustments. Notwithstanding the above, an increase will not be made in
the Total Commitment if such increase is prohibited pursuant to the
terms of the Subordinated Debt.
SECTION 2.3. THE REVOLVING CREDIT NOTES. The Revolving Credit Loans
shall be evidenced by separate Revolving Credit Notes, dated as of June 29,
1998, the Closing Date or such other date on which a Person may become a party
hereto in accordance with SECTION 18 hereof, and completed with appropriate
insertions. One Revolving Credit Note shall be payable to the order of each
Revolving Credit Lender in a principal amount equal to such Lender's Commitment
or, if less, the outstanding amount of all Revolving Credit Loans made by such
Lender, plus interest accrued thereon, as set forth below. The Borrowers
irrevocably authorize each Revolving Credit Lender to make or cause to be made,
in connection with a Drawdown Date of any Revolving Credit Loan or at the time
of receipt of any payment of principal
<PAGE> 29
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on such Lender's Revolving Credit Note, an appropriate notation on such Lender's
records reflecting the making of such Revolving Credit Loan or the receipt of
such payment (as the case may be). The outstanding amount of the Revolving
Credit Loans set forth on such Lender's record shall be PRIMA FACIE evidence of
the principal amount thereof owing and unpaid to such Lender, but the failure to
record, or any error in so recording, any such amount shall not limit or
otherwise affect the obligation of the Borrowers hereunder or under any
Revolving Credit Note to make payments of principal of or interest on any
Revolving Credit Note when due.
SECTION 2.4. INTEREST ON REVOLVING CREDIT LOANS AND SWING LINE LOANS.
Except as otherwise provided in SECTION 5.6, the outstanding principal amount of
the Revolving Credit Loans shall bear interest at the rate per annum equal to
(a) the Base Rate PLUS the Applicable Base Rate Margin on Base Rate Loans or (b)
the Eurodollar Rate PLUS the Applicable Revolver Eurodollar Margin on Eurodollar
Loans and the outstanding principal amount of the Swing Line Loans shall bear
interest at the rate per annum equal to the Base Rate plus the Applicable Base
Rate Margin. The Borrowers jointly and severally promise to pay interest on each
Revolving Credit Loan and Swing Line Loan (i) quarterly in arrears on the first
Business Day of each calendar quarter for the immediately preceding calendar
quarter, commencing October 1, 1998, on Base Rate Loans, (ii) the last day of
the applicable Interest Period, and if such Interest Period is longer than three
(3) months, also on the day which is three (3) months after the commencement of
such Interest Period, on Eurodollar Loans, and (iii) on the Revolving Credit
Maturity Date for all Revolving Credit Loans and Swing Line Loans.
SECTION 2.4. ELECTION OF EURODOLLAR RATE; NOTICE OF ELECTION; INTEREST
PERIODS; MINIMUM AMOUNTS.
(a) At the Borrowers' option, so long as no Default or Event
of Default has occurred and is then continuing, the Borrowers may (i) elect to
convert any Revolving Credit Loan (other than a Swing Line Loan) which is a Base
Rate Loan or a portion thereof to a Eurodollar Loan, (ii) at the time of any
Loan and Letter of Credit Request, specify that a requested Revolving Credit
Loan shall be a Eurodollar Loan, or (iii) upon expiration of the applicable
Interest Period, elect to maintain an existing Eurodollar Loan as such, PROVIDED
THAT the Borrowers give notice to the Administrative Agent pursuant to SECTION
2.5(b) hereof. Upon determining any Eurodollar Rate, the Administrative Agent
shall forthwith provide notice thereof to the Borrowers and the Revolving Credit
Lenders, and each such notice to the Borrowers and the such Lenders shall be
considered PRIMA FACIE correct and binding, absent manifest error.
(b) Three (3) Eurodollar Business Days prior to the making of
any Eurodollar Loan or the conversion of any Base Rate Loan to a Eurodollar
Loan, or, in the case of an outstanding Eurodollar Loan, the expiration date of
the applicable Interest Period, the Borrowers shall give
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telephonic notice (confirmed by telecopy on the same Eurodollar Business Day) to
the Administrative Agent not later than 1:00 p.m. (Boston time) of their
election pursuant to SECTION 2.5(a). Each such notice delivered to the
Administrative Agent shall specify the aggregate principal amount of the
Revolving Credit Loans to be borrowed or maintained as or converted to
Eurodollar Loans and the requested duration of the Interest Period that will be
applicable to such Eurodollar Loan, and shall be irrevocable and binding upon
the Borrowers. If the Borrowers shall fail to give the Administrative Agent
notice of their election hereunder together with all of the other information
required by this SECTION 2.5(b) with respect to any Revolving Credit Loan, such
Revolving Credit Loan shall be deemed a Base Rate Loan. In the event that the
Borrowers fail to provide any such notice with respect to the continuation of
any Eurodollar Loan as such, then such Eurodollar Loan shall be automatically
converted to a Base Rate Loan at the end of the then expiring Interest Period
relating thereto.
(c) Notwithstanding anything herein to the contrary, the
Borrowers may not specify an Interest Period that would extend beyond the
Revolving Credit Maturity Date.
(d) All Revolving Credit Loans shall be in a minimum amount of
$500,000 or an integral multiple of $100,000 in excess thereof. In no event
shall the Borrowers have more than five (5) different maturities of Eurodollar
Loans (whether Revolving Credit Loans or a portion of the Term Loan) outstanding
at any time.
SECTION 2.6. REQUESTS FOR REVOLVING CREDIT LOANS AND SWING LINE LOANS.
The Borrowers shall give to the Administrative Agent written notice in the form
of EXHIBIT C hereto (or telephonic notice confirmed by telecopy on the same
Business Day in the form of EXHIBIT C hereto) of each Revolving Credit Loan and
Swing Line Loan requested hereunder (a "Loan and Letter of Credit Request") not
later than (a) 11:00 a.m. (Boston time) on the day of the proposed Drawdown Date
of any Loan which is a Base Rate Loan, or (b) 1:00 p.m. (Boston time) three (3)
Eurodollar Business Days prior to the proposed Drawdown Date of any Eurodollar
Loan, or (c) 1:00 p.m. (Boston time) on the proposed Drawdown Date of funding of
any Swing Line Loan, PROVIDED, HOWEVER, that the Borrowers shall not request any
Eurodollar Rate Loan having an Interest Period longer than one (1) month until
the date which is ninety (90) days following the Closing Date. Each such notice
shall be given by the Borrowers and shall specify the principal amount of the
Revolving Credit Loan and Swing Line Loan requested, if a Revolving Credit Loan,
whether such Revolving Credit Loan is a Base Rate Loan or a Eurodollar Loan, the
Drawdown Date of such Loan and shall include a current Loan and Letter of Credit
Request reflecting the Maximum Drawing Amount and the outstanding Loans. Each
Loan and Letter of Credit Request shall be irrevocable and binding on the
Borrowers and shall obligate the Borrowers to accept the Loan requested from the
applicable Revolving Credit Lenders on the proposed Drawdown Date. Each of the
representations and warranties made by or on behalf of the Borrowers to
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the Lenders or the Administrative Agent in this Credit Agreement or any other
Loan Document shall be true and correct in all material respects when made and
shall, for all purposes of this Credit Agreement, be deemed to be repeated on
and as of the date of the submission of any Loan and Letter of Credit Request
and on and as of the Drawdown Date of such Loan, or the date of issuance of such
Letter of Credit (except to the extent of changes resulting from transactions
contemplated or permitted by this Credit Agreement and the other Loan Documents
and changes occurring in the ordinary course of business that singly or in the
aggregate are not materially adverse, or to the extent that such representations
and warranties expressly relate solely to an earlier date). The Administrative
Agent shall promptly notify each Revolving Credit Lender of each Loan and Letter
of Credit Request (other than requests for Swing Line Loans only) received by
the Administrative Agent and provide, upon request by any Lender, a monthly
summary with respect to Letters of Credit issued hereunder.
SECTION 2.7. FUNDS FOR REVOLVING CREDIT LOANS
(a) Not later than 1:00 p.m. (Boston time) on the proposed Drawdown
Date of any Revolving Credit Loan, each of the Revolving Credit Lenders will
make available to the Administrative Agent, at the Administrative Agent's Head
Office, in immediately available funds, the amount of such Lender's Commitment
Percentage of the amount of the requested Revolving Credit Loans. Upon receipt
from each Revolving Credit Lender of such amount, and upon receipt of the
documents required by SECTION SECTION 10 and 11 and the satisfaction of the
other conditions set forth therein, to the extent applicable, the Administrative
Agent will make available to the Borrowers in immediately available funds the
aggregate amount of such Revolving Credit Loans made available to the
Administrative Agent by the Revolving Credit Lenders. The failure or refusal of
any Revolving Credit Lender to make available to the Administrative Agent at the
aforesaid time and place on any Drawdown Date the amount of its Commitment
Percentage of the requested Revolving Credit Loans shall not relieve any other
Revolving Credit Lender from its several obligation hereunder to make available
to the Administrative Agent the amount of such other Lender's Commitment
Percentage of any requested Revolving Credit Loans.
(b) The Administrative Agent may, unless notified to the contrary by
any Revolving Credit Lender prior to a Drawdown Date, assume that such Lender
has made available to the Administrative Agent on such Drawdown Date the amount
of such Lender's Commitment Percentage of the Revolving Credit Loans to be made
on such Drawdown Date, and the Administrative Agent may (but shall not be
required to), in reliance upon such assumption, make available to the Borrowers
a corresponding amount. If any Revolving Credit Lender makes available to the
Administrative Agent such amount on a date after such Drawdown Date, such Lender
shall pay to the Administrative Agent on demand an amount equal to the product
of (i) the average computed for the period referred to in clause (iii) below, of
the
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weighted average interest rate paid by the Administrative Agent for federal
funds acquired by the Administrative Agent during each day included in such
period, TIMES (ii) the amount of such Lender's Commitment Percentage of such
Revolving Credit Loans, TIMES (iii) a fraction, the numerator of which is the
number of days that elapse from and including such Drawdown Date to the date on
which the amount of such Lender's Commitment Percentage of such Revolving Credit
Loans shall become immediately available to the Administrative Agent, and the
denominator of which is 365. A statement of the Administrative Agent submitted
to such Lender with respect to any amounts owing under this paragraph shall be
PRIMA FACIE evidence, absent manifest error, of the amount due and owing to the
Administrative Agent by such Lender. If the amount of such Lender's Commitment
Percentage of such Revolving Credit Loans is not made available to the
Administrative Agent by such Lender within three (3) Business Days following
such Drawdown Date, the Administrative Agent shall be entitled to recover such
amount from the Borrowers on demand, with interest thereon at the rate per annum
applicable to the Revolving Credit Loans made on such Drawdown Date.
SECTION 2.8. SWING LINE LOANS; SETTLEMENTS.
(a) Solely for ease of administration of the Revolving Credit Loans,
BKB may, upon receipt of a Loan and Letter of Credit Request no later than 1:00
p.m. (Boston time) on the proposed date of funding, but shall not be required
to, fund Base Rate Loans made in accordance with the provisions of this Credit
Agreement ("Swing Line Loans") for periods not to exceed seven (7) days in any
one case, bearing interest as set forth in SECTION 2.4. The Swing Line Loans
shall be evidenced by a Swing Line Note and shall each be in a minimum amount of
$100,000 or greater, PROVIDED THAT the outstanding amount of Swing Line Loans
advanced by BKB hereunder shall not exceed $15,000,000 at any time. Each
Revolving Credit Lender shall remain severally and unconditionally liable to
fund its PRO RATA share (based upon each Revolving Credit Lender's Commitment
Percentage) of such Swing Line Loans on each Settlement Date and, in the event
BKB chooses not to fund all Base Rate Loans requested on any date, to fund its
Commitment Percentage of the Base Rate Loans requested, subject to satisfaction
of the provisions hereof relating to the making of Base Rate Loans. Prior to
each Settlement, all payments or repayments of the principal of, and interest
on, Swing Line Loans shall be credited to the account of BKB. BKB will, on the
Closing Date, convert all outstanding Swing Line Loans under the Prior Credit
Agreement into Swing Line Loans hereunder.
(b) The Revolving Credit Lenders shall effect Settlements on (i) the
Business Day immediately following any day which BKB gives written notice to the
Administrative Agent to effect a Settlement, (ii) the Business Day immediately
following the Administrative Agent's becoming aware of the existence of any
Default or Event of Default, (iii) the Revolving Credit Maturity Date, (iii) any
date on which the Borrowers wish to convert a Swing
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Line Loan into a Eurodollar Rate Loan, and (iv) in any event, the seventh day on
which any Swing Line Loan remains outstanding (each such date, a "Settlement
Date"). One (1) Business Day prior to each such Settlement Date, the
Administrative Agent shall give telephonic notice to the Revolving Credit
Lenders of (A) the respective outstanding amount of Revolving Credit Loans made
by each Revolving Credit Lender as at the close of business on the prior day,
(B) the amount that any Revolving Credit Lender, as applicable (a "Settling
Lender"), shall pay to effect a Settlement (a "Settlement Amount"). A statement
of the Administrative Agent submitted to the Revolving Credit Lenders with
respect to any amounts owing hereunder shall be PRIMA FACIE evidence of the
amount due and owing. Each Settling Lender shall, not later than 1:00 p.m.
(Boston time) on each Settlement Date, effect a wire transfer of immediately
available funds to the Administrative Agent at the Administrative Agent's Head
Office in the amount of such Lender's Settlement Amount. All funds advanced by
any Revolving Credit Lender as a Settling Lender pursuant to this SECTION 2.8
shall for all purposes be treated as a Base Rate Loan to the Borrowers.
(c) The Administrative Agent may (unless notified to the contrary by
any Settling Lender by 12:00 noon (Boston time) one (1) Business Day prior to
the Settlement Date) assume that each Settling Lender has made available (or
will make available by the time specified in SECTION 2.8(b)) to the
Administrative Agent its Settlement Amount, and the Administrative Agent may
(but shall not be required to), in reliance upon such assumption, effect
Settlements. If the Settlement Amount of such Settling Lender is made available
to the Administrative Agent on a date after such Settlement Date, such Settling
Lender shall pay the Administrative Agent on demand an amount equal to the
product of (i) the average, computed for the period referred to in clause (iii)
below, of the weighted average annual interest rate paid by the Administrative
Agent for federal funds acquired by the Administrative Agent during each day
included in such period TIMES (ii) such Settlement Amount TIMES (iii) a
fraction, the numerator of which is the number of days that elapse from and
including such Settlement Date to but not including the date on which such
Settlement Amount shall become immediately available to the Administrative
Agent, and the denominator of which is 365. Upon payment of such amount such
Settling Lender shall be deemed to have delivered its Settlement Amount on the
Settlement Date and shall become entitled to interest payable by the Borrowers
with respect to such Settling Lender's Settlement Amount as if such share were
delivered on the Settlement Date. If such Settlement Amount is not in fact made
available to the Administrative Agent by such Settling Lender within three (3)
Business Days of such Settlement Date, the Administrative Agent shall be
entitled to recover such amount from the Borrowers, with interest thereon at the
Base Rate.
(d) After any Settlement Date, any payment by the Borrowers of Swing
Line Loans hereunder shall be allocated PRO RATA among the Revolving Credit
Lenders, in accordance with such Lender's Commitment Percentage.
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SECTION 2.9. MATURITY OF THE REVOLVING CREDIT LOANS. The Revolving
Credit Loans and Swing Line Loans shall be due and payable on the Revolving
Credit Maturity Date. The Borrowers jointly and severally promise to pay on the
Revolving Credit Maturity Date all Revolving Credit Loans and Swing Line Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.
SECTION 2.10. MANDATORY REPAYMENTS OF THE REVOLVING CREDIT LOANS AND
SWING LINE LOANS AND REIMBURSEMENT OBLIGATIONS.
If at any time the sum of the outstanding amount of the Revolving
Credit Loans PLUS the Swing Line Loans PLUS the Maximum Drawing Amount PLUS
unpaid Reimbursement Obligations exceeds the Total Commitment, whether by
reduction of the Total Commitment or otherwise, then the Borrowers shall
immediately pay the amount of such excess to the Administrative Agent for
application first, to any Swing Line Loans, second, to unpaid Reimbursement
Obligations, third, to the Revolving Credit Loans, or if no Revolving Credit
Loans shall be outstanding, to be held by the Administrative Agent as collateral
security for the Reimbursement Obligations, PROVIDED, HOWEVER, that if the
amount of cash collateral held by the Administrative Agent pursuant to this
SECTION 2.10 exceeds the amount of the Reimbursement Obligations, the
Administrative Agent shall return such excess to the Borrowers. Each payment of
any unpaid Reimbursement Obligations or prepayment of Revolving Credit Loans
shall be allocated among the Revolving Credit Lenders, in proportion, as nearly
as practicable, to each Reimbursement Obligation or (as the case may be) the
respective unpaid principal amount of each Revolving Credit Lender's Revolving
Credit Note, with adjustments to the extent practicable to equalize any prior
payments or repayments not exactly in proportion.
SECTION 2.11. OPTIONal PREPAYMENtS oF REVOLVIng CREDiT LOANS AND SWING
LINE LOANS. The Borrowers shall have the right, at their election, to prepay the
outstanding amount of the Revolving Credit Loans and Swing Line Loans, as a
whole or in part, at any time without penalty or premium (other than the
obligation to reimburse the Revolving Credit Lenders and the Administrative
Agent pursuant to SECTION 5.8 hereof). The Borrowers shall give written notice
to the Administrative Agent (or telephonic notice confirmed in writing) no later
than (a) 1:00 p.m. (Boston time) on the Business Day of the proposed prepayment
of any Base Rate Loan, (b) 1:00 p.m. (Boston time) three (3) Eurodollar Business
Days prior to the proposed prepayment of any Eurodollar Loan or (c) 1:00 p.m.
(Boston time) on the Business Day of the proposed prepayment of any Swing Line
Loan, in each case specifying the proposed date of prepayment of the Revolving
Credit Loans or Swing Line Loans and the principal amount to be paid. Each such
partial repayment of (i) the Revolving Credit Loans shall be in the amount of
$1,000,000 or an integral multiple of $500,000 in excess thereof and (ii) the
Swing Line Loans shall be in the amount of $100,000 or a greater integral
multiple of $10,000 in excess thereof, and shall be accompanied by the payment
of accrued interest on the principal prepaid to the date of prepayment and shall
be
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applied, in the absence of instruction by the Borrowers, first to the principal
of Base Rate Loans and then to the principal of Eurodollar Loans. Each partial
prepayment of Revolving Credit Loans shall be allocated among the Revolving
Credit Lenders, in proportion, as nearly as practicable, to the respective
unpaid principal amount of each Revolving Credit Lender's Revolving Credit
Loans, with adjustments to the extent practicable to equalize any prior
repayments not exactly in proportion.
3. THE TERM LOAN.
3.1. COMMITMENT TO LEND. Subject to the terms and conditions set forth
in this Credit Agreement, each Term Loan Lender agrees to lend to the Borrowers
on the Closing Date the amount of its Term Loan Percentage of the principal
amount of $175,000,000.
3.2. THE TERM NOTES. The Term Loan shall be evidenced by separate
promissory notes of the Borrowers in substantially the form of EXHIBIT B hereto
(each a "Term Note"), dated the Closing Date (or such other date on which a Term
Loan Lender may become a party hereto in accordance with SECTION 18 hereof) and
completed with appropriate insertions. One Term Note shall be payable to the
order of each Term Loan Lender in a principal amount equal to such Lender's Term
Loan Percentage of the Term Loan and representing the obligation of the
Borrowers to pay to such Lender such principal amount or, if less, the
outstanding amount of such Lender's Term Loan Percentage of the Term Loan, plus
interest accrued thereon, as set forth below. The Borrowers irrevocably
authorize each Term Loan Lender to make or cause to be made a notation on such
Lender's Term Note Record reflecting the original principal amount of such
Lender's Term Loan Percentage of the Term Loan and, at or about the time of such
Lender's receipt of any principal payment on such Lender's Term Note, an
appropriate notation on such Lender's Term Note Record reflecting such payment.
The aggregate unpaid amount set forth on such Lender's Term Note Record shall be
PRIMA FACIE evidence of the principal amount thereof owing and unpaid to such
Lender, but the failure to record, or any error in so recording, any such amount
on such Lender's Term Note Record shall not affect the obligations of the
Borrowers hereunder or under any Term Note to make payments of principal of and
interest on any Term Note when due.
3.3. SCHEDULE OF INSTALLMENT PAYMENTS OF PRINCIPAL OF TERM LOAN. The
Borrowers jointly and severally promise to pay to the Administrative Agent for
the account of the Term Loan Lenders, in accordance with their respective Term
Loan Percentages, the principal amount of the Term Loan in five consecutive
payments equal to $1,750,000 each, such installments to be due and payable on
each anniversary of the Term Loan, commencing on the first anniversary of such
Term Loan, with a final payment on the Term Loan Maturity Date in an amount
equal to the unpaid balance of the Term Loan.
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3.4. MANDATORY PREPAYMENTS. If at any time any of the Borrowers is
required to make any prepayments of a Subordinated Debt Offering as a result of
any sale or other disposition of assets otherwise permitted hereunder, the
Borrowers shall, one Business Day prior to making such prepayment, prepay the
Term Loan in an amount at least equal to such prepayment. Such prepayment of the
Term Loan shall be allocated among the Term Loan Lenders in proportion in
accordance with such Lenders' Term Loan Percentages. Any prepayment of principal
of the Term Loan shall include all interest accrued to the date of prepayment
and shall be applied against the scheduled installments of principal due on the
Term Loan in the inverse order of maturity. No amount repaid with respect to the
Term Loan may be reborrowed.
3.5. OPTIONAL PREPAYMENT OF TERM LOAN. The Borrowers shall have the
right at any time to prepay the Term Notes on or before the Term Loan Maturity
Date, as a whole, or in part, upon not less than five (5) Business Days prior
written notice to the Administrative Agent, without premium or penalty, PROVIDED
that (i) each partial prepayment shall be in the principal amount of $1,000,000
or an integral multiple of $500,000 thereof, (ii) no portion of the Term Loan
bearing interest at the Eurodollar Rate may be prepaid pursuant to this SECTION
3.5 except on the last day of the Interest Period relating thereto, and (iii)
each partial prepayment shall be allocated among the Term Loan Lenders in
accordance with such Lenders' Term Loan Percentages. Any prepayment of principal
of the Term Loan shall include all interest accrued to the date of prepayment
and shall be applied against the scheduled installments of principal due on the
Term Loan in the inverse order of maturity. No amount repaid with respect to the
Term Loan may be reborrowed.
3.6. INTEREST ON TERM LOAN.
3.6.1. INTEREST RATES. Except as otherwise provided in SECTION 5.6, the
outstanding principal amount of the Term Loan shall bear interest at the rate
per annum equal to the Eurodollar Rate PLUS the Applicable Term Loan Eurodollar
Margin on Eurodollar Loans. The Borrowers jointly and severally promise to pay
interest on the Term Loan on the last day of the applicable Interest Period, and
if such Interest Period is longer than three (3) months, also on the day which
is three (3) months after the commencement of such Interest Period, on
Eurodollar Loans, and (ii) in any event, on the Term Loan Maturity Date,
PROVIDED, HOWEVER, that the Borrowers shall not request any Eurodollar Rate Loan
having an Interest Period longer than one (1) month until the Term Loan is fully
syndicated (as determined by the Arranger).
3.6.2. NOTIFICATION BY BORROWERS. The Borrowers shall notify the
Administrative Agent, such notice to be irrevocable, at least three (3)
Eurodollar Business Days prior to the Drawdown Date of the Term Loan (or any
portion thereof). After the Term Loan has been made, the provisions of SECTION
2.5 shall apply MUTATIS MUTANDIS with respect to all or any portion of the Term
Loan so that the Borrowers may have the same Eurodollar interest
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rate option with respect to all or any portion of the Term Loan as they would be
entitled to with respect to the Revolving Credit Loans, PROVIDED, HOWEVER, the
Borrowers will have no more than 5 different maturities of Eurodollar Loans
(whether Revolving Credit Loans or a portion of the Term Loan) outstanding at
any time.
3.6.3. AMOUNTS, ETC. Any portion of the Term Loan bearing interest at
the Eurodollar Rate relating to any Interest Period shall be in the amount of
$1,000,000 in an integral thereof. No Interest Period relating to the Term Loan
or any portion thereof bearing interest at the Eurodollar Rate shall extend
beyond the date on which any regularly scheduled installment payment of the
principal of the Term Loan is to be made unless a portion of the Term Loan at
least equal to such installment payment has an Interest Period ending on such
date.
SECTION 4. LETTERS OF CREDIT.
SECTION 4.1. LETTER OF CREDIT COMMITMENTS.
(a) Subject to the terms and conditions hereof and the execution and
receipt of a Loan and Letter of Credit Request reflecting the Maximum Drawing
Amount of all Letters of Credit (including the requested Letter of Credit) and
the outstanding Revolving Credit Loans and Swing Line Loans and a Letter of
Credit Application, the Administrative Agent, on behalf of the Revolving Credit
Lenders with respect to each Revolving Credit Lender's Commitment Percentage and
in reliance upon the agreement of the Revolving Credit Lenders set forth in
SECTION 4.1(b) and upon the representations and warranties of the Borrowers
contained herein, agrees to issue, extend, and renew for the account of the
Borrowers one or more standby letters of credit, in such form as may be
requested from time to time by the Borrowers and agreed to by the Administrative
Agent; PROVIDED, HOWEVER, that, after giving effect to such request, the Maximum
Drawing Amount PLUS all unpaid Reimbursement Obligations shall not exceed the
lesser of (i) $25,000,000 or (ii) the Total Commitment MINUS the aggregate
outstanding amount of the Revolving Credit Loans and Swing Loan. No Letter of
Credit shall have an expiration date later than the earlier of (i) one (1) year
after the date of issuance of the Letter of Credit (which may incorporate
automatic renewals for periods of up to one (1) year, PROVIDED THAT no later
than thirty (30) days prior to the date of any automatic renewal the
Administrative Agent may terminate such Letter of Credit), or (ii) fourteen (14)
days prior to the Revolving Credit Maturity Date. Each Letter of Credit so
issued, extended or renewed shall be subject to the Uniform Customs.
(b) Each Revolving Credit Lender severally agrees that it shall be
absolutely liable, without regard to the occurrence of any Default or Event of
Default or any other condition precedent whatsoever, to the extent of such
Lender's Commitment Percentage thereof, to reimburse the Administrative Agent on
demand for the amount of each draft or other form
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of demand for payment paid by the Administrative Agent under each Letter of
Credit issued. extended or renewed in accordance with the terms hereof to the
extent that such amount is not reimbursed by the Borrowers pursuant to SECTION
4.2 (such agreement for a Revolving Credit Lender being called herein the
"Letter of Credit Participation" of such Lender).
(c) Each such payment made by a Revolving Credit Lender shall be
treated as the purchase by such Lender of a participating interest in the
Borrowers' Reimbursement Obligation under SECTION 4.2 in an amount equal to such
payment. Each Revolving Credit Lender shall share in accordance with its
participating interest in any interest which accrues pursuant to SECTION 4.2.
(d) All Letters of Credit outstanding under the Prior Credit Agreement
shall constitute Letters of Credit hereunder, as listed on SCHEDULE 4.1(d)
hereto.
SECTION 4.2. REIMBURSEMENT OBLIGATION OF THE BORROWERS. In order to
induce the Administrative Agent to issue, extend and renew each Letter of Credit
and the Revolving Credit Lenders to participate therein, the Borrowers hereby
agree to reimburse or pay to the Administrative Agent with respect to each
Letter of Credit issued, extended or renewed by the Administrative Agent
hereunder as follows:
(a) on each date that any draft or other form of demand for payment
presented under any Letter of Credit is honored by the Administrative Agent or
the Administrative Agent otherwise makes payment with respect thereto, (i) the
amount paid by the Administrative Agent under or with respect to such Letter of
Credit, and (ii) the amount of any taxes, fees, charges or other costs and
expenses whatsoever incurred by the Administrative Agent or any Revolving Credit
Lender in connection with any payment made by the Administrative Agent or any
Revolving Credit Lender under, or with respect to, such Letter of Credit;
PROVIDED HOWEVER, if the Borrowers do not reimburse the Administrative Agent on
the Drawdown Date, such amount shall, provided that no Event of Default under
SECTION SECTION 13(g) or 13(h) has occurred, become automatically a Revolving
Credit Loan which is a Base Rate Loan advanced hereunder in an amount equal to
such sum; and
(b) upon the Revolving Credit Maturity Date or the termination of the
Total Commitment, or the acceleration of the Reimbursement Obligations in
accordance with SECTION 13, an amount equal to the Maximum Drawing Amount, which
amount shall be held by the Administrative Agent for the benefit of the
Revolving Credit Lenders and the Administrative Agent as cash collateral for all
Reimbursement Obligations.
Each such payment shall be made to the Administrative Agent at the
Administrative Agent's Head Office in immediately available funds. Interest on
any and all amounts remaining unpaid by the Borrowers under this SECTION 4.2
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at any time from the date such amounts become due and payable (whether as stated
in this SECTION 4.2, by acceleration or otherwise) until payment in full
(whether before or after judgment) shall be payable to the Administrative Agent
on demand at the rate specified in SECTION 5.6 for overdue principal on the
Loans.
SECTION 4.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented
or other demand for payment shall be made under any Letter of Credit, the
Administrative Agent shall notify the Borrowers of the date and amount of the
draft presented or demand for payment and of the date and time when it expects
to pay such draft or honor such demand for payment. On the date that such draft
is paid or other payment is made by the Administrative Agent, the Administrative
Agent shall promptly notify the Revolving Credit Lenders of the amount of any
unpaid Reimbursement Obligation. No later than 3:00 p.m. (Boston time) on the
Business Day next following the receipt of such notice, each Revolving Credit
Lender shall make available to the Administrative Agent, at the Administrative
Agent's Head Office, in immediately available funds, such Lender's Commitment
Percentage of such unpaid Reimbursement Obligation, together with an amount
equal to the product of (a) the weighted average, computed for the period
referred to in clause (c) below, of the interest rate paid by the Administrative
Agent for federal funds acquired by the Administrative Agent during each day
included in such period, TIMES (b) the amount equal to such Lender's Commitment
Percentage of such unpaid Reimbursement Obligation, TIMES (c) a fraction, the
numerator of which is the number of days that have elapsed from and including
the date the Administrative Agent paid the draft presented for honor or
otherwise made payment until the date on which such Lender's Commitment
Percentage of such unpaid Reimbursement Obligation shall become immediately
available to the Administrative Agent, and the denominator of which is 365. The
responsibility of the Administrative Agent to the Borrowers and the Revolving
Credit Lenders shall be only to determine that the documents (including any
draft or other form of demand for payment) delivered under each Letter of Credit
in connection with such presentment shall be in conformity in all material
respects with such Letter of Credit in accordance with the Uniform Customs.
SECTION 4.4. OBLIGATIONS ABSOLUTE. The Borrowers' obligations under
this SECTION 4 shall be absolute and unconditional under any and all
circumstances and irrespective of the occurrence of any Default or Event of
Default or any condition precedent whatsoever or any setoff, counterclaim or
defense to payment which any Borrower may have or have had against the
Administrative Agent, any Revolving Credit Lender or any beneficiary of a Letter
of Credit. Subject to the obligations of the Revolving Credit Lenders pursuant
to Article V of the Uniform Commercial Code and the obligations of the
Administrative Agent pursuant to the last sentence of SECTION 4.3, the Borrowers
further agree with the Administrative Agent and the Revolving Credit Lenders
that the Administrative Agent and the Revolving Credit Lenders shall not be
responsible for, and the Borrowers' Reimbursement
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Obligations under SECTION 4.2 shall not be affected by, among other things, the
validity or genuineness of documents or of any endorsements thereon, even if
such documents should in fact prove to be in any or all respects invalid,
fraudulent or forged, or any dispute between or among any Borrower, the
beneficiary of any Letter of Credit or any financing institution or other party
to which any Letter of Credit may be transferred or any claims or defenses
whatsoever of any Borrower against the beneficiary of any Letter of Credit or
any such transferee. The Administrative Agent and the Revolving Credit Lenders
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. The Borrowers agree that
any action taken or omitted by the Administrative Agent or any Revolving Credit
Lender under or in connection with each Letter of Credit and the related drafts
or other forms of demand for payment and documents, if done in good faith, shall
be binding upon the Borrowers and shall not result in any liability on the part
of the Administrative Agent or any Revolving Credit Lender to the Borrowers.
SECTION 4.5. RELIANCE BY ADMINISTRATIVE AGENT. To the extent not
inconsistent with SECTION 4.4, the Administrative Agent shall be entitled to
rely, and shall be fully protected in relying upon, any Letter of Credit, draft,
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons and upon advice and statements of legal
counsel, independent accountants or other experts selected by the Administrative
Agent. The Administrative Agent shall be fully justified in failing or refusing
to take any action under this Credit Agreement unless it shall first have
received such advice or concurrence of the Required Revolving Credit Lenders as
it reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. The Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Credit Agreement in accordance
with a request of the Required Revolving Credit Lenders, and such request and
any action taken or failure to act pursuant thereto shall be binding upon the
Revolving Credit Lenders and all future holders of the Revolving Credit Notes or
of a Letter of Credit Participation.
SECTION 5. CERTAIN GENERAL PROVISIONS.
SECTION 5.1. FEES.
(a) COMMITMENT FEE. The Borrowers jointly and severally agree
to pay to the Administrative Agent, for the respective account of each Revolving
Credit Lender, a fee (the "Commitment Fee") equal to the Applicable Commitment
Rate MULTIPLIED BY the average daily amount of the unused portion of such
Lender's Commitment during each calendar quarter
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or portion thereof from the Closing Date to the Revolving Credit Maturity Date
(or to the date of termination in full of the Total Commitment, if earlier). The
Commitment Fee shall be payable quarterly in arrears on the first day of each
calendar quarter for the immediately preceding calendar quarter commencing on
October 1, 1998, with a final payment on the Revolving Credit Maturity Date or
any earlier date on which the Commitments shall terminate. Prior to any
Settlement, the Swing Line Loan shall not constitute usage of any Revolving
Credit Lender's Commitment other than BKB.
(b) LETTER OF CREDIT FEES. The Borrowers shall pay a fee (the
"Letter of Credit Fee") equal to the Applicable L/C Margin MULTIPLIED BY the
Maximum Drawing Amount of each Letter of Credit. Such Letter of Credit Fee shall
be payable to the Administrative Agent for the account of the Revolving Credit
Lenders, to be shared PRO RATA by the Revolving Credit Lenders in accordance
with their respective Commitment Percentages. The Borrowers shall also pay a fee
(the "Issuance Fee") to the Administrative Agent, for its own account, equal to
0.125% per annum on the Maximum Drawing Amount of all Letters of Credit issued
by the Administrative Agent, plus its customary administrative charges. The
Letter of Credit Fee and the Issuance Fee shall be payable for the number of
days each Letter of Credit is outstanding, and shall be payable quarterly in
arrears on the first day of each calendar quarter for the immediately preceding
calendar quarter, and on the Revolving Credit Maturity Date.
(c) ADMINISTRATIVE AGENT'S FEES. The Borrowers shall pay to
the Administrative Agent an Administrative Agent's fee, as previously agreed
upon among the Borrowers and the Administrative Agent.
SECTION 5.2. PAYMENTS.
(a) All payments of principal, interest, Reimbursement
Obligations, fees and any other amounts due hereunder or under any of the other
Loan Documents shall be made to the Administrative Agent, for the respective
accounts of the applicable Lenders and the Administrative Agent, to be received
at the Administrative Agent's Head Office in immediately available funds by 1:00
p.m. (Boston time) on any due date.
(b) All payments by the Borrowers hereunder and under any of
the other Loan Documents shall be made without setoff or counterclaim and free
and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any jurisdiction
or any political subdivision thereof or taxing or other authority therein unless
the Borrowers are compelled by law to make such deduction or withholding. If any
such obligation is imposed upon the Borrowers with respect to any amount payable
by them hereunder or under any of the other Loan Documents, the Borrowers will
pay to the Administrative Agent, for the account of the applicable Lenders or
(as the
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case may be) the Administrative Agent, on the date on which such amount is due
and payable hereunder or under such other Loan Document, such additional amount
in Dollars as shall be necessary to enable the applicable Lenders or the
Administrative Agent to receive the same net amount which such Lenders or the
Administrative Agent would have received on such due date had no such obligation
been imposed upon the Borrowers. In the event that the Borrowers are required to
make such deduction or withholding as a result of the fact that a Lender is
organized outside of the United States, such Lender shall use its reasonable
best efforts to transfer its Loans to an affiliate organized within the United
States if such transfer would have no adverse effect on such Lender or the
Loans. The Borrowers will deliver promptly to the Lender certificates or other
valid vouchers for all taxes or other charges deducted from or paid with respect
to payments made by the Borrowers hereunder or under such other Loan Document.
(c) Whenever a payment or fee hereunder or under any of the
other Loan Documents becomes due on a day that is not a Business Day, the due
date for such payment or fee shall be extended to the next succeeding Business
Day, and interest shall accrue during such extension; PROVIDED THAT any Interest
Period for any Eurodollar Loan which ends on a day that is not a Eurodollar
Business Day shall end on the next succeeding Eurodollar Business Day unless the
result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the immediately
preceding Eurodollar Business Day.
SECTION 5.3. COMPUTATIONS. All computations of interest on Base Rate
Loans and of Commitment Fees, Letter of Credit Fees or other fees shall, unless
otherwise expressly provided herein, be based on a 365-day year (or 366-day
year, as applicable) and paid for the actual number of days elapsed. All
computations of interest on Eurodollar Loans shall, unless otherwise expressly
provided herein, be based on a 360-day year and paid for the actual number of
days elapsed.
SECTION 5.4. CAPITAL ADEQUACY. If any present or future law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) or the interpretation thereof by a court or
governmental authority with appropriate jurisdiction affects the amount of
capital required or expected to be maintained by any Lender or the
Administrative Agent or any corporation controlling such Lender or the
Administrative Agent, and such Lender or the Administrative Agent determines
that the amount of capital required to be maintained by it is increased by or
based upon the existence of such Lender's or the Administrative Agent's Loans,
Letter of Credit Participations or Letters of Credit, or commitment with respect
thereto, then such Lender or the Administrative Agent may notify the Borrowers
of such fact. To the extent that the costs of such increased capital
requirements are not reflected in the Base Rate (if relating to Base Rate
Loans), the Borrowers and such Lender or (as the case may be) the Administrative
Agent shall thereafter attempt to negotiate in good faith,
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within thirty (30) days of the day on which the Borrowers receive such notice,
an adjustment payable hereunder that will adequately compensate such Lender or
the Administrative Agent in light of these circumstances. If the Borrowers and
such Lender or the Administrative Agent are unable to agree to such adjustment
within thirty (30) days of the date on which the Borrowers receive such notice,
then commencing on the date of such notice (but not earlier than the effective
date of any such increased capital requirement), the fees payable hereunder
shall increase by an amount that will, in such Lender's or the Administrative
Agent's reasonable determination, provide adequate compensation. Each Lender and
the Administrative Agent shall allocate such cost increases among its customers
in good faith and on an equitable basis.
SECTION 5.5. CERTIFICATE. A certificate setting forth any additional
amounts payable pursuant to SECTION 5.4 and a brief explanation of such amounts
which are due, submitted by any Lender or the Administrative Agent to the
Borrowers, shall be PRIMA FACIE evidence that such amounts are due and owing.
SECTION 5.6. INTEREST AFTER DEFAULT. After and during the continuance
of an Event of Default, interest on the Loans (and any overdue amounts payable
hereunder or under any of the other Loan Documents) shall bear interest
compounded monthly and payable on demand at a rate per annum equal to the Base
Rate PLUS, if applicable, the Applicable Base Rate Margin PLUS two (2)
percentage points (2.00%) until such amount shall be paid in full (after, as
well as before, judgment).
SECTION 5.7. INTEREST LIMITATION. Notwithstanding any other term of
this Credit Agreement or any Note or any other document referred to herein or
therein, the maximum amount of interest which may be charged to or collected
from any person liable hereunder or under any Note by any Lender shall be
absolutely limited to, and shall in no event exceed, the maximum amount of
interest which could lawfully be charged or collected under applicable law
(including, to the extent applicable, the provisions of Section 5197 of the
Revised Statutes of the United States of America, as amended, 12 U.S.C. Section
85, as amended), so that the maximum of all amounts constituting interest under
applicable law, however computed, shall never exceed as to any Person liable
therefor such lawful maximum, and any term of this Credit Agreement, the Notes,
the Letter of Credit Applications, or any other document referred to herein or
therin which could be construed as providing for interest in excess of such
lawful maximum shall be and hereby is made expressly subject to and modified by
the provisions of this paragraph.
SECTION 5.8. EURODOLLAR INDEMNITY. The Borrowers agree to indemnify the
Lenders and the Administrative Agent and to hold them harmless from and against
any loss, cost or expenses that the Lenders and the Administrative Agent may
sustain or incur as a consequence of (a) default by the Borrowers in payment of
the principal amount of or any interest on any Eurodollar
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Loans as and when due and payable, including any such loss or expense arising
from interest or fees payable by any Lender or the Administrative Agent to
lenders of funds obtained by it in order to maintain its Eurodollar Loans, (b) a
prepayment of principal on any Eurodollar Loan, including prepayments which are
the result of acceleration by the Lenders, or (c) failure by the Borrowers to
make a borrowing or conversion after the Borrowers have given (or are deemed to
have given) notice pursuant to SECTION 2.5, SECTION 2.6 or 3.6.2 or (d) the
making of any payment of a Eurodollar Loan or the making of any conversion of
any such Eurodollar Loan to a Base Rate Loan on a day that is not the last day
of the applicable Interest Period with respect thereto, including interest or
fees payable by any Lender to lenders of funds obtained by it in order to
maintain any such Loans. Such loss or reasonable expense shall include an amount
equal to (i) the excess, if any, as reasonably determined by each Lender of its
cost of obtaining the funds for the Eurodollar Loan being paid, prepaid,
converted, not converted, or not borrowed, as the case may be (based on the
Eurodollar Rate) for the period from the date of such payment, prepayment,
conversion, or failure to borrow or convert, as the case may be, to the last day
of the Interest Period for such Loan (or, in the case of a failure to borrow,
the Interest Period for the Loan which would have commenced on the date of such
failure to borrow) over (ii) the amount of interest (as reasonably determined by
such Lender) that would be realized by such Lender in reemploying the funds so
paid, prepaid, converted, or not borrowed, converted, or prepaid for such period
or Interest Period, as the case may be, which determinations shall be conclusive
absent manifest error.
SECTION 5.9. ILLEGALITY; INABILITY TO DETERMINE EURODOLLAR RATE.
Notwithstanding any other provision of this Credit Agreement, if (a) the
introduction of, any change in, or any change in the interpretation of, any law
or regulation applicable to the Administrative Agent or any Lender shall make it
unlawful, or any central bank or other governmental authority having
jurisdiction thereof shall assert that it is unlawful, for any Lender or the
Administrative Agent to perform its obligations in respect of any Eurodollar
Loans, or (b) if any Lender or the Administrative Agent shall determine with
respect to Eurodollar Loans that (i) by reason of circumstances affecting the
Eurodollar interbank market generally, adequate and reasonable methods do not
exist for ascertaining the Eurodollar Rate which would otherwise be applicable
during any Interest Period, or (ii) deposits of Dollars in the relevant amount
for the relevant Interest Period are not available to such Lender or the
Administrative Agent in any Eurodollar interbank market, or (iii) the Eurodollar
Rate does not or will not accurately reflect the cost to such Lender or the
Administrative Agent of obtaining or maintaining the applicable Eurodollar Loans
during any Interest Period, then such Lender or the Administrative Agent shall
promptly give telephonic, telex or cable notice of such determination to the
Parent (which notice shall be conclusive and binding upon the Borrowers). Upon
such notification by such Lender or the Administrative Agent, the obligation of
such Lender or the Administrative Agent to make Eurodollar Loans shall be
suspended until such Lender or the Administrative Agent
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determines that such circumstances no longer exist, and the outstanding
Eurodollar Loans shall continue to bear interest at the applicable rate based on
the Eurodollar Rate until the end of the applicable Interest Period or such
earlier periods as may be required by law, and thereafter shall be deemed
converted to Base Rate Loans in equal principal amounts.
SECTION 5.10. ADDITIONAL COSTS, ETC. If any present or future
applicable law, which expression, as used herein, includes statutes, rules and
regulations thereunder and interpretations thereof by any competent court or by
any governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Lender by any central bank or other fiscal, monetary or
other authority (whether or not having the force of law), shall:
(a) subject any Lender or the Administrative Agent to any tax,
levy, impost, duty, charge, fee, deduction or withholding of any nature with
respect to this Credit Agreement, the other Loan Documents, any Letters of
Credit or participations therein, such Lender's Commitment or the Loans or
participations therein (other than taxes based upon or measured by the income or
profits of such Lender or the Administrative Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Lender of the
principal of or the interest on any Loans or any other amounts payable to any
Lender or the Administrative Agent under this Credit Agreement or any of the
other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held by, or
deposits in or for the account of, or loans by, or letters of credit issued by
or participated in, or commitments of an office of any Lender, or
(d) impose on any Lender or the Administrative Agent any other
conditions or requirements with respect to this Credit Agreement, the other Loan
Documents, any Letters of Credit, the Loans, such Lender's Commitment, or any
class of loans, letters of credit or commitments of which any of the Loans or
such Lender's Commitment forms a part, and the result of any of the foregoing
is:
(i) to increase the cost to any Lender of making,
funding, issuing, renewing, extending or maintaining any of the Loans or such
Lender's Commitment or any Letter of Credit or participations therein, or
(ii) to reduce the amount of principal, interest,
Reimbursement Obligation or other amount payable to such Lender or the
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Administrative Agent hereunder on account of such Lender's Commitment, any
Letter of Credit or any of the Loans or any participations therein, or
(iii) to require such Lender or the Administrative
Agent to make any payment or to forego any interest or Reimbursement Obligation
or other sum payable hereunder, the amount of which payment or foregone interest
or Reimbursement Obligation or other sum is calculated by reference to the gross
amount of any sum receivable or deemed received by such Lender or the
Administrative Agent from the Borrowers hereunder;
then, and in each such case, the Borrowers will, upon demand made by such Lender
at any time and from time to time and as often as the occasion therefor may
arise, pay to such Lender such additional amounts as will be sufficient to
compensate such Lender for such additional cost, reduction, payment or foregone
interest or other sum (after such Lender shall have allocated the same fairly
and equitably among all customers of any class generally affected thereby).
SECTION 5.11. REPLACEMENT OF LENDERS. If any Lender (an "Affected
Lender") (i) makes demand upon the Borrowers for (or if the Borrowers are
otherwise required to pay) amounts pursuant to SECTION SECTION 5.4 or 5.10 or
(ii) is unable to make or maintain Eurodollar Loans as a result of a condition
described in SECTION 5.9, the Borrowers may, within 90 days of receipt of such
demand or notice (or the occurrence of such other event causing the Borrowers to
be required to pay such compensation or causing SECTION 5.9 to be applicable),
by notice in writing to the Administrative Agent and such Affected Lender (a
"Replacement Notice") obtain a replacement lender satisfactory to the
Administrative Agent (the "Replacement Lender") to assume the Affected Lender's
Commitment and/or the Affected Lender's Term Loan Percentage of the Term Loan,
as applicable, by (A) requesting the non-Affected Lenders to acquire and assume
all of the Affected Lender's Loans and Commitment, as provided herein, but none
of such Lenders shall be under an obligation to do so; or (B) designating a
Replacement Lender reasonably satisfactory to the Administrative Agent. If any
satisfactory Replacement Lender shall be obtained, and/or any of the
non-Affected Lenders shall agree to acquire and assume all of the Affected
Lender's Loans and Commitment, then such Affected Lender shall, so long as no
Event of Default shall have occurred and be continuing, assign, in accordance
with SECTION 18, all of its Commitment, Loans, Notes and other rights and
obligations under this Credit Agreement and all other Loan Documents to such
Replacement Lender or non-Affected Lenders, as the case may be, in exchange for
payment of the principal amount so assigned and all interest and fees accrued on
the amount so assigned, plus all other Obligations then due and payable to the
Affected Lender; PROVIDED, HOWEVER, that (i) such assignment shall be without
recourse, representation or warranty and shall be on terms and conditions
reasonably satisfactory to such Affected Lender and such Replacement Lender
and/or non-Affected Lenders, as the case may be, and (ii) prior to any such
assignment, the Borrowers shall have paid to such Affected Lender all amounts
properly demanded and
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unreimbursed under SECTION SECTION 5.4, 5.8, 5.9 and 5.10. Upon the effective
date of such assignment, the Borrowers shall issue replacement Revolving Credit
Notes or Term Notes, as applicable, to such Replacement Lender and/or
non-Affected Lenders, as the case may be, and such institution shall become a
"Lender" for all purposes under this Credit Agreement and the other Loan
Documents.
SECTION 5.12. CONCERNING JOINT AND SEVERAL LIABILITY OF THE BORROWERS.
(a) Each of the Borrowers is accepting joint and several liability hereunder and
under the other Loan Documents in consideration of the financial accommodations
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 other Borrower to accept joint and several liability
for the Obligations.
(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 Obligations (including, without limitation, any
Obligations arising under this SECTION 5.12), it being the intention of the
parties hereto that all of 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 of the Borrowers under the provisions of
this SECTION 5.12 constitute full recourse Obligations of each of the Borrowers
enforceable against each such Person to the full extent of its properties and
assets, irrespective of the validity, regularity or enforceability of this
Credit Agreement or any other circumstance whatsoever.
(e) Except as otherwise expressly provided in this Credit Agreement,
each of the Borrowers hereby waives notice of acceptance of its joint and
several liability, notice of any Loans made under this Credit Agreement, notice
of any action at any time taken or omitted by the Lenders under or in respect of
any of the Obligations, and, generally, to the extent permitted by applicable
law, all demands, notices and other formalities of every kind in connection with
this Credit Agreement. Each Borrower hereby waives all defenses which may be
available by virtue of any valuation, stay, moratorium law or other similar law
now or hereafter in effect, any right to require the marshaling of assets of the
Borrowers and any other entity or Person primarily or secondarily liable with
respect to any of the Obligations, and all suretyship defenses generally. Each
of the Borrowers hereby assents to, and waives notice of, any extension or
postponement of the time for the
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payment of any of the Obligations, the acceptance of any payment of any of the
Obligations, the acceptance of any partial payment thereon, any waiver, consent
or other action or acquiescence by the Lenders at any time or times in respect
of any default by any of the Borrowers in the performance or satisfaction of any
term, covenant, condition or provision of this Credit Agreement, any and all
other indulgences whatsoever by the Lenders 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 the
addition, substitution or release, in whole or in part, of any of the Borrowers.
Without limiting the generality of the foregoing, each of the Borrowers assents
to any other action or delay in acting or failure to act on the part of the
Lenders with respect to the failure by any of the Borrowers to comply with any
of its respective Obligations, including, without limitation, any failure
strictly or diligently to assert any right or to pursue any remedy or to comply
fully with applicable laws or regulations thereunder, which might, but for the
provisions of this SECTION 5.12, afford grounds for terminating, discharging or
relieving any of the Borrowers, in whole or in part, from any of its Obligations
under this SECTION 5.12, it being the intention of each of the Borrowers that,
so long as any of the Obligations hereunder remain unsatisfied, the Obligations
of such Borrowers under this SECTION 5.12 shall not be discharged except by
performance and then only to the extent of such performance. The Obligations of
each of the Borrowers under this SECTION 5.12 shall not be diminished or
rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, re-construction or similar proceeding with respect to any of the
Borrowers or the Lenders. The joint and several liability of the Borrowers
hereunder 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 of the Borrowers or the
Lenders.
(f) Each of the Borrowers hereby agrees that it will not enforce any of
its rights of contribution or subrogation against the other Borrowers with
respect to any liability incurred by it hereunder or under any of the other Loan
Documents, any payments made by it to any of the Lenders or the Administrative
Agent with respect to any of the Obligations or any collateral security therefor
until such time as all of the Obligations have been irrevocably paid in full in
cash. Any claim which any Borrower may have against any other Borrower with
respect to any payments to the Lenders or the Administrative Agent hereunder or
under any other Loan Document are hereby expressly made subordinate and junior
in right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full of the Obligations
and, in the event of any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceeding under the laws of any jurisdiction
relating to any Borrower, its debts or its assets, whether voluntary or
involuntary, all such Obligations shall be paid in full before any payment or
distribution of any character, whether in cash, securities or other property,
shall be made to any other Borrower therefor.
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(g) Each of Borrowers hereby agrees that the payment of any amounts due
with respect to the indebtedness owing by any Borrower to any other Borrower is
hereby subordinated to the prior payment in full in cash of the Obligations.
Each Borrower hereby agrees that after the occurrences and during the
continuance of any Default or Event of Default, such Borrower will not demand,
sue for or otherwise attempt to collect any indebtedness of any other Borrower
owing to such Borrower until the Obligations shall have been paid in full in
cash. If, notwithstanding the foregoing sentence, such Borrower shall collect,
enforce or receive any amounts in respect of such indebtedness, such amounts
shall be collected, enforced, received by such Borrower as trustee for the
Administrative Agent and be paid over to the Administrative Agent for the PRO
RATA accounts of the Lenders (in accordance with each Lender's Loan Percentage)
to be applied to repay (or be held as security for the repayment of) the
Obligations.
(h) The provisions of this SECTION 5.12 are made for the benefit of the
Lenders and their successors and assigns, and may be enforced in good faith by
them from time to time against any or all of the Borrowers as often as the
occasion therefor may arise and without requirement on the part of the Lenders
first to marshal any of their claims or to exercise any of their rights against
any other Borrower or to exhaust any remedies available to them against any
other Borrower or to resort to any other source or means of obtaining payment of
any of the Obligations hereunder or to elect any other remedy. The provisions of
this SECTION 5.12 shall remain in effect until all of 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 the Lenders upon the insolvency,
bankruptcy or reorganization of any of the Borrowers or is repaid in good faith
settlement of a pending or threatened avoidance claim, or otherwise, the
provisions of this SECTION 5.12 will forthwith be reinstated in effect, as
though such payment had not been made.
(i) Each of the Borrowers hereby appoints the Parent, the Parent hereby
agrees, to act as its representative and authorized signor with respect to any
notices, demands, communications or requests under this Credit Agreement or the
other Loan Documents, including, without limitation, with respect to Loan and
Letter of Credit Requests and Compliance Certificates and pursuant to SECTION 20
of this Credit Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers
jointly and severally represents and warrants to the Lenders that on and as of
the date of this Credit Agreement, each Drawdown Date, and the date of issuance
of any Letter of Credit (with any disclosure on a schedule pursuant to this
SECTION 6 applying to all relevant representations and warranties, regardless of
whether such schedule is referenced in each relevant representation):
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SECTION 6.1. CORPORATE AUTHORITY.
(a) INCORPORATION; GOOD STANDING. Each Borrower (i) is a corporation
duly organized, validly existing and in good standing or in current status under
the laws of its respective state of incorporation, (ii) has all requisite
corporate power to own its property and conduct its business as now conducted
and as presently contemplated, and (iii) is in good standing as a foreign
corporation and is duly authorized to do business in each jurisdiction in which
its property or business as presently conducted or contemplated makes such
qualification necessary except where a failure to be so qualified would not have
a materially adverse effect on the business, assets or financial condition of
such Borrower.
(b) AUTHORIZATION. The execution, delivery and performance of the Loan
Documents and the transactions contemplated hereby and thereby (i) are within
the corporate authority of each Borrower, (ii) have been duly authorized by all
necessary corporate proceedings, (iii) do not conflict with or result in any
breach or contravention of any provision of law, statute, rule or regulation to
which any Borrower is subject or any judgment, order, writ, injunction, license
or permit applicable to any Borrower, (iv) do not conflict with any provision of
the corporate charter or bylaws of any Borrower, and (v) do not conflict with
any provision of any agreement or other instrument binding upon any Borrower in
a manner which is reasonably likely to have a materially adverse effect on the
Borrowers taken as a whole.
(c) ENFORCEABILITY. The execution, delivery and performance of the Loan
Documents will result in valid and legally binding obligations of the Borrowers
enforceable against each in accordance with the respective terms and provisions
hereof and thereof, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought.
SECTION 6.2. GOVERNMENTAL APPROVALS. The execution, delivery and
performance by the Borrowers of the Loan Documents and the transactions
contemplated hereby and thereby do not require any approval or consent of, or
filing with, any governmental agency or authority other than those already
obtained except filings required by the Security Documents which may not have
been completed on the Closing Date but executed copies of which, if applicable,
have been delivered to the Administrative Agent in form and substance
satisfactory to the Administrative Agent.
SECTION 6.3. TITLE TO PROPERTIES; LEASES. The Borrowers own all of the
assets reflected in the consolidated balance sheets as at the Balance Sheet Date
or acquired since that date (except property and assets sold or otherwise
disposed of in the ordinary course of business since that date),
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subject to no mortgages, capitalized leases, conditional sales agreements, title
retention agreements, liens or other encumbrances except Permitted Liens.
SECTION 6.4. FINANCIAL STATEMENTS; SOLVENCY.
(a) There has been furnished to each of the Lenders audited
consolidated financial statements of the Borrowers dated the Balance Sheet Date.
Said financial statements have been prepared in accordance with GAAP and fairly
present in all material respects the financial condition of the Borrowers on a
consolidated basis, as at the close of business on the date thereof and the
results of operations for the period then ended. There are no contingent
liabilities of the Borrowers involving material amounts, known to the officers
of the Borrowers, which have not been disclosed in said balance sheets and the
related notes thereto or otherwise in writing to the Lenders.
(b) The Borrowers on a consolidated basis (both before and
after giving effect to the transactions contemplated by this Credit Agreement)
are and will be solvent (i.e., they have assets having a fair value in excess of
the amount required to pay their probable liabilities on their existing debts as
they become absolute and matured) and have, and expect to have, the ability to
pay their debts from time to time incurred in connection therewith as such debts
mature.
(c) Each Borrower has a fiscal year which is the twelve months
ending on December 31 of each calendar year.
SECTION 6.5. NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date,
there have occurred no material adverse changes in the financial condition or
businesses of the Borrowers, taken as a whole, as shown on or reflected in the
consolidated balance sheet of the Borrowers as of the Balance Sheet Date, or the
consolidated statement of income for the fiscal period then ended. Since the
Balance Sheet Date, there have not been any Distributions other than as
permitted by SECTION 8.6 hereof.
SECTION 6.6. PERMITS, FRANCHISES, PATENTS, COPYRIGHTS, ETC. Each
Borrower possess all franchises, patents, copyrights, trademarks, trade names,
licenses and permits, and rights in respect of the foregoing, adequate for the
conduct of their businesses substantially as now conducted without known
conflict with any rights of others.
SECTION 6.7. LITIGATION. Except as shown on SCHEDULES 6.7 and 6.16
hereto, there are no actions, suits, proceedings or investigations of any kind
pending or, to the knowledge of any Borrower, threatened against any Borrower
before any court, tribunal or administrative agency or board which, if adversely
determined, might, either in any individual case or in the aggregate, materially
adversely affect the properties, assets, financial condition or business of the
Borrowers, taken as a whole, or materially
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impair the right of the Borrowers, taken as a whole, to carry on business
substantially as now conducted, or result in any material liability not
adequately covered by insurance, or for which adequate reserves are not
maintained on the consolidated balance sheet or which question the validity of
any of the Loan Documents or any action taken or to be taken pursuant hereto or
thereto.
SECTION 6.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. No Borrower is
subject to any charter, corporate or other legal restriction, or any judgment,
decree, order, rule or regulation which in the judgment of the Borrowers'
officers has or is expected in the future to have a materially adverse effect on
the business, assets or financial condition of the Borrowers, taken as a whole.
No Borrower is a party to any contract or agreement which in the judgment of the
Borrowers' officers has or is expected to have any materially adverse effect on
the business of the Borrowers, taken as a whole.
SECTION 6.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. No Borrower
is violating any material provision of (a) its charter documents or by-laws or
(b) any agreement or instrument by which it may be subject or by which it or any
of its properties may be bound or any decree, order, judgment, or any statute,
license, rule or regulation in a manner which could have a materially adverse
effect on the financial condition, properties or business of the Borrowers,
taken as a whole.
SECTION 6.10. TAX STATUS. Each Borrower has made or filed all federal
and state income and all other tax returns, reports and declarations required by
any jurisdiction to which any of them is subject (unless and only to the extent
that such Borrower has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes); and have paid all taxes and
other governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings; and have set aside
on their books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Borrowers know of
no basis for any such claim.
SECTION 6.11. NO EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
SECTION 6.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. No Borrower
is a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company," as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is any Borrower a "registered
investment company," or an "affiliated company" or a "principal underwriter" of
a "registered investment company," as such terms are defined in the Investment
Company Act of 1940, as amended.
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SECTION 6.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect
to Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry, or other public office, which purports to cover,
affect or give notice of any present or possible future lien on, or security
interest in, any assets or property of any Borrower, or any rights relating
thereto, other than financing statements covering assets acquired in
acquisitions permitted under SECTION 8.4.1 for which the Borrowers are in the
process of obtaining termination statements or amendments releasing the acquired
assets covered thereunder, provided that the Borrowers have evidence in each
case that the obligations secured by such liens have been discharged.
SECTION 6.14. EMPLOYEE BENEFIT PLANS.
(a) Each Employee Benefit Plan and each Guaranteed Pension Plan has
been maintained and operated in compliance in all material respects with the
provisions of ERISA and, to the extent applicable, the Code, including but not
limited to the provisions thereunder respecting prohibited transactions and the
bonding of fiduciaries and other persons handling plan funds as required by
SECTION 412 of ERISA. Each Borrower has heretofore delivered to the
Administrative Agent the most recently completed annual report, Form 5500, with
all required attachments, and actuarial statement required to be submitted under
SECTION 103(d) of ERISA, with respect to each Guaranteed Pension Plan.
(b) No Employee Benefit Plan, which is an employee welfare benefit plan
within the meaning of SECTION 3(1) or SECTION 3(2)(B) of ERISA, provides benefit
coverage subsequent to termination of employment, except as required by Title I,
Part 6 of ERISA or the applicable state insurance laws. A Borrower may terminate
each such Plan at any time (or at any time subsequent to the expiration of any
applicable bargaining agreement) in the discretion of such Borrower without
liability to any Person other than for claims arising prior to termination.
(c) Each contribution required to be made to a Guaranteed Pension Plan,
whether required to be made to avoid the incurrence of an accumulated funding
deficiency, the notice or lien provisions of SECTION 302(f) of ERISA, or
otherwise, has been timely made. No waiver of an accumulated funding deficiency
or extension of amortization periods has been received with respect to any
Guaranteed Pension Plan, and no Borrower nor any ERISA Affiliate is obligated to
or has posted security in connection with an amendment to a Guaranteed Pension
Plan pursuant to SECTION 307 of ERISA or SECTION 401(a)(29) of the Code. No
liability to the PBGC (other than required insurance premiums, all of which have
been paid) has been incurred by any Borrower or any ERISA Affiliate with respect
to any Guaranteed Pension Plan and there has not been any ERISA Reportable Event
(other than an ERISA Reportable Event as to which the requirement of 30 days
notice has been waived), or any other event or condition which presents a
material risk
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of termination of any Guaranteed Pension Plan by the PBGC. Based on the latest
valuation of each Guaranteed Pension Plan (which in each case occurred within
twelve months of the date of this representation), and on the actuarial methods
and assumptions employed for that valuation, the aggregate benefit liabilities
of all such Guaranteed Pension Plans within the meaning of SECTION 4001 of ERISA
did not exceed the aggregate value of the assets of all such Guaranteed Pension
Plans, disregarding for this purpose the benefit liabilities and assets of any
Guaranteed Pension Plan with assets in excess of benefit liabilities.
(d) No Borrower nor any ERISA Affiliate has incurred any material
liability (including secondary liability) to any Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan under SECTION
4201 of ERISA or as a result of a sale of assets described in SECTION 4204 of
ERISA. No Borrower nor any ERISA Affiliate has been notified that any
Multiemployer Plan is in reorganization or insolvent under and within the
meaning of SECTION 4241 or SECTION 4245 of ERISA or is at risk of entering
reorganization or becoming insolvent, or that any Multiemployer Plan intends to
terminate or has been terminated under SECTION 4041A of ERISA.
SECTION 6.15. USE OF PROCEEDS.
SECTION 6.15.1. GENERAL. The proceeds of the Loans shall be
used solely as follows: (a) to finance acquisitions permitted pursuant to
SECTION 8.4; and (b) for capital expenditures, working capital, and general
corporate purposes. The Borrowers will use Letters of Credit solely for working
capital and general corporate purposes.
SECTION 6.15.2. REGULATIONS U AND X. No portion of any Loan is
to be used, and no portion of any Letter of Credit is to be obtained, for the
purpose of purchasing or carrying any "margin security" or "margin stock" as
such terms are used in Regulations U and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Parts 221 and 224.
SECTION 6.15.3. INELIGIBLE SECURITIES. No portion of the
proceeds of any Loans is to be used, and no portion of any Letter of Credit is
to be obtained, for the purpose of (a) knowingly purchasing, or providing credit
support for the purchase of, Ineligible Securities from a Section 20 Subsidiary
during any period in which such Section 20 Subsidiary makes a market in such
Ineligible Securities, (b) knowingly purchasing, or providing credit support for
the purchase of, during the underwriting or placement period, any Ineligible
Securities being underwritten or privately placed by a Section 20 Subsidiary, or
(c) making, or providing credit support for the making of, payments of principal
or interest on Ineligible Securities underwritten or privately placed by a
Section 20 Subsidiary and issued by or for the benefit of the Borrowers or other
Affiliate of the Borrowers.
SECTION 6.16. ENVIRONMENTAL COMPLIANCE. Each Borrower has investigated
the past and present condition and usage of the Real Property
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and the operations conducted thereon and, based upon such diligent
investigation, has determined that, except as shown on SCHEDULE 6.16:
(a) No Borrower, nor any operator of the Borrowers' properties, is in
violation, or alleged violation, of any judgment, decree, order, law, permit,
license, rule or regulation pertaining to environmental matters, including
without limitation, those arising under RCRA, CERCLA, the Superfund Amendments
and Reauthorization Act of 1986, the Federal Clean Water Act, the Federal Clean
Air Act, the Toxic Substances Control Act, or any state or local statute,
regulation, ordinance, order or decree relating to health, safety or the
environment (the "Environmental Laws"), which violation would have a material
adverse effect on the business, assets or financial condition of the Borrowers
on a consolidated basis.
(b) No Borrower has received notice from any third party, including,
without limitation: any federal, state or local governmental authority, (i) that
any of the Borrowers has been identified by the United States Environmental
Protection Agency ("EPA") as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40 C.F.R. Part 300
Appendix B; (ii) that any hazardous waste, as defined by 42 U.S.C. SECTION
6903(5), any hazardous substances as defined by 42 U.S.C. SECTION 9601(14), any
pollutant or contaminant as defined by 42 U.S.C. SECTION 9601(33) or any toxic
substance, oil or hazardous materials or other chemicals or substances regulated
by any Environmental Laws ("Hazardous Substances") which any of the Borrowers
has generated, transported or disposed of has been found at any site at which a
federal, state or local agency or other third party has conducted or has ordered
that any Borrower conduct a remedial investigation, removal or other response
action pursuant to any Environmental Law; or (iii) that it is or shall be a
named party to any claim, action, cause of action, complaint, legal or
administrative proceeding arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in connection with the
release of Hazardous Substances.
(c) Except where it would not have a material adverse effect on the
Borrowers taken as a whole, (i) no portion of the Real Property has been used
for the handling, processing, storage or disposal of Hazardous Substances; and
no underground tank or other underground storage receptacle for Hazardous
Substances is located on such properties; (ii) in the course of any activities
conducted by the Borrowers, or operators of the Real Property, no Hazardous
Substances have been generated or are being used on such properties in violation
of any Environmental Law; (iii) there have been no unpermitted Releases or
threatened Releases of Hazardous Substances on, upon, into or from the Real
Property; (iv) to the best of the Borrowers' knowledge, there have been no
Releases on, upon, from or into any real property in the vicinity of the Real
Property which, through soil or groundwater contamination, may have come to be
located on such properties; and (v) in addition, when required under applicable
Environmental Laws, any Hazardous Substances that have been generated
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on the Real Property have been transported offsite only by carriers having an
identification number issued by the EPA, treated or disposed of only by
treatment or disposal facilities maintaining valid permits as required under
applicable Environmental Laws, which transporters and facilities, to the best of
the Borrowers' knowledge, have been and are operating in material compliance
with such permits and applicable Environmental Laws.
(d) None of the Real Property is or shall be subject to any applicable
environmental clean-up responsibility law or environmental restrictive transfer
law or regulation, by virtue of the transactions set forth herein and
contemplated hereby.
SECTION 6.17. PERFECTION OF SECURITY INTERESTS. Except as contemplated
by SECTION 7.19 and subject to SECTION 8.4.1, all filings, assignments, pledges
and deposits of documents or instruments have been made and all other actions
have been taken that are necessary or advisable under applicable law to
establish and perfect the Administrative Agent's security interest in the
Collateral. Subject to SECTION 8.4.1, the Collateral and the Administrative
Agent's rights with respect to the Collateral are not subject to any setoff,
claims, withholdings or other defenses. The Borrowers' rights in the Collateral
are free from any lien, security interest, encumbrance and any other claim or
demand, except for Permitted Liens.
SECTION 6.18. TRANSACTIONS WITH AFFILIATES. Except as set forth on
SCHEDUlE 6.18 and arm's length transactions pursuant to which a Borrower makes
payments in the ordinary course of business upon terms no less favorable than
such Borrower could obtain from third parties, none of the officers, directors,
or employees of any Borrower is presently a party to any transaction with any
Borrower (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of any Borrower, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
SECTION 6.19. SUBSIDIARIES. SCHEDULE 2 sets forth a complete and
accurate list of the Subsidiaries of the Parent, including the name of each
Subsidiary, the location of its chief executive office, its tax identification
number, and its jurisdiction of incorporation, together with the number of
authorized and outstanding shares of each Subsidiary. Each Subsidiary listed on
SCHEDULE 2 is wholly owned by the Parent or a Subsidiary of the Parent and is a
Borrower hereunder, 100% of the assets and stock or other equity interests of
which have been pledged to the Administrative Agent on behalf of the Lenders
pursuant to the Security Documents. The Parent has good and marketable title to
all of the shares or other equity interests it purports to own of each such
Subsidiary, free and clear in each case of any lien or encumbrance. All such
shares have been duly issued and are fully
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paid and non-assessable. None of the Borrowers is engaged in any joint venture
or partnership with any other Person.
SECTION 6.20. TRUE COPIES OF CHARTER AND OTHER DOCUMENTS. Each Borrower
has furnished the Administrative Agent copies, in each case true and complete as
of the Closing Date, of its (a) charter and other incorporation documents and
(b) by-laws, each including any amendments thereto.
SECTION 6.21. DISCLOSURE. None of this Credit Agreement, nor any of the
other Loan Documents, nor any document or information furnished by the Borrowers
in connection therewith contains any untrue statement of a material fact or
omits to state a material fact (known to any Borrower in the case of any
document or information not furnished by the Borrowers) necessary in order to
make the statements herein or therein not misleading. There is no fact known to
any Borrower which materially adversely affects, or which is reasonably likely
in the future to materially adversely affect, the business, assets, or financial
condition of any Borrower, exclusive of effects resulting from changes in
general economic conditions, legal standards or regulatory conditions.
SECTION 6.22. CAPITALIZATION.
(a) As of the Closing Date, the authorized capital stock of the Parent
consists of 250,000,000 shares of common stock (par value $0.01 per share) of
which 44,360,335 shares are outstanding as of the Closing Date, and 5,000,000
shares of preferred stock (par value $0.01 per share) of which no shares are
outstanding as of the Closing Date. All of such outstanding shares are fully
paid and non-assessable.
(b) The shares of the capital stock of the Borrowers (other than the
Parent) pledged to the Administrative Agent pursuant to the Stock Pledge
Agreements are held of record as set forth on ANNEX A to the Stock Pledge
Agreements. Such capital stock constitutes, of record, 100% of the outstanding
capital stock of each such Subsidiary, and, to the Borrowers' knowledge, on a
fully-diluted basis, 100% of such outstanding capital stock.
SECTION 6.23. YEAR 2000 COMPLIANCE. The Borrowers have reviewed the
areas within their business and operations which could be adversely affected by,
and have developed or are developing a program to address on a timely basis, the
Year 2000 Compliance. Based on such review and program, the Year 2000 Compliance
will not have a material adverse effect on their business and operations.
SECTION 6.24. SUBORDINATED DEBT. The incurrence of Senior Funded Debt,
including without limitation, the Term Loan, and the incurrence of Indebtedness
pursuant to a Subordinated Debt Offering will not be prohibited pursuant to the
terms of the then existing Subordinated Debt.
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SECTION 7. AFFIRMATIVE COVENANTS OF THE BORROWERS. Each of the
Borrowers jointly and severally covenants and agrees that, so long as any Loan,
Note or other Obligation is outstanding or the Lenders have any obligation to
make Loans or participate in Loans or Letters of Credit, or the Administrative
Agent has any obligation to issue, extend, or renew any Letters of Credit:
SECTION 7.1. PUNCTUAL PAYMENT. The Borrowers will duly and punctually
pay or cause to be paid the principal and interest on the Loans, all
Reimbursement Obligations, fees and other amounts provided for in this Credit
Agreement and the other Loan Documents, all in accordance with the terms of this
Credit Agreement and such other Loan Documents.
SECTION 7.2. MAINTENANCE OF OFFICES. The Parent will maintain its chief
executive office at 450 E. Las Olas Blvd., Suite 1400, Ft. Lauderdale, Florida
33301, and each Borrower will maintain its chief executive offices at the
location set forth on SCHEDULE 2, or at such other place in the United States as
any Borrower shall designate upon 30 days' prior written notice to the
Administrative Agent.
SECTION 7.3. RECORDS AND ACCOUNTS. Each Borrower will (i) keep true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with GAAP, (ii) maintain adequate accounts and
reserves for all taxes (including income taxes), depreciation, depletion,
obsolescence and amortization of its properties, contingencies, and other
reserves, and (iii) at all times engage Accountants as the independent certified
public accountants of the Borrowers.
SECTION 7.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The
Borrowers will deliver to the Lenders:
(a) as soon as practicable, but, in any event not later 90 days after
the end of each fiscal year of the Parent, the consolidated and consolidating
balance sheets of the Parent as at the end of such year, statements of cash
flows, and the related consolidated and consolidating statements of operations,
each setting forth in comparative form the figures for the previous fiscal year,
all such consolidated and consolidating financial statements to be in reasonable
detail, prepared in accordance with GAAP and, with respect to the consolidated
financial statements, certified by the Accountants;
(b) as soon as practicable, but in any event not later than 45 days
after the end of each fiscal quarter of the Borrowers, copies of the
consolidated and consolidating balance sheets and statement of operations of the
Parent as at the end of such quarter, subject to year end adjustments, the
related statement of cash flows, all in reasonable detail and prepared in
accordance with GAAP, with a certification by the principal financial or
accounting officer of each Borrower (the "CFO") that the consolidated financial
statements are prepared in accordance with GAAP
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and fairly present the consolidated financial condition of the Borrowers as at
the close of business on the date thereof (subject to year-end adjustments) and
the results of operations for the period then ended;
(c) simultaneously with the delivery of the financial statements
referred to in (a) and (b) above, a statement in the form of EXHIBIT D hereto
(the "Compliance Certificate") certified by the CFO that the Borrowers are in
compliance with the covenants contained in SECTION SECTION 7, 8 and 9 hereof, as
of the end of the applicable period and setting forth in reasonable detail
computations evidencing such compliance, PROVIDED THAT if the Borrowers shall at
the time of issuance of such certificate or at any other time obtain knowledge
of any Default or Event of Default, the Borrowers shall include in such
certificate or otherwise deliver forthwith to the Lenders a certificate
specifying the nature and period of existence thereof and what action the
Borrowers propose to take with respect thereto;
(d) annually or at such other time as may be requested by the
Administrative Agent, copies of the financial statements, financial projections,
annual budget, variance reports and business plan concerning the Borrowers in
substantially the same form in which such information is supplied to the boards
of directors of the Borrowers;
(e) contemporaneously with, or promptly following, the filing or
mailing thereof, copies of all material of a financial nature filed with the SEC
or sent to the stockholders of the Borrowers; and
(g) from time to time, such other financial data and other information
(including accountants' management letters) as the Lenders may reasonably
request.
Subject to SECTION 21 hereof, the Borrowers hereby authorize the
Lenders to disclose any information obtained pursuant to this Credit Agreement
to all appropriate governmental regulatory authorities where required by law;
PROVIDED, HOWEVER, that this authorization shall not be deemed to be a waiver of
any rights to object to the disclosure by the Lenders of any such information
which the Borrowers have or may have under the federal Right to Financial
Privacy Act of 1978, as in effect from time to time.
SECTION 7.5. CORPORATE EXISTENCE AND CONDUCT OF BUSINESS Each
Borrower will do or cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence, corporate rights and
franchises and will not convert to a limited liability company except as
determined by such Borrower's Board of Directors in its reasonable discretion
and only after taking all actions that the Administrative Agent deems necessary
or desirable under applicable law to continue the perfection and preservation of
the Administrative Agent's security interest in the Collateral and the
effectiveness of this Credit Agreement and the other Loan Documents with respect
to such Borrower; effect and maintain its foreign qualifications, licensing,
domestication or authorization except as
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terminated by such Borrower's Board of Directors in the exercise of its
reasonable judgment and except where the failure of a Borrower to remain so
qualified would not materially adversely impair the financial condition of the
Borrowers on a consolidated basis; use its reasonable best efforts to comply
with all applicable laws; and shall not become obligated under any contract or
binding arrangement which, at the time it was entered into would materially
adversely impair the financial condition of the Borrowers on a consolidated
basis. Each Borrower will continue to engage primarily in the businesses now
conducted by it and in related businesses.
SECTION 7.6. MAINTENANCE OF PROPERTIES. The Borrowers will cause all
material properties used or useful in the conduct of their businesses to be
maintained and kept in good condition, repair and working order and supplied
with all necessary equipment and will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Borrowers may be necessary so that the businesses carried on in
connection therewith may be properly and advantageously conducted at all times;
PROVIDED, HOWEVER, that nothing in this section shall prevent the Borrowers from
discontinuing the operation and maintenance of any of their properties if such
discontinuance is, in the judgment of the Borrowers, desirable in the conduct of
their business and which does not in the aggregate materially adversely affect
the businesses of the Borrowers on a consolidated basis.
SECTION 7.7. INSURANCE. The Borrowers will maintain with financially
sound and reputable insurance companies, funds or underwriters' insurance of the
kinds, covering the risks (other than risks arising out of or in any way
connected with personal liability of any officers and directors thereof) and in
the relative proportionate amounts usually carried by reasonable and prudent
companies conducting businesses similar to that of the Borrowers, but in no
event less than that required under SECTION 8 of the Security Agreement. In
addition, the Borrowers will furnish from time to time, upon the Administrative
Agent's request, a summary of the insurance coverage of each of the Borrowers,
which summary shall be in form and substance satisfactory to the Administrative
Agent and, if requested by the Administrative Agent, will furnish to the
Administrative Agent copies of the applicable policies.
SECTION 7.8. TAXES The Borrowers will duly pay and discharge, or cause
to be paid and discharged, before the same shall become overdue, all taxes,
assessments and other governmental charges imposed upon it and its real
properties, sales and activities, or any material part thereof, or upon the
income or profits therefrom, as well as all claims for labor, materials, or
supplies, which if unpaid might by law become a lien or charge upon any material
portion of its property; PROVIDED, HOWEVER, that any such tax, assessment,
charge, levy or claim need not be paid if the validity or amount thereof shall
currently be contested in good faith by appropriate proceedings and if such
Borrower shall have set aside on its books adequate reserves with respect
thereto; and PROVIDED, FURTHER, that the Borrowers will
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pay all such taxes, assessments, charges, levies or claims forthwith upon the
commencement of proceedings to foreclose any lien which may have attached as
security therefor.
SECTION 7.9. INSPECTION OF PROPERTIES, BOOKS, AND CONTRACTS.
(a) Each Borrower will permit the Lenders, the Agent or any of
their designated representatives, upon reasonable notice during normal business
hours, to visit and inspect any of its properties, to examine its books of
account (including the making of periodic accounts receivable reviews), or
contracts (and to make copies thereof and extracts therefrom), and to discuss
its affairs, finances and accounts with, and to be advised as to the same by,
their officers, all at such times and intervals as the Administrative Agent or
any Lender may reasonably request.
(b) No more frequently than once during each calendar year, or
more frequently as determined by the Administrative Agent if an Event of Default
shall have occurred and be continuing, upon the request of the Administrative
Agent, in each case upon reasonable notice and during normal business hours, the
Borrowers will obtain and deliver to the Administrative Agent, or, if the
Administrative Agent so elects, will cooperate with the Administrative Agent in
the Administrative Agent's obtaining, a report of an independent collateral
auditor satisfactory to the Administrative Agent (which may be affiliated with
one of the Lenders) based on a review and audit of the rental equipment and
inventory of the Borrowers, including verification of the existence and
condition of the same, and such report shall be in form and substance
satisfactory to the Administrative Agent. All such collateral reports shall be
conducted and made at the expense of the Borrowers.
(c) Each Borrower authorizes the Administrative Agent and, if
accompanied by the Administrative Agent, the Lenders to communicate directly
with the Accountants and authorizes the Accountants to disclose to the
Administrative Agent and the Lenders any and all financial statements and other
supporting financial documents and schedules including copies of any management
letter with respect to the business, financial condition and other affairs of
the Borrowers. At the request of the Administrative Agent, each Borrower shall
deliver a letter addressed to such Accountants instructing them to comply with
the provisions of this SECTION 7.9(c).
SECTION 7.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES AND PERMITS;
MAINTENANCE OF MATERIAL LICENSES AND PERMITS. Each Borrower will (i) comply with
the provisions of its charter documents and by-laws, (ii) comply with the
provisions of all agreements and instruments by which it or any of its
properties may be bound except where noncompliance with such provisions would
not have a materially adverse effect in the aggregate on the consolidated
financial condition, properties or business of the Borrowers taken as a whole;
and (ii) comply with all applicable laws and regulations (including
Environmental Laws), decrees, orders, judgments,
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licenses and permits, including, without limitation, all environmental permits
hereto ("Applicable Laws"), except where noncompliance with such Applicable Laws
would not have a materially adverse effect in the aggregate on the consolidated
financial condition, properties or businesses of the Borrowers taken as a whole.
If at any time while the Notes, or any Loan or Letter of Credit is outstanding
or any Lender or the Administrative Agent has any obligation to make Loans or
issue Letters of Credit hereunder, any authorization, consent, approval, permit
or license from any officer, agency or instrumentality of any government shall
become necessary or required in order that the Borrowers may fulfill any of
their obligations hereunder, the Borrowers will immediately take or cause to be
taken all reasonable steps within the power of the Borrowers to obtain such
authorization, consent, approval, permit or license and furnish the Lenders with
evidence thereof.
SECTION 7.11. ENVIRONMENTAL INDEMNIFICATION. Each Borrower covenants
and agrees that it will indemnify and hold the Administrative Agent and the
Lenders harmless from and against any and all claims, expense, damage, loss or
liability incurred by the Administrative Agent or any Lender (including all
costs of legal representation incurred by the Administrative Agent and the
Lenders) relating to (a) any release or threatened release of hazardous
substances on the Real Property; (b) any violation of any Environmental Laws
with respect to conditions at the Real Property or the operations conducted
thereon; or (c) the investigation or remediation of offsite locations at which
any Borrower or its predecessors are alleged to have directly or indirectly
disposed of hazardous substances. It is expressly acknowledged by each Borrower
that this covenant of indemnification shall not include claims, expense, damage,
loss or liability incurred by the Administrative Agent or any Lender based upon
the Administrative Agent's or such Lenders' gross negligence or willful
misconduct (other than gross or wilful misconduct which is attributed to the
Administrative Agent or any Lender solely by nature of any interest it may have
in the Real Property), and this covenant shall survive any foreclosure or any
modification, release or discharge of the Loan Documents or the payment of the
Loans and shall inure to the benefit of the Lenders, their successors and
assigns.
SECTION 7.12. FURTHER ASSURANCES. The Borrowers will cooperate with the
Lenders and execute such further instruments and documents as the Lenders shall
reasonably request to carry out to the Lenders' satisfaction the transactions
contemplated by this Credit Agreement and the Loan Documents.
SECTION 7.13. NOTICE OF POTENTIAL CLAIMS OR LITIGATION. The Borrowers
will give notice to the Administrative Agent and each of the Lenders in writing
within thirty (30) days of becoming aware of any pending litigation or
proceedings affecting any Borrower or to which any Borrower is or becomes a
party (including without limitation any alleged violation of any Environmental
Law) involving an uninsured claim against any Borrower, wherein the potential
liability is in excess of $1,000,000, and stating the nature and status of such
litigation or proceedings. The Borrowers will give
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notice to the Administrative Agent and each of the Lenders, in writing, in form
and detail satisfactory to the Administrative Agent, within ten (10) days of any
judgment not covered by insurance, final or otherwise, against any Borrower in
an amount in excess of $1,000,000.
SECTION 7.14. NOTICE OF CERTAIN EVENTS CONCERNING INSURANCE AND
ENVIRONMENTAL CLAIMS.
(a) The Borrowers will provide the Lenders with written notice
as to any material cancellation or material change in any insurance of the
Borrowers within ten (10) Business Days after the Borrowers' receipt of any
notice (whether formal or informal) of such cancellation or change by any of
their insurers.
(b) The Borrowers will promptly notify the Lenders in writing
of any of the following events:
(i) upon any Borrower obtaining knowledge of any violation of
any Environmental Law regarding the Real Property or any Borrower's operations,
which violation could have a materially adverse effect on the Borrowers'
operations taken as a whole; (ii) upon any Borrower obtaining knowledge of any
potential or known Release or threat of Release of any Hazardous Substance at,
from, or into the Real Property which any Borrower reports in writing or is
reportable by it in writing to any governmental authority and which is material
in amount or nature or which could materially affect the value of the Real
Property; (iii) upon any Borrower's receipt of any notice of violation of any
Environmental Laws or of any Release or threatened Release of Hazardous
Substances, including a notice or claim of liability or potential responsibility
from any third party (including without limitation any federal, state or local
governmental officials) and including notice of any formal inquiry, proceeding,
demand, investigation or other action with regard to (A) any Borrower's or any
Person's operation of the Real Property, (B) contamination on, from or into the
Real Property, or (C) investigation or remediation of offsite locations at which
any Borrower or any of its predecessors is alleged to have directly or
indirectly Disposed of Hazardous Substances, which violation or Release in any
such case could have a material adverse effect on the Real Property or on any
Borrower's operations; or (iv) upon any Borrower obtaining knowledge that any
material expense or loss has been incurred by such governmental authority in
connection with the assessment, containment, removal or remediation of any
Hazardous Substances with respect to which any Borrower may be liable or for
which a lien may be imposed on the Real Property.
SECTION 7.15. NOTICE OF DEFAULT. The Borrowers will promptly notify the
Lenders in writing of the occurrence of any Default or Event of Default. If any
Person shall give any notice or take any other action in respect of a claimed
default (whether or not constituting an Event of Default) under this Credit
Agreement or any other note, evidence of Indebtedness, indenture or
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other obligation evidencing Indebtedness in excess of $1,000,000 as to which any
Borrower is a party or obligor, whether as principal or surety, the Borrowers
shall forthwith give written notice thereof to the Lenders, describing the
notice of action and the nature of the claimed default.
SECTION 7.16. NEW SUBSIDIARIES. (a) Any newly-created or
acquired Subsidiary of the Parent permitted under SECTION 8.4 shall, within
seven (7) days of being created or acquired, become a Borrower hereunder and
become a party to the Security Documents by (i) signing a joinder agreement in
substantially the form attached hereto as EXHIBIT F (the "Joinder Agreement"),
(ii) signing allonges to the Notes and (iii) providing such other documentation
as the Lenders or the Administrative Agent may reasonably request, including,
without limitation, documentation with respect to the conditions specified in
SECTION 10 hereof, and 100% of the stock or other equity interests and assets of
such new Subsidiaries shall be pledged to the Administrative Agent for the
benefit of the Lenders. In such event, the Administrative Agent is hereby
authorized by the parties to amend SCHEDULE 2 to include such new Subsidiary.
(b) The Parent shall at all times directly or indirectly through a
Subsidiary own all of the shares of capital stock of each of the Borrowers
(other than the Parent), and such shares shall at all times be pledged to the
Administrative Agent pursuant to the Stock Pledge Agreements.
SECTION 7.17. EMPLOYEE BENEFIT PLANS. The Borrowers will (i)
promptly upon filing the same with the Department of Labor or Internal Revenue
Service, upon request of the Administrative Agent, furnish to the Administrative
Agent a copy of the most recent actuarial statement required to be submitted
under SECTION 103(d) of ERISA and Annual Report, Form 5500, with all required
attachments, in respect of each Guaranteed Pension Plan and (ii) promptly upon
receipt or dispatch, furnish to the Administrative Agent any notice, report or
demand sent or received in respect of a Guaranteed Pension Plan under SECTION
SECTION 302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect
of a Multiemployer Plan, under SECTION SECTION 4041A, 4202, 4219, 4242, or 4245
of ERISA.
SECTION 7.18. USE OF PROCEEDS. The Borrowers will use the proceeds of
the Loans and obtain Letters of Credit solely for the purposes set forth in
SECTION 6.15.1 hereof.
SECTION 7.19. TITLE AND REGISTRATION. If requested by the Majority
Lenders and if the value of titled or registered equipment exceeds five percent
(5%) of total net property plant and equipment, as shown on the Borrowers'
consolidated financial statements in accordance with GAAP, within 30 days of
such request, the Borrowers will cause such inventory and equipment, now owned
or hereafter acquired by any of the Borrowers, which, under applicable law, is
required to be registered, to be properly registered in the name of such Person
and cause all inventory and equipment, now owned or hereafter acquired by any of
the Borrowers, the ownership of which, under
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applicable law, is evidenced by a certificate of title, to be properly titled in
the name of such Person and will cause the lien of the Administrative Agent to
be properly noted on the certificates of title issued with respect to the
equipment and inventory and deliver such certificates of title to the
Administrative Agent in accordance with the terms of the Security Agreement.
SECTION 7.20. INTEREST RATE PROTECTION. The Borrowers will, prior to
December 31, 1998, purchase or enter a Swap Contract for not less than
$175,000,000 of notional amount, on terms and conditions reasonably satisfactory
to the Administrative Agent, PROVIDED, HOWEVER, that this SECTION 7.20 shall be
satisfied if, prior to December 31, 1998, the Borrowers shall have received
proceeds in an aggregate minimum amount of $175,000,000 pursuant to the
Subordinated Debt Offering.
SECTION 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. Each Borrower
agrees that, so long as any Loan or any Note or other Obligation is outstanding
or the Lenders have any obligation to make Loans or participate in Loans or
Letters of Credit or the Administrative Agent has any obligation to issue,
extend or renew any Letters of Credit hereunder:
SECTION 8.1. RESTRICTIONS ON INDEBTEDNESS. The Borrowers shall not
become or be a guarantor or surety of, or otherwise create, incur, assume, or be
or remain liable, contingently or otherwise, with respect to any Indebtedness,
or become or be responsible in any manner (whether by agreement to purchase any
obligations, stock, assets, goods or services, or to supply or advance any
funds, assets, goods or services or otherwise) with respect to any undertaking
or Indebtedness of any other Person, or incur any Indebtedness other than:
(a) Indebtedness to the Lenders and the Administrative Agent arising
under this Credit Agreement or the Loan Documents;
(b) incurrence of guaranty, suretyship or indemnification obligations
in connection with the Borrowers' performance of services for their respective
customers in the ordinary course of their businesses;
(c) Indebtedness of one Borrower to another then existing Borrower;
(d) (i) purchase money Indebtedness incurred in connection with the
acquisition after the Prior Closing Date of any real or personal property or
under equipment leases or equipment chattel, (ii) existing Indebtedness of any
Subsidiary acquired after the Prior Closing Date (the "Acquired Subsidiary")
originally incurred by the Acquired Subsidiary in connection with the lease or
acquisition of property or fixed assets used in the business of the Acquired
Subsidiary; or with respect to industrial finance bonds issued to finance the
purchase of such property or assets; (iii) other
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unsecured existing Indebtedness of any Acquired Subsidiary; (iv) Indebtedness
with respect to obligations under Capitalized Leases or sale and leaseback
transactions and (v) Indebtedness (other than Subordinated Debt) incurred in
connection with acquisitions after the date hereof of any equity interest in, or
assets of any Person owing to the seller(s) of such equity interests or assets;
PROVIDED THAT (A) such acquisitions are otherwise permitted pursuant to SECTION
8.4; (B) the aggregate amount of such Indebtedness under this subsection (d)
(including Indebtedness assumed in connection with the Sky Reach Acquisition)
shall not exceed the greater of (x) $65,000,000 and (y) EBITDA for the four
fiscal quarters most recently ended multiplied by 0.75 (calculated on a pro
forma basis assuming any acquisition made at any time during such period had
been completed at the beginning of such period) and (C) the incurrence of such
Indebtedness would not otherwise create an Event of Default under SECTION 9;
(e) Subordinated Debt, provided such Indebtedness is not amended or
prepaid without the consent of the Majority Lenders;
(f) Indebtedness existing as of the Prior Closing Date and listed and
described on SCHEDULE 8.1 hereto;
(g) additional unsecured Indebtedness of the Borrowers in an aggregate
amount not to exceed $5,000,000; and
(h) Indebtedness incurred in respect of Swap Contracts incurred
pursuant to SECTION 7.20 hereof;
provided that if the creation, incurrence, assumption or existence of any
Indebtedness would constitute an Event of Default under, or be prohibited
pursuant to the terms of, the then existing Subordinated Debt, then the
creation, incurrence, assumption or existence of such Indebtedness shall not be
permitted hereunder.
SECTION 8.2. RESTRICTIONS ON LIENS. The Borrowers shall not create or
incur or suffer to be created or incurred or to exist any lien, encumbrance,
mortgage, pledge, charge, restriction or other security interest of any kind
upon any property or assets of any character, whether now owned or hereafter
acquired, or upon the income or profits therefrom; or transfer any of such
property or assets or the income or profits therefrom for the purpose of
subjecting the same to the payment of Indebtedness or performance of any other
obligation in priority to payment of its general creditors; or acquire, or agree
or have an option to acquire, any property or assets upon conditional sale or
other title retention or purchase money security agreement, device or
arrangement; or suffer to exist for a period of more than 30 days after the same
shall have been incurred any Indebtedness or claim or demand against it which if
unpaid might by law or upon bankruptcy or insolvency, or otherwise, be given any
priority whatsoever over its general creditors; or sell, assign, pledge or
otherwise transfer any
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accounts, contract rights, general intangibles or chattel paper, with or without
recourse, except as follows (the "Permitted Liens"):
(a) Liens to secure taxes, assessments and other government charges in
respect of obligations not overdue or liens on properties to secure claims for
labor, material or supplies in respect of obligations not overdue;
(b) Deposits or pledges made in connection with, or to secure payment
of, workmen's compensation, unemployment insurance, old age pensions or other
social security obligations;
(c) Liens in respect of judgments or awards which have been in force
for less than the applicable period for taking an appeal so long as execution is
not levied thereunder or in respect of which the applicable Borrower shall at
the time in good faith be prosecuting an appeal or proceedings for review and in
respect of which a stay of execution shall have been obtained pending such
appeal or review and in respect of which such Borrower maintains adequate
reserves;
(d) Liens of carriers, warehousemen, mechanics and materialmen, and
other like liens, in existence less than 120 days from the date of creation
thereof in respect of obligations not overdue, PROVIDED THAT such liens may
continue to exist for a period of more than 120 days if the validity or amount
thereof shall currently be contested by the applicable Borrower in good faith by
appropriate proceedings and if such Borrower shall have set aside on its books
adequate reserves with respect thereto as required by GAAP and PROVIDED FURTHER
that such Borrower will pay any such claim forthwith upon commencement of
proceedings to foreclose any such lien;
(e) Encumbrances on Real Property consisting of easements, rights of
way, zoning restrictions, restrictions on the use of real property and defects
and irregularities in the title thereto, landlord's or lessor's liens under
leases to which any Borrower is a party, and other minor liens or encumbrances
none of which in the opinion of such Borrower interferes materially with the use
of the property affected in the ordinary conduct of the business of such
Borrower, which defects do not individually or in the aggregate have a material
adverse effect on the business of such Borrower individually or of the Borrowers
on a consolidated basis;
(f) Liens existing as of the Prior Closing Date and listed on SCHEDULE
8.2 on the terms and conditions in effect as of the date hereof (subject to the
termination or amendment of certain liens as noted on such Schedule);
(g) (i) previously existing Liens granted by acquired Subsidiaries with
respect to asset financings (mortgages, Capitalized Leases, etc.) or industrial
revenue bonds permitted under SECTION 8.1(d) on the terms and conditions in
effect as of the date of the acquisition, and the replacement, extension or
renewal of any such Lien PROVIDED THAT in each such
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case such Liens shall encumber only the property or assets so financed and shall
not exceed the fair market value thereof and shall not have been incurred in
contemplation of such acquisition; (ii) Liens in respect of Indebtedness to
Sellers and Capitalized Leases permitted by SECTION 8.1(d); and (iii) purchase
money security interests in or purchase money mortgages on real or personal
property to secure purchase money Indebtedness of the type and amount permitted
by SECTION 8.1(d), incurred in connection with the acquisition of such property,
which security interests or mortgages cover only the real or personal property
so acquired, and the replacement, extension or renewal of any such Lien
encumbering no more than the property or assets encumbered by such Lien; and
(h) Liens in favor of the Administrative Agent for the benefit of the
Lenders and the Administrative Agent under the Loan Documents.
SECTION 8.3. RESTRICTIONS ON INVESTMENTS. The Borrowers shall not
purchase or acquire, or make any commitment therefor, any capital stock, equity
interest, or other obligations or securities of, or any interest in, any other
Person, or make or commit to make any acquisition under SECTION 8.4, or make or
commit to make any advance, loan, extension of credit or capital contribution to
or any other investment in, any other Person, other than:
(a) marketable direct or guaranteed obligations of the United States of
America that mature within one (1) year from the date of purchase;
(b) demand deposits, certificates of deposit, bankers acceptances and
time deposits of United States banks or Eligible Foreign Banks having unimpaired
capital and surplus in excess of $250,000,000;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof that at the time of purchase have been rated and
the ratings for which are not less than "P 1" if rated by Moody's Investors
Service, Inc., and not less than "A 1" if rated by Standard and Poor's Rating
Group;
(d) extensions of credit in the nature of accounts receivable or notes
receivable arising from the sale or lease of goods or services in the ordinary
course of business;
(e) investments existing as of the Prior Closing Date and listed on
SCHEDULE 8.3;
(f) loans, investments and advances by any Borrower in or to another
Borrower;
(g) investments with respect to Indebtedness permitted by SECTION
8.1(e); and
(h) investments permitted under SECTION 8.4.
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SECTION 8.4. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
SECTION 8.4.1. MERGERS AND ACQUISITIONS. The Borrowers will
not become a party to any merger or consolidation, or agree to or effect any
asset acquisition or stock acquisition (other than the acquisition of assets in
the ordinary course of business consistent with past practices) except the
merger or consolidation of, or asset or stock acquisitions between existing
Borrowers (provided that the Parent will be the survivor of any such transaction
between the Parent and another Borrower) and except as otherwise provided in
this SECTION 8.4. Any Borrower may purchase or otherwise acquire all or
substantially all of the assets or stock or other equity interests of any other
Person PROVIDED THAT:
(a) the Borrowers are in current compliance with and, giving effect to
the proposed acquisition (including any borrowings made or to be made in
connection therewith), will continue to be in compliance with all of the
covenants in SECTION 9 hereof on a pro forma historical combined basis as if the
transaction occurred on the first day of the period of measurement, PROVIDED
THAT a Compliance Certificate demonstrating such compliance shall have been
provided to the Administrative Agent and, upon a request by any Lender, to such
Lender, for any acquisition to be purchased for cash consideration (including
deferred payments and the aggregate amount of all Funded Debt assumed) of an
aggregate amount equal or greater than $15,000,000;
(b) at the time of such acquisition, no Default or Event of Default has
occurred and is continuing, and such acquisition will not otherwise create a
Default or an Event of Default hereunder;
(c) the business to be acquired is predominantly in the same lines of
business as the Borrowers, or businesses reasonably related or incidental
thereto;
(d) the business to be acquired operates predominantly in the United
States or Canada;
(e) all of the assets to be acquired shall be owned by an existing or
newly created Subsidiary of the Parent which Subsidiary shall be a Borrower,
100% of the assets and stock or other equity interests of which have been or,
simultaneously with such acquisition, will be pledged to the Administrative
Agent on behalf of the Lenders or, in the case of a stock or other equity
interest acquisition, the acquired company, within seven (7) days after such
acquisition, shall become a Borrower or shall be merged with and into a wholly
owned Subsidiary that is a Borrower and such newly acquired or created
Subsidiary shall otherwise comply with the provisions of SECTION 7.16(a) hereof;
(f) not later than seven (7) days prior to the proposed acquisition
date of an acquisition requiring the consent of the Majority Lenders
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(including without limitation, acquisitions under SECTION 8.4.1(j)), and not
later than two (2) days prior to the proposed acquisition date of an acquisition
not requiring the consent of the Majority Lenders, a copy of the purchase
agreement, together with audited (if available, or otherwise unaudited)
financial statements and projections for any Subsidiary to be acquired or
created for the preceding two (2) fiscal years or such shorter period of time as
such Subsidiary has been in existence shall have been furnished to the
Administrative Agent; the Administrative Agent will, at the request of any
Lender, deliver a copy of such agreement and projections to such Lender after
the Administrative Agent's receipt thereof;
(g) not later than seven (7) days prior to the proposed acquisition
date of an acquisition requiring the consent of the Majority Lenders, and not
later than two (2) days prior to the proposed acquisition date of an acquisition
not requiring the consent of the Majority Lenders, each acquisition is preceded
by the Borrowers' standard due diligence practices, summaries of which shall
have been provided to the Administrative Agent; the Administrative Agent will,
at the request of any Lender, deliver a copy of such summaries to such Lender
after the Administrative Agent's receipt thereof;
(h) the board of directors and (if required by applicable law) the
shareholders, or the equivalent thereof, of the business to be acquired has
approved such acquisition;
(i) if such acquisition is made by a merger, a Borrower shall be the
surviving entity;
(j) after giving effect to such acquisition, the cash consideration to
be paid by the Borrowers in connection with such acquisition or series of
related acquisitions (including deferred payments and the aggregate amount of
all Funded Debt assumed) shall not exceed 5% of Consolidated Total Assets as of
such date without the consent of Administrative Agent and the Majority Lenders;
and
(k) the Parent shall provide a certificate certifying that such
acquisition has been completed substantially in accordance with the terms of its
acquisition documents.
Notwithstanding the restrictions contained in SECTION 8.4.1(j), the Sky
Reach Acquisition shall be permitted under this Credit Agreement substantially
on the terms and subject to the conditions set forth in the Sky Reach Documents,
PROVIDED THAT the Borrowers shall have otherwise complied with the provisions of
SECTION 8.4.1. Upon completion of the Sky Reach Acquisition, the EBIT of Sky
Reach shall be included in the calculation of EBIT under the Credit Agreement.
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Notwithstanding anything herein to the contrary, the ability
of the Borrowers to incur any Indebtedness in connection with any transaction
permitted pursuant to this SECTION 8.4 shall be governed by SECTION 8.1.
SECTION 8.4.2. DISPOSITION OF ASSETS. The Borrowers will not
become a party to or agree to or effect any sale or disposition of assets, other
than (a) among existing Borrowers, (b) the licensing of intellectual property
and the disposition of obsolete assets, in each case in the ordinary course of
business consistent with past practices and (c) so long as no Default or Event
of Default shall have occurred and be continuing at the time of such
disposition, the sale of rental equipment PROVIDED the net proceeds of such
disposition are invested by the Borrowers within ninety (90) days of such
disposition in the purchase of new rental equipment. The Administrative Agent
will release its lien on the assets disposed of in accordance with this SECTION
8.4.2(b) and (c) and will deliver to the Borrowers' such evidence of such
release as the Borrowers may reasonably request.
SECTION 8.5. SALE AND LEASEBACK. None of the Borrowers shall enter into
any arrangement, directly or indirectly, whereby any Borrower shall sell or
transfer any property owned by it in order then or thereafter to lease such
property or lease other property which such Borrower intends to use for
substantially the same purpose as the property being sold or transferred,
without the prior written consent of the Majority Lenders.
SECTION 8.6. RESTRICTED DISTRIBUTIONS AND REDEMPTIONS. None of the
Borrowers shall make Distributions except any Borrower may make Distributions to
another Borrower PROVIDED no Default or Event of Default exists or would be
created by the making of such Distribution. None of the Borrowers shall effect
or permit any change in or amendment to any document or instrument pertaining to
the terms of any Borrower's (other than the Parent's) capital stock.
SECTION 8.7. EMPLOYEE BENEFIT PLANS. None of the Borrowers nor any
ERISA Affiliate will:
(a) engage in any "prohibited transaction" within the meaning of
SECTION 406 of ERISA or SECTION 4975 of the Code which could result in a
material liability for any Borrower; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated funding
deficiency", as such term is defined in SECTION 302 of ERISA, whether or not
such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could result
in the imposition of a lien or encumbrance on the assets of any Borrower
pursuant to SECTION 302(f) or SECTION 4068 of ERISA; or
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(d) amend any Guaranteed Pension Plan in circumstances requiring the
posting of security pursuant to SECTION 307 of ERISA or SECTION 401(a)(29) of
the Code; or
(e) permit or take any action which would result in the aggregate
benefit liabilities (within the meaning of SECTION 4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of such
Plans, disregarding for this purpose the benefit liabilities and assets of any
such Plan with assets in excess of benefit liabilities.
SECTION 8.8. NEGATIVE PLEDGES. The Borrowers shall not enter into or
permit to exist any arrangement or agreement, enforceable under applicable law,
which directly or indirectly prohibits any Borrower from creating or incurring
any lien, encumbrance, mortgage, pledge, charge, restriction or other security
interest in favor of the Administrative Agent for the benefit of the Lenders and
the Administrative Agent under the Loan Documents.
SECTION 8.9. BUSINESS ACTIVITIES. The Borrowers will not engage
directly or indirectly (whether through Subsidiaries or otherwise) in any type
of business other than the businesses conducted by any Borrower on the Closing
Date and in related businesses.
SECTION 8.10. TRANSACTIONS WITH AFFILIATES. The Borrowers will not
engage in any transaction with any Affiliate (other than for services as
employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any such Affiliate or, to the knowledge of any Borrower, any
corporation, partnership, trust or other entity in which any such Affiliate has
a substantial interest or is an officer, director, trustee or partner, on terms
more favorable to such Person than would have been obtainable on an arm's-length
basis in the ordinary course of busineSECTION
SECTION 8.11. SUBORDINATED DEBT. None of the Borrowers will amend,
supplement or otherwise modify the terms of any of the Subordinated Debt without
thirty (30) days prior written notice to the Administrative Agent and the
Lenders of such change, and will not make any change which, in the opinion of
the Administrative Agent, would be in any way materially adverse to the Lenders
without the prior written consent of the Majority Lenders or prepay, redeem or
repurchase any of the Subordinated Debt. Prior to the making of any scheduled
payment of principal on any of the Subordinated Debt, the Borrowers shall
deliver to the Administrative Agent and Lenders a Compliance Certificate
demonstrating that on a pro forma basis after giving effect to the proposed
payment and any borrowings needed to make such payment, assuming such payment
and borrowing had been competed as of the last day of the fiscal quarter, the
Borrowers are and shall continue to be in compliance with all of the covenants
in SECTION 9 hereof. In the event that the Borrowers are unable to deliver such
Compliance Certificate, the Borrowers shall prepay the Term Loan, at least one
Business Day prior to making any
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payment on any Subordinated Debt, in an amount sufficient to bring the Borrowers
into pro forma compliance with the covenants in SECTION 9 of the Credit
Agreement. Each such payment on the Term Loan shall be allocated in the manner
set forth in SECTION 3.4 of this Credit Agreement. Notwithstanding anything
herein to the contrary, in no case may the Borrowers make any payment of
principal, interest, or other amounts owing with respect to the Subordinated
Debt if an Event of Default under SECTION 13.1(a) or (b) exists or would be
created by the making of such payment.
SECTION 8.12. FISCAL YEAR. None of the Borrowers will change the date
of its fiscal year from that set forth in SECTION 6.4(c) hereof.
SECTION 9. FINANCIAL COVENANTS. Each of the Borrowers covenants and
agrees that, so long as any Loan, any Revolving Credit Note, Swing Line Note,
Term Note, any Reimbursement Obligation or other Obligation is outstanding or
the Lenders have any obligation to make Loans or participate in Loans or Letters
of Credit or the Administrative Agent has any obligation to issue, extend or
renew any Letters of Credit hereunder:
SECTION 9.1. LEVERAGE RATIO. Commencing with the fiscal quarter ending
September 30, 1998, the ratio of (a) Funded Debt as at the end of any fiscal
quarter to (b) EBITDA for the period of four (4) consecutive fiscal quarters
ending on such date shall not exceed 4.50:1.00.
SECTION 9.2. SENIOR FUNDED DEBT TO EBITDA. Commencing with the fiscal
quarter ending September 30, 1998, the ratio of (a) Senior Funded Debt as at the
end of any fiscal quarter ending during a period described in the table below to
(b) EBITDA for the period of four (4) consecutive fiscal quarters ending on such
date shall not exceed the ratio set forth in the following table:
Period Percentage
------ ----------
Closing Date-September 30, 1998 3.50:1.00
October 1, 1998-June 30, 1999 3.25:1.00
July 1, 1999 and thereafter 3.00:1.00
SECTION 9.3. INTEREST COVERAGE RATIO. As of the end of any fiscal
quarter of the Borrowers commencing with the fiscal quarter ending September 30,
1998, the Borrowers will not permit the ratio of (a) the sum of (i) actual
reported EBIT (without adjustment) PLUS (ii) amortization expense relating to
intangible assets to (b) Consolidated Total Interest Expense to be less than the
ratio appearing opposite the relevant period in the table set forth below:
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Period Ratio
------ -----
July 1, 1998 - December 31, 1998 1.75:1
January 1, 1999 - December 31, 1999 2.00:1
January 1, 2000 and thereafter 2.25:1
The Interest Coverage Ratio shall be calculated on a cumulative
quarterly basis for the fiscal quarters ending September 30, 1998 through
December 31, 1998, and thereafter for the four fiscal quarters then ending.
SECTION 9.4. TANGIBLE ASSETS TO SENIOR DEBT. The Borrowers will not
permit at any time the ratio of (a) Consolidated Tangible Assets to (b) the sum
of the Loans, unpaid Reimbursement Obligations and the Maximum Drawing Amount to
be less than 1.00:1.
SECTION 9.5. CONSOLIDATED NET WORTH. The Borrowers will not permit
Consolidated Net Worth at any time to be less than $175,000,000 PLUS the sum of
(i) 50% of positive Consolidated Net Income for each fiscal quarter, beginning
with the fiscal quarter ended September 30, 1998, and (ii) 100% of the net
proceeds of any sale by the Borrowers of (A) equity securities issued by the
Borrowers or (B) warrants or subscription rights for equity securities issued by
the Borrowers.
SECTION 9.6. CAPITAL EXPENDITURES. Capital Expenditures (other than for
rental equipment inventory used in the ordinary course of business) for the
fiscal years set forth below shall not exceed the amounts set forth opposite
such fiscal year in the following table:
Fiscal Year Amount
----------- ------
1998 $10,000,000
1999 $20,000,000
2000 $25,000,000
PROVIDED, HOWEVER, that, if during any fiscal year the amount of Capital
Expenditures permitted for that fiscal year is not utilized, such unutilized
amount may be utilized in the next succeeding fiscal year after application of
the amount set forth in the table above, but not in any subsequent fiscal year.
SECTION 10. CLOSING CONDITIONS. The obligations of the Lenders to
convert the Loans under the Prior Credit Agreement into Revolving Credit Loans
and to make the initial Loans, the Administrative Agent to issue any initial
Letters of Credit, and the Lenders and the Administrative Agent
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otherwise be bound by the terms of this Credit Agreement shall be subject to the
satisfaction of each of the following conditions precedent:
SECTION 10.1. LOAN DOCUMENTS, ETC. Each of the Loan Documents shall
have been duly and properly authorized, executed and delivered by the respective
parties thereto and shall be in full force and effect in a form satisfactory to
the Lenders.
SECTION 10.2. CORPORATE ACTION. All corporate action necessary for the
valid execution, delivery and performance by each Borrower of the Loan Documents
shall have been duly and effectively taken, and satisfactory evidence thereof
shall have been provided to the Administrative Agent.
SECTION 10.3. CERTIFICATE OF SECRETARY; GOOD STANDING CERTIFICATES. The
Administrative Agent shall have received from each Borrower either (i) a
certificate as to the good standing of such Borrower from the Secretary of State
or other appropriate official of the state of its organization and from each
state in which it is authorized to conduct business, in each case dated as of a
recent date or (ii) a certificate stating that the good standing certificate
previously delivered by such Borrower remains true, accurate and complete as of
the Closing Date. The Administrative Agent shall also have received from each
Borrower either (i) a certificate of its Secretary certifying the following
attachments thereto: (a) a copy of its certificate or articles of incorporation
or constitutive documents, in each case as amended to date, certified as of a
recent date by the Secretary of State or other appropriate official of the state
of its organization, (b) a true, correct and complete copy of its by-laws,
including all amendments thereto, and (c) a true, correct and complete copy of
the resolutions of its board of directors authorizing the transactions
contemplated hereunder and under the other Loan Documents or (ii) a certificate
of its Secretary certifying that such documents previously delivered on the
Prior Closing Date with respect to such Borrower is true, accurate and complete
as of the Closing Date. Such Secretary's Certificate shall also give the name
and bear a specimen signature of each individual who shall be authorized (i) to
sign the Loan Documents on behalf of each Borrower; (ii) to make Loan and Letter
of Credit Requests; and (iii) to give notices and to take other action on each
Borrower's behalf under the Loan Documents.
SECTION 10.4. VALIDITY OF LIENS. The Security Documents shall be
effective to create and maintain in favor of the Administrative Agent a legal,
valid and enforceable first (except for Permitted Liens entitled to priority
under applicable law) security interest in and lien upon the Collateral. All
filings, recordings, deliveries of instruments and other actions necessary or
desirable in the opinion of the Administrative Agent to protect and preserve
such security interests including, without limitation, notation of the
Administrative Agent's lien on certificates of title as described in SECTION
7.19, shall have been duly effected. The Administrative Agent shall have
received evidence thereof in form and substance satisfactory to the
Administrative Agent.
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SECTION 10.5. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The
Administrative Agent shall have received from each Borrower either (i) a
completed and fully executed Perfection Certificate or (ii) a certificate
stating that the Perfection Certificate previously delivered by such Borrower is
true, accurate and complete as of the Closing Date and the results of UCC
searches with respect to the Collateral, indicating no liens other than
Permitted Liens and otherwise in form and substance satisfactory to the
Administrative Agent.
SECTION 10.6. CERTIFICATES OF INSURANCE. The Administrative Agent shall
have received either (i) a certificate of insurance signed by the insurer or an
agent authorized to bind the insurer dated as of the Closing Date, identifying
insurers, types of insurance, insurance limits, and policy terms, and otherwise
describing the Borrowers' insurance coverage and naming the Administrative Agent
as loss payee and additional insured as further provided in the Security
Agreement or (ii) a certificate from the Borrowers stating that the insurance
certificate previously delivered on the Prior Closing Date is true, accurate and
complete as of the Closing Date.
SECTION 10.7. LEGAL OPINIONS. The Administrative Agent shall have
received a favorable legal opinion from counsel to the Borrowers, addressed to
the Administrative Agent and each Lender, dated as of the Closing Date, in form
and substance satisfactory to the Administrative Agent, including but not
limited to an opinion regarding noncontravention of the Loan Documents and the
transactions contemplated herein and therein with the Subordinated Debt
Documents.
SECTION 10.8. PAYMENT OF FEES. The Borrowers shall have paid all fees
owing to any of the Lenders or the Administrative Agent, as appropriate,
including, without limitation, the fees and expenses of the Administrative
Agent's counsel and the fees set forth in the fee letter dated September 17,
1998 (the "Fee Letter").
SECTION 10.9. CLOSING CERTIFICATE. The Borrowers shall have delivered
to the Administrative Agent a certificate, dated as of the Closing Date, stating
that, as of such date (a) the representations and warranties set forth herein or
in any other Loan Document are true and correct and (b) no Default or Event of
Default has occurred and is continuing.
SECTION 10.10. CONSENTS. The Borrowers shall have delivered to the
Administrative Agent evidence that all requisite third-party consents to the
transactions contemplated hereunder and under the other Loan Documents have been
received.
SECTION 10.11. SUBORDINATED DEBT DOCUMENTS. The Borrowers shall have
delivered to the Administrative Agent true, correct and complete copies of the
Subordinated Debt Documents in existence as of the Closing Date and such
documents shall be in form and substance satisfactory to the Administrative
Agent.
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SECTION 10.12. COMPLIANCE CERTIFICATE. The Borrowers shall have
delivered to the Administrative Agent a duly executed and completed Compliance
Certificate.
SECTION 11. CONDITIONS OF ALL LOANS. The obligations of the Lenders to
convert the Loans under the Prior Credit Agreement into Revolving Credit Loans
hereunder and to make or extend any Loan and of the Administrative Agent to
issue, extend or renew any Letter of Credit on or after the Closing Date, shall
also be subject to the following conditions precedent:
SECTION 11.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of the Borrowers contained in this Credit
Agreement, the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with this Credit Agreement shall be true as of the
date as of which they were made and shall also be true at and as of the time of
any Drawdown Date or the issuance, extension or renewal of any Letter of Credit
with the same effect as if made at and as of that time (except to the extent of
changes resulting from transactions contemplated or permitted by this Credit
Agreement and the other Loan Documents and changes occurring in the ordinary
course of business which singly or in the aggregate are not materially adverse,
or to the extent that such representations and warranties relate solely and
expressly to an earlier date) and no Default or Event of Default shall have
occurred and be continuing.
SECTION 11.2. PERFORMANCE; NO EVENT OF DEFAULT. The Borrowers shall
have performed and complied with all terms and conditions herein required to be
performed or complied with by the Borrowers prior to or at the time of any Loan,
and at the time of any Loan, there shall exist no Event of Default or condition
which would result in an Event of Default upon consummation of such Loan
(including without limitation any amounts to be drawn under a Letter of Credit).
Each request by the Borrowers for a Loan and each request for issuance,
extension or renewal of a Letter of Credit subsequent to the Closing Date shall
constitute certification by the Borrowers that the conditions specified in
SECTIONS 11.1 and 11.2 will be duly satisfied on the date of such Loan or
Letter of Credit issuance.
SECTION 11.3. NO LEGAL IMPEDIMENT. No change shall have occurred in any
law or regulations thereunder or interpretations thereof which in the reasonable
opinion of any Lender would make it illegal for such Lender to make Loans
hereunder or to participate in the issuance, extension or renewal of letters of
credit or in the reasonable opinion of the Administrative Agent would make it
illegal for the Administrative Agent to issue, extend or renew such Letter of
Credit.
SECTION 11.4. GOVERNMENTAL REGULATION. Each Lender shall have received
such statements in form and substance reasonably satisfactory to such Lender as
such Lender shall require for the purpose of compliance with any
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applicable regulations of the Comptroller of the Currency or the Board of
Governors of the Federal Reserve System.
SECTION 11.5. PROCEEDINGS AND DOCUMENTS. All proceedings in connection
with the transactions contemplated by this Credit Agreement, the other Loan
Documents and all documents incident thereto shall have been delivered to the
Lenders in form and substance satisfactory to the Lenders, the Administrative
Agent and its counsel, including without limitation a Loan and Letter of Credit
Request in the form attached hereto as EXHIBIT C, and the Lenders, the
Administrative Agent and such counsel shall have received all information and
such counterpart originals or certified or other copies of such documents as the
Administrative Agent or any Lender may reasonably request.
SECTION 12. COLLATERAL SECURITY. The Obligations shall be secured by
(a) a perfected first priority security interest (subject only to Permitted
Liens entitled to priority under applicable law) in all assets of each Borrower
(other than perfection of titled or registered equipment unless perfection is
required pursuant to SECTION 7.19), whether now owned or hereafter acquired,
pursuant to the terms of the Security Documents to which such Borrower is a
party and (b) a pledge of one hundred percent (100%) of the stock or other
equity interests of each Subsidiary of the Parent pursuant to the terms of the
Stock Pledge Agreements.
SECTION 13. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT.
SECTION 13.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the
following events ("Events of Default" or, if the giving of notice or the lapse
of time or both is required, then, prior to such notice and/or lapse of time,
"Defaults") shall occur:
(a) the Borrowers shall fail to pay any principal of the Loans or any
Reimbursement Obligation when the same shall become due and payable, whether at
the Revolving Credit Maturity Date, Term Loan Maturity Date or any accelerated
date of maturity or at any other date fixed for payment (including, without
limitation, any prepayments required by SECTIONS 3.4 or 8.11);
(b) the Borrowers shall fail to pay any interest or fees or other
amounts owing hereunder within five (5) Business Days after the same shall
become due and payable whether at the Revolving Credit Maturity Date, Term Loan
Maturity Date or any accelerated date of maturity or at any other date fixed for
payment;
(c) any Borrower shall fail to comply with any of the covenants
contained in SECTIONS 7.1, the first clause of 7.5, 7.15, 7.16, 7.19, 8
or 9;
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(d) any Borrower shall fail to perform any term, covenant or agreement
contained herein or in any of the other Loan Documents (other than those
specified in subsections (a), (b), and (c) above) within thirty (30) days after
the earlier to occur of (i) written notice of such failure has been given to the
Borrowers by the Administrative Agent or any Lender or (ii) the date on which
any Borrower knew or should have known about such event;
(e) any representation or warranty contained in this Credit Agreement,
any of the Loan Documents or in any document or instrument delivered pursuant to
or in connection with this Credit Agreement shall prove to have been false in
any material respect upon the date when made or repeated;
(f) any Borrower shall fail to pay at maturity, or within any
applicable period of grace, any obligation for borrowed money (other than the
Obligations) or any guaranty with respect thereto in an aggregate amount greater
than $1,000,000 or fail to observe or perform any material term, covenant or
agreement contained in any agreement by which it is bound, evidencing or
securing borrowed money in an aggregate amount greater than $1,000,000 for such
period of time as would, or would have permitted (assuming the giving of
appropriate notice if required) the holder or holders thereof or of any
obligations issued thereunder to accelerate the maturity thereof;
(g) any Borrower makes an assignment for the benefit of creditors, or
admits in writing its inability to pay or generally fails to pay its debts as
they mature or become due, or petitions or applies for the appointment of a
trustee or other custodian, liquidator or receiver of any Borrower or of any
substantial part of the assets of any Borrower or commences any case or other
proceeding relating to any Borrower under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law of any jurisdiction, now or hereafter in effect, or takes any action
to authorize or in furtherance of any of the foregoing, or if any such petition
or application is filed or any such case or other proceeding is commenced
against any Borrower and such Borrower indicates its approval thereof, consent
thereto or acquiescence therein or such petition or application shall not have
been dismissed within ninety (90) days following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any Borrower bankrupt or
insolvent, or approving a petition in any such case or other proceeding, or a
decree or order for relief is entered in respect of any Borrower in an
involuntary case under federal bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days, whether or not consecutive, any
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final judgment against any Borrower which, with other outstanding final
judgments, undischarged, unsatisfied and unstayed against the Borrowers, exceeds
in the aggregate $1,000,000 after taking into account any undisputed insurance
coverage;
(j) the holders of all or any part of the Subordinated Debt shall
accelerate the maturity of all or any part of the Subordinated Debt or the
Subordinated Debt shall be prepaid, redeemed or repurchased in whole or in part,
other than payments made in compliance with SECTION 3.4 hereof;
(k) any Borrower or any ERISA Affiliate incurs any liability to the
PBGC or a Guaranteed Pension Plan pursuant to Title IV of ERISA in an aggregate
amount exceeding $1,000,000, or any Borrower or any ERISA Affiliate is assessed
withdrawal liability pursuant to Title IV of ERISA by a Multiemployer Plan
requiring aggregate annual payments exceeding $1,000,000, or any of the
following occurs with respect to a Guaranteed Pension Plan: (i) an ERISA
Reportable Event, or a failure to make a required installment or other payment
(within the meaning of SECTION 302(f)(1) of ERISA), PROVIDED THAT the
Administrative Agent determines in its reasonable discretion that such event (A)
could be expected to result in liability of any Borrower to the PBGC or such
Guaranteed Pension Plan in an aggregate amount exceeding $1,000,000 and (B)
could constitute grounds for the termination of such Guaranteed Pension Plan by
the PBGC, for the appointment by the appropriate United States District Court of
a trustee to administer such Guaranteed Pension Plan or for the imposition of a
lien in favor of such Guaranteed Pension Plan; or (ii) the appointment by a
United States District Court of a trustee to administer such Guaranteed Pension
Plan; or (iii) the institution by the PBGC of proceedings to terminate such
Guaranteed Pension Plan;
(l) any of the Loan Documents shall be cancelled, terminated, revoked
or rescinded or the Administrative Agent's security interests or liens in a
substantial portion of the Collateral shall cease to be perfected, or shall
cease to have the priority contemplated by the Security Documents, in each case
otherwise than in accordance with the terms thereof or with the express prior
written agreement, consent or approval of the Lenders, or any action at law,
suit or in equity or other legal proceeding to cancel, revoke or rescind any of
the Loan Documents shall be commenced by or on behalf of any Borrower or any of
their respective stockholders, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the effect
that, any one or more of the Loan Documents is illegal, invalid or unenforceable
in accordance with the terms thereof;
(m) (i) the Parent shall at any time, legally or beneficially own less
than one hundred percent (100%) of the shares of the capital stock of each other
Borrower, as adjusted pursuant to any stock split, stock dividend or
recapitalization or reclassification of the capital of such Borrower; or (ii)
except as set forth on SCHEDULE 13.1(m) any person or group of persons
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(within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934,
as amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said Act) of
20% or more of the outstanding shares of common stock of the Parent; or, during
any period of twelve consecutive calendar months, individuals who were directors
of the Parent on the first day of such period shall cease to constitute a
majority of the board of directors;
then, and in any such event, so long as the same may be continuing, the
Administrative Agent may, and at the request of the Majority Lenders shall, by
notice in writing to the Borrowers, declare all amounts owing with respect to
this Credit Agreement, the Notes and the other Loan Documents and all
Reimbursement Obligations to be, and they shall thereupon forthwith become,
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Borrowers; PROVIDED
THAT in the event of any Event of Default specified in SECTIONS 13(g),
13(h) or 13(j) all such amounts shall become immediately due and payable
automatically and without any requirement of notice from the Administrative
Agent or any Lender. Upon demand by the Required Revolving Credit Lenders after
the occurrence of any Event of Default, the Borrowers shall immediately provide
to the Administrative Agent cash in an amount equal to the Maximum Drawing
Amount, to be held by the Administrative Agent as collateral security for the
Letter of Credit Obligations, PROVIDED THAT in the event of any Event of Default
specified in SECTIONS 13(g), 13(h) or 13(j), all such amounts shall
become immediately due and payable automatically and without any requirement of
notice from the Administrative Agent or any Lender.
SECTION 13.2. TERMINATION OF COMMITMENTS. If any Event of Default shall
occur, the Administrative Agent may, and at the request of the Required
Revolving Credit Lenders shall, by notice to the Borrowers, terminate the unused
portion of the Total Commitment hereunder, and upon such notice being given,
such unused portion of the Total Commitment hereunder shall terminate
immediately and the Revolving Credit Lenders shall be relieved of all further
obligations to make Revolving Credit Loans to the Borrowers and the
Administrative Agent shall be relieved of all further obligations to issue,
extend or renew Letters of Credit for the account of the Borrowers hereunder,
PROVIDED THAT in the event of any Event of Default specified in SECTIONS
13(g), 13(h) or 13(j), the Total Commitment shall forthwith terminate and each
of the Revolving Credit Lenders shall be relieved of all further obligations to
make Revolving Credit Loans to the Borrowers and the Administrative Agent shall
be relieved of all further obligations to issue, extend or renew Letters of
Credit automatically and without any requirement of notice from the
Administrative Agent or any Lender. No termination of any portion of the Total
Commitment hereunder shall relieve the Borrowers of any of their existing
Obligations to the Revolving Credit Lenders hereunder or elsewhere.
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SECTION 13.3. REMEDIES. Subject to SECTION 14, in case any one or more
Events of Default shall have occurred and be continuing, and whether or not the
Lenders shall have accelerated the maturity of the Loans pursuant to SECTION
13.1, each Lender may proceed to protect and enforce its rights by suit in
equity, action at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this Credit Agreement and
the other Loan Documents or any instrument pursuant to which the Obligations to
such Lender are evidenced, including, without limitation, as permitted by
applicable law the obtaining of the EX PARTE appointment of a receiver, and, if
such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any legal or equitable right of such Lender,
PROVIDED THAT, if any of the Collateral is Real Property located in California,
Louisiana or any other state or province having a one form of action rule or any
rule which might impair the Collateral, then prior to initiating any such
proceeding, such Lender shall have supplied the Administrative Agent with
opinions of nationally recognized law firms specializing in California law,
Louisiana law, and the law of any other state or province, as applicable, having
a one form of action rule to the effect that actions by such Lender under such
circumstances shall not constitute an action for purposes of such state's or
province's one form of action rule or in any other way impair the Collateral. No
remedy herein conferred upon any Lender or the Administrative Agent or the
holder of any Note or purchaser of any Letter of Credit Participation is
intended to be exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or any other provision
of law.
SECTION 13.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that,
following the occurrence or during the continuance of any Event of Default, the
Administrative Agent or any Lender, as the case may be, receives any monies in
connection with the enforcement of any the Security Documents, or otherwise with
respect to the realization upon any of the Collateral, such monies shall be
distributed for application as follows:
(a) First, to the payment of, or (as the case may be)
the reimbursement of the Administrative Agent for or in
respect of all reasonable costs, expenses, fees, disbursements
and losses which shall have been incurred or sustained by the
Administrative Agent in connection with the collection of such
monies by the Administrative Agent, for the exercise,
protection or enforcement by the Administrative Agent of all
or any of the rights, remedies, powers and privileges of the
Administrative Agent under this Credit Agreement or any of the
other Loan Documents or in respect of the Collateral or in
support of any provision of adequate indemnity to the
Administrative Agent against any taxes or liens which by law
shall have, or may have, priority over the rights of the
Administrative Agent to such monies;
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(b) Second, notwithstanding anything to the contrary
set forth herein, to the payment of the Lenders, be
distributed PARI PASSU in accordance with the aggregate
outstanding principal amount of, or held as cash collateral
for, the Obligations (including the Maximum Drawing Amount of
Letters of Credit outstanding) owing to each Lender divided by
the aggregate outstanding principal amount of all Obligations
(including the Maximum Drawing Amount of Letters of Credit
outstanding), PROVIDED that upon the expiration or termination
of any Letters of Credit, the Maximum Drawing Amount which has
been included in calculating outstanding Obligations and any
cash collateral held for the benefit of the Revolving Credit
Lenders in respect thereto will be redistributed PARI PASSU to
the Lenders in accordance with this paragraph (b);
(c) Third, upon payment and satisfaction in full or
other provisions for payment in full satisfactory to the
Lenders and the Administrative Agent of all of the
Obligations, to the payment of any obligations required to be
paid pursuant to SECTION 9-504(1)(c) of the Uniform Commercial
Code of the Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to
the Borrowers or to such other Persons as are entitled
thereto.
SECTION 14. SETOFF. Regardless of the adequacy of any Collateral,
during the continuance of an Event of Default, any deposits or other sums
credited by or due from any Lender to any Borrower and any securities or other
property of any Borrower in the possession of such Lender may be applied to or
set off against the payment of the Obligations and any and all other
liabilities, direct or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, of any Borrower to the Lenders. The Lenders
agree among themselves that, if a Lender shall obtain payment on any Obligation
outstanding under this Credit Agreement through the exercise of a right of
offset, banker's lien or counterclaim, or from any other source including under
SECTION 13.3 (other than by way of A PRO RATA payment under this Credit
Agreement), it shall promptly make such adjustments with the other Lenders as
shall be equitable to the end that all the Lenders shall share the benefits of
such payments PRO RATA in accordance with each Lender's Loan Percentage
immediately prior to the payment obtained by such Lender as aforesaid. The
Lenders further agree among themselves that if any payment to a Lender obtained
by such Lender through the exercise of a right of offset, banker's lien or
counterclaim, or from any other source (other than by way of a PRO RATA payment)
as aforesaid shall be rescinded or must otherwise be restored, the Lenders who
shall have shared the benefit of such payment shall return their share of that
benefit to the Lender whose payment shall have been rescinded or otherwise
restored.
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SECTION 15. THE ADMINISTRATIVE AGENT.
SECTION 15.1. AUTHORIZATION.
(a) The Administrative Agent is authorized to take such action on
behalf of each of the Lenders and to exercise all such powers as are hereunder
and under any of the other Loan Documents and any related documents delegated to
the Administrative Agent, together with such powers as are reasonably incident
thereto, PROVIDED that no duties or responsibilities not expressly assumed
herein or therein shall be implied to have been assumed by the Administrative
Agent.
(b) The relationship between the Administrative Agent and each of the
Lenders is that of an independent contractor. The use of the term
"Administrative Agent" is for convenience only and is used to describe, as a
form of convention, the independent contractual relationship between the
Administrative Agent and each of the Lenders. Nothing contained in this Credit
Agreement nor the other Loan Documents shall be construed to create an agency,
trust or other fiduciary relationship between the Administrative Agent and any
of the Lenders.
(c) As an independent contractor empowered by the Lenders to exercise
certain rights and perform certain duties and responsibilities hereunder and
under the other Loan Documents, the Administrative Agent is nevertheless a
"representative" of the Lenders, as that term is defined in Article 1 of the
Uniform Commercial Code, for purposes of actions for the benefit of the Lenders
and the Administrative Agent with respect to all collateral security and
guaranties contemplated by the Loan Documents. Such actions include the
designation of the Administrative Agent as "secured party", "mortgagee" or the
like on all financing statements and other documents and instruments, whether
recorded or otherwise, relating to the attachment, perfection, priority or
enforcement of any security interests, mortgages or deeds of trust in collateral
security intended to secure the payment or performance of any of the
Obligations, all for the benefit of the Lenders and the Administrative Agent.
SECTION 15.2. EMPLOYEES AND AGENTS. The Administrative Agent may
exercise its powers and execute its duties by or through employees or agents and
shall be entitled to take, and to rely on, advice of counsel concerning all
matters pertaining to its rights and duties under this Credit Agreement and the
other Loan Documents. The Administrative Agent may utilize the services of such
Persons as the Administrative Agent in its sole discretion may reasonably
determine, and all reasonable fees and expenses of any such Persons shall be
paid by the Borrowers.
SECTION 15.3. NO LIABILITY. Neither the Administrative Agent nor any of
its shareholders, directors, officers or employees nor any other Person
assisting them in their duties nor any agent or employee thereof, shall be
liable for any waiver, consent or approval given or any action taken, or omitted
to be taken, in good faith by it or them hereunder or under any of the other
Loan Documents, or in connection herewith or therewith, or be responsible for
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the consequences of any oversight or error of judgment whatsoever, except that
the Administrative Agent or such other Person, as the case may be, may be liable
for losses due to its willful misconduct or gross negligence.
SECTION 15.4. NON-RELIANCE ON AGENT AND OTHER BANKS. Each Lender
represents that it has, independently and without reliance on the Administrative
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of the financial condition and
affairs of the Borrowers and decision to enter into this Credit Agreement and
the other Loan Documents and agrees that it will, independently and without
reliance upon the Administrative Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own appraisals and decisions in taking or not taking action under this
Credit Agreement or any other Loan Document. The Administrative Agent shall not
be required to keep informed as to the performance or observance by the
Borrowers of this Credit Agreement, the other Loan Documents or any other
document referred to or provided for herein or therein or by any other Person of
any other agreement or to make inquiry of, or to inspect the properties or books
of, any Person. Except for notices, reports and other documents and information
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning any person
which may come into the possession of the Administrative Agent or any of its
affiliates. Each Lender shall have access to all documents relating to the
Administrative Agent's performance of its duties hereunder at such Lender's
request. Unless any Lender shall promptly object to any action taken by the
Administrative Agent hereunder (other than actions to which the provisions of
SECTION 27 are applicable and other than actions which constitute gross
negligence or willful misconduct by the Administrative Agent), such Lender shall
conclusively be presumed to have approved the same.
SECTION 15.5. NO REPRESENTATIONS.
SECTION 15.5.1. GENERAL. The Administrative Agent shall not be
responsible for the execution or validity or enforceability of this
Credit Agreement, the Notes, the Letters of Credit, any of the other
Loan Documents or any instrument at any time constituting, or intended
to constitute, collateral security for the Notes, or for the value of
any such collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Notes, or
for any recitals or statements, warranties or representations made
herein or in any of the other Loan Documents or in any certificate or
instrument hereafter furnished to it by or on behalf of any Borrower,
or be bound to ascertain or inquire as to the performance or observance
of any of the terms, conditions, covenants or agreements herein or in
any instrument at any time constituting, or intended to constitute,
collateral security for the Notes or to inspect any of the
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properties, books or records of any Borrower. The Administrative Agent
shall not be bound to ascertain whether any notice, consent, waiver or
request delivered to it by the Borrowers or any holder of any of the
Notes shall have been duly authorized or is true, accurate and
complete. The Administrative Agent has not made nor does it now make
any representations or warranties, express or implied, nor does it
assume any liability to the Lenders, with respect to the credit
worthiness or financial conditions of any Borrower. Each Lender
acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based upon such
information and documents as it has deemed appropriate, made its own
credit analysis and decision to enter into this Credit Agreement.
SECTION 15.5.2. CLOSING DOCUMENTATION, ETC. For purposes of
determining compliance with the conditions set forth in SECTION 10,
each Lender that has executed this Credit Agreement shall be deemed to
have consented to, approved or accepted, or to be satisfied with, each
document and matter either sent, or made available, by the
Administrative Agent or the Arranger to such Lender for consent,
approval, acceptance or satisfaction, unless an officer of the
Administrative Agent or the Arranger active upon the Borrowers' account
shall have received notice from such Lender prior to the Closing Date
specifying such Lender's objection thereto and such objection shall not
have been withdrawn by notice to the Administrative Agent or the
Arranger to such effect on or prior to the Closing Date.
SECTION 15.6. PAYMENTS.
SECTION 15.6.1. PAYMENTS TO ADMINISTRATIVE AGENT. A payment by
the Borrower to the Administrative Agent hereunder or any of the other
Loan Documents for the account of any Lender shall constitute a payment
to such Lender. The Administrative Agent agrees promptly to distribute
to each Lender such Lender's PRO RATA share (based on such Lender's
Loan Percentage) of payments received by the Administrative Agent for
the account of the Lenders except as otherwise expressly provided
herein or in any of the other Loan Documents.
SECTION 15.6.2. DISTRIBUTION BY ADMINISTRATIVE AGENT. If in
the opinion of the Administrative Agent the distribution of any amount
received by it in such capacity hereunder, under the Notes or under any
of the other Loan Documents might involve it in liability, it may
refrain from making distribution until its right to make distribution
shall have been adjudicated by a court of competent jurisdiction. If a
court of competent jurisdiction shall adjudge that any amount received
and distributed by the Administrative Agent is to be repaid, each
Person to whom any such distribution shall have been made shall either
repay to the Administrative Agent its proportionate share
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of the amount so adjudged to be repaid or shall pay over the same in
such manner and to such Persons as shall be determined by such court.
SECTION 15.6.3. DELINQUENT LENDERS. Notwithstanding anything
to the contrary contained in this Credit Agreement or any of the other
Loan Documents, any Lender that fails (i) when required hereunder to
make available to the Administrative Agent its PRO RATA share of any
Loan or to purchase any Letter of Credit Participation or (ii) to
comply with the provisions of SECTION 14 with respect to making
dispositions and arrangements with the other Lenders, where such
Lender's share of any payment received, whether by setoff or otherwise,
is in excess of its PRO RATA share of such payments due and payable to
all of the Lenders, in each case as, when and to the full extent
required by the provisions of this Credit Agreement, shall be deemed
delinquent (a "Delinquent Lender") and shall be deemed a Delinquent
Lender until such time as such delinquency is satisfied. A Delinquent
Lender shall be deemed to have assigned any and all payments due to it
from the Borrowers, whether on account of outstanding Loans, unpaid
Reimbursement Obligations, interest, fees or otherwise, to the
remaining nondelinquent Lenders for application to, and reduction of,
their respective PRO RATA shares of all outstanding Loans and unpaid
Reimbursement Obligations. The Delinquent Lender hereby authorizes the
Administrative Agent to distribute such payments to the nondelinquent
Lenders in proportion to their respective PRO RATA shares of all
outstanding Loans and unpaid Reimbursement Obligations. A Delinquent
Lender shall be deemed to have satisfied in full a delinquency when and
if, as a result of application of the assigned payments to all
outstanding Loans and unpaid Reimbursement Obligations of the
nondelinquent Lenders, the Lenders' respective PRO RATA shares of all
outstanding Loans and unpaid Reimbursement Obligations have returned to
those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency. A Delinquent
Lender shall not be entitled to vote on any matters under this Credit
Agreement or the other Loan Documents until such delinquency is
satisfied in accordance with this SECTION 15.6.3, other than matters
specified in SECTION 27 that require the consent of each Lender
affected thereby (and such Delinquent Lender is affected thereby) or
the consent of all Lenders.
SECTION 15.7. HOLDERS OF NOTES. The Administrative Agent may deem and
treat the payee of any Note or the purchaser of any Letter of Credit
Participation as the absolute owner or purchaser thereof for all purposes hereof
until it shall have been furnished in writing with a different name by such
payee or by a subsequent holder, assignee or transferee.
SECTION 15.8. INDEMNITY. The Lenders ratably (based on such Lender's
Loan Percentage) agree hereby to indemnify and hold harmless the
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Administrative Agent, its affiliates and the Documentation Agent from and
against any and all claims, actions and suits (whether groundless or otherwise),
losses, damages, costs, expenses (including any expenses for which the
Administrative Agent, such affiliate or the Documentation Administrative Agent
has not been reimbursed by the Borrowers as required by SECTION 16), and
liabilities of every nature and character arising out of or related to this
Credit Agreement, the Notes, or any of the other Loan Documents or the
transactions contemplated or evidenced hereby or thereby, or the Administrative
Agent's, such affiliates or the Documentation Administrative Agent's actions
taken hereunder or thereunder, except to the extent that any of the same shall
be directly caused by the Administrative Agent's, such affiliates or the
Documentation Administrative Agent's willful misconduct or gross negligence.
SECTION 15.9. ADMINISTRATIVE AGENT AS LENDER. In its individual
capacity, BKB shall have the same obligations and the same rights, powers and
privileges in respect to its Commitment and the Loans made by it, and as the
holder of any of the Notes and as the purchaser of any Letter of Credit
Participations, as it would have were it not also the Administrative Agent. In
its individual capacity, LaSalle shall have the same obligations and the same
rights, powers and privileges in respect to its Commitment and the Loans made by
it, and as the holder of any of the Notes and as the purchaser of any Letter of
Credit Participations, as it would have were it not also the Documentation
Agent.
SECTION 15.10. RESIGNATION. The Administrative Agent may resign at any
time by giving sixty (60) days prior written notice thereof to the Lenders and
the Borrowers. Upon any such resignation, the Majority Lenders shall have the
right to appoint a successor Administrative Agent. Unless a Default or Event of
Default shall have occurred and be continuing, such successor Administrative
Agent shall be reasonably acceptable to the Borrowers. If no successor
Administrative Agent shall have been so appointed by the Majority Lenders and
shall have accepted such appointment within thirty (30) days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a financial institution having a rating of
not less than A or its equivalent by Standard & Poor's Ratings Group. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Administrative Agent.
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SECTION 15.11. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each
Lender hereby agrees that, upon learning of the existence of a Default or an
Event of Default, it shall promptly notify the Administrative Agent thereof. The
Administrative Agent hereby agrees that upon receipt of any notice under this
SECTION 15.11 it shall promptly notify the other Lenders of the existence of
such Default or Event of Default.
SECTION 15.12. DUTIES IN THE CASE OF ENFORCEMENT. In case one of more
Events of Default have occurred and shall be continuing, and whether or not
acceleration of the Obligations shall have occurred, the Administrative Agent
shall, if (i) so requested by the Majority Lenders and (ii) the Lenders have
provided to the Administrative Agent such additional indemnities and assurances
against expenses and liabilities as the Administrative Agent may reasonably
request, proceed to enforce the provisions of the Security Documents authorizing
the sale or other disposition of all or any part of the Collateral and exercise
all or any such other legal and equitable and other rights or remedies as it may
have in respect of such Collateral. The Majority Lenders may direct the
Administrative Agent in writing as to the method and the extent of any such sale
or other disposition, the Lenders hereby agreeing to indemnify and hold the
Administrative Agent, harmless from all liabilities incurred in respect of all
actions taken or omitted in accordance with such directions, PROVIDED that the
Administrative Agent need not comply with any such direction to the extent that
the Administrative Agent reasonably believes the Administrative Agent's
compliance with such direction to be unlawful in any applicable jurisdiction.
SECTION 15.13. DUTIES OF DOCUMENTATION AGENT AND CO-AGENTS. The
Documentation Agent and Co-Agents as such shall have no duties or
responsibilities to the Borrowers, the Lenders or the Administrative Agent
hereunder.
SECTION 16. EXPENSES AND INDEMNIFICATION.
SECTION 16.1. EXPENSES. Whether or not the transactions contemplated
herein shall be consummated, the Borrowers jointly and severally agree to pay
(i) the reasonable costs of producing and reproducing this Credit Agreement, the
other Loan Documents and the other agreements and instruments mentioned herein,
(ii) any taxes (including any interest and penalties in respect thereto) payable
by the Administrative Agent or any of the Lenders (other than taxes based upon
the Administrative Agent's or any Lender's net income) on or with respect to the
transactions contemplated by this Credit Agreement (the Borrowers hereby
agreeing to indemnify the Administrative Agent and each Lender with respect
thereto), (iii) the reasonable fees, expenses and disbursements of counsel to
the Administrative Agent incurred in connection with the preparation,
syndication, administration or interpretation of the Loan Documents and other
instruments mentioned herein, each closing hereunder, any amendments,
modifications, approvals, consents or waivers hereto or
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hereunder, or the cancellation of any Loan Document upon payment in full in cash
of all of the Obligations or pursuant to any terms of such Loan Document
providing for such cancellation, (iv) the fees, expenses and disbursements of
the Administrative Agent, the Arranger, or any of their affiliates incurred by
the Administrative Agent, the Arranger, or such affiliate in connection with the
preparation, syndication, administration or interpretation of the Loan Documents
and other instruments mentioned herein, including all appraisal charges, (v) all
reasonable out-of-pocket expenses (including without limitation reasonable
attorneys' fees and costs, other than attorneys which are employees of any
Lender or the Administrative Agent, and reasonable consulting, accounting,
appraisal, investment banking and similar professional fees and charges)
incurred by any Lender or the Administrative Agent in connection with (A) the
enforcement of or preservation of rights under any of the Loan Documents against
any Borrower or the administration thereof after the occurrence of a Default or
Event of Default and (B) any litigation, proceeding or dispute whether arising
hereunder or otherwise, in any way related to any Lender's or the Administrative
Agent's relationship with any Borrower and (vi) all reasonable fees, expenses
and disbursements of the Administrative Agent incurred in connection with UCC
searches and UCC filings.
SECTION 16.2. INDEMNIFICATION. The Borrowers agree to indemnify and
hold harmless the Administrative Agent, their affiliates, the Arranger and the
Lenders from and against any and all claims, actions and suits whether
groundless or otherwise, and from and against any and all liabilities, losses,
damages and expenses of every nature and character arising out of this Credit
Agreement or any of the other Loan Documents or the transactions contemplated
hereby including, without limitation, (i) any actual or proposed use by the
Borrowers of the proceeds of any of the Loans or Letters of Credit, (ii) the
Borrowers entering into or performing this Credit Agreement or any of the other
Loan Documents or (iii) with respect to the Borrowers and their respective
properties and assets, the violation of any Environmental Law, the presence,
disposal, escape, seepage, leakage, spillage, discharge, emission, release or
threatened release of any Hazardous Substances or any action, suit, proceeding
or investigation brought or threatened with respect to any Hazardous Substances
(including, but not limited to, claims with respect to wrongful death, personal
injury or damage to property), in each case including, without limitation, the
reasonable fees and disbursements of counsel (excluding the allocated costs of
internal counsel) incurred in connection with any such investigation, litigation
or other proceeding except for claims, actions, suits, liabilities, losses,
damages and expenses arising from the gross negligence or willful misconduct of
the Administrative Agent, such affiliate or such Lender. In litigation, or the
preparation therefor, the Lenders, the Administrative Agent, the Arranger and
their affiliates shall be entitled to select their own counsel and, in addition
to the foregoing indemnity, the Borrowers agree to pay promptly the reasonable
fees and expenses of such counsel for each Lender and the Administrative Agent.
If, and to the extent that the obligations of the Borrowers under this SECTION
16.2 are unenforceable for
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any reason, the Borrowers hereby agree to make the maximum contribution to the
payment in satisfaction of such obligations which is permissible under
applicable law.
SECTION 16.3. SURVIVAL. The covenants contained in this SECTION 16
shall survive payment or satisfaction in full of all other Obligations.
SECTION 17. SURVIVAL OF COVENANTS, ETC. Unless otherwise stated herein,
all covenants, agreements, representations and warranties made herein, in the
Notes, in the other Loan Documents or in any documents or other papers delivered
by or on behalf of the Borrowers pursuant hereto shall be deemed to have been
relied upon by the Lenders and the Administrative Agent, notwithstanding any
investigation heretofore or hereafter made by any of them, and shall survive the
making by the Lenders of the Loans and the issuance, extension or renewal of any
Letters of Credit, as herein contemplated, and shall continue in full force and
effect so long as any amount due under this Credit Agreement, any Letter of
Credit or the Notes remains outstanding and unpaid or any Lender has any
obligation to make any Loans or the Administrative Agent has any obligation to
issue any Letters of Credit hereunder. All statements contained in any
certificate or other paper delivered by or on behalf of the Borrowers pursuant
hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrowers hereunder.
SECTION 18. ASSIGNMENT AND PARTICIPATION.
SECTION 18.1. CONDITIONS TO ASSIGNMENT BY LENDERS. Except as provided
herein, each Lender may assign to one or more Eligible Assignees all or a
portion of its interests, rights and obligations under this Credit Agreement
(including all or a portion of its Commitment Percentage and Commitment and the
same portion of the Revolving Credit Loans and/or all or a portion of its Term
Loan at the time owing to it, the Revolving Credit Note or Term Note held by it
and, if applicable, its participating interest in the risk relating to any
Letters of Credit or Swing Line Loans); PROVIDED that (i) each of the
Administrative Agent and, unless a Default or Event of Default shall have
occurred and be continuing, the Parent (as the representative of the Borrowers)
shall have given its prior written consent to such assignment, which consent, in
the case of the Parent, will not be unreasonably withheld, (ii) each such
assignment shall be of a constant, and not a varying, percentage of all the
assigning Lender's rights and obligations under this Credit Agreement, PROVIDED,
HOWEVER, that nothing contained herein shall restrict any Lender from making a
non-pro rata assignment of its Loans, (iii) each assignment shall be in a
minimum amount of $5,000,000, or, if less, the entire Commitment of such Lender
and (iv) the parties to such assignment shall execute and deliver to the
Administrative Agent, for recording in the Register (as hereinafter defined), an
Assignment and Acceptance, substantially in the form of EXHIBIT E hereto (an
"Assignment and Acceptance"), together with any Notes subject to such
assignment. Upon such execution, delivery, acceptance and recording, from and
after
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the effective date specified in each Assignment and Acceptance, which effective
date shall be at least five (5) Business Days after the execution thereof, (i)
the assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance, have the rights and obligations of a Lender
hereunder, and (ii) the assigning Lender shall, to the extent provided in such
assignment and upon payment to the Administrative Agent of the registration fee
referred to in SECTION 18.3, be released from its obligations under this Credit
Agreement.
SECTION 18.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS;
COVENANTS. By executing and delivering an Assignment and Acceptance, the parties
to the assignment thereunder confirm to and agree with each other and the other
parties hereto as follows:
(a) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of any
adverse claim, the assigning Lender makes no representation or warranty, express
or implied, 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 other Loan Documents or any
other instrument or document furnished pursuant hereto or the attachment,
perfection or priority of any security interest,
(b) the assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrowers or any other Person primarily or secondarily liable in respect of any
of the Obligations, or the performance or observance by the Borrowers or any
other Person primarily or secondarily liable in respect of any of the
Obligations of any of their obligations under this Credit Agreement or any of
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto;
(c) such assignee confirms that it has received a copy of this Credit
Agreement, together with copies of the most recent financial statements referred
to in SECTION 7.4 and SECTION 8.4 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;
(d) such assignee will, independently and without reliance upon the
assigning Lender, the Administrative Agent 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;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
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(f) such assignee appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under this
Credit Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms hereof or thereof, together with such powers
as are reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Credit Agreement are
required to be performed by it as a Lender;
(h) such assignee represents and warrants that it is legally authorized
to enter into such Assignment and Acceptance; and
(i) if applicable, such assignee acknowledges that it has made
arrangements with the assigning Lender satisfactory to such assignee with
respect to its PRO RATA share of Letter of Credit Fees in respect of outstanding
Letters of Credit.
SECTION 18.3. REGISTER. The Administrative Agent shall maintain a copy
of each Assignment and Acceptance delivered to it and a register or similar list
(the "Register") for the recordation of the names and addresses of the Lenders
and the Commitment Percentage of, and principal amount of the Loans owing to and
Letter of Credit Participations purchased by, the Lenders from time to time. The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrowers, the Administrative 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 shall be available for
inspection by the Borrowers and the Lenders at any reasonable time and from time
to time upon reasonable prior notice. Upon each such recordation, the assigning
Lender (or, in the case that the assignee Lender is a Replacement Lender, the
Replacement Lender) agrees to pay to the Administrative Agent a registration fee
in the sum of $3,500.
SECTION 18.4. NEW NOTES. Upon its receipt of an Assignment and
Acceptance executed by the parties to such assignment, together with each Note
subject to such assignment, the Administrative Agent shall (i) record the
information contained therein in the Register, and (ii) give prompt notice
thereof to the Borrower and the Lenders (other than the assigning Lender).
Within five (5) Business Days after receipt of such notice, the Borrowers, at
their own expense, shall execute and deliver to the Administrative Agent, in
exchange for each surrendered Note, a new Note or Notes to the order of such
Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Lender
has retained some portion of its obligations hereunder, a new Note or Notes to
the order of the assigning Lender in an amount equal to the amount retained by
it hereunder. Such new Note or Notes shall provide that they are replacements
for the surrendered Notes, shall be in an aggregate principal amount equal to
the
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aggregate principal amount of the surrendered Notes, shall be dated the
effective date of such in Assignment and Acceptance and shall otherwise be
substantially the form of the assigned Note or Notes. Within five (5) days of
issuance of any new Notes pursuant to this SECTION 18.4, if requested by the
assignor or assignee Lender, the Borrowers shall deliver an opinion of counsel,
addressed to the Lenders and the Administrative Agent, relating to the due
authorization, execution and delivery of such new Note or Notes and the
legality, validity and binding effect thereof, in form and substance
satisfactory to the Lenders. The surrendered Notes shall be cancelled and
returned to the Borrowers.
SECTION 18.5. PARTICIPATIONS. Each Lender may sell participations to
one or more Lenders or other entities in all or a portion of such Lender's
rights and obligations under this Credit Agreement and the other Loan Documents;
PROVIDED that (i) each such participation shall be in an amount of not less than
$5,000,000, (ii) any such sale or participation shall not affect the rights and
duties of the selling Lender hereunder to the Borrowers and (iii) the only
rights granted to the participant pursuant to such participation arrangements
with respect to waivers, amendments or modifications of the Loan Documents shall
be the rights to approve waivers, amendments or modifications that would reduce
the principal of or the interest rate on any Loans, extend the term or increase
the amount of the Commitment of such Lender as it relates to such participant,
reduce the amount of any fees to which such participant is entitled or extend
any regularly scheduled payment date for principal or interest.
SECTION 18.6. DISCLOSURE. Each Borrower agrees that in addition to
disclosures made in accordance with standard and customary banking practices any
Lender may disclose information obtained by such Lender pursuant to this Credit
Agreement to assignees or participants and potential assignees or participants
hereunder; PROVIDED that such assignees or participants or potential assignees
or participants shall agree (i) to treat in confidence such information unless
such information otherwise becomes public knowledge, (ii) not to disclose such
information to a third party, except as required by law or legal process and
(iii) not to make use of such information for purposes of transactions unrelated
to such contemplated assignment or participation.
SECTION 18.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH A BORROWER. If
any assignee Lender is an Affiliate of any Borrower, then any such assignee
Lender shall have no right to vote as a Lender hereunder or under any of the
other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or other modifications to any of the Loan
Documents or for purposes of making requests to the Administrative Agent
pursuant to SECTION 13.1 or SECTION 13.2, and the determination of the Majority
Lenders shall for all purposes of this Credit Agreement and the other Loan
Documents be made without regard to such assignee Lender's interest in any of
the Loans or Reimbursement Obligations. If any Lender sells a participating
interest in any of the Loans or Reimbursement Obligations to a participant, and
such participant is a Borrower or an Affiliate of a Borrower,
<PAGE> 95
-88-
then such transferor Lender shall promptly notify the Administrative Agent of
the sale of such participation. A transferor Lender shall have no right to vote
as a Lender hereunder or under any of the other Loan Documents for purposes of
granting consents or waivers or for purposes of agreeing to amendments or
modifications to any of the Loan Documents or for purposes of making requests to
the Administrative Agent pursuant to SECTION 13.1 or SECTION 13.2 to the extent
that such participation is beneficially owned by a Borrower or any Affiliate of
a Borrower, and the determination of the Majority Lenders shall for all purposes
of this Credit Agreement and the other Loan Documents be made without regard to
the interest of such transferor Lender in the Loans or Reimbursement Obligations
to the extent of such participation.
SECTION 18.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Lender
shall retain its rights to be indemnified pursuant to SECTION 16 with respect to
any claims or actions arising prior to the date of such assignment. If any
assignee Lender is not incorporated under the laws of the United States of
America or any state thereof, it shall, prior to the date on which any interest
or fees are payable hereunder or under any of the other Loan Documents for its
account, deliver to the Borrower and the Administrative Agent certification as
to its exemption from deduction or withholding of any United States federal
income taxes. Anything contained in this SECTION 18 to the contrary
notwithstanding, any Lender may at any time pledge all or any portion of its
interest and rights under this Credit Agreement (including all or any portion of
its Notes) to (a) any of the twelve Federal Reserve Banks organized under
SECTION 4 of the Federal Reserve Act, 12 U.S.C. SECTION 341 or (b) to a lender
or such bank (or trustee therefor) in connection with a bona fide financing. No
such pledge or the enforcement thereof shall release the pledgor Lender from its
obligations hereunder or under any of the other Loan Documents, provide any
voting rights hereunder to the pledgee thereof, or affect any rights or
obligations of the Borrowers or the Administrative Agent hereunder.
Notwithstanding any contained herein to the contrary, no assignment or
participation shall operate to increase the Total Commitment hereunder or
otherwise alter the substantive terms of this Credit Agreement, except as
contemplated under SECTION 2.2.2.
SECTION 18.9. ASSIGNMENT BY BORROWERS. None of the Borrowers shall
assign or transfer any of its rights or obligations under any of the Loan
Documents without the prior written consent of each of the Lenders.
SECTION 19. PARTIES IN INTEREST. All the terms of this Credit Agreement
and the other Loan Documents shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto and thereto.
SECTION 20. NOTICES, ETC. Except as otherwise expressly provided in
this Credit Agreement, all notices and other communications made or required to
be given pursuant to this Credit Agreement or the other Loan Documents shall be
in writing and shall be delivered in hand, mailed by United States
<PAGE> 96
-89-
first-class mail, postage prepaid, or sent by telegraph, telecopy, telex or
facsimile and confirmed by delivery via courier or postal service, addressed as
follows:
(a) if to the Borrowers, at NationsRent Inc., 450 E. Los Olas Blvd.,
Suite 1400, Ft. Lauderdale, Florida 33301, Attention: Gene J. Ostrow, Executive
Vice President, telephone number (954)- 760-6550, fax number (954)-760-6565;
(b) if to the Administrative Agent or BKB, at 100 Federal Street,
Boston, Massachusetts 02110, Attention: Timothy M. Laurion, Director, telephone
number 617-434-9689, fax number 617-434-2160; and
(c) if to any Lender, at such Lender's address set forth on SCHEDULE 1
hereto;
or, in each case, such other address for notice as shall have last been
furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile,
(b) if sent by registered or certified first-class mail, postage prepaid, five
Business Days after the posting thereof, and (c) if sent by telex or cable, at
the time of the dispatch thereof, if in normal business hours in the country of
receipt, or otherwise at the opening of business on the following Business Day.
SECTION 21. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
SECTION 21.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY. Each
Borrower acknowledges that from time to time financial advisory, investment
banking and other services may be offered or provided to the Borrowers, in
connection with this Credit Agreement or otherwise, by a Section 20 Subsidiary.
Each Borrower hereby authorizes (a) such Section 20 Subsidiary to share with the
Administrative Agent and each Lender any information delivered to such Section
20 Subsidiary by such Borrower, and (b) the Administrative Agent and each Lender
to share with such Section 20 Subsidiary any information delivered to the
Administrative Agent or such Lender by the Borrowers pursuant to this Credit
Agreement, or in connection with the decision of such Lender to enter into this
Credit Agreement; it being understood, in each case, that any such Section 20
Subsidiary receiving such information shall be bound by the confidentiality
provisions of this Credit Agreement. Such authorization shall survive the
payment and satisfaction in full of all of the Obligations.
<PAGE> 97
-90-
SECTION 21.2. CONFIDENTIALITY. Each of the Lenders and the
Administrative Agent agrees, on behalf of itself and each of their affiliates,
directors, officers, employees and representatives, to use reasonable
precautions to keep confidential, in accordance with their customary procedures
for handling confidential information of the same nature and in accordance with
safe and sound banking practices, any non-public information supplied to it by
the Borrowers pursuant to this Credit Agreement unless such information is
identified by such Person as not being confidential at the time the same is
delivered to the Lenders or the Administrative Agent, PROVIDED THAT nothing
herein shall limit the disclosure of any such information (a) after such
information shall have become public other than through a violation of this
SECTION 21, (b) to the extent required by statute, rule, regulation or judicial
process, (c) to counsel for any of the Lenders or the Administrative Agent, (d)
to bank examiners or any other regulatory authority having jurisdiction over any
Lender or the Administrative Agent, or to auditors or accountants, (e) to the
Administrative Agent, any Lender or any Section 20 Subsidiary, (f) in connection
with any litigation to which any one or more of the Lenders, the Administrative
Agent or any Section 20 Subsidiary is a party, or in connection with the
enforcement of rights or remedies hereunder or under any other Loan Document,
(g) to a subsidiary or affiliate of such Lender or (h) to any assignee or
participant (or prospective assignee or participant) so long as such assignee or
participant agrees to be bound by the provisions of this SECTION 21.
SECTION 21.3. PRIOR NOTIFICATION. Unless specifically prohibited by
applicable law or court order, each of the Lenders and the Administrative Agent
shall, prior to disclosure thereof, notify the Borrowers of any request for
disclosure of any such non-public information by any governmental agency or
representative thereof (other than any such request in connection with an
examination of the financial condition of such Lender by such governmental
agency) or pursuant to legal proceSECTION
SECTION 21.4. OTHER. In no event shall any Lender or the Administrative
Agent be obligated or required to return any materials furnished to it or any
Section 20 Subsidiary by the Borrowers. The obligations of each Lender under
this SECTION 21 shall supersede and replace the obligations of such Lender under
any confidentiality letter in respect of this financing signed and delivered by
such Lender to the Borrowers prior to the date hereof and shall be binding upon
any assignee of, or purchaser of any participation in, any interest in any of
the Loans or Reimbursement Obligations from any Lender.
SECTION 22. MISCELLANEOUS. The rights and remedies herein expressed are
cumulative and not exclusive of any other rights which the Lenders or
Administrative Agent would otherwise have. The captions in this Credit Agreement
are for convenience of reference only and shall not define or limit the
provisions hereof. This Credit Agreement and any amendment hereof may be
executed in several counterparts and by each party on a separate counterpart,
each of which when so executed and delivered shall be an original, but all of
which together shall constitute one instrument. In
<PAGE> 98
-91-
proving this Credit Agreement it shall not be necessary to produce or account
for more than one such counterpart signed by the party against whom enforcement
is sought.
SECTION 23. ENTIRE AGREEMENT, ETC. The Loan Documents and any other
documents executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions contemplated
hereby. Neither this Credit Agreement nor any term hereof may be changed,
waived, discharged or terminated, except as provided in SECTION 27. No waiver
shall extend to or affect any obligation not expressly waived or impair any
right consequent thereon. No course of dealing or omission on the part of the
Administrative Agent or any Lender in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon
the Borrowers shall entitle the Borrowers to other or further notice or demand
in similar or other circumstances.
SECTION 24. WAIVER OF JURY TRIAL. EACH BORROWER HEREBY WAIVES ITS RIGHT
TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE
IN CONNECTION WITH THIS CREDIT AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN
DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE
OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH BORROWER
HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION
REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. THE BORROWERS (a) CERTIFY THAT NO REPRESENTATIVE, ADMINISTRATIVE AGENT
OR ATTORNEY OF ANY LENDER OR THE ADMINISTRATIVE AGENT HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH LENDER OR THE ADMINISTRATIVE AGENT WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (b) ACKNOWLEDGE
THAT THE ADMINISTRATIVE AGENT AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO
THIS CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH THEY ARE A PARTY
BECAUSE OF, AMONG OTHER THINGS, THE BORROWERS' WAIVERS AND CERTIFICATIONS
CONTAINED HEREIN.
SECTION 25. GOVERNING LAW. This Credit Agreement and each of the other
Loan Documents are contracts under the laws of the Commonwealth of Massachusetts
and shall for all purposes be construed in accordance with and governed by the
laws of said commonwealth (excluding the laws applicable to conflicts or choice
of law). The Borrowers consent to the jurisdiction of any of the federal or
state courts located in the Commonwealth of Massachusetts in connection with any
suit to enforce the rights of any Lender or the Administrative Agent under this
Credit Agreement or any of the other Loan Documents.
<PAGE> 99
-92-
SECTION 26. SEVERABILITY. The provisions of this Credit Agreement are
severable and if any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision of this Credit
Agreement in any jurisdiction.
SECTION 27. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or approval
required or permitted by this Credit Agreement to be given by the Lenders may be
given, and any term of this Credit Agreement, the other Loan Documents or any
other instrument related hereto or mentioned herein may be amended, and the
performance or observance by the Borrowers of any terms of this Credit
Agreement, the other Loan Documents or such other instrument or the continuance
of any Default or Event of Default may be waived (either generally or in a
particular instance and either retroactively or prospectively) with, but only
with, the written consent of the Borrowers and the written consent of the
Majority Lenders, PROVIDED HOWEVER, that the Administrative Agent may, in its
reasonable discretion, release Collateral with an aggregate value of $500,000 or
less in any calendar year (in addition to Collateral released pursuant to
SECTION 8.4.2) provided that the Administrative Agent shall promptly thereafter
notify the Lenders regarding the reasons for such release. Notwithstanding the
foregoing, no amendment, waiver or consent shall do any of the following unless
in writing and signed by the Borrowers and each of the Lenders affected thereby:
(a) increase the Commitments of the Lenders or the principal amount of the Term
Loan or subject any Lender to any additional obligations (other than in
accordance with SECTION 2.2.2 hereof), or (b) reduce the principal of or the
rate of interest on the Notes (including, without limitation, the default
interest rate) or any fees payable hereunder; and FURTHER, no amendment, waiver
or consent shall do any of the following unless in writing and signed by ALL of
the Lenders: (c) postpone the Revolving Credit Maturity Date or Term Loan
Maturity Date or any date fixed for any payment in respect of principal or
interest (including, without limitation, the default interest rate) on the
Notes; (d) change the definition of "Majority Lenders"; "Loan Percentage" or the
number of Lenders which shall be required for the Lenders or any of them to take
any action under the Loan Documents; (e) amend SECTION 2.2.2 or this SECTION 27;
(f) release any Collateral with an aggregate value exceeding $500,000 (in
addition to Collateral released pursuant to SECTION 8.4.2) in any calendar year
or (g) release any Borrower from its obligations hereunder; and FURTHER, no
amendment, waiver or consent shall do any of the following unless in writing and
signed by the Administrative Agent: (h) amend the amount of the Administrative
Agent's fee or Issuance Fees payable for the Administrative Agent's account (i)
amend SECTION 15; and further, no amendment, waiver or consent shall amend
SECTION 2.8 or any other provisions relating to the Swing Line Loans unless in
writing and signed by BKB or (j) without the written consent of all Revolving
Credit Lenders, change the definition of "Required Revolving Credit Lenders".
<PAGE> 100
-93-
No waiver shall extend to or affect any obligation not expressly waived
or impair any right consequent thereon. No course of dealing or delay or
omission on the part of the Administrative Agent or any Lender in exercising any
right shall operate as a waiver thereof or otherwise be prejudicial thereto. No
notice to or demand upon the Borrowers shall entitle the Borrowers to other or
further notice or demand in similar or other circumstances.
SECTION 28. TRANSITIONAL ARRANGEMENTS.
SECTION 28.1. PRIOR LOAN AGREEMENT SUPERSEDED. This Credit Agreement
shall supersede the Prior Credit Agreement in its entirety, except as provided
in this SECTION 28. On the Closing Date, the rights and obligations of the
parties under the Prior Credit Agreement shall be subsumed within and be
governed by this Credit Agreement; PROVIDED, HOWEVER, that each of the "Loans"
(as defined in the Prior Credit Agreement) outstanding under the Prior Credit
Agreement on the Closing Date shall, for purposes of this Credit Agreement, be
included as Revolving Credit Loans (as defined herein) or Swing Line Loans (as
defined herein), as applicable.
SECTION 28.2. CONTINUATION OF REVOLVING CREDIT NOTES AND SWING LINE
NOTES. The "Revolving Credit Notes" and "Swing Line Note", each as defined in
the Prior Credit Agreement, shall be deemed to be the "Revolving Credit Notes"
and "Swing Line Note", respectively, each as defined under this Credit
Agreement.
SECTION 28.3. REFERENCE TO AGENT. Each of the parties hereto agree that
all references to the "Agent" made in any UCC-1 financing statements filed
previously in connection with this Credit Agreement or in any other Loan
Agreement shall be amended and deemed to be references to the "Administrative
Agent" as defined herein.
SECTION 28.4. INTEREST AND FEES UNDER SUPERSEDED AGREEMENT. All
interest and all commitment, facility and other fees and expenses owing or
accruing under or in respect of the Prior Credit Agreement shall be calculated
as of the Closing Date (prorated in the case of any fractional periods) and
shall be paid on the dates and in accordance with the method specified in the
Prior Credit Agreement, as if the Prior Credit Agreement were still in effect.
[Signature Pages Follow]
<PAGE> 101
94
IN WITNESS WHEREOF, each of the undersigned have duly executed this
Credit Agreement under seal as of the date first set forth above.
THE BORROWERS:
NATIONSRENT, INC.
NATIONSRENT OF ALABAMA, INC.
NATIONSRENT OF FLORIDA, INC.
NATIONSRENT OF GEORGIA, INC.
NATIONSRENT OF INDIANA, INC.
NATIONSRENT OF KENTUCKY, INC.
NATIONSRENT OF LOUISIANA, INC.
NATIONSRENT OF MICHIGAN, INC.
NATIONSRENT OF OHIO, INC.
NATIONSRENT OF TENNESSEE, INC.
NATIONSRENT OF TEXAS, INC.
NATIONSRENT OF WEST VIRGINIA, INC.
A-ACTION RENTAL, INC.
A TO Z RENTS IT, INC.
A TO Z RENTS IT, INC. #2
THE BODE-FINN COMPANY
CENTRAL ALABAMA RENTAL
CENTER, INC.
GABRIEL TRAILER
MANUFACTURING COMPANY, INC.
GOLD COAST AERIAL LIFT, INC.
HIGH REACH COMPANY, INC.
THE J. KELLY COMPANY
RAYMOND EQUIPMENT CO.
SAM'S EQUIPMENT RENTAL, INC.
TITAN RENTALS, INC.
BY:
---------------------------------
<PAGE> 102
95
THE LENDERS:
BANKBOSTON, N.A.,
individually and as Administrative Agent
By:
---------------------------------
Timothy M. Laurion, Director
LASALLE NATIONAL BANK,
individually and as Documentation Agent
By:
---------------------------------
Name:
Title:
THE FIFTH THIRD BANK OF COLUMBUS
By:
Name:
Title:
NATIONSBANK, N.A.,
individually and as Co-Agent
By:
---------------------------------
Name:
Title:
FLEET BANK, N.A.,
individually and as Co-Agent
By:
---------------------------------
Name:
Title:
HUNTINGTON NATIONAL BANK
By:
---------------------------------
Name:
Title:
<PAGE> 103
96
COMERICA BANK
By:
---------------------------------
Name:
Title:
NATIONAL CITY BANK
By:
---------------------------------
Name:
Title:
DEUTSCHE BANK AG, NEW YORK
AND/OR CAYMAN ISLAND BRANCHES
By:
---------------------------------
Name:
Title:
By:
---------------------------------
Name:
Title:
FIRST UNION NATIONAL BANK
By:
---------------------------------
Name:
Title:
USTRUST
By:
---------------------------------
Name:
Title:
BANKERS TRUST COMPANY
By:
---------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.5
OMNIBUS AMENDMENT NO. 2
TO
SECURITY DOCUMENTS
OMNIBUS AMENDMENT NO. 2 TO SECURITY DOCUMENTS (this "Amendment") dated
as of September 24, 1998, by and among NATIONSRENT, INC. (the "Parent"), a
Delaware corporation and its Subsidiaries (collectively with the Parent, the
"Borrowers" and each a "Borrower"), and BANKBOSTON, N.A., as administrative
agent (the "Administrative Agent"). Capitalized terms used herein without
definition shall have the meanings set forth in the Second Amended and Restated
Credit Agreement (as defined below).
WHEREAS, the Parent, the Borrowers and the Administrative Agent are
parties to that certain Security Agreement dated as of March 18, 1998 (as
supplemented prior to the date hereof and as otherwise amended, modified or
supplemented and in effect from time to time, the "Security Agreement");
WHEREAS, the Parent and the Administrative Agent are parties to that
certain Stock Pledge Agreement dated as of March 18, 1998 (as supplemented prior
to the date hereof and as otherwise amended, modified or supplemented and in
effect from time to time, the "Parent Stock Pledge Agreement");
WHEREAS, NationsRent of West Virginia, Inc. ("NR-WV") and the
Administrative Agent are parties to that certain Stock Pledge Agreement dated as
of March 18, 1998 (as amended, modified or supplemented and in effect from time
to time, the "NR-WV Stock Pledge Agreement");
WHEREAS, Gabriel Trailer Manufacturing Company ("Gabriel") and the
Administrative Agent are parties to that certain Stock Pledge Agreement dated as
of March 18, 1998 (as amended, modified or supplemented and in effect from time
to time, the "Gabriel Stock Pledge Agreement");
WHEREAS, the Borrowers and the Administrative Agent are parties to that
certain Omnibus Amendment to Security Documents dated as of June 29, 1998;
WHEREAS, the Borrowers, BankBoston, N.A. and certain lending
institutions (collectively the "Lenders"), BankBoston, N.A. as Administrative
Agent for the Lenders, LaSalle National Bank as documentation agent for the
Lenders entered, Fleet Bank, N.A. as Co-Agent and NationsBank, N.A. as Co-Agent
into an Amended and Restated Revolving Credit Agreement dated as of June 29,
1998, as amended by an Amendment No. 1 (as amended, modified or supplemented and
in effect from time to time, the "Prior Credit Agreement").
WHEREAS, the Borrowers, the Lenders and the Administrative Agent have
agreed to enter into an amendment and restatement of the Original Credit
<PAGE> 2
-2-
Agreement (the "Second Amended and Restated Credit Agreement") dated as of the
date hereof pursuant to which, among other things, the Lenders have agreed to
extend loans to the Borrowers;
WHEREAS, the effectiveness of the Second Amended and Restated Credit
Agreement is conditioned upon, among other things, the Borrowers and the
Administrative Agent amending certain provisions of the Security Agreement and
reaffirming the continued effectiveness of the Security Agreement;
WHEREAS, the effectiveness of the Amended and Restated Credit Agreement
is further conditioned upon, among other things, the Borrowers and the
Administrative Agent amending certain provisions of the Parent Stock Pledge
Agreement and reaffirming the continued effectiveness of the Parent Stock Pledge
Agreement;
WHEREAS, the effectiveness of the Amended and Restated Credit Agreement
is further conditioned upon, among other things, NR-WV and the Administrative
Agent amending certain provisions of the NR-WV Stock Pledge Agreement and
reaffirming the continued effectiveness of the NR-WV Stock Pledge Agreement;
WHEREAS, the effectiveness of the Amended and Restated Credit Agreement
is further conditioned upon, among other things, Gabriel and the Administrative
Agent amending certain provisions of the Gabriel Stock Pledge Agreement and
reaffirming the continued effectiveness of the Gabriel Stock Pledge Agreement;
NOW, THEREFORE, in consideration of the premises contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. AMENDMENT TO THE SECURITY DOCUMENTS. The Security Documents (as
defined in the Second Amended and Restated Credit Agreement) are amended to
provide the following:
1.1. For each of the Security Documents, any and all references to the
"Credit Agreement" shall be deemed to be references to the Second Amended and
Restated Credit Agreement. Each of the Security Documents are hereby further
amended MUTATIS MUTANDIS as appropriate to reflect the fact that the Original
Credit Agreement has been amended and restated as the Second Amended and
Restated Credit Agreement.
1.2. For each of the Security Documents, any and all references to the
"Agent" shall be deemed to be references to the "Administrative Agent", as
defined in the Second Amended and Restated Credit Agreement.
1.3. With respect to each of the Security Documents, any and all
references to the "Lenders" shall be deemed to be references to "Lenders", as
defined in the Second Amended and Restated Credit Agreement.
<PAGE> 3
-3-
1.4. For each of the Security Documents, any and all references to the
words "Revolving Credit Notes" shall be deemed to be references to the word
"Notes", as defined in the Second Amended and Restated Credit Agreement.
1.5. With respect to the Security Agreement, any and all of the
references to the following sections in the Original Credit Agreement shall be
amended and deemed to be references to such sections in the Second Amended and
Restated Credit Agreement: (a) references to Section 6.19 shall be amended and
deemed to be references to Section 7.19, (b) references to Section 7.4.2 shall
be amended and deemed to be references to Section 8.4.2, and (c) references to
Section 19 shall be amended and deemed to be references to Section 20.
1.6. With respect to each of the Parent Stock Pledge Agreement, the
NR-WV Stock Pledge Agreement and the Gabriel Stock Pledge Agreement, any and all
references to the following sections in the Original Credit Agreement shall be
amended and deemed to be references to such sections in the Second Amended and
Restated Credit Agreement: (a) references to Section 7.6 shall be amended and
deemed to be references to Section 8.6, and (b) references to Section 19 shall
be amended and deemed to be references to Section 20.
2. CONFIRMATION OF SECURITY DOCUMENTS. Each of the Borrowers hereby
ratifies and confirms the Security Documents (as amended hereby) to which it is
a party and the pledges and security interests created thereby. Each of the
Borrowers hereby further ratifies and confirms that each of the Security
Documents (as amended hereby) to which it is a party and the pledges and
security interest created thereby secure the Obligations of the Borrowers under
the Second Amended and Restated Credit Agreement, the Security Documents (as
amended hereby) and the Notes.
4. CONDITIONS TO EFFECTIVENESS. This Amendment shall not become
effective unless and until the Administrative Agent receives counterparts of
this Amendment and each of the conditions set forth in Section 10 of the Second
Amended and Restated Credit Agreement have been met.
5. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. Each of the Borrowers
represents and warrants to the Administrative Agent and the Lenders that (a)
each and every one of the representations and warranties made by each Borrower
to the Administrative Agent and the Lenders in Section 6 or elsewhere in the
Second Amended and Restated Credit Agreement or in the other Loan Documents are
true and correct in all material respects; (b) each of the Borrowers has duly
and properly performed, complied with and observed each of its covenants,
agreements and obligations contained in Sections 7, 8 and 9 or elsewhere in the
Original Credit Agreement or the other Loan Documents (as defined in the
Original Credit Agreement); and (c) no event has occurred or is continuing and
no condition exists which constitutes a Default or Event of Default.
6. RATIFICATION, ETC. Except as expressly amended by this Amendment,
the Security Documents and all documents, instruments and agreements related
thereto are hereby ratified and confirmed in all respects and shall continue in
full force and effect. The Security Documents (as amended hereby) and the
perfected
<PAGE> 4
-4-
first priority security interests of the Administrative Agent on behalf of the
Lenders thereunder shall continue in full force and effect, and the collateral
security and guaranties provided for in the Security Documents shall not be
impaired by this Amendment.
7. MISCELLANEOUS. Nothing contained herein shall constitute a waiver
of, impair or otherwise affect any Obligations, any other obligation of any
Borrower or any rights of the Administrative Agent or any of the Lenders
consequent thereon. This Amendment may be executed in one or more counterparts,
each of which shall be deemed an original but which together shall constitute
one and the same instrument. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute part of this
Amendment for any other purpose. This Amendment shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Massachusetts
(without reference to conflict of laws).
<PAGE> 5
-5-
IN WITNESS WHEREOF, the Borrowers and the Administrative Agent
have duly executed this Amendment as a sealed instrument as of the date first
above written.
BANKBOSTON, N.A.,
as Administrative Agent
By:
-----------------------------------------
Timothy M. Laurion, Director
NATIONSRENT, INC.
NATIONSRENT OF ALABAMA, INC.
NATIONSRENT OF FLORIDA, INC.
NATIONSRENT OF GEORGIA, INC.
NATIONSRENT OF INDIANA, INC.
NATIONSRENT OF KENTUCKY, INC.
NATIONSRENT OF LOUISIANA, INC.
NATIONSRENT OF MICHIGAN, INC.
NATIONSRENT OF OHIO, INC.
NATIONSRENT OF TENNESSEE, INC.
NATIONSRENT OF TEXAS, INC.
NATIONSRENT OF WEST VIRGINIA, INC.
A-ACTION RENTAL, INC.
A TO Z RENTS IT, INC.
A TO Z RENTS IT, INC. #2
THE BODE-FINN COMPANY
CENTRAL ALABAMA RENTAL CENTER, INC.
GABRIEL TRAILER MANUFACTURING COMPANY, INC.
GOLD COAST AERIAL LIFT, INC.
HIGH REACH COMPANY, INC.
THE J. KELLY COMPANY
RAYMOND EQUIPMENT CO.
SAM'S EQUIPMENT RENTAL, INC.
TITAN RENTALS, INC.
By:
-----------------------------------------
Name:
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 9,231
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0
0
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</TABLE>
