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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 JUNE 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________.
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COMMISSION FILE NUMBER 001-14299
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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 EAST 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
August 11, 1999 was 56,453,781.
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NATIONSRENT, INC.
INDEX TO QUARTERLY REPORT
ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1999 and December 31, 1998 ...... 1
Unaudited Consolidated Statements of Income for the Three Months and Six
Months Ended June 30, 1999 and 1998 ..................................... 2
Unaudited Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1999 and 1998 ............................................ 3
Notes to Unaudited Consolidated Financial Statements ....................... 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................................. 8
PART II
OTHER INFORMATION
Item 1. Legal Proceedings ................................................... 15
Item 2. Changes in Securities and Use of Proceeds ........................... 15
Item 6. Exhibits and Reports on Form 8-K .................................... 16
Signatures ................................................................... 18
</TABLE>
<PAGE> 3
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
NATIONSRENT, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
---------- ----------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents ......................................... $ 9,953 $ 10,597
Accounts receivable, net .......................................... 83,490 72,951
Inventories ....................................................... 27,811 23,147
Prepaid expenses and other assets ................................. 32,121 24,451
Rental equipment, net ............................................. 425,574 382,573
Property and equipment, net ....................................... 56,750 37,839
Intangible assets related to acquired businesses, net ............. 536,702 524,254
---------- ----------
Total Assets ............................................ $1,172,401 $1,075,812
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable ................................................ $ 40,268 $ 68,177
Accrued compensation and related taxes .......................... 5,702 4,901
Accrued expenses and other liabilities .......................... 30,617 32,970
Debt ............................................................ 787,036 678,035
Income taxes payable ............................................ 593 3,115
Deferred income taxes ........................................... 11,803 6,384
---------- ----------
Total liabilities ....................................... 876,019 793,582
---------- ----------
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, 250,000,000 shares
authorized, 56,453,781 shares and 55,618,023 shares
issued and outstanding at June 30, 1999 and December 31,
1998, respectively ........................................... 564 556
Additional paid-in capital ...................................... 273,189 268,019
Retained earnings ............................................... 22,629 13,655
---------- ----------
Total stockholders' equity .............................. 296,382 282,230
---------- ----------
Total Liabilities and Stockholders' Equity .............. $1,172,401 $1,075,812
========== ==========
</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>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- -------------------
1999 1998 1999 1998
-------- -------- --------- -------
<S> <C> <C> <C> <C>
Revenue:
Equipment rentals .................................................... $ 96,928 $ 18,108 $ 172,028 $24,019
Sales of equipment, merchandise, service, parts and supplies ......... 33,381 17,251 60,596 20,379
-------- -------- --------- -------
Total revenue ................................................ 130,309 35,359 232,624 44,398
-------- -------- --------- -------
Cost of revenue:
Cost of equipment rentals, excluding depreciation .................... 37,521 6,823 66,833 9,484
Rental equipment depreciation ........................................ 13,383 4,042 25,008 5,118
Cost of sales of equipment, merchandise, service, parts and supplies . 22,465 12,226 40,631 14,479
-------- -------- --------- -------
Total cost of revenue ........................................ 73,369 23,091 132,472 29,081
-------- -------- --------- -------
Gross profit ........................................................... 56,940 12,268 100,152 15,317
Operating expenses:
Selling, general and administrative expenses ......................... 24,489 7,093 43,496 8,852
Expenses related to abandoned merger, net ............................ 3,932 -- 3,932 --
Non-rental equipment depreciation and amortization ................... 4,985 621 9,550 1,066
-------- -------- --------- -------
Operating income ....................................................... 23,534 4,554 43,174 5,399
-------- -------- --------- -------
Other (income)/expense:
Interest expense, net ................................................ 15,986 2,614 30,432 3,401
Other, net ........................................................... (413) (130) (2,598) (232)
-------- -------- --------- -------
15,573 2,484 27,834 3,169
-------- -------- --------- -------
Income before provision for income taxes ............................... 7,961 2,070 15,340 2,230
Provision for income taxes ........................................... 3,304 870 6,366 937
-------- -------- --------- -------
Net income ............................................................. $ 4,657 $ 1,200 $ 8,974 $ 1,293
======== ======== ========= =======
Net income per share-- basic and diluted ............................... $ 0.08 $ 0.04 $ 0.16 $ 0.05
======== ======== ========= =======
Weighted average common shares outstanding:
Basic ................................................................ 55,759 26,726 55,733 25,820
======== ======== ========= =======
Diluted .............................................................. 64,768 29,711 64,714 28,018
======== ======== ========= =======
</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>
Six Months Ended
June 30,
-------------------------
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ............................................................. $ 8,974 $ 1,293
Adjustments to reconcile net income to net cash (used in)/provided
by operating activities:
Depreciation and amortization ........................................ 35,417 6,184
Gain on sale of rental equipment ..................................... (9,136) (1,321)
Gain on sale of lift truck dealership ................................ (1,818) --
Deferred income tax provision ........................................ 6,089 795
Changes in operating assets and liabilities:
Accounts receivable .......................................... (15,295) (4,717)
Inventories .................................................. (8,402) (52)
Prepaid expenses and other assets ............................ (7,640) (6,654)
Accounts payable ............................................. (26,157) 15,246
Accrued expenses and other liabilities ....................... (3,515) (263)
Income taxes payable ......................................... (2,600) (1,308)
--------- ---------
Net cash (used in)/provided by operating activities .......... (24,083) 9,203
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of business, net of cash acquired ....................... (14,916) (75,732)
Payment of contingent acquisition consideration ..................... (500) --
Proceeds from sale of lift truck dealership ......................... 23,315 --
Purchases of rental equipment ....................................... (92,551) (42,692)
Purchases of property and equipment ................................. (23,728) (2,234)
Proceeds from sale of rental equipment .............................. 29,348 5,685
--------- ---------
Net cash used in investing activities ........................ (79,032) (114,973)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock .............................. -- 27,600
Capital contribution ................................................ -- 23,400
Proceeds from debt .................................................. 179,278 131,918
Repayments of debt .................................................. (74,862) (75,472)
Debt issuance costs ................................................. (1,945) --
--------- ---------
Net cash provided by financing activities .................... 102,471 107,446
--------- ---------
Net (decrease)/increase in cash and cash equivalents ................... (644) 1,676
Cash and cash equivalents, beginning of period ......................... 10,597 1,493
--------- ---------
Cash and cash equivalents, end of period ............................... $ 9,953 $ 3,169
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest .............................................. $ 35,574 $ 2,050
========= =========
Cash paid for income taxes .......................................... $ 5,348 $ 1,520
========= =========
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 .................................. $ 24,358 $ 168,982
Total liabilities assumed ........................................... (2,267) (64,491)
Amount paid through the issuance of debt ............................ (7,175) (28,759)
--------- ---------
Net cash paid ................................................ $ 14,916 $ 75,732
========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE> 6
NATIONSRENT, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
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 six months ended
June 30, 1999 and 1998, 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. For
interim reporting purposes, advertising expenses are charged to earnings in
proportion to the relationship that revenue for such period bears to estimated
full year revenue and related advertising expenses. 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, 1998
appearing in the Company's Annual Report on Form 10-K/A filed with the
Securities and Exchange Commission. The results of operations for the three and
six months ended June 30, 1999 are not necessarily indicative of the results
which may be reported for the year ending December 31, 1999.
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 March 1998, 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 adopted SOP 98-1 prospectively effective January
1, 1999. The adoption of SOP 98-1 did not 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
SOP 98-5, "Reporting on the Costs of Start-Up Activities." 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. The Company adopted SOP 98-5 effective January 1, 1999. The
adoption of SOP 98-5 did not have a material effect on the Company's financial
position or results of operations.
NOTE 2 -- ACQUISITIONS
The Company made four acquisitions of equipment rental businesses during the
six months ended June 30, 1999. The aggregate consideration for these
acquisitions was $23,106,000 and consisted of (i) $15,931,000 of cash and (ii)
$7,175,000 of subordinated convertible debt. The cash portion of the
consideration was funded through borrowings under the Company's senior credit
facility (the "Credit Facility"). In addition, the Company repaid or assumed
outstanding indebtedness of the acquired companies in the aggregated amount of
$1,980,000. These 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 these 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
Company is awaiting information from third-party appraisers as to the fair value
of certain rental equipment acquired and the final determination of certain
liabilities assumed. The Company does not believe the final assignment of the
fair value of the net assets acquired will have a significant impact on future
operating results. The operations of the acquired businesses have been included
in the Company's consolidated statements of income since the date of
acquisition.
The following table sets forth the estimated fair value of the assets
acquired and liabilities assumed for the aforementioned acquisition (in
thousands):
Assets, including cash ..... $ 7,587
Goodwill ................... 17,786
Liabilities ................ 2,267
4
<PAGE> 7
NATIONSRENT, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
JUNE 30, 1999
The following table sets forth the unaudited pro forma consolidated results
of operations for the three and six months ended June 30, 1999 and 1998 giving
effect to the acquisitions completed during 1999 and 1998 as if the acquisitions
had occurred on January 1, 1998 (in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue ................................. $130,932 $121,733 $235,643 $220,746
Net income .............................. 4,698 5,491 9,086 7,333
Basic and diluted earnings per share .... 0.08 0.10 0.16 0.13
</TABLE>
The above unaudited pro forma consolidated results of operations are based
upon certain assumptions and estimates which the Company believes are
reasonable. The unaudited pro forma consolidated results of operations may not
be indicative of the operating results that actually would have been reported
had the acquisitions been consummated on January 1, 1998, nor are they
necessarily indicative of results which will be reported in the future.
During the six months ended June 30, 1999, the Company paid consideration of
$500,000 of cash and 78,973 shares of common stock to the former owners of a
previously acquired business related to the achievement of certain operating
results. The Company records amounts paid for contingent consideration as
additional purchase price once they are incurred since the consideration is
required regardless of the former owner's continued association with the
Company.
NOTE 3 -- SEASONALITY
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 4 -- EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share (in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Numerator:
Numerator for basic earnings per share-- net income ......... $ 4,657 $ 1,200 $ 8,974 $ 1,293
Interest expense on convertible subordinated debt, net of
income taxes ............................................. 751 229 1,479 329
------- ------- ------- -------
Numerator-- diluted earnings per share ...................... $ 5,408 $ 1,429 $10,453 $ 1,622
======= ======= ======= =======
Denominator:
Denominator for basic earnings per
share-- weighted-average shares .......................... 55,759 26,726 55,733 25,820
Effect of dilutive securities:
Convertible subordinated debt ............................ 8,840 2,803 8,748 2,073
Employee stock options ................................... 169 182 233 125
------- ------- ------- -------
Denominator for diluted earnings per share -- adjusted
weighted-average shares ..................................... 64,768 29,711 64,714 28,018
======= ======= ======= =======
Basic and diluted earnings per share .......................... $ 0.08 $ 0.04 $ 0.16 $ 0.05
======= ======= ======= =======
</TABLE>
5
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NATIONSRENT, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
JUNE 30, 1999
NOTE 5 -- DEBT
In February 1999, the Company amended its Credit Facility to increase the
total aggregate commitment to $500,000,000. At that time the term loan (the
"Term Loan") was increased to $180,000,000 and the aggregate commitment under
the revolving credit facility (the "Revolver") was increased to $320,000,000.
The Revolver has a three-year term scheduled to expire in June 2001 and the Term
Loan has a six-year term scheduled to expire in September 2004. Borrowings under
the Revolver bear interest at either the BankBoston base rate plus a percentage
ranging from 0.00% 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.
In February 1999, the Company completed an exchange offer to replace its
privately issued 10.375% Senior Subordinated Notes due 2008 with publicly
registered notes.
NOTE 6 -- COMPREHENSIVE INCOME
The objective of reporting comprehensive income is to disclose all changes
in equity of an enterprise that result from transactions and other economic
events in a period other than transactions with owners. The comprehensive income
of the Company was equal to net income for all periods presented.
NOTE 7 -- NON-RECURRING ITEMS
In January of 1999, the Company received net proceeds of $23,315,000 related
to the sale of a lift truck dealership acquired as part of an acquisition made
in April 1998. The carrying value of the tangible assets sold was $14,770,000
resulting in proceeds in excess of carrying value of $8,545,000. The Company
recorded a pre-tax gain of $1,818,000 based on the increase in value of the
dealership since the date of acquisition. The remaining $6,727,000 of proceeds
in excess of carrying value was recorded as a reduction of goodwill. The Company
continues to evaluate the carrying value of its goodwill for impairment in
accordance with SFAS 121.
In January 1999, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Rental Service Corporation ("RSC"), a Delaware
corporation, pursuant to which the Company was to be merged with and into RSC
with RSC continuing as the surviving corporation to be named RSC NationsRent. On
May 20, 1999, the Company entered into a Termination and Release Agreement (the
"Termination Agreement"), with RSC, pursuant to which the Company and RSC have
mutually agreed to terminate the Merger Agreement and to abandon the proposed
merger between the parties. As part of the Termination Agreement, RSC paid the
Company $6,000,000 as reimbursement of out-of-pocket costs and expenses incurred
in connection with or relating to the Merger Agreement and the Termination
Agreement and the performance of the Company's obligations thereunder through
the date of termination. The Company recorded a pre-tax charge of $3,932,000 in
the second quarter of 1999 for the unreimbursed portion of expenses incurred
related to the proposed merger.
NOTE 8 -- SUBSEQUENT EVENTS
The Company has completed two acquisitions of rental equipment businesses
since June 30, 1999 for aggregate consideration of $31,320,000. Such
consideration consisted of an aggregate (i) $28,320,000 of cash and (ii)
$3,000,000 of subordinated convertible debt. The cash portion of the
consideration was funded through borrowings under the Credit Facility. In
addition, the Company repaid or assumed outstanding indebtedness of the acquired
companies in the aggregate amount of $22,005,000. Each of the acquisitions has
been accounted for using the purchase method.
In July 1999, the Company amended its Credit Facility to increase the total
aggregate commitment to $800,000,000. At that time the Term Loan was increased
to $300,000,000 and the aggregate commitment under the Revolver was increased to
$500,000,000. The Revolver has a five-year term scheduled to expire in July 2004
and the Term Loan has a seven-year term scheduled to expire in July 2006.
Borrowings under the Revolver bear interest at either the BankBoston base rate
or, at the Company's option, the Eurodollar market rate plus a percentage
ranging from 1.50% to 2.50%. The Term Loan bears interest at 3.00% over the
Eurodollar market rate. The percentage over 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
6
<PAGE> 9
NATIONSRENT, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
JUNE 30, 1999
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.
In July 1999, the Company entered into a Preferred Stock Purchase Agreement
with NR Holdings Limited and NR Investments Limited, affiliates of Investcorp,
S.A., pursuant to which the Company agreed to sell 100,000 shares of its
perpetual Series A Convertible Preferred Stock ("Preferred Stock") for an
aggregate purchase price of $100,000,000. On July 20, 1999, pursuant to the
Purchase Agreement, the Company sold 78,000 shares of Preferred Stock for an
aggregate purchase price of $78,000,000. The proceeds of the initial closing
were used to pay down amounts outstanding under the Credit Facility. The sale of
the additional 22,000 shares of Preferred Stock, for an aggregate purchase price
of $22,000,000, is subject to stockholder approval at a special meeting of the
stockholders scheduled to be held within the next 30 to 60 days. Regardless of
whether the stockholders approve the sale of the additional 22,000 shares of
Preferred Stock, the first closing for the 78,000 shares of Preferred Stock will
remain consummated. The 100,000 shares of Preferred Stock, when issued, will be
convertible into approximately 14,286,000 shares of Common Stock, based on a
liquidation preference of $1,000 per share of Preferred Stock and a conversion
price of $7.00 per share of Common Stock. The holders of the Preferred Stock
were granted certain demand and piggy-back registration rights with respect to
the shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock, pursuant to a Registration Rights Agreement among the Company,
NR Holdings Limited, NR Investments Limited and certain of the Company's
stockholders. The terms of the Preferred Stock are set forth in the Certificate
of Designation filed as an exhibit to this Quarterly Report on Form 10-Q along
with the Preferred Stock Purchase Agreement and the Registration Rights
Agreement.
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of our consolidated results of
operations and financial condition should be read in conjunction with the
unaudited interim consolidated financial statements and the related notes
included herein and the consolidated financial statements for the year ended
December 31, 1998 appearing in our Annual Report on Form 10-K/A filed with the
Securities and Exchange Commission.
GENERAL
NationsRent is one of the fastest growing equipment rental companies in the
United States. We have acquired a platform of equipment rental businesses
concentrated in selected markets and are building a network of nationally
branded locations. As of August 10, 1999, we operated more than 140 equipment
rental locations in 24 states. We have become a leading provider of rental
equipment as a result of our strategy to acquire core businesses, open or
acquire additional locations concentrated around those businesses and expand our
fleet of rental equipment. We believe that this cluster strategy enables us to
increase profitability in our acquired stores and achieve profitability in our
newly opened locations more quickly than our competitors. By implementing the
cluster strategy and expanding our fleet of rental equipment, we are able to
provide a full range of rental equipment to customers with a wide variety of
equipment rental needs.
NationsRent seeks to acquire businesses that have:
o strong positions in their geographic market;
o experienced local management teams that will continue to work with
us following the acquisition;
o high quality inventory of rental equipment; and
o physical and operating characteristics that are suited to conversion
to the NationsRent format.
During the period January 1, 1999 through August 10, 1999, we have acquired
six equipment rental businesses. We paid an aggregate of approximately $54.5
million for these six acquisitions which consisted of approximately:
o $44.3 million in cash; and
o $10.2 million of convertible subordinated debt.
We funded the cash portion of the consideration paid for these acquisitions
with borrowings under our senior credit facilities. The acquisitions have been
accounted for using the purchase method and, accordingly, the acquired assets
and assumed liabilities have been recorded at their estimated fair values as of
the date of acquisition. Purchase accounting values for certain acquisitions
have been assigned on a preliminary basis, and are subject to adjustment when
additional information as to the fair values of the net assets acquired is
available. We are awaiting information from third-party appraisers as to the
fair value of certain rental equipment acquired and the final determination of
certain liabilities assumed. We do not believe the final assignment of the fair
value of the net assets acquired will have a significant impact on future
operating results.
After making an acquisition, we convert acquired locations to the
NationsRent format. Distinguishing characteristics of this format include
drive-through lanes, clearly marked equipment aisles, prominent use of the
NationsRent logo and colors and attractive, well-organized and clean store
facilities. The cost of converting an acquired location to the NationsRent
format varies depending on the physical properties of the acquired location and
the condition, breadth and depth of rental equipment inventory at such location,
which are factors considered in the selection and pricing of acquisition
candidates. Once we have established a presence in a particular market, we may
open new locations in that geographic area or adjacent areas. During the six
months ended June 30, 1999, we opened six of the 12 new locations we plan to
open in 1999. We continue to evaluate the need for new locations as we acquire
equipment rental companies in new markets. The cost of opening our new locations
has varied depending on whether we leased or purchased the underlying real
property, the size of the location and the breadth and depth of inventory at
each location. See "-- Liquidity and Capital Resources."
We derive our revenue from equipment rental, sales of new and used
equipment, spare parts and supplies and maintenance and repair services. 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
as well as maintenance and repair services is primarily affected by equipment
rental and sales volume.
The principal components of our cost of revenue include depreciation of
rental equipment, costs of new and used equipment sold, personnel costs,
occupancy costs, the cost of rental equipment under operating leases, repair and
maintenance costs and vehicle operations.
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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 primarily three to ten years and is
depreciated to a salvage value ranging from zero to ten percent of original
cost. Since the second quarter of 1999, we have financed approximately $210.9
million of rental fleet additions with operating leases. The use of these leases
reduces reported depreciation expense. Rental equipment depreciation expense as
a percent of rental revenue was 13.8% and 14.5% for the three and six months
ended June 30, 1999, respectively, and when adjusted for the impact of the
operating leases, it would have been 19.7% for each of such periods.
Selling, general and administrative expenses include 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.
On May 20, 1999 we abandoned our merger with Rental Service Corporation
("RSC") and entered into a Termination and Release Agreement (the "Termination
Agreement") with RSC. The Termination Agreement provided that RSC would
reimburse us for $6.0 million of expenses incurred in connection with the
transaction. The $6.0 million was paid by RSC and offset a total of $9.9 million
of expenses incurred in connection with the transaction. The net $3.9 million of
unreimbursed expenses is included in operating expenses in the three months
ended June 30, 1999.
HISTORICAL RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998
REVENUE. The following table sets forth our revenue by type for the three
months ended June 30, 1999 and 1998 (in thousands, except percentages):
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
------------------------------- -------------------------------
1999 1998 1999 1998
--------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equipment rentals ............... $ 96,928 74.4% $18,108 51.2% $172,028 74.0% $24,019 54.1%
Sales of equipment, merchandise,
service, parts and supplies . 33,381 25.6% 17,251 48.8% 60,596 26.0% 20,379 45.9%
-------- ----- ------- ----- -------- ----- ------- -----
$130,309 100.0% $35,359 100.0% $232,624 100.0% $44,398 100.0%
======== ===== ======= ===== ======== ===== ======= =====
</TABLE>
Total revenue increased $95.0 million and $188.2 million for the three and
six months ended June 30, 1999, respectively, when compared to the same periods
in 1998. These increases were due primarily to the inclusion of revenue from
businesses acquired during 1998 and 1999. Also contributing to the growth in
revenue was an increase in equipment rental revenue resulting from the expansion
of our rental fleet at existing locations. Equipment rental revenue as a
percentage of total revenue was 74.4% and 74.0% for the three and six months
ended June 30, 1999, respectively, up from 51.2% and 54.1% for the same periods
in 1998. The higher mix of rental revenue in the 1999 periods is due primarily
to the acquisition of companies with a higher percentage of equipment rentals
and the expansion of our rental fleet. It also is the result of a decrease in
the sales of new equipment, parts and service resulting from the sale in January
1999 of a lift truck dealership that derived the majority of its revenue from
sales of new equipment and related parts and service.
GROSS PROFIT. Gross profit increased $44.7 million and $84.8 million for the
three and six months ended June 30, 1999, respectively, when compared to the
same periods in 1998. These increases in gross profit were primarily due to the
increase in total revenue. Gross profit as a percentage of total revenue was
43.7% and 43.1% for the three and six months ended June 30, 1999, respectively,
compared to 34.7% and 34.5% for the same periods in 1998. The increase in gross
profit as a percentage of total revenue was due to the growth in revenue from
equipment rentals. We derive higher margins from equipment rental revenue than
revenue from sales of equipment, merchandise, service, parts and supplies.
OPERATING EXPENSES. Selling, general and administrative expenses increased
$17.4 million and $34.6 million for the three and six months ended June 30,
1999, respectively, when compared to the same periods in 1998. These increases
were due primarily to the inclusion of such costs from companies acquired during
1998 and 1999 and additional corporate expenses including costs associated with
our strategic marketing initiatives. Also included in operating expenses for the
three and six months ended June 30, 1999 is the aforementioned $3.9 million of
unreimbursed expenses incurred in connection with the abandoned merger with RSC.
Selling, general and administrative expenses as a percentage of total revenue
were 21.8% and 18.7% for the three and six months ended June 30, 1999,
respectively.
Non-rental equipment depreciation and amortization increased $4.4 million
and $8.5 million for the three and six months ended June 30, 1999, respectively,
when compared to the same periods in 1998. These increases were due primarily to
the increase in goodwill amortization in connection with acquisitions completed
during 1998 and 1999.
OPERATING INCOME. Operating income increased $19.0 million and $37.8 million
for the three and six months ended June 30, 1999, respectively, when compared to
the same periods in 1998. Operating income as a percentage of total revenue was
18.1% and 18.6% for the three and six months ended June 30, 1999, respectively,
compared to 12.9% and 12.2% for the same periods in 1998. Theses increases were
due primarily to the higher percentage of revenue from equipment rentals in
1999.
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OTHER INCOME AND EXPENSE. Interest expense increased $13.4 million and $27.0
million for the three and six months ended June 30, 1999, respectively, when
compared to the same periods in 1998. These increases were due primarily to the
increase in debt incurred to finance acquisitions and the expansion of our
rental fleet during 1998 and 1999. Interest expense is primarily attributable to
borrowings under our senior credit facilities, notes issued to finance the
purchase of equipment, subordinated notes issued to sellers of businesses we
acquired and our senior subordinated notes issued in December 1998.
Other income for the six months ended June 30, 1999 included a pre-tax gain
of approximately $1.8 million from the sale in January of a lift truck
dealership. See "Note 7 to the unaudited consolidated financial statements."
INCOME TAXES. Our effective income tax rate for the three and six months
ended June 30, 1999 was 41.5%. The amount above statutory income tax rates is
attributable primarily to non-deductible goodwill amortization for federal
income tax purposes.
NET INCOME. Net income increased $3.5 million and $7.7 million for the three
and six months ended June 30, 1999, respectively, when compared to the same
periods in 1999. The increase in net income was due to the factors discussed
above, offset by the aforementioned charge related to the abandoned merger with
RSC. Net income, excluding the charge related to the abandoned merger with RSC,
would have been $6.9 million or $0.12 diluted earnings per share and $11.3
million or $0.20 diluted earnings per share for the three and six months ended
June 30, 1999, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Our primary uses of cash have been the funding of acquisitions and capital
expenditures. To date, we have funded our cash requirements primarily with
borrowings under our senior credit facilities, proceeds from the issuance of
debt and equity securities, equity contributions from our founding stockholders
and cash provided by operations.
Our net cash used by operations was $24.1 million for the six months ended
June 30, 1999 compared to net cash provided by operations of $9.2 million for
the same period in 1998. The increase in cash used by operations was due
primarily to an increase in the working capital required as a result of our
acquisitions and to fund our internal growth. Net cash used in investing
activities was $79.0 million for the six months ended June 30, 1999. Cash used
in investing activities in the period was primarily a result of $92.6 million of
purchases of rental equipment, $23.7 million for purchases of and improvements
to property and equipment and cash consideration of $14.9 million for the
acquisition of businesses. Cash provided by financing activities was $102.5
million for the six months ended June 30, 1999 and was primarily a result of net
borrowings under our senior credit facilities.
In July 1999, we increased our senior credit facilities from $500.0 million
to $800.0 million consisting of a $300.0 million term loan due July 2006 and a
$500.0 million revolving line of credit due July 2004. The credit facilities 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 revolving line of credit bear interest
at either the BankBoston, N.A. base rate or, at our option, the Eurodollar
market rate plus a percentage ranging from 1.50% to 2.50%. The term loan bears
interest at 3.00% over the Eurodollar market rate. The percentage over the
Eurodollar market rate is based on our financial performance as measured by the
total funded debt ratio. The credit facilities are secured by a security
interest in substantially all of our assets. The credit facilities also impose,
among other covenants, a tangible assets to senior debt covenant, a restriction
on all of our retained earnings including 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 June
30, 1999, $253.6 million and $180.0 million of cash borrowings were outstanding
under the revolving line of credit and term loan, respectively.
In July 1999, we entered into an agreement to sell 100,000 shares of
perpetual convertible preferred stock for an aggregate purchase price of $100
million to certain affiliates of Investcorp, S.A., a global investment group
with a prior successful investment in the equipment rental industry. The
preferred stock is convertible into approximately 14.3 million shares of our
common stock at any time based on a liquidation preference of $1,000 per share
of preferred stock and a conversion price of $7.00 per share of common stock.
The private placement of $78.0 million was completed in July with the remaining
$22.0 million to be funded following stockholder approval to be sought at a
special meeting over the next 30 to 60 days. Proceeds from the private placement
have been and will be used to repay borrowings under our revolving credit
facility.
During the six months ended June 30, 1999, we added $95.8 million of new
equipment to our rental equipment fleet using operating leases. These operating
leases have terms expiring over the next seven years.
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<PAGE> 13
Our short-term cash requirements for our existing operations consist
primarily of:
o capital expenditures to maintain, modernize and expand our rental
equipment inventory;
o working capital requirements; and
o repair and maintenance of rental equipment, purchase of merchandise
inventory and other operating activities.
We estimate that equipment expenditures over the next 12 months for our
existing locations and for new store openings will be in the range of $175.0
million to $225.0 million, net of proceeds from used equipment sales.
Approximately one-third of the estimated net capital expenditures is to replace
existing rental equipment. We believe that we will be able to finance our
short-term cash needs through borrowings under the senior credit facilities, the
use of equipment leases and cash generated from operations. We estimate that
such sources will be sufficient to fund the cash required for our existing
operations for at least 12 months.
During the six months ended June 30, 1999, we opened six new locations in
markets where we already have a presence. We estimate that the average aggregate
capital costs associated with each such new location were in the range of $2.0
million to $4.5 million. We expect to open a total of 12 new locations in 1999.
We believe that cash generated from operations and borrowings under our senior
credit facilities will be sufficient to fund these costs without the issuance of
additional debt or equity securities.
We are developing a management information system that became operational at
certain locations in the fourth quarter of 1998. We estimate the total cost to
complete development and installation of the system at our existing locations
will range from $6.0 million to $8.0 million over the next several years and we
believe cash generated from operations and borrowings under our senior credit
facilities will be sufficient to fund these costs.
We plan to continue our acquisition strategy and believe that, in connection
with new acquisitions, we will be required to make additional expenditures to
expand and modernize rental equipment of acquired companies. We expect to
finance future acquisitions and related rental equipment expenditures using
cash, capital stock, notes and/or assumption of indebtedness. To fully implement
our growth strategy and meet the resulting capital requirements, we will be
required to increase amounts available under our senior credit facilities or
raise additional capital through issuance of additional debt or equity
securities. There can be no assurance that additional capital, if and when
required, will be available on terms satisfactory to us or at all.
There may be liabilities that we fail or are unable to discover in the
course of performing due diligence investigations on each company or business we
have acquired or seek to acquire in the future. Such liabilities could include
those arising from employee benefits contribution obligations of a prior owner
or non-compliance with applicable federal, state or local environmental
requirements by prior owners for which we, as a successor owner, may be
responsible. We try to minimize these risks by conducting such due diligence,
including employee benefit and environmental reviews, as we deem appropriate
under the circumstances. However, we cannot assure that we have identified, or
in the case of future acquisitions, will identify, all existing or potential
risks. We also generally require each seller of acquired businesses or
properties to indemnify us against undisclosed liabilities. In some cases this
indemnification obligation may be supported by deferring payment of a portion of
the purchase price or other appropriate security. However, we cannot assure that
the indemnification, even if obtained, will be enforceable, collectible or
sufficient in amount, scope or duration to fully offset the possible liabilities
associated with the business or property acquired. Any such liabilities,
individually or in the aggregate, could have a material adverse effect on our
business, financial condition or results of operations.
SEASONALITY AND FLUCTUATIONS IN OPERATING RESULTS
Our revenue and income are dependent upon activity in the construction
industry in the markets we serve. Construction activity is dependent upon
weather and other seasonal factors affecting construction in the geographic
areas where we have operations. Because of this variability in demand, our
quarterly revenue may fluctuate, and revenue for the first quarter of each year
can be expected to be lower than the remaining quarters. Although we believe
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.
Operating results may fluctuate due to other factors including, but not
limited to:
o changes in general economic conditions including changes in
national, regional or local construction or industrial activities;
o the timing of acquisitions and opening of new locations;
o the timing of expenditures for new rental equipment and the
disposition of used equipment;
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<PAGE> 14
o competitive pricing pressures; and
o changes in interest rates.
We 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 for a period of time. Our new locations have on average achieved
profitability within approximately five months of their opening. In addition,
when we purchase 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 our current rental equipment inventory
may reduce our operating margins during a start-up period.
INFLATION
We do not believe that inflation has been a significant factor to the cost
of our operations.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In March 1998, 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 adopted SOP 98-1 prospectively effective January
1, 1999. The adoption of SOP 98-1 did not 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
SOP 98-5, "Reporting on the Costs of Start-Up Activities." 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. The Company adopted SOP 98-5 effective January 1, 1999. The
adoption of SOP 98-5 did 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
microprocessors 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. We may be affected
by Year 2000 issues in our own information technology ("IT") systems or non-IT
systems, as well as by Year 2000 issues related to IT and non-IT systems
operated by third parties.
STATE OF READINESS
Our plan to address the Year 2000 issue is structured in five phases:
inventory, assessment, correction, testing and implementation. The inventory
phase is an investigation of all our operations to identify the software and
hardware of all of our systems. The assessment phase is an analysis of each
component of each system to determine date sensitivity to the year 2000. The
correction phase is the effort to correct, replace, upgrade or eliminate
non-compliant hardware and software. The testing phase involves verifying that
corrections to our systems are Year 2000 compliant. Finally, the implementation
phase is the effort to deploy the corrected and verified systems throughout our
current operations.
IT SYSTEMS. Our current state of progress with our IT systems is as follows:
o INVENTORY AND ASSESSMENT. Since our inception, we have acquired 42
equipment rental companies, each with its own information system for
rental counter operations, inventory control and financial
reporting. In assessing the systems of the companies that we
acquired, we determined that there was no one system that could
manage our projected growth and that was Year 2000 compliant. We
determined, therefore, that we needed to develop our own Year 2000
compliant management information system. We believe the inventory
and assessment phases of our IT systems are complete.
o CORRECTION AND TESTING. During the second quarter of 1998, we began
developing our own management information system that included
software modules for rental counter operations, inventory control,
database and financial reporting to replace the information systems
of businesses we have acquired. During the development of our
systems, we tested and validated them for Year 2000 compliance and
selected our third-party vendors for the software modules and
hardware components of our new system based on their certification
of Year 2000 compliance. To date, we have handled our Year 2000 plan
with our own internal
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personnel and have not engaged any third-party consultants. The
system is functional and we believe we are completed with the
testing of all of the components. We are not currently aware of any
Year 2000 problems relating to our new IT system or the systems and
hardware supplied by third parties which would have a material
effect on our business, results of operations or financial
condition.
o IMPLEMENTATION. For us, the implementation phase consists of the
conversion and replacement of the non-Year 2000 compliant systems of
our acquired businesses with our new management information system.
During October 1998, we began converting our operations to our new
management information system. As of August 12, 1999, we operated
144 locations. We have completely converted 74 of these locations to
our new system and have converted 24 additional locations to the
financial reporting component of our system. We expect to have all
of our current operations fully converted to our new system by
September 30, 1999.
NON-IT SYSTEMS. We have completed the inventory and assessment phase for our
non-IT systems (such as chips and microprocessors that may be embedded in our
facilities and equipment) at our corporate offices and we believe we are
approximately 50% complete in the inventory and assessment phase at our store
locations. We believe there is a minimal amount of dependence of our critical
operations on non-IT systems. However, since we have not completed our inventory
and assessment at our store locations, we cannot currently determine if there
are any potential Year 2000 problems that would cause a material adverse effect
on our business, results of operations or financial condition. We expect to
complete all five phases of our Year 2000 plan for our non-IT systems by
September 30, 1999.
THIRD-PARTY SYSTEMS. We rely on third-party suppliers for operating
supplies, merchandise for sale, 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 our
business, results of operations or financial condition. We have begun efforts to
evaluate the progress of our critical third-party suppliers relative to their
Year 2000 issues. Letters and questionnaires are being sent to all essential
third parties with which we do business to assess their Year 2000 readiness. To
the extent necessary, we will seek alternative third-party relationships if
circumstances warrant. We have begun efforts to evaluate the progress of our
critical customers' relative to their Year 2000 issues. We believe we are
approximately 50% complete in the determination of our third-party suppliers and
customers Year 2000 readiness. We expect to complete the applicable phases of
our Year 2000 plan for our third-party systems by September 30, 1999.
COSTS
The majority of our costs to address the Year 2000 issue are related to the
development of our new management information system. Such costs principally
consist of licensing and developing software and purchasing hardware. To date,
we have spent a total of approximately $8.8 million for the new system, of which
approximately $6.6 million was related to software development and approximately
$2.2 million was related to purchases of hardware. Such costs have been
capitalized in accordance with generally accepted accounting principles. We
expect to incur in the range of approximately $0.5 million to $1.0 million in
additional software and hardware costs installing the new IT system at the rest
of our current locations in 1999. The aggregate cost of conversion and training
employees to the new IT system, which will be charged to expense in the period
incurred, is expected to range from $0.7 million to $1.0 million. Although we do
not expect to incur significant expenses to address the Year 2000 issue beyond
our capital investment in the new IT system software and hardware, Year 2000
problems may require us to incur unanticipated expenses which could have a
material adverse effect on our business, financial condition or results of
operations. These costs account for approximately 90% of our information
technology budget for 1999. To date, the development of our management
information system has run concurrent with and been a part of our Year 2000
compliance efforts. No other major projects have been deferred as a result of
the system development effort. The source of the funds for our Year 2000
compliance efforts has been cash generated from operations and borrowings under
our senior credit facilities.
RISKS RELATING TO THE COMPANY'S FAILURE TO BECOME YEAR 2000 COMPLIANT
Our worst case scenarios resulting from the Year 2000 issue include:
o Interruptions in our customers' operations which could prevent them
from renting our equipment, using our services or paying for
equipment rented or services rendered.
o Disruptions to our utilities and other service providers which could
prevent our locations from operating in the normal course of
business.
o Failure of our suppliers' operations which could result in our
inability to obtain rental equipment and other supplies to meet the
demands of our customers.
o Failure to convert all of our locations to our new management
information system before December 31, 1999 which could prevent such
locations from processing invoices from our counter systems and
tracking accounts receivable, equipment
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<PAGE> 16
utilization and other critical financial data. This could also
prevent our locations from sharing equipment and data to service
our customers in a timely manner.
o Failure to convert all of the systems of the businesses we acquire
during 1999 to our system prior to the year 2000 which could prevent
these locations from being integrated into the rest of our
operations.
Such failures could materially and adversely affect our business, results of
operations 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, we are unable to determine at
this time what our most reasonably likely worst case scenario would be or
whether the consequences of Year 2000 failures will have a material adverse
impact on our results of operations, liquidity or financial condition. As we
complete all of the phases of our Year 2000 compliance plan, we expect to have a
better understanding of our most reasonably likely worst case scenarios and will
tailor our contingency plans accordingly.
CONTINGENCY PLANS
Our Year 2000 efforts are ongoing and our overall plan, as well as the
consideration of contingency plans, will continue to evolve as new information
becomes available. Contingency plans for Year 2000-related interruptions are
being developed and will include emergency backup and recovery procedures for
lost data, manual invoicing, billing and collection procedures, identification
of alternate suppliers, acceleration of conversion times to our management
information system and increasing inventory levels of critical supplies and
rental equipment. All plans are expected to be completed by the end of the third
quarter of 1999. These activities are intended to provide a means of managing
risk, but cannot eliminate the potential for disruption due to third-party
failure.
We are currently considering what our final contingency plans will be in the
event that we are not able to bring all of our existing and acquired systems
into Year 2000 compliance by the end of 1999. We currently plan to complete such
contingency plans by September 30, 1999.
FORWARD LOOKING STATEMENTS
Certain statements and information in this Quarterly Report on Form 10-Q may
include "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, including in particular the statements about our plans,
strategies and prospects under the heading "Management's Discussion and Analysis
of Financial Condition and Results of Operations." Although we believe that our
plans, intentions and expectations reflected in or suggested by such
forward-looking statements are reasonable, we cannot assure you that such plans,
intentions or expectations will be achieved. Important factors that could cause
actual results to differ materially from our forward-looking statements are set
forth below and elsewhere in this Quarterly Report on Form 10-Q. Such factors
include, among others: the ability to develop and implement operational and
financial systems to manage rapidly growing operations; competition in our
principal businesses; the ability to integrate and successfully operate acquired
businesses and the risks associated with such businesses; the ability to obtain
financing on terms acceptable to us to finance our growth strategy, and for us
to operate within the limitations imposed by financing arrangements; and the
ability to properly assess and capitalize on future business opportunities.
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PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In connection with our proposed merger with Rental Service Corporation
(which merger was abandoned in May 1999), in April 1999, United Rentals, Inc.
and UR Acquisition Corporation (collectively, "United Rentals") commenced a
tender offer for all the issued and outstanding shares of Rental Service's
common stock, at a price of $22.75 per share in cash. On April 13, 1999, United
Rentals commenced a consent solicitation of Rental Service's stockholders to
remove the board of directors of Rental Service and replace the board with
nominees of United Rentals. On April 16, 1999, the Rental Service's board of
directors determined that United Rental's tender offer was inadequate and was
not in the best interests of Rental Service or its stockholders. Rental
Service's board of directors recommended that Rental Service's stockholders
reject the tender offer and not tender their shares of Rental Service's common
stock pursuant to the tender offer. In May 1999, we mutually agreed with Rental
Service to terminate our merger agreement and abandoned our proposed merger. In
June 1999, Rental Service announced that it had entered into a definitive
agreement with Atlas Copco North America, Inc., pursuant to which Atlas Copco
agreed to acquire all of the outstanding shares of Rental Service common stock
for $29.00 per share in cash. Following such announcement, United Rentals
announced that it would not compete for Rental Service and withdrew its tender
offer and consent solicitation.
As part of our agreement with Rental Service to abandon our proposed merger,
in May 1999, we filed a notice of voluntary dismissal with prejudice in the
Company's lawsuit against United Rentals, Bradley S. Jacobs, John N. Milne and
Goldman, Sachs & Co. in the Circuit Court in Broward County, Florida. As a
result of the termination of our merger agreement with Rental Service, in June
1999, United Rentals filed a stipulation of dismissal as to the Company and
James L. Kirk without prejudice in United Rentals' lawsuit against James L.
Kirk, the Company and Rental Service in the United States District Court for the
District of Connecticut. As a result of United Rentals' withdrawal of its tender
offer and consent solicitation, in July 1999, United Rentals, Rental Service and
the Company together filed a stipulation of dismissal without prejudice in
United Rentals' lawsuit against Rental Service, Rental Service's board of
directors and the Company in the Court of Chancery of the State of Delaware. For
a more detailed description of these cases, please see the Company's Quarterly
Report on Form 10-Q for the period ended March 31, 1999.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) RECENT SALES OF UNREGISTERED SECURITIES
During the period covered by this report (April 1, 1999 through June 30,
1999), 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 February 1999, in connection with the acquisition of Hudson Rental
Center, Inc., the Company issued promissory notes in the aggregate principal
amount of $600,000, which are convertible into shares of common stock at the
option of the holder at a price of $10.00 per share.
In April 1999, in connection with the acquisition of the assets of JR.
Equipment, Inc. d/b/a Howe Rental & Sales, the Company issued promissory notes
in the aggregate principal amount of $3,075,000, which are convertible into
shares of common stock at the option of the holder at a price of $10.00 per
share. In June 1999, the Company converted $2,460,000 principal amount of such
notes into 410,000 shares of common stock.
In April 1999, in connection with the acquisition of the assets of Placer
Equipment Rentals, Inc., the Company issued a promissory note in the principal
amount of $1,500,000, which is convertible into shares of common stock at the
option of the holder at a price of $10.00 per share. In June 1999, the Company
converted $1,000,000 principal amount of such note into 166,666 shares of common
stock.
In June 1999, the Company converted the $610,000 principal amount of a
convertible promissory note, originally issued in connection with the
acquisition of Advanced Construction Equipment, Inc., into 101,666 shares of
common stock.
In June 1999, in connection with the acquisition of Gold Coast Ariel Lift,
Inc. and Villella Holding Company, the Company issued an aggregate of 15,952
shares of common stock to the stockholders of such companies.
From April 1, 1999 to June 30, 1999, the Company granted options to certain
of its employees to purchase an aggregate of 2,025,500 shares of common stock at
exercise prices ranging from $5.50 to $5.625 per share. These options generally
vest over a four year period at the rate of 25% per year beginning on the first
anniversary of the date of grant.
15
<PAGE> 18
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
-------- -----------
2.1 Agreement and Plan of Merger, dated as of January 20, 1999,
between the Company and Rental Service Corporation. (5)
2.2 Stock Option Agreement, dated as of January 20, 1999, between
the Company and Rental Service Corporation.(5)
2.3 Stock Option Agreement, dated as of January 20, 1999, between
Rental Service Corporation and the Company.(5)
2.4 Voting Agreement, dated as of January 20, 1999, between Kirk
Holdings Limited Partnership, H. Family investments, Inc. and
Huizenga Investments Limited Partnership, as shareholders, and
Rental Service Corporation.(5)
2.5 Termination and Release Agreement, dated May 20, 1999, between
the Company and Rental Service Corporation.(6)
2.6 Stock Option Termination Agreement dated May 20, 1999, between
the Company and Rental Service Corporation.(6)
3.1 Amended and Restated Certificate of Incorporation of the
Company.(2)
3.2 Amended and Restated By-Laws of the Company.(1)
3.3* Certificate of Designation for Series A Convertible Preferred
Stock
4.1 Unregistered 10 3/8% Global Senior Subordinated Notes due
2008.(4)
4.2 Registered 10 3/8% Senior Subordinated Notes due 2008.(4)
4.3 Senior Subordinated Guarantee dated December 11, 1998, of the
guarantors.(4)
4.4 Indenture, dated December 11, 1998, by and among Company, the
Guarantors and The Bank of New York.(4)
4.5 Registration Rights Agreement, dated December 11, 1998, by and
among the Company, the Guarantors and the Initial Purchasers as
defined therein.(4)
4.6* Fourth Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of July 20, 1999, by and among the Company,
its subsidiaries, BankBoston N.A., as administrative agent,
Bankers Trust Company, as syndication agent, BancBoston
Robertson Stevens Inc. and Deutsche Bank Securities Inc., as
coarrangers, and the other lending institutions named therein.
4.7* Amended and Restated Security Agreement, dated as of July 20,
1999, between the Company, its subsidiaries and BankBoston, N.A.
4.8* Amended and Restated Stock Pledge Agreement, dated as of July
20, 1999, between the Company, NRGP, Inc. and BankBoston, N.A.
10.1 Stock Purchase Agreement, dated August 15, 1997, by and among
the Company, Sam's and the shareholders of Sam's, together with
Amendment nos.1-6.(1)
10.2 Form of Unsecured Subordinated Promissory Notes-Sam's.(1)
10.3 Form of Unsecured Convertible Promissory Notes-Sam's.(1)
10.4 Form of Unsecured Contingent Convertible Subordinated Promissory
Notes-Sam's(1)
10.5 Agreement, dated September 22, 1997, between the Company and
Gary L. Gabriel.(1)
10.6 Asset Purchase Agreement, dated December 8, 1997, by and among
NationsRent of Ohio, Inc., R&R Rental, Inc. ("R&R) and the sole
shareholder of R&R, together with an Amendment dated December
10, 1997.(1)
10.7 Form of Unsecured Subordinated Promissory Note-R&R.(1)
10.8 Asset Purchase Agreement, dated December 8, 1997, as amended,
among NationsRent of Indiana, Inc. and C&E Rental and Service,
Inc. ("C&E"), together with an Amendment dated December 23,
1997.(1)
10.9 Form of Unsecured Convertible Subordinated Promissory Note
C&E.(1)
10.10 Stock Purchase Agreement, dated December 20, 1997, as amended,
among NationsRent of West Virginia, Inc., Titan, together with
an Amendment dated December 31, 1997.(1)
10.11 Form of Unsecured Convertible Subordinated Promissory Note -
Titan.(1)
10.12 Stock Purchase Agreement, dated March 24, 1998, among the
Company, Bode-Finn Limited Partnership ("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.(1)
10.13 Form of Unsecured Convertible Subordinated Promissory
Notes-Bode-Finn.(1)
10.14 Form of Warrant-Bode-Finn.(1)
10.15 Registration Rights Agreement, dated May 5, 1998, among the
Company, Bode-Finn, and Raymond E. Mason Foundation.(1)
10.16 Asset Purchase Agreement, dated March 25, 1998, among
NationsRent of Indiana, Inc., RFL, Enterprises, Inc. and the
sole shareholder of RFL Enterprises, Inc. ("RFL").(1)
16
<PAGE> 19
10.17 Asset Purchase Agreement, dated April 21, 1998, among
NationsRent of Florida, Inc. and Naples Rent-All and Sales
Company, Inc. ("Naples").(1)
10.18 Form of Unsecured Convertible Subordinated Promissory
Note-Naples.(1)
10.19 Stock Purchase Agreement, dated May 7, 1998, among the Company,
Raymond Equipment Co. ("Raymond Equipment") and the shareholders
of Raymond Equipment.(1)
10.20 Form of Unsecured Subordinated Promissory Notes-Raymond
Equipment.(1)
10.21 Form of Unsecured Convertible Subordinated Promissory
Notes-Raymond Equipment.(1)
10.22 Asset Purchase Agreement, dated May 14, 1998, among the Company
and General Rental, Inc.(1)
10.23 Stock Purchase Agreement, dated May 30, 1998, among the Company,
J. Kelly Co., Inc. ("J. Kelly") and the shareholders of J.
Kelly.(1)
10.24 Form of Unsecured convertible Subordinated Promissory Note-J.
Kelly.(1)
10.25 Form of Registration Rights Agreement among the Company and the
shareholders of J. Kelly.(1)
10.26 Asset Purchase Agreement, dated June 7, 1998, among the Company,
Associated Rental Equipment Management Company, Inc.
("Associated") and the sole shareholder of Associated.(1)
10.27 Form of Unsecured Convertible Subordinated Promissory
Note-Associated.(1)
10.28 Form of Registration Rights Agreement-Associated.(1)
10.29 Form of Subscription Agreement, dated May 1998, between the
Company and certain subscribers.(1)
10.30* NationsRent Amended and Restated 1998 Stock Option Plan.
10.31 Form of Stock Option Agreement.(1)
10.32 Amended and Restated Purchase Agreement, dated as of September
9, 1998, by and among NationsRent, Inc., Ray L. O'Neal, Inc.,
Arenco, L.L.C., Don R. O'Neal, Elizabeth M. O'Neal and the
O'Neal Revocable Trust dated December 29, 1987.(3)
10.33 Unsecured Convertible Subordinated Promissory Note, dated as of
October 213, 1998, from the Company to Ray L. O'Neal, Inc.(3)
10.34* Preferred Stock Purchase Agreement, dated July 20, 1999, by and
among the Company, NR Holdings Limited and NR Investments
Limited.
10.35* Registration Rights Agreement, dated as of July 20, 1999, by and
between the Company, NR Holdings Limited, NR Investments
Limited, James L. Kirk and H. Wayne Huizenga
27.1* Financial Data Schedule (for SEC use only)
-------------
* Filed herewith
(1) Incorporated by reference to the Company's Registration Statement on Form
S-1, as amended, Commission File No. 333-56233.
(2) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
for the period ended June 30, 1998.
(3) Incorporated by reference to the Company's Current Report on Form 8-K
filed on November 9, 1998.
(4) Incorporated by reference to the Company's Registration Statement on Form
S-4, Commission File No. 333-69691.
(5) Incorporated by reference to the Company's Current Report on Form 8-K
filed on April 8, 1999.
(6) Incorporated by reference to the Company's Current Report on Form 8-K
filed on May 21, 1999.
(b) REPORTS ON FORM 8-K
We filed a Current Report on Form 8-K dated April 4, 1999, as amended on
Form 8-K/A, relating to the Agreement and Plan of Merger, dated as of
January 20, 1999, between the Company and Rental Service Corporation.
We filed a Current Report on Form 8-K dated May 21, 1999 relating to the
termination of the Agreement and Plan of Merger, dated as of January 20, 1999,
between the Company and Rental Service Corporation.
17
<PAGE> 20
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: August 16, 1999 By: /s/ James L. Kirk
----------------------------------
James L. Kirk
Chairman of the Board and
Chief Executive Officer
(Duly Authorized Officer)
Date: August 16, 1999 By: /s/ Gene J. Ostrow
----------------------------------
Gene J. Ostrow
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: August 16, 1999 By: /s/ Kris E. Hansel
----------------------------------
Kris E. Hansel
Vice President and Controller
(Principal Accounting Officer)
18
<PAGE> 21
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
3.3 Certificate of Designation for Series A Convertible
Preferred Stock
4.6 Fourth Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of July 20, 1999, by and among
the Company, its subsidiaries, BankBoston N.A., as
administrative agent, Bankers Trust Company, as
syndication agent, BancBoston Robertson Stevens Inc. and
Deutsche Bank Securities Inc., as coarrangers, and the
other lending institutions named therein.
4.7 Amended and Restated Security Agreement, dated as of
July 20, 1999, between the Company, its subsidiaries and
BankBoston, N.A.
4.8 Amended and Restated Stock Pledge Agreement, dated as of
July 20, 1999, between the Company, NRGP, Inc. and
BankBoston, N.A.
10.30 NationsRent Amended and Restated 1998 Stock Option Plan.
10.34 Preferred Stock Purchase Agreement, dated July 20, 1999,
by and among the Company, NR Holdings Limited and NR
Investments Limited.
10.35 Registration Rights Agreement, dated as of July 20,
1999, by and between the Company, NR Holdings Limited,
NR Investments Limited, James L. Kirk and H. Wayne
Huizenga
27.1 Financial Data Schedule (for SEC use only)
19
<PAGE> 1
Exhibit 3.3
CERTIFICATE OF DESIGNATION
OF
CONVERTIBLE
PREFERRED STOCK, SERIES A
OF
NATIONSRENT, INC.
------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------------------
NationsRent, Inc., a Delaware corporation (the "Company"), certifies
that pursuant to the authority contained in its Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation"), and in accordance with
the provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors of the Company on July 20, 1999 (the "Adoption
Date"), duly approved and adopted the following resolution, which resolution
remains in full force and effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation, the Board of Directors does
hereby designate, create, authorize and provide for the issue of a series of
preferred stock having a par value of $.01 per share, with a liquidation
preference of $1,000 per share (the "Liquidation Preference"), which shall be
designated as Series A Convertible Preferred Stock (the "Preferred Stock"),
consisting of 100,000 shares having the following powers, designations,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions:
1. RANKING. The Preferred Stock shall, with respect to distributions
upon the liquidation, winding-up and dissolution of the Company, rank (i) senior
to all classes of Common Stock of the Company and to each other class of capital
stock or series of preferred stock established after the Adoption Date, by the
Board of Directors, the terms of which do not expressly provide that it ranks
senior to or on a parity with the Preferred Stock as to dividend distributions
and distributions upon the liquidation, winding-up and dissolution of the
Company (collectively referred to with the Common Stock of the Company as
"Junior Securities"); (ii) on a parity with any additional shares of Preferred
Stock issued by the Company in the future and any other class of capital stock
or series of preferred stock issued by the Company established after the
Adoption Date, by the Board of Directors, the terms of which expressly provide
that such class or series will rank on a parity with the Preferred Stock as to
dividend distributions and distributions upon the liquidation, winding-up and
dissolution
<PAGE> 2
of the Company (collectively referred to as "Parity Securities"); and (iii)
junior to each class of capital stock or series of preferred stock issued by the
Company established after the Adoption Date, by the Board of Directors, the
terms of which expressly provide that such class or series will rank senior to
the Preferred Stock as to dividend distributions and/or distributions upon the
liquidation, winding-up and dissolution of the Company (collectively referred to
as "Senior Securities"). Notwithstanding the foregoing, a security shall not be
deemed to be a "Senior Security" solely because such security has a stated
dividend or interest coupon.
2. PARTICIPATING DIVIDENDS. In the event that the Company declares,
makes or pays any dividends or other distributions upon the Common Stock
(whether payable in cash, securities, rights or other property) other than
dividends and distributions referred to in paragraph 3(vi), the Company shall
also declare and pay to the holders of the Preferred Stock at the same time that
it declares and pays such dividends or other distributions to the holders of the
Common Stock (and with the same record date), the dividends or distributions
which would have been declared and paid with respect to the Common Stock
issuable upon conversion of the Preferred Stock had all of the outstanding
Preferred Stock been converted immediately prior to the record date for such
dividend or distribution, or if no record date is fixed, the date as of which
the record holders of Common Stock entitled to such dividends or distributions
are determined.
3. CONVERSION RIGHTS.
(i) A holder of shares of Preferred Stock may convert such
shares into Common Stock at any time, unless previously redeemed, at the option
of the holder thereof. In the event of a Change in Control that is not an
acquisition which is accounted for under the "pooling-of-interests" method of
generally accepted accounting principles, shares of Preferred Stock may be
converted at any time up to the time that the holder of shares has accepted the
Company's redemption offer pursuant to paragraph 5 (or after such offer is
rejected) and, in the case of a Change in Control that is an acquisition which
is accounted for under the "pooling-of-interests" method of generally accepted
accounting principles, such shares may be converted at any time up to the
effective time of the Change in Control. In the case of a redemption of shares
of Preferred Stock pursuant to paragraph 6, such shares may be converted at any
time up to the time of redemption. For the purposes of conversion, each share of
Preferred Stock shall be valued at the Liquidation Preference, which shall be
divided by the Conversion Price in effect on the Conversion Date to determine
the number of shares issuable upon conversion. Immediately following such
conversion, the rights of the holders of converted Preferred Stock shall cease
and the persons entitled to receive the Common Stock upon the conversion of
Preferred Stock shall be treated for all purposes as having become the owners of
such Common Stock.
(ii) To convert Preferred Stock, a holder must (A) surrender
the certificate or certificates evidencing the shares of Preferred Stock to be
converted, duly endorsed in a form satisfactory to the Company, at the office of
the Company or transfer agent for the Preferred Stock, (B) notify the Company at
such office that he elects to convert Preferred Stock and the number of shares
he wishes to convert, (C) state in writing the name or names in which he wishes
the certificate
2
<PAGE> 3
or certificates for shares of Common Stock to be issued, and (D) pay any
transfer or similar tax if required by clause (iv) below. In the event that a
holder fails to notify the Company of the number of shares of Preferred Stock
which he wishes to convert, he shall be deemed to have elected to convert all
shares represented by the certificate or certificates surrendered for
conversion. The date on which the holder satisfies all those requirements is the
"Conversion Date." As soon as practical following the Conversion Date, the
Company shall deliver a certificate representing the number of full shares of
Common Stock issuable upon the conversion, and a new certificate representing
the unconverted portion, if any, of the shares of Preferred Stock represented by
the certificate or certificates surrendered for conversion. The person in whose
name the Common Stock certificate is registered shall be treated as the
stockholder of record on and after the Conversion Date. No payment or adjustment
will be made for accrued and unpaid dividends on shares of Preferred Stock which
have been converted. The holder of record of a share of Preferred Stock at the
close of business on a record date with respect to the payment of dividends on
the Preferred Stock in accordance with paragraph 2 hereof will be entitled to
receive such dividends with respect to such share of Preferred Stock on the
corresponding dividend payment date, notwithstanding the conversion of such
share after such record date and prior to such dividend payment date. If a
holder of Preferred Stock converts more than one share at a time, the number of
full shares of Common Stock issuable upon conversion shall be based on the total
Liquidation Preference of all shares of Preferred Stock converted.
(iii) The Company shall not issue any fractional shares of
Common Stock upon conversion of Preferred Stock. Instead the Company shall pay a
cash adjustment based upon the closing price of the Common Stock on the
principal securities exchange on which the Common Stock is then listed on the
Business Day prior to the Conversion Date.
(iv) If a holder converts shares of Preferred Stock, the
Company shall pay any documentary, stamp or similar issue or transfer tax due on
the issue of shares of Common Stock upon the conversion. However, the holder
shall pay any such tax that is due because the shares are issued in a name other
than the holder's name.
(v) The Company has reserved and shall continue to reserve out
of its authorized but unissued Common Stock or its Common Stock held in treasury
enough shares of Common Stock to permit the conversion of the Preferred Stock in
full. The Company further covenants that it will list and keep listed on the New
York Stock Exchange, so long as the Common Stock shall be listed on the New York
Stock Exchange, all Common Stock issuable upon conversion of the Preferred
Stock. All shares of Common Stock that may be issued upon conversion of
Preferred Stock shall be fully paid and nonassessable. The Company shall
endeavor to comply with all securities laws regulating the offer and delivery of
shares of Common Stock upon conversion of Preferred Stock.
(vi) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Common Stock, the
Conversion Price in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be reduced by multiplying such Conversion
Price by
3
<PAGE> 4
a fraction the numerator of which shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination and the denominator of which shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for the determination of the
holders entitled to such dividends and distributions. For the purposes of this
paragraph 3(vi), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company. The Company will
not pay any dividend or make any distribution on shares of Common Stock held in
the treasury of the Company.
(vii) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be reduced, and, conversely, in case
the outstanding shares of Common Stock shall each be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be increased, in either case to equal the product of the
Conversion Price in effect on such date and a fraction the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior to
such subdivision or combination, as the case may be, and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
after such subdivision or combination, as the case may be. Such reduction or
increase, as the case may be, shall become effective immediately after the
opening of business on the day following the day upon which such subdivision or
combination becomes effective.
(viii) The capital reorganization, reclassification,
conversion or exchange of Common Stock into securities, including securities
other than Common Stock (other than a reclassification, conversion or exchange
in connection with a business combination to which paragraph 3(xv) below shall
apply), shall be deemed to involve (A) a distribution of such securities other
than Common Stock to all holders of Common Stock, and (B) a subdivision or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification, conversion or exchange
into the number of shares of Common Stock outstanding immediately thereafter
(and the effective date of such reclassification, conversion or exchange shall
be deemed to be "the day upon which such subdivision becomes effective" or "the
day upon which such combination becomes effective," as the case may be, and "the
day upon which such subdivision or combination becomes effective" within the
meaning of paragraph 3(vii) above).
(ix) No adjustment in the Conversion Price need be made until
all cumulative adjustments amount to 1% or more of the Conversion Price as last
adjusted. Any adjustments that are not made shall be carried forward and taken
into account in any subsequent adjustment. Any adjustment to the Conversion
Price carried forward and not theretofore made shall be made immediately prior
to the conversion of any shares of Preferred Stock pursuant hereto.
4
<PAGE> 5
(x) For purposes of this paragraph 3, "Common Stock" includes
any stock of any class of the Company which has no preference in respect of
dividends or of amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the Company and which is not subject
to redemption by the Company. However, subject to the provisions of paragraph
3(xv) below, shares issuable on conversion of shares of Preferred Stock shall
include only shares of the class designated as Common Stock of the Company on
the Preferred Stock Issue Date or shares of any class or classes resulting from
any reclassification, conversion or exchange thereof and which have no
preferences in respect of dividends or amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the Company
and which are not subject to redemption by the Company, provided that, if at any
time there shall be more than one such resulting class, the shares of each such
class then so issuable shall be substantially in the proportion which the total
number of shares of such class resulting from all such reclassifications,
conversions or exchanges bears to the total number of shares of all such classes
resulting from all such reclassifications, conversions or exchanges.
(xi) No adjustment in the Conversion Price shall reduce the
Conversion Price below the then par value of the Common Stock.
(xii) Whenever the Conversion Price is adjusted, the Company
shall promptly mail to holders of Preferred Stock, first class, postage prepaid,
a notice of the adjustment. The Company shall file with the transfer agent for
the Preferred Stock, if any, a certificate from the Company's chief financial
officer briefly stating the facts requiring the adjustment and the manner of
computing it. In the event of any dispute thereon, the opinion of the Company's
independent public accountants, if accepted by the Board of Directors of the
Company, shall be conclusive and binding on the holders of the Preferred Stock
absent manifest error.
(xiii) Upon a determination by the Board of Directors of the
Company, the Company from time to time may reduce the Conversion Price if the
Board of Directors of the Company considers such reductions to be advisable in
order that any event treated for federal income tax purposes as a dividend of
stock or stock rights will not be taxable to the holders of Common Stock by any
amount.
(xiv) If:
(A) the Company enters an agreement to consolidate or
merge with, or transfer all or substantially all of its assets to,
another Person, and stockholders of the Company must approve the
transaction; or
(B) the Company adopts a plan of dissolution or
liquidation of the Company;
the Company shall mail to holders of the Preferred Stock, first class, postage
prepaid, a notice stating the proposed record or effective date, as the case may
be. The Company shall mail the notice at least
5
<PAGE> 6
10 days before such date. However, failure to mail the notice or any defect in
it shall not affect the validity of any transaction referred to in clause (A) or
(B) of this paragraph 3(xiv).
(xv) In the case of any
(A) consolidation or merger of the Company with or
into any other Person in which the Common Stock is converted into
securities of another Person, or the right to receive cash or assets,
(B) transaction consisting of a sale or transfer of
all or substantially all the assets of the Company in exchange for
securities of another Person, cash or assets followed by a liquidation,
or
(C) capital reorganization or reclassification,
conversion or exchange of outstanding shares of Common Stock other than
in connection with a business combination,
then, except with respect to shares of Preferred Stock that the Company shall
become obligated to purchase upon due acceptance of an offer made by the Company
pursuant to paragraph 5 or unless the Preferred Stock shall be automatically
converted into Common Stock pursuant to paragraph 5, upon consummation of such
transaction, each share of Preferred Stock shall automatically become
convertible into the kind and amount of securities, or the right to receive cash
or other assets, receivable upon the consolidation, merger, liquidation, capital
reorganization, conversion, reclassification or exchange by a holder of the
number of shares of Common Stock into which such share of Preferred Stock might
have been converted immediately prior to such consolidation, merger,
liquidation, capital reorganization, conversion, reclassification or exchange
(assuming such holder of Common Stock failed to exercise any rights of election
and received per share the kind and amount of consideration receivable per share
by a plurality of non-electing shares). Appropriate adjustment (as determined by
the Board of Directors of the Company) shall be made in the application of the
provisions herein set forth with respect to the rights and interests thereafter
of the holders of Preferred Stock, to the end that the provisions set forth
herein (including provisions with respect to changes in and other adjustment of
the Conversion Price) shall thereafter be applicable, as nearly as reasonably
may be, in relation to any shares of stock or other securities or property
thereafter deliverable upon the conversion of Preferred Stock. If this paragraph
3(xv) applies, paragraphs 3(vi), 3(vii) and 3(viii) shall be deemed not to
apply. Notwithstanding anything contained herein to the contrary, the Company
will not effect any transaction of the type referred to in clause (A), (B) or
(C) of this paragraph unless, prior to the consummation thereof, the Surviving
Person (as defined in paragraph 17) thereof, if it is not the Company, shall
assume, by written instrument mailed to each record holder of Preferred Stock,
at such holder's address as it appears on the transfer books of the Company, the
obligation to deliver to such holder such securities, cash or assets to which,
in accordance with the foregoing provisions, such holder is entitled upon
conversion. Nothing contained in this paragraph (xv) shall limit the rights of
holders of the Preferred Stock to convert the Preferred Stock in connection with
the transaction or limit the rights of holders under paragraph 5.
6
<PAGE> 7
(xvi) In any case in which this paragraph 3 shall require that
an adjustment as a result of any event becomes effective from and after a record
date, the Company may elect to defer until after the occurrence of such event
the issuance to the holder of any shares of Preferred Stock converted after such
record date and before the occurrence of such event of the additional shares of
Common Stock issuable upon such conversion over and above the shares issuable on
the basis of the Conversion Price in effect immediately prior to adjustment;
provided, however, that if such event shall not have occurred and authorization
of such event shall be rescinded by the Company, the Conversion Price shall be
recomputed immediately upon such rescission to the price that would have been in
effect had such event not been authorized, provided that such rescission is
permitted by and effective under applicable laws.
4. LIQUIDATION PREFERENCE. Upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, each holder of shares of
the Preferred Stock will be entitled to payment out of the assets of the Company
available for distribution of an amount equal to the Liquidation Preference per
share of Preferred Stock held by such holder, plus accrued and unpaid dividends,
if any, to the date fixed for liquidation, dissolution or winding-up, before any
distribution is made on any Junior Securities, including, without limitation,
Common Stock of the Company. After payment in full of the Liquidation Preference
and all accrued dividends, if any, to which holders of Preferred Stock are
entitled, such holders will not be entitled to any further participation in any
distribution of assets of the Company. If, upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the amounts payable with
respect to the Preferred Stock and all other Parity Securities are not paid in
full, the holders of the Preferred Stock and the Parity Securities will share
equally and ratably in any distribution of assets of the Company in proportion
to the full liquidation preference and accumulated and unpaid dividends, if any,
to which each is entitled. However, neither the voluntary sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with or into one or more
Persons will be deemed to be a voluntary or involuntary liquidation, dissolution
or winding-up of the Company, unless such sale, conveyance, exchange or transfer
shall be in connection with a liquidation, dissolution or winding-up of the
business of the Company.
5. REDEMPTIONS UPON A CHANGE IN CONTROL. If a Change in Control has
occurred or the Company enters into a binding agreement to effect a Change in
Control, the Company shall give prompt written notice of such Change in Control
(or a proposed Change in Control) describing in reasonable detail the material
terms and date or anticipated date of consummation thereof to each holder of
Preferred Stock, and the Company shall give each holder of Preferred Stock
prompt written notice of any material change in the terms or timing of such
transaction. In respect of an actual or proposed Change in Control that is not
an acquisition which is accounted for under the "pooling-of-interests" method of
generally accepted accounting principles, the Company shall be obligated, by
notice given at any time before the effective date of such Change in Control or
not more than 10 Business Days after the effective date of such Change in
Control, to offer to purchase within 20 Business Days after the Change in
Control all of the then outstanding Preferred Stock tendered under this
paragraph at a purchase price in cash per share equal to the Liquidation
Preference thereof plus
7
<PAGE> 8
an amount equal to 8% of the Liquidation Preference, compounded annually from
the Preferred Stock Issue Date to the purchase date (the "Call Price");
provided, however, that in the case of a merger or consolidation where the
Company is not the surviving corporation or a sale or other disposition of
substantially all of the Company's assets, such notice shall be given at least
10 Business Days before the effective date of such Change in Control and such
offer shall be to purchase concurrently with the effectiveness of such Change in
Control. The Company shall in its Change in Control redemption offer afford to
the holders of Preferred Stock at least five Business Days after the mailing or
delivery of the Change in Control redemption offer in which to accept such
redemption offer by written notice to the Company; the failure by any holder to
accept such redemption offer within such time period shall be deemed a rejection
of such redemption offer. Upon the occurrence of a Change in Control that is an
acquisition which is accounted for under the "pooling-of-interests" method of
generally accepted accounting principles, each then outstanding share of
Preferred Stock at the effective time of the Change in Control will be
automatically converted into a number of shares of Common Stock equal to 110% of
the Call Price per share of Preferred Stock divided by the closing price of a
share of Common Stock on the Business Day prior to the effective date of the
Change in Control. Notwithstanding anything to the contrary herein, offers by
the Company under this paragraph 5 shall comply with all procedural and other
requirements of federal and state securities laws then in effect, but no such
provisions of such securities laws shall negate the obligation of the Company to
purchase shares of the Preferred Stock under this paragraph 5 which are validly
tendered and not withdrawn at the price set forth herein.
"Change in Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), is or becomes the "beneficial owner" (as defined
in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of
more than 50% of the total voting capital stock of the Company; except that, in
the event that James L. Kirk, H. Wayne Huizenga, H. Family Investments, Inc. or
any holder of Preferred Stock or any Affiliate of such holder, either
individually or as part of a group shall become the beneficial owner of more
than 50% of the total voting capital stock of the Company, then such event shall
not constitute a Change in Control hereunder, unless, in the case of James L.
Kirk, H. Wayne Huizenga and H. Family Investments, Inc., the effect of such
event is that the Common Stock of the Company shall no longer be listed on a
national securities exchange or quoted on NASDAQ or another national securities
association, or (b) any Person consolidates with, or merges with or into, the
Company, or the Company consolidates with, or merges with or into, another
Person (other than a wholly-owned subsidiary of the Company) or sells, assigns,
conveys, transfers, leases or otherwise disposes of all or substantially all of
its assets to any Person, in any such event in a transaction in which the
outstanding voting capital stock of the Company is converted into or exchanged
for cash, securities or other property, provided that following any transaction
described in this subpart (b) the holders of voting stock of the Company
immediately prior to such transaction do not own more than 50% of the voting
power of the voting stock of the Person surviving such transaction or to which
such assets are transferred.
8
<PAGE> 9
6. REDEMPTION AT THE OPTION OF THE COMPANY. At any time after the first
anniversary of the Preferred Stock Issue Date, the Company may, at its election,
redeem, in whole but not in part, the shares of the then outstanding Preferred
Stock at a purchase price in cash per share equal to $14.00 compounded annually
at the rate of 20% per annum for the period from the first anniversary of the
Preferred Stock Issue Date up to and including the date of redemption. The
Company will mail or cause to be delivered to each holder of the Preferred Stock
a written notice of the Company's election to redeem shares of Preferred Stock
not less than thirty (30) days prior to the date set for the redemption. The
notice will state (i) the total number of shares of the Preferred Stock being
redeemed; (ii) the number of shares of the Preferred Stock held by the holder
that the Company intends to redeem; (iii) the aggregate purchase price for the
shares of Preferred Stock being redeemed; (iv) the redemption date; and (v) that
the holder is to surrender to the Company, at the office of the Company or the
transfer agent for the Preferred Stock, the certificate or certificates
representing the Preferred Stock to be redeemed. Such notice shall be
accompanied by a representation by the Company to the effect that the
consummation of the redemption will not render the Company insolvent or unable
to pay its debts as they become due, as well as an opinion of counsel to the
Company in form and substance reasonably satisfactory to the holders of the
Preferred Stock to the effect that the consummation of the redemption will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default (or an event that with the giving of
notice or the lapse of time or both would constitute a default) under, or give
rise to a right of termination, amendment, cancellation or acceleration of any
right or obligation of the Company or any of its subsidiaries under, or give
rise to a loss of any material benefit to which the Company or any of its
subsidiaries is entitled under, or require any consent, approval or
authorization under, any indenture, credit agreement or other material agreement
to which the Company or any of the subsidiaries is a party or by which any of
them are bound or to which any of their property is subject, or give the holder
of any note, debenture or other evidence of indebtedness the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any of its subsidiaries. As soon as practical following the
redemption date and receipt of the certificate or certificates representing the
shares of Preferred Stock so redeemed, the Company shall deliver to the holder
the aggregate price payable in respect of the redeemed shares and a new
certificate representing the unredeemed portion of the shares, if any. At the
effective date of the redemption the redeemed shares shall no longer be deemed
outstanding shares of Preferred Stock for any purpose and shall thereafter only
be deemed to entitle the holder to receive the redemption price upon surrender
of the certificates formerly representing such shares of Preferred Stock.
7. VOTING RIGHTS.
(i) The holders of Preferred Stock shall be entitled to notice
of all stockholders meetings in accordance with the Company's bylaws and the
Delaware General Corporation Law (the "DGCL"), and except as set forth in
paragraphs 7(ii) and (iii) below and as otherwise required by applicable law,
the holders of the Preferred Stock shall be entitled to vote (or act by written
consent) on all matters submitted to the stockholders for a vote (or for
action), voting together with the holders of the Common Stock as a single class,
with each share of Common Stock entitled to one vote per share and each share of
Preferred Stock entitled to one vote for each share of Common
9
<PAGE> 10
Stock issuable upon conversion of the Preferred Stock as of the record date for
such vote (or action) or, if no record date is specified, as of the date of such
vote (or action).
(ii) In the election of directors of the Company, the holders
of the Preferred Stock, voting separately as a single class to the exclusion of
all other classes or series of the Company's capital stock and with each share
of Preferred Stock entitled to one vote, shall be entitled to elect (i) two
members of the Company's Board of Directors; provided that on the record date
for such vote, Investcorp S.A. ("Investcorp") and its Affiliates have voting and
dispositive power with respect to at least 66,666 shares of Preferred Stock or
(ii) one member of the Company's Board of Directors, provided that on the record
date for such vote, Investcorp and its Affiliates have voting and dispositive
power with respect to at least 33,333 shares of Preferred Stock; provided,
however, that nothing herein shall be construed as a limitation on the right of
the Board of Directors of the Company to increase the size of the Board of
Directors. If on the record date relating to a meeting of stockholders for the
election of directors, Investcorp and its Affiliates fail to have voting and
dispositive power with respect to at least 33,333 shares of Preferred Stock, the
holders of Preferred Stock shall only be entitled to vote for the election of
directors on the basis set forth in paragraph 7(i). A person may be a director
nominee or a successor director nominee of the holders of Preferred Stock only
if he or she is acceptable to the Company, provided that the Company's
acceptance shall not be unreasonably withheld.
(iii) In addition to any other vote required by law, the
affirmative vote or consent of the holders of at least a majority of the shares
of Preferred Stock then outstanding voting or consenting as the case may be, as
one class, shall be required to:
(A) authorize, create (by way of reclassification or
otherwise) or issue any Senior Securities or any obligation or security
convertible or exchangeable into or evidencing the right to purchase,
shares of any class or series of Senior Securities;
(B) amend or otherwise alter the Certificate of
Designation setting forth this resolution or the Certificate of
Incorporation in any manner that under the Delaware General Corporation
Law requires the prior vote as a separate class of the holders of
Preferred Stock;
(C) waive compliance with any provision of this
Certificate of Designation; or
(D) make repurchases of, optional redemptions of
and/or tender offers for, the capital stock of the Company, the
aggregate fair market value of which exceeds 5% of the Company's market
capitalization (determined as provided below) during any 12-month
period that occurs in whole or in part during the first five years
after the Preferred Stock Issue Date. For purposes of this clause (D),
the Company's market capitalization shall be the product of the
then-current market price per share of the Common Stock (determined as
provided below) times the sum of the aggregate number of shares of
Common Stock then outstanding.
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<PAGE> 11
For purposes of this clause (D), the current market price per share of
Common Stock on any day shall be deemed to be the average of the
closing prices of the Common Stock on the principal securities exchange
on which the Common Stock is then traded for the 20 consecutive Trading
Days ending the day before the day in question.
(E) authorize an amendment (including, but not
limited to, an amendment resulting from a merger or consolidation
unless it constitutes a Change in Control under paragraph 5) or waiver
of the Company's Certificate of Incorporation or of the Certificate of
Designation setting forth this resolution which would:
(1) alter the voting rights with respect to the
Preferred Stock or reduce the number of
shares of Preferred Stock whose holders must
consent to an amendment, supplement or
waiver;
(2) reduce the Liquidation Preference or alter
the provisions with respect to the
redemption of the Preferred Stock;
(3) alter in any manner the conversion rights of
the holders of Preferred Stock set forth in
paragraph 3 hereof;
(4) reduce the rate of or change the time for
payment of dividends on any share of
Preferred Stock;
(5) waive the consequences of any failure to pay
dividends on the Preferred Stock;
(6) make any share of Preferred Stock payable in
any form other than that stated in the
Certificate of Designation setting forth
this resolution;
(7) make any change in the provisions of the
Certificate of Designation setting forth
this resolution relating to waivers of the
rights of holders of Preferred Stock to
receive the Liquidation Preference and
dividends on the Preferred Stock;
(8) waive a redemption payment with respect to
any share of Preferred Stock; or
(9) make any change in the foregoing amendment
and waiver provisions.
(iv) Notwithstanding any other provision hereof, the Company
in its sole discretion may in accordance with the provisions of applicable law
11
<PAGE> 12
without the vote or consent of any holders of the Preferred Stock amend or
supplement this Certificate of Designation:
(A) to cure any ambiguity, defect or inconsistency in
any manner that does not adversely affect the holders of Preferred
Stock;
(B) to provide for uncertificated Preferred Stock in
addition to or in place of certificated Preferred Stock; or
(C) to make any change that would provide any
additional rights or benefits to the holders of the Preferred Stock or
that does not adversely affect the rights under this Certificate of
Designation of any such holder.
8. MERGER, CONSOLIDATION AND SALE OF ASSETS. Except for transactions
which pursuant to paragraph 5 constitute a Change in Control, without the vote
or consent of the holders of a majority of the then outstanding shares of
Preferred Stock, the Company may not consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its assets to, any person unless, if the Company is not the Surviving Person,
the Preferred Stock is converted into or exchanged for and becomes shares of
such Surviving Person, having in respect of such Surviving Person the same (or
more favorable) powers, preferences and relative, participating, optional or
other special rights thereof that the Preferred Stock had immediately prior to
such transaction. The Surviving Person of such transaction shall thereafter be
deemed to be the "Company" for all purposes of this Certificate of Designation.
9. REPORTS. Provided the holders of the Preferred Stock are then
entitled under the Certificate of Designation setting forth this resolution to
elect as a class at least one member of the Company's Board of Directors
pursuant to paragraph 7(ii) then, (a) the Company will, within three Business
Days after their filing with the Commission, deliver to the holders of the
Preferred Stock all documents filed by it with the Commission pursuant to the
Securities Act or the Exchange Act, including exhibits thereto; and (b) promptly
upon receipt thereof, copies of all final reports submitted to the Company or
any of its subsidiaries by independent certified public accountants in
connection with each annual, interim or special audit of the books of the
Company made by such accountants, including, without limitation, any final
comment letter submitted by such accountants to management in connection with
their annual audit. The Company will also deliver to such holders, promptly upon
their becoming available, copies of all financial statements, reports, notices
and proxy statements sent or made available generally by the Company to its
security holders in their capacity as such or by any subsidiary of the Company
to the Company's security holders.
10. AMENDMENT. Except as specifically set forth herein, amendments to
the Certificate of Designation setting forth this resolution may be made by the
Company with the consent of the holders of a majority of the outstanding shares
of Preferred Stock and any other approvals required by Delaware law.
11. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by
law, the shares of Preferred Stock shall not have any voting powers, preferences
and relative, participating, optional or other special rights, other than those
specifically set forth in this resolution (as such resolution may
12
<PAGE> 13
be amended from time to time) and in the Certificate of Incorporation. Except as
provided in paragraph 12, the shares of Preferred Stock shall have no preemptive
or subscription rights.
12. PREEMPTIVE RIGHTS. Provided holders of Preferred Stock are entitled
under the Certificate of Designation setting forth this resolution to elect as a
class at least one member of the Company's Board of Directors pursuant to
paragraph 7(ii), then the holders of Preferred Stock shall have preemptive
rights to purchase or subscribe to purchase any capital stock of the Company, or
any obligation or security convertible or exchangeable into or evidencing the
right to purchase any capital stock of the Company, offered from time to time by
the Company for cash in a public offering or private placement (other than any
shares of capital stock of the Company, or any obligation or security
convertible or exchangeable into or evidencing the right to purchase any capital
stock of the Company, including shares of capital stock of the Company issuable
upon conversion or exchange of any such right or obligation, issued or issuable
as consideration in a business combination or as compensation to an employee,
consultant or otherwise). In any case in which the rights of the holders of the
Preferred Stock under this paragraph 12 are applicable, the Company shall submit
a written offer to each holder of Preferred Stock identifying the stock,
obligations or securities proposed to be sold, the terms of the proposed sale
including but not limited to the price or the basis upon which the price is to
be calculated (provided that, in connection with any proposed sale intended to
be substantially at market price, the sales price disclosed can be substantially
at market) and, to the extent practicable under the circumstances, the identity
of the buyer or buyers, and offering to such holder the opportunity to purchase
its proportionate share of such securities on terms and conditions, including
price, not less favorable to the holder than those on which the Company proposes
to sell such securities to any other purchaser. Each holder shall have the right
to purchase its proportionate share of such securities based on the ratio which
the Common Stock of the Company owned by or issuable to such holder upon
conversion of any Preferred Stock that it owns bears to all the issued and
outstanding shares of Common Stock of the Company. Any holder may transfer its
right to be offered any such opportunity to any transferee that is an Affiliate
of such holder, a holder of Preferred Stock or an Affiliate of a holder of
Preferred Stock. The Company's offer to the holders of Preferred Stock shall
remain open and irrevocable for 5 Business Days. Any shares so offered to the
holders which they do not elect to purchase pursuant to such offer may be sold
by the Company in accordance with the terms of the proposed offering at any time
within 180 days following the date of such offer, but may not be sold after such
180 day period without renewed compliance with this paragraph 12.
13. HEADINGS OF SUBDIVISIONS. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
14. SEVERABILITY OF PROVISIONS. If any voting or other powers,
preferences and relative, participating, optional and other special rights of
the Preferred Stock and qualifications, limitations and restrictions thereof set
forth in the Certificate of Designation setting forth this resolution (as such
Certificate of Designation setting forth this resolution may be amended from
time to time) is invalid, unlawful or incapable of being enforced by reason of
any rule of law or public policy, all other voting or other powers, preferences
and relative, participating, optional and other special rights of Preferred
13
<PAGE> 14
Stock and qualifications, limitations and restrictions thereof set forth in the
Certificate of Designation setting forth this resolution (as so amended) which
can be given effect without the invalid, unlawful or unenforceable voting or
other powers, preferences and relative, participating, optional or other special
rights of Preferred Stock and qualifications, limitations and restrictions
thereof shall, nevertheless, remain in full force and effect and no voting or
other powers, preferences and relative, participating, optional or other special
rights of Preferred Stock and qualifications, limitations and restrictions
thereof herein set forth shall be deemed dependent upon any other such voting or
other powers, preferences and relative, participating, optional or other special
rights of Preferred Stock and qualifications, limitations and restrictions
thereof unless so expressed herein.
15. RE-ISSUANCE OF PREFERRED STOCK. Shares of Preferred Stock that have
been issued and reacquired in any manner, including shares purchased or redeemed
or exchanged or converted, shall (upon compliance with any applicable provisions
of the laws of Delaware) have the status of authorized but unissued shares of
preferred stock of the Company undesignated as to series and may be designated
or re-designated and issued or reissued, as the case may be, as part of any
series of preferred stock of the Company, provided that any issuance of such
shares as Preferred Stock must be in compliance with the terms hereof.
16. MUTILATED OR MISSING PREFERRED STOCK CERTIFICATES. If any of the
Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the
Company shall issue, in exchange and in substitution for and upon cancellation
of the mutilated Preferred Stock certificate, or in lieu of and substitution for
the Preferred Stock certificate lost, stolen or destroyed, a new Preferred Stock
certificate of like tenor and representing an equivalent amount of shares of
Preferred Stock, but only upon receipt of evidence of such loss, theft or
destruction of such Preferred Stock certificate and indemnity, if requested,
satisfactory to the Company and the transfer agent (if other than the Company).
17. CERTAIN DEFINITIONS. As used in the Certificate of Designation
setting forth this resolution, the following terms shall have the following
meanings (with terms defined in the singular having comparable meanings when
used in the plural and vice versa), unless the context otherwise requires:
"Affiliate" shall have the meaning attributed thereto under Rule 12b-2
under the Securities Exchange Act of 1934, as amended.
"Business Day" means any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
"closing price" shall mean the closing price of a share of Common
Stock, as reported in the Wall Street Journal, on the New York Stock Exchange or
other national securities exchange or other national quotation system on which
the Common Stock is then traded or quoted.
14
<PAGE> 15
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company as presently constituted.
"Conversion Price" shall initially mean $7.00 per share and thereafter
shall be subject to adjustment from time to time pursuant to the terms of
paragraph 3 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any Agency or political subdivision thereof or any other entity.
"Preferred Stock Issue Date" means the date on which the Preferred
Stock is originally issued by the Company under the Certificate of Designation
setting forth this resolution.
"Surviving Person" shall mean the continuing or surviving Person of a
merger, consolidation or other corporate combination, the Person receiving a
transfer of all or substantially all of the assets of the Company, or the Person
consolidating with or merging into the Company in a merger, consolidation or
other corporate combination in which the Company is the continuing or surviving
Person, in connection with which the Common Stock of the Company is exchanged,
converted or reinstated into the securities of any other Person or cash or any
other property; provided, however, if such Surviving Person is a direct or
indirect subsidiary of a Person, the parent entity also shall be deemed to be a
Surviving Person.
"Trading Day" means any day on which the New York Stock Exchange or
other applicable stock exchange or market is open for business.
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed by James L. Kirk, Chairman of the Board and Chief Executive Officer of
the Company, this July 20, 1999.
NATIONSRENT, INC.
By: /s/ James L. Kirk
-------------------------------
James L. Kirk
Chairman of the Board and Chief
Executive Officer
15
<PAGE> 1
EXHIBIT 4.6
FOURTH AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
Dated as of July 20, 1999
by and among
NATIONSRENT, INC.
AND THE RESTRICTED SUBSIDIARIES PARTY HERETO
(the "Borrowers"),
BANKBOSTON, N.A.,
AS ADMINISTRATIVE AGENT,
BANKERS TRUST COMPANY,
AS SYNDICATION AGENT,
AND
THE LENDING INSTITUTIONS PARTY HERETO
(the "Lenders")
WITH
BANCBOSTON ROBERTSON STEPHENS INC. AND DEUTSCHE BANK SECURITIES
INC., AS CO-LEAD ARRANGERS AND JOINT BOOK RUNNERS (THE "CO-ARRANGERS")
<PAGE> 2
TABLE OF CONTENTS
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Section 1. DEFINITIONS AND RULES OF INTERPRETATION.............................................................. 1
Section 1.1. Definitions......................................................................... 1
Section 1.2. Rules of Interpretation..............................................................17
Section 2. THE REVOLVING CREDIT FACILITY.........................................................................18
Section 2.1. Commitment to Lend...................................................................18
Section 2.2. Reduction of Total Commitment........................................................19
Section 2.3. The Revolving Credit Notes...........................................................19
Section 2.4. Interest on Revolving Credit Loans and Swing Line Loans..............................19
Section 2.5. Election of Eurodollar Rate; Notice of Election; Interest
Periods; Minimum Amounts.............................................................20
Section 2.6. Requests for Revolving Credit Loans and Swing Line Loans.............................20
Section 2.7. Funds for Revolving Credit Loans.....................................................21
Section 2.8. Swing Line Loans; Settlements........................................................22
Section 2.9. Maturity of the Revolving Credit Loans...............................................24
Section 2.10. Mandatory Repayments of the Revolving Credit Loans and Swing Line Loans and
Reimbursement Obligations............................................................24
Section 2.11. Optional Prepayments of Revolving Credit Loans and Swing Line Loans..................25
Section 3. LETTERS OF CREDIT.....................................................................................25
Section 3.1. Letter of Credit Commitments.........................................................25
Section 3.2. Reimbursement Obligation of the Borrowers............................................26
Section 3.3. Letter of Credit Payments............................................................27
Section 3.4. Obligations Absolute.................................................................27
Section 3.5. Reliance by Issuing Bank.............................................................28
Section 4. THE TERM LOAN.........................................................................................28
Section 4.1. Commitment to Lend...................................................................28
Section 4.2. The Term Notes.......................................................................28
Section 4.3. Schedule of Installment Payments of Principal of Term Loan...........................29
Section 4.4. Mandatory Prepayments of Term Loan...................................................29
Section 4.4.1. Prepayment of Subordinated Debt......................................29
Section 4.4.2. Prepayment of Term Loan with Proceeds of Subordinated
Debt Offering........................................................29
Section 4.4.3. Payment Provisions...................................................29
Section 4.5. Optional Prepayment of Term Loan.....................................................29
Section 4.6. Interest on Term Loan................................................................30
Section 4.6.1. Interest Rates.......................................................30
Section 4.6.2. Notification by Borrowers............................................30
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Section 4.6.3. Amounts, etc.........................................................30
Section 5. CERTAIN GENERAL PROVISIONS............................................................................30
Section 5.1. Fees.................................................................................30
Section 5.2. Payments.............................................................................31
Section 5.3. Computations.........................................................................33
Section 5.4. Capital Adequacy.....................................................................33
Section 5.5. Certificate..........................................................................33
Section 5.6. Interest After Default...............................................................33
Section 5.7. Interest Limitation..................................................................34
Section 5.8. Eurodollar Indemnity.................................................................34
Section 5.9. Illegality; Inability to Determine Eurodollar Rate...................................34
Section 5.10. Additional Costs, Etc................................................................35
Section 5.11. Replacement of Lenders...............................................................36
Section 5.12. Concerning Joint and Several Liability of the Borrowers..............................37
Section 5.13. Reasonable Efforts to Mitigate.......................................................39
Section 6. REPRESENTATIONS AND WARRANTIES........................................................................40
Section 6.1. Corporate Authority..................................................................40
Section 6.2. Governmental Approvals...............................................................40
Section 6.3. Title to Properties; Leases..........................................................41
Section 6.4. Financial Statements; Solvency.......................................................41
Section 6.5. No Material Changes, Etc.............................................................41
Section 6.6. Permits, Franchises, Patents, Copyrights, Etc........................................41
Section 6.7. Litigation...........................................................................41
Section 6.8. No Materially Adverse Contracts, Etc.................................................42
Section 6.9. Compliance With Other Instruments, Laws, Etc.........................................42
Section 6.10. TaxStatus............................................................................42
Section 6.11. No Event of Default..................................................................42
Section 6.12. Holding Company and Investment Company Acts..........................................42
Section 6.13. Absence of Financing Statements, Etc.................................................42
Section 6.14. Employee Benefit Plans...............................................................43
Section 6.15. Use of Proceeds......................................................................44
Section 6.15.1. General.............................................................44
Section 6.15.2. Regulations U and X.................................................44
Section 6.15.3. Ineligible Securities...............................................44
Section 6.16. Environmental Compliance.............................................................44
Section 6.17. Perfection of Security Interests.....................................................45
Section 6.18. Transactions with Affiliates.........................................................45
Section 6.19. Subsidiaries.........................................................................46
Section 6.20. True Copies of Charter and Other Documents...........................................46
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Section 6.21. Disclosure...........................................................................46
Section 6.22. Capitalization.......................................................................46
Section 6.23. Year 2000 Compliance.................................................................47
Section 6.24. Subordinated Debt....................................................................47
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWERS................................................................47
Section 7.1. Punctual Payment.....................................................................47
Section 7.2. Maintenance of Offices...............................................................47
Section 7.3. Records and Accounts.................................................................47
Section 7.4. Financial Statements,Certificates and Information....................................47
Section 7.5. Corporate Existence and Conduct of BusineSection ....................................48
Section 7.6. Maintenance of Properties............................................................49
Section 7.7. Insurance............................................................................49
Section 7.8. Taxes................................................................................49
Section 7.9. Inspection of Properties, Books, and Contracts.......................................49
Section 7.10. Compliance with Laws, Contracts, Licenses and Permits; Maintenance of
Material Licenses and Permits........................................................50
Section 7.11. Environmental Indemnification........................................................51
Section 7.12. Further Assurances...................................................................51
Section 7.13. Notice of Potential Claims or Litigation.............................................51
Section 7.14. Notice of Certain Events Concerning Insurance and Environmental Claims...............51
Section 7.15. Notice of Default....................................................................52
Section 7.16. New Subsidiaries.....................................................................52
Section 7.17. Employee Benefit Plans...............................................................53
Section 7.18. Use of Proceeds......................................................................53
Section 7.19. Title and Registration...............................................................53
Section 7.20. Interest Rate Protection.............................................................53
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS...........................................................54
Section 8.1. Restrictions on IndebtedneSection ...................................................54
Section 8.2. Restrictions on Liens................................................................55
Section 8.3. Restrictions on Investments..........................................................57
Section 8.4. Merger, Consolidation and Disposition of Assets......................................58
Section 8.4.1. Mergers and Acquisitions.............................................58
Section 8.4.2. Disposition of Assets................................................60
Section 8.5. Sale and Leaseback...................................................................60
Section 8.6. Restricted Distributions and Redemptions.............................................61
Section 8.7. Employee Benefit Plans...............................................................61
Section 8.8. Negative Pledges.....................................................................61
Section 8.9. Business Activities..................................................................61
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Section 8.10. Transactions with Affiliates.........................................................61
Section 8.11. Subordinated Debt....................................................................62
Section 8.12. FiscalYear...........................................................................62
Section 9. FINANCIAL COVENANTS...................................................................................62
Section 9.1. Leverage Ratio.......................................................................62
Section 9.2. Senior Funded Debt to EBITDA.........................................................63
Section 9.3. Interest Coverage Ratio..............................................................63
Section 9.4. SeniorDebt to Tangible Assets........................................................63
Section 9.5. Consolidated Net Worth...............................................................63
Section 9.6. Capital Expenditures.................................................................63
Section 10. CLOSING CONDITIONS...................................................................................64
Section 10.1. LOAN DOCUMENTS, ETC.................................................................64
SEction 10.2. Corporate Action....................................................................64
Section 10.3. Certificate of Secretary; Good Standing Certificates................................64
Section 10.4. Validity of Liens...................................................................65
Section 10.5. Perfection Certificates and Search Results..........................................65
Section 10.6. Certificates of Insurance...........................................................65
Section 10.7. Legal Opinions......................................................................65
Section 10.8. Payment of Fees.....................................................................65
Section 10.9. Closing Certificate.................................................................65
Section 10.10. Consents............................................................................65
Section 10.11. Subordinated Debt Documents.........................................................66
Section 10.12. Subordinated Debt Offering..........................................................66
Section 10.13. Compliance Certificate..............................................................66
Section 10.14. Material Adverse Changes............................................................66
Section 10.15. Solvency Certificate................................................................66
Section 11. CONDITIONS OF ALL LOANS..............................................................................66
Section 11.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT...........................................66
Section 11.2. PERFORMANCE; NO EVENT OF DEFAULT....................................................66
Section 11.3. NO LEGAL IMPEDIMENT.................................................................67
Section 11.4. GOVERNMENTAL REGULATION.............................................................67
Section 11.5. PROCEEDINGS AND DOCUMENTS...........................................................67
Section 12. COLLATERAL SECURITY..................................................................................67
Section 13. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT...........................................67
Section 13.1. EVENTS OF DEFAUlT AND ACCELERATION...................................................67
Section 13.2. TERMINATION OF COMMITMENTS...........................................................70
Section 13.3. REMEDIES.............................................................................71
Section 13.4. DISTRIBUTION OF COLLATERAL PROCEEdS..................................................71
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Section 14. SETOFF...............................................................................................72
Section 15. THE ADMINISTRATIVE AGENT.............................................................................72
Section 15.1. AUTHORIZATION........................................................................72
Section 15.2. EMPLOYEES AND AGENTS.................................................................73
Section 15.3. NO LIABILITY.........................................................................73
Section 15.4. NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND OTHER LENDERS...........................73
Section 15.5. NO REPRESENTATIONS...................................................................74
Section 15.5.1. GENERal.............................................................74
Section 15.5.2. CLOSING DOCUMENTATION, ETC..........................................74
Section 15.6. PAYMENTS.............................................................................74
Section 15.6.1. PAYMENTS TO ADMINISTRATIVE AGENT....................................74
Section 15.6.2. DISTRIBUTION BY ADMINISTRATIVE AGENT................................75
Section 15.6.3. DELINQUENT LENDERS..................................................75
Section 15.7. HOLDERS OF NOTES, ETC................................................................76
Section 15.8. INDEMNITY............................................................................76
Section 15.9. ADMINISTRATIVE AGENT AS LENDER.......................................................76
Section 15.10. RESIGNATION..........................................................................76
Section 15.11. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT.......................................76
Section 15.12. DUTIES IN THE CASE OF ENFORCEMENT....................................................76
Section 15.13. DUTIES OF SYNDICATION AGENT..........................................................77
Section 16. EXPENSES AND INDEMNIFICATION........................................................................77
Section 16.1. EXPENSES.............................................................................77
Section 16.2. INDEMNIFICATION......................................................................78
Section 16.3. SURVIVAL.............................................................................78
Section 17. SURVIVAL OF COVENANTS, ETC..........................................................................78
Section 18. ASSIGNMENT AND PARTICIPATION........................................................................78
Section 18.1. CONDITIONS TO ASSIGNMENT BY LENDERS..................................................79
Section 18.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS.......................79
Section 18.3. REGISTER.............................................................................80
Section 18.4. NEW NOTES............................................................................81
Section 18.5. PARTICIPATIONS.......................................................................81
Section 18.6. DISCLOSURE...........................................................................81
Section 18.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH A BORROWER...................................81
Section 18.8. MISCELLANEOUS ASSIGNMENT PROVISIONS..................................................82
Section 18.9. ASSIGNMENT BY BORROWERS..............................................................82
Section 19. PARTIES IN INTEREST.................................................................................82
Section 20. NOTICES, ETC........................................................................................82
Section 21. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.......................................................83
Section 21.1. SHARING OF INFORMATION WITH SECTION 20 SUBSIDIARY....................................83
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Section 21.2. CONFIDENTIALITY......................................................................83
Section 21.3. PRIOR NOTIFICATION...................................................................84
Section 21.4. OTHER................................................................................84
Section 22. MISCELLANEOUS.......................................................................................84
Section 23. ENTIRE AGREEMENT, ETC...............................................................................84
Section 24. WAIVER OF JURY TRIAL................................................................................84
Section 25. GOVERNING LAW; SUBMISSION TO JURISDICTION...........................................................85
Section 26. SEVERABILITY........................................................................................85
Section 27. CONSENTS, AMENDMENTS, WAIVERS, ETC..................................................................85
Section 28. PARI PASSU TREATMENT................................................................................86
Section 29. TRANSITIONAL ARRANGEMENTS...........................................................................87
Section 29.1. PRIOR CREDIT AGREEMENT SUPERSEDED.....................................................87
Section 29.2. RETURN AND SUBSTITUTION OF NOTES......................................................87
Section 29.3. REFERENCE TO AGENT....................................................................88
Section 29.4. INTEREST AND FEES UNDER SUPERSEDED AGREEMENT .........................................88
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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 Seller Notes
Schedule 1 Lenders; Addresses; Commitment Percentages
Schedule 2 Restricted Subsidiaries
Schedule 3 Unrestricted Subsidiaries
Schedule 3.1(d) Letters of Credit Outstanding
Schedule 4 Subordinated Seller Notes
Schedule 6.7 Litigation
Schedule 6.14 Employee Benefit Plans
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> 9
FOURTH AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This FOURTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN
AGREEMENT is made as of July 20, 1999 (the "Credit Agreement"), by and among (a)
NATIONSRENT, INC., a Delaware corporation (the "Parent"), and the Restricted
Subsidiaries party hereto (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"), and the other lending institutions which become
parties hereto (collectively, the "Lenders"), (c) BANKBOSTON, N.A., as
administrative agent for the Lenders (the "Administrative Agent"), and (d)
BANKERS TRUST COMPANY, as syndication agent for the Lenders (the "Syndication
Agent", and collectively with the Administrative Agent, the "Agents").
WHEREAS, pursuant to that certain Third Amended and Restated Revolving
Credit and Term Loan Agreement, dated as of February 11, 1999, as amended by the
First Amendment to Third Amended and Restated Credit Agreement, dated as of
March 24, 1999 (as amended, the "Prior Credit Agreement"), BKB has acted as
administrative agent thereunder, certain of the Term Loan Lenders have made a
term loan and certain of the Revolving Credit Lenders have made revolving credit
loans and otherwise extended credit to the Borrowers for the purposes 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
replace certain prior lenders, to provide additional financing and to make
certain other changes to the terms and provisions of the Prior Credit Agreement;
NOW THEREFORE, the Borrowers, the Lenders party hereto 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.
SS.1. DEFINITIONS AND RULES OF INTERPRETATION.
SS.1.1. DEFINITIONS. The following terms shall have the meanings set
forth in this ss.1 or elsewhere in the provisions of this Credit Agreement
referred to below:
ACCOUNTANTS. Arthur Andersen, LLP, or any other independent accounting
firm of national standing, or in connection with acquisitions permitted by
ss.8.4 hereof, regional accounting firms reasonably acceptable to the
Administrative Agent.
ACQUIRED BUSINESS. See the definition of Consolidated Earnings Before
Interest and Taxes or EBIT.
ACQUIRED SUBSIDIARY. See ss.8.1(d).
ADJUSTMENT DATE. The first day of the month immediately following the
month in which a Compliance Certificate is to be delivered by the Borrowers
pursuant to ss.7.4(c),
<PAGE> 10
provided, however, notwithstanding the foregoing, the first Adjustment Date
shall be six (6) months following the Closing Date.
ADMINISTRATIVE AGENT. See Preamble.
AFFECTED LENDER. See ss.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 SEC,
as in effect on the date hereof if such Borrower were issuing securities.
AGENTS. Collectively, the Administrative Agent and the Syndication
Agent.
APPLICABLE BASE RATE MARGIN. The applicable margin with respect to
Loans made at the Base Rate as set forth in the Pricing Table.
APPLICABLE COMMITMENT RATE. The applicable rate with respect to the
Commitment Fee as set forth in the Pricing Table.
APPLICABLE LAWS. See ss.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 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.
ASSIGNMENT AND ACCEPTANCE. See ss.18.
BALANCE SHEET DATE. December 31, 1998.
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-half of one percent (0.5%) 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.
BASKET LIENS. Permitted Liens under ss.ss.8.2(f).
BKB. See Preamble.
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BORROWERS. The Parent and any Restricted Subsidiary of the Parent which
as of the date of determination, is a party to this Credit Agreement or,
pursuant to ss.7.16 hereof, is required to be a party to this Credit Agreement.
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 business.
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 ss.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 ss.7.4(b).
CLOSING DATE. The date on which the conditions precedent set forth in
ss.10 are satisfied.
CO-ARRANGERS. BancBoston Robertson Stephens Inc. and Deutsche Bank
Securities Inc.
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 by the Total
Commitment specified in ss.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.
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COMMITMENT FEE. See ss.5.1(a).
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 ss.18) as such Revolving Credit Lender's percentage of the Total
Commitment.
COMPLIANCE CERTIFICATE. See ss.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, (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, (c) Merger Charges, as
applicable, (d) EBIT of the businesses acquired by the Parent or any of its
Restricted Subsidiaries (through asset purchases or otherwise) other than
Unrestricted Subsidiaries (each an "Acquired Business") or the Restricted
Subsidiaries acquired or formed during such period other than Unrestricted
Subsidiaries (each a "New Subsidiary") PROVIDED THAT (i) the financial
statements of such Acquired Businesses or New Subsidiaries have been audited for
the most recent fiscal year ended of such Acquired Businesses or New
Subsidiaries, or (ii) the Administrative Agent consents to such inclusion after
being furnished with other acceptable financial statements, and, in each case, a
Compliance Certificate and other reasonably appropriate documentation, in form
and substance reasonably satisfactory to the Administrative Agent, with respect
to the historical operating results and balance sheet of such Acquired
Businesses or New Subsidiaries (which information to the knowledge of the CFO is
correct in all material respects) are provided to the Administrative Agent, (e)
PRO FORMA expense and cost reductions (i) calculated on a basis consistent with
Regulation S-X promulgated under the Securities Act incurred in connection with
any merger, consolidation or acquisition permitted under ss.9.4.1 or the Prior
Credit Agreement as if such merger, consolidation or acquisition had been
consummated on the first day of the applicable period, as determined in good
faith by the CFO based on reasonable assumptions, and (ii) such other expenses
and cost reductions approved by the Administrative Agent, and (f) actual cash
dividends received from Unrestricted Subsidiaries during such period on or prior
to the date of determination of EBIT, all without duplication.
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 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 Acquired Businesses and New Subsidiaries (plus adjustments 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.
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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. The net book value of all accounts
receivable, inventory, Rental Equipment, other property, plants and equipment
(including titled equipment) of the Borrowers in which the Administrative Agent
for the benefit of the Lenders and the Administrative Agent has a first priority
perfected security interest (other than in Real Property and titled equipment
unless required by ss.7.19), and which in any case are subject to no other
liens, encumbrances, restrictions (including restrictions otherwise permitted
under ss.8.8) or other security interests of any kind (other than Permitted
Liens which are not Basket Liens), 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 calculated and reported pursuant to GAAP, whether 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 (all without duplication).
CONSOLIDATED TOTAL LIABILITIES. All liabilities of the Borrowers
determined on a consolidated basis in accordance with GAAP and classified as
such on the consolidated balance sheet of the Borrowers, PLUS (without
duplication) Indebtedness with respect to Synthetic Leases and Permitted
Receivables Transactions, calculated in the manner set forth in the definition
of "Indebtedness."
CREDIT AGREEMENT. This Fourth 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 ss.13.
DELINQUENT LENDER. See ss.15.6.3.
DISPOSAL (or DISPOSED). See definition of Release.
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<PAGE> 14
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 (but only to the extent of
consideration paid by such Person in exchange for such 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.
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
ss.ss.2.5 or 4.6.2, or the date that any draft or other form of demand for
payment is honored with respect to a Letter of Credit.
DUE DILIGENCE SUMMARY. See ss.8.4.1(b)(ii).
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 (iv) any Lender and any affiliate of
any Lender and any fund that invests in loans and is managed by such Lender or
by the same investment advisor of such Lender or by an affiliate of such
investment advisor (and treating all such funds so managed as a single Eligible
Assignee); and (v) any other bank, insurance company, commercial finance company
or other financial institution or fund 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
ss.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 ss.6.16(a).
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EPA. See ss.6.16(b).
ERISA. The Employee Retirement Income Security Act of 1974, as amended
and in effect from time to time.
ERISA AFFILIATE. Any Person which is treated as a single employer with
any Borrower under ss.414 of the Code.
ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of ss.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 (2) 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 interbank 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.
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 ss.13.
FEE LETTER. See ss.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.
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GENERALLY ACCEPTED ACCOUNTING PRINCIPLES OR GAAP. (i) When used in
ss.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 ss.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.
HAZARDOUS SUBSTANCES. See ss.6.16(b).
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.
INDEBTEDNESS. 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 and contingent obligation
of such Person with respect to letters of credit 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 in accordance with their terms or the Borrowers' normal or
ordinary business practices 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,
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<PAGE> 17
(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, including, without limitation, pursuant
to a Permitted Receivables Transaction (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, the disposition of assets or Rental Equipment
pursuant to ss.8.4.2 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 Swap Contract,
(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, and
(xi) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guaranteeing 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,
including, without limitation, Receivables sold pursuant to a Permitted
Receivables Transaction, 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
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<PAGE> 18
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. ss.24, Seventh), as amended.
INTEREST PERIOD. With respect to each Eurodollar Loan:
(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), six (6) or, if available, twelve
(12) 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), six (6) or twelve (12) 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.
INTERNATIONAL STANDBY PRACTICES. With respect to any standby Letter of
Credit, International Standby Practices (ISP98) as promulgated by the Institute
of International Banking Law & Practice, Inc., or any successor code of standby
letter of credit practices among banks adopted by the Administrative Agent in
the ordinary course of its business as a standby letter of credit issuer and in
effect at the time of issuance of such Letter of Credit.
ISSUANCE FEE. See ss.5.1(b).
ISSUING BANK(S). With respect to Letters of Credit for the account of
the Borrowers, BKB, and any other Lender acceptable to the Administrative Agent
and the Borrowers.
JOINDER AGREEMENT. See ss.7.16(a).
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.
LETTERS OF CREDIT. Standby Letters of Credit issued or to be issued by
the Issuing Bank under ss.3 hereof for the account of the Borrowers.
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<PAGE> 19
LETTER OF CREDIT APPLICATIONS. Letter of Credit Applications in such
form as may be agreed upon by the Borrowers and the Issuing Bank from time to
time which are entered into pursuant to ss.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 Credit Agreement, the terms of this Credit
Agreement shall control.
LETTER OF CREDIT FEE. See ss.5.1(b).
LETTER OF CREDIT PARTICIPATION. See ss.3.1(b).
LOAN AND LETTER OF CREDIT REQUEST. SEE ss.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.
LOAN PERCENTAGE(S). With respect to each Lender as of a particular
date, 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 uncollateralized 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 ss.15.8 only, the unused
Commitments on such date.
LOANS. Revolving Credit Loans, Swing Line Loans and the Term Loan made
or to be made by the Lenders to the Borrowers hereunder.
MAJORITY CONSENT. See ss.8.4.1(a).
MAJORITY LENDERS. As of any date, the Lenders whose aggregate
percentages constitute at least fifty-one percent (51%) of the Loan Percentages.
MAXIMUM DRAWING AMOUNT. The maximum aggregate amount at any time of
determination 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; PROVIDED that for purposes of calculating Loan
Percentage(s), the face amount of Letters of Credit which have been cash
collateralized under ss.3.2(b) shall not be included.
MERGER CHARGES. Transaction related charges incurred prior to the
Closing Date in connection with the terminated NRI Merger Agreement, MINUS any
"break-up" fees received by the Parent, in an amount not to exceed $10,000,000.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of
ss.3(37) of ERISA maintained or contributed to by any Borrower or any ERISA
Affiliate.
NRI MERGER AGREEMENT. That certain Agreement and Plan of Merger, dated
as of January 20, 1999, between Rental Service Corporation and the Parent.
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<PAGE> 20
NET CASH PROCEEDS. With respect to any Subordinated Debt Offering, the
excess of the gross cash proceeds received by such Person from such Subordinated
Debt Offering after deduction of reasonable and customary transaction expenses
(including without limitation, underwriting discounts and commissions) actually
incurred in connection with the Subordinated Debt Offering.
NET EQUITY PROCEEDS. With respect to any equity offering, including the
Series A Preferred Stock offering, the excess of the gross cash proceeds
received by such Person from such equity offering after deduction of reasonable
and customary transaction expenses (including without limitation, underwriting
discounts and commissions) actually incurred in connection with the equity
offering.
NEW SUBSIDIARY. See the definition of EBIT.
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, the Administrative Agent or the Issuing Bank,
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 (but only to the extent such indebtedness, obligations,
or liabilities under such Swap Contract become due and owing during the term of
this Credit Agreement) between the Borrowers and any Lender, or in respect of
any 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.
OUTSTANDING OR 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 ss.4002 of
ERISA and any successor entity or entities having similar responsibilities.
PERMITTED RECEIVABLES TRANSACTION. Any non-recourse sale or sales of,
and/or securitization of, any accounts receivable or promissory notes payable to
the Borrowers (the "Receivables") pursuant to which (a) the Borrowers realize
aggregate net proceeds of not more than one percent (1%) of Consolidated Total
Assets in the aggregate at any one time outstanding, including, without
limitation, any revolving purchase(s) of Receivables where the maximum aggregate
uncollected purchase price (exclusive of any deferred purchase price) for such
Receivables at any time outstanding does not exceed one percent (1%) of
Consolidated Total Assets in the aggregate, and (b) which Receivables shall not
be discounted more than twenty-five percent (25%).
PERFECTION CERTIFICATES. The Perfection Certificates as defined in the
Security Agreement, and any quarterly updates thereof provided to the
Administrative Agent.
PERMITTED LIENS. See ss.8.2.
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<PAGE> 21
PERSON. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
PLEDGE AGREEMENTS. The Amended and Restated Pledge Agreements among the
Borrowers that are pledgors thereunder and the Administrative Agent, as amended
and in effect from time to time, pursuant to which 100% of the capital stock or
equity interests of each Borrower (other than the Parent) is pledged to the
Administrative Agent for the benefit of the Lenders as security for all the
Obligations.
PRICING RATIO. As of the end of any fiscal quarter of the Borrowers
commencing with the fiscal quarter ending June 30, 1999, 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.
PRICING TABLE:
<TABLE>
<CAPTION>
--------- ------------------------- ------------- ------------- ------------- ---------------- -------------
APPLICABLE APPLICABLE APPLICABLE APPLICABLE APPLICABLE
LEVEL PRICING RATIO REVOLVER BASE RATE L/C MARGIN COMMITMENT RATE EURODOLLAR
EURODOLLAR MARGIN (PER ANNUM) (PER ANNUM) TERM LOAN
MARGIN (PER ANNUM) MARGIN
(PER ANNUM) (PER ANNUM)
--------- ------------------------- ------------- ------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1 Less than 2.50:1 1.50% 0.00% 1.50% 0.375% 3.00%
--------- ------------------------- ------------- ------------- ------------- ---------------- -------------
2 Greater than or equal 1.75% 0.00% 1.75% 0.375% 3.00%
to 2.50:1 but less than
3.00:1
--------- ------------------------- ------------- ------------- ------------- ---------------- -------------
3 Greater than or equal 2.00% 0.00% 2.00% 0.375% 3.00%
to 3.00:1 but less than
3.50:1
--------- ------------------------- ------------- ------------- ------------- ---------------- -------------
4 Greater than or equal 2.25% 0.00% 2.25% 0.500% 3.00%
to 3.50:1 but less than
4.25:1
--------- ------------------------- ------------- ------------- ------------- ---------------- -------------
5 Greater than or equal 2.50% 0.00% 2.50% 0.500% 3.00%
to 4.25:1
--------- ------------------------- ------------- ------------- ------------- ---------------- -------------
</TABLE>
For each period commencing on an Adjustment Date through the date
immediately preceding the next Adjustment Date (each a "Rate Adjustment
Period"), the applicable margin shall be the margin set forth above with respect
to the Pricing Ratio, determined for the period ending on the fiscal quarter-end
immediately preceding the applicable Rate Adjustment Period.
Notwithstanding the foregoing, (a) if the Borrowers fail to deliver any
Compliance Certificate in accordance with ss.7.4(c) hereof, then, for the period
commencing on the next Adjustment Date to occur subsequent to such failure
through the date immediately following the date on which such Compliance
Certificate is delivered, the applicable margin shall be the highest rate set
forth above, subject to adjustment prospectively upon actual receipt of such
Compliance Certificate, and (b) the pricing during the period from the Closing
Date through the first Adjustment Date shall be Level 5 of the Pricing Table.
PRIOR CREDIT AGREEMENT. See Preamble.
RATE ADJUSTMENT PERIOD. See the definition of Pricing Table.
RCRA. See definition of Release.
RECEIVABLES. See the definition of Permitted Receivables Transaction.
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REAL PROPERTY. All real property heretofore, now, or hereafter owned or
leased (as lessee or sublessee) by any Borrowers.
REGISTER. See ss.18.3.
REIMBURSEMENT OBLIGATION. The Borrowers' joint and several obligations
to reimburse the Issuing Bank and the Revolving Credit Lenders on account of any
drawing under any Letter of Credit as provided in ss.3.2.
RELEASE. Shall have the meaning specified in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. ss.ss.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. ss.ss.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.
RENTAL EQUIPMENT. With respect to any Borrower, all goods, inventory
and equipment held for rental by such Borrower in the ordinary course of
business and all goods, inventory and equipment held for sale by such Borrower
in the ordinary course of business.
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 ss.5.11.
REPLACEMENT NOTICE. See ss.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.
RESTRICTED SUBSIDIARIES. Collectively, all Subsidiaries of the Parent
which are not Unrestricted Subsidiaries.
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 ss.18.
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<PAGE> 23
REVOLVING CREDIT LOANS. Revolving Credit Loans advanced to the
Borrowers pursuant to ss.2.1.
REVOLVING CREDIT MATURITY DATE. July 20, 2004, or such earlier date on
which the Obligations become due and owing.
REVOLVING CREDIT NOTES. See ss.2.3.
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 Amended and Restated Security Agreement, dated
as of the Closing Date, among the Borrowers and the Administrative Agent, as
supplemented, amended and effective from time to time.
SECURITY DOCUMENTS. The Security Agreement, the Pledge Agreements, 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.
SELLER NOTES. See the definition of Subordinated Debt.
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 PROVIDED THAT the principal amount of any scheduled principal payments
of any Seller Notes occurring within twelve (12) months after the date of
determination shall not be counted as "Subordinated Debt" for the purposes of
ss.ss.4.4.2 and 9.2.
SENIOR SUBORDINATED INDENTURE. The Indenture, dated as of December 11,
1998, among the Parent, certain Subsidiaries of the Parent and The Bank of New
York, as trustee, in the form delivered to the Administrative Agent prior to the
Closing Date.
SENIOR SUBORDINATED NOTES. The 10 3/8% Senior Subordinated Notes due
2008 issued by the Parent, or to be issued by the Parent, in the aggregate
principal amount of up to $225,000,000 pursuant to the Senior Subordinated
Indenture, in the form delivered to the Administrative Agent prior to the
Closing Date.
SERIES A PREFERRED STOCK. Series A Preferred Stock issued by the Parent
pursuant to the Certificate of Designation of Convertible Preferred Stock,
Series A, dated as of July 20, 1999, consisting of not more than 100,000 shares.
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 ss.2.8
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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 ss.2.8(b).
SETTLEMENT DATE. See ss.2.8(b).
SETTLING LENDER. See ss.2.8(b).
SIGNIFICANT SUBSIDIARY. Any Restricted Subsidiary that is a
"significant subsidiary" as defined in Rule 1-02(w) of the Regulation S-X (17
CFR 210), as amended from time to time.
SUBORDINATED DEBT. Collectively (a) the Indebtedness existing as of the
Closing Date in respect of the Senior Subordinated Notes, (b) the Subordinated
Debt Offering, and (c) other unsecured Indebtedness of the Parent or a
Subsidiary of the Parent that is expressly subordinated and made junior to the
payment and performance in full of the Obligations, and that contains
subordination provisions substantially similar to those attached hereto as
EXHIBIT G or are evidenced by the unsecured subordinated notes listed on
SCHEDULE 4 (all Indebtedness under this clause (c) shall be referred to herein
as the "Seller Notes").
SUBORDINATED DEBT OFFERING. The unsecured Indebtedness of the Parent
(and subordinated unsecured guarantees thereof by its Subsidiaries) issued or to
be issued pursuant to (a) the Senior Subordinated Indenture, or (b) 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 senior subordinated unsecured debt, in each case
with all principal payments amortizing after the Term Loan Maturity Date and on
other terms substantially similar to those contained in the Senior Subordinated
Indenture or on terms reasonably satisfactory to the Administrative Agent.
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 ss.2.8.
SWING LINE NOTE. See ss.2.8.
SYNDICATION AGENT. See Preamble.
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<PAGE> 25
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
$300,000,000.
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 ss.18.
TERM LOAN MATURITY DATE. July 20, 2006, 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
ss.18 and ss.4.4.3 hereof) as such Lender's percentage of the Term LoAN.
TERM NOTES. See ss.4.2.
TERM NOTE RECORD. A record with respect to a Term Note.
TOTAL COMMITMENT. See ss.2.1.
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 Issuing Bank 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.
UNRESTRICTED SUBSIDIARIES. See ss.8.3(l).
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.
SS.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.
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<PAGE> 26
(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 State of New York have the meanings assigned to them therein.
(h) Reference to a particular "ss." 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 "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 construed 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.
SS.2. THE REVOLVING CREDIT FACILITY.
SS.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 ss.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 $500,000,000 at any time, as such amount may be reduced or
increased, as the case may be, pursuant to ss.2.2 hereof (the "Total
Commitment"). The Revolving Credit Loans shall be made PRO RATA in accordance
with each Revolving Credit
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<PAGE> 27
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 ss.10 and ss.11, as the case may be, have been
satisfied on the date of such request.
SS.2.2. 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 $5,000,000 or an integral multiple of $1,000,000 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 ss.2.2.
(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.
SS.2.3. THE REVOLVING CREDIT NOTES. The Revolving Credit Loans shall be
evidenced by separate promissory notes of the Borrowers in substantially the
form of EXHIBIT A-1 hereto (each a "Revolving Credit Note") dated as of the
Closing Date (or such other date on which a Person may become a party hereto in
accordance with ss.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 Revolving Credit
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 on such Revolving Credit 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 in the absence of manifest error
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.
SS.2.4. INTEREST ON REVOLVING CREDIT LOANS AND SWING LINE LOANS. Except
as otherwise provided in ss.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, 1999, on Base Rate Loans, (ii) the last day of
the applicable Interest Period, and if such Interest Period is longer than three
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(3) months, also on the day which is three (3) months and, if applicable, six
(6) months and nine (9) 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.
SS.2.5. 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 ss.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 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 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 ss.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 ss.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.
(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
$1,000,000 or an integral multiple of $500,000 in excess thereof. In no event
shall the Borrowers have more than twenty (20) different maturities of
Eurodollar Loans (whether Revolving Credit Loans or a portion of the Term Loan)
outstanding at any time.
SS.2.6. REQUESTS FOR REVOLVING CREDIT LOANS AND SWING LINE LOANS.
(a) 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) 12:00 p.m. (Boston time) on the day of the proposed
Drawdown Date of any Base Rate Loan, or (b) 1:00 p.m. (Boston time)
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three (3) Eurodollar Business Days prior to the proposed Drawdown Date of any
Eurodollar Loan, or (c) 2:30 p.m. (Boston time) on the day of the proposed
Drawdown Date of funding of any Swing Line Loan. Each such Loan and Letter of
Credit Request 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 the Maximum
Drawing Amount of all Letters of Credit and the amount of all 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.
(b) Each of the representations and warranties made by or on behalf of
the Borrowers to the Lenders, the Administrative Agent or the Issuing Bank 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 Revolving Credit Lender, a monthly summary with
respect to Letters of Credit issued hereunder.
SS.2.7. FUNDS FOR REVOLVING CREDIT LOANS.
(a) Not later than 2:00 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 ss.ss.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
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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 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.
SS.2.8. SWING LINE LOANS; SETTLEMENTS.
(a) Solely for ease of administration of the Revolving Credit Loans and
so long as the Administrative Agent has not received a written notice pursuant
to ss.7.15 of a Default or Event of Default, BKB may, upon receipt of a Loan and
Letter of Credit Request requesting a Swing Line Loan no later than 2:30 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 ss.2.4. The Swing Line Loans shall be
evidenced by a promissory note of the Borrowers in substantially the form of
EXHIBIT A-2 hereto (the "Swing Line Note") dated as of the Closing Date, 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 $50,000,000 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 Swing Line
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.
(b) The Revolving Credit Lenders shall effect Settlements on (i) the
Business Day immediately following any day which the Administrative Agent gives
written notice to the Revolving Credit Lenders 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, (iv) on the third Business Day following any date on which the
Borrowers request a conversion of a Swing Line Loan into a Eurodollar Rate Loan,
and (v) 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
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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 ss.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 ss.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 five (5) 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.
(e) If, prior to the making of a Revolving Credit Loan pursuant to
paragraph (b) of this ss.2.8, a Default or Event of Default has occurred and is
continuing, each Revolving Credit Lender will, on the date such Revolving Credit
Loan was to have been made, purchase an undivided participating interest in the
outstanding Swing Line Loans in an amount equal to its Commitment Percentage of
such Swing Line Loans. Each Revolving Credit Lender will immediately transfer to
the Administrative Agent, in immediately available funds, the amount of its
participation and upon receipt thereof the Administrative Agent will deliver to
such Revolving Credit Lender a Swing Line participation certificate dated the
date of receipt of such funds and in such amount.
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(f) Whenever, at any time after the Administrative Agent has received
from any Revolving Credit Lender such Revolving Credit Lender's participating
interest in the Swing Line Loans pursuant to clause (e) above, the
Administrative Agent receives any payment on account thereof, the Administrative
Agent will distribute to such Revolving Credit Lender its participating interest
in such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Revolving Credit Lender's
participating interest was outstanding and funded) in like funds as received;
PROVIDED, HOWEVER, that in the event that such payment received by the
Administrative Agent is required to be returned, such Revolving Credit Lender
will return to the Administrative Agent any portion thereof previously
distributed by the Administrative Agent to it in like funds as such payment is
required to be returned by the Administrative Agent.
(g) Each Revolving Credit Lender's obligation to purchase participating
interests pursuant to clause (e) above shall be absolute and unconditional and
shall not be affected by any circumstance, including, without limitation, (i)
any set-off, counterclaim, recoupment, defense or other right which such
Revolving Credit Lender may have against the Administrative Agent, the Borrowers
or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default or Event of Default; (iii) any adverse change in the
condition (financial or otherwise) of the Borrowers or any other Person; (iv)
any breach of this Credit Agreement by the Borrowers or any other Lender or the
Administrative Agent; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
SS.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, Swing Line Loans and
all unpaid Reimbursement Obligations outstanding on such date, together with any
and all accrued and unpaid interest thereon.
SS.2.10. MANDATORY REPAYMENTS OF THE REVOLVING CREDIT LOANS AND SWING
LINE LOANS AND REIMBURSEMENT OBLIGATIONS.
(a) 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 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
ss.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.
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(b) If at any time the ratio set forth in ss.9.4 is greater than 1:1,
then the Borrowers shall, within ten (10) days of knowledge of such occurrence,
pay the Dollar amount needed to eliminate such excess to the Administrative
Agent for application first, to any Swing Line Loans (if applicable), second, to
any unpaid Reimbursement Obligations, and third, to any 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 ss.2.10(b), exceeds the amount of the
Reimbursement Obligations required to be collateralized pursuant to this
ss.2.10, the Administrative Agent shall return such excess to the BorrowerS.
Payment of such excess within the time period specified herein shall constitute
a cure of any Default or Event of Default under ss.9.4 which was triggered by
such excess, PROVIDED that no default exists under the Subordinated Debt.
SS.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 ss.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) 2:30 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 (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
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. Payments
received from the Borrowers hereunder shall be applied only to Revolving Credit
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.
SS.3. LETTERS OF CREDIT.
SS.3.1. 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, the Issuing Bank,
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 ss.3.1(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 Letters of Credit, in such form as
may be requested from time to time by
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the Borrowers and agreed to by the Issuing Bank; PROVIDED, HOWEVER, that, after
giving effect to such request, the Maximum Drawing Amount of all Letters of
Credit PLUS all unpaid Reimbursement Obligations shall not exceed the lesser of
(A) $50,000,000 or (B) the Total Commitment MINUS the aggregate outstanding
amount of the Revolving Credit Loans and the Swing Line Loans. 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 Issuing
Bank 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 (i) provide for the payment of sight drafts for honor thereunder
when presented in accordance with the terms thereof and when accompanied by the
documents described therein and (ii) be subject to the Uniform Customs or, in
the case of a standby Letter of Credit, either the Uniform Customs or the
International Standby Practices.
(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 Issuing Bank on demand
for the amount of each draft or other form of demand for payment paid by the
Issuing Bank 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 ss.3.2 (such agreement for a Revolving
Credit Lender being called herein the "Letter of Credit Participation" of such
Lender). Each Revolving Credit Lender agrees that its obligation to reimburse
the Issuing Bank pursuant to this ss.3.1(b) shall not be affected in any way by
any circumstance other than the gross negligence or willful misconduct of the
Issuing Bank.
(c) Each such payment made by a Revolving Credit Lender to the Issuing
Bank shall be treated as the purchase by such Lender of a participating interest
in the Borrowers' Reimbursement Obligation under ss.3.2 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 ss.3.2.
(d) All Letters of Credit outstanding under the Prior Credit Agreement
and listed on SCHEDULE 3.1(d) hereto shall constitute Letters of Credit
hereunder.
SS.3.2. REIMBURSEMENT OBLIGATION OF THE BORROWERS. In order to induce
the Issuing Bank to issue, extend and renew Letters of Credit and the Revolving
Credit Lenders to participate therein, the Borrowers, hereby jointly and
severally agree, in accordance with and subject to the provisions of ss.5.12, to
reimburse or pay to the Issuing Bank with respect to each Letter of Credit
issued, extended or renewed by the Issuing Bank 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 Issuing Bank or the
Issuing Bank otherwise makes payment with respect thereto, (i) the amount paid
by the Issuing Bank 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 Issuing Bank or any Revolving Credit Lender in connection with
any payment made by the Issuing Bank or any Revolving Credit Lender under, or
with respect to, such Letter of Credit; PROVIDED HOWEVER, if the Borrowers do
not reimburse the Issuing Bank on
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the Drawdown Date, such amount shall, provided that no Event of Default under
ss.ss.13.1(g) or 13.1(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 ss.13, an amount equal to the Maximum Drawing Amount, which
amount shall be paid by the Borrowers to the Administrative Agent as cash
collateral for the 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 ss.3.2 which
has not become a Revolving Credit Loan under paragraph (a) of this ss.3.2 at any
time from the date such amounts become due and payable (whether as stated in
this ss.3.2, 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 ss.5.6 for overdue principal on the Loans.
SS.3.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Issuing
Bank 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 Issuing Bank, the Issuing Bank 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
Issuing Bank, at the Issuing Bank'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 Issuing Bank for federal funds acquired by the Issuing Bank 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 Issuing Bank 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 Issuing Bank, and the denominator of which is 365. The
responsibility of the Issuing Bank 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 or the
International Standby Practices, as applicable.
SS.3.4. OBLIGATIONS ABSOLUTE. The Borrowers' obligations under this
ss.3 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 any Issuing Bank, 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 Issuing Bank pursuant to the last
sentence of ss.3.3, the Borrowers further agree with the Issuing Bank and the
Revolving Credit Lenders that such Issuing Bank and the
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Revolving Credit Lenders shall not be responsible for, and the Borrowers'
Reimbursement Obligations under ss.3.2 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 Issuing Bank 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. Subject to the prior provisions of this
ss.3.4, the Borrowers agree that any action taken or omitted by the Issuing Bank
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 Issuing Bank or any Revolving Credit Lender to
the Borrowers.
SS.3.5. RELIANCE BY ISSUING BANK. To the extent not inconsistent with
ss.3.4, each Issuing Bank 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 Issuing Bank. The Issuing Bank
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 Issuing Bank 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.
SS.4. THE TERM LOAN.
SS.4.1. 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 $300,000,000.
SS.4.2. 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 ss.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
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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.
SS.4.3. 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 six (6) consecutive
payments, each such payment equal to one percent (1%) of the notional amount of
the Term Loan, and due and payable on each anniversary of the Term Loan,
commencing on the first anniversary of such Term Loan, with a final additional
payment on the Term Loan Maturity Date in an amount equal to the unpaid balance
of the Term Loan.
SS.4.4. MANDATORY PREPAYMENTS OF TERM LOAN.
SS.4.4.1. PREPAYMENT OF SUBORDINATED DEBT. If at any time any of the
Borrowers are required to make any prepayments of the Senior Subordinated Notes
or the Subordinated Debt Offering as a result of any sale or other disposition
of assets otherwise permitted hereunder, the Borrowers shall, one (1) Business
Day prior to making such prepayment, prepay the Term Loan in an amount at least
equal to such prepayment.
SS.4.4.2. PREPAYMENT OF TERM LOAN WITH PROCEEDS OF SUBORDINATED DEBT
OFFERING. In the event any Subordinated Debt Offering occurs at any time after
the Closing Date, and on the date of such Subordinated Debt Offering, the ratio
of Senior Funded Debt as at such date to EBITDA for the period of the four (4)
consecutive fiscal quarters most recently ended prior to such date is greater
than 3.25:1, the Borrowers shall make a prepayment of the Term Loan in an amount
equal to fifty percent (50%) of the Net Cash Proceeds of such Subordinated Debt
Offering; PROVIDED HOWEVER THAT, notwithstanding the foregoing, from and after
the Closing Date the Borrowers may issue up to $200,000,000 of Indebtedness
pursuant to one or more Subordinated Debt Offerings without having to make a
prepayment of the Term Loan otherwise required by this ss.4.4.2 so long as no
Default or Event of Default has occurred and is continuing or would exist as a
result thereof.
SS.4.4.3. PAYMENT PROVISIONS. Each prepayment of the Term Loan required
by this ss.4.4 shall be allocated among the Term Loan Lenders in accordance with
each such Lender's Term Loan Percentage. 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. Any Term Loan Lender may decline to accept any payments due
to such Term Loan Lender pursuant to this ss.4.4, in which case the Borrowers
may retain the amount of any prepayment so declined.
SS.4.5. 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,
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upon not less than three (3) Business Days prior written notice to the
Administrative Agent, without premium or penalty (other than the obligation to
reimburse the Term Loan Lenders and the Administrative Agent pursuant to ss.5.8
hereof), PROVIDed that (i) each partial prepayment shall be in the principal
amount of $1,000,000 or an integral multiple of $500,000 thereof, and (ii) 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.
SS.4.6. INTEREST ON TERM LOAN.
SS.4.6.1. INTEREST RATES. Except as otherwise provided in ss.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 and, if applicable, six (6) months and nine (9) months,
after the commencement of such Interest Period, on Eurodollar Loans, and (ii) in
any event, on the Term Loan Maturity Date.
SS.4.6.2. 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 ss.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 rate options 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 twenty (20) different maturities of Eurodollar Loans (whether
Revolving Credit Loans or a portion of the Term Loan) outstanding at any time.
In the event that the Borrowers fail to give the Administrative Agent notice
with respect to the continuation of any Eurodollar Loan hereunder within three
(3) days prior to the expiration of the Interest Period relating thereto, then
such Eurodollar Loan shall be converted to a Base Rate Loan.
SS.4.6.3. 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 or 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.
SS.5. CERTAIN GENERAL PROVISIONS.
SS.5.1. FEES.
(a) COMMITMENT FEE. The Borrowers jointly and severally agree, in
accordance with the provisions of ss.5.12, to pay to the Administrative Agent,
for the respective account of each Revolving Credit Lender in accordance with
such Revolving Credit Lender's Commitment,
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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 or portion thereof from the Closing Date to the
Revolving Credit Maturity Date (or 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, 1999, with a final payment on the
Revolving Credit Maturity Date or any earlier date on which the Commitments
shall terminate.
(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 Commitments. The Borrowers shall also pay a fee (the "Issuance
Fee") to the Issuing Bank, for its own account, equal to 0.125% per annum on the
Maximum Drawing Amount of all Letters of Credit issued by the Issuing Bank, 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 FEE. The Borrowers shall pay to the
Administrative Agent an Administrative Agent's fee, as previously agreed upon
among the Borrowers and the Administrative Agent.
SS.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. The Administrative Agent will, promptly after its
receipt thereof, transfer in immediately available funds, as applicable, (i) to
each of the Revolving Credit Lenders its PRO RATA portion of such payment in
accordance with its respective Commitment Percentage in the case of Revolving
Credit Loans and Letters of Credit, (ii) to BKB in the case of payments with
respect to Swing Line Loans, and (iii) to each of the Term Loan Lenders its PRO
RATA portion of such payment in accordance with its respective Term Loan
Percentage.
(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. Except as otherwise
provided in this Section 5.2, 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 the Administrative Agent, on the
date on which such amount is due and payable hereunder or under
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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. 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) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof or the District of Columbia (a "Non-U.S.
Lender") agrees that, prior to the first date on which any payment is due to it
hereunder, it will deliver to the Borrowers and the Administrative Agent (i) two
duly completed copies of United States Internal Revenue Service Form 1001 or
4224 or successor applicable form, as the case may be, certifying in each case
that such Non-U.S. Lender is entitled to receive payments under this Credit
Agreement and the Notes payable to it, without deduction or withholding of any
United States federal income taxes, or (ii) if such Lender is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and intends to claim
exemption from U.S. Federal withholding tax under Section 871(h) or 881(c) of
the Code with respect to payments of "portfolio interest," a Form W-8, or any
subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender
delivers a Form W-8, a certificate (a "Section 5.2(c)(ii) Certificate")
representing that such Non-U.S. Lender is not a bank for purposes of Section
881(c) of the Code), is not a ten-percent shareholder (within the meaning of
Section 871(h)(3)(B) of the Code) of the Borrowers and is not a controlled
foreign corporation related to the Borrowers (within the meaning of Section
864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S.
Lender claiming complete exemption from, or a reduced rate of, U.S. Federal
withholding tax on payments of interest by the Borrowers under this Credit
Agreement and the other Loan Documents. Each Non-U.S. Lender that so delivers a
Form 1001 or 4224, or a Form W-8 and a Section 5.2(c)(ii) Certificate, as the
case may be, pursuant to the preceding sentence further undertakes to deliver to
each of the Borrowers and the Administrative Agent two further copies of Form
1001 or 4224, or Form W-8 and Section 5.2(c)(ii) Certificate, as the case may
be, or successor applicable form, or other manner of certification, as the case
may be, on or before the date that any such letter or form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrowers, and such extensions or
renewals thereof as may reasonably be requested by the Borrowers, certifying in
the case of a Form 1001 or 4224, or a Form W-8 and a Section 5.2(c)(ii)
Certificate, as the case may be, that such Non-U.S. Lender is entitled to
receive payments under this Credit Agreement and the Notes without deduction or
withholding of any United States federal income taxes, unless in any such case
an event (including, without limitation, any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Non-U.S. Lender from duly completing and delivering any such form
with respect to it and such Non-U.S. Lender advises the Borrowers that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax.
(d) 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.
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(e) 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.
SS.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.
SS.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 the
Administrative Agent shall thereafter attempt to negotiate in good faith, 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.
SS.5.5. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to ss.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.
SS.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)
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percentage points (2.00%) until such amount shall be paid in full (after, as
well as before, judgment).
SS.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
therein 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.
SS.5.8. EURODOLLAR INDEMNITY. The Borrowers agree to indemnify the
Lenders and the Administrative Agent and in each case to hold them harmless from
and against any loss, cost or expenses that such 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 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 ss.2.5, ss.2.6 or 4.6.2 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 or 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 the applicable 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 prima
facie evidence thereof absent manifest error.
SS.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
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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 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.
SS.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 or the Administrative Agent 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 or the Administrative
Agent of the principal of or the interest on any Loans or any other amounts
payable to such 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 or included in the
calculation of the interest rate) 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 the Administrative Agent, 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:
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(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
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 or the Administrative Agent at any time and from time to time and as
often as the occasion therefor may arise, pay to such Lender or the
Administrative Agent such additional amounts as will be sufficient to compensate
such Lender or the Administrative Agent for such additional cost, reduction,
payment or foregone interest or other sum (after such Lender or the
Administrative Agent shall have allocated the same fairly and equitably among
all customers of any class generally affected thereby).
SS.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 ss.ss.5.2(b), 5.4 or 5.10 or (ii) is unable
to make or maintain Eurodollar Loans as a result of a condition described in
ss.5.9 or (iii) when required hereunder fails to make available to the
Administrative Agent its PRO RATA share of any Loan or to purchase any Letter of
Credit Participation, the Borrowers may, within 90 days of (A) 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 ss.5.9 to be applicable), or (B)
the date on which such Affected Lender fails to make available to the
Administrative Agent its PRO RATA share of any Loan or to purchase any Letter of
Credit Participation 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 (1) 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 (2) 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 ss.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
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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 unreimbursed under ss.ss.5.4, 5.8, 5.9 and 5.10, if applicable.
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.
SS.5.12. CONCERNING JOINT AND SEVERAL LIABILITY OF THE BORROWERS.
(a) Each of the Borrowers is accepting joint and several liability for
the Obligations of all of the Borrowers hereunder and under the other Loan
Documents in consideration of the financial accommodations to be provided by the
Administrative Agent and 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 of the Borrowers (including, without
limitation, any Obligations arising under this ss.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 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 ss.5.12 constitute full recourse obligations of each of such Borrowers
enforceable against each such Borrower 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, to the fullest extent permitted by applicable law, 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 Administrative Agent or 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, to the fullest extent permitted by applicable
law, 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, to the
fullest extent permitted by applicable law, hereby assents to, and waives notice
of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any 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
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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 ss.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 ss.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
ss.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
ss.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, the Administrative Agent 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, the Administrative Agent or the Lenders.
(f) To the extent any Borrower makes a payment hereunder in excess of
the aggregate amount of the benefit received by such Borrower in respect of the
extensions of credit under the Credit Agreement (the "Benefit Amount"), then
such Borrower, after the payment in full, in cash, of all of the Obligations,
shall be entitled to recover from each other Borrower such excess payment, PRO
RATA, in accordance with the ratio of the Benefit Amount received by each such
other Borrower to the total Benefit Amount received by all Borrowers, and the
right to such recovery shall be deemed to be an asset and property of such
Borrower so funding; PROVIDED, that 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.
(g) Each of the 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
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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 before payment in full in cash of the Obligations, 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 such 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 ss.5.12 are made for the benefit of the
Administrative Agent and 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 Administrative Agent or 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 ss.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 Administrative Agent or 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 ss.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, and 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 ss.20
of this Credit Agreement.
SS.5.13. REASONABLE EFFORTS TO MITIGATE. Each Lender and the
Administrative Agent agrees that as promptly as practicable after it becomes
aware of the occurrence of an event or the existence of a condition that would
cause it to be affected under ss.5.2(b), ss.5.4, ss.5.9 or ss.5.10, such Lender
or the Administrative Agent will give notice thereof to the Borrowers, with a
copy to the Administrative Agent, and, to the extent so requested by the
Borrowers and not inconsistent with such Lender's or the Administrative Agent's
internal policies, such Lender or the Administrative Agent shall use reasonable
efforts and take such actions as are reasonably appropriate if as a result
thereof the additional monies which would otherwise be required to be paid to
such Lender or the Administrative Agent pursuant to such subsections would be
materially reduced, or the illegality or other adverse circumstances which would
otherwise require a conversion of such Loans or result in the inability to make
such Loans pursuant to such sections would cease to exist, and in each case if,
as determined by such Lender in its sole discretion, the taking of such actions
would not adversely affect such Loans or such Lender or the Administrative Agent
or otherwise be disadvantageous to such Lender or the Administrative Agent. To
the extent practicable and applicable, each Lender and the Administrative Agent
shall allocate such cost increases among its customers in good faith and on an
equitable basis.
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SS.6. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers jointly and
severally represents and warrants to the Lenders and the Administrative Agent
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 ss.6 applying to all relevant representations and warranties,
regardless of whether such schedule is referenced in each relevant
representation):
SS.6.1. CORPORATE AUTHORITY.
(a) INCORPORATION; GOOD STANDING. Each Borrower (i) is a corporation
or, as the case may be, a limited partnership duly organized, validly existing
and in good standing or in current status under the laws of its respective
jurisdiction of incorporation or formation, (ii) has all requisite corporate or
partnership 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 Person
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 material
adverse effect on the business, assets or financial condition of the Borrowers
as a whole.
(b) AUTHORIZATION. The execution, delivery and performance of the Loan
Documents and the transactions contemplated hereby and thereby (i) are within
the corporate or other organizational authority of each Borrower, (ii) have been
duly authorized by all necessary corporate or other organizational 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 in a manner which is reasonably likely to have a material adverse
effect on the Borrowers taken as a whole, (iv) do not conflict with any
provision of the corporate charter, bylaws, certificate of limited partnership
or partnership agreement, as applicable, 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 material 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.
SS.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 required hereunder, have been
delivered to the Administrative Agent in form and substance satisfactory to the
Administrative Agent.
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SS.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 or except as otherwise permitted
hereunder since that date), subject to no mortgages, capitalized leases,
conditional sales agreements, title retention agreements, liens or other
encumbrances except Permitted Liens.
SS.6.4. FINANCIAL STATEMENTS; SOLVENCY.
(a) There has been furnished to each of the Lenders audited
consolidated financial statements of the Borrowers dated as of the Balance Sheet
Date. Said audited 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 required to
be disclosed under GAAP, known to the officers of the Parent, 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., (i) they have assets having a fair value in excess of their
liabilities, (ii) they have assets having a fair value in excess of the amount
required to pay their probable liabilities on existing debts as such debts
become absolute and matured, and (iii) they have, and expect to continue to
have, access to adequate capital for the conduct of their business and the
ability to pay their debts from time to time incurred in connection with the
operation of their business as such debts mature.
(c) Each Borrower has a fiscal year which is the twelve months ending
on December 31 of each calendar year.
SS.6.5. NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date, except
as described in the Parent's filings with the SEC prior to the Closing 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 ss.8.6 hereof.
SS.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, required for the conduct of
their businesses substantially as now conducted without known conflict with any
material rights of others.
SS.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, could reasonably be expected to, either in any individual case or in
the aggregate, have a material adverse effect on the properties, assets,
financial condition or business of the Borrowers, taken as a whole, or
materially impair the right of the
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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.
SS.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 material 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 material adverse effect on the business
of the Borrowers, taken as a whole.
SS.6.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. No Borrower is
violating any material provision of (a) its charter documents, certificate of
limited partnership, by-laws or partnership agreement or other constituent
documents, as applicable, 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 reasonably be expected to have a material adverse effect on the financial
condition, properties or business of the Borrowers, taken as a whole.
SS.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 for which the Borrowers have not set aside
on their books provisions reasonably adequate for the payment of such unpaid
taxes, and the officers of the Borrowers know of no basis for any such claim.
SS.6.11. NO EVENT OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
SS.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.
SS.6.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
Permitted Liens, there is no effective 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
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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 ss.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.
SS.6.14. EMPLOYEE BENEFIT PLANS.
(a) Except as shown on SCHEDULE 6.14 hereto, 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 ss.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 ss.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 ss.3(1) or ss.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 ss.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 ss.307 of ERISA or ss.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 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 ss.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 ss.4201
of ERISA or as a result of a sale of assets described in ss.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
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ss.4241 or ss.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 ss.4041A of ERISA.
SS.6.15. USE OF PROCEEDS.
SS.6.15.1. GENERAL. The proceeds of the Loans shall be used
solely as follows: (a) to refinance existing Indebtedness of the Parent and
certain of its Subsidiaries under the Prior Credit Agreement; (b) to finance
acquisitions permitted pursuant to ss.8.4; and (c) for capital expenditures,
working capital, and general corporate purposes. The Borrowers will use Letters
of Credit solely for working capital and general corporate purposes.
SS.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.
SS.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.
SS.6.16. ENVIRONMENTAL COMPLIANCE. Each Borrower has investigated the
past and present condition and usage of the Real Property now or heretofore
owned or leased by such Borrower 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. ss.6903(5),
any hazardous substances as defined by 42 U.S.C. ss.9601(14), any pollutant or
contaminant as defined by 42 U.S.C. ss.9601(33) or any waste, hazardous waste,
dangerous goods, contaminants,
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pollutants, 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, stored, handled, 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 may 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 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.
SS.6.17. PERFECTION OF SECURITY INTERESTS. Subject to ss.7.19 and
ss.8.4.1 and except with respect to documents delivered to the Administrative
Agent but not yet filed or recorded, 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 ss.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.
SS.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,
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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.
SS.6.19. SUBSIDIARIES. SCHEDULE 2 sets forth a complete and accurate
list of the Restricted Subsidiaries of the Parent, including the name of each
such Subsidiary and its jurisdiction of incorporation, and such SCHEDULE 2 shall
be updated by the Borrowers from time to time. The Perfection Certificate of
each Restricted Subsidiary of the Parent that is a Borrower sets forth the
location of the Collateral owned by such Subsidiary, the location of such
Subsidiary's chief executive office and its tax identification number. The
Pledge Agreements set forth the number of authorized and outstanding shares of
capital stock or equity interests of each Restricted Subsidiary of the Parent
that is a Borrower. Each Restricted Subsidiary listed on SCHEDULE 2 is
wholly-owned by the Parent or a Restricted Subsidiary of the Parent. The Parent
or a Restricted Subsidiary of 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 paid and non-assessable, to the extent
applicable. As of the Closing Date, all Subsidiaries of the Parent are
Restricted Subsidiaries other than as set forth in Schedule 3.
SS.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 or certificate of limited partnership, as
applicable, and other incorporation or constituent documents and (b) by-laws, or
partnership agreement, as applicable, each including any amendments thereto.
SS.6.21. DISCLOSURE. Neither 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 the Borrowers as a whole, exclusive of effects resulting from
changes in general economic conditions, legal standards or regulatory
conditions.
SS.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 56,453,781 shares are outstanding as of July 19, 1999, and 5,000,000
shares of preferred stock (par value $0.01 per share), of which no shares are
outstanding as of July 19, 1999. All of such outstanding shares are fully paid
and non-assessable.
(b) The shares of the capital stock or other equity interests of the
Borrowers (other than the Parent) pledged to the Administrative Agent pursuant
to the Pledge Agreements are held of record as set forth on ANNEX A to the
Pledge Agreements. Such capital stock or equity interests constitutes, of
record, 100% of the outstanding capital stock or equity interests of each
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such Subsidiary, and, to the Borrowers' knowledge, on a fully-diluted basis,
100% of such outstanding capital stock or equity interests.
SS.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 the Borrowers' business and
operations, taken as a whole.
SS.6.24. SUBORDINATED DEBT. The incurrence of Senior Funded Debt,
including without limitation, the Obligations, will not be prohibited pursuant
to the terms of the then existing Subordinated Debt as of the date of such
incurrence.
SS.7. AFFIRMATIVE COVENANTS OF THE BORROWERS. Each of the Borrowers
jointly and severally covenants and agrees, in accordance with the provisions of
ss.5.12 hereof, 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 Issuing Bank has any obligation to issue,
extend, or renew any Letters of Credit:
SS.7.1. PUNCTUAL PAYMENT. Each Borrower will duly and punctually pay or
cause to be paid the principal and interest on the Loans, all Reimbursement
Obligations, all 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.
SS.7.2. MAINTENANCE OF OFFICES. The Parent will maintain its chief
executive office at 450 East Las Olas Blvd., Suite 1400, Ft. Lauderdale, Florida
33301, and each other Borrower will maintain its chief executive offices at the
location set forth in the Perfection Certificate of such Borrower, or at such
other place in the United States as any Borrower shall designate upon 30 days'
prior written notice to the Administrative Agent.
SS.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.
SS.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 than 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;
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(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 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 ss.ss.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 have 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 reasonably 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 ss.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.
SS.7.5. CORPORATE EXISTENCE AND CONDUCT OF BUSINESS. Except as
permitted by ss.8.4.1, each Borrower will do or cause to be done all things
necessary to preserve and keep in full force and effect its legal existence,
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 reasonably
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 terminated by such
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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; comply with all applicable laws, except where the failure to
comply with such laws could not reasonably be expected to have a material
adverse effect on the business or financial condition of the Borrowers on a
consolidated basis; 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.
SS.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.
SS.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 ss.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 naming the Administrative
Agent as a loss payee in accordance with the Security Agreement thereunder as
its interests may appear on behalf of itself and the Lenders.
SS.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 (other than Permitted Liens); 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 required by GAAP with respect thereto; and PROVIDED, FURTHER, that the
Borrowers will 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.
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SS.7.9. INSPECTION OF PROPERTIES, BOOKS, AND CONTRACTS.
(a) Each Borrower will permit the Lenders, the Administrative 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) 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 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 ss.7.9(c).
SS.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, by-laws, certificate of limited
partnership, partnership agreement and other constituent documents (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 (iii) comply with all applicable laws and regulations (including
Environmental Laws), decrees, orders, judgments, licenses and permits,
including, without limitation, all environmental permits applicable 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
Administrative Agent with evidence thereof upon the Administrative Agent's
request.
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SS.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 party hereto that this covenant
of indemnification shall not include claims, expense, damage, loss or liability
incurred by any Administrative Agent or any Lender based upon the Administrative
Agent's or such Lenders' gross negligence or willful misconduct (other than
gross or willful misconduct which is attributed to 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.
SS.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.
SS.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 $10,000,000, and stating the nature and status of such
litigation or proceedings. The Borrowers will give 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
$10,000,000.
SS.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 material 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
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or is reportable by it in writing to any governmental authority and which could
have a material adverse effect on the Borrowers' operations taken as a whole;
(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) the presence of Hazardous
Substances or the Release of Hazardous Substances 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 Borrowers' operations taken as a
whole; 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.
SS.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 other
obligation evidencing Indebtedness in excess of $10,000,000 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.
SS.7.16. NEW SUBSIDIARIES. (a) Any newly-created or acquired Restricted
Subsidiary of the Parent permitted under ss.8.4 shall, within ten (10) days of
being created or acquired, become a Borrower hereunder (unless it is merged or
amalgamated within such 10-day period) and become a party to the applicable
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 applicable Notes, (iii) pledging to the Administrative Agent for the benefit
of the Lenders all of the assets of such new Restricted Subsidiary and
delivering UCC-1 financing statements naming the Administrative Agent as secured
party and executed on behalf of such Restricted Subsidiary, and (iv) providing
such other documentation in such time period as the Administrative Agent shall
reasonably request, PROVIDED THAT notwithstanding anything in this Credit
Agreement to the contrary, no newly-created Restricted Subsidiary shall be
required to become a Borrower hereunder or otherwise be subject to the
requirements of this ss.7.16 until such Restricted Subsidiary acquires or has
assets having a value in excess of $100,000. Within such ten-day period, the
Parent or other Borrower, as applicable, shall pledge to the Administrative
Agent for the benefit of the Lenders 100% of the capital stock or other equity
interests of any such new Restricted Subsidiary. In such event, the
Administrative Agent is hereby authorized by the parties to amend SCHEDULE 2 to
include such new Borrower.
(b) The Parent shall at all times directly or indirectly through a
Restricted Subsidiary own all of the shares of capital stock of each of the
Borrowers (other than the Parent), and 100% of such shares or other equity
interest shall at all times be pledged (in accordance with ss.7.16(a)) to the
Administrative Agent pursuant to the Pledge Agreements.
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(c) The Parent shall deliver legal opinions in form and substance
satisfactory to the Administrative Agent for each new Borrower within thirty
(30) days of delivery to the Administrative Agent of the Joinder Agreement for
such Borrower, PROVIDED THAT no legal opinion shall be required for any new
Borrower with less than $10,000,000 in total assets (calculated in accordance
with GAAP) as of the date of the Joinder Agreement for such Borrower, unless the
assets of such new Borrower, when aggregated with the assets of all other new
Borrowers for which a legal opinion was not required to be delivered hereunder,
exceed 2.5% of Consolidated Total Assets calculated as of the date of the
Joinder Agreement for such Borrower. Notwithstanding the foregoing, the Parent
shall deliver, at the request of the Administrative Agent or any Lender, to the
Administrative Agent within such time period as the Administrative Agent shall
reasonably request, a legal opinion for any new Borrower (for which a legal
opinion was not required at the time of creation or acquisition) that becomes a
Significant Subsidiary.
SS.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 ss.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 ss.ss.302, 4041, 4042,
4043, 4063, 4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan,
under ss.ss.4041A, 4202, 4219, 4242, or 4245 of ERISA.
SS.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
ss.6.15.1 hereof.
SS.7.19. TITLE AND REGISTRATION. If requested by the Majority Lenders
and if the value of titled or registered Rental Equipment and owned Real
Property exceeds seven percent (7%) of net Rental Equipment and owned Real
Property, as shown on the Borrowers' consolidated financial statements in
accordance with GAAP, within 30 days of such request, the Borrowers will cause
such Rental 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 the applicable Borrower and cause all Rental
Equipment, now owned or hereafter acquired by any of the Borrowers, the
ownership of which, under applicable law, is evidenced by a certificate of
title, to be properly titled in the name of the applicable Borrower and will
cause the lien of the Administrative Agent, subject only to Permitted Liens, to
be properly noted on the certificates of title issued with respect to the Rental
Equipment and deliver such certificates of title to the Administrative Agent in
accordance with the terms of the Security Agreement and the Borrowers will
deliver to the Administrative Agent a fully executed mortgage or deed of trust
over such Real Property in form and substance satisfactory to the Administrative
Agent, together with title insurance policies, surveys, and other documents and
certificates reasonably requested by the Administrative Agent to obtain a valid
and enforceable first priority mortgage or deed of trust over such Real
Property, subject only to Permitted Liens.
SS.7.20. INTEREST RATE PROTECTION. The Borrowers will, prior to
December 31, 1999, have an aggregate amount of not less than 50% of the notional
amount of Funded Debt (the "50% Amount") on a fixed rate long term basis or
subject to Swap Contracts on terms and
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conditions reasonably acceptable to the Administrative Agent, provided, however,
that this ss.7.20 shall be satisfied if, prior to December 31, 1999, the
Borrowers shall have outstanding at least an amount of fixed-rate long term debt
equal to the 50% Amount.
SS.8. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. Each Borrower agrees
that, so long as any Loan, 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 Issuing Bank have any obligation to issue, extend or renew any
Letters of Credit hereunder:
SS.8.1. RESTRICTIONS ON INDEBTEDNESS. The Borrowers shall not, nor
permit any of their Subsidiaries to, 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, the Administrative Agent and the
Issuing Bank arising under this Credit Agreement or the other 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 of any real or personal property, (ii) Indebtedness of any
Restricted Subsidiary acquired after the 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 and existing on the date of
acquisition of such Acquired Subsidiary; (iii) other unsecured Indebtedness of
any Acquired Subsidiary existing on the date of acquisition of such Acquired
Subsidiary; (iv) Indebtedness with respect to obligations under Capitalized
Leases or sale and leaseback transactions (without duplication); (v)
Indebtedness in respect of Synthetic Leases, (vi) 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 and (vii) Indebtedness existing as of the
Closing Date and listed and described on SCHEDULE 8.1 hereto; PROVIDED THAT (A)
any such acquisitions are otherwise permitted pursuant to ss.8.4; (B) the
aggregate amount of all Indebtedness under this subsection (d) PLUS Indebtedness
with respect to Permitted Receivables Transactions under subsection (j) shall
not exceed the greater of (x) $200,000,000 or (y) fifteen percent (15%) of
Consolidated Tangible Assets and (C) the incurrence of any such Indebtedness
would not otherwise create an Event of Default under ss.9;
(e) Subordinated Debt, provided such Indebtedness is not amended or
prepaid, except in accordance with Section 8.11, without the consent of the
Majority Lenders, provided further that in the event that after the Closing Date
any
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Subsidiary of the Parent guarantees any Subordinated Debt, the terms of such
guaranty shall provide for the release of such guaranty upon the sale of stock
or all or substantially all of the assets of such Subsidiary (even if such sale
was made in a foreclosure) in substantially the same form of release provision
as in the Senior Subordinated Indenture and PROVIDED further that the
Obligations hereunder shall be "senior debt";
(f) Indebtedness incurred in respect of Swap Contracts;
(g) additional unsecured Indebtedness of the Borrowers in an aggregate
amount not to exceed $25,000,000;
(h) Indebtedness of any Borrower incurred to refinance or replace other
Indebtedness permitted under this ss.8.1, PROVIDed THat (i) the principal amount
(or committed principal amount) of such refinancing Indebtedness shall not
exceed the outstanding principal amount (or committed principal amount) of the
Indebtedness being refinanced and (ii) the terms of such refinancing
Indebtedness are not more onerous in the aggregate to such Borrower than the
terms of the Indebtedness being refinanced;
(i) Unsecured guarantees of the Parent of any of the Indebtedness
permitted in (b) through (h) above;
(j) Indebtedness of any Unrestricted Subsidiary (including with respect
to Permitted Receivables Transactions) which is non-recourse to the Borrowers
(except that the capital stock of such Unrestricted Subsidiary may be pledged by
the Borrowers to secure such Indebtedness of such Unrestricted Subsidiary);
(k) Indebtedness with respect to the indemnification of officers and
directors of the Borrowers or any Subsidiary in the ordinary course of business;
and
(l) Contingent Indebtedness with respect to the Series A Preferred
Stock, provided that no Distribution shall be made with respect to such
Indebtedness;
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.
SS.8.2. RESTRICTIONS ON LIENS. The Borrowers shall not, nor permit any
of their Subsidiaries to, 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
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any priority whatsoever over its general creditors; or sell, assign, pledge or
otherwise transfer any 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, to the extent
that payment thereof is not required pursuant to ss.7.8 hereof;
(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 or to secure contracts, leases and statutory
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 or are covered by insurance or bonds;
(d) Liens of carriers, warehousemen, mechanics and materialmen and
reclamation rights of suppliers and vendors, 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
unless such lien is bonded;
(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 and rights
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 Real 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 and do not adversely affect the
Lenders' collateral rights;
(f) (i) liens granted by the Borrowers or acquired Subsidiaries with
respect to asset financings (mortgages, Capitalized Leases, etc.) or industrial
revenue bonds or other leases permitted under ss.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 case such Liens
shall encumber only the property or assets so financed and the proceeds thereof
and shall not exceed the fair market value thereof at the time incurred and
shall not have been incurred in contemplation of such acquisition; (ii) Liens in
respect of Indebtedness to sellers and Capitalized Leases permitted by
ss.8.1(d); (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 ss.8.1(d), incurred in connection with the
acquisition of such property, which
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security interests or mortgages cover only the real or personal property so
acquired and the proceeds thereof, and the replacement, extension or renewal of
any such Lien encumbering no more than the property or assets encumbered by such
Lien; (iv) Liens existing as of the Closing Date and listed on SCHEDULE 8.2; (v)
Liens created pursuant to a Permitted Receivables Transaction on the receivables
so transferred and securing only the obligations of Unrestricted Subsidiaries
with respect thereto; (vi) Liens granted on rental contracts or accounts
receivable relating to equipment financed by Deutsche Financial Services ("DFS")
not to exceed $8,500,000, which liens may only be exercised by DFS after an
Event of Default pursuant to Section 13.1(g) of this Credit Agreement; and (vii)
Liens to secure refinancing Indebtedness of the Indebtedness permitted by
ss.8.1(d) PROVIDeD THat such Liens shall encumber only the property or assets so
refinanced and the proceeds thereof;
(g) Liens in favor of the Administrative Agent for the benefit of the
Lenders and the Administrative Agent under the Loan Documents; and
(h) Liens securing Indebtedness of Unrestricted Subsidiaries under
ss.8.1(j) provided that such Liens are only on the capital stock or assets of
such Unrestricted Subsidiaries.
SS.8.3. RESTRICTIONS ON INVESTMENTS. The Borrowers shall not, directly
or indirectly, purchase or acquire any capital stock, equity interest, or other
obligations or securities of, or any interest in, any other Person, or make any
acquisition, or make any advance, loan, extension of credit or capital
contribution to or any other investment in, any other Person, (an "Investment")
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 and time deposits of
commercial banks in the United States or of 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) money market mutual funds which invest primarily in assets
described in ss.8.3(a) - (c);
(e) 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;
(f) investments existing as of the Closing Date and listed on SCHEDULE
8.3;
(g) loans, investments and advances by any Borrower in or to another
then existing Borrower;
(h) investments with respect to Indebtedness permitted by ss.8.1(e);
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(i) investments permitted under ss.8.4;
(j) contributions to and payments of benefits under any Employee
Benefit Plan (in accordance with the terms of the Employee Benefit Plan)
permitted hereunder;
(k) advances or loans made in the ordinary course of business not to
exceed $5,000,000 in the aggregate outstanding at any one time; and
(l) other investments (other than those permitted under ss.8.4) and
commitments to make such investments in connection with acquisitions of any
stock of, partnership or joint venture interests in, or assets of any Person
(hereinafter an "Unrestricted Subsidiary"); PROVIDED that (A) the total
consideration paid with respect to all such investments (when aggregated with
all such other investments permitted pursuant to this ss.8.3(l)) shall not
exceed $30,000,000 and (B) and all liabilities with respect to such Unrestricted
Subsidiaries shall be non-recourse to the Borrowers (except as provided in
ss.8.2(h).
SS.8.4. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
SS.8.4.1. MERGERS AND ACQUISITIONS. The Borrowers will not
effect any merger, amalgamation, consolidation, asset acquisition or stock
acquisition (other than the acquisition of assets in the ordinary course of
business consistent with past practices and Capital Expenditures permitted by
ss.9.6) except the merger, amalgamation 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 ss.8.4. Any Borrower may effect such a
merger, amalgamation, consolidation or purchase or otherwise acquire all of the
stock or other equity interests or all or any portion of the assets of any other
Person PROVIDED THAT:
(a) at the time of each such merger consolidation, amalgamation, or
acquisition or series of mergers, amalgamations, consolidations or acquisitions;
(i) 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 ss.9 hereof on a
pro forma historical combined basis as if the transaction
occurred on the first day of the period of measurement;
(ii) 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;
(iii) the business to be acquired is predominantly in the same
lines of business as the Borrowers, or businesses reasonably
related or incidental thereto;
(iv) the business to be acquired operates predominantly in the
United States or Canada;
(v) all of the assets to be acquired shall be owned by the
Parent or an existing or newly created or acquired Subsidiary
of the Parent which Subsidiary
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shall, subject to ss.7.16, be a Borrower, all of the assets
and stock or other equity interests have been or, within ten
(10) days after such acquisition, will be pledged to the
Administrative Agent in accordance with ss.7.16 hereof or, in
the case of a stock or other equity interest acquisition, the
acquired company, within ten (10) days after such acquisition,
shall become a Borrower or shall be merged with and into, or
amalgamated with, a wholly-owned Subsidiary that is a Borrower
and such newly acquired or created Subsidiary shall otherwise
comply with the provisions of ss.7.16 hereof;
(vi) 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;
(vii) if such acquisition is made by a merger or amalgamation,
a Borrower shall be the surviving entity;
(viii) 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 acquisition date without the consent of Administrative
Agent and the Majority Lenders ("Majority Consent"); and
(ix) each acquisition is preceded by the Borrowers' standard
due diligence practices.
(b) in connection with each such merger, amalgamation, consolidation or
acquisition, or series of mergers, amalgamations, consolidations or
acquisitions, requiring Majority Consent, the Borrowers shall, unless waived by
the Majority Lenders, comply with the requirements set forth in ss.8.4.1(a) and:
(i) not later than seven (7) days prior to the proposed
acquisition date of such acquisition, a copy of the purchase
agreement (or a current draft thereof), together with audited
(if available, or otherwise unaudited) financial statements
for any Subsidiary or business to be acquired for the
preceding two (2) fiscal years or such shorter period of time
as such Subsidiary or business 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 to such Lender after the
Administrative Agent's receipt thereof;
(ii) not later than seven (7) days prior to the proposed
acquisition date, summaries of the relevant due diligence
review shall have been provided to the Administrative Agent
(each a "Due Diligence Summary"); 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;
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(iii) a Compliance Certificate demonstrating compliance with
ss.8.4.1(a)(i) shall have been provided to the Administrative
Agent and, upon a request by any Lender, to such Lender;
(iv) not later than ten (10) days after the closing date of
such acquisition, the Parent shall provide a certificate
stating that such acquisition has been completed substantially
in accordance with the terms of the acquisition documents
provided to the Administrative Agent and the Loan Documents;
and
(c) in connection with each such merger, amalgamation, consolidation or
acquisition, or series of mergers, amalgamations, consolidations or
acquisitions, where the cash consideration to be paid by the Borrowers
(including deferred payments and the aggregate amount of all Funded Debt
assumed) exceeds 2.5% of Consolidated Total Assets as of such acquisition date,
the Borrowers shall, unless waived by the Majority Lenders, comply with the
requirements set forth in ss.8.4.1(a) and the Parent will deliver to the
Administrative Agent at the time the first Compliance Certificate covering such
Subsidiary is delivered to the Administrative Agent (A) a copy of the purchase
agreement (if requested by the Administrative Agent or any Lender); (B) audited
(if available, or otherwise unaudited) financial statements for any such
Subsidiary for the preceding two (2) fiscal years (from the date of creation or
acquisition, as the case may be) or such shorter period of time as such
Subsidiary has been in existence; and (C) the applicable Due Diligence Summary;
and the Administrative Agent will, at the request of any Lender, deliver a copy
of such materials to such Lender after the Administrative Agent's receipt
thereof.
Notwithstanding anything herein to the contrary, the ability of the
Borrowers to incur any Indebtedness in connection with any transaction permitted
pursuant to this ss.8.4 shall be governed by ss.8.1.
SS.8.4.2. DISPOSITION OF ASSETS. The Borrowers will not effect
any sale or disposition of assets, other than (a) in the ordinary course of
business consistent with past practices, (b) sales pursuant to a Permitted
Receivables Transaction, and (c) so long as no Default or Event of Default shall
have occurred and be continuing at the time of such disposition, (i) other sales
of Rental Equipment, (ii) sales of Real Property acquired in connection with
acquisitions permitted under ss.8.4.1 and (iii) other sales or dispositions of
non-Rental Equipment assets not exceeding $25,000,000 in the aggregate during
the term of this Credit Agreement, PROVIDED THAT in the case of this clause (c),
the net proceeds of such sale or disposition are invested by the Borrowers in
the purchase of Rental Equipment or are applied to reduce the outstanding amount
of Revolving Credit Loans, within ninety (90) days of each such sale or
disposition. The Administrative Agent shall release its lien on the assets
disposed of in accordance with this ss.8.4.2 and will deliver to the Borrowers
such evidence of such release as the Borrowers may reasonably request.
SS.8.5. SALE AND LEASEBACK. Except as permitted under ss.8.1(d)(iv),
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.
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SS.8.6. RESTRICTED DISTRIBUTIONS AND REDEMPTIONS. None of the Borrowers
shall make Distributions except that the Parent may repurchase shares of its
common stock having an aggregate value of up to $15,000,000 per year and 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 Distributions.
Notwithstanding the foregoing, any Borrower may make Distributions to the
Parent. 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 that could adversely affect the rights of the
Lenders and the Administrative Agent.
SS.8.7. EMPLOYEE BENEFIT PLANS. None of the Borrowers nor any ERISA
Affiliate will:
(a) engage in any "prohibited transaction" within the meaning of ss.406
of ERISA or ss.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 ss.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 ss.302(f) or ss.4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances requiring the
posting of security pursuant to ss.307 of ERISA or ss.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 ss.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.
SS.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 on any assets owned by the Borrowers in favor of the Administrative
Agent for the benefit of the Lenders and the Administrative Agent under the Loan
Documents, other than with respect to assets which are subject to Basket Liens.
SS.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
such businesses permitted by ss.8.4.1(a)(iii).
SS.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
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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 business. Nothing in this ss.8.10 shall prohibit transactions permitted by
ss.ss.8.1(c), 8.3(f), 8.4.2(a) and 8.6 or customary indemnification of officers
and directors of the Borrowers.
SS.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, except in accordance with this Section
8.11. 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
the 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, AND any other Indebtedness incurred since the most recent
Compliance Certificate delivered to the Administrative Agent, assuming such
payment and borrowing had been incurred as of the last day of the prior fiscal
quarter, the Borrowers are and shall continue to be in compliance with all of
the covenants in ss.9 hereof as of such date of delivery of such Compliance
Certificate. In the event that the Borrowers are unable to deliver such
Compliance Certificate, the Borrowers shall prepay the Term Loan, at least one
(1) Business Day prior to making any payment on any Subordinated Debt, in an
amount sufficient to bring the Borrowers into pro forma compliance with the
covenants in ss.9 of the Credit Agreement. Each such payment on the Term Loan
shall be allocated in the manner set forth in ss.4.4.3 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 ss.13.1(a) or (b) exists or
would be created by the making of such payment. Seller Notes may be repaid prior
to the scheduled maturity date thereof from the proceeds of (i) an offer and
sale of shares of common stock of the Parent or (ii) Subordinated Debt other
than the Seller Notes, provided that prior to such payments the Borrowers shall
deliver to the Administrative Agent and the Lenders a Compliance Certificate
demonstrating that on a pro forma basis after giving effect to the proposed
payment and any other Indebtedness incurred since the most recent Compliance
Certificate delivered to the Administrative Agent, assuming such payment and
borrowing had been incurred as of the last day of the prior fiscal quarter, the
Borrowers are and shall continue to be in compliance with all of the covenants
in Section 9 hereof as of such date of delivery of such Compliance Certificate.
SS.8.12. FISCAL YEAR. None of the Borrowers will change the date of its
fiscal year from that set forth in ss.6.4(c) hereof.
SS.9. FINANCIAL COVENANTS. Each of the Borrowers covenants and agrees
that, so long as any Loan, any 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 Issuing Bank has any
obligation to issue, extend or renew any Letters of Credit hereunder:
SS.9.1. LEVERAGE RATIO. Commencing with the fiscal quarter ending June
30, 1999, the ratio of (a) Funded Debt as at the end of any fiscal quarter to
(b) EBITDA for the period of four
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(4) consecutive fiscal quarters ending on such date shall not exceed the ratio
for the quarters ending on or within the respective periods set forth in the
following table:
Quarters Ending Ratio
--------------- -----
On or before March 31, 2001 4.75:1
June 30, 2001 and thereafter 4.50:1
SS.9.2. SENIOR FUNDED DEBT TO EBITDA. Commencing with the fiscal
quarter ending June 30, 1999, the ratio of (a) Senior 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 the ratio for the quarters
ending on or within the respective periods set forth in the following table:
Quarters Ending Ratio
--------------- -----
On or before March 31, 2000 3.75:1
June 30, 2000 - March 31, 2001 3.50:1
June 30, 2001 and thereafter 3.25:1
SS.9.3. INTEREST COVERAGE RATIO. As of the end of any fiscal quarter of
the Borrowers commencing with the fiscal quarter ending June 30, 1999, the
Borrowers will not permit the ratio (the "Interest Coverage Ratio") of (a) the
sum of (i) actual reported EBIT (without PRO FORMA adjustment for acquisitions)
for the period of four (4) consecutive fiscal quarters ending on such date PLUS
(ii) amortization expense relating to intangible assets to (b) Consolidated
Total Interest Expense to be less than the ratio for the quarters ending on or
within the respective periods set forth in the following table:
Quarters Ending Ratio
--------------- -----
On or before March 31, 2000 1.75:1
June 30, 2000 and thereafter 2.00:1
SS.9.4. SENIOR DEBT TO TANGIBLE ASSETS. The Borrowers will not permit
at any time the ratio of (a) the sum of the Loans, unpaid Reimbursement
Obligations and the Maximum Drawing Amount to (b) Consolidated Tangible Assets
to be greater than 1.00:1.
SS.9.5. CONSOLIDATED NET WORTH. The Borrowers will not permit
Consolidated Net Worth at any time to be less than $270,000,000 PLUS the sum of
(i) 50% of positive Consolidated Net Income for each fiscal quarter, beginning
with the fiscal quarter ended June 30, 1999, 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.
SS.9.6. CAPITAL EXPENDITURES. Capital Expenditures (other than for
Rental Equipment and trucks, trailers and other equipment used to transport the
same used in the ordinary course of
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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
----------- ------
1999 $30,000,000
2000 $30,000,000
2001 $35,000,000
2002 $40,000,000
2003 $45,000,000
2004 $50,000,000
2005 $55,000,000
2006 $60,000,000
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.
SS.10. CLOSING CONDITIONS. The obligations of (a) the Lenders to
convert the loans and letters of credit under the Prior Credit Agreement into
Loans and Letters of Credit and to make the initial Loans, (b) the Issuing Bank
to issue any initial Letters of Credit, and (c) the Lenders and the
Administrative Agent otherwise to be bound by the terms of this Credit Agreement
shall be subject to the satisfaction of each of the following conditions
precedent:
SS.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.
SS.10.2. CORPORATE ACTION. All corporate or partnership action
necessary for the valid execution, delivery and performance by each Borrower of
the Loan Documents to which it is a party shall have been duly and effectively
taken, and satisfactory evidence thereof shall have been provided to the
Administrative Agent.
SS.10.3. CERTIFICATE OF SECRETARY; GOOD STANDING CERTIFICATES. The
Administrative Agent shall have received from each Borrower a certificate of
good standing, valid existence or subsistence, status, or compliance, as
applicable, of such Borrower from the Secretary of State or other appropriate
official of the jurisdiction of its organization or formation and from each
jurisdiction in which it is authorized to conduct business, in each case dated
as of a recent date. The Administrative Agent shall also have received from each
Borrower a certificate of its Secretary certifying the following attachments
thereto: (a) a copy of its certificate or articles of incorporation, certificate
of limited partnership or other constituent 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 jurisdiction of its organization or formation, (b) a
true, correct and complete copy of its by-laws or limited partnership agreement,
as applicable, including all amendments thereto, and (c) a true, correct and
complete copy of the resolutions of its board of directors or a committee
thereof or general partner, as applicable, authorizing the transactions
contemplated hereunder and under the other Loan Documents. Such Secretary's
Certificate shall also give the
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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.
SS.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 shall have been duly effected or such documentation shall be delivered
to the Administrative Agent, including, without limitation, the filing of such
UCC-3 Assignments and UCC-3 Amendments to continue the liens granted by the
Parent and its Subsidiaries under the Prior Credit Agreement and the security
documents related thereto. The Administrative Agent shall have received evidence
thereof in form and substance reasonably satisfactory to the Administrative
Agent.
SS.10.5. PERFECTION CERTIFICATES AND SEARCH RESULTS. The Administrative
Agent shall have received from each Borrower a completed and fully executed
Perfection Certificate and the results of UCC searches with respect to the
Collateral, indicating no liens other than Permitted Liens and otherwise in form
and substance reasonably satisfactory to the Administrative Agent.
SS.10.6. CERTIFICATES OF INSURANCE. The Administrative Agent shall have
received 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 Agreements.
SS.10.7. LEGAL OPINIONS. The Administrative Agent shall have received
favorable legal opinions 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, and including, without
limiting the generality of the foregoing, an opinion regarding noncontravention
of the Loan Documents and the transactions contemplated herein and therein with
the documents evidencing the Subordinated Debt from the Parent's general
counsel.
SS.10.8. PAYMENT OF FEES. The Borrowers shall have paid all fees owing
to any of the Lenders or the Agents, as appropriate, including, without
limitation, the fees and expenses of the Administrative Agent's counsel and the
fees set forth in the fee letters dated as of the July 20, 1999 (the "Fee
Letter").
SS.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.
SS.10.10. CONSENTS. The Borrowers shall have delivered to the
Administrative Agent evidence that all requisite material third-party consents
to the transactions contemplated hereunder and under the other Loan Documents
have been received.
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SS.10.11. SUBORDINATED DEBT DOCUMENTS. The Borrowers shall have
delivered to the Administrative Agent true, correct and complete copies of the
documents evidencing the Subordinated Debt (including any amendments thereof) in
existence as of the Closing Date and any of such documents not previously
delivered and approved by the Administrative Agent shall be in form and
substance satisfactory to the Administrative Agent.
SS.10.12. EQUITY OFFERING. The Borrowers shall have received Net Equity
Proceeds of an amount not less than $50,000,000 since June 30, 1999, from the
Series A Preferred Stock offering by the Parent completed immediately after the
closing of this Agreement and prior to the close of business on the Closing
Date, PROVIDED that no Lender shall be obligated to fund under this Agreement
prior to receipt of evidence of the Series A Preferred Stock closing
satisfactory to the Administrative Agent and the Syndication Agent, including,
without limitation, an opinion with respect thereto.
SS.10.13. COMPLIANCE CERTIFICATE. The Borrowers shall have delivered to
the Administrative Agent a duly executed and completed Compliance Certificate.
SS.10.14. MATERIAL ADVERSE CHANGES. Since March 31, 1999, there shall
not have occurred any material adverse changes in the financial condition,
business or prospects of the Parent and its Restricted Subsidiaries, taken as a
whole except as set forth in publicly available filings of the Parent with the
SEC prior to the Closing Date.
SS.10.15. SOLVENCY CERTIFICATE. The Borrowers shall have delivered to
the Administrative Agent a certificate, dated as of the Closing Date, as to the
solvency of the Borrowers on a consolidated basis following consummation of the
transactions contemplated herein, in form and substance satisfactory to the
Administrative Agent.
SS.11. CONDITIONS OF ALL LOANS. The obligations of the Lenders to
convert the loans under the Prior Credit Agreement into Loans hereunder, and to
make or extend any Loan, and of the Issuing Bank to issue, extend or renew any
Letter of Credit on or after the Closing Date shall also be subject to the
following conditions precedent:
SS.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 in all
material respects as of the date as of which they were made and shall also be
true in all material respects 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.
SS.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
or Letter of Credit. Each request by the Borrowers for a Loan, for issuance,
extension or renewal of a Letter of Credit subsequent to the Closing
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Date shall constitute certification by the Borrowers that the conditions
specified in ss.ss.11.1 and 11.2 will be duly satisfied on the date of such Loan
or Letter of Credit issuance.
SS.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 Issuing Bank would make it illegal
for the Issuing Bank to issue, extend or renew such Letter of Credit.
SS.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 applicable
regulations of the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System.
SS.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 required to be delivered hereunder 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.
SS.12. COLLATERAL SECURITY. The Obligations shall be secured by (a) a
perfected first priority security interest (except for assets subject to Basket
Liens or other Permitted Liens entitled to priority under applicable law) in all
assets (other than Real Property or titled or registered Rental Equipment unless
required pursuant to ss.7.19) of each Borrower, whether now owned or hereafter
acquired, pursuant to the terms of the Security Documents to which such Borrower
is a party; (b) a pledge of 100% of the capital stock or other equity interests
of each Restricted Subsidiary of the Parent pursuant to the terms of the Pledge
Agreements.
SS.13. EVENTS OF DEFAULT; ACCELERATION; TERMINATION OF COMMITMENT.
SS.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 ss.ss.4.4 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;
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(c) (i) any Borrower shall fail to comply with any of the covenants
contained in ss.7.1, 7.16, 7.19, 8 or 9, or (ii) any Borrower shall fail to
comply with any of the covenants contained in the first clause of ss.7.5 or in
ss.7.15 within ten (10) days after the earlier to occur of (A) written notice of
such failure given to the Borrowers by the Administrative Agent or any Lender or
(B) the date on which any Borrower knew or should have known about such event;
(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) the date that 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) (i) the Parent shall fail to pay at maturity, or within any
applicable period of grace, any Indebtedness (other than the Obligations) in an
aggregate amount greater than $10,000,000 or fail to observe or perform any
material term, covenant or agreement contained in any agreement by which it is
bound, evidencing or securing Indebtedness in an aggregate amount greater than
$10,000,000 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, or (ii)
any Borrower other than the Parent shall fail to pay at maturity, or within any
applicable period of grace, any Indebtedness (other than the Obligations) in an
aggregate amount greater than $5,000,000 (or, together with the other non-Parent
Borrowers exceeds an aggregate amount of $10,000,000) or fail to observe or
perform any material term, covenant or agreement contained in any agreement by
which it is bound, evidencing or securing Indebtedness in an aggregate amount
greater than $5,000,000 (or, together with the other non-Parent Borrowers
exceeds an aggregate amount of $10,000,000) 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, receiver or receiver and manager 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 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, receiver or receiver and manager or adjudicating any
Borrower bankrupt or insolvent, or
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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 sixty (60) days, whether or not consecutive, any final
judgment against any Borrower which, with other outstanding final judgments,
undischarged, unsatisfied and unstayed against the Borrowers, exceeds in the
aggregate $10,000,000 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 ss.4.4 or ss.8.11 hereof;
(k) any Borrower, other than the Parent, 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 $5,000,000, (or, in the case of the
Parent, or together with other non-Parent Borrowers, exceeds an aggregate amount
of $10,000,000) any Borrower, other than the Parent or any ERISA Affiliate is
assessed withdrawal liability pursuant to Title IV of ERISA by a Multiemployer
Plan requiring aggregate annual payments exceeding $5,000,000 (or, in the case
of the Parent, or together with other non-Parent Borrowers, exceeds an aggregate
amount of $10,000,000), 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 ss.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 other than the Parent to the PBGC or such Plan in an aggregate amount
exceeding $10,000,000 (or, in the case of the Parent, or together with other
non-Parent Borrowers, exceeds an aggregate amount of $10,000,000) and (B) could
constitute grounds for the termination of such Plan by the PBGC, for the
appointment by the appropriate United States District Court of a trustee to
administer such Plan or for the imposition of a lien in favor of such Plan; or
(ii) the appointment by a United States District Court of a trustee to
administer such Plan; or (iii) the institution by the PBGC of proceedings to
terminate such 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
directly or indirectly less than one hundred percent (100%) of the shares of the
capital stock of each other Borrower,
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as adjusted pursuant to any stock split, stock dividend or recapitalization or
reclassification of the capital of such Borrower; (ii) except as set forth on
SCHEDULE 13.1(M), any Person or group of Persons (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 SEC
under said Act) of 30% or more of the outstanding shares of common stock of the
Parent, unless such change in beneficial ownership is a result of issuances of
common stock by the Parent after the Closing Date, in which case such percentage
shall be increased to 35%; or, during any period of twelve consecutive calendar
months, individuals who were directors of the Parent on the first day of such
period (together with any new directors whose election by such board or whose
nomination for election by the shareholders of the Parent was approved by a vote
of a majority of the directors still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) shall cease to constitute a majority of the board of
directors of the Parent; or (iii) there shall occur a "Change of Control" under
the Series A Preferred Stock or Subordinated Debt (in each case as defined
therein) and such "Change of Control" shall (A) create an event of default
thereunder of Indebtedness in excess of $10,000,000 in the aggregate, or (B)
entitle the holders thereof to payment in excess of $10,000,000 in the
aggregate;
then, and in any such Event of Default, 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 ss.ss.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 ss.ss.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.
SS.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 Issuing Bank
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 ss.ss.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 Issuing Bank 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, the Issuing Bank or any
Lender. No termination of any portion of the
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Total Commitment hereunder shall relieve the Borrowers of any of their existing
Obligations to the Revolving Credit Lenders hereunder or elsewhere.
SS.13.3. REMEDIES. Subject to ss.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 and other Obligations pursuant
to ss.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, 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.
SS.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 of 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;
(b) Second, notwithstanding anything to the contrary
set forth herein, to the payment of the Lenders, to 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
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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 ss.9-504(1)(c) of the Uniform Commercial Code
of the State of New York; and
(d) Fourth, the excess, if any, shall be returned to
the Borrowers or to such other Persons as are entitled
thereto.
SS.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 or the Administrative Agent to any Borrower and any
securities or other property of any Borrower in the possession of such Lender or
the Administrative Agent 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 and the Administrative Agent. The Lenders and the
Administrative Agent 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 ss.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 and the Administrative Agent 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 and Administrative Agent 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.
SS.15. THE ADMINISTRATIVE AGENT.
SS.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.
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(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.
SS.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.
SS.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 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.
SS.15.4. NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND OTHER LENDERS.
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
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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
after receiving notice thereof (other than actions to which the provisions of
ss.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.
SS.15.5. NO REPRESENTATIONS.
SS.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 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.
SS.15.5.2. CLOSING DOCUMENTATION, ETC. For purposes of
determining compliance with the conditions set forth in ss.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 any affiliate to such Lender for consent,
approval, acceptance or satisfaction, unless an officer of the
Administrative Agent or any affiliate 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 any affiliate to such effect on or prior to the Closing Date.
SS.15.6. PAYMENTS.
SS.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
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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 Commitment
Percentage or Loan Percentage, as the case may be) 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.
SS.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 the
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 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.
SS.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 ss.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 and 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 for which such Delinquent Lender has any
obligations hereunder. 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 such
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 such
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 ss.15.6.3, other than matters
specified in ss.27 that require the consent of each Lender affected
thereby (and such Delinquent Lender is affected thereby) or the consent
of all Lenders.
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SS.15.7. HOLDERS OF NOTES, ETC. 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.
SS.15.8. INDEMNITY. The Lenders ratably (based on each such Lender's
Loan Percentage) agree hereby to indemnify and hold harmless the Administrative
Agent and their affiliates from and against any and all claims, actions and
suits (whether groundless or otherwise), losses, damages, costs, expenses, 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 or such affiliates' actions taken hereunder or thereunder, except to the
extent that (a) the Administrative Agent or such affiliates have been reimbursed
by the Borrowers as required by ss.16 or (b) any of the same shall be directly
caused by the Administrative Agent or such affiliates' willful misconduct or
gross negligence.
SS.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.
SS.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 the 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 the Administrative Agent.
SS.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
ss.15.11 it shall promptly notify the other Lenders of the existence of such
Default or Event of Default.
SS.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
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(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.
SS.15.13. DUTIES OF SYNDICATION AGENT. The Syndication Agent as such
shall have no duties or responsibilities to the Borrowers, the Lenders or the
Administrative Agent hereunder.
SS.16. EXPENSES AND INDEMNIFICATION.
SS.16.1. EXPENSES. Whether or not the transactions contemplated herein
shall be consummated, the Borrowers jointly and severally agree to pay, in
accordance with the provisions of ss.5.12, (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 one (1) United States 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 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 or any of its
affiliates incurred by the Administrative Agent or its affiliates 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 and
during the continuance 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 and other relevant searches, UCC and other
relevant filings, mortgage recordings, certificates of title and any other
applicable filings or recordings with
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respect to any Security Documents or Collateral, and (vii) any environmental
assessments commissioned by the Administrative Agent prior to foreclosure on any
Real Property.
SS.16.2. INDEMNIFICATION. The Borrowers agree to indemnify and hold
harmless, in accordance with the provisions of ss.5.12, the Administrative
Agent, the Lenders and their respective shareholders, directors, officers,
agents, subsidiaries and affiliates from and against any and all claims, actions
and suits (whether groundless or otherwise), losses, damages, costs, expenses
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 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 Lender or such affiliate. In litigation, or the
preparation therefor, the Lenders, the Administrative Agent and its 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 ss.16.2 are
unenforceable for 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.
SS.16.3. SURVIVAL. The covenants contained in this ss.16 shall survive
payment or satisfaction in full of all other Obligations.
SS.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 Issuing Bank 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.
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SS.18. ASSIGNMENT AND PARTICIPATION.
SS.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 and until the sell-down of the Administrative Agent's
and the Syndication Agent's initial underwriting and the Agents have reached
their desired hold levels, the Parent (as the representative of the Borrowers)
shall have given its prior written consent to such assignment, which consent
will not be unreasonably withheld, PROVIDED that such consent shall not be
required in connection with any assignment to any Lender, any affiliate of any
Lender or any fund that invests in loans and is managed by any Lender or
affiliate of any Lender, (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 (PROVIDED that
such minimum amount shall not be required in connection with any assignment to
any Lender, any affiliate of any Lender or any fund that invests in loans and is
managed by any Lender or affiliate of any Lender), or, if less, the entire
Commitment or portion of the Term Loan 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 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 ss.18.3, be released from its obligations under this Credit
Agreement.
SS.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
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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 ss.7.4 and ss.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;
(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.
SS.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, provided, however, that no such fee shall be payable in
the case of an assignment between existing Lenders or between a Lender and an
affiliate of such Lender and, provided further that in the case of
contemporaneous assignments by a Lender to more than one fund that invest in
loans and that are managed by the same investment advisor (which funds are not
Lenders hereunder), only one such fee shall be payable for all such
contemporaneous assignments.
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SS.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 in the case of Revolving Credit Loans and/or a portion of the
Term Loan, 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 Revolving Credit Lender or Term Loan 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
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 thirty (30) days of
issuance of any new Notes pursuant to this ss.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.
SS.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) any such sale or participation shall not affect the rights and duties
of the selling Lender hereunder to the Borrowers and (ii) 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, extend any
regularly scheduled payment date for principal or interest or release all or
substantially all of the Collateral.
SS.18.6. DISCLOSURE. Each Borrower agrees that in addition to
disclosures made in accordance with standard and customary lending 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.
SS.18.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH A BORROWER. If any
assignee Lender is an Affiliate, 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 ss.13.1 or ss.13.2,
and the
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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, 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 ss.13.1 or ss.13.2 to
the extent that such participation is beneficially owned by a Borrower or an
Affiliate, 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.
SS.18.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Lender
shall retain its rights to be indemnified pursuant to ss.16 with respect to any
claims or actions arising prior to the date of such assignment. If any Eligible
Assignee 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 ss.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 ss.4 of the Federal
Reserve Act, 12 U.S.C. ss.341, (b) to a lender of such Lender (or trustee
therefor) in connection with a bona fide financing, and (c) any Lender that is a
fund that invests in bank loans may at any time pledge all or any portion of its
interests and rights with respect to its Term Note to any trustee for, or any
other representative of, holders of obligations owed or securities issued by
such fund as security for such obligations or securities, PROVIDED that any
foreclosure or similar action by such trustee or other representative shall be
subject to the other provisions of this ss.18. 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 anything 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.
SS.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.
SS.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 permitted assigns of the parties
hereto and thereto.
SS.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
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hand, mailed by United States 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 East Las Olas
Boulevard, Suite 1400, Ft. Lauderdale, Florida 33301, Attention: Gene J. Ostrow,
Executive Vice President, telephone number (954) 760-6550, fax number (954)
760-6585;
(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;
(c) if to any Lender, at such Lender's address set forth on SCHEDULE 1;
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
(5) 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.
SS.21. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
SS.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.
SS.21.2. CONFIDENTIALITY. Each of the Lenders and the Administrative
Agent agrees, on behalf of itself and each of their affiliates, directors,
officers and employees, 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 commercial lending
practices, any material 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 ss.21, (b) to the extent
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required by statute, rule, regulation or judicial process, (c) to counsel for
any of the Lenders or the Administrative Agent, (d) to bank examiners, the
National Association of Insurance Commissioners 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 or other proceeding
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 any fund that invest in loans and is managed by 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 ss.21.
SS.21.3. PRIOR NOTIFICATION. Unless 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 material non-public information by any governmental agency or
representative thereof (other than any such request in connection with an
examination of such Lender by such governmental agency) or pursuant to legal
process.
SS.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 ss.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.
SS.22. MISCELLANEOUS. The rights and remedies herein expressed are
cumulative and not exclusive of any other rights which the Lenders or the
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 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.
SS.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 ss.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.
SS.24. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
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WAIVES ANY AND ALL 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, THE BORROWERS HEREBY WAIVE ANY RIGHT ANY OF THEM 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. EACH BORROWER (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY LENDER, THE ADMINISTRATIVE AGENT OR ANY
AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH LENDER, THE
ADMINISTRATIVE AGENT OR SUCH AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE ADMINISTRATIVE
AGENT, THE OTHER AGENTS AND THE LENDERS HAVE BEEN INDUCED TO ENTER INTO THIS
CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS BECAUSE OF, AMONG OTHER THINGS,
THE BORROWERS' WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
SS.25. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS CREDIT AGREEMENT
AND EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE STATE
OF NEW YORK AND SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW SS.5-1401,
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. THE BORROWERS CONSENT AND AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO
THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE BORROWERS IN ACCORDANCE WITH LAW AT THE ADDRESS
SPECIFIED IN SS.20. THE BORROWERS HEREBY WAIVE ANY OBJECTION THAT THEY MAY NOW
OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH
SUIT IS BROUGHT IN AN INCONVENIENT COURT.
SS.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.
SS.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
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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 ss.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 adversely affected thereby: (a) increase the Commitments of the
Revolving Credit Lenders or the principal amount of the Term Loan or subject any
Lender to any additional obligations, (b) reduce the principal of or the rate of
interest (including, without limitation, the default interest rate) of any Loan
or any payments thereon or reduce any fees or postpone the date for payment of
fees payable hereunder, or (c) waive or postpone the date for any mandatory
prepayment under ss.4.4; and FURTHER, no amendment, waiver or consent shall do
any oF the following unless in writing and signed by ALL of the Lenders: (d)
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; (e) change the
definition of "Majority Lenders"; "Loan Percentage" or the percentage of Lenders
which shall be required for the Lenders or any of them to take any action under
the Loan Documents; (f) amend ss.4.4, ss.5, ss.13.4, this ss.27, or ss.28; (g)
release any CollateraL with an aggregate value exceeding $500,000 (in addition
to Collateral released pursuant to ss.8.4.2) in any calendar yeaR or (h) 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: (i) amend the amount of the Administrative Agent's fee;
and FURTHER, no amendment, waiver or consent shall do any of the following
unless in writing and signed by the Issuing Bank: (j) amend the amount of the
Issuance Fees payable for the Issuing Bank's account; and FURTHER, no amendment,
waiver or consent shall do any of the following unless in writing and signed by
the Administrative Agent: (k) amend ss.15; and further, no amendment, waiver or
consent shall amend ss.2.8 or Any other provisions relating to the Swing Line
Loans unless in writing and signed by BKB or (l) without the written consent of
all Revolving Credit Lenders, change the definition of "Required Revolving
Credit Lenders".
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.
SS.28. PARI PASSU TREATMENT.
(a) Subject to ss.13.4 and notwithstanding anything to the contrary set
forth herein, each payment oR prepayment of principal and interest received
after the occurrence of an Event of Default hereunder shall be distributed pari
passu among the Lenders, in accordance with the aggregate outstanding principal
amount of the Obligations owing to each Lender divided by the aggregate
outstanding principal amount of all Obligations.
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(b) Following the occurrence and during the continuance of any Event of
Default, each Lender agrees that if it shall, through the exercise of a right of
banker's lien, setoff or counterclaim against any Borrower (pursuant to ss.15 or
otherwise), including a secured claim under Section 506 of the Bankruptcy Code
or otheR security or interest arising from or in lieu of, such secured claim,
received by such Lender under any applicable bankruptcy, insolvency or other
similar law or otherwise, obtain payment (voluntary or involuntary) in respect
of the Loans, and other Obligations held by it as a result of which the unpaid
principal portion of the Loans and the Obligations held by it shall be
proportionately less than the unpaid principal portion of the Loans and
Obligations held by any other Lender, it shall be deemed to have simultaneously
purchased from such other Lender a participation in the Loans and Obligations
held by such other Lender, so that the aggregate unpaid principal amount of the
Loans, Obligations and participations in Loans and Obligations held by each
Lender shall be in the same proportion to the aggregate unpaid principal amount
of the Loans and Obligations then Outstanding as the principal amount of the
Loans and other Obligations held by it prior to such exercise of banker's lien,
setoff or counterclaim was to the principal amount of all Loans and other
Obligations outstanding prior to such exercise of banker's lien, setoff or
counterclaim; PROVIDED, however, that if any such purchase or purchases or
adjustments shall be made pursuant to this ss.28 and the payment giving rise
thereto shall thereafter be recovered, sucH purchase or purchases or adjustments
shall be rescinded to the extent of such recovery and the purchase price or
prices or adjustments restored without interest.
(c) Each Borrower expressly consents to the foregoing arrangements and
agrees that any Person holding such a participation in the Loans and the
Obligations deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by such Borrower to such Person as fully as if such Person had made a Loan
directly to such Borrower in the amount of such participation.
(d) Nothing contained in this ss.28 shall impair, as between the
Borrowers and any Lender, thE obligation of the Borrowers to pay such Lender all
amounts payable in respect of such Lender's Loans and other Obligations as and
when the same shall become due and payable in accordance with the terms thereof.
SS.29. TRANSITIONAL ARRANGEMENTS.
SS.29.1. PRIOR CREDIT AGREEMENT SUPERSEDED. This Credit Agreement shall
supersede the Prior CrediT Agreement in its entirety, except as provided in this
ss.29. On the Closing Date, the rights and obligations oF the parties under the
Prior Credit Agreement which remain Lenders hereunder 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), Swing Line
Loans (as defined herein) or the Term Loan (as defined herein), as applicable.
SS.29.2. RETURN AND SUBSTITUTION OF NOTES. As soon as reasonably
practicable after its receipt of itS Notes hereunder on the Closing Date, each
of the Revolving Credit Lenders party to the Prior Credit Agreement will
promptly return to the Parent, marked "Substituted", any
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superseded promissory notes of the Borrowers, and any allonges thereto, held by
such Lender pursuant to the Prior Credit Agreement.
SS.29.3. REFERENCE TO AGENT. Each of the parties hereto agree that all
references to the "Agent" oR "Administrative Agent" made in any security
documents, UCC-1 financing statements filed previously in connection with the
Prior Credit Agreement shall be amended and deemed to be references to the
"Administrative Agent".
SS.29.4. 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 to those Lenders who
remain Lenders hereunder, and shall be paid with respect to prior lenders who
are withdrawing as parties to this Credit Agreement.
[Signature Pages Follow]
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IN WITNESS WHEREOF, each of the undersigned have duly executed this
Credit Agreement as of the date first set forth above.
THE BORROWERS:
--------------
NATIONSRENT, INC.
NATIONSRENT USA, INC.
NATIONSRENT TRANSPORTATION
SERVICES, INC.
NR DELAWARE, INC.
NRGP, INC.
NATIONSRENT WEST, INC.
LOGAN EQUIPMENT CORP.
By: /s/ Thomas C. Richardson
-----------------------------
Name: Thomas C. Richardson
Title: Vice President
NATIONSRENT OF TEXAS, LP
NATIONSRENT OF INDIANA, LP
By: NRGP, Inc., general partner
By: /s/ Thomas C. Richardson
-----------------------------
Name: Thomas C. Richardson
Title: Vice President
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
<PAGE> 98
THE LENDERS:
------------
BANKBOSTON, N.A.,
individually and as Administrative Agent
By: /s/ Timothy M. Laurion
-----------------------------
Timothy M. Laurion, Director
BANKERS TRUST COMPANY,
individually and as Syndication Agent
By: /s/
-----------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.7
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT (this "Security Agreement"),
dated as of July 20, 1999, between NATIONSRENT, INC., a Delaware corporation
(the "Parent") and its Restricted Subsidiaries party to the Credit Agreement
defined below (each a "Borrower" and collectively, the "Borrowers"), and
BANKBOSTON, N.A., a national banking association, as administrative agent
(hereinafter, in such capacity, the "Administrative Agent") for itself and other
lending institutions (hereinafter, collectively, the "Lenders"), which are or
may become parties to a Fourth Amended and Restated Revolving Credit and Term
Loan Agreement dated as of July 20, 1999 (as amended and in effect from time to
time, the "Credit Agreement"), among the Borrowers, the Lenders, the
Administrative Agent and Bankers Trust Company, as syndication agent (the
"Syndication Agent").
WHEREAS, certain of the Borrowers as well as certain other parties
entered into a Third Amended and Restated Revolving Credit and Term Loan
Agreement dated as of February 11, 1999 (such agreement as heretofore amended
and in effect from time to time, the "Prior Credit Agreement"); and
WHEREAS, certain of the Borrowers and the Administrative Agent were
parties to that certain Security Agreement dated as of March 18, 1998 (as
amended to date, the "Prior Security Agreement"), pursuant to which the
Borrowers named therein pledged and granted security interests in favor of the
Administrative Agent for the benefit of the Lenders to secure the payment and
performance of such Borrowers' obligations under the Prior Credit Agreement; and
WHEREAS, the remainder of the Borrowers joined the Prior Security
Agreement pursuant to various Joinder Agreements or amendments to the Prior
Security Agreement; and
WHEREAS, each of the Borrowers is expected to receive substantial
direct and indirect benefits from the extensions of credit by the Lenders to the
Borrowers pursuant to the Credit Agreement; and
WHEREAS, the Prior Credit Agreement will be superseded by the Credit
Agreement on the Closing Date (as defined in the Credit Agreement); and
WHEREAS, it is a condition precedent to the Lenders' making any Loans
to, and the Issuing Banks' issuing Letters of Credit for the account of, the
Borrowers under the Credit Agreement that each of the Borrowers execute and
deliver to the Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, a security agreement in substantially the form hereof; and
<PAGE> 2
WHEREAS, the parties hereto desire to amend and restate all of their
rights and obligations under the Security Agreement and reaffirm and grant
security interests in favor of and as provided herein; and
NOW, THEREFORE, in consideration of the promises 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. DEFINITIONS. All capitalized terms used herein without definitions
shall have the respective meanings provided therefor in the Credit Agreement.
All terms defined in the Uniform Commercial Code of the State of New York and
used herein shall have the same definitions herein as specified therein. "Motor
Vehicle Equipment" shall mean all trucks, trailers, automobiles, tires and all
related equipment and accessions with respect to which any Borrower now or
hereafter has full and unencumbered title, except for Permitted Liens.
2. GRANT OF SECURITY INTEREST.
2.1. COLLATERAL GRANTED. Each of the Borrowers (a) hereby
ratifies and affirms the grant of security interests made pursuant to
the Prior Security Agreement, and (b) to the extent not covered under
clause (a), further grants to the Administrative Agent, for the benefit
of the Lenders and the Administrative Agent, to secure the payment and
performance in full of all of the Obligations, a security interest in
and so pledges and collaterally assigns to the Administrative Agent,
for the benefit of the Lenders and the Administrative Agent, the
following properties, assets and rights of such Borrower, wherever
located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof (all of the same being hereinafter called
the "Collateral"):
All personal and fixture property of every kind and
nature including without limitation all furniture, fixtures,
equipment (including all titled or registered equipment and
rental equipment), raw materials, motor vehicles, trucks,
trailers, tractors, cranes, and all related equipment, parts
and accessions and additions with respect thereto, inventory,
other goods, accounts, contract rights, rights to the payment
of money, insurance refund claims and all other insurance
claims and proceeds, tort claims, chattel paper, documents,
instruments, securities and other investment property, deposit
accounts and all general intangibles including, without
limitation, all tax refund claims, license fees, patents,
patent applications, trademarks, trademark applications, trade
names, copyrights, copyright applications, rights to sue and
recover for past infringement of patents, trademarks and
copyrights, computer programs, computer software, engineering
drawings, service marks, customer lists, goodwill, and all
licenses,
2
<PAGE> 3
permits, agreements of any kind or nature pursuant to which
such Borrower possesses, uses or has authority to possess or
use property (whether tangible or intangible) of others or
others possess, use or have authority to possess or use
property (whether tangible or intangible) of such Borrower,
and all recorded data of any kind or nature, regardless of the
medium of recording including, without limitation, all
software, writings, plans, specifications and schematics.
2.2. DELIVERY OF INSTRUMENTS, ETC.
(a) Pursuant to the terms hereof, each of the
Borrowers has endorsed, assigned and delivered to the
Administrative Agent all negotiable or non-negotiable
instruments (including certificated securities) and chattel
paper pledged by it hereunder, together with instruments of
transfer or assignment duly executed in blank as the
Administrative Agent may have specified. In the event that any
of the Borrowers shall, after the date of this Security
Agreement, acquire any other negotiable or non-negotiable
instruments (including certificated securities) or chattel
paper to be pledged by it hereunder, such Borrower shall
forthwith endorse, assign and deliver the same to the
Administrative Agent, accompanied by such instruments of
transfer or assignment duly executed in blank as the
Administrative Agent may from time to time specify. The
Administrative Agent agrees with each of the Borrowers that
the Administrative Agent shall not take any actions with
respect to such instruments and chattel paper unless a Default
or an Event of Default has occurred and is continuing and the
Administrative Agent has elected to exercise its rights and
remedies as contemplated by ss.15.
(b) To the extent that any securities now or
hereafter acquired by any of the Borrowers are uncertificated
and are issued to such Borrower or its nominee directly by the
issuer thereof, such Borrower shall cause the issuer to note
on its books the security interest of the Administrative Agent
in such securities and shall cause the issuer, pursuant to an
agreement in form and substance satisfactory to the
Administrative Agent, to agree to comply with instructions
from the Administrative Agent as to such securities, without
further consent of such Borrower or such nominee. To the
extent that any securities, whether certificated or
uncertificated, or other financial assets now or hereafter
acquired by any of the Borrower are held by such Borrower or
its nominee through a securities intermediary, such Company
shall (i) cause such securities intermediary to note on its
books the security interest of the Administrative Agent in
such securities or other financial assets and to confirm such
notation promptly to the Administrative Agent and (ii), at the
request of the
3
<PAGE> 4
Administrative Agent, cause such securities intermediary,
pursuant to an agreement in form and substance satisfactory to
the Administrative Agent, to agree to comply with entitlement
orders or other instructions from the Administrative Agent as
to such securities or other financial assets, without further
consent of such Borrower or such nominee. The Administrative
Agent agrees with each of the Borrowers that the
Administrative Agent shall not give any such entitlement
orders or instructions to any such issuer or securities
intermediary unless a Default or an Event of Default has
occurred and is continuing and the Administrative Agent has
elected to exercise its rights and remedies as contemplated by
ss.15.
2.3. EXCLUDED COLLATERAL. Notwithstanding the foregoing
provisions of this ss.2, such grant of security interest shall not
extend to, and the term "Collateral" shall not include, any chattel
paper and general intangibles which are now or hereafter held by any of
the Borrowers as licensee, lessee or otherwise, to the extent that (i)
such chattel paper and general intangibles are not assignable or
capable of being encumbered as a matter of law or under the terms of
the license, lease or other agreement applicable thereto (but solely to
the extent that any such restriction shall be enforceable under
applicable law), without the consent of the licensor or lessor thereof
or other applicable party thereto and (ii) such consent has not been
obtained; PROVIDED, HOWEVER, that the foregoing grant of security
interest shall extend to, and the term "Collateral" shall include, (A)
any and all proceeds of such chattel paper and general intangibles to
the extent that the assignment or encumbering of such proceeds is not
so restricted and (B) upon any such licensor, lessor or other
applicable party consent with respect to any such otherwise excluded
chattel paper or general intangibles being obtained, thereafter such
chattel paper or general intangibles as well as any and all proceeds
thereof that might have theretofore have been excluded from such grant
of a security interest and the term "Collateral".
2.4. STOCK PLEDGE AGREEMENT. Concurrently herewith the Parent
and NRGP, Inc. are executing and delivering to the Administrative
Agent, for the benefit of the Lenders and the Administrative Agent, a
stock pledge agreement pursuant to which the Parent and NRGP, Inc. are
each pledging to the Administrative Agent, for the benefit of the
Lenders and the Administrative Agent, all the shares of the capital
stock of each of their Subsidiaries. Such pledge shall be governed by
the terms of such stock pledge agreement and not by the terms of this
Security Agreement.
2.5. PARTNERSHIP PLEDGE AGREEMENTS. Concurrently herewith
NRGP, Inc., NR Delaware, Inc., and NationsRent USA, Inc. are executing
and delivering to the Administrative Agent, for the benefit of the
Lenders and the Administrative Agent, several partnership pledge
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agreements pursuant to which NRGP, Inc., NR Delaware, Inc., and
NationsRent USA, Inc. are each pledging to the Administrative Agent,
for the benefit of the Lenders and the Administrative Agent, all the
shares of the partnership interests of each of NationsRent of Indiana,
LP and NationsRent of Texas, LP. Such pledges shall be governed by the
terms of such partnership pledge agreements and not by the terms of
this Security Agreement.
3. TITLE TO COLLATERAL, ETC. Each of the Borrowers is the owner of the
Collateral free from any adverse lien, security interest or other encumbrance,
except for the security interest created by this Security Agreement and other
liens permitted by the Credit Agreement. None of the Collateral constitutes, or
is the proceeds of, "farm products" as defined in ss.9-109(3) of the Uniform
Commercial Code of the State of New York. None of the account debtors in respect
of any accounts, chattel paper or general intangibles and none of the obligors
in respect of any instruments included in the Collateral is a governmental
authority subject to the Federal Assignment of Claims Act.
4. CONTINUOUS PERFECTION - IN GENERAL. Each Borrower's place of
business or, if more than one, chief executive office is indicated on the
Perfection Certificate delivered by each Borrower to the Administrative Agent
herewith (the "Perfection Certificates"). None of the Borrowers will change the
same, or the name, identity or corporate structure of such Borrower in any
manner, without providing at least thirty (30) days prior written notice to the
Administrative Agent. The Collateral, other than Motor Vehicle Equipment, to the
extent not delivered to the Administrative Agent pursuant to ss.2.2, except
under rental arrangements in the ordinary course of business, will be kept at
those locations listed on the Perfection Certificates and none of the Borrowers
will remove the Collateral from such locations, without providing at least
thirty (30) days prior written notice to the Administrative Agent.
5. PERFECTION - MOTOR VEHICLE EQUIPMENT. (a) ON THE CLOSING DATE. If
required under ss.7.19 of the Credit Agreement, each item of Collateral the
ownership of, or title to, which is evidenced by a motor vehicle or other
certificate of title statute (the "Titled Equipment"), the jurisdiction in which
each such item of Titled Equipment is registered or titled, and the vehicle
identification number, or other appropriate serial number relating thereto, is
listed on the Schedule of Titled Equipment (the "Titled Equipment Schedule")
attached to the Perfection Certificate delivered by each Borrower to the
Administrative Agent. On the Closing Date, the Borrowers shall either (i)
deliver to the Administrative Agent properly completed applications to note the
lien of the Administrative Agent on the certificates of title with respect to
each item of Titled Equipment owned by any Borrower which will evidence the lien
of the Administrative Agent in such Titled Equipment together with the originals
of each such certificate of title and provide for payment of all filing fees
with respect thereto or (ii) make appropriate electronic application(s) to note
the lien of the Administrative Agent on certificates of title (which will
evidence the lien of
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the Administrative Agent in such Titled Equipment) with the appropriate state
registries of motor vehicles on behalf of the Administrative Agent and provide
evidence satisfactory to the Administrative Agent that originals of such
certificates of title have been delivered to such registries of motor vehicles
and that the Borrowers have paid all filing fees relating to such applications.
(b) COVENANTS OF THE BORROWERS. Each Borrower will, at all times,
except for transfers permitted pursuant to ss.6 hereof, if required under
ss.7.19 of the Credit Agreement, (i) maintain the registration and titling of
each item of Titled Equipment in the jurisdiction set forth with respect thereto
on the applicable Perfection Certificate and (ii) cause the lien of the
Administrative Agent on each item of Titled Equipment to be noted on the
certificate of title relating thereto. Upon the acquisition of any additional
Titled Equipment, such Borrower shall promptly, and in any event within ten (10)
days after such acquisition, (i) cause the lien of the Administrative Agent on
such Titled Equipment to be noted on the certificate of title relating thereto
and (ii) deliver to the Administrative Agent such certificate of title (which
shall evidence the lien of the Administrative Agent thereon). The Borrowers
shall cause all additional Titled Equipment to be listed on the Titled Equipment
Schedule Update delivered to the Administrative Agent pursuant to ss.6(c)
hereof. Each certificate of title relating to Titled Equipment shall be
delivered by the Borrowers to the Administrative Agent at the Administrative
Agent's Head Office, Attention: Timothy M. Laurion, Environmental Division.
6. TRANSFERS OF COLLATERAL.(a) IN GENERAL. Except (i) as otherwise
permitted under the Credit Agreement and (ii) in compliance with the terms of
this ss.6, if applicable, none of the Borrowers will sell or offer to sell or
otherwise transfer the Collateral or any interest therein.
(b) TRANSFERS OF TITLED EQUIPMENT. If the Lenders' liens have been
noted on titled equipment pursuant to ss.7.19 of the Credit Agreement, in
connection with any sale or other transfer of Titled Equipment permitted
pursuant to ss.8.4.2 of the Credit Agreement, the applicable Borrower shall
request the Administrative Agent to release the lien of the Administrative Agent
in such Titled Equipment; PROVIDED that the Borrowers shall not take or request
or cause the Administrative Agent to take, any action to release such lien if
(i) such release of lien or transfer of Titled Equipment would not be in
compliance with the terms of this Security Agreement or the other Loan
Documents, or (ii) after giving effect to such sale or transfer, a Default or
Event of Default shall exist under the Credit Agreement. The proceeds from the
sale of Titled Equipment shall be applied in accordance with ss.8.4.2 of the
Credit Agreement.
(c) REVISED TITLED EQUIPMENT SCHEDULE. If required pursuant to ss.7.19
of the Credit Agreement and requested by the Majority Lenders, within 30 days of
such request, each Borrower shall deliver to the Administrative Agent an updated
Titled Equipment Schedule, listing, as of the last day of the immediately
preceding calendar month, (i) each item of
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Titled Equipment owned by such Borrower, (ii) the jurisdiction in which each
such item of Titled Equipment is registered or titled, (iii) the vehicle
identification number, or other appropriate serial number relating thereto, and
(iv) each item of Titled Equipment acquired and each item of Titled Equipment
sold or otherwise transferred during such calendar month.
7. NO LIENS. Except for the security interest herein granted and liens
permitted by the Credit Agreement, the Borrowers shall be the owner of the
Collateral free from any lien, security interest or other encumbrance, and each
of the Borrowers shall defend the same against all material claims and demands
of all persons at any time claiming the same or any interests therein adverse to
the Administrative Agent or any of the Lenders. None of the Borrowers shall
pledge, mortgage or create, or suffer to exist a security interest in the
Collateral in favor of any person other than the Administrative Agent, for the
benefit of the Lenders and the Administrative Agent, except for liens permitted
by the Credit Agreement.
8. INSURANCE.
8.1. MAINTENANCE OF INSURANCE. Each of the Borrowers will
maintain with financially sound and reputable insurers insurance with
respect to its properties and business against such casualties and
contingencies as shall be in accordance with general practices of
businesses engaged in similar activities in similar geographic areas.
Such insurance shall be in such minimum amounts that such Borrower will
not be deemed a co-insurer under applicable insurance laws, regulations
and policies and otherwise shall be in such amounts, contain such
terms, be in such forms and be for such periods as may be reasonably
satisfactory to the Administrative Agent. In addition, all such
insurance covering losses over $1,000,000 shall be payable to the
Administrative Agent as loss payee under a "standard" or "New York"
loss payee clause for the benefit of the Lenders and the Administrative
Agent and the Administrative Agent shall be named as additional insured
on all liability insurance policies. Without limiting the foregoing,
each of the Borrowers will (i) keep all of its physical property
insured with casualty or physical hazard insurance on an "all risks"
basis, with broad form flood and earthquake coverage and electronic
data processing coverage, with a full replacement cost endorsement and
an "agreed amount" clause in an amount equal to 100% of the full
replacement cost of such property, (ii) maintain all such workers'
compensation or similar insurance as may be required by law and (iii)
maintain, in amounts and with deductibles equal to those generally
maintained by businesses engaged in similar activities in similar
geographic areas, general public liability insurance against claims of
bodily injury, death or property damage occurring, on, in or about the
properties of such Borrower; business interruption insurance; and
product liability insurance.
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8.2. INSURANCE PROCEEDS. The proceeds of any casualty
insurance in respect of any casualty loss of any of the Collateral
shall, subject to the rights, if any, of other parties with a prior
interest in the property covered thereby, (i) so long as no Default or
Event of Default has occurred and is continuing and to the extent that
the amount of such proceeds is less than $1,000,000 be disbursed to the
Borrower which has suffered such loss for direct application by such
Borrower solely to the repair or replacement of such Borrower's
property so damaged or destroyed and (ii) in all other circumstances,
be held by the Administrative Agent as cash collateral for the
Obligations. Upon the occurrence of an Event of Default, the
Administrative Agent may, at its sole option, disburse from time to
time all or any part of such proceeds so held as cash collateral, upon
such terms and conditions as the Administrative Agent may reasonably
prescribe, for direct application by the Borrowers solely to the repair
or replacement of the Borrowers property so damaged or destroyed, or
the Administrative Agent may apply all or any part of such proceeds to
the Obligations with the Total Commitment (if not then terminated)
being reduced by the amount so applied to the Obligations.
8.3. NOTICE OF CANCELLATION, ETC. All policies of insurance
shall provide for at least thirty (30) days prior written cancellation
notice to the Administrative Agent. In the event of failure by any of
the Borrowers to provide and maintain insurance as herein provided, the
Administrative Agent may, at its option, provide such insurance and
charge the amount thereof to the Borrowers. Each of the Borrowers shall
furnish the Administrative Agent with certificates of insurance and
policies evidencing compliance with the foregoing insurance provision.
9. MAINTENANCE OF COLLATERAL; COMPLIANCE WITH LAW. Each of the
Borrowers will keep the Collateral in good order and repair in their reasonable
business judgment and will not use the same in violation of law or any policy of
insurance thereon. The Administrative Agent, or its designee, may inspect the
Collateral at any reasonable time, wherever located. Each of the Borrowers will
pay promptly when due all taxes, assessments, governmental charges and levies
upon the Collateral or incurred in connection with the use or operation of such
Collateral or incurred in connection with this Security Agreement. Each of the
Borrowers has at all times operated, and such Borrower will continue to operate,
its business in compliance with all applicable provisions of the federal Fair
Labor Standards Act, as amended, and with all applicable provisions of federal,
state and local statutes and ordinances dealing with the control, shipment,
storage or disposal of hazardous materials or substances.
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10. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
10.1. EXPENSES INCURRED BY ADMINISTRATIVE AGENT. In its
discretion, the Administrative Agent may discharge taxes and other
encumbrances at any time levied or placed on any of the Collateral,
make repairs thereto and pay any necessary filing fees. Each of the
Borrowers agrees to reimburse the Administrative Agent on demand for
any and all expenditures so made. The Administrative Agent shall have
no obligation to any of the Borrowers to make any such expenditures,
nor shall the making thereof relieve the Borrowers of any default.
10.2. ADMINISTRATIVE AGENT'S OBLIGATIONS AND DUTIES. Anything
herein to the contrary notwithstanding, each of the Borrowers shall
remain liable under each contract or agreement comprised in the
Collateral to be observed or performed by such Borrower thereunder.
Neither the Administrative Agent nor any Lender shall have any
obligation or liability under any such contract or agreement by reason
of or arising out of this Security Agreement or the receipt by the
Administrative Agent or any Lender of any payment relating to any of
the Collateral, nor shall the Administrative Agent or any Lender be
obligated in any manner to perform any of the obligations of such
Borrower under or pursuant to any such contract or agreement, to make
inquiry as to the nature or sufficiency of any payment received by the
Administrative Agent or any Lender in respect of the Collateral or as
to the sufficiency of any performance by any party under any such
contract or agreement, to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts
which may have been assigned to the Administrative Agent or to which
the Administrative Agent or any Lender may be entitled at any time or
times. The Administrative Agent's sole duty with respect to the
custody, safe keeping and physical preservation of the Collateral in
its possession, under ss.9-207 of the Uniform Commercial Code of the
State of New York or otherwise, shall be to deal with such Collateral
in the same manner as the Administrative Agent deals with similar
property for its own account and as otherwise required by law.
11. SECURITIES AND DEPOSITS. The Administrative Agent may at any time,
at its option, transfer to itself or any nominee any securities constituting
Collateral, receive any income thereon and hold such income as additional
Collateral or apply it to the Obligations. Whether or not any Obligations are
due, the Administrative Agent may at any time sue for, collect, or make any
settlement or compromise which it deems desirable with respect to the
Collateral. Regardless of the adequacy of Collateral or any other security for
the Obligations, any deposits or other sums at any time credited by or due from
the Administrative Agent or any Lender to any of the Borrowers may at any time
be applied to or set off against any of the Obligations.
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12. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER OBLIGORS. If an Event of
Default shall have occurred and be continuing, each of the Borrowers shall, at
the request of the Administrative Agent, notify account debtors on accounts,
chattel paper and general intangibles of such Borrower and obligors on
instruments for which such Borrower is an obligee of the security interest of
the Administrative Agent in any account, chattel paper, general intangible or
instrument and that payment thereof is to be made directly to the Administrative
Agent or to any financial institution designated by the Administrative Agent as
the Administrative Agent's agent therefor, and the Administrative Agent may
itself, if a Default or an Event of Default shall have occurred and be
continuing, without notice to or demand upon such Borrower, so notify account
debtors and obligors. After the making of such a request or the giving of any
such notification, each of the Borrowers shall hold any proceeds of collection
of accounts, chattel paper, general intangibles and instruments received by such
Borrower as trustee for the Administrative Agent, for the benefit of the Lenders
and the Administrative Agent, without commingling the same with other funds of
such Borrower and shall turn the same over to the Administrative Agent in the
identical form received, together with any necessary endorsements or
assignments. The Administrative Agent shall apply the proceeds of collection of
accounts, chattel paper, general intangibles and instruments received by the
Administrative Agent to the Obligations, such proceeds to be immediately entered
after final payment in cash or solvent credits of the items giving rise to them.
13. FURTHER ASSURANCES. Each of the Borrowers, at its own expense,
shall do, make, execute and deliver all such additional and further acts,
things, deeds, assurances and instruments as the Administrative Agent may
reasonably require more completely to vest in and assure to the Administrative
Agent and the Lenders their respective rights hereunder or in any of the
Collateral, including, without limitation, (i) executing, delivering and, where
appropriate, filing financing statements and continuation statements under the
Uniform Commercial Code, (ii) obtaining governmental and other third party
consents and approvals, including without limitation any consent of any
licensor, lessor or other applicable party referred to in ss.2.3, (iii)
obtaining waivers from mortgagees and landlords, and (iv) taking all actions
required by Sections 8-313 and 8-321 of the Uniform Commercial Code (1990) or
Sections 8-106 and 9-115 of the Uniform Commercial Code (1994), as applicable in
each relevant jurisdiction, with respect to certificated and uncertificated
securities.
14. POWER OF ATTORNEY.
14.1. APPOINTMENT AND POWERS OF ADMINISTRATIVE AGENT. Each of
the Borrowers hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power
of substitution, as its true and lawful attorneys-in-fact with full
irrevocable power and authority in the place and stead of such Borrower
or in the Administrative Agent's own name, for the purpose of carrying
out the terms of this Security Agreement, to take
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any and all appropriate action and to execute any and all documents and
instruments that may be necessary or desirable to accomplish the
purposes of this Security Agreement and hereby gives said attorneys the
power and right, on behalf of such Borrower, without notice to or
assent by such Borrower, to do the following:
(a) upon the occurrence and during the continuance of
a Default or an Event of Default, generally to sell, transfer,
pledge, make any agreement with respect to or otherwise deal
with any of the Collateral in such manner as is consistent
with the Uniform Commercial Code of the State of New York and
as fully and completely as though the Administrative Agent
were the absolute owner thereof for all purposes, and to do at
such Borrower's expense, at any time, or from time to time,
all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral
and the Administrative Agent's security interest therein, in
order to effect the intent of this Security Agreement, all as
fully and effectively as such Borrower might do, including,
without limitation, (i) the filing and prosecuting of
registration and transfer applications with the appropriate
federal or local agencies or authorities with respect to
trademarks, copyrights and patentable inventions and
processes, (ii) upon written notice to such Borrower, the
exercise of voting rights with respect to voting securities,
which rights may be exercised, if the Administrative Agent so
elects, with a view to causing the liquidation in a
commercially reasonable manner of assets of the issuer of any
such securities and (iii) the execution, delivery and
recording, in connection with any sale or other disposition of
any Collateral, of the endorsements, assignments or other
instruments of conveyance or transfer with respect to such
Collateral; and
(b) to file such financing statements with respect
hereto, with or without such Borrower's signature, or a
photocopy of this Security Agreement in substitution for a
financing statement, as the Administrative Agent may deem
appropriate and to execute in such Borrower's name such
financing statements and amendments thereto and continuation
statements which may require such Borrower's signature.
14.2. RATIFICATION BY BORROWERS. To the extent permitted by
law, each of the Borrowers hereby ratifies all that said attorneys
shall lawfully do or cause to be done by virtue hereof. This power of
attorney is a power coupled with an interest and shall be irrevocable.
14.3. NO DUTY ON ADMINISTRATIVE AGENT. The powers conferred on
the Administrative Agent hereunder are solely to protect the interests
of the Administrative Agent and the Lenders in the Collateral and shall
not impose any duty upon the Administrative
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Agent to exercise any such powers. The Administrative Agent shall be
accountable only for the amounts that it actually receives as a result
of the exercise of such powers and neither it nor any of its officers,
directors, employees or agents shall be responsible to any of the
Borrowers for any act or failure to act, except for the Administrative
Agent's own gross negligence or willful misconduct.
15. REMEDIES. If an Event of Default shall have occurred and be
continuing, the Administrative Agent may, without notice (except as otherwise
provided for in the Credit Agreement) to or demand upon any of the Borrowers,
declare this Security Agreement to be in default, and the Administrative Agent
shall thereafter have in any jurisdiction in which enforcement hereof is sought,
in addition to all other rights and remedies, the rights and remedies of a
secured party under the Uniform Commercial Code, including, without limitation,
the right to take possession of the Collateral, and for that purpose the
Administrative Agent may, so far as the Borrowers can give authority therefor,
enter upon any premises on which the Collateral may be situated and remove the
same therefrom. The Administrative Agent may in its discretion require any of
the Borrowers to assemble all or any part of the Collateral at such location or
locations within the state(s) of such Borrower's principal office(s) or at such
other locations as the Administrative Agent may designate. Unless the Collateral
is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, the Administrative Agent shall give to
the Borrowers at least ten (10) Business Days prior written notice of the time
and place of any public sale of Collateral or of the time after which any
private sale or any other intended disposition is to be made. Each of the
Borrowers hereby acknowledges that ten (10) Business Days prior written notice
of such sale or sales shall be reasonable notice. In addition, each of the
Borrowers waives any and all rights that it may have to a judicial hearing in
advance of the enforcement of any of the Administrative Agent's rights
hereunder, including, without limitation, its right following an Event of
Default to take immediate possession of the Collateral and to exercise its
rights with respect thereto.
16. NO WAIVER, ETC. Each of the Borrowers waives demand, notice (except
as otherwise provided for in the Credit Agreement), protest, notice of
acceptance of this Security Agreement, notice of loans made, credit extended,
Collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description. With respect to both the
Obligations and the Collateral, each of the Borrowers assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Administrative Agent may deem advisable. The
Administrative Agent shall have no duty as to the collection or protection of
the Collateral or any income thereon, nor as to the preservation of rights
against prior parties, nor as to the
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preservation of any rights pertaining thereto beyond the safe custody thereof as
set forth in ss.10.2. The Administrative Agent shall not be deemed to have
waived any of its rights upon or under the Obligations or the Collateral unless
such waiver shall be in writing and signed by the Administrative Agent with the
consent of the Majority Lenders. No delay or omission on the part of the
Administrative Agent in exercising any right shall operate as a waiver of such
right or any other right. A waiver on any one occasion shall not be construed as
a bar to or waiver of any right on any future occasion. All rights and remedies
of the Administrative Agent with respect to the Obligations or the Collateral,
whether evidenced hereby or by any other instrument or papers, shall be
cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such times as the Administrative Agent deems
expedient.
17. MARSHALLING. Neither the Administrative Agent nor any Lender shall
be required to marshal any present or future collateral security (including but
not limited to this Security Agreement and the Collateral) for, or other
assurances of payment of, the Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and
all of the rights of the Administrative Agent hereunder and of the
Administrative Agent or any Lender in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, each of
the Borrowers hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Administrative Agent's rights under this Security Agreement or under any
other instrument creating or evidencing any of the Obligations or under which
any of the Obligations is outstanding or by which any of the Obligations is
secured or payment thereof is otherwise assured, and, to the extent that it
lawfully may, each of the Borrowers hereby irrevocably waives the benefits of
all such laws.
18. PROCEEDS OF DISPOSITIONS; EXPENSES. The Borrowers shall pay to the
Administrative Agent on demand any and all expenses, including reasonable
attorneys' fees and disbursements, incurred or paid by the Administrative Agent
in protecting, preserving or enforcing the Administrative Agent's rights under
or in respect of any of the Obligations or any of the Collateral. After
deducting all of said expenses, the residue of any proceeds of collection or
sale of the Obligations or Collateral shall, to the extent actually received in
cash, be applied to the payment of the Obligations in such order or preference
as is provided in the Credit Agreement, proper allowance and provision being
made for any Obligations not then due. Upon the final payment and satisfaction
in full of all of the Obligations and after making any payments required by
Section 9-504(1)(c) of the Uniform Commercial Code of the State of New York, any
excess shall be returned to the Borrowers, and each of the Borrowers shall
remain liable for any deficiency in the payment of the Obligations.
19. OVERDUE AMOUNTS. Until paid, all amounts remaining unpaid past the
date on which such amounts shall have first become due and
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payable by any of the Borrowers hereunder shall be a debt secured by the
Collateral and shall bear, whether before or after judgment, interest at the
rate of interest for overdue principal set forth in the Credit Agreement.
20. GOVERNING LAW; CONSENT TO JURISDICTION. THIS SECURITY AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK. Each of the Borrowers agrees that any suit for the enforcement of this
Security Agreement may be brought in the courts of the State of New York or any
federal court sitting therein and consents to the non-exclusive jurisdiction of
such court and to service of process in any such suit being made upon such
Borrower by mail at the address set forth in ss.20 of the Credit Agreement. Each
of the Borrowers hereby waives any objection that it may now or hereafter have
to the venue of any such suit or any such court or that such suit is brought in
an inconvenient court.
21. WAIVER OF JURY TRIAL. EACH OF THE ADMINISTRATIVE AGENT AND THE
BORROWERS WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS SECURITY AGREEMENT, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR
OBLIGATIONS. Except as prohibited by law and absent gross negligence and willful
misconduct of the Administrative Agent or the Lenders, each of the Borrowers
waives any right which 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. Each of the Borrowers (i) certifies that neither the Administrative
Agent nor any Lender nor any representative, agent or attorney of the
Administrative Agent or any Lender has represented, expressly or otherwise, that
the Administrative Agent or any Lender would not, in the event of litigation,
seek to enforce the foregoing waivers and (ii) acknowledges that, in entering
into the Credit Agreement and the other Loan Documents to which the
Administrative Agent or any Lender is a party, the Administrative Agent and the
Lenders are relying upon, among other things, the waivers and certifications
contained in this ss.21.
22. MISCELLANEOUS.
(a) The headings of each section of this Security Agreement
are for convenience only and shall not define or limit the provisions
thereof. This Security Agreement and all rights and obligations
hereunder shall be binding upon each of the Borrowers and its
respective successors and assigns, and shall inure to the benefit of
the Administrative Agent, the Lenders and their respective successors
and assigns. If any term of this Security Agreement shall be held to be
invalid, illegal or unenforceable, the validity of all other terms
hereof shall in no way be affected thereby, and this Security Agreement
shall be construed and be enforceable as if such invalid, illegal or
unenforceable term had not been included herein. Each of
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the Borrowers acknowledges receipt of a copy of this Security
Agreement.
(b) To the extent this Security Agreement is inconsistent with
or conflicts with the Credit Agreement, the Credit Agreement will
control.
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IN WITNESS WHEREOF, intending to be legally bound, each of the
Borrowers has caused this Security Agreement to be duly executed as of the date
first above written.
NATIONSRENT, INC.
NATIONSRENT USA, INC.
NATIONSRENT TRANSPORTATION
SERVICES, INC.
NR DELAWARE, INC.
NRGP, INC.
NATIONSRENT WEST, INC.
LOGAN EQUIPMENT CORP.
By: /s/ Thomas C. Richardson
---------------------------------
Name: Thomas C. Richardson
Title: Vice President
NATIONSRENT OF TEXAS, LP
NATIONSRENT OF INDIANA, LP
By: NRGP, Inc., general partner
By: /s/ Thomas C. Richardson
---------------------------------
Name: Thomas C. Richardson
Title: Vice President
Accepted and Agreed:
BANKBOSTON, N.A.,
as Administrative Agent
By: /s/ Timothy M. Laurion
---------------------------------
Name: Timothy M. Laurion
Title: Director
16
<PAGE> 17
STATE OF OHIO )
) ss.
COUNTY OF Franklin )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ______ day of July, 1999, personally appeared Thomas C.
Richardson to me known personally, and who, being by me duly sworn, deposes and
says that he is the Vice President of each of NATIONSRENT, INC., NRGP, INC.,
NATIONSRENT WEST, INC., LOGAN EQUIPMENT CORP., NATIONSRENT TRANSPORTATION
SERVICES, INC., NR DELAWARE, INC. and NATIONSRENT USA, INC. and that said
instrument was signed on behalf of each of said entities by authority of its
Board of Directors, and said Thomas C. Richardson acknowledged said instrument
to be the free act and deed of each of said entities.
------------------------------
Notary Public
My commission expires:
STATE OF OHIO )
) ss.
COUNTY OF FRANKLIN )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ______ day of July, 1999, personally appeared Thomas C.
Richardson to me known personally and who, being by me duly sworn, deposes and
says that he is the Vice President of NRGP, Inc., the sole general partner of
NATIONSRENT OF TEXAS, LP and NATIONSRENT OF INDIANA, LP and that said instrument
was signed on behalf of each of said entities and said Thomas C. Richardson
acknowledged said instrument to be the free act and deed of each of said
entities.
------------------------------
Notary Public
My commission expires:
17
<PAGE> 18
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF SUFFOLK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this ______ day of July, 1999, personally appeared Timothy M.
Laurion to me known personally, and who, being by me duly sworn, deposes and
says that he is the Director of BANKBOSTON, N.A. and that said instrument was
signed on behalf of said lending institution by authority of its governing body,
and said Director acknowledged said instrument to be the free act and deed of
said lending institution.
------------------------------
Notary Public
My commission expires:
18
<PAGE> 1
EXHIBIT 4.8
AMENDED AND RESTATED STOCK PLEDGE AGREEMENT
This AMENDED AND RESTATED STOCK PLEDGE AGREEMENT (this "Agreement") is
made as of July 20, 1999, by and between NATIONSRENT, INC., a Delaware
corporation (the "Parent") and NRGP, INC., a Delaware corporation (together with
the Parent, the "Pledgors") and BANKBOSTON, N.A., a national banking
association, as administrative agent (hereinafter, in such capacity, the
"Administrative Agent") for itself and the other lending institutions
(collectively, the "Lenders") which are or may become parties to a Fourth
Amended and Restated Revolving Credit and Term Loan Agreement dated as of July
20, 1999 (as amended and in effect from time to time, the "Credit Agreement"),
among the Parent and its Restricted Subsidiaries party thereto (collectively
with the Parent, the "Borrowers"), the Lenders, the Administrative Agent and
Bankers Trust Company, as syndication agent for the Lenders (the "Syndication
Agent").
WHEREAS, certain of the Borrowers and the Administrative Agent were
parties to the several Stock Pledge Agreements (as defined in the Prior Credit
Agreement) (as amended to date, the "Prior Pledge Agreements"), pursuant to
which the Borrowers named therein pledged and granted security interests in
favor of the Administrative Agent for the benefit of the Lenders to secure the
payment and performance of such Borrowers' obligations under the Prior Credit
Agreement; and
WHEREAS, the Pledgors are the direct or indirect legal and beneficial
owners of all of the issued and outstanding shares of each class of the capital
stock of each of the corporations described on ANNEX A hereto (the "Pledgees");
and
WHEREAS, it is a condition precedent to the Lenders' making any Loans
or otherwise extending credit to the Borrowers under the Credit Agreement that
the Pledgors execute and deliver to the Administrative Agent, for the benefit of
the Lenders and the Administrative Agent, a pledge agreement in substantially
the form hereof; and
WHEREAS, the Pledgors each wish to grant pledges and security interests
in favor of the Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, as herein provided;
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:
<PAGE> 2
1. PLEDGE OF STOCK, ETC.
1.1. PLEDGE OF STOCK. Each Pledgor hereby reaffirms and
pledges, assigns, grants a security interest in, and delivers to the
Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, all of the shares of capital stock of the
Pledgees of every class, as more fully described on ANNEX A hereto, to
be held by the Administrative Agent, for the benefit of the Lenders and
the Administrative Agent, subject to the terms and conditions
hereinafter set forth. The certificates for such shares, accompanied by
stock powers or other appropriate instruments of assignment thereof
duly executed in blank by the Pledgors, have been delivered to the
Administrative Agent.
1.2. ADDITIONAL STOCK. In case either of the Pledgors shall
acquire any additional shares of the capital stock of any Restricted
Subsidiary or corporation which is the successor of any Restricted
Subsidiary, or any securities exchangeable for or convertible into
shares of such capital stock of any class of any Restricted Subsidiary
or such successor, by purchase, stock dividend, stock split or
otherwise, then such Pledgor shall forthwith deliver to and pledge such
shares or other securities to the Administrative Agent, for the benefit
of the Lenders and the Administrative Agent, under this Agreement and
shall deliver to the Administrative Agent forthwith any certificates
therefor, accompanied by stock powers or other appropriate instruments
of assignment duly executed by such Pledgor in blank. Each Pledgor
agrees that the Administrative Agent may from time to time attach as
ANNEX A hereto an updated list of the shares of capital stock or
securities at the time pledged to the Administrative Agent hereunder.
1.3. PLEDGE OF CASH COLLATERAL ACCOUNT. Each Pledgor also
hereby pledges, assigns, grants a security interest in, and delivers to
the Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, the Cash Collateral Account and all of the Cash
Collateral as such terms are hereinafter defined.
2. DEFINITIONS. The term "Obligations" and all other capitalized terms
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement. Terms used herein and not defined in the
Credit Agreement or otherwise defined herein that are defined in the New York
Uniform Commercial Code have such defined meanings herein, unless the context
otherwise indicated or requires, and the following terms shall have the
following meanings:
CASH COLLATERAL. See ss.4.
CASH COLLATERAL ACCOUNT. See ss.4.
STOCK. Includes the shares of stock described in ANNEX A attached
hereto and any additional shares of stock at the time pledged to the
Administrative Agent hereunder.
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STOCK COLLATERAL. The property at any time pledged to the
Administrative Agent hereunder (whether described herein or not) and all income
therefrom, increases therein and proceeds thereof, including without limitation
that included in the Cash Collateral, but excluding from the definition of
"Stock Collateral" any income, increases or proceeds received by the Pledgors to
the extent expressly permitted by ss.6.
TIME DEPOSITS. See ss.4.
3. SECURITY FOR OBLIGATIONS. This Agreement and the security interest
in and pledge of the Stock Collateral hereunder are made with and granted to the
Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, as security for the payment and performance in full of all the
Obligations.
4. LIQUIDATION, RECAPITALIZATION, ETC.
4.1. DISTRIBUTIONS PAID TO ADMINISTRATIVE AGENT. Any sums or
other property paid or distributed upon or with respect to any of the
Stock, whether by dividend or redemption or upon the liquidation or
dissolution of the issuer thereof or otherwise, shall, except to the
limited extent provided in ss.6, be paid over and delivered to the
Administrative Agent to be held by the Administrative Agent, for the
benefit of the Lenders and the Administrative Agent, as security for
the payment and performance in full of all of the Obligations. In case,
pursuant to the recapitalization or reclassification of the capital of
the issuer thereof or pursuant to the reorganization thereof, any
distribution of capital shall be made on or in respect of any of the
Stock or any property shall be distributed upon or with respect to any
of the Stock, the property so distributed shall be delivered to the
Administrative Agent, for the benefit of the Lenders and the
Administrative Agent, to be held by the Administrative Agent as
security for the Obligations. Except to the limited extent provided in
ss.6, all sums of money and property paid or distributed in respect of
the Stock, whether as a dividend or upon such a liquidation,
dissolution, recapitalization or reclassification or otherwise, that
are received by the Pledgors shall, until paid or delivered to the
Administrative Agent, be held in trust for the Administrative Agent,
for the benefit of the Lenders and the Administrative Agent, as
security for the payment and performance in full of all of the
Obligations.
4.2. CASH COLLATERAL ACCOUNT. All sums of money that are
delivered to the Administrative Agent pursuant to this ss.4 shall be
deposited into an interest bearing account with the Administrative
Agent (the "Cash Collateral Account"). Some or all of the funds from
time to time in the Cash Collateral Account may be invested in time
deposits, including, without limitation, certificates of deposit issued
by the Administrative Agent (such certificates of deposit or other time
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<PAGE> 4
deposits being hereinafter referred to, collectively, as "Time
Deposits"), that are satisfactory to the Administrative Agent after
consultation with the appropriate Pledgor, PROVIDED, that, in each such
case, arrangements satisfactory to the Administrative Agent are made
and are in place to perfect and to insure the first priority of the
Administrative Agent's security interest therein. Interest earned on
the Cash Collateral Account and on the Time Deposits, and the principal
of the Time Deposits at maturity that is not invested in new Time
Deposits, shall be deposited in the Cash Collateral Account. The Cash
Collateral Account, all sums from time to time standing to the credit
of the Cash Collateral Account, any and all Time Deposits, any and all
instruments or other writings evidencing Time Deposits and any and all
proceeds or any thereof are hereinafter referred to as the "Cash
Collateral."
4.3. PLEDGORS' RIGHTS TO CASH COLLATERAL, ETC. Except as
otherwise expressly provided in ss.15, the Pledgors shall have no right
to withdraw sums from the Cash Collateral Account, to receive any of
the Cash Collateral or to require the Administrative Agent to part with
the Administrative Agent's possession of any instruments or other
writings evidencing any Time Deposits.
5. WARRANTY OF TITLE; AUTHORITY. Each of the Pledgors hereby represents
and warrants that: (i) such Pledgor has good and marketable title to, and is the
sole record and beneficial owner of, the Stock described in ss.1, subject to no
pledges, liens, security interests, charges, options, restrictions or other
encumbrances except the pledge and security interest created by this Agreement,
(ii) all of the Stock described in ss.1 is validly issued, fully paid and
non-assessable, (iii) such Pledgor has full power, authority and legal right to
execute, deliver and perform its obligations under this Agreement and to pledge
and grant a security interest in all of the Stock Collateral pursuant to this
Agreement, and the execution, delivery and performance hereof and the pledge of
and granting of a security interest in the Stock Collateral hereunder have been
duly authorized by all necessary corporate or other action and do not contravene
any law, rule or regulation or any provision of such Pledgor's charter documents
or by-laws or of any judgment, decree or order of any tribunal or of any
agreement or instrument to which such Pledgor is a party or by which it or any
of its property is bound or affected or constitute a default thereunder, and
(iv) the information set forth in ANNEX A hereto relating to the Stock is true,
correct and complete in all respects. Each Pledgor covenants that it will defend
the rights of the Lenders and the Administrative Agent and security interest of
the Administrative Agent, for the benefit of the Lenders and the Administrative
Agent, in such Stock against the claims and demands of all other persons
whomsoever. Each Pledgor further covenants that it will have the like title to
and right to pledge and grant a security interest in the Stock Collateral
hereafter pledged or in which a security interest is granted to the
Administrative Agent hereunder and will likewise defend the rights, pledge
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<PAGE> 5
and security interest thereof and therein of the Lenders and the Administrative
Agent.
6. DIVIDENDS, VOTING, ETC., PRIOR TO MATURITY. So long as no Default or
Event of Default shall have occurred and be continuing, the Pledgors shall be
entitled to receive all cash dividends paid in respect of the Stock solely to
the extent permitted by ss.8.6 of the Credit Agreement, to vote the Stock and to
give consents, waivers and ratifications in respect of the Stock; PROVIDED,
HOWEVER, that no vote shall be cast or consent, waiver or ratification given by
the Pledgors if the effect thereof would in the reasonable judgment of the
Administrative Agent impair any of the Stock Collateral or be inconsistent with
or result in any violation of any of the provisions of the Credit Agreement, the
Notes or any of the other Loan Documents. All such rights of the Pledgors to
receive cash dividends shall cease in case a Default or an Event of Default
shall have occurred and be continuing. All such rights of the Pledgors to vote
and give consents, waivers and ratifications with respect to the Stock shall, at
the Administrative Agent's option, as evidenced by the Administrative Agent's
notifying the applicable Pledgor of such election, cease in case a Default or an
Event of Default shall have occurred and be continuing.
7. REMEDIES.
7.1. IN GENERAL. If a Default or an Event of Default shall
have occurred and be continuing, the Administrative Agent shall
thereafter have the following rights and remedies (to the extent
permitted by applicable law) in addition to the rights and remedies of
a secured party under the New York Uniform Commercial Code, all such
rights and remedies being cumulative, not exclusive, and enforceable
alternatively, successively or concurrently, at such time or times as
the Administrative Agent deems expedient:
(a) if the Administrative Agent so elects and gives
notice of such election to the applicable Pledgor, the
Administrative Agent may vote any or all shares of the Stock
(whether or not the same shall have been transferred into its
name or the name of its nominee or nominees) for any lawful
purpose, including, without limitation, if the Administrative
Agent so elects, for the liquidation of the assets of the
issuer thereof, and give all consents, waivers and
ratifications in respect of the Stock and otherwise act with
respect thereto as though it were the outright owner thereof
(each Pledgor hereby irrevocably constituting and appointing
the Administrative Agent the proxy and attorney-in-fact of
such Pledgor, with full power of substitution, to do so);
(b) the Administrative Agent may demand, sue for,
collect or make any compromise or settlement the
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<PAGE> 6
Administrative Agent deems suitable in respect of any Stock
Collateral;
(c) the Administrative Agent may sell, resell, assign
and deliver, or otherwise dispose of any or all of the Stock
Collateral, for cash or credit or both and upon such terms at
such place or places, at such time or times and to such
entities or other persons as the Administrative Agent thinks
expedient, all without demand for performance by the
applicable Pledgor or any notice or advertisement whatsoever
except as expressly provided herein or as may otherwise be
required by law;
(d) the Administrative Agent may cause all or any
part of the Stock held by it to be transferred into its name
or the name of its nominee or nominees; and
(e) the Administrative Agent may set off against the
Obligations any and all sums deposited with it or held by it,
including without limitation, any sums standing to the credit
of the Cash Collateral Account and any Time Deposits issued by
the Administrative Agent.
7.2. SALE OF STOCK COLLATERAL. In the event of any disposition
of the Stock Collateral as provided in clause (c) of ss.7.1, the
Administrative Agent shall give to the applicable Pledgor at least ten
(10) Business Days prior written notice of the time and place of any
public sale of the Stock Collateral or of the time after which any
private sale or any other intended disposition is to be made. Each
Pledgor hereby acknowledges that ten (10) Business Days prior written
notice of such sale or sales shall be reasonable notice. The
Administrative Agent may enforce its rights hereunder without any other
notice and without compliance with any other condition precedent now or
hereunder imposed by statute, rule of law or otherwise (all of which
are hereby expressly waived by the Pledgors, to the fullest extent
permitted by law). The Administrative Agent may buy any part or all of
the Stock Collateral at any public sale and if any part or all of the
Stock Collateral is of a type customarily sold in a recognized market
or is of the type which is the subject of widely-distributed standard
price quotations, the Administrative Agent may buy at private sale and
may make payments thereof by any means. The Administrative Agent may
apply the cash proceeds actually received from any sale or other
disposition to the reasonable expenses of retaking, holding, preparing
for sale, selling and the like, to reasonable attorneys' fees, travel
and all other expenses which may be incurred by the Administrative
Agent in attempting to collect the Obligations or to enforce this
Agreement or in the prosecution or defense of any action or proceeding
related to the subject matter of this Agreement, and then to the
Obligations.
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7.3. PRIVATE SALES. Each Pledgor recognizes that the
Administrative Agent may be unable to effect a public sale of the Stock
by reason of certain prohibitions contained in the Securities Act,
federal banking laws, and other applicable laws, but may be compelled
to resort to one or more private sales thereof to a restricted group of
purchasers. Each Pledgor agrees that any such private sales may be at
prices and other terms less favorable to the seller than if sold at
public sales and that such private sales shall not by reason thereof be
deemed not to have been made in a commercially reasonable manner. The
Administrative Agent shall be under no obligation to delay a sale of
any of the Stock for the period of time necessary to permit the issuer
of such securities to register such securities for public sale under
the Securities Act, or such other federal banking or other applicable
laws, even if the issuer would agree to do so. Subject to the
foregoing, the Administrative Agent agrees that any sale of the Stock
shall be made in a commercially reasonable manner, and each Pledgor
agrees to use its best efforts to cause the issuer or issuers of the
Stock contemplated to be sold, to execute and deliver, and cause the
directors and officers of such issuer to execute and deliver, all at
such Pledgor's expense, all such instruments and documents, and to do
or cause to be done all such other acts and things as may be necessary
or, in the reasonable opinion of the Administrative Agent, advisable to
exempt such Stock from registration under the provisions of the
Securities Act, and to make all amendments to such instruments and
documents which, in the opinion of the Administrative Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto.
7.4. PLEDGORS' AGREEMENTS, ETC. Each Pledgor further agrees to
do or cause to be done all such other acts and things as may be
reasonably necessary to make any sales of any portion or all of the
Stock pursuant to this ss.7 valid and binding and in compliance with
any and all applicable laws (including, without limitation, the
Securities Act, the Securities Exchange Act of 1934, as amended, the
rules and regulations of the Securities and Exchange Commission
applicable thereto and all applicable state securities or "Blue Sky"
laws), regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales,
all at the applicable Pledgor's expense. Each Pledgor further agrees
that a breach of any of the covenants contained in this ss.7 will cause
irreparable injury to the Administrative Agent and the Lenders, that
the Administrative Agent and the Lenders have no adequate remedy at law
in respect of such breach and, as a consequence, agrees that each and
every covenant contained in this ss.7 shall be specifically enforceable
against the Pledgors by the Administrative Agent and
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each Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants.
8. MARSHALLING. Neither the Administrative Agent nor any Lender shall
be required to marshal any present or future collateral security for (including
but not limited to this Agreement and the Stock Collateral), or other assurances
of payment of, any or all of the Obligations, or to resort to such collateral
security or other assurances of payment in any particular order. All of the
Administrative Agent's rights hereunder and of the Lenders and the
Administrative Agent in respect of such collateral security and other assurances
of payment shall be cumulative and in addition to all other rights, however
existing or arising. To the extent that it lawfully may, each Pledgor hereby
agrees that it will not invoke any law relating to the marshalling of collateral
that might cause delay in or impede the enforcement of the Administrative
Agent's rights under this Agreement or under any other instrument evidencing any
of the Obligations or under which any of the Obligations is outstanding or by
which any of the Obligations is secured or payment thereof is otherwise assured,
and to the extent that it lawfully may each Pledgor hereby irrevocably waives
the benefits of all such laws.
9. PLEDGORS' OBLIGATIONS NOT AFFECTED. The obligations of each Pledgor
hereunder shall remain in full force and effect without regard to, and shall not
be impaired by (i) any exercise or nonexercise, or any waiver, by the
Administrative Agent or any Lender of any right, remedy, power or privilege
under or in respect of any of the Obligations or any security thereof (including
this Agreement); (ii) any amendment to or modification of the Credit Agreement,
the Notes, the other Loan Documents or any of the Obligations; (iii) any
amendment to or modification of any instrument (other than this Agreement)
securing any of the Obligations, including, without limitation, any of the
Security Documents; or (iv) the taking of additional security for, or any other
assurances of payment of, any of the Obligations or the release or discharge or
termination of any security or other assurances of payment or performance for
any of the Obligations; whether or not the applicable Pledgor shall have notice
or knowledge of any of the foregoing.
10. TRANSFER, ETC., BY PLEDGORS. Without the prior written consent of
the Administrative Agent, none of the Pledgors will sell, assign, transfer or
otherwise dispose of, grant any option with respect to, or pledge or grant any
security interest in or otherwise encumber or restrict any of the Stock
Collateral or any interest therein, except for the pledge thereof and security
interest therein provided for in this Agreement.
11. FURTHER ASSURANCES. Each Pledgor will do all such acts, and will
furnish to the Administrative Agent all such financing statements, certificates,
legal opinions and other documents and will obtain all such governmental
consents and corporate approvals and will do or cause to be done all such other
things as the Administrative Agent may reasonably
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request from time to time in order to give full effect to this Agreement and to
secure the rights of the Lenders and the Administrative Agent hereunder, all
without any cost or expense to the Administrative Agent or any Lender. If the
Administrative Agent so elects, a photocopy of this Agreement may at any time
and from time to time be filed by the Administrative Agent as a financing
statement in any recording office in any jurisdiction.
12. ADMINISTRATIVE AGENT'S EXONERATION. Under no circumstances shall
the Administrative Agent be deemed to assume any responsibility for or
obligation or duty with respect to any part or all of the Stock Collateral of
any nature or kind or any matter or proceedings arising out of or relating
thereto, other than (i) to exercise reasonable care in the physical custody of
the Stock Collateral and (ii) after a Default or an Event of Default shall have
occurred and be continuing to act in a commercially reasonable manner. Neither
the Administrative Agent nor any Lender shall be required to take any action of
any kind to collect, preserve or protect its or the Pledgors' rights in the
Stock Collateral or against other parties thereto. The Administrative Agent's
prior recourse to any part or all of the Stock Collateral shall not constitute a
condition of any demand, suit or proceeding for payment or collection of any of
the Obligations.
13. NO WAIVER, ETC. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated except by a written instrument
expressly referring to this Agreement and to the provisions so modified or
limited, and executed by the Administrative Agent, with the consent of the
Majority Lenders, and the Pledgors. No act, failure or delay by the
Administrative Agent shall constitute a waiver of its rights and remedies
hereunder or otherwise. No single or partial waiver by the Administrative Agent
of any default or right or remedy that it may have shall operate as a waiver of
any other default, right or remedy or of the same default, right or remedy on a
future occasion. Each Pledgor hereby waives presentment, notice of dishonor and
protest of all instruments, included in or evidencing any of the Obligations or
the Stock Collateral, and any and all other notices and demands whatsoever
(except as expressly provided herein or in the Credit Agreement).
14. NOTICE, ETC. All notices, requests and other communications
hereunder shall be made in the manner set forth in ss.20 of the Credit
Agreement.
15. TERMINATION. Upon final payment and performance in full of the
Obligations, this Agreement shall terminate and the Administrative Agent shall,
at the Pledgors' request and expense, return such Stock Collateral in the
possession or control of the Administrative Agent as has not theretofore been
disposed of pursuant to the provisions hereof, together with any moneys and
other property at the time held by the Administrative Agent hereunder.
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<PAGE> 10
16. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
Pledgors hereunder shall be a debt secured by the Stock Collateral and shall
bear, whether before or after judgment, interest at the rate of the default
interest rate set forth in the Credit Agreement.
17. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. Each Pledgor agrees that any suit for the enforcement of this Agreement
may be brought in the courts of the State of New York or any federal court
sitting therein and consents to the non-exclusive jurisdiction of such court and
to service of process in any such suit being made upon the Pledgors by mail at
the address specified in ss.20 of the Credit Agreement. Each Pledgor hereby
waives any objection that it may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.
18. WAIVER OF JURY TRIAL. EACH PLEDGOR WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, each Pledgor waives
any right which 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. Each Pledgor (i)
certifies that neither the Administrative Agent or any Lender nor any
representative, agent or attorney of the Administrative Agent or any Lender has
represented, expressly or otherwise, that the Administrative Agent or any Lender
would not, in the event of litigation, seek to enforce the foregoing waivers and
(ii) acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Administrative Agent is a party, the Administrative Agent
and the Lenders are relying upon, among other things, the waivers and
certifications contained in this ss.18.
19. MISCELLANEOUS.
(a) The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof.
This Agreement may be executed in any number of counterparts, but all
of such counterparts shall together constitute but one agreement. In
making proof of this Agreement, it shall not be necessary to produce or
account for more than one counterpart signed by each of the parties
hereto. This Agreement and all rights and obligations hereunder shall
be binding upon each Pledgor and its respective successors and assigns,
and shall inure to the benefit of the Administrative Agent and the
Lenders and their respective successors and assigns. If any term of
this Agreement shall be held to be invalid, illegal or unenforceable,
the validity of all other terms hereof shall be in no way affected
thereby, and this Agreement shall be construed
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<PAGE> 11
and be enforceable as if such invalid, illegal or unenforceable term
had not been included herein. Each Pledgor acknowledges receipt of a
copy of this Agreement.
(b) To the extent this Agreement is inconsistent with or
conflicts with the Credit Agreement, the Credit Agreement shall
control.
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<PAGE> 12
IN WITNESS WHEREOF, intending to be legally bound, the Pledgors and the
Administrative Agent have caused this Agreement to be executed as of the date
first above written.
NATIONSRENT, INC.
NRGP, INC.
By: /s/ Thomas C. Richardson
-----------------------------------
Name: Thomas C. Richardson
Title: Vice President
BANKBOSTON, N.A., as Administrative Agent
By: /s/ Timothy M. Laurion
-----------------------------------
Name: Timothy M. Laurion
Title: Director
The undersigned Pledgees hereby join in the above Agreement for the
sole purpose of consenting to and being bound by the provisions of ss.ss.4.1, 6
and 7 thereof, each of the undersigned hereby agreeing to cooperate fully and in
good faith with the Administrative Agent and the Pledgors in carrying out such
provisions.
NATIONSRENT TRANSPORTATION
SERVICES, INC.
NR DELAWARE, INC.
NATIONSRENT USA, INC.
NATIONSRENT WEST, INC.
LOGAN EQUIPMENT CORP.
By: /s/ Thomas C. Richardson
----------------------------------------
Name: Thomas C. Richardson
Title: Vice President
<PAGE> 13
ANNEX A TO PLEDGE AGREEMENT
None of the issuers has any authorized, issued or outstanding shares of
its capital stock of any class or any commitments to issue any shares of its
capital stock of any class or any securities convertible into or exchangeable
for any shares of its capital stock of any class except as otherwise stated in
this ANNEX A.
<TABLE>
<CAPTION>
- ------------------------ ------------------ -------------- ---------------- -------------- -------------------- -----------------
Number of Number of Number of Par or
Record Class of Authorized Issued Outstanding Liquidation
Issuer Owner Shares Shares Shares Shares Value
- ------------------------ ------------------ -------------- ---------------- -------------- -------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
NR Delaware, NRGP, Inc.
Inc. Common 1,000 100 100 $.01
- ------------------------ ------------------ -------------- ---------------- -------------- -------------------- -----------------
NationsRent NationsRent,
Transportation Inc. Common 1,000 100 100 $.01
Services, Inc.
- ------------------------ ------------------ -------------- ---------------- -------------- -------------------- -----------------
NationsRent NationsRent,
USA, Inc. Inc. Common 1,000 100 100 $.01
- ------------------------ ------------------ -------------- ---------------- -------------- -------------------- -----------------
NRGP, Inc. NationsRent,
Inc. Common 1,000 100 100 $.01
- ------------------------ ------------------ -------------- ---------------- -------------- -------------------- -----------------
NationsRent NationsRent,
West, Inc. Inc. Common 1,000 100 100 $.01
- ------------------------ ------------------ -------------- ---------------- -------------- -------------------- -----------------
Logan NationsRent,
Equipment Corp. Inc. Common 1,000 100 100 $.01
- ------------------------ ------------------ -------------- ---------------- -------------- -------------------- -----------------
</TABLE>
<PAGE> 1
EXHIBIT 10.30
NATIONSRENT, INC.
AMENDED AND RESTATED
1998 STOCK OPTION PLAN
1. ESTABLISHMENT, EFFECTIVE DATE AND TERM
NationsRent, Inc., a Delaware corporation (the "Company") hereby
establishes the "NationsRent, Inc. 1998 Stock Option Plan" (the "Plan"). The
effective date of the Plan shall be August 6, 1998 (the "Effective Date"), which
is the date that the Plan was approved and adopted by the Board of Directors of
the Company (the "Board") and the stockholders of the Company. The Plan was
amended by the Board of Directors on June 16, 1999, which amendment was approved
by the stockholders of the Company on July 21, 1999 and incorporated into this
amended and restated plan. Unless earlier terminated pursuant to Section 17
hereof, the Plan shall terminate on August 6, 2008.
2. PURPOSE
The purpose of the Plan is to advance the interests of the Company by
providing Eligible Individuals (as defined in Section 5 below) with an
opportunity to acquire or increase a proprietary interest in the Company, which
thereby will create a stronger incentive to expend maximum effort for the growth
and success of the Company and its subsidiaries, and will encourage such
individuals to remain in the employ of the Company or one or more of its
subsidiaries.
3. TYPE OF OPTIONS
Each stock option granted under the Plan (an "Option") may be
designated by the Board, in its sole discretion, either as (i) an "incentive
stock option" ("Incentive Stock Options") within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended from time to time (the "Code"), or
(ii) as a non-qualified option which is not intended to meet the requirements of
Section 422 of the Code; PROVIDED that Incentive Stock Options may only be
granted to employees of the Company or any "subsidiary corporation" as defined
in Section 424 of the Code (a "Subsidiary"). In the absence of any designation,
Options granted under the Plan will be deemed to be non-qualified options. The
Plan shall be administered and interpreted so that all incentive stock options
granted under the plan will qualify as incentive stock options under Section 422
of the Code. Options designated as Incentive Stock Options that fail to continue
to meet the requirements of Section 422 of the Code shall be redesignated as
non-qualified options automatically on the date of such failure to continue to
meet such requirements without further action by the Board.
<PAGE> 2
4. ADMINISTRATION
(a) BOARD. The Plan shall be administered by the Board, which
shall have the full power and authority to take all actions,
and to make all determinations required or provided for under
the Plan or any Option granted or Option Agreement (as defined
in Section 9 below) entered into under the Plan and all such
other actions and determinations not inconsistent with the
specific terms and provisions of the Plan deemed by the Board
to be necessary or appropriate to the administration of the
Plan or any Option granted or Option Agreement entered into
hereunder. The Board may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any
Option Agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect and shall be the sole
and final judge of such expediency. All such actions and
determinations shall be by the affirmative vote of a majority
of the members of the Board present at a meeting at which any
issue relating to the Plan is properly raised for
consideration or without a meeting by written consent of the
Board executed in accordance with the Company's Certificate of
Incorporation and By-laws and applicable law. The
interpretation and construction by the Board of any provision
of the Plan or of any Option granted or Option Agreement
entered into hereunder shall be final and conclusive.
(b) COMMITTEE. The Board may, in its discretion, from time to time
appoint a Stock Option Committee (the "Committee") consisting
of not less than two members of the Board, none of whom shall
be an officer or other salaried employee of the Company or any
Subsidiary, and each of whom shall qualify in all respects as
a "non-employee director" as defined in Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and an "outside director" for purposes of
Section 162(m) of the Code. The Board, in its sole discretion,
may provide that the role of the Committee shall be limited to
making recommendations to the Board concerning any
determinations to be made and actions to be taken by the Board
pursuant to or with respect to the Plan, or the Board may
delegate to the Committee such powers and authorities related
to the administration of the Plan, as set forth in Section
4(a) above, as the Board shall determine, consistent with the
Certificate of Incorporation and By-laws of the Company and
applicable law. The Board may remove members, add members, and
fill vacancies on the Committee from time to time, all in
accordance with the Company's Certificate of Incorporation and
By-laws, and with applicable law. The majority vote of the
Committee, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid
acts of the Committee.
(c) NO LIABILITY. No member of the Board or of the Committee shall
be liable for any action or determination made in good faith
with respect to the Plan or any Option granted or Option
Agreement entered into hereunder.
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<PAGE> 3
(d) DELEGATION TO THE COMMITTEE. In the event that the Plan or any
Option granted or Option Agreement entered into hereunder
provides for any action to be taken by or determination to be
made by the Board, such action may be taken by or such
determination may be made by the Committee if the power and
authority to do so has been delegated to the Committee by the
Board as provided for in Section 4(b) above. Unless otherwise
expressly determined by the Board, any such action or
determination by the Committee shall be final and conclusive.
5. COMMON STOCK
The capital stock of the Company that may be issued pursuant to Options
granted under the Plan shall be shares of common stock, $.01 par value, of the
Company (the "Common Stock"), which shares may be treasury shares or authorized
but unissued shares. The total number of shares of Common Stock that may be
issued pursuant to Options granted under the Plan shall be 7,000,000 shares,
subject to adjustment as provided in Section 18 below. If any Option expires,
terminates, or is terminated or canceled for any reason prior to exercise in
full, the shares of Common Stock that were subject to the unexercised portion of
such Option shall be available for future Options granted under the Plan.
6. ELIGIBILITY
Options may be granted under the Plan to any employee or director
(employee and non-employee directors) of the Company or any Subsidiary, as well
as to any independent contractor or consultant performing services for the
Company or any Subsidiary as determined by the Board from time to time on the
basis of their importance to the business of the Company or any Subsidiary
(collectively, "Eligible Individuals"), provided that Incentive Stock Options
may only be granted to employees of the Company and its Subsidiaries. An
individual may hold more than one Option, subject to such restrictions as are
provided herein.
7. GRANT OF OPTIONS
(a) GENERAL. Subject to the terms and conditions of the Plan, the
Board may, at any time and from time to time, prior to the
date of termination of the Plan, grant to such Eligible
Individuals as the Board may determine ("Optionees"), Options
to purchase such number of shares of Common Stock on such
terms and conditions as the Board may determine. The date on
which the Board approves the grant of an Option (or such later
date as is specified by the Board) shall be considered the
date on which such Option is granted. The maximum number of
shares of Common Stock subject to Options that may be granted
during any calendar year under the Plan to any executive
officer or other employee of the Company or any Subsidiary
whose compensation is or may be subject to Section 162(m) of
the Code is 1,000,000 shares (subject to adjustment as
provided in Section 18 below).
3
<PAGE> 4
(b) NON-EMPLOYEE DIRECTORS.
(i) Each member of the Board that is not an employee of the
Company, as determined by the Board in its sole discretion (a
"Non-Employee Director"), shall automatically be granted, as
of the effective date of the registration statement (the "IPO
Effective Date") relating to the Company's initial public
offering of its Common Stock ("IPO"), an Option to acquire
50,000 shares of Common Stock at a price per share equal to
the initial public offering price. Each Non-Employee Director
who joins the Board after the closing date of the IPO shall
automatically be granted, as of the date he or she joins the
Board, an Option to acquire 50,000 shares of Common Stock at a
price per share equal to the closing price of a share of
Common Stock on the New York Stock Exchange on the last
trading date immediately prior to the grant date, provided if
the Common Stock is not listed on the NYSE, the price per
share shall be determined in accordance with Section 10.
(ii) Additionally, each Non-Employee Director as of the first
day of each fiscal year of the Company, shall automatically be
granted, as of such date, an Option to acquire 10,000 shares
of Common Stock at a price per share equal to the closing
price of a share of Common Stock on the New York Stock
Exchange on the last trading date immediately prior to the
grant date, provided if the Common Stock is not listed on the
NYSE, the price per share shall be determined in accordance
with Section 10.
(iii) All Options granted under this Section 7(b) shall be
fully vested and immediately exercisable, and shall remain
exercisable for a term of ten years from the date of grant so
long as such person remains a member of the Board. At such
time as such person ceases to be a Board member, any portion
of the Option that has not been exercised shall no longer be
exercisable and shall terminate.
(iv) No Option referred to herein shall be granted, awarded,
or exercised at any time prior to the IPO Effective Date. If
the IPO is not consummated, the Options referred to herein
shall not be granted or awarded or become exercisable.
8. LIMITATION ON INCENTIVE STOCK OPTIONS
(a) TEN PERCENT STOCKHOLDER. Notwithstanding any other provision
of this Plan to the contrary, no individual may receive an
Incentive Stock Option under the Plan if such individual, at
the time the award is granted, owns (after application of the
rules contained in Section 424(d) of the Code) stock
possessing more than 10 percent of the total combined voting
power of all classes of stock of the Company or its
subsidiaries, unless (i) the purchase price for each share of
Common Stock subject to such Incentive Stock Option is at
least 110 percent of the fair market value of a share of
Common Stock on the date of grant (as determined in good faith
by the Board) and (ii) such Incentive Stock Option is not
exercisable after the date which is five years from the date
of grant.
4
<PAGE> 5
(b) LIMITATION ON GRANTS. The aggregate fair market value
(determined with respect to each Incentive Stock Option at the
time such Incentive Stock Option is granted) of the shares of
Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by an individual during any
calendar year (under this Plan or any other plan of the
Company or a subsidiary) shall not exceed $100,000. If an
incentive stock option is granted pursuant to which the
aggregate fair market value of shares with respect to which it
first becomes exercisable in any calendar year by an
individual exceeds such $100,000 limitation, the portion of
such option which is in excess of the $100,000 limitation, and
any such options issued subsequently in the same calendar
year, shall be treated as a non-qualified option pursuant to
Section 422(d)(1) of the Code. In the event that an individual
is eligible to participate in any other stock option plan of
the Company or any parent or subsidiary of the Company which
is also intended to comply with the provisions of Section 422
of the Code, such $100,000 limitation shall apply to the
aggregate number of shares for which incentive stock options
may be granted under this Plan and all such other plans.
9. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by written
agreements ("Option Agreements"), to be executed by the Company and by the
Optionee, in such form or forms as the Board shall from time to time determine.
Option Agreements covering Options granted from time to time or at the same time
need not contain similar provisions; PROVIDED, HOWEVER, that all such Option
Agreements shall comply with all terms of the Plan.
10. OPTION PRICE
The purchase price of each share of Common Stock subject to an Option
(the "Option Price") shall be fixed by the Board and stated in each Option
Agreement, and subject to the provisions of Sections 7(b) and 8(a) above, shall
be not less than 100 percent of the fair market value of a share of Common Stock
on the date the Option is granted. If the Common Stock is then listed on any
national securities exchange, the fair market value shall be the closing price
of a share of Common Stock on such exchange on the last trading day immediately
prior to the date of grant; PROVIDED, HOWEVER, that when granting Incentive
Stock Options, the Board shall determine fair market value in accordance with
the provisions of Section 422 of the Code. If the Common Stock is not listed on
any such exchange, the fair market value shall be determined in good faith by
the Board. Notwithstanding the foregoing, the Option Price of Options granted on
the IPO Effective Date shall be equal to the initial public offering price.
5
<PAGE> 6
11. TERM AND VESTING OF OPTIONS
(a) OPTION PERIOD. Subject to the provisions of Sections 8(a) and
14 hereof, each Option granted under the Plan shall terminate
and all rights to purchase shares thereunder shall cease upon
the expiration of 10 years from the date such Option is
granted, or on such date prior thereto as may be fixed by the
Board and stated in the Option Agreement relating to such
Option. Notwithstanding the foregoing, the Board may in its
discretion, at any time prior to the expiration or termination
of any Option, extend the term of any such Option for such
additional period as the Board in its discretion may
determine; PROVIDED, HOWEVER, that in no event shall the
aggregate option period with respect to any Option, including
the initial term of such Option and any extensions thereof,
exceed 10 years.
(b) VESTING. Subject to the provisions of Section 14 hereof, and
except as set forth in Section 7(b)(iii), each Option shall
become exercisable with respect to 25% of the total number of
shares subject to the Option on the date that is 12 months
after the date of its grant (the "Vesting Date") and with
respect to an additional 25% of the number of such shares on
each of the next three succeeding anniversaries of the Vesting
Date. Notwithstanding the foregoing, the Board may in its
discretion provide that any vesting requirement or other such
limitation on the exercise of an Option may be rescinded,
modified or waived by the Board, in its sole discretion, at
any time and from time to time after the date of grant of such
Option, so as to accelerate the time at which the Option may
be exercised.
(c) CHANGE IN CONTROL. In the event of a Change in Control (as
defined below), except as the Board shall otherwise provide in
an Option Agreement with respect to an Option granted under
the Plan, all outstanding Options shall become immediately
exercisable in full, without regard to any limitation on
exercise imposed pursuant to Section 11(b) above. For purposes
of the Plan, a "Change in Control" shall be deemed to occur if
any person (excluding those persons or affiliates of those
persons who were stockholders of the Company prior to the
Company's initial public offering) shall acquire direct or
indirect beneficial ownership (whether as a result of stock
ownership, revocable or irrevocable proxies or otherwise) of
more than 50% of the total combined voting power with respect
to the election of directors of the issued and outstanding
capital stock of the Company (except that no Change in Control
shall be deemed to have occurred if the stockholders of the
Company immediately before such acquisition own all or
substantially all of the voting stock or other interests of
such acquiring person immediately after such transaction). For
purposes of the Plan, a "person" shall mean any person,
corporation, partnership, joint venture or other entity or any
group (as such term is defined for purposes of Section 13(d)
of the Exchange Act) and "beneficial ownership" shall be
determined in accordance with Rule 13d-3 under the Exchange
Act.
6
<PAGE> 7
12. MANNER OF EXERCISE AND PAYMENT
(a) EXERCISE. An Option that is exercisable hereunder may be
exercised by delivery to the Company on any business day, at
its principal office, addressed to the attention of the Stock
Option Administrator, of written notice of exercise, which
notice shall specify the number of shares with respect to
which the Option is being exercised, and shall be accompanied
by payment in full of the Option Price of the shares for which
the Option is being exercised, by one or more of the methods
provided below. The minimum number of shares of Common Stock
with respect to which an Option may be exercised, in whole or
in part, at any time shall be the lesser of 100 shares or the
maximum number of shares available for purchase under the
Option at the time of exercise.
(b) PAYMENT. Payment of the Option Price for the shares of Common
Stock purchased pursuant to the exercise of an Option shall be
made (i) in cash or in cash equivalents; (ii) through the
tender to the Company of shares of Common Stock, which shares
shall be valued, for purposes of determining the extent to
which the Option Price has been paid thereby, at their fair
market value (determined in the manner described in Section 10
above) on the date of exercise; (iii) by delivering a written
direction to the Company that the Option be exercised pursuant
to a "cashless" exercise/sale procedure (pursuant to which
funds to pay for exercise of the Option are delivered to the
Company by a broker upon receipt of stock certificates from
the Company) or a cashless exercise/loan procedure (pursuant
to which the Optionees would obtain a margin loan from a
broker to fund the exercise) through a licensed broker
acceptable to the Company whereby the stock certificate or
certificates for the shares of Common Stock for which the
Option is exercised will be delivered to such broker as the
agent for the individual exercising the Option and the broker
will deliver to the Company cash (or cash equivalents
acceptable to the Company) equal to the Option Price for the
shares of Common Stock purchased pursuant to the exercise of
the Option plus the amount (if any) of federal and other taxes
that the Company, may, in its judgment, be required to
withhold with respect to the exercise of the Option; (iv) to
the extent permitted by applicable law and agreed to by the
Board in its sole and absolute discretion, by the delivery of
a promissory note of the Optionee to the Company on such terms
as the Board shall specify in its sole and absolute
discretion; or (v) by a combination of the methods described
in clauses (i), (ii), (iii) and (iv). Payment in full of the
Option Price need not accompany the written notice of exercise
if the Option is exercised pursuant to the cashless
exercise/sale procedure described above. An attempt to
exercise any Option granted hereunder other than as set forth
above shall be invalid and of no force and effect.
(c) ISSUANCE OF CERTIFICATES. Promptly after the exercise of an
Option, the individual exercising the Option shall be entitled
to the issuance of a certificate or certificates evidencing
his ownership of such shares of Common Stock. An individual
holding or exercising an Option shall have none of the rights
of a
7
<PAGE> 8
stockholder until the shares of Common Stock covered thereby
are fully paid and issued to him and, except as provided in
Section 18 below, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date of
such issuance.
13. TRANSFERABILITY OF OPTIONS
No Option shall be assignable or transferable by the Optionee to whom
it is granted, other than by will or the laws of descent and distribution.
14. TERMINATION OF EMPLOYMENT, DEATH OR DISABILITY
(a) GENERAL. Upon the termination of the employment or other
service of an Optionee with the Company or any Subsidiary,
other than by reason of death or "permanent and total
disability" (within the meaning of Section 22(e)(3) of the
Code) of such Optionee, any Option granted to such Optionee
pursuant to the Plan shall terminate upon the date of such
termination of employment or service and such Optionee shall
have no further right to purchase shares of Common Stock
pursuant to such Option. Notwithstanding the foregoing
provisions of this Section 14, the Board may provide, in its
discretion, that following the termination of employment or
service of an Optionee with the Company or any Subsidiary, an
Optionee may exercise an Option, in whole or in part, at any
time subsequent to such termination of employment or service
and prior to termination of the Option pursuant to Section
11(a) above, either subject to or without regard to any
vesting or other limitation on exercise imposed pursuant to
Section 11(b) above. Unless otherwise determined by the Board,
temporary absence from employment or service because of
illness, vacation, approved leaves of absence, military
service and transfer of employment shall not constitute a
termination of employment or service with the Company or any
Subsidiary.
(b) DEATH. If an Optionee dies while in the employ or service of
the Company or any Subsidiary, Optionee's estate or the
devisee named in the Optionee's valid last will and testament
or the Optionee's heir at law who inherits the Option shall
have the right, at any time within three years after the date
of such Optionee's death and prior to termination of the
Option pursuant to Section 11(a) above, to exercise, in whole
or in part, any vested portion of the Option (in accordance
with Section 11(b) above) held by such Optionee at the date of
such Optionee's death. On the date of Optionee's death, the
unvested portion of the Option shall terminate.
(c) DISABILITY. If an Optionee terminates employment or service
with the Company or any Subsidiary by reason of the "permanent
and total disability" (within the meaning of Section 22(e)(3)
of the Code) of such Optionee, then Optionee shall have the
right at any time within three years after such termination of
employment or service and prior to termination of the Option
pursuant to Section 11(a) above,
8
<PAGE> 9
to exercise, in whole or in part, any vested portion of the
Option (in accordance with Section 11(b) above) held by such
Optionee at the date of such termination of employment or
service. On the date of such termination of employment or
service, the unvested portion of the Option shall terminate.
Whether a termination of employment or service is to be
considered by reason of "permanent and total disability" for
purposes of this Plan shall be determined by the Board, which
determination shall be final and conclusive.
15. USE OF PROCEEDS
The proceeds received by the Company from the sale of Common Stock
pursuant to Options granted under the Plan shall constitute general funds of the
Company.
16. REQUIREMENTS OF LAW
(a) VIOLATIONS OF LAW. The Company shall not be required to sell
or issue any shares of Common Stock under any Option if the
sale or issuance of such shares would constitute a violation
by the individual exercising the Option or the Company of any
provisions of any law or regulation of any governmental
authority, including without limitation any federal or state
securities laws or regulations. Any determination in this
connection by the Board shall be final, binding, and
conclusive. The Company shall not be obligated to take any
affirmative action in order to cause the exercise of an Option
or the issuance of shares pursuant thereto to comply with any
law or regulation of any governmental authority.
(b) REGISTRATION. At the time of any exercise of any Option, the
Company may, if it shall determine it necessary or desirable
for any reason, require the Optionee (or his or her heirs,
legatees or legal representative, as the case may be), as a
condition to the exercise thereof, to deliver to the Company a
written representation of present intention to purchase the
shares for their own account as an investment and not with a
view to, or for sale in connection with, the distribution of
such shares, except in compliance with applicable federal and
state securities laws with respect thereto. In the event such
representation is required to be delivered, an appropriate
legend may be placed upon each certificate delivered to the
Optionee (or his or her heirs, legatees or legal
representative, as the case may be) upon his or her exercise
of part or all of the Option and a stop transfer order may be
placed with the transfer agent. Each Option shall also be
subject to the requirement that, if at any time the Company
determines, in its discretion, that the listing, registration
or qualification of the shares subject to the Option upon any
securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body is
necessary or desirable as a condition of or in connection
with, the issuance or purchase of the shares thereunder, the
Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions
not acceptable to the Company in its sole
9
<PAGE> 10
discretion. The Company shall not be obligated to take any
affirmative action in order to cause the exercisability or
vesting of an Option or to cause the exercise of an Option or
the issuance of shares pursuant thereto to comply with any law
or regulation of any governmental authority.
(c) WITHHOLDING. The Board may make such provisions and take such
steps as it may deem necessary or appropriate for the
withholding of any taxes that the Company is required by any
law or regulation of any governmental authority, whether
federal, state or local, domestic or foreign, to withhold in
connection with the exercise of any Option, including, but not
limited to: (i) the withholding of delivery of shares of
Common Stock upon exercise of Options until the holder
reimburses the Company for the amount the Company is required
to withhold with respect to such taxes, (ii) the canceling of
any number of shares of Common Stock issuable upon exercise of
such Options in an amount sufficient to reimburse the Company
for the amount it is required to so withhold, or (iii)
withholding the amount due from any such person's wages or
compensation due such person.
(b) GOVERNING LAW. This Plan shall be governed by, and construed
and enforced in accordance with, the laws of the State of
Delaware.
17. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Common Stock as to which Options have not
been granted; PROVIDED, HOWEVER, that the approval by a majority of the votes
present and entitled to vote at a duly held meeting of the stockholders of the
Company at which a quorum representing a majority of all outstanding voting
stock is, either in person or by proxy, present and voting on the amendment, or
by written consent in accordance with applicable state law and the Certificate
of Incorporation and By-laws of the Company shall be required for any amendment
(i) that changes the requirements as to Eligible Individuals to receive Options
under the Plan, (ii) that increases the maximum number of shares of Common Stock
in the aggregate that may be sold pursuant to Options that are granted under the
Plan (except as permitted under Section 18 hereof), or (iii) if approval of such
amendment is necessary to comply with federal or state law (including without
limitation Rule 162(m) of the Code and Rule 16b-3 under the Exchange Act) or
with the rules of any stock exchange or automated quotation system on which the
Common Stock may be listed or traded. Except as permitted under Section 18
hereof, no amendment, suspension or termination of the Plan shall, without the
consent of the holder of the Option, alter or impair rights or obligations under
any Option theretofore granted under the Plan.
18. EFFECT OF CHANGES IN CAPITALIZATION
(a) RECAPITALIZATION. If the outstanding shares of Common Stock
are increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the
Company by reason of any recapitalization, reclassification,
reorganization (other than as described in Section 18(b)
below),
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<PAGE> 11
stock split, reverse split, combination of shares, exchange of
shares, stock dividend or other distribution payable in
capital stock of the Company, or other increase or decrease in
such shares effected without receipt of consideration by the
Company, occurring after the Effective Date, an appropriate
and proportionate adjustment shall be made by the Board (i) in
the aggregate number and kind of shares of Common Stock
available under the Plan, (ii) in the number and kind of
shares of Common Stock issuable upon exercise of outstanding
Options granted under the Plan, and (iii) in the Option Price
per share of outstanding Options granted under the Plan.
(b) REORGANIZATION. In connection with a merger, consolidation,
reorganization or other business combination of the Company
with one or more other entities in which the Company is not
the surviving entity, each then outstanding Option shall upon
exercise thereafter entitle the holder thereof to such number
of shares of Common Stock or other securities or property to
which a holder of shares of Common Stock would have been
entitled to upon such merger, consolidation, reorganization or
other business combination.
(c) DISSOLUTION OR LIQUIDATION. Upon the dissolution or
liquidation of the Company, the Plan and all Options
outstanding hereunder shall terminate. In the event of any
termination of the Plan under this Section 18(c), each
individual holding an Option shall have the right, immediately
prior to the occurrence of such termination and during such
reasonable period as the Board in its sole discretion shall
determine and designate, to exercise such Option in whole or
in part, whether or not such Option was otherwise exercisable
at the time such termination occurs and without regard to any
vesting or other limitation on exercise imposed pursuant to
Section 11(b) above.
(d) ADJUSTMENTS. Adjustments under this Section 18 related to
stock or securities of the Company shall be made by the Board,
whose determination in that respect shall be final, binding,
and conclusive. No fractional shares of Common Stock or units
of other securities shall be issued pursuant to any such
adjustment, and any fractions resulting from any such
adjustment shall be eliminated in each case by rounding
downward to the nearest whole share or unit.
(e) NO LIMITATIONS. The grant of an Option pursuant to the Plan
shall not affect or limit in any way the right or power of the
Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business
structure or to merge, consolidate, dissolve or liquidate, or
to sell or transfer all or any part of its business or assets.
19. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the
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employ of the Company or any Subsidiary or to interfere in any way with the
right and authority of the Company or any Subsidiary either to increase or
decrease the compensation of any individual, including any Option holder, at any
time, or to terminate any employment or other relationship between any
individual and the Company or any Subsidiary. A holder of an option shall not be
deemed for any purpose to be a stockholder of the Company with respect to such
option except to the extent that such option shall have been exercised with
respect thereto and, in addition, a stock certificate shall have been issued
theretofore and delivered to the holder. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued, except as expressly provided in
Section 18 hereof.
20. NONEXCLUSIVITY OF THE PLAN
The adoption of the Plan shall not be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options or stock
appreciation rights otherwise than under the Plan.
21. SEVERABILITY
If any provision of the Plan or any Option Agreement shall be
determined to be illegal or unenforceable by any court of law in any
jurisdiction, the remaining provisions hereof and thereof shall be severable and
enforceable in accordance with their terms, and all provisions shall remain
enforceable in any other jurisdiction.
22. NOTICES
Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: President, and if to the holder of an option, to the address as
appearing on the records of the Company.
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Exhibit 10.34
NATIONSRENT, INC.
SERIES A CONVERTIBLE PREFERRED STOCK, $.01 Par Value
PREFERRED STOCK PURCHASE AGREEMENT
<PAGE> 2
PREFERRED STOCK PURCHASE AGREEMENT ("Agreement") dated July 20, 1999,
by and among NationsRent, Inc., a Delaware corporation (the "Company"), NR
Holdings Limited, a Cayman Islands corporation and NR Investments Limited, a
Cayman Islands corporation (collectively the "Purchasers").
RECITALS
WHEREAS, the Company proposes that the Company issue to the Purchasers
and the Purchasers agree to purchase, shares of the Company's Convertible
Preferred Stock, Series A, par value $.01 per share, upon the terms and subject
to the conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. AUTHORIZATION OF STOCK. The Company will authorize the issue and
sale of 100,000 shares (the "Shares", such term to include any such shares
issued in substitution therefor pursuant to Section 8) of its Series A
Convertible Preferred Stock, $.01 par value, to be designated as its "Series A
Convertible Preferred Stock" (the "Stock"). The relative rights, preferences and
limitations of the Stock, including, without limitation, the right to convert
Shares into shares of the Company's common stock, par value $.01 per share (the
"Common Stock"), will be as set forth in the form of the Certificate of
Designation of the Stock of the Company attached as Exhibit A hereto (the
"Certificate of Designation"). Certain capitalized terms used in this Agreement
are defined in Section 9; references to a "Schedule" or an "Exhibit" are, unless
otherwise specified, to a Schedule or an Exhibit attached to this Agreement and
references to a "Section" are, unless otherwise specified, to one of the
Sections of this Agreement.
2. SALE AND PURCHASE OF STOCK.
2.1 Subject to the terms and conditions herein set forth, the
Company agrees that it will issue to the Purchasers, and the Purchasers agree
that they will acquire from the Company, at the First Closing, an aggregate of
78,000 shares of Preferred Stock (the "First Preferred Shares") for a purchase
price of $1,000 per share or an aggregate of $78,000,000 (the "First Purchase
Price"). The number of Shares to be purchased by each Purchaser at such Closing
shall be as set forth in Exhibit B.
2.2 Subject to the terms and conditions herein set forth, the
Company agrees that it will issue to the Purchasers, and the Purchasers agree
that they will acquire from the Company, at the Second Closing, an aggregate of
22,000 shares of Preferred Stock (the "Second Preferred Shares" and together
with the First Preferred Shares, the "Shares") for a purchase price of $1,000
per share or an aggregate of $22,000,000 (the "Second Purchase Price" and
together with the First Purchase Price, the "Purchase Price"). The number of
Shares to be purchased by each Purchaser at such Closing shall be as set forth
in Exhibit B.
<PAGE> 3
3. CLOSINGS; PAYMENT OF PURCHASE PRICE.
3.1 The sale of the First Preferred Shares to be purchased by
the Purchasers shall take place at the offices of Akerman, Senterfitt & Eidson,
P.A., 450 East Las Olas Boulevard, 9th Floor, Fort Lauderdale, Florida 33301, at
10:00 a.m., local time, at a closing (the "First Closing") on Tuesday, July 20,
1999, provided the conditions to closing set forth in Section 4 (other than
Section 4.15 which shall be satisfied at the Second Closing) have been satisfied
or waived by the party entitled to waive such condition or on such other
Business Day thereafter or prior to such date as may be agreed upon by the
Company and the Purchasers.
3.2 The sale of the Second Preferred Shares to be purchased by
the Purchasers shall take place at the offices of Akerman, Senterfitt & Eidson,
P.A., 450 East Las Olas Boulevard, 9th Floor, Fort Lauderdale, Florida 33301 at
10:00 a.m., local time, at a closing (the "Second Closing" and together with the
First Closing, the "Closings") on the third Business Day after the conditions to
the Second Closing set forth in Section 4 have been satisfied or waived by the
party entitled to waive such conditions or on such other Business Day thereafter
or prior to such date as may be agreed upon by the Company and the Purchasers.
3.3 The names in which the Company will register the shares of
the Stock to be purchased at the Closings are as set forth in Exhibit B. At each
of the Closings, the Company will deliver to the Purchasers the Shares to be
purchased by the Purchasers in the form of a single certificate (or such greater
number of certificates representing such Shares as the Purchasers may request)
dated the date of the Closing and registered in the names aforesaid, and the
Purchasers jointly and severally shall deliver to the Company or its order cash
in immediately available funds in the amount of the purchase price for such
Shares to an account designated by the Company. If at a Closing the Company
shall fail to tender to the Purchasers the Shares to be purchased by the
Purchasers, as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled, the Purchasers shall, at
their election, be relieved of all further obligations under this Agreement,
without thereby waiving any other rights the Purchasers may have by reason of
such failure or such nonfulfillment; provided, however, that if the First
Closing has already occurred, then only the obligation to proceed with the
Second Closing may be relieved, and all other obligations of the parties
hereunder shall remain in effect with respect to the Shares issued to the
Purchasers at the First Closing. If at a Closing, (i) the Purchasers shall fail
to tender to the Company the purchase price for the Shares, as provided above in
this Section 3, other than on account of any of the conditions specified in
Section 4 not having been fulfilled or on account of the breach by the Company
of any of its obligations under this Agreement, or (ii) if the representations
and warranties of Purchasers contained in Section 6 shall not be true and
correct, then the Company shall, at its election, be relieved of all further
obligations under this Agreement, without thereby waiving any other rights the
Company may have by reason of such failure; provided, however, that if the First
Closing has already occurred, then only the obligation to proceed with the
Second Closing may be relieved, and all other obligations of the parties
hereunder shall remain in effect with respect to the Shares issued to the
Purchasers at the First Closing. If the stockholders of the Company vote on but
do not approve the issue and sale of the Shares to the Purchasers, then the
Company shall, at its election, be relieved of the obligation to proceed with
the Second Closing, in which case all other
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obligations of the parties hereunder shall remain in effect with respect to the
Shares issued to the Purchasers at the First Closing.
4. CONDITIONS TO EACH CLOSING. The Purchasers' obligation to purchase
and pay for the Shares to be sold to the Purchasers at each Closing is subject
to the fulfillment, prior to or concurrently with such Closing, of the following
conditions. The obligation of each Purchaser to purchase the First Preferred
Shares at the First Closing shall be subject to the satisfaction or waiver of
all of the conditions set forth below except for the condition in Section 4.15.
The obligation of each Purchaser to purchase the Second Preferred Shares at the
Second Closing shall be subject to the satisfaction or waiver of the conditions
set forth in Sections 4.1, 4.2, 4.3 and 4.15.
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 5.6 of this Agreement shall be
true and correct when made and at the time of the Closing, except that any
inaccuracy in a number of shares that does not exceed 500,000 shares shall not
be deemed to be a breach of the representations contained in Section 5.6. The
other representations and warranties of the Company contained in this Agreement
shall be true and correct when made and at the time of the Closing, except as
affected by the consummation of the transactions contemplated by this Agreement,
and except where the failure of such representations and warranties to be so
true and correct (without giving effect to any limitation as to "materiality" or
"Material Adverse Effect" set forth therein) would not individually or in the
aggregate have a Material Adverse Effect.
4.2 PERFORMANCE; NO DEFAULT. The Company shall have performed
and complied with all agreements and conditions contained in this Agreement
required to be performed or complied with by it prior to or at the Closing.
4.3 COMPLIANCE CERTIFICATES. The Company shall have delivered
to the Purchasers an Officers' Certificate, dated the date of the Closing,
certifying that the conditions specified in Sections 4.1 and 4.2 have been
fulfilled.
4.4 OPINION OF COUNSEL. The Purchasers shall have received the
favorable opinion of Akerman, Senterfitt & Eidson, P.A., counsel for the
Company, substantially in the form set forth in Exhibit B and dated the date of
the Closing.
4.5 CERTIFICATE OF DESIGNATION. The Certificate of Designation
shall have been duly filed under the laws of the State of Delaware, and the
Amended and Restated Certificate of Incorporation of the Company, as amended by
the Certificate of Designation, shall be in full force and effect, and shall not
have been otherwise amended or modified.
4.6 REGISTRATION RIGHTS AGREEMENT. The Purchasers shall have
received a fully executed counterpart of the Registration Rights Agreement
substantially in the form set out in Exhibit C (the "Registration Rights
Agreement"), such agreement shall be in full force and effect and no term or
condition thereof shall have been amended, modified or waived.
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<PAGE> 5
4.7 NO ACTIONS PENDING. There shall be no suit, action,
investigation, inquiry or other proceeding by any Governmental Authority or any
other Person or any other legal or administrative proceeding pending or to the
knowledge of the Company threatened which questions the validity or legality of
the transactions contemplated by this Agreement, or seeks damages in connection
therewith.
4.8 COMPLIANCE WITH SECURITIES LAWS. The offering and sale by
the Company, at or prior to the Closing, of the Shares pursuant to this
Agreement shall have been made in compliance with all applicable requirements of
federal and state securities laws and the Purchasers shall have received
evidence thereof in form and substance reasonably satisfactory to the
Purchasers.
4.9 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
reasonably satisfactory to the Purchasers, and the Purchasers shall have
received all such counterpart originals or certified or other copies of such
documents as the Purchasers or their counsel may reasonably request.
4.10 RESERVATION OF COMMON STOCK. The shares of Common Stock
initially issuable upon conversion of the Stock shall have been duly authorized
and reserved for issuance upon conversion of the Stock.
4.11 AMENDED CREDIT AGREEMENT. The Company, BankBoston, N.A.
and the other lending institutions and parties thereto shall have executed the
Fourth Amended and Restated Revolving Credit and Term Loan Agreement
substantially in the form of the draft dated July 18, 1999, a copy of which has
been furnished by the Company to the Purchasers with such changes that the
Company and BankBoston, N.A. may have agreed upon, which, to the extent such
changes are material, shall be reasonably satisfactory to the Purchasers, and
such agreement shall be in full force and effect.
4.12 EXECUTIVE COMMITTEE. The Board of Directors of the
Company shall have adopted the resolutions modifying the authority of the
Executive Committee set forth in Exhibit D, and such resolutions shall not have
been rescinded, amended or modified and shall be in full force and effect.
4.13 VOTING AGREEMENTS. Persons having aggregate voting power
with respect to a majority of the outstanding shares of Common Stock shall have
executed and delivered to Purchasers voting agreements in the form of Exhibit C
attached hereto ("Voting Agreements") and such agreements shall not have been
rescinded, amended or modified and shall be in full force and effect.
4.14 SECOND QUARTER RESULTS. The Purchasers shall be
reasonably satisfied that the Company's results for the quarter ended June 30,
1999 when publicly announced will be consistent with the estimated results
previously disclosed to the Purchasers' representative.
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4.15 STOCKHOLDER APPROVAL. In connection with the Second
Closing only, the stockholders of the Company shall have approved the
transactions contemplated hereby in accordance with the requirements of the New
York Stock Exchange.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants that:
5.1 ORGANIZATION, STANDING, ETC. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into and perform all of its obligations under
this Agreement and the Registration Rights Agreement, to issue and sell the
Shares to be issued and sold at the Closing (except that the issue and sale of
the Second Preferred Shares shall require the approval of the stockholders of
the Company) and to carry out the transactions contemplated hereby or thereby.
5.2 SUBSIDIARIES. SCHEDULE 5.2 lists as to each Subsidiary of
the Company on the date of this Agreement (a) its name, (b) the jurisdiction of
its incorporation or organization and (c) the percentage of its issued and
outstanding shares or other ownership interests owned by the Company or by
another Subsidiary of the Company (specifying such other Subsidiary), as the
case may be. Each Subsidiary of the Company is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted. All the outstanding shares of capital stock of each
Subsidiary of the Company are validly issued, fully paid and nonassessable, and
all such shares indicated in SCHEDULE 5.2 as owned by the Company or by a
Subsidiary of the Company are so owned beneficially and of record by the Company
or by such Subsidiary, as the case may be, free and clear of any Lien except as
indicated in SCHEDULE 5.2.
5.3 QUALIFICATION. Each of the Company and its Subsidiaries is
duly qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction (other than the jurisdiction of its incorporation)
in which the nature of its activities or the character of the properties it owns
or leases makes such qualification necessary and in which the failure so to
qualify would have a Material Adverse Effect. A "Material Adverse Effect" shall
mean any effect that is or is reasonably likely to be materially adverse to the
properties, business, results of operations or financial condition of the
Company and its Subsidiaries taken as a whole.
5.4 BUSINESS; FINANCIAL STATEMENTS. The Company has delivered
to the Purchasers complete and correct copies of the audited consolidated
balance sheets of the Company and its Subsidiaries as of December 31, 1998 and
December 31, 1997, and the related audited consolidated statements of income,
stockholders' equity and cash flows of the Company and its Subsidiaries for the
year ended December 31, 1998 and for the period from August 14, 1997 (inception)
to December 31, 1997. Such audited financial statements are hereinafter referred
to as the "Financial Statements." The Financial Statements are accompanied by
the report of Arthur Andersen LLP, which states that the Financial Statements
present fairly, in all material respects, the consolidated
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<PAGE> 7
financial position of the Company and its Subsidiaries as of December 31, 1998
and 1997, and the results of their operations and their cash flows for the year
ended December 31, 1998 and for the period from August 14, 1997 (inception) to
December 31, 1997 in conformity with GAAP, and that the audit by such
accountants of the Financial Statements has been made in accordance with
generally accepted auditing standards. The Company has also delivered to the
Purchasers complete and correct copies of the unaudited consolidated balance
sheet of the Company and its Subsidiaries as of March 31, 1999, and the related
unaudited consolidated statement of income, stockholders' equity and cash flows
of the Company and its Subsidiaries for the three month period ended on such
date. Such unaudited financial statements are hereinafter referred to as the
"Unaudited Statements." The Financial Statements and the Unaudited Statements
have been prepared in accordance with GAAP consistently applied throughout the
periods involved (except as otherwise specified therein) and present fairly the
financial position of the Company and its Subsidiaries as of the respective
dates specified, and the results of their operations and their cash flows for
the respective periods specified. The Company's results for the quarter ended
June 30, 1999 will be consistent with the estimated results previously disclosed
to the Purchasers' representative.
5.5 CHANGES, ETC. Since December 31, 1998, except as disclosed
in Commission Documents and except as set forth on SCHEDULE 5.5, neither the
Company nor any of the Subsidiaries has sustained any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental action,
order or decree which would be material to the Company and the Subsidiaries
taken as a whole, otherwise than as reserved for as disclosed in the Company's
financials statements; and there has not been any change in the capital stock of
the Company or increase in the long-term debt (other than accretion or scheduled
repayments thereof) of the Company and the Subsidiaries taken as a whole, or any
change which has had a Material Adverse Effect.
5.6 CAPITAL STOCK AND RELATED MATTERS. The authorized capital
stock of the Company consists of 250,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock, $.01 par value per share (the "Preferred
Stock"). As of the date hereof, there were (i) no shares of Preferred Stock
issued or outstanding, (ii) 56,453,781 shares of Common Stock issued and
outstanding, (iii) 14,939,357 shares of Common Stock issuable upon the exercise
of outstanding stock options and warrants and upon the conversion or exchange of
outstanding convertible or exchangeable securities, (iv) an aggregate of
7,000,000 shares of Common Stock reserved for issuance under the Company's 1998
Stock Option Plan, and (v) no shares of capital stock of the Company held in the
treasury of the Company. All issued and outstanding shares of Common Stock have
been duly authorized and are validly issued, fully paid, nonassessable and free
of preemptive rights. The Shares, when issued to the Purchasers in accordance
with this Agreement, will be duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. Except as set forth above and on
SCHEDULE 5.6, as of the date hereof, there are no outstanding securities
convertible into or exchangeable for any shares of capital stock of the Company
or any of its Subsidiaries, or any outstanding rights (either preemptive or
other) to subscribe for or to purchase, or any outstanding options for the
purchase of, or any agreements providing for the issuance (contingent or
otherwise) of, or any outstanding calls, commitments or claims of any character
relating to, any capital stock of the Company or any of its Subsidiaries or any
stock or securities convertible into or exchangeable for any capital stock of
the Company or any of its Subsidiaries. Except as set forth on SCHEDULE 5.6, as
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of the date hereof, neither the Company nor any of its Subsidiaries is subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital stock or any convertible securities, rights
or options of the type described in the preceding sentence. Neither the Company
nor any of its Subsidiaries is a party to, or has knowledge of, any agreement
(except as set forth on SCHEDULE 5.6) restricting the transfer of any shares of
the Company's capital stock which would affect the transferability of the Common
Stock issuable upon conversion of the Stock. Except as set forth on SCHEDULE
5.6, as of the date hereof, the Company is not a party to or bound by any
agreement or commitment pursuant to which the Company is or could be required to
register any securities under the Securities Act of 1933.
5.7 TAX RETURNS AND PAYMENTS. The Company and each of the
Subsidiaries have filed all material federal, state, local and foreign income,
payroll, franchise and other tax returns required to be filed (after giving
effect to extensions) and have paid all taxes shown as due thereon, all such tax
returns are true, complete and accurate in all material respects, and there is
no tax deficiency that has been, or to the knowledge of the Company is likely to
be, asserted against the Company, any of the Subsidiaries or any of their
properties or assets that would result in a Material Adverse Effect, except for
taxes that are being contested in good faith by appropriate proceedings and with
respect to which the Company has established adequate reserves in accordance
with United States generally accepted accounting principles.
5.8 INDEBTEDNESS OF THE COMPANY. SCHEDULE 5.8 correctly
describes all secured and unsecured Indebtedness of the Company and its
Subsidiaries (other than intercompany items) outstanding, or for which the
Company or one of its Subsidiaries has commitments, which is individually in
excess of $5,000,000 ("Significant Indebtedness") (excluding operating leases),
as of June 30, 1999. Neither the Company nor any of its Subsidiaries is in
default with respect to any Indebtedness or any instrument or agreement relating
thereto, nor has any event occurred (i) that with the giving of notice or the
lapse of time or both would constitute a default thereunder, or (ii) that has
given or that with the giving of notice or the lapse of time or both would give
rise to a right of termination, amendment, cancellation or acceleration of any
right or obligation of the Company or any of its Subsidiaries thereunder, or to
a loss of any material benefit to which the Company or any of its Subsidiaries
is entitled thereunder, except for any default, termination, amendment,
cancellation, acceleration or loss of material benefit related to Indebtedness
other than Significant Indebtedness as would not, either in any case or in the
aggregate, have a Material Adverse Effect.
5.9 TITLE TO PROPERTIES; LIENS. The Company and each of the
Subsidiaries have good and marketable title to all real property (other than
property which is leased) material to the conduct of the business of the Company
and the Subsidiaries, taken as a whole, and good and marketable title to all
personal property (other than property which is leased) material to the conduct
of the business of the Company and the Subsidiaries, taken as a whole, in each
case free and clear of all liens, encumbrances and defects except such as are
described on SCHEDULE 5.9 or such as do not in the aggregate have a Material
Adverse Effect; and any real property and buildings held under lease by the
Company and the Subsidiaries, material to the conduct of the business of the
Company and the Subsidiaries, taken as a whole, are held by them under valid,
subsisting and enforceable leases with such exceptions as are described on
SCHEDULE 5.9 and except for such other exceptions as do not have a Material
Adverse Effect.
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5.10 LITIGATION, ETC. There is no action, proceeding or
investigation pending or (to the knowledge of the Company) threatened (or any
basis therefor known to the Company) which questions the validity of this
Agreement, the Shares or any action taken or to be taken pursuant to this
Agreement, the Shares or the Registration Rights Agreement. Other than as set
forth on SCHEDULE 5.10 and as disclosed in Commission Documents, there are no
legal or governmental proceedings pending to which the Company or any of the
Subsidiaries is a party or of which any property of the Company or the
Subsidiaries is the subject, which if determined adversely to the Company or any
of the Subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and, to the Company's knowledge, no such proceedings which would
in the aggregate have a Material Adverse Effect are threatened or contemplated
by governmental authorities or threatened by others.
5.11 COMPLIANCE WITH OTHER INSTRUMENTS, ETC. Neither the
Company nor any of its Subsidiaries is in violation of any term of its
certificate or articles of incorporation, by-laws or other organizational
document, and neither the Company nor any of its Subsidiaries is in violation of
any term of any agreement or instrument to which it is a party or by which it is
bound or any term of any applicable law, ordinance, rule or regulation of any
Governmental Authority or any term of any applicable order, judgment or decree
of any court, arbitrator or Governmental Authority, the consequences of which
violation could reasonably be expected to have a Material Adverse Effect. Except
as set forth on SCHEDULE 5.11, the compliance by the Company with all of the
provisions of this Agreement and the Registration Rights Agreement, the
execution, delivery and performance by the Company of this Agreement and the
Registration Rights Agreement, the issuance by the Company of the Common Stock
upon the conversion of the Shares, and the compliance with the terms of the
Certificate of Designation will not conflict with or result in a breach or
violation of any of the terms and provisions of, or constitute a default (or an
event that with the giving of notice or the lapse of time or both would
constitute a default) under, or give rise to a right of termination, amendment,
cancellation or acceleration of any right or obligation of the Company or any of
its Subsidiaries under, or give rise to a loss of any material benefit to which
the Company or any of its Subsidiaries is entitled under, or require any
consent, approval or authorization under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or to which any of the property or assets of the Company
or any of the Subsidiaries is subject, or constitute a Repayment Event
thereunder, nor will such actions result in any violation of the provisions of
the certificate or articles of incorporation or bylaws of the Company or any of
the Subsidiaries or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of the
Subsidiaries or any of their properties except in each case as would not,
individually or in the aggregate have a Material Adverse Effect. Except as set
forth on SCHEDULE 5.11, the execution, delivery and performance by the Company
of this Agreement and the transactions contemplated hereby will not subject the
Company to or accelerate any obligation to make payments to any Person.
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5.12 GOVERNMENTAL CONSENTS, ETC. No consent, approval or
authorization of, or declaration or filing with, any Governmental Authority on
the part of the Company is required for the valid execution and delivery of this
Agreement, the valid offer, issue, sale and delivery of the Shares pursuant to
this Agreement or the valid issue and delivery of shares of Common Stock
issuable upon conversion of the Stock. Except for (a) applicable state
securities or blue sky laws, and (b) consents, approvals, filings or notices
that will be given or made at or prior to the time of the Closing, neither the
Company nor any of its Subsidiaries is required to obtain any consent, approval
or authorization of, or to make any declaration or filing with, any Governmental
Authority as a condition to the valid execution, delivery or performance of the
Registration Rights Agreement or the consummation of the transactions
contemplated thereby.
5.13 OFFERING OF SECURITIES. Neither the Company nor any
Person acting on its behalf has offered the Stock or any similar securities of
the Company to, or solicited any offers to buy any thereof from, or otherwise
approached or negotiated with respect thereto with, any Person or Persons other
than the Purchasers in such manner as would subject the offering, issuance or
sale of any of the Stock to the provisions of Section 5 of the Securities Act.
Neither the Company nor any Person acting on behalf of the Company has taken or
will take any action which would subject the offering, issuance or sale of any
of the Stock to the provisions of Section 5 of the Securities Act.
5.14 CERTAIN FEES. Except for the fees payable by the Company
to Bear Stearns & Co., Inc. and to Deutsche Bank/Alex. Brown, the amount of
which will be disclosed to the Purchasers in writing prior to the Closing, no
broker's or finder's fees or commissions will be payable by the Company with
respect to the transactions contemplated by this Agreement and the Registration
Rights Agreement, and the Company hereby agrees to indemnify the Purchasers
against and agrees that it will hold the Purchasers harmless from any claim,
demand or liability for broker's or finder's fees alleged to have been incurred
at the instance of the Company or any Person acting on behalf of or at the
request of the Company or any agent of the Company in connection with any of the
transactions contemplated by this Agreement and the Registration Rights
Agreement, and from any expenses, including reasonable legal fees, arising in
connection with any such claim, demand or liability.
5.15 INVESTMENT COMPANY ACT. The Company is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
5.16 DISCLOSURE. None of the Company's Annual Report on Form
10-K, as amended on Form 10-K/A, for the year ended December 31, 1998, each
document filed by the Company with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1994 (the "Exchange Act") since the
Annual Report on Form 10-K, as amended on Form 10-K/A, for the year ended
December 31, 1998, the Company's Prospectus dated August 7, 1998 in respect of
its initial public offering or the Company's Offering Memorandum dated December
8, 1998 in respect of its 10-3/8% Senior Subordinated Notes due 2008, contains
(in each case, as of its date) any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they are made, not
misleading.
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5.17 ENFORCEABILITY. This Agreement and the Registration
Rights Agreement have been duly authorized and when validly executed and
delivered by the Company (assuming the due authorization, execution and delivery
thereof by the other parties thereto) will constitute the valid and binding
obligations of the Company, enforceable in accordance with their respective
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws relating to or
affecting enforcement of creditors' rights generally, or by general principles
of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law).
5.18 INTEGRATION. Neither the Company nor any affiliate (as
such term is defined in Rule 501(b) under the Securities Act) has, directly or
through any agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as defined in the Securities Act) which
is or will be integrated with the sale of the Shares, in a manner that would
require the registration of the Shares under the Securities Act.
5.19 MANIPULATION. Prior to the date hereof, neither the
Company nor any of its affiliates has taken any action which is designed to or
which has constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company in
connection with the sale of the Shares.
5.20 INTELLECTUAL PROPERTY. The Company and the Subsidiaries
own or possess, or can acquire on reasonable terms, adequate patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property") necessary to carry
on the business now operated by them, and neither the Company nor any of the
Subsidiaries has received any notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any Intellectual
Property or of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company or any of
the Subsidiaries therein, and which infringement or conflict (if the subject of
any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, would result in a Material Adverse Effect.
5.21 GOVERNMENT LICENSES. The Company and the Subsidiaries
possess such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate federal,
state, local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them, except where the failure to so possess such
Government Licenses would not, singly or in the aggregate, have a Material
Adverse Effect; the Company and the Subsidiaries are in compliance with the
terms and conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, have a Material Adverse
Effect; all of the Governmental Licenses are valid and in full force and effect,
except when the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have, singly or
in the aggregate, a Material Adverse Effect; and neither the Company nor any of
the Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly or in
the
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aggregate, if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect.
5.22 ENVIRONMENTAL LAWS. Except as described on SCHEDULE 5.22
or except as would not, singly or in the aggregate, result in a Material Adverse
Effect: (a) neither the Company nor any of the Subsidiaries is in violation of
any federal, state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent,
decree or judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (b) neither the Company nor any of the Subsidiaries is
lacking any permits, authorizations and approvals required under any applicable
Environmental Laws or are in violation of the requirements of such Environmental
Laws, (c) there are no pending or, to the best knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of the Subsidiaries and (d) to the knowledge of the Company there
are no events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or proceeding
by any private party or governmental body or agency, against or affecting the
Company or any of the Subsidiaries relating to Hazardous Materials or any
Environmental Laws.
5.23 INSURANCE. Neither the Company nor any Subsidiary has
received notice from any insurer providing insurance coverage for the Company
and the Subsidiaries or agent of such insurer that capital improvements or other
expenditures will have to be made in order to continue present insurance
coverage, except such as could not reasonably be expected, singularly or in the
aggregate, to have a Material Adverse Effect.
5.24 INTERNAL CONTROLS. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (a) transactions are executed in accordance with
management's general or specific authorization; (b) transactions are recorded as
necessary (i) to permit preparation of financial statements in conformity with
generally accepted accounting principles and (ii) to maintain accountability for
assets; (c) access to assets is permitted only in accordance with management's
general or specific authorization; and (d) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any material differences; except as described on
SCHEDULE 5.24 and except where the failure to so maintain such system could not
reasonably be expected, singularly or in the aggregate, to have a Material
Adverse Effect.
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5.25 ERISA. Neither the Company nor any of the Subsidiaries
has violated any provisions of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or the rules and regulations promulgated thereunder,
except for such violations which, singly or in the aggregate, would not have a
Material Adverse Effect. If any plan subject to ERISA is adopted, the execution
and delivery of this Agreement and the sale of the Shares will not involve any
non-exempt prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Internal Revenue Code of 1986, as amended.
5.26 YEAR 2000 DISCLOSURE. The Company has made all
disclosures in Commission Documents required by the Securities and Exchange
Commission's Staff Legal Bulletin No. 5 related to Year 2000 compliance. Such
disclosures (as of the date made) do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
5.27 NO LIABILITIES. Neither the Company nor any of its
Subsidiaries has any liabilities or obligations (direct or indirect, contingent
or absolute, matured or unmatured) of any nature whatsoever, whether arising out
of contract, tort, statute or otherwise ("Liabilities"), except (i) as reflected
in the notes to the Financial Statements for the year ended December 31, 1998
and not heretofore discharged, (ii) as reflected or reserved against in the
unaudited balance sheet of the Company at March 31, 1999 included in the
Company's Form 10-Q for the quarter ended March 31, 1999 and not heretofore
discharged, (iii) Liabilities incurred in the ordinary course of business since
March 31, 1999, (iv) contractual liabilities incurred in the ordinary course of
business, (v) Liabilities incurred in connection with any acquisition of another
business entity made by the Company after the date hereof, (vi) other
Liabilities that do not, singly or in the aggregate, have a Material Adverse
Effect, (vii) as disclosed in Commission Documents or (viii) as set forth in
SCHEDULE 5.27.
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. The Purchasers
hereby represent and warrant as follows:
6.1 INVESTMENT REPRESENTATIONS.
(a) Each Purchaser understands that neither the
Shares nor any Common Stock issuable upon conversion, if any, of the
Shares have been registered under the Securities Act and that the
certificates for the Shares and such Common Stock will bear a legend to
that effect, based in part upon Purchasers' representations contained
in this Agreement.
(b) Each Purchaser has been organized by Investcorp
S.A. ("Investcorp") for the purpose of purchasing its respective number
of Shares. Each Purchaser is acquiring the Shares for its account
and/or for the account of affiliates of Investcorp and certain other
international investors with whom Investcorp has administrative
relationships and who have acquired or may acquire equity interests in
such Purchaser not with a view toward distribution in a manner which
would violate the Securities Act. Neither Purchaser, nor Investcorp nor
any Person acting on their behalf has taken or will take any action in
connection with the transactions contemplated by this Agreement or the
offering, sale or issuance of any equity
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interests in either Purchaser which would subject the offering,
issuance or sale of the Shares to the provisions of Section 5 of the
Securities Act.
(c) Each Purchaser represents that by reason of the
business or financial experience of Investcorp and its affiliates, and
the business or financial experience of each of the other international
investors who have or may acquire equity interests in such Purchaser,
such Purchaser and its shareholders have the capacity to protect their
own interests in connection with the transaction contemplated in this
Agreement.
(d) Each Purchaser has been given access to all
Company documents, records, and other information, and has had adequate
opportunity to ask questions of, and receive answers from, the
Company's officers, employees, agents, accountants, and
representatives, concerning the Company's business, operations,
financial condition, assets, liabilities, and other matters considered
by the Purchasers as relevant to its investment in the Shares.
6.2 NO BROKERS. Purchasers represent and warrant to the
Company that no broker's or finder's fees or commissions will be payable by the
Purchasers with respect to the transactions contemplated by this Agreement and
the Registration Rights Agreement, and the Purchasers hereby jointly and
severally agree to indemnify and hold the Company harmless from any claim,
demand or liability for broker's or finder's fees alleged to have been incurred
at the instance of the Purchasers, their affiliates or agents or any Person
acting on behalf of or at the request of the Purchasers, their affiliates or
agents.
6.3 COMPLIANCE WITH LAWS. Purchasers and their transferees
will comply with all filing and other reporting obligations under all
Requirements of Law which shall be applicable to Purchasers with respect to the
Shares and to the Common Stock issuable or issued on conversion of the Shares.
6.4 POWER AND AUTHORITY; ENFORCEABILITY. Each of the
Purchasers has all requisite power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. Each of the Purchasers has taken all actions
necessary to authorize its execution and delivery of this Agreement, the
performance of its obligations hereunder and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of the Purchasers and constitutes a legal, valid and binding
obligation of it, enforceable against it in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws). The Purchasers have sufficient financial means and ability to deliver the
purchase price for the Shares at Closing.
6.5 HSR ACT. Each Purchaser warrants and represents that
neither Purchaser shall be required to file a notification within the meaning of
such term in the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the regulations thereunder, 16 C.F.R. Parts 801-803 (the "HSR
Act"), at any time in connection with the Purchasers' execution and delivery of
this Agreement and the conclusion of the transactions contemplated hereby.
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6.6 NO OTHER REPRESENTATIONS. The Purchasers acknowledge that,
in connection with the acquisition of the Shares, no representations or
warranties of any type or description have been made to any Purchaser by any
Person with regard to the Company, any of its subsidiaries, any of their
respective businesses, properties or prospects or the acquisition of the Shares
contemplated herein, other than the representations and warranties set forth in
Section 5.
7. AFFIRMATIVE COVENANTS. The Company covenants that from and after the
date of this Agreement through the Closing and thereafter, but, in the cases of
Sections 7.1, 7.2 and 7.10, only so long as the holders of Shares are entitled
under the Certificate of Designation to elect as a class at least one member of
the Company's Board of Directors:
7.1 EXCHANGE ACT AND SECURITIES ACT FILINGS. The Company will
deliver to the Purchasers, within three Business Days of their filing with the
Securities and Exchange Commission, all Commission Documents filed by it with
the Securities and Exchange Commission.
7.2 CERTIFICATES; OTHER INFORMATION. The Company will deliver
to the Purchasers: (a) promptly upon receipt thereof, copies of all final
reports submitted to the Company or any of its Subsidiaries by independent
certified public accountants in connection with each annual, interim or (but
only if the holders of the Shares are then entitled under the Certificate of
Designation to elect as a class at least one member of the Company's Board of
Directors) special audit of the books of the Company or any of its Subsidiaries
made by such accountants, including, without limitation, any final comment
letter submitted by such accountants to management in connection with their
annual audit; (b) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or made
available generally by the Company to all of its security holders in their
capacity as such or by any Subsidiary of the Company to its security holders;
and (c) the monthly financial package of information of the Company internally
prepared by the Company for distribution to its senior management, within five
(5) Business Days after such information has been distributed internally in
final form.
7.3 BOOKS AND RECORDS. The Company will, and will cause each
of its Subsidiaries to keep proper books of record and account in which entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities.
7.4 RESERVATION OF COMMON STOCK. The Company will at all times
reserve and keep available, solely for issuance and delivery upon conversion of
the Stock, the number of shares of Common Stock from time to time issuable upon
conversion of all shares of the Stock at the time outstanding. All shares of
Common Stock issuable upon conversion of the Stock shall be duly authorized and,
when issued upon such conversion, shall be validly issued, fully paid and
non-assessable.
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7.5 AVAILABILITY OF INFORMATION. The Company will comply with
the reporting requirements of Sections 13 and 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and will comply with all other
public information reporting requirements of the Securities and Exchange
Commission (including Rule 144 promulgated by the Securities and Exchange
Commission under the Securities Act) from time to time in effect and relating to
the availability of an exemption from the Securities Act for the sale of any
Restricted Securities. The Company will also reasonably cooperate with each
holder of any Restricted Securities in supplying such information as may be
necessary for such holder to complete and file any information reporting forms
presently or hereafter required by the Securities and Exchange Commission as a
condition to the availability of an exemption from the Securities Act for the
sale of any Restricted Securities.
7.6 STOCKHOLDER APPROVAL. As soon as practicable following the
date hereof, the Company will take all action necessary in accordance with the
Exchange Act, Delaware law and its certificate of incorporation and by-laws to
obtain the approval of its stockholders of the transactions contemplated hereby
in accordance with the requirements of the New York Stock Exchange (the
"Stockholder Approval"). Purchasers covenant that each shall cooperate and
assist the Company as reasonably required to obtain such stockholder approval
and each covenants that it shall vote to approve the transactions contemplated
hereby.
7.7 NO CONVERSION PRICE ADJUSTMENT EVENTS PRIOR TO SECOND
CLOSING. The Company shall not take any action prior to the consummation of the
Second Closing which would entitle the holders of the Shares to an adjustment of
the conversion price of the Shares pursuant to the Certificate of Designation.
7.8 APPOINTMENT OF PURCHASER DESIGNEES TO THE BOARD. Promptly
following the First Closing, the Company's Board of Directors will increase the
size of the Company's Board of Directors from six to at least eight and will
appoint Christopher J. O'Brien and Charles J. Philippin to the Company's Board
of Directors to fill two of such vacancies created thereby, to serve until the
next annual meeting of the stockholders of the Company and until their
successors are elected. In the event that none of the foregoing directors or the
directors elected by the holders of the Shares is able to attend a meeting of
the Company's Board of Directors, then the Purchasers shall have the right to
have a representative selected by the Purchasers attend such meeting as a guest
without voting rights; provided, however, that any such representative shall be
reasonably acceptable to the Company, such representative shall have signed a
confidentiality agreement in a form reasonably satisfactory to the Company
concerning Company information provided in connection with such meeting and that
a Purchasers' representative shall not attend any two board of directors
meetings in succession. At all times during which the holders of the Stock are
entitled to elect at least one member of the Company's Board of Directors, the
Certificate of Incorporation or Bylaws of the Company will provide for
indemnification of the Company's directors to the fullest extent permitted under
Delaware law.
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7.9 CONDUCT OF BUSINESS PENDING FIRST CLOSING. The Company
will not take any action prior to the First Closing without the consent of the
Purchasers if such action would require the consent or vote of the Purchasers or
the holders of the Stock pursuant to this Agreement, the Certificate of
Designation or the Registration Rights Agreement if taken after the First
Closing.
7.10 EXECUTIVE COMMITTEE. The Company agrees that it will not
rescind, amend or modify the resolution adopted to satisfy the condition set
forth in Section 4.12 without the unanimous consent of the members of the
Company's Board of Directors.
7.11 VOTING AGREEMENTS. The Company agrees that it will not
permit any shares of Common Stock that are subject to a Voting Agreement to be
transferred, prior to the time the Stockholder Approval is obtained, unless the
transferee has executed and delivered a Voting Agreement to the Purchasers.
8. REGISTRATION, TRANSFER AND SUBSTITUTION OF CERTIFICATES FOR STOCK.
8.1 STOCK REGISTER; OWNERSHIP OF STOCK.
(a) The Company will keep at its principal office a
register in which the Company will provide for the registration of the
Stock and the registration of transfers or conversion of the Stock. The
Company may treat the Person in whose name any of the Shares or shares
issued upon conversion of any of the Stock are registered on such
register as the owner thereof and the Company shall not be affected by
any notice to the contrary. All references in this Agreement to a
"holder" of any Shares or shares issued upon conversion of any of the
Stock shall mean the Person in whose name such Shares or shares issued
upon conversion of any of the Stock are at the time registered on such
register.
(b) Upon the surrender of any certificate for Stock,
properly endorsed, for registration of transfer or for conversion at
the office of the Company maintained pursuant to subdivision (a) of
this Section 8.1, the Company at its expense will (subject to
compliance with Section 8.2 hereof, if applicable) execute and deliver
to or upon the order of the holder thereof (i) a new certificate or
certificates for the same aggregate number of Shares of Stock less the
number of Shares of Stock being converted or transferred, if any, in
the name of such holder or as such holder (upon payment by such holder
of any applicable transfer taxes) may direct, (ii) a certificate or
certificates for the number of shares of Common Stock to be issued upon
conversion of the Shares of Stock so surrendered, if applicable, in the
name of such holder or as such holder (upon payment by such holder of
any applicable transfer taxes) may direct, and (iii) a new certificate
or certificates for the number of Shares of Stock transferred, if
applicable, in the name of the transferee (upon payment by such holder
of any applicable transfer taxes).
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8.2 REPLACEMENT OF CERTIFICATES. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any certificate representing shares of Stock or Common Stock
issued upon the conversion of Shares of Stock and, in the case of any such loss,
theft or destruction of any certificate representing shares of Stock or Common
Stock issued upon the conversion of Shares of Stock held by a Person other than
the Purchasers, upon delivery of indemnity reasonably satisfactory to the
Company in form and amount or, in the case of any such mutilation, upon
surrender of such certificate representing shares of Stock or Common Stock
issued upon the conversion of Shares of Stock for cancellation at the office of
the Company maintained pursuant to subdivision (a) of Section 8.1 hereof, the
Company at its expense will execute and deliver, in lieu thereof, a new
certificate representing shares of Stock or Common Stock of like tenor.
8.3 RESTRICTIVE LEGENDS. Except as otherwise permitted by this
Section 8, each certificate for Stock (including each certificate for Stock
issued upon the transfer of any certificate for Stock) shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"The shares represented by this Certificate and any shares of
Common Stock issuable upon conversion of any such shares have
not been registered under the Securities Act of 1933 and may
not be transferred in the absence of such registration or an
exemption therefrom under such Act. Such shares and any such
shares of Common Stock may be transferred only in compliance
with the conditions specified in the Preferred Stock Purchase
Agreement dated July 20, 1999 between NationsRent, Inc. (the
"Company") and the purchasers identified therein. A complete
and correct copy of such Agreement is available for inspection
at the principal office of the Company and will be furnished
without charge to the holder of such shares upon written
request."
Except as otherwise permitted by this Section 8, each certificate for Common
Stock issued upon the conversion of any of the Stock, and each certificate
issued upon the transfer of any such Common Stock, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be
transferred in the absence of such registration or an
exemption therefrom under such Act. Such shares may be
transferred only in compliance with the conditions specified
in the Preferred Stock Purchase Agreement dated July 20, 1999
between NationsRent, Inc. (the "Company") and the purchasers
identified therein. A complete and correct copy of such
Agreement is available for inspection at the principal office
of the Company and will be furnished without charge to the
holder of such shares upon written request."
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8.4 NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL. Prior to
any transfer of any Restricted Securities which are not registered under an
effective registration statement under the Securities Act, the holder thereof
will give written notice to the Company of such holder's intention to effect
such transfer and to comply in all other respects with this Section 8.4. Each
such notice shall describe the manner and circumstances of the proposed transfer
and shall be accompanied by an opinion of counsel for such holder, which counsel
and opinion shall each be reasonably satisfactory to the Company, that the
proposed transfer may be effected without registration of such shares of
Restricted Securities under the Securities Act. Such holder shall thereupon be
entitled to transfer such shares in accordance with the terms of the notice
delivered by such holder to the Company. Each certificate representing such
shares issued upon or in connection with such transfer shall bear the
restrictive legends required by Section 8.3, unless the related restrictions on
transfer shall have ceased and terminated as to such shares pursuant to Section
8.5 hereof.
8.5 TERMINATION OF RESTRICTIONS. The restrictions imposed by
this Section 8 upon the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities when such restrictions are
no longer required in order to insure compliance with the Securities Act.
Whenever such restrictions shall cease and terminate as to any Restricted
Securities, the holder thereof shall be entitled to receive from the Company,
without expense (other than applicable transfer taxes, if any), new certificates
for such securities of like tenor not bearing the applicable legends required by
Section 8.3 hereof.
9. DEFINITIONS.
9.1 CERTAIN DEFINED TERMS. As used in this Agreement the
following terms have the following respective meanings:
Affiliate: Shall have the meaning attributed thereto under
Rule 12b-2 under the Exchange Act.
Business Day: Any day except a Saturday, a Sunday, or any day
on which banking institutions in New York, New York are required or authorized
by law or other governmental action to be closed.
Certificate of Designation: As defined in Section 1 of this
Agreement.
Closing: As defined in Section 3 of this Agreement.
Closing Date: The date of the Closing.
Code: The Internal Revenue Code of 1986, as amended from time
to time.
Commission Document: All registration statements, proxy
statements, reports and other documents (and all amendments thereto) filed by
the Company under the Securities Act or the Exchange Act.
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Common Stock: As defined in Section 1 of this Agreement.
Company: As defined in the introduction to this Agreement.
Exchange Act: At any time, the Securities Exchange Act of
1934, as amended.
Financial Statements: As defined in Section 5.4 of this
Agreement.
First Closing: As defined in Section 3 of this Agreement.
First Closing Date: The date of the First Closing.
First Preferred Shares: As defined in Section 3 of this
Agreement.
GAAP: Generally accepted accounting principles set forth in
the Opinions of the Accounting Principles Board of the American Institute of
Certified Public Accountants and in statements by the Financial Accounting
Standards Board or in such other statement by such other entity as may be
approved by a significant segment of the accounting profession; and the
requisite that such principles be applied on a consistent basis shall mean that
the accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period.
Governmental Authority: Any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
Indebtedness: With respect to any Person, at a particular time
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property, (b) the face amount of all letters of credit issued
for the account of such Person and, without duplication, all drafts drawn
thereunder, (c) all liabilities secured by any Lien on any property owned by
such Person, to the extent attributable to such Person's interest in such
property, even though such Person has not assumed or become liable for the
payment thereof, (d) lease obligations of such Person which, in accordance with
GAAP, should be capitalized, and (e) all guarantees by such Person of any such
indebtedness, letters of credit, drafts, liabilities or lease obligations of any
other Person; but excluding trade and other accounts payable in the ordinary
course of business in accordance with customary trade terms and which are not
overdue for a period of more than 60 days or, if overdue for more than 60 days,
as to which a dispute exists and adequate reserves in conformity with GAAP have
been established on the books of such Person. The term "Indebtedness" shall not
include amounts which have not been drawn under credit facilities,
notwithstanding that such amounts when drawn will automatically be secured by an
existing Lien.
Lien: Any mortgage, pledge, hypothecation, assignment,
security interest, lien, charge or encumbrance, or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effects as
any of the
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foregoing, and the filing of, or agreement to give, any financing statement
under the Uniform Commercial Code or comparable law of any jurisdiction).
Majority in Interest: At any time, the holders of a majority,
by number of shares, of the outstanding Shares and the outstanding shares of
Common Stock, if any, issued upon conversion of any Shares, such majority to be
determined by reference to the number of shares of Common Stock into which all
outstanding Shares are at the time convertible.
Officers' Certificate: As to the Company, a certificate
executed on behalf of the Company by its Chief Executive Officer, and any one of
its Vice Presidents or Chief Financial Officer.
Person: An individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization or a government or any department or agency thereof.
Registration Rights Agreement: As defined in Section 4.6 of
this Agreement.
Repayment Event: Any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person acting
on such holder's behalf) the right to require the repurchase, redemption or
repayment of all or a portion of such indebtedness by the Company or any of the
Subsidiaries.
Requirement of Law: As to any Person, the Certificate of
Incorporation and by-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
Restricted Securities: All of the following: (a) any
certificates for Stock bearing the applicable legend or legends referred to in
Section 8.3 hereof, (b) any shares of Common Stock which have been issued upon
the conversion of any of the Stock and which are evidenced by a certificate or
certificates bearing the applicable legend or legends referred to in such
Section and (c) unless the context otherwise requires, any shares of Common
Stock which are at the time issuable upon the conversion of Stock and which,
when so issued, will be evidenced by a certificate or certificates bearing the
applicable legend or legends referred to in such Section.
Second Closing: As defined in Section 3 of this Agreement.
Second Closing Date: The date of the Second Closing.
Second Preferred Shares: As defined in Section 3 of this
Agreement.
Securities Act: At any time, the Securities Act of 1933 as
then in effect or any similar federal statute then in effect, and any reference
to a particular Section of such Act shall be deemed to include a reference to
the comparable Section, if any, in any such similar federal statute.
20
<PAGE> 22
Securities and Exchange Commission: The U.S. Securities and
Exchange Commission, or any other federal agency at the time administering the
Securities Act or the Exchange Act, whichever is the relevant statute for the
particular purpose.
Shares: As defined in Section 1 of this Agreement.
Stock: As defined in Section 1 of this Agreement.
Subsidiaries: With respect to any Person, any corporation with
respect to which more than 50% of the combined voting power of each class having
ordinary voting power (other than stock having such power only by reason of the
happening of a contingency) is at the time owned by such Person or by one or
more Subsidiaries of such Person or by such Person and one or more Subsidiaries
of such Person.
Any of the above-defined terms may, unless the context
otherwise requires, be used in the singular or plural depending on the
reference.
9.2 ACCOUNTING TERMS. As used in this Agreement, and in any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 9.1 and accounting terms
partly defined in said Section 9.1 to the extent not defined, shall have the
respective meanings given to them under GAAP.
9.3 OTHER PROVISIONS REGARDING DEFINITIONS: Unless otherwise
defined therein, all terms defined in this Agreement shall have the defined
meanings when used in any certificate, report or other document made or
delivered pursuant to this Agreement. The words "hereof", "herein", and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement.
10. EXPENSES, ETC. Whether or not the transactions contemplated by this
Agreement shall be consummated, the Company will pay all of its expenses in
connection with such transactions and in connection with any amendments or
waivers (whether or not the same become effective) under or in respect of this
Agreement or the Shares purchased by the Purchasers hereunder, including,
without limitation: (a) the cost and expenses of reproducing this Agreement and
the Shares purchased by the Purchasers, of furnishing all opinions of counsel
for the Company and all certificates on behalf of the Company, and of the
Company's performance of and compliance with all agreements and conditions
contained herein to be performed or complied with by it; and (b) the cost (other
than any applicable stock transfer taxes) of delivering to their principal
office, insured to their satisfaction, the Shares sold to the Purchasers
hereunder and any Shares delivered to the Purchasers upon any substitution of
Shares pursuant to Section 8 and of the Purchasers delivering any Shares,
insured to their satisfaction, upon any such substitution. At the First Closing,
the Company shall pay to Investcorp Management Services Ltd. a fee equal to 4%
of the gross proceeds to the Company of the sale of the First Preferred Shares
to the Purchasers at the First Closing. At the Second Closing, the Company shall
pay to Investcorp Management Services Ltd. an additional fee equal to 4% of the
gross proceeds to the Company of the sale of the Second Preferred Shares to the
Purchasers at the Second Closing. In addition, if the transactions contemplated
hereby have been consummated, the Company shall pay
21
<PAGE> 23
all of the reasonably itemized out-of-pocket expenses incurred by the Purchasers
in connection with such transactions (including the fees and disbursements of
their counsel), provided that the Company's liability under this sentence shall
not exceed $550,000. Reference is made to Section 5 of this Agreement for
certain agreements among the parties regarding the fees, if any, of brokers and
finders.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION;
CERTAIN LIMITATIONS. The Company's indemnification obligations and all
representations and warranties contained in this Agreement shall survive the
execution and delivery of this Agreement, any investigation at any time made by
the Purchasers or on their behalf, and the purchase of the Shares by the
Purchasers under this Agreement and any conversion of any of the Stock or any
disposition of any shares of Common Stock issued upon conversion of any of the
Stock; provided that all such representations and warranties (and the
indemnities in respect thereof with respect to claims not made prior to such
date) shall expire 30 days after the date the Company's audited financial
statements for the fiscal year ending December 31, 1999 are publicly filed with
the Commission or delivered to Purchasers, except that the representations and
warranties set forth in Section 5.6 (and the indemnities in respect thereof)
shall survive for a period of two (2) years following the First Closing Date. No
written (except as explicitly stated therein) or oral statements made by or on
behalf of the Company, other than in this Agreement, the Registration Rights
Agreement and the exhibits hereto and thereto, shall constitute representations
or warranties within the meaning of this Agreement. In no event shall Purchasers
be entitled to the remedy of rescission.
12. AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
or modified and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the Company and (a) in the case
of any such action prior to the Closing, the Purchasers; and (b) in the case of
any other such action, a Majority in Interest.
13. NOTICES, ETC. Except as otherwise provided in this Agreement,
notices and other communications under this Agreement shall be in writing and
shall be delivered, or mailed by first-class mail, postage pre-paid, addressed,
(a) if to the Purchasers or any other holder of Shares or shares of Common Stock
into which the Shares have been converted, at the address set forth below, or at
such other address as the Purchasers or such other holder shall have furnished
to the Company in writing, and (b) if to the Company at the address of the
Company set forth below, to the attention of its Chief Executive Officer, or at
such other address, or to the attention of such other officer, as the Company
shall have furnished to the Purchasers and each such other holder in writing.
If to the Purchasers: NR Holdings Limited
NR Investments Limited
c/o Investcorp Management Services Ltd.
c/o Investcorp International Inc.
280 Park Avenue, 37th Floor West
New York, New York 10017
Attention: Christopher J. O'Brien
Facsimile: 212-983-7073
22
<PAGE> 24
If to the Company: NationsRent, Inc.
450 East Las Olas Boulevard
Suite 1400
Ft. Lauderdale, FL 33301
Attention: James L. Kirk
Facsimile: (954) 759-5838
14. INDEMNIFICATION.
(a) The Company shall indemnify, defend and hold
harmless the Purchasers, their affiliates, partners, officers,
employees and agents (each, an "Indemnified Person") from and against
any and all losses, liabilities, damages, judgments, settlements and
expenses (including interest and penalties recovered by a third party
with respect thereto and reasonable attorneys' fees and expenses and
reasonable accountants' fees and expenses incurred in the investigation
or defense of any of the same or in asserting, preserving or enforcing
any of rights hereunder), that arise out of any breach by the Company
of any of its representations, warranties or covenants contained in
this Agreement or in the Registration Rights Agreement.
(b) The Purchasers shall give the Company prompt
notice of any third-party claim that may give rise to any
indemnification obligation under this Section 14 and the Company shall
(except as set forth below) have the right to assume and control the
defense (at its expense) and settlement of any such claim through the
Company's own counsel or through other counsel reasonably acceptable to
the Purchasers. The Purchasers may retain additional counsel at their
own expense. If, under applicable standards of professional conduct, a
conflict with respect to any significant issue between the Purchasers
and the Company exists in respect of such third-party claim, the
Company shall not assume the defense of such claim and shall also pay
the reasonable fees and expenses of one counsel selected by Purchasers
in respect of such claim. Notwithstanding the foregoing, without the
Purchasers' consent, the Company will not settle any action or
proceeding which does not provide the Purchasers a full, unconditional
release from all liability with respect to such claim by each claimant
or plaintiff in a form acceptable to the Purchasers' counsel, nor will
the Company consent to any injunctive or other non-monetary relief
affecting any Indemnified Person.
15. CONTROL BY INVESTCORP. Each Purchaser covenants and agrees that
Investcorp or an Affiliate of Investcorp will control, directly or indirectly, a
majority of the voting and dispositive power with respect to the Shares so long
as any Shares remain outstanding. Each Purchaser covenants and agrees that
Investcorp or an Affiliate of Investcorp will control, directly or indirectly, a
majority of the voting and dispositive power with respect to the shares of
Common Stock into which any of the Shares have been converted which continue to
be held by Purchasers and their respective Affiliates.
16. TERMINATION. This Agreement may be terminated (a) by the mutual
written consent of the Purchasers and the Company at any time, (b) by the
Purchasers or the Company if the First
23
<PAGE> 25
Closing shall not have been consummated on or before August 15, 1999, (c) by the
Purchasers or the Company if the Second Closing shall not have been consummated
on or before November 30, 1999, (d) by the Purchasers or the Company if the
stockholder meeting occurs and the stockholders do not vote to approve the
transactions contemplated hereby, (e) by either party if any representation or
warranty of the other party contained herein proves not to have been true and
correct in any material respect when made, or (f) by either party if the other
party materially breaches any covenant hereunder; provided, however, that the
right to terminate this Agreement pursuant to clause (b) or (c) of this Section
15 shall not be available to any party whose failure to perform any of its
obligations under this Agreement results in the failure to consummate the
transactions by such time.
17. PUBLIC ANNOUNCEMENTS. The initial press release or releases
concerning the transactions contemplated hereby shall be in the form agreed to
by the Company and the Purchasers. Prior to the First Closing, neither party
will issue any other press release or make any other public announcement
concerning this Agreement or the transactions contemplated hereby without the
prior consent of the other, except that either party may make such public
disclosure as may be required by law or a court of competent jurisdiction (in
which event such party will notify the other party as long in advance as
practicable prior to making such disclosure and will, unless not practicable
under the circumstances, give the other party the opportunity to comment on the
language of the disclosure prior to making such disclosure) or by any national
securities exchange on which the Common Stock is listed.
18. MISCELLANEOUS. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns of each the parties hereto; provided
that neither of the Purchasers may assign, delegate or otherwise transfer any of
its rights, interests or obligations under this Agreement, without the prior
written consent of the Company, except to the other Purchaser or an Affiliate of
either of the Purchasers or of Investcorp. This Agreement embodies the entire
agreement and understanding between the Purchasers and the Company and
supersedes all prior agreements and understandings relating to the subject
matter hereof, except that certain Confidentiality Agreement dated May 26, 1999
by and between Investcorp and Bear Stearns & Co., Inc. shall not be superseded
by this Agreement, is affirmed by Investcorp and shall remain in full force and
effect. This Agreement shall be construed and enforced in accordance with and
governed by the law of the State of Delaware without regard to the principles
regarding conflicts of laws. The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof. This
Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one instrument.
24
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their respective representatives hereunto duly
authorized as of the date first above written.
NATIONSRENT, INC., a Delaware corporation
By: /s/ JAMES L. KIRK
-------------------------
James L. Kirk,
Chairman of the Board and
Chief Executive Officer
NR HOLDINGS LIMITED, a Cayman Islands
corporation
By: /s/ SYDNEY J. COLEMAN
-------------------------
The Director Ltd.
Director
NR INVESTMENTS LIMITED, a Cayman Islands
corporation
By: /s/ SYDNEY J. COLEMAN
-------------------------
The Director Ltd.
Director
25
<PAGE> 27
LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Certificate of Designation
Exhibit B Number of Shares to be Purchased by Purchasers
Exhibit C Form of Opinion of Akerman, Senterfitt & Eidson, P.A.
Exhibit D Form of Registration Rights Agreement
Exhibit E Proposed Board Resolutions Amending Authority of
Executive Committee
Exhibit F Form of Voting Agreements
Schedule 5.2 Subsidiaries
Schedule 5.5 Changes Since December 31, 1998
Schedule 5.6 Capitalization
Schedule 5.8 Indebtedness
Schedule 5.9 Liens
Schedule 5.10 Litigation
Schedule 5.11 Compliance with Other Instruments, etc.
Schedule 5.22 Environmental Matters
Schedule 5.24 Internal Controls
Schedule 5.27 Undisclosed Liabilities
26
<PAGE> 1
Exhibit 10.35
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and
entered into as of July 20, 1999 by and between NATIONSRENT, INC., a Delaware
corporation ("NationsRent"), NR Holdings Limited, a Cayman Islands corporation,
and NR Investments Limited, a Cayman Islands corporation (collectively, the
"Holders"), and James L. Kirk and H. Wayne Huizenga. Certain other capitalized
terms used herein are defined in Section 10 and throughout this Agreement.
WHEREAS, NationsRent and the Holders have entered into a Preferred
Stock Purchase Agreement dated as of July 20, 1999 (the "Stock Purchase
Agreement"), pursuant to which NationsRent agrees to issue 100,000 shares of its
Series A Convertible Preferred Stock, par value $.01 per share (the "Preferred
Stock") to the Holders; and
WHEREAS, the Preferred Stock is convertible into NationsRent common
stock, par value $.01 per share (the "Common Stock"), as provided in the Stock
Purchase Agreement; and
WHEREAS, NationsRent has agreed to provide to the Holders the
registration rights provided herein with respect to the Registrable Securities;
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements set forth herein and in the Stock Purchase Agreement, the parties
agree as follows:
1. DEMAND REGISTRATION.
(a) REGISTRATION ON REQUEST. At any time after the 90th day
following the First Closing (as defined in the Stock Purchase Agreement), upon
written request by the Holders of at least a majority (by number of shares) of
the Registrable Securities, NationsRent shall utilize best reasonable efforts to
cause, as soon as practicable following the date of such notice, a registration
statement to be filed under the Securities Act or a pending registration
statement to be amended for the purpose of registering the Registrable
Securities for resale by the requesting Holders in accordance with the intended
method of disposition stated in such request; provided that NationsRent shall
not be required to effect any registration pursuant to this Section 1(a) on more
than three (3) separate occasions. Each request for a demand registration shall
specify the approximate number of Registrable Securities requested to be
registered and the anticipated per share price range for such offering.
NationsRent shall give all other Holders written notice of such written request
within ten (10) days thereof and give all other Holders the opportunity to
request that their Registrable Securities be included in the registration
statement filed with the SEC. No request for registration may be made pursuant
to this Section 1(a) unless the Registrable Securities requested to be
registered on behalf of requesting Holders total at least 25% of the aggregate
number of Registrable Securities acquired by the Holders in the First Closing
and the Second Closing (as defined in the Stock Purchase
<PAGE> 2
Agreement) or have a market value (based upon the closing price of such
Registrable Securities quoted on the securities exchange or over-the-counter
quotation system on which such Registrable Securities are listed or quoted, as
the case may be, on the trading day immediately preceding any request pursuant
to this Section 1(a)) of at least $25 million at the close of the last trading
day prior to such request.
(b) REGISTRATION STATEMENT FORM. Registrations under Section
1(a) shall be on such appropriate registration form of the SEC as shall permit
the disposition of such Registrable Securities in accordance with the intended
method or methods of disposition specified in the request for such registration
and as shall be permitted under the Securities Act.
(c) EFFECTIVE REGISTRATION STATEMENT. A registration requested
pursuant to Section 1(a) shall be deemed to have been effected if a registration
statement with respect thereto has become effective, provided that a
registration statement which does not become effective after NationsRent has
filed a registration statement with respect thereto solely by reason of the
refusal by the Holders to proceed (other than a refusal to proceed based upon
the written advice of counsel relating to a material matter regarding the
Company) shall be deemed to have been effected by the Company at the request of
such Holders, unless (i) after it has become effective, such registration
statement becomes subject to any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason, other than by reason of an act or omission attributable to such Holders
with respect thereto; provided that upon the lifting of any such order
registration will be deemed to be effective, or (ii) unless the conditions to
closing specified in the purchase agreement or underwriting agreement entered
into in connection with such registration are not satisfied, other than by
reason of an act or omission attributable to such Holders.
(d) SELECTION OF UNDERWRITERS. If a requested registration
pursuant to Section 1(a) involves an underwritten public offering, the managing
or lead underwriter shall be selected by NationsRent and shall be reasonably
acceptable to the Holders of at least a majority (by number of shares) of the
Registrable Securities as to which registration has been requested, which shall
not unreasonably withhold its acceptance of any such underwriters, and one
co-managing or co-lead underwriter shall be selected by the Holders of at least
a majority (by number of shares) of the Registrable Securities as to which
registration has been requested and shall be reasonably acceptable to
NationsRent, which shall not unreasonably withhold its acceptance of any such
co-managing or co-lead underwriter.
(e) PRIORITY ON DEMAND REGISTRATIONS. If a requested
registration pursuant to Section 1(a) involves an underwritten public offering
and the managing or lead underwriter advises NationsRent in writing, with a copy
to each Holder requesting registration, that in its opinion the number of
securities requested to be included in such registration (including securities
to be sold by NationsRent or by other persons who are not Holders of Registrable
Securities) exceeds the number of securities which can be sold in an orderly
manner in such offering within a price range acceptable
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<PAGE> 3
to the Holders of at least a majority (by number of shares) of the Registrable
Securities to be included in such registration without adversely affecting the
marketability of the offering, NationsRent shall include in such registration
prior to the inclusion of any securities which are not Registrable Securities
the number of Registrable Securities requested to be included which in the
opinion of such underwriters can be sold in an orderly manner within the price
range of such offering, pro rata among the respective Holders thereof on the
basis of the amount of Registrable Securities requested by each such Holder to
be included in such offering.
(f) RESTRICTIONS ON DEMAND REGISTRATION. NationsRent shall not
be obligated to effect any registration pursuant to Section 1(a) during any of
the following periods: (i) 30 days prior to the anticipated commencement of an
underwritten public offering by NationsRent of its equity securities and 90 days
subsequent to the consummation of such underwritten public offering unless, in
the good faith judgment of the managing or lead underwriter or underwriters
thereof, which is confirmed in writing, such filing would not have an adverse
effect on such offering, (ii) if such filing is prohibited by applicable law or
(iii) if NationsRent determines in good faith that the filing or effectiveness
of such registration statement would require NationsRent to disclose a material
financing, acquisition or other corporate transaction or development, and the
proper officers of NationsRent shall have determined in good faith that such
disclosure is not in the best interests of NationsRent, provided that
NationsRent may not delay the filing or effectiveness of any registration
statement pursuant to this Section 1(f) for more than an aggregate of 180 days
in any twelve-month period; provided, further, that NationsRent shall file the
registration statement and cause it to become effective as soon as reasonably
practicable after it shall determine in its good faith judgment that such
registration will not materially interfere with or materially adversely affect
the financing, acquisition or other corporate transaction or development.
2. PIGGYBACK REGISTRATION.
(a) RIGHT TO PIGGYBACK. The Holders of the Registrable
Securities are hereby granted the following piggyback registration rights with
respect to the Registrable Securities. Whenever NationsRent proposes to file a
registration statement, other than pursuant to Section 1(a) above, for the
registration of shares of its Common Stock in connection with an underwritten
primary public offering on behalf of NationsRent or an underwritten secondary
public offering on behalf of other persons who are not the Holders of
Registrable Securities, NationsRent will, prior to such filing, give fifteen
(15) days prior written notice to the Holders of its intention to do so and,
upon the written request of the Holders given within ten (10) days after receipt
of such notice, NationsRent shall, subject to the terms of this Agreement, use
its best reasonable efforts to cause the Registrable Securities which
NationsRent has been requested to register by such Holders to be registered
under the Securities Act to the extent necessary to permit their sale. If, at
any time after giving written notice of its intention to register any securities
and prior to the effective date of the registration statement filed in
connection with such registration, NationsRent shall determine for any reason
(other than by reason of acts or omissions attributable to any of the Holders)
either not to register or to
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<PAGE> 4
delay registration of such securities, NationsRent may, at its election, give
written notice of such determination to each Holder and, thereupon, (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration (but
not from its obligation to pay the Registration Expenses in connection
therewith), without prejudice, however, to the rights of any Holders entitled to
do so to request that such registration be effected as a registration under
Section 1(a), and (ii) in the case of a determination to delay registration,
shall be permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. No registration
effected under this Section 2(a) shall relieve NationsRent of its obligation to
effect any registration upon request under Section 1(a), nor shall any such
registration hereunder be deemed to have been effected pursuant to Section 1(a).
(b) PRIORITY IN PIGGYBACK REGISTRATIONS. In a requested
registration pursuant to Section 2(a), if the managing or lead underwriters
advise NationsRent in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in an orderly manner in such offering within a price range acceptable to
NationsRent or the other persons who are not Holders of Registrable Securities,
who requested the filing of a registration statement pursuant to Section 2(a)
above, NationsRent shall include in such registration (i) first, the securities
NationsRent proposes to sell, and (ii) second, the Registrable Securities and
securities held by other persons who are not Holders of Registrable Securities
requested to be included in such registration, pro rata among the Holders of
Registrable Securities and the other persons who are not holders of Registered
Securities on the basis of the number of shares requested by each such Holder of
Registrable Securities and each other person who is not a Holder of Registrable
Securities to be included in such offering.
3. HOLDBACK AGREEMENTS.
(a) So long as a Holder and its affiliates own Common Stock
and/or Preferred Stock convertible into Common Stock exceeding 5% of the Common
Stock of NationsRent then outstanding or such Holder has the right to designate
one or more directors to the board of directors of NationsRent (unless otherwise
required by the underwriters), such Holder of Registrable Securities shall not
effect any public sale or distribution (including sales pursuant to Rule 144) of
equity securities of NationsRent, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven (7) days prior
to and the 90-day period beginning on the effective date of any underwritten
registration (except as part of such underwritten registration), unless the
underwriters managing the registered public offering agree to a shorter
restricted period for Messrs. Kirk or Huizenga.
(b) NationsRent (i) shall not effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven (7) days prior
to and during the 90-day period beginning on the effective date of any
underwritten demand registration or any underwritten piggyback registration
(except as part of such
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<PAGE> 5
underwritten registration), unless the underwriters managing the registered
public offering otherwise agree, and (ii) shall use best reasonable efforts to
cause each holder of at least 5% (on a fully-diluted basis) of its Common Stock,
or any securities convertible into or exchangeable or exercisable for Common
Stock, purchased or acquired from NationsRent at any time after the date of this
Agreement (other than in a registered public offering) to agree not to effect
any public sale or distribution (including sales pursuant to Rule 144) of any
such securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.
4. REGISTRATION PROCEDURES. Whenever the Holders of Registrable Securities have
requested that any Registrable Securities be registered pursuant to this
Agreement, NationsRent shall use its best reasonable efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto NationsRent shall
as expeditiously as possible:
(a) prepare and as soon as reasonably practicable file with
the SEC a registration statement with respect to such Registrable Securities and
use its best reasonable efforts to cause such registration statement to become
and remain effective (provided that before filing a registration statement or
prospectus or any amendments or supplements thereto, NationsRent shall furnish
to the counsel selected by the Holders of at least a majority (by number of
shares) of the Registrable Securities covered by such registration statement
copies of all such documents proposed to be filed, which documents shall be
subject to the review and comment of such counsel);
(b) notify each seller of Registrable Securities of the
effectiveness of each registration statement filed hereunder and prepare and
file with the SEC such amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period of not less than 180 days and
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(c) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best reasonable efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such
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<PAGE> 6
seller to consummate the disposition of the Registrable Securities owned by such
seller in such jurisdictions (provided that NationsRent shall not be required to
(i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, and, at the request of any such
seller, NationsRent shall promptly prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which they were made;
(f) use its best reasonable efforts to cause all such
Registrable Securities to be listed on each securities exchange on which
securities of the same class are then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions
(including, without limitation, causing at least one member of senior management
of NationsRent to participate in any "road show" or "road shows") as the sellers
of at least a majority (by number of shares) of the Registrable Securities being
sold or the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities;
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of NationsRent, and cause NationsRent's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its best reasonable efforts to comply with
all applicable rules and regulations of the SEC, and make available to its
stockholders, as soon as reasonably practicable, an
- 6 -
<PAGE> 7
earnings statement covering the period of at least twelve months beginning with
the first day of NationsRent's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) if and to the extent that any seller of Registrable
Securities, in its sole and exclusive judgment, might be deemed to be an
underwriter or a controlling person of NationsRent, permit such seller to
participate in the preparation of such registration or comparable statement and
require the insertion therein of material, furnished to NationsRent in writing,
which in the reasonable judgment of such seller and its counsel should be
included;
(l) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Stock included in such registration statement for sale in any
jurisdiction, use its best reasonable efforts promptly to obtain the withdrawal
of such order;
(m) use its best reasonable efforts to cause such Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be necessary
to enable the sellers thereof to consummate the disposition of such Registrable
Securities; and
(n) furnish to each Holder of Registrable Securities a cold
comfort letter from NationsRent's independent public accountants in customary
form and covering such matters of the type customarily covered by cold comfort
letters as the sellers of at least a majority (by number of shares) of the
Registrable Securities being sold reasonably request, in form and substance
reasonably satisfactory to such Holder.
NationsRent will not file any registration statement or
amendment thereto or any prospectus or any supplement thereto (including such
documents incorporated by reference and proposed to be filed after the initial
filing of the registration statement) to which the Holders of at least a
majority (by number of shares) of Registrable Securities covered by such
registration statement or the underwriter or underwriters, if any, shall
reasonably object, provided that NationsRent may file such document in a form
required by law upon the advice of its counsel.
5. REGISTRATION EXPENSES. NationsRent will pay or cause to be paid all
Registration Expenses (as defined below) in connection with any registration of
Registrable Securities requested pursuant to this Agreement. "Registration
Expenses" means all expenses incident to NationsRent's performance of or
compliance with this Agreement, including without limitation, all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, listing expenses, printing expenses, messenger and delivery expenses, fees
and disbursements of custodians, fees and
- 7 -
<PAGE> 8
disbursements of counsel for NationsRent and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
persons retained by NationsRent and the reasonable fees and disbursements of one
counsel chosen by the Holders of at least a majority (by number of shares) of
the Registrable Securities included in such registration. Registration Expenses
shall not include any taxes payable in connection with the resale of the
Registrable Securities.
6. INDEMNIFICATION.
(a) INDEMNIFICATION BY NATIONSRENT. NationsRent agrees to
indemnify, to the extent permitted by law, each Holder of Registrable
Securities, its officers, directors, partners, members, affiliates and each
person who controls such Holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses arising out of or
based upon any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and, except as otherwise provided herein, NationsRent
will reimburse such Holder, officer, director, partner, member, affiliate and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending against any such loss, claim.
damage, liability or expense, except insofar as the same arise from or are based
upon any information made in reliance upon and in conformity with written
information provided to NationsRent by such Holder expressly for use therein or
by such Holder's failure to deliver a copy of the final prospectus or any
amendments or supplements thereto after NationsRent has furnished such Holder
with a sufficient number of copies of the same. In connection with an
underwritten offering, NationsRent shall indemnify such underwriters, their
officers and directors and each person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the Holders of Registrable Securities.
(b) INDEMNIFICATION BY THE HOLDERS. In connection with any
registration statement in which a Holder of Registrable Securities is
participating, each such Holder shall furnish to NationsRent in writing such
information and affidavits as NationsRent reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, shall indemnify NationsRent, its directors and officers and
each person who controls NationsRent (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses arising out of or
based upon any untrue or alleged untrue statement of material fact contained in
the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is made in reliance upon and in conformity with written information
furnished to NationsRent by such Holder specifically stating that it is for use
in the preparation of such registration statement, prospectus or preliminary
prospectus, amendment or supplement; provided that the obligation to indemnify
shall be individual, not joint and several, for each Holder and shall
- 8 -
<PAGE> 9
be limited to the net amount of proceeds received by such Holder from the sale
of Registrable Securities pursuant to such registration statement. In connection
with an underwritten offering, the selling Holders of Registrable Securities
shall indemnify such underwriters, their officers and directors and each person
who controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of
NationsRent.
(c) NOTICE OF CLAIMS. Any person entitled to indemnification
hereunder shall (i) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification (provided that the failure
to give prompt notice shall not impair any person's right to indemnification
hereunder to the extent such failure has not prejudiced the indemnifying party)
and (ii) unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided, however, that any indemnified party may, at its own expense, retain
separate counsel to participate in such defense. If such defense is assumed, the
indemnifying party shall not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation or which requires action other than the
payment of money by the indemnifying party. An indemnifying party who is not
entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.
(d) SURVIVAL OF INDEMNIFICATION. The indemnification provided
for under this Agreement shall remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director, partner, member, affiliate or controlling person of such indemnified
party and shall survive the transfer of securities.
(e) CONTRIBUTION. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party in respect of any loss, claim,
damage, liability or expense referred to herein, then each indemnifying party,
in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage, liability or expense (i) in such proportion as is appropriate to reflect
the relative benefits received by NationsRent on the one hand and the Holder or
other person, as the case may be, on the other from the distribution of the
Registrable Securities or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of NationsRent on the one hand and of the Holder or other person,
as the case may be, on the other in connection with the
- 9 -
<PAGE> 10
statements or omissions which resulted in such loss, claim, damage, liability or
expense, as well as any other relevant equitable considerations. The relative
benefits received by NationsRent on the one hand and the Holder or other person,
as the case may be, on the other in connection with the distribution of the
Registrable Securities shall be deemed to be in the same proportion as the total
net proceeds received by NationsRent from the initial sale of the Registrable
Securities by NationsRent to the Holder pursuant to the Stock Purchase Agreement
bear to the gain, if any, realized by the selling Holder or the underwriting
discounts and commissions received by the underwriter, as the case may be. The
relative fault of NationsRent on the one hand and of the Holder or other person,
as the case may be, on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or omission to state a material fact relates to information supplied by
NationsRent, by the Holder or by the other person and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission, provided that the foregoing contribution agreement
shall not inure to the benefit of any indemnified party if indemnification would
be unavailable to such indemnified party by reason of the provisions contained
in the first sentence of Section 6(a), and in no event shall the obligation of
any indemnifying party to contribute under this Section 6(e) exceed the amount
that such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under this Section 6 had
been available under the circumstances.
The Company and the Holders of Registrable Securities agree that it
would not be just and equitable if contribution pursuant to this Section 6(e)
were determined by pro rata allocation (even if the Holders and any underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth in the preceding sentence and
Section 6(c), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim.
Notwithstanding the provisions of this Section 6(e), no Holder of
Registrable Securities or underwriter shall be required to contribute any amount
in excess of the amount by which (i) in the case of any such Holder, the net
proceeds received by such Holder from the sale of Registrable Securities or (ii)
in the case of an underwriter, the total price at which the Registrable
Securities purchased by it and distributed to the public were offered to the
public exceeds, in any such case, the amount of any damages that such Holder or
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Holder may participate in any
registration hereunder which involves an underwritten offering unless such
Holder (i) agrees to sell such Holder's
- 10 -
<PAGE> 11
securities on the basis provided in any underwriting arrangements approved by
the parties entitled hereunder to approve such arrangements and (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements; provided that no Holder of Registrable Securities included in any
underwritten registration shall be required to make any representations or
warranties to NationsRent or the underwriters (other than representations and
warranties regarding such Holder and such Holder's intended method of
distribution) or to undertake any indemnification obligations to NationsRent or
the underwriters with respect thereto, except as otherwise provided in paragraph
6 hereof.
8. OTHER AGREEMENTS. NationsRent shall not enter into any agreement or
instrument which would conflict with or result in a material breach or violation
of any of the terms or provisions of this Agreement. In addition, NationsRent
shall not enter into any agreement or instrument with any person which grants
such person demand registration rights similar to those in Section 1(a) which
preclude the Holders of Registrable Securities from exercising their rights
pursuant to Section 2(a) hereof in connection with any registration statement
filed pursuant to which such person will sell securities of NationsRent.
9. TAG-ALONG RIGHTS.
(a) CERTAIN DEFINITIONS.
(i) The term "Huizenga Shares" means all shares of Common
Stock beneficially owned by H. Wayne Huizenga, as of the
date hereof, and any of such shares which are
subsequently transferred to a Huizenga Transferee (such
persons, the "Huizenga Stockholders").
(ii) The term "Huizenga Transferee" means (i) any member of
Mr. Huizenga's immediate family, or (ii) any trust,
limited partnership or similar entity controlled by H.
Wayne Huizenga or any members of Mr. Huizenga's
immediate family, or with respect to which he has or
they have a beneficial interest.
(iii) The term "Kirk Shares" means all shares of Common Stock
beneficially owned by James L. Kirk or Kirk Holdings
Limited Partnership, as of the date hereof, and any such
shares which are subsequently transferred to a Kirk
Transferee (such persons, the "Kirk Stockholders").
(iv) The term "Kirk Transferee" means (i) any member of Mr.
Kirk's immediate family, or (ii) any trust, limited
partnership or similar entity controlled by James L.
Kirk, Kirk Holdings Limited Partnership or any member of
- 11 -
<PAGE> 12
Mr. Kirk's immediate family, or with respect to which he
has or they have a beneficial interest.
(v) The term "Tag-Along Sale" means any transaction or
series of transactions occurring at substantially the
same time (other than underwritten offerings, transfers
for tax or estate planning purposes or any pledge as
security in a bona fide loan transaction and any related
foreclosure or margin sales) which involves the sale by
any Huizenga Stockholder or Kirk Stockholder, or both,
of shares of Common Stock, representing 2% or more of
the outstanding shares of Common Stock, calculated on a
fully-diluted basis for all outstanding options,
warrants and other securities convertible into or
exchangeable for shares of Common Stock, including but
not limited to the Registrable Securities.
(b) TAG-ALONG RIGHT. Prior to the fifth anniversary of the
Second Closing, in connection with any proposed Tag-Along Sale, the Huizenga
Stockholders and the Kirk Stockholders participating in such sale shall afford
the Holders (pro rata among such Holders) the opportunity to participate in such
sale, on the same terms and conditions as such Huizenga Stockholders and Kirk
Stockholders, with respect to the number of shares of Common Stock equal to the
number derived by multiplying the total number of shares proposed to be sold in
the Tag-Along Sale by a fraction, the numerator of which is the total number of
shares of Common Stock then held by the Holders (including shares issuable upon
the conversion of shares of Preferred Stock) and the denominator of which is the
sum of (i) the total number of shares of Common Stock then held by the Holders
(including shares issuable upon the conversion of shares of Preferred Stock),
(ii) the total number of Huizenga Shares then held by the Huizenga Stockholders
if any Huizenga Stockholder is participating in such sale and (iii) the total
number of Kirk Shares then held by the Kirk Stockholders if any Kirk Stockholder
is participating in such sale.
(c) NOTICES. The Huizenga Stockholders or the Kirk
Stockholders participating in any Tag-Along Sale shall, at least five (5) days
prior to the Tag-Along Sale, give written notice to the Holders providing a
summary of the terms of the proposed sale and the number of Huizenga Shares and
Kirk Shares proposed to be sold in such Tag-Along Sale. Each Holder may exercise
its right to participate in such Tag-Along Sale by providing written notice (a
"Tag-Along Notice") to any of the Huizenga Stockholders or Kirk Stockholders
participating in such Tag-Along Sale, stating the number of shares of Common
Stock that the Holder wishes to sell the Tag-Along Sale. If no Tag-Along Notice
is received by the Huizenga Stockholders or the Kirk Stockholders in the five
(5) day period prior to the proposed sale, the Huizenga Stockholders and the
Kirk Stockholders shall have the right for a 30-day period to sell up to the
proposed number of shares on terms and
- 12 -
<PAGE> 13
conditions no more favorable in any material respect than those stated in the
notice provided to the Holders pursuant to the first sentence of this Section
9(c) (provided that, in connection with any proposed Tag-Along Sale intended to
be substantially at market price, the sales price can be substantially at
market).
(d) CERTAIN TRANSFERS. No transfer of Huizenga Shares to a
Huizenga Transferee and no transfer of Kirk Shares to a Kirk Transferee will be
made unless the Huizenga Transferee or the Kirk Transferee, as the case may be,
agrees to be bound by the provisions of this Section 9; provided that shares of
Common Stock which are sold by either Mr. Huizenga or Mr. Kirk to any Huizenga
Transferee or Kirk Transferee, respectively, in a bona fide sale transaction at
fair market value shall not be deemed to be held by the respective transferee
for purposes of any Tag-Along Sale.
10. DEFINITIONS. As used in this Agreement, the following terms shall have the
following respective meanings:
"Affiliate" shall have the meaning attributed thereto under
Rule 12b-2 under the Exchange Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations
promulgated thereunder, all as the same shall be in effect at the time.
"Registrable Securities" shall mean, as of any date of
determination, outstanding shares of Common Stock that were issued by
NationsRent upon the conversion of the Preferred Stock, shares of Common Stock
issuable by NationsRent upon conversion of any Preferred Stock and any other
shares of capital stock of NationsRent issued in respect of any of the foregoing
as a result of stock splits, stock dividends, reclassification,
recapitalization, mergers, consolidations or similar events; provided that any
such securities shall no longer be Registrable Securities if such securities
have been resold or exchanged pursuant to an effective registration statement or
pursuant to Rule 144 under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect at the time.
11. MISCELLANEOUS.
(a) NOTICE GENERALLY. Any notice, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Agreement shall be sufficiently given or made if in
writing and either delivered in person with receipt acknowledged, delivered by
reputable overnight courier, telecopied and confirmed separately in writing by a
copy
- 13 -
<PAGE> 14
mailed or sent by registered or certified mail, return receipt requested,
postage prepaid, to the appropriate address or addresses set forth in the Stock
Purchase Agreement.
(b) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto; provided that neither of the Holders may assign, delegate or otherwise
transfer any of its rights, interests or obligations under this Agreement,
without the prior written consent of NationsRent, except to the other Holder or
an Affiliate of either of the Holders. In no event, however, may either of the
Holders or Affiliates of either of the Holders assign, delegate or otherwise
transfer any of the Tag-Along Rights provided in Section 9 of this Agreement.
(c) CONTROL BY INVESTCORP. Each of the Holders covenants and
agrees that Investcorp S.A. ("Investcorp") or an Affiliate of Investcorp will
control, directly or indirectly, a majority of the voting and dispositive power
with respect to the Registrable Securities held by either of the Holders or
Affiliates of either of the Holders.
(d) GOVERNING LAW. This Agreement shall be governed by the
laws of the State of Delaware, without regard to the provisions thereof relating
to conflict of laws.
(e) SEVERABILITY. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provisions shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
(f) ENTIRE AGREEMENT. This Agreement, together with the Stock
Purchase Agreement, is intended by the parties as a final expression of their
agreement and intended to be a complete exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to the subject matter hereof.
(g) COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall collectively and separately, constitute one
agreement.
[signatures following on next page]
- 14 -
<PAGE> 15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NATIONSRENT, INC.
By: /s/ James L. Kirk
----------------------------------
Name: James L. Kirk
Title: Chief Executive Officer and
Chairman of the Board
NR HOLDINGS LIMITED
By:/s/ Sydney J. Coleman
----------------------------------
Name: The Director Ltd.
Title: Director
NR INVESTMENTS LIMITED
By:/s/ Sydney J. Coleman
----------------------------------
Name: The Director Ltd.
Title: Director
JAMES L. KIRK
/s/ James L. Kirk
-------------------------------------
H. WAYNE HUIZENGA
/s/ H. Wayne Huizenga
-------------------------------------
- 15 -
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 9,953
<SECURITIES> 0
<RECEIVABLES> 88,609
<ALLOWANCES> 5,119
<INVENTORY> 27,811
<CURRENT-ASSETS> 0
<PP&E> 535,354
<DEPRECIATION> 53,030
<TOTAL-ASSETS> 1,172,401
<CURRENT-LIABILITIES> 0
<BONDS> 787,036
0
0
<COMMON> 564
<OTHER-SE> 295,818
<TOTAL-LIABILITY-AND-EQUITY> 1,172,401
<SALES> 60,596
<TOTAL-REVENUES> 232,624
<CGS> 40,631
<TOTAL-COSTS> 132,472
<OTHER-EXPENSES> 56,978
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,432
<INCOME-PRETAX> 15,340
<INCOME-TAX> 6,366
<INCOME-CONTINUING> 8,974
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,974
<EPS-BASIC> .16
<EPS-DILUTED> .16
</TABLE>
