EXHIBIT 10.7
U.S. RENTALS, INC.
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
NOTE AGREEMENT
Re: $10,000,000 6.82% Senior Secured Notes, Series A,
Due August 21, 1999,
10,000,000 6.89% Senior Secured Notes, Series B,
Due August 21, 2000,
$10,000,000 7.04% Senior Secured Notes, Series C,
Due August 21, 2001,
and
$20,000,000 7.13% Senior Secured Notes, Series D,
Due August 21, 2002
Dated as of
August 15, 1995
To the Purchaser named in Schedule I
hereto which is a signatory of this
Agreement
Ladies and Gentlemen:
The undersigned, U.S. Rentals, Inc., a California corporation (the
"Company"), agrees with you as follows:
-------
SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.
Section 1.1. Description of Notes. (a) The Company will authorize the
-----------------------------------
issue and sale of its 6.82% Senior Secured Notes, Series A, Due August 21, 1999
(the "Series A Notes") in an aggregate principal amount of $10,000,000, its
--------------
6.89% Senior Secured Notes, Series B, Due August 21,
2000 (the "Series B Notes") in an aggregate principal amount of $10,000,000, its
--------------
7.04% Senior Secured Notes, Series C, Due August 21, 2001 (the "Series C Notes")
--------------
in an aggregate principal amount of $10,000,000, and its 7.13% Senior Secured
Notes, Series D, Due August 21, 2002 (the "Series D Notes") in an aggregate
--------------
principal amount of $20,000,000. The Series A Notes, the Series B Notes, the
Series C Notes and the Series D Notes issued pursuant to this Agreement and the
other separate agreements referred to in (S)1.3 are hereinafter collectively
referred to as the "Notes".
-----
(b) The Series A Notes will be dated the date of issue, will bear
interest from such date at the rate of 6.82% per annum, payable semiannually on
the twenty-first day of February and August in each year (commencing February
21, 1996) and at maturity and will bear interest on overdue principal (including
any overdue required or optional prepayment of principal) and premium, if any,
and (to the extent legally enforceable) on any overdue installment of interest
at the Overdue Rate after the date due, whether by acceleration or otherwise,
until paid, will be expressed to mature on August 21, 1999, and will be
substantially in the form attached hereto as Exhibit A-1.
The Series B Notes will be dated the date of issue, will bear interest
from such date at the rate of 6.89% per annum, payable semiannually in arrears
on the twenty-first day of February and August in each year (commencing February
21, 1996) and at maturity and will bear interest on overdue principal (including
any overdue optional prepayment of principal) and premium, if any, and (to the
extent legally enforceable) on any overdue installment of interest at the
Overdue Rate after the date due, whether by acceleration or otherwise, until
paid, will be expressed to mature on August 21, 2000 and will be substantially
in the form attached hereto as Exhibit A-2.
The Series C Notes will be dated the date of issue, will bear interest
from such date at the rate of 7.04% per annum, payable semiannually in arrears
on the twenty-first day of February and August in each year (commencing February
21, 1996) and at maturity and will bear interest on overdue principal (including
any overdue optional prepayment of principal) and premium, if any, and (to the
extent legally enforceable) on any overdue
-2-
installment of interest at the Overdue Rate after the date due, whether by
acceleration or otherwise, until paid, will be expressed to mature on August 21,
2001 and will be substantially in the form attached hereto as Exhibit A-3.
The Series D Notes will be dated the date of issue, will bear interest
from such date at the rate of 7.13% per annum, payable semiannually in arrears
on the twenty-first day of February and August in each year (commencing February
21, 1996) and at maturity and will bear interest on overdue principal (including
any overdue optional prepayment of principal) and premium, if any, and (to the
extent legally enforceable) on any overdue installment of interest at the
Overdue Rate after the date due, whether by acceleration or otherwise, until
paid, will be expressed to mature on August 21, 2002 and will be substantially
in the form attached hereto as Exhibit A-4.
Interest on the Notes shall be computed on the basis of a 360-day year
of twelve 30-day months. The Notes are not subject to prepayment or redemption
at the option of the Company prior to their expressed maturity dates except on
the terms and conditions and in the amounts and with the premium, if any, set
forth in (S)2 of this Agreement. The term "Notes" as used herein shall include
-----
each Note delivered pursuant to this Agreement and the separate agreements with
the other purchasers named in Schedule I. You and the other purchasers named in
Schedule I are hereinafter sometimes referred to as the "Purchasers". The terms
----------
which are capitalized herein shall have the meanings set forth in (S)8.1 unless
the context shall otherwise require.
Section 1.2. Commitment, Closing Date. Subject to the terms and
-------------------------------------
conditions hereof and on the basis of the representations and warranties
hereinafter set forth, the Company agrees to issue and sell to you, and you
agree to purchase from the Company, Notes in the principal amount set forth
opposite your name on Schedule I hereto at a price of 100% of the principal
amount thereof on the Closing Date hereafter mentioned.
Delivery of the Notes will be made at the offices of Xxxxxxx and Xxxxxx,
000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, against payment therefor in
Federal Reserve or other funds current and immediately available at the
principal office of Bank of America, Department 5693, 0000 Xxxxxxx
-0-
Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, ABA #000000000 for credit to the Company's
Account Number 12331-13468 in the amount of the purchase price at 12:00 Noon,
San Francisco, California time, on August 21, 1995 or such later date (not later
than August 31, 1995) as shall mutually be agreed upon by the Company and the
Purchasers (the "Closing Date"). The Notes delivered to you on the Closing Date
------------
will be delivered to you in the form of a single registered Note in the form
attached hereto as Exhibit A for the full amount of your purchase (unless
different denominations are specified by you), registered in your name or in the
name of such nominee, as may be specified in Schedule I attached hereto.
Section 1.3. Other Agreements. Simultaneously with the execution and
-----------------------------
delivery of this Agreement, the Company is entering into similar agreements with
the other Purchasers under which such other Purchasers agree to purchase from
the Company the principal amount of Notes set opposite such Purchasers' names in
Schedule I, and your obligation is subject to the execution and delivery of the
similar agreements by the other Purchasers. This Agreement and said similar
agreements with the other Purchasers are herein collectively referred to as the
"Agreements". The obligations of each Purchaser shall be several and not joint
----------
and no Purchaser shall be liable or responsible for the acts of any other
Purchaser.
Section 1.4. Security for the Notes. The Notes will be entitled to the
-----------------------------------
benefit of the Second Amended and Restated Security Agreement Re: Receivables,
Inventory, Equipment and Documents dated as of the date of this Agreement which
will be in form and substance satisfactory to you and your special counsel,
together with any amendments, replacements or restatements of the foregoing (the
"Security Document") and enforcement of the rights and benefits in respect of
-----------------
the Security Document will be subject to an Intercreditor Agreement dated as of
the date of this Agreement in form and substance satisfactory to you and your
special counsel (the "Intercreditor Agreement") to be entered into by the
-----------------------
Collateral Agent, Bank of America National Trust and Savings Association and the
Company with each of you.
SECTION 2. PREPAYMENT OF NOTES.
Section 2.1. Optional Prepayment with Premium. Upon compliance with
---------------------------------------------
(S)2.3, the Company shall have the privilege, on any interest payment date
-4-
of prepaying the outstanding Notes, either in whole or in part (but if in part
then in a minimum principal amount of $2,000,000), by payment of the principal
amount of the Notes, or portion thereof to be prepaid, and accrued interest
thereon to the date of such prepayment, together with a premium equal to the
Make-Whole Amount, determined as of three Business Days prior to the date of
such prepayment pursuant to this (S)2.1.
Section 2.2. Prepayment of Notes upon Change of Control. (a) In the
-------------------------------------------------------
event that the Company has knowledge of a Change of Control (as hereinafter
defined) or an impending Change of Control, the Company will give written notice
(the "Company Notice") of such fact in the manner provided in (S)9.6 hereof to
--------------
the holders of the Notes at least 60 days prior to the occurrence of such Change
of Control, provided that if the Company does not have knowledge of a Change of
--------
Control sufficient to provide 60 days prior notice to the holders of the Notes,
then the Company Notice shall be delivered promptly upon receipt of such
knowledge by the Company and in any event no later than three Business Days
following the occurrence of any Change of Control. The Company Notice shall (1)
describe the facts and circumstances of such Change of Control in reasonable
detail, (2) make reference to this (S)2.2 and the right of the holders of the
Notes to require prepayment of the Notes on the terms and conditions provided
for in this (S)2.2, (3) offer in writing to prepay the outstanding Notes,
together with accrued interest to the date of prepayment, and a premium equal to
the then applicable Make-Whole Amount, and (4) specify a date for such
prepayment (the "Change of Control Prepayment Date"), which Change of Control
---------------------------------
Prepayment Date shall be (A) in the event the Company has knowledge of such
Change of Control at least 60 days prior to the occurrence thereof, the date
such Change of Control actually occurs, or (B) in all other events, not more
than 90 days nor less than 30 days following the date of such Company Notice.
Each holder of the then outstanding Notes shall have the right to accept such
offer and require prepayment of the Notes held by such holder in full by written
notice to the Company (a "Noteholder Notice") given not later than 20 days after
-----------------
receipt of the Company Notice. The Company shall on the Change of Control
Prepayment Date prepay in full all of the Notes held by holders which have so
accepted such offer of prepayment. The prepayment price of the Notes payable
upon the occurrence of any Change of Control shall be an amount equal to 100% of
the outstanding principal amount of the Notes so to be prepaid and accrued
interest thereon to the date of such prepayment, together
-5-
with a premium equal to the then applicable Make-Whole Amount, determined as of
three Business Days prior to the date of such prepayment pursuant to this
(S)2.2(a).
(b)(1) Without limiting the foregoing, notwithstanding any failure on
the part of the Company to give the Company Notice herein required as a result
of the occurrence of a Change of Control, each holder of the Notes shall have
the right by delivery of written notice to the Company to require the Company to
prepay, and the Company will prepay, such holder's Notes in full, together with
accrued interest thereon to the date of prepayment, and a premium equal to the
then applicable Make-Whole Amount. Notice of any required prepayment pursuant to
this (S)2.2(b)(1) shall be delivered by any holder of the Notes which was
entitled to, but did not receive, such Company Notice to the Company after such
holder has actual knowledge of such Change of Control. On the date (the "Change
------
of Control Delayed Prepayment Date") designated in such holder's notice (which
----------------------------------
shall be not more than 90 days nor less than 30 days following the date of such
holder's notice), the Company shall prepay in full all of the Notes held by such
holder, together with accrued interest thereon to the date of prepayment, and a
premium equal to the then applicable Make-Whole Amount. If the holder of any
Note gives any notice pursuant to this (S)2.2(b)(1), the Company shall give a
Company Notice within three Business Days of receipt of such notice and identify
the Change of Control Delayed Prepayment Date to all other holders of the Notes
and each of such other holders shall then and thereupon have the right to accept
the Company's offer to prepay the Notes held by such holder in full and require
prepayment of such Notes by delivery of a Noteholder Notice within 20 days
following receipt of such Company Notice; provided only that any date for
--------
prepayment of such holder's Notes shall be the Change of Control Delayed
Prepayment Date. On the Change of Control Delayed Prepayment Date, the Company
shall prepay in full the Notes of each holder thereof which has accepted such
offer of prepayment at a prepayment price equal to 100% of the outstanding
principal amount of the Notes so to be prepaid and accrued interest thereon to
the date of such prepayment, together with a premium equal to the then
applicable Make-Whole Amount, determined as of three Business Days prior to the
date of such prepayment pursuant to this (S)2.2(b)(1).
-6-
(2) Compliance with the provisions of this (S)2.2(b) shall not be deemed
to constitute a waiver of, or consent to, any Default or Event of Default caused
by any violation of the provisions of (S)2.2(a).
Section 2.3. Notice of Optional Prepayments. The Company will give
-------------------------------------------
notice of any prepayment of the Notes pursuant to (S)2.1 to each holder
thereof not less than 30 days nor more than 60 days before the date fixed for
such optional prepayment specifying (a) such date, (b) the principal amount of
the holder's Notes to be prepaid on such date, (c) that a premium may be
payable, (d) the date when such premium will be calculated, (e) the estimated
premium, together with a reasonably detailed computation of such estimated
premium, and (f) the accrued interest applicable to the prepayment. Such notice
of prepayment shall also certify all facts, if any, which are conditions
precedent to any such prepayment. Notice of prepayment having been so given, the
aggregate principal amount of the Notes specified in such notice, together with
accrued interest thereon and the premium, if any, payable with respect thereto
shall become due and payable on the prepayment date specified in said notice.
Two Business Days prior to the prepayment date specified in such notice, the
Company shall provide each holder of a Note written notice of the premium, if
any, payable in connection with such prepayment and, whether or not any premium
is payable, a reasonably detailed computation of the Make-Whole Amount.
Section 2.4. Application of Prepayments. All partial prepayments made
---------------------------------------
pursuant to (S)2.1 shall be applied on all outstanding Notes ratably in
accordance with the unpaid principal amounts thereof. All partial prepayments
made pursuant to (S)2.2 shall be applied only to the Notes of the holders who
have elected to participate in such prepayment.
Section 2.5. Direct Payment. Notwithstanding anything to the contrary
---------------------------
contained in this Agreement or the Notes, in the case of any Note owned by you
or your nominee or owned by any subsequent Institutional Holder which has given
written notice to the Company requesting that the provisions of this (S)2.5
shall apply, the Company will punctually pay when due the principal thereof,
interest thereon and premium, if any, due with respect to said principal,
without any presentment thereof, directly to you, to your nominee or to such
subsequent Institutional Holder at your address or your nominee's address set
forth in Schedule I hereto or such other address
-7-
as you, your nominee or such subsequent Institutional Holder may from time to
time designate in writing to the Company or, if a bank account with a United
States bank is designated for you or your nominee on Schedule I hereto or in any
written notice to the Company from you, from your nominee or from any such
subsequent Institutional Holder, the Company will make such payments in
immediately available funds to such bank account, no later than 12:00 Noon
Chicago, Illinois time on the date due, marked for attention as indicated, or in
such other manner or to such other account in any United States bank as you,
your nominee or any such subsequent Institutional Holder may from time to time
direct in writing. If for any reason whatsoever the Company does not make any
such payment by such 12:00 Noon Chicago, Illinois time, such payment shall be
deemed to have been made on the next following Business Day and such payment
shall bear interest at the Overdue Rate.
SECTION 3. REPRESENTATIONS AND AGREEMENT.
Section 3.1. Representations of the Company. The Company represents
-------------------------------------------
and warrants that all representations and warranties set forth in Exhibit B are
true and correct as of the date hereof and are incorporated herein by reference
with the same force and effect as though herein set forth in full.
Section 3.2. Representations and Agreement of the Purchaser. (a) You
-----------------------------------------------------------
represent, and in entering into this Agreement the Company understands, that
you are acquiring the Notes for the purpose of investment and not with a view
to the distribution thereof, and that you have no present intention of selling,
negotiating or otherwise disposing of the Notes; it being understood, however,
that the disposition of your property shall at all times be and remain within
your control.
(b) You further represent that either: (1) you are acquiring the Notes
with assets from your general account and not with the assets of any separate
account in which any employee benefit plan has any interest; (2) no part of the
funds to be used by you to purchase the Notes constitutes assets allocated to
any separate account maintained by you such that the application of such funds
constitutes a prohibited transaction under Section 406 of ERISA; or (3) all or
a part of such funds constitute assets of one or more separate accounts, trusts
or a commingled pension trust maintained by you, and you
-8-
have disclosed to the Company the names of such employee benefit plans whose
assets in such separate account or accounts or pension trusts exceed 10% of the
total assets or are expected to exceed 10% of the total assets of such account
or accounts or trusts as of the date of such purchase and the Company has
advised you in writing (and in making the representations set forth in this
clause (3) you are relying on such advice) that the Company is not a party-in-
interest nor are the Notes employer securities with respect to the particular
employee benefit plan disclosed to the Company by you as aforesaid (for the
purpose of this clause (3), all employee benefit plans maintained by the same
employer or employee organization are deemed to be a single plan). As used in
this (S)3.2(b), the terms "separate account", "party-in-interest", "employer
---------------- ----------------- --------
securities" and "employee benefit plan" shall have the respective meanings
---------- ---------------------
assigned to them in ERISA.
(c) You agree that you will not resell the Notes purchased by you under
this Agreement to a Person which, to the best of your knowledge, is a Competitor
or Competitor Affiliate. It is understood and agreed that in establishing
compliance by you with the foregoing, you may rely upon the written
representation of the transferee of a Note to the effect that such transferee is
not a Competitor or Competitor Affiliate.
SECTION 4. CLOSING CONDITIONS.
Section 4.1. Conditions. Your obligation to purchase the Notes on the
-----------------------
Closing Date shall be subject to the performance by the Company of its
agreements hereunder which by the terms hereof are to be performed at or prior
to the time of delivery of the Notes and to the following further conditions
precedent:
(a) Closing Certificate. You shall have received a certificate
-------------------
dated the Closing Date, signed by a Responsible Officer of the Company,
the truth and accuracy of which shall be a condition to your obligation
to purchase the Notes proposed to be sold to you and to the effect that
(1) the representations and warranties of the Company set forth in
Exhibit B hereto are true and correct on and with respect to the Closing
Date, (2) the Company has performed all of its obligations hereunder
which are to be performed on or prior to the Closing Date, and (3) no
Default or Event of Default has occurred and is continuing.
-9-
(b) Legal Opinions. You shall have received from Xxxxxxx and Xxxxxx, who
--------------
are acting as your special counsel in this transaction, and from Xxxxxxx X.
Xxxxx, Esq., counsel for the Company, their respective opinions dated the
Closing Date, in form and substance satisfactory to you, and covering the
matters set forth in Exhibits C and D, respectively, hereto.
(c) Company's Existence and Authority. On or prior to the Closing Date,
---------------------------------
you shall have received, in form and substance reasonably satisfactory to you
and your special counsel, such documents and evidence with respect to the
Company as you may reasonably request in order to establish the existence and
good standing of the Company and the authorization of the transactions
contemplated by this Agreement.
(d) Security Document, Etc. The Security Document and the Intercreditor
----------------------
Agreement shall be in form and substance satisfactory to you and your special
counsel, shall have been duly executed and delivered by the parties thereto and
shall be in full force and effect and you shall have received true, correct and
complete copies of each thereof. You shall also have received a true, correct
and complete copy of the Bank Agreement.
(e) Filing and Recording. The Security Document (and/or financing
--------------------
statements or similar notices thereof if and to the extent permitted or
required by applicable law) shall have been recorded or filed for record in
such public offices as may be deemed necessary or appropriate by you or your
special counsel in order to perfect the Liens and security interests granted or
conveyed thereby.
(f) Related Transactions. The Company shall have consummated the sale of
--------------------
the entire principal amount of the Notes scheduled to be sold on the Closing
Date pursuant to this Agreement and the other agreements referred to in (S)1.3.
(g) Private Placement Numbers. On or prior to the Closing Date, special
-------------------------
counsel to the Purchasers shall have duly made the appropriate filings with
Standard & Poor's CUSIP Service Bureau, as
-10-
agent for the National Association of Insurance Commissioners, in order to
obtain a private placement number for each Series of the Notes.
(h) Funding Instructions. At least three Business Days prior to the
--------------------
Closing Date, you shall have received written instructions executed by a
Responsible Officer of the Company directing the manner of the payment of funds
and setting forth (1) the name and address of the transferee bank, (2) such
transferee bank's ABA number, (3) the account name and number into which the
purchase price for the Notes is to be deposited, and (4) the name and telephone
number of the account representative responsible for verifying receipt of such
funds.
(i) Special Counsel Fees. Concurrently with the delivery of the Notes to
--------------------
you on the Closing Date, the charges and disbursements of Xxxxxxx and Xxxxxx,
your special counsel, shall have been paid by the Company.
(j) Legality of Investment. The Notes to be purchased by you shall be a
----------------------
legal investment for you under the laws of each jurisdiction to which you may be
subject (without resort to any so-called "basket provisions" to such laws).
-----------------
(k) Satisfactory Proceedings. All proceedings taken in connection with
------------------------
the transactions contemplated by this Agreement, and all documents necessary to
the consummation thereof, shall be satisfactory in form and substance to you and
your special counsel, and you shall have received a copy (executed or certified
as may be appropriate) of all legal documents or proceedings taken in connection
with the consummation of said transactions.
Section 4.2. Waiver of Conditions. If on the Closing Date the Company
---------------------------------
fails to tender to you the Notes to be issued to you on such date or if the
conditions specified in (S)4.1 have not been fulfilled, you may thereupon elect
to be relieved of all further obligations under this Agreement. Without
limiting the foregoing, if the conditions specified in (S)4.1 have not been
fulfilled, you may waive compliance by the Company with any such
-11-
condition to such extent as you may in your sole discretion determine. Nothing
in this (S)4.2 shall operate to relieve the Company of any of its obligations
hereunder or to waive any of your rights against the Company.
SECTION 5. COMPANY COVENANTS.
From and after the Closing Date and continuing so long as any amount
remains unpaid on any Note:
Section 5.1. Corporate Existence, Etc. The Company will preserve and
-------------------------------------
keep in full force and effect, and will cause each Subsidiary to preserve and
keep in full force and effect, its corporate existence and all Material licenses
and permits relating to the proper conduct of its business, provided that the
--------
foregoing shall not prevent any transaction permitted by (S)5.12.
Section 5.2. Insurance. The Company will maintain, and will cause each
----------------------
Subsidiary to maintain, insurance coverage by financially sound and reputable
insurers and in such forms and amounts (including deductibles, co-insurance and
self-insurance, if adequate reserves are maintained with respect thereto) and
against such risks as are customary for corporations of established reputation
engaged in the same or a similar business and owning and operating similar
properties.
Section 5.3. Taxes, Claims for Labor and Materials; Compliance with
-------------------------------------------------------------------
Laws. (a) The Company will promptly pay and discharge, and will cause each
----
Subsidiary promptly to pay and discharge, prior to becoming delinquent, all
taxes, assessments and governmental charges or levies imposed upon the Company
or such Subsidiary, respectively, or upon or in respect of all or any part of
the property or business of the Company or such Subsidiary, all trade accounts
payable in accordance with usual and customary business terms, and all claims
for work, labor or materials, which if unpaid might become a Lien upon any
property of the Company or such Subsidiary; provided the Company or such
--------
Subsidiary shall not be required to pay any such tax, assessment, charge, levy,
account payable or claim if (1) the validity, applicability or amount thereof is
being contested in good faith by appropriate actions or proceedings which will
prevent the forfeiture or sale of any property of the Company or such Subsidiary
or any material interference with the use thereof by the Company or such
Subsidiary, and (2) the
-12-
Company or such Subsidiary shall set aside on its books, reserves deemed by it
to be adequate with respect thereto.
(b) The Company will promptly comply and will cause each Subsidiary to
promptly comply with all laws, ordinances or governmental rules and regulations
to which it is subject, including, without limitation, the Occupational Safety
and Health Act of 1970, as amended, ERISA and all Environmental Laws, the
violation of which could materially and adversely affect the business,
operations, affairs, financial condition, assets, properties or prospects of the
Company and its Subsidiaries or would result in any Lien not permitted under
(S)5.10.
Section 5.4. Maintenance, Etc. The Company will in all Material respects
-----------------------------
maintain, preserve and keep, and will cause each Subsidiary to in all Material
respects maintain, preserve and keep, its properties which are used or useful in
the conduct of its business (whether owned in fee or a leasehold interest) in
good repair and working order and from time to time will in all Material
respects make all necessary repairs, replacements, renewals and additions so
that at all times the efficiency thereof shall be maintained.
Section 5.5. Nature of Business. Neither the Company nor any Subsidiary
-------------------------------
will engage in any business if, as a result, the general nature of the business,
taken on a consolidated basis, which would then be engaged in by the Company and
its Subsidiaries would be substantially changed from the general nature of the
business engaged in by the Company and its Subsidiaries on the date of this
Agreement.
Section 5.6. Collateral Ratio. The Company will at all times keep and
-----------------------------
maintain the ratio of Book Value of Consolidated Total Assets to Consolidated
Secured Indebtedness at not less than 1.25 to 1.00.
Section 5.7. Consolidated Tangible Net Worth. The Company will at all
--------------------------------------------
times keep and maintain Consolidated Tangible Net Worth at an amount not less
than the sum of (a) $35,000,000 plus (b) 25% of Consolidated Net Income computed
----
on a cumulative basis for each of the elapsed fiscal quarters ending after June
30, 1995, provided that notwithstanding that Consolidated Net Income for any
--------
such elapsed fiscal quarter may be a deficit figure, no
-13-
reduction as a result thereof shall be made in the sum to be maintained pursuant
hereto.
Section 5.8. Fixed Charges Coverage Ratio. The Company will as at the
-----------------------------------------
end of each fiscal quarter keep and maintain the ratio of Consolidated Net
Income Available for Fixed Charges for any four of the immediately preceding
five fiscal quarters to Consolidated Fixed Charges for such four fiscal quarter
period at not less than 1.50 to 1.00.
Section 5.9. Limitations on Indebtedness. (a) The Company will not, and
----------------------------------------
will not permit any Restricted Subsidiary to, create, assume, guarantee or
otherwise incur or in any manner be or become liable in respect of any
Indebtedness, except:
(1) Indebtedness evidenced by the Notes;
(2) Indebtedness of the Company and its Restricted Subsidiaries
outstanding as of the date of this Agreement and described on Schedule
II hereto;
(3) Senior Indebtedness of the Company and Indebtedness of any of
the Company's Restricted Subsidiaries, provided that at the time of
--------
creation, issuance, assumption, guarantee or incurrence thereof and
after giving effect thereto and to the application of the proceeds
thereof:
(i) the sum of (A) Senior Indebtedness of the Company
(including, without limitation, all Senior Indebtedness of the
Company secured by Liens permitted to be incurred within the
limitations of subclause (iii) below) plus (B) Indebtedness of
----
Restricted Subsidiaries permitted to be incurred within the
limitations of subclause (iii) below shall not exceed 300% of
Adjusted Consolidated Tangible Net Worth,
(ii) Subordinated Indebtedness of the Company shall not exceed
100% of the Consolidated Tangible Net Worth, and
(iii) the sum of (A) the aggregate amount of all Indebtedness
of the Company secured by Liens permitted by (S)5.10(h) plus (B)
----
the aggregate amount of all Indebtedness of
-14-
Restricted Subsidiaries shall not exceed 10% of Adjusted
Consolidated Tangible Net Worth;
(4) Subordinated Indebtedness of the Company, provided that at the
--------
time of issuance thereof and after giving effect thereto and to the
application of the proceeds thereof, the aggregate amount of all
Subordinated Indebtedness of the Company shall not exceed 100% of
Consolidated Tangible Net Worth; and
(5) Indebtedness of a Restricted Subsidiary to the Company or to a
Wholly-owned Restricted Subsidiary.
(b) Indebtedness issued or incurred in accordance with the limitations
of (S)5.9(a) may be renewed, extended or refunded (without increase in the
original principal amount, which shall be deemed to be $50,000,000 in the case
of the Indebtedness issued pursuant to the Bank Agreement and without increase
in principal amount remaining unpaid at the time of such renewal, extension or
refunding in the case of any other Indebtedness), provided that at the time of
--------
such renewal, extension or refunding and after giving effect thereto, no Default
or Event of Default would exist.
(c) Any Person which becomes a Restricted Subsidiary after the date
hereof shall for all purposes of this (S)5.9 be deemed to have created, assumed
or incurred at the time it becomes a Restricted Subsidiary all Indebtedness of
such Person existing immediately after it becomes a Restricted Subsidiary.
Section 5.10. Limitation on Liens. The Company will not, and will not
---------------------------------
permit any Restricted Subsidiary to, create or incur, or suffer to be incurred
or to exist, any Lien on its or their property or assets, whether now owned or
hereafter acquired, or upon any income or profits therefrom, or transfer any
property for the purpose of subjecting the same to the payment of obligations in
priority to the payment of its or their general creditors, or acquire or agree
to acquire, or permit any Restricted Subsidiary to acquire, any property or
assets upon conditional sales agreements or other title retention devices,
except:
-15-
(a) Liens for property taxes and assessments or governmental charges or
levies and Liens securing claims or demands of mechanics and materialmen,
provided that payment thereof is not at the time required by (S)5.3;
--------
(b) Liens of or resulting from any judgment or award, the time for the
appeal or petition for rehearing of which shall not have expired, or in respect
of which the Company or a Restricted Subsidiary shall at any time in good faith
be prosecuting an appeal or proceeding for a review and in respect of which a
stay of execution pending such appeal or proceeding for review shall have been
secured and reserves reasonably deemed by the Company to be adequate shall have
been established;
(c) Liens incidental to the conduct of business or the ownership of
properties and assets (including Liens in connection with worker's compensation,
unemployment insurance and other like laws, warehousemen's and attorneys' liens
and statutory landlords' liens) and Liens to secure the performance of bids,
tenders or trade contracts, or to secure statutory obligations, surety or appeal
bonds or other Liens of like general nature, in any such case incurred in the
ordinary course of business and not in connection with the borrowing of money,
provided in each case, the obligation secured is not overdue or, if overdue, is
--------
being contested in good faith by appropriate actions or proceedings and in
respect of which reserves reasonably deemed by the Company to be adequate shall
have been established;
(d) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities and other similar
purposes, or zoning or other restrictions as to the use of real properties,
which are necessary for the conduct of the activities of the Company and its
Restricted Subsidiaries or which customarily exist on properties of corporations
engaged in similar activities and similarly situated and which do not in any
event materially impair their use in the operation of the business of the
Company and its Restricted Subsidiaries;
-16-
(e) Liens securing Indebtedness of a Restricted Subsidiary to the
Company or to another Wholly-owned Restricted Subsidiary;
(f) Liens existing as of the Closing Date and described on Schedule II
hereto;
(g) Liens created or incurred after the Closing Date given to secure the
payment of the purchase price incurred in connection with the acquisition or
purchase of fixed assets useful and intended to be used in carrying on the
business of the Company or a Restricted Subsidiary, including Liens existing on
such fixed assets at the time of acquisition thereof or at the time of
acquisition or purchase by the Company or a Restricted Subsidiary of any
business entity then owning such fixed assets, whether or not such existing
Liens were given to secure the payment of the purchase price of the fixed assets
to which they attach so long as they were not incurred, extended or renewed in
contemplation of such acquisition or purchase, provided that (1) the Lien shall
attach solely to the fixed assets acquired or purchased, (2) such Lien shall
have been created or incurred within ninety days of the date of acquisition or
purchase, (3) at the time of acquisition or purchase of such fixed assets, the
aggregate amount remaining unpaid on all Indebtedness secured by Liens on such
fixed assets, whether or not assumed by the Company or a Restricted Subsidiary,
shall not exceed an amount equal to 100% of the total purchase price of such
fixed assets, (4) in the case of the creation or incurrence of any Capitalized
Lease, the fixed asset which is the subject thereof if previously owned by the
Company shall have been sold or otherwise disposed of within the limitations
provided in (S)5.12(b)(2), and (5) all such Indebtedness shall have been
incurred within the applicable limitations provided in (S)5.9(a);
(h) Liens created or incurred after the Closing Date given to secure
Indebtedness of the Company or any Restricted Subsidiary, in addition to the
Liens permitted by the preceding clauses (a) through (g) hereof, provided that
--------
all Indebtedness secured by such Liens shall have been incurred within the
limitations provided in (S)5.9(a)(3); and
(i) the Lien of the Security Document.
-17-
Section 5.11. Restricted Payments. (a) The Company will not except as
---------------------------------
otherwise provided in clause (b) of this (S)5.11:
(1) Declare or pay any dividends, either in cash or property, on
any shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of common stock of the Company);
(2) Directly or indirectly, or through any Subsidiary or through
any Affiliate of the Company, purchase, redeem or retire any shares of
its capital stock of any class or any warrants, rights or options to
purchase or acquire any shares of its capital stock;
(3) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock;
or
(4) Make any payment of or on account of any Subordinated
Indebtedness or any payment on account of the purchase, redemption or
other retirement thereof, except (i) a payment of interest on such
Subordinated Indebtedness, (ii) payment at final maturity or (iii) a
payment in compliance with the applicable provisions of such
Subordinated Indebtedness thereof or of any indenture, agreement or
similar instrument under or pursuant to which such Subordinated
Indebtedness has been issued unconditionally requiring at such time and
in the amounts being made, payments of a sinking fund, periodic
prepayments or other analogous payments for the amortization of such
Subordinated Indebtedness, all as established by the original terms
thereof;
(such declarations or payments of dividends, purchases, redemptions or
retirements of capital stock and warrants, rights or options and all such other
payments, prepayments, redemptions, purchases or distributions being herein
collectively called "Restricted Payments"), if after giving effect thereto the
-------------------
aggregate amount of Restricted Payments made during the period from and after
the Closing Date to and including the date of the making of the Restricted
Payment in question, would exceed the sum of (A) $7,500,000 plus (B) 50% of
----
Consolidated Net Income for such period, computed on a cumulative basis for
said entire period (or if such Consolidated Net Income is
-18-
a deficit figure, then minus 100% of such deficit) plus (C) the aggregate net
----- ----
cash proceeds received by the Company from the issuance and sale of common stock
during such period plus (D) the aggregate net cash proceeds received by the
----
Company from the sale or other disposition of any Restricted Investment during
such period.
(b) Notwithstanding the foregoing provisions of clause (a) of this
(S)5.11, the Company may pay, for any fiscal year or portion thereof (a "Tax
---
Year") in which the Company shall have been an "S corporation" under Section
---- -------------
1361 of the Code, dividends to the holders of common stock of the Company to
enable such holders to make payments of Federal and state income taxes
(including estimates therefor) which may become due and payable with respect to
any Tax Year ("Tax Dividends"); provided, however, that the Tax Dividends for
------------- -----------------
such Tax Year shall not exceed the product of (1) the excess of (A) the sum of
(i) the maximum Federal income tax rate applicable to individuals (determined
without regard to phaseouts of rate brackets, personal exemptions or other
items) plus (ii) the Adjusted State Income Tax Rate from time to time applicable
to any holder of common stock of the Company with respect to its share of the
Taxable Income (as defined below) of the Company over (B) the product of such
Federal income tax rate and the Adjusted State Income Tax Rate and (2) the
Company's Taxable Income for such Tax Year, provided, further, that Tax
-----------------
Dividends shall be increased by an amount equal to the alternative minimum tax
that would be imposed under Section 55 of the Code on shareholders of the
Company with respect to those items of Taxable Income included in calculating
and adjusting their alternative minimum taxable incomes, as defined and adjusted
in Sections 55 and 56 of the Code. Tax Dividends for any succeeding Tax Year
shall be reduced by the amount by which prior Tax Dividends made by the Company
during any preceding Tax Year exceeded the amounts which would have been
distributed based on the actual Taxable Income of the Company for such Tax Year
or Years. Tax Dividends also shall be reduced by credits allowed or allowable to
shareholders of the Company under Section 53 of the Code with respect to their
shares of income of the Company. Further, Tax Dividends made to enable holders
to pay estimated income taxes shall not exceed those amounts which the Company
reasonably determines in good faith to be necessary to enable the holders to
avoid the imposition of penalties in interest for the underpayment of estimated
income taxes with respect to Taxable Income of the Company.
-19-
As used herein, the term "Adjusted State Income Tax Rate" which shall be
------------------------------
applicable to the Tax Dividends of all holders of common stock, shall mean the
highest effective rate of state income tax imposed on any holder of common
stock of the Company with respect to its share of Taxable Income of the Company
adjusted for state modifications to Taxable Income and for credits allowed
against such taxes. For purposes of determining the Adjusted State Income Tax
Rate, each holder of common stock of the Company shall be deemed to have no
items of income, gain, loss, deduction or credit other than those taken into
account in determining Taxable Income.
As used herein, the term "Taxable Income" (or "Taxable Loss" if Taxable
-------------- ------------
Income is a negative amount) shall mean the sum of all items of taxable income,
gain, loss and deduction taken into account under Section 1366(a) of the Code,
or any successor provision thereto, in determining Federal income tax liability
of the holders of common stock of the Company, appropriately adjusted to take
into account items taxed at rates lower than the maximum rate (e.g., capital
----
gains and losses) and tax credits permitted thereunder. Taxable Income shall
also be reduced to the extent the Company has realized any Taxable Losses in
Tax Years governed by this provision which have not previously been used to
reduce Taxable Income.
(c) The Company will not declare any dividend which constitutes a
Restricted Payment payable more than 60 days after the date of declaration
thereof.
(d) For the purposes of this (S)5.11, the amount of any Restricted
Payment declared, paid or distributed in property shall be deemed to be the
greater of the book value or fair market value (as determined in good faith by
the Board of Directors of the Company) of such property at the time of the
making of the Restricted Payment in question.
(e) The Company will not authorize or make a Restricted Payment
permitted within the terms of (S)5.11(a) if after giving effect to the proposed
Restricted Payment: (1) a Default or Event of Default would exist or (2) the
Company could not incur at least $1.00 of additional Indebtedness pursuant to
(S)(S)5.9(a)(3) and (4).
-20-
Section 5.12. Mergers, Consolidations and Sales of Assets. (a) The
---------------------------------------------------------
Company will not, and will not permit any Restricted Subsidiary to, consolidate
with or be a party to a merger with any other Person, or sell, lease or
otherwise dispose of all or substantially all of its assets; provided that:
--------
(1) any Restricted Subsidiary may merge or consolidate with or into
the Company or any Wholly-owned Restricted Subsidiary so long as in any
merger or consolidation involving the Company, the Company shall be the
surviving or continuing corporation; and
(2) the Company may consolidate or merge with or into any other
corporation if (i) the corporation which results from such consolidation
or merger (the "surviving corporation") is organized under the laws of
any state of the United States or the District of Columbia, (ii) the due
and punctual payment of the principal of and premium, if any, and
interest on all of the Notes, according to their tenor, and the due and
punctual performance and observation of all of the covenants in the
Notes and this Agreement to be performed or observed by the Company are
expressly assumed in writing by the surviving corporation and the
surviving corporation shall furnish to the holders of the Notes an
opinion of counsel satisfactory to such holders to the effect that the
instrument of assumption has been duly authorized, executed and
delivered and constitutes the legal, valid and binding contract and
agreement of the surviving corporation enforceable in accordance with
its terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles, and (iii) at the time of such consolidation or
merger and immediately after giving effect thereto, (A) no Default or
Event of Default would exist and (B) the surviving corporation would be
permitted by the provisions of (S)(S)5.9(a)(3) and (4) to incur at least
$1.00 of additional Indebtedness.
(b) The Company will not, and will not permit any Restricted Subsidiary
to, sell, lease, transfer, abandon or otherwise dispose of assets (except assets
sold in the ordinary course of business for fair market value) to any Person;
provided that the foregoing restrictions do not apply to:
--------
-21-
(1) the sale, lease, transfer or other disposition of assets of a
Restricted Subsidiary to the Company or a Wholly-owned Restricted Subsidiary; or
(2) the sale of assets by the Company or a Restricted Subsidiary if all
of the following conditions are met:
(i) the sale of such property is for cash consideration which
equals or exceeds the fair market value of the property so sold (as
determined in good faith by the Board of Directors of the Company);
(ii) such property is leased by the Company or Restricted
Subsidiary, as lessee, within 180 days of the sale of such property;
(iii) immediately after the consummation of the sale of such
property and immediately after the consummation of the leaseback thereof
by the Company or Restricted Subsidiary, as the case may be, and after
giving effect thereto, (A) no Default or Event of Default would exist,
and (B) the Company would be permitted by the provisions of
(S)(S)5.9(a)(3) and (4) to incur at least $1.00 of additional
Indebtedness; and
(iv) the sale of such property and the leaseback thereof by the
Company or a Restricted Subsidiary is otherwise consummated within the
limitations of this Agreement;
(3) the sale of assets for cash or other property to a Person or Persons
(other than an Affiliate) if all of the following conditions are met:
(i) such assets (valued at net book value) do not, together with all
other assets of the Company and its Restricted Subsidiaries previously
disposed of during the immediately preceding 12 calendar month period
(other than in the ordinary course of business), exceed 10% of
Consolidated Total Assets,
-22-
determined as of the end of the immediately preceding fiscal year;
(ii) in the opinion of a Responsible Officer of the Company, the
sale is for fair value and is in the best interests of the Company; and
(iii) immediately after the consummation of the transaction and
after giving effect thereto, (A) no Default or Event of Default would
exist, and (B) the Company would be permitted by the provisions of
(S)(S)5.9(a)(3) and (4) to incur at least $1.00 of additional
Indebtedness;
provided, however, that for purposes of the foregoing calculation, there
-----------------
shall not be included any assets the proceeds of which were or are (y)
immediately after the consummation of such sale invested in Investments of the
character described in clauses (d), (e) and (f) of the definition of
"Restricted Investments" contained in (S)8.1, and (z) applied within 180 days of
the date of sale of such assets to either (A) the acquisition of fixed assets
useful and intended to be used in the operation of the business of the Company
and its Restricted Subsidiaries as described in (S)5.5 and having a fair market
value (as determined in good faith by the Board of Directors of the Company) at
least equal to that of the assets so disposed of or (B) the prepayment at any
applicable prepayment premium, on a pro rata basis, of Senior Indebtedness of
--------
the Company. It is understood and agreed by the Company that: (A) any holder
of the Notes may decline any such offer of prepayment, (B) the failure of any
such holder to accept or decline any such offer of prepayment shall be deemed
to be an election by such holder to accept such prepayment, and (C) if such
offer is so accepted, the proceeds so offered towards the prepayment of the
Notes and accepted shall be prepaid as and to the extent provided in (S)2.1. In
the event any holder of Senior Indebtedness of the Company declines any such
offer of prepayment, the Company shall offer, on a pro rata basis, the proceeds
--------
so declined to the holders of Senior Indebtedness of the Company accepting the
offer of prepayment.
-23-
Computations pursuant to this (S)5.12(b) shall include dispositions
made pursuant to (S)5.12(c) and computations pursuant to (S)5.12(c) shall
include dispositions made pursuant to this (S)5.12(b).
(c) The Company will not, and will not permit any Restricted Subsidiary
to, sell, pledge or otherwise dispose of any shares of the stock (including as
"stock" for the purposes of this (S)5.12(c) any options or warrants to purchase
stock or other Securities exchangeable for or convertible into stock) of a
Restricted Subsidiary (said stock, options, warrants and other Securities herein
called "Subsidiary Stock") or any Indebtedness of any Restricted Subsidiary, nor
----------------
will any Restricted Subsidiary issue, sell, pledge or otherwise dispose of any
shares of its own Subsidiary Stock to any Person, provided that the foregoing
--------
restrictions do not apply to:
(1) the issue of directors' qualifying shares; or
(2) the issue of Subsidiary Stock to the Company; or
(3) the sale or other disposition at any one time to a Person (other
than directly or indirectly to an Affiliate) of the entire Investment of
the Company and its other Restricted Subsidiaries in any Restricted
Subsidiary if all of the following conditions are met:
(i) the assets (valued at net book value) of such Restricted
Subsidiary do not, together with all other assets of the Company and
its Restricted Subsidiaries previously disposed of during the
immediately preceding 12 calendar month period (other than in the
ordinary course of business), exceed 10% of Consolidated Total
Assets, determined as of the end of the immediately preceding fiscal
year;
(ii) in the opinion of a Responsible Officer of the Company, the
sale is for fair value and is in the best interests of the Company;
(iii) immediately after the consummation of the transaction and
after giving effect thereto, such Restricted Subsidiary shall have
no Indebtedness of or continuing
-24-
Investment in the capital stock of the Company or of any Restricted
Subsidiary and any such Indebtedness or Investment shall have been
discharged or acquired, as the case may be, by the Company or a
Restricted Subsidiary; and
(iv) immediately after the consummation of the transaction and
after giving effect thereto, (A) no Default or Event of Default
would exist, and (B) the Company would be permitted by the
provisions of (S)(S)5.9(a)(3) and (4) to incur at least $1.00 of
additional Indebtedness;
provided, however, that for purposes of the foregoing calculation, there
-----------------
shall not be included any assets the proceeds of which were or are (y)
immediately after the consummation of such sale invested in Investments
of the character described in clauses (d), (e) and (f) of the definition
of "Restricted Investments" contained in (S)8.1, and (z) applied within
180 days of the date of sale of such assets to either (A) the
acquisition of fixed assets useful and intended to be used in the
operation of the business of the Company and its Restricted Subsidiaries
as described in (S)5.5 and having a fair market value (as determined in
good faith by the Board of Directors of the Company) at least equal to
that of the assets so disposed of or (B) the prepayment at any
applicable prepayment premium, on a pro rata basis, of Senior
--------
Indebtedness of the Company. It is understood and agreed by the Company
that: (A) any holder of the Notes may decline any such offer of
prepayment, (B) the failure of any such holder to accept or decline any
such offer of prepayment shall be deemed to be an election by such
holder to accept such prepayment, and (C) if such offer is so accepted,
the proceeds so offered towards the prepayment of the Notes and accepted
shall be prepaid as and to the extent provided in (S)2.1. In the event
any holder of Senior Indebtedness of the Company declines any such offer
of prepayment, the Company shall offer, on a pro rata basis, the
--------
proceeds so declined to the holders of Senior Indebtedness of the
Company accepting the offer of prepayment.
Computations pursuant to this (S)5.12(c) shall include dispositions
made pursuant to (S)5.12(b) and computations pursuant to (S)5.12(b) shall
include dispositions made pursuant to this (S)5.12(c).
-25-
Section 5.13. Guaranties. The Company will not, and will not permit any
------------------------
Restricted Subsidiary to, become or be liable in respect of any Guaranty except
Guaranties by the Company which are limited in amount to a stated maximum dollar
exposure or which constitute Guaranties of obligations incurred by any
Restricted Subsidiary in compliance with the provisions of this Agreement.
Section 5.14. Repurchase of Notes. Except as provided in (S)2.1 and
---------------------------------
(S)2.2, neither the Company nor any Subsidiary or Affiliate, directly or
indirectly, may repurchase or make any offer to repurchase any Notes.
Section 5.15. Transactions with Affiliates. The Company will not, and
------------------------------------------
will not permit any Restricted Subsidiary to, enter into or be a party to any
transaction or arrangement with any Affiliate (including, without limitation,
the purchase from, sale to or exchange of property with, or the rendering of any
service by or for, any Affiliate), except in the ordinary course of and pursuant
to the reasonable requirements of the Company's or such Restricted Subsidiary's
business and upon fair and reasonable terms no less favorable to the Company or
such Restricted Subsidiary than would obtain in a comparable arm's-length
transaction with a Person other than an Affiliate.
Section 5.16. Termination of Pension Plans. The Company will not and
------------------------------------------
will not permit any Subsidiary to withdraw from any Multiemployer Plan or permit
any employee benefit plan maintained by it to be terminated if such withdrawal
or termination could result in withdrawal liability (as described in Part 1 of
Subtitle E of Title IV of ERISA) or the imposition of a Lien on any property of
the Company or any Subsidiary pursuant to Section 4068 of ERISA.
Section 5.17. Reports and Rights of Inspection. The Company will keep,
----------------------------------------------
and will cause each Restricted Subsidiary to keep, proper books of record and
account in which full and correct entries will be made of all dealings or
transactions of, or in relation to, the business and affairs of the Company or
such Restricted Subsidiary, in accordance with GAAP consistently applied (except
for changes disclosed in the financial statements furnished to you pursuant to
this (S)5.17 and concurred in by the independent public accountants referred to
in (S)5.17(b)), and will furnish to you so long as you are the holder of any
Note and to each other Institutional Holder of the
-26-
then outstanding Notes (in duplicate if so specified below or otherwise
requested):
(a) Quarterly Statements. As soon as available and in any event
--------------------
within 45 days after the end of each quarterly fiscal period (including
the last) of each fiscal year, copies of:
(1) a consolidated balance sheet of the Company and its
Restricted Subsidiaries as of the close of such quarterly fiscal
period, setting forth in comparative form the consolidated figures
for the fiscal year then most recently ended,
(2) consolidated statements of income of the Company and its
Restricted Subsidiaries for such quarterly fiscal period and for the
portion of the fiscal year ending with such quarterly fiscal period,
in each case setting forth in comparative form the consolidated
figures for the corresponding periods of the preceding fiscal year,
and
(3) consolidated statements of income, shareholder's equity and
cash flows of the Company and its Restricted Subsidiaries for the
portion of the fiscal year ending with such quarterly fiscal period,
setting forth in comparative form the consolidated figures for the
corresponding period of the preceding fiscal year,
all in reasonable detail and certified as complete and correct by an
authorized financial officer of the Company;
(b) Annual Statements. As soon as available and in any event within
-----------------
150 days after the close of each fiscal year of the Company, copies of:
(1) a consolidated balance sheet of the Company and its
Restricted Subsidiaries as of the close of such fiscal year, and
-27-
(2) consolidated statements of income, shareholder's equity and
cash flows of the Company and its Restricted Subsidiaries for such
fiscal year,
in each case setting forth in comparative form the consolidated figures for
the preceding fiscal year, all in reasonable detail and accompanied by a report
thereon of a firm of independent public accountants of recognized national
standing selected by the Company to the effect that the consolidated financial
statements present fairly, in all material respects, the consolidated financial
position of the Company and its Restricted Subsidiaries as of the end of the
fiscal year being reported on and the consolidated results of the operations
and cash flows for said year in conformity with GAAP and that the examination
of such accountants in connection with such financial statements has been
conducted in accordance with generally accepted auditing standards and included
such tests of the accounting records and such other auditing procedures as said
accountants deemed necessary in the circumstances;
(c) Auditor's Reports. Promptly upon receipt thereof, one copy of each
-----------------
interim or special audit made by independent accountants of the books of the
Company or any Restricted Subsidiary and any management letter received from
such accountants;
(d) SEC and Other Reports. Promptly upon their becoming available and in
---------------------
any event within 15 days following the date of filing thereof, one copy of each
financial statement, report, notice or proxy statement sent by the Company to
its creditors and stockholders generally and of each regular or periodic report,
and any registration statement or prospectus filed by the Company or any
Subsidiary with any securities exchange or the Securities and Exchange
Commission or any successor agency, and copies of any orders in any proceedings
to which the Company or any of its Subsidiaries is a party, issued by any
governmental agency, Federal or state, having jurisdiction over the Company or
any of its Subsidiaries;
(e) ERISA Reports. Promptly upon the occurrence thereof, written notice
-------------
of (1) a Reportable Event with respect to any Plan; (2) the institution of any
steps by the Company, any ERISA Affiliate,
-28-
the PBGC or any other Person to terminate any Plan; (3) the institution of any
steps by the Company or any ERISA Affiliate to withdraw from any Plan; (4) a
non-exempt "prohibited transaction" within the meaning of Section 406 of ERISA
in connection with any Plan; (5) any material increase in the contingent
liability of the Company or any Restricted Subsidiary with respect to any post-
retirement welfare liability; or (6) the taking of any action by, or the
threatening of the taking of any action by, the Internal Revenue Service, the
Department of Labor or the PBGC with respect to any of the foregoing;
(f) Officer's Certificates. Within the periods provided in paragraphs
----------------------
(a) and (b) above, a certificate of the chief financial officer of the Company
stating that such officer has reviewed the provisions of this Agreement and
setting forth: (1) the information and computations (in sufficient detail)
required in order to establish whether the Company was in compliance with the
requirements of (S)(S)5.6 through 5.12 at the end of the period covered by the
financial statements then being furnished, and (2) whether there existed as of
the date of such financial statements and whether, to the best of such officer's
knowledge, there exists on the date of the certificate or existed at any time
during the period covered by such financial statements any Default or Event of
Default and, if any such condition or event exists on the date of the
certificate, specifying the nature and period of existence thereof and the
action the Company is taking and proposes to take with respect thereto;
(g) Accountant's Certificates. Within the period provided in paragraph
-------------------------
(b) above, a certificate of the accountants who render an opinion with respect
to such financial statements, stating that they have reviewed this Agreement and
stating further whether, in making their audit, such accountants have become
aware of any Default or Event of Default under any of the terms or provisions of
this Agreement insofar as any such terms or provisions pertain to or involve
accounting matters or determinations, and if any such condition or event then
exists, specifying the nature and period of existence thereof; and
(h) Requested Information. With reasonable promptness, such other data
---------------------
and information (other than information on a "by-
---
-29-
store" basis) as you or any such Institutional Holder may reasonably
-----
request.
Without limiting the foregoing, the Company will permit you, so long as you
are the holder of any Note, and each Institutional Holder of the then
outstanding Notes (or such Persons as either you or such Institutional Holder
may designate), to visit and inspect, under the Company's guidance, any of the
properties of the Company or any Restricted Subsidiary, to examine all of their
books of account, records, reports and other papers, to make copies and
extracts therefrom and to discuss their respective affairs, finances and
accounts with their respective officers, employees, and independent public
accountants (and by this provision the Company authorizes said accountants to
discuss with you the finances and affairs of the Company and its Restricted
Subsidiaries), all at such reasonable times and as often as may be reasonably
requested. Any visitation shall be at the sole expense of you or such
Institutional Holder, unless a Default or Event of Default shall have occurred
and be continuing or the holder of any Note or of any other evidence of
Indebtedness of the Company or any Restricted Subsidiary gives any written
notice or takes any other action with respect to a claimed default, in which
case, any such visitation or inspection shall be at the sole expense of the
Company.
Section 5.18. Notes to Rank Pari Passu. The Company will keep and
--------------------------------------
maintain the obligation of the Company with respect to the Notes and all other
monetary obligations outstanding at any one time owing to the holders of the
Notes under this Agreement as direct obligations of the Company ranking pari
passu as against assets of the Company with all of the present and future
secured Senior Indebtedness of the Company.
Section 5.19. Completion of Lien Perfection. Not later than August 31,
-------------------------------------------
1995, the Company shall have caused to be completed and recorded or filed for
record in such public office as may be deemed necessary or appropriate by the
holders of the Notes or their special counsel the Security Document and/or
financing statements or similar notices thereof if and to the extent permitted
or required by applicable law in order to complete perfection of the Lien and
security interests granted or conveyed by the Security Document. Without
limiting the foregoing, the Company shall also, not later than October 15, 1995,
have caused to be delivered to the holders of the Notes
-30-
and their special counsel an opinion of counsel to the Company to the effect
that the Security Document (or financing statements or similar notices thereof
to the extent permitted or required by applicable law) has been filed for record
or recorded in all public offices wherein such filing or recordation is
necessary to perfect the security interest granted by the Security Document in
the collateral therein described as against creditors of and purchasers from the
Company and its Subsidiaries and the Security Document creates a valid and
perfected security interest in such collateral effective as against creditors of
and purchasers from the Company and its Subsidiaries, subject only to
encumbrances expressly permitted by the terms of the Security Document.
SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.
Section 6.1. Events of Default. Any one or more of the following shall
------------------------------
constitute an "Event of Default" as such term is used herein:
----------------
(a) Default shall occur in the payment of interest on any Note when
the same shall have become due and such default shall continue for more
than five Business Days; or
(b) Default shall occur in the making of any other payment of the
principal of any Note or premium, if any, thereon at the expressed or
any accelerated maturity date or at any date fixed for prepayment; or
(c) Default shall occur in the observance or performance of any
covenant or agreement contained in (S)5.5 through (S)5.12 or (S)5.15; or
(d) Default shall occur in the observance or performance of any
other provision of this Agreement which is not remedied within 30 days
after the earlier of (1) the day on which a Responsible Officer of the
Company first obtains knowledge of such default, or (2) the day on which
written notice thereof is given to the Company by the holder of any
Note; or
(e) Default shall be made in the payment when due (whether by lapse
of time, by declaration, by call for redemption or otherwise) of the
principal of or interest on any Indebtedness for borrowed money
-31-
(other than the Notes) of the Company or any Restricted Subsidiary
aggregating in excess of $5,000,000 and such default shall continue
beyond the period of grace, if any, allowed with respect thereto; or
(f) Default or the happening of any event shall occur under any
indenture, agreement or other instrument under which any Indebtedness
for borrowed money (other than the Notes) of the Company or any
Restricted Subsidiary aggregating in excess of $5,000,000 may be issued
and such default or event shall continue for a period of time sufficient
to permit the acceleration of the maturity of any Indebtedness for
borrowed money of the Company or any Restricted Subsidiary outstanding
thereunder; or
(g) Any representation or warranty made by the Company herein, or
made by the Company in any statement or certificate furnished by the
Company in connection with the consummation of the issuance and delivery
of the Notes or furnished by the Company pursuant hereto, is untrue in
any material respect as of the date of the issuance or making thereof;
or
(h) Final judgment or judgments for the payment of money aggregating
in excess of $1,000,000 is or are outstanding against the Company or any
Restricted Subsidiary or against any property or assets of either and
any one of such judgments has remained unpaid, unvacated, unbonded or
unstayed by appeal or otherwise for a period of 45 days from the date of
its entry; or
(i) An event of default (as such term is defined in the Security
Document) or event which with the lapse of time or the giving of notice,
or both, would constitute an event of default (as such term is defined
in the Security Document) under the Security Document; or
(j) The Security Document shall cease to be in full force and effect
for any reason whatsoever, including, without limitation, a
determination of any governmental body or court that the Security
Document is invalid, void or unenforceable or the first and prior
perfected security interests created pursuant thereto is not legal,
valid and binding or the Company shall contest or deny in writing the
-32-
validity or enforceability of any of its obligations under the Security
Document; or
(k) A custodian, liquidator, trustee or receiver is appointed for
the Company or any Restricted Subsidiary or for the major part of the
property of either and is not discharged within 60 days after such
appointment; or
(l) The Company or any Restricted Subsidiary becomes insolvent or
bankrupt, is generally not paying its debts as they become due or makes
an assignment for the benefit of creditors, or the Company or any
Restricted Subsidiary applies for or consents to the appointment of a
custodian, liquidator, trustee or receiver for the Company or such
Restricted Subsidiary or for the major part of the property of either;
or
(m) Bankruptcy, reorganization, arrangement or insolvency
proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or
against the Company or any Restricted Subsidiary and, if instituted
against the Company or any Restricted Subsidiary, are consented to or
are not dismissed within 60 days after such institution.
Section 6.2. Notice to Holders and Collateral Agent. When any Event of
---------------------------------------------------
Default described in the foregoing (S)6.1 has occurred, or if the holder of any
Note or of any other evidence of Indebtedness for borrowed money of the Company
gives any notice or a Responsible Officer of the Company becomes aware that any
such holder has taken any other action with respect to a claimed default, the
Company agrees to give notice within three Business Days of such event to all
holders of the Notes then outstanding and to the Collateral Agent.
Section 6.3. Acceleration of Maturities. When any Event of Default
---------------------------------------
described in paragraph (a) or (b) of (S)6.1 has happened and is continuing, any
holder of any Note may, by notice in writing sent to the Company in the manner
provided in (S)9.6, declare the entire principal and all interest accrued on
such Note to be, and such Note shall thereupon become forthwith due and payable,
without any presentment, demand, protest or other notice of any
-33-
kind, all of which are hereby expressly waived. When any Event of Default
described in paragraphs (a) through (j), inclusive, of said (S)6.1 has happened
and is continuing, the holder or holders of 25% or more of the principal amount
of the Notes at the time outstanding may, by notice in writing to the Company in
the manner provided in (S)9.6, declare the entire principal and all interest
accrued on all Notes to be, and all Notes shall thereupon become, forthwith due
and payable, without any presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived. When any Event of Default
described in paragraph (k), (l) or (m) of (S)6.1 has occurred, then all
outstanding Notes shall immediately become due and payable without presentment,
demand or notice of any kind. Upon the Notes becoming due and payable as a
result of any Event of Default as aforesaid, the Company will forthwith pay to
the holders of the Notes the entire principal and interest accrued on the Notes
and, to the extent not prohibited by applicable law, an amount as liquidated
damages for the loss of the bargain evidenced hereby (and not as a penalty)
equal to the Make-Whole Amount, determined as of the date on which the Notes
shall so become due and payable. No course of dealing on the part of the holder
or holders of any Notes nor any delay or failure on the part of any holder of
Notes to exercise any right shall operate as a waiver of such right or otherwise
prejudice such holder's rights, powers and remedies. The Company further agrees,
to the extent permitted by law, to pay to the holder or holders of the Notes all
costs and expenses incurred by them in the collection of any Notes upon any
default hereunder or thereon, including reasonable compensation to such holder's
or holders' attorneys for all services rendered in connection therewith.
Section 6.4. Rescission of Acceleration. The provisions of (S)6.3 are
---------------------------------------
subject to the condition that if the principal of and accrued interest on all or
any outstanding Notes have been declared immediately due and payable by reason
of the occurrence of any Event of Default described in paragraphs (a) through
(j), inclusive, of (S)6.1, the holders of 76% in aggregate principal amount of
the Notes then outstanding may, by written instrument filed with the Company,
rescind and annul such declaration and the consequences thereof, provided that
--------
at the time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or this Agreement;
-34-
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal,
interest or premium on the Notes which has become due and payable solely
by reason of such declaration under (S)6.3) shall have been duly paid;
and
(c) each and every other Default and Event of Default shall have
been made good, cured or waived pursuant to (S)7.1;
and provided further, that no such rescission and annulment shall extend to
----------------
or affect any subsequent Default or Event of Default or impair any right
consequent thereto.
SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.
Section 7.1. Consent Required. Any term, covenant, agreement or
-----------------------------
condition of this Agreement may, with the consent of the Company, be amended or
compliance therewith may be waived (either generally or in a particular instance
and either retroactively or prospectively), if the Company shall have obtained
the consent in writing of the holders of at least 51% in aggregate principal
amount of outstanding Notes; provided that without the written consent of the
--------
holders of all of the Notes then outstanding, no such amendment or waiver shall
be effective (a) which will change the time of payment of the principal of or
the interest on any Note or change the principal amount thereof or change the
rate of interest thereon, or (b) which will change any of the provisions with
respect to optional prepayments, or (c) which will change the percentage of
holders of the Notes required to consent to any such amendment or waiver of any
of the provisions of this (S)7 or (S)6.
Section 7.2. Solicitation of Holders. So long as there are any Notes
------------------------------------
outstanding, the Company will not solicit, request or negotiate for or with
respect to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each holder of Notes (irrespective of the amount
of Notes then owned by it) shall be informed thereof by the Company and shall be
afforded the opportunity of considering the same and shall be supplied by the
Company with sufficient information to enable it to make an informed decision
with respect thereto. The Company will not, directly or indirectly, pay or cause
to be paid any remuneration, whether by
-35-
way of supplemental or additional interest, fee or otherwise, to any holder of
Notes as consideration for or as an inducement to entering into by any holder of
Notes of any proposed or actual waiver or amendment of any of the terms and
provisions of this Agreement or the Notes or as compensation for internal fees
charged, incurred or allocated by such holder, or otherwise, unless such
remuneration is concurrently offered, on the same terms, ratably to the holders
of all Notes then outstanding. Promptly and in any event within 30 days of the
date of execution and delivery of any such waiver or amendment, the Company
shall provide a true, correct and complete copy thereof to each of the holders
of the Notes.
Section 7.3. Effect of Amendment or Waiver. Any such amendment or waiver
------------------------------------------
shall apply equally to all of the holders of the Notes and shall be binding upon
them, upon each future holder of any Note and upon the Company, whether or not
such Note shall have been marked to indicate such amendment or waiver. No such
amendment or waiver shall extend to or affect any obligation not expressly
amended or waived or impair any right consequent thereon.
SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.
Section 8.1. Definitions. Unless the context otherwise requires, the
------------------------
terms hereinafter set forth when used herein shall have the following meanings
and the following definitions shall be equally applicable to both the singular
and plural forms of any of the terms herein defined:
"Acquiring Person" shall mean a "person" or "group of persons" within
---------------- ------ ----------------
the meaning of Section 13(d) and 14(d) of the Securities and Exchange Act of
1934, as amended; provided that notwithstanding the foregoing, "Acquiring
-------- ---------
Person" shall not be deemed to include any member of the Xxxxxxx Control Group,
------
unless such member has, directly or indirectly, disposed of, sold or otherwise
transferred to, or encumbered or restricted (whether by means of voting trust
agreement or otherwise) for the benefit of, an Acquiring Person, all or any
portion of the voting power of the Voting Stock of the Company directly or
indirectly owned or controlled by such member or such member directly or
indirectly acquiesces in, consents to or votes all or any portion of the voting
power of the Voting Stock of the Company directly or indirectly owned or
controlled by such member for the
-36-
taking of any action which, directly or indirectly, constitutes or would result
in a Change of Control, in which event such member of the Xxxxxxx Control Group
shall be deemed to constitute an Acquiring Person to the extent of the voting
power of the Voting Stock of the Company owned or controlled by such member.
"Adjusted Consolidated Tangible Net Worth" shall mean the sum of (a)
----------------------------------------
Consolidated Tangible Net Worth plus (b) Subordinated Indebtedness of the
----
Company.
"Adjusted State Income Tax Rate" shall have the meaning set forth in
------------------------------
(S)5.11(b).
"Affiliate" shall mean any Person (other than a Restricted Subsidiary),
---------
(a) which directly or indirectly through one or more intermediaries controls, or
is controlled by, or is under common control with, the Company, (b) which
beneficially owns or holds 5% or more of any class of the Voting Stock of the
Company or (c) 5% or more of the Voting Stock (or in the case of a Person which
is not a corporation, 5% or more of the equity interest) of which is
beneficially owned or held by the Company or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Agreements" shall have the meaning set forth in (S)1.3.
----------
"Bank Agreement" shall mean that certain First Amended and Restated
--------------
Credit Agreement between the Company and Bank of America National Trust and
Savings Bank dated as of August 11, 1995.
"Base Year" shall mean 1995.
---------
"Book Value of Consolidated Total Assets" shall mean Consolidated Total
---------------------------------------
Assets less interest bearing notes receivable from Affiliates to the Company or
any of its Restricted Subsidiaries.
-37-
"Business Day" shall mean any day other than a Saturday, Sunday or other
------------
day on which banks in Los Angeles, California or New York City, New York are
required by law to close or are customarily closed.
"Capitalized Lease" shall mean any lease the obligation for Rentals with
-----------------
respect to which is required to be capitalized on a consolidated balance sheet
of the lessee and its subsidiaries in accordance with GAAP.
"Capitalized Rentals" of any Person shall mean as of the date of any
-------------------
determination thereof the amount at which the aggregate Rentals due and to
become due under all Capitalized Leases under which such Person is a lessee
would be reflected as a liability on a consolidated balance sheet of such
Person.
"Change of Control" shall mean the earliest to occur of (a) the date of
-----------------
a merger between the Company and an Acquiring Person, or the date of a
consolidation of the Company with an Acquiring Person or the date of an
acquisition of an Acquiring Person by the Company or the acquisition of the
Company by an Acquiring Person (whether such acquisition is pursuant to the
purchase of all or substantially all of the assets of such Acquiring Person or
the purchase of stock of such Acquiring Person or any other transaction
involving the sale or other disposition of assets or stock), if immediately
after any such event, the Xxxxxxx Control Group would own or control less than
51% of the voting power of the outstanding Voting Stock of the Company or of the
surviving, resulting or continuing corporation if the Company shall not be the
surviving entity; (b) the date of execution of a binding agreement by an
Acquiring Person for the purchase, directly or indirectly, in one or more
related transactions, of voting power of the outstanding Voting Stock of the
Company, such that after giving effect thereto, the Xxxxxxx Control Group would
legally or beneficially own or control less than 51% of the voting power of the
outstanding Voting Stock of the Company, (c) the date of commencement of a
tender offer or exchange offer that would result in an Acquiring Person legally
or beneficially owning or controlling the voting power of the outstanding Voting
Stock of the Company, such that after giving effect thereto, the Xxxxxxx Control
Group would legally or beneficially own or control less than 51% of the voting
power of the outstanding Voting Stock of the Company, (d) the date of a public
announcement that an Acquiring Person has acquired or has obtained the right to
acquire legal or beneficial
-38-
ownership of more than 50% of the voting power of the outstanding Voting Stock
of the Company, and (e) the date the Voting Stock of the Company is the subject
of a Public Offering and immediately after such event, the Xxxxxxx Control Group
legally or beneficially owns or controls less than 51% of the voting power of
the outstanding Voting Stock of the Company.
"Change of Control Delayed Prepayment Date" shall have the meaning set
-----------------------------------------
forth in (S)2.2(b).
"Change of Control Prepayment Date" shall have the meaning set forth in
---------------------------------
(S)2.2(a).
"Closing Date" shall have the meaning set forth in (S)1.2.
------------
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
----
regulations from time to time promulgated thereunder.
"Xxxxxxx Control Group" shall mean, collectively: (a) Xxxxxxx X.
---------------------
Xxxxxxx, (b) the lineal descendants of Xxxxxxx X. Xxxxxxx, (c) the estate of one
or more of the Persons named in clause (a) or (b) above, and (d) each trust in
respect of which one or more of the Persons described in clauses (a), (b) or (c)
above (1) are the principal beneficiaries and (2) constitute majority of the
trustees with voting power over such trust.
"Xxxxxxx School of Performing Arts Notes" shall mean, collectively (a)
---------------------------------------
that certain Subordinated Promissory Note of the Company dated December 28,
1993, due December 31, 2013, payable to Xxxxxxx X. Xxxxxxx, in the principal
amount of $10,000,000 with respect to which all right, title and interest has
been assigned by Xxxxxxx X. Xxxxxxx to The Xxxxxxx School of Performing Arts and
(b) that certain Subordinated Promissory Note of the Company dated December 30,
1993, due December 31, 2014, payable to Xxxxxxx X. Xxxxxxx, in the principal
amount of $10,000,000 with respect to which all right, title and interest has
been assigned by Xxxxxxx X. Xxxxxxx to The Xxxxxxx School of Performing Arts, in
each case, as in effect on the Closing Date, together with those certain
Subordination Provisions Applicable to Subordinated Indebtedness executed by The
Xxxxxxx School on August 17, 1995 pursuant to which the obligations of the
Company under
-39-
such Subordinated Promissory Notes have been subordinated to the Company's
obligations under the Notes.
"Collateral" shall mean all collateral under the Security Document.
----------
"Collateral Agent" shall mean Bank of America National Trust and Savings
----------------
Association.
"Company" shall mean U.S. Rentals, Inc., a California corporation, and
-------
any Person who succeeds to all, or substantially all, of the assets and business
of U.S. Rentals, Inc.
"Company Notice" shall have the meaning set forth in (S)2.2.
--------------
"Competitor" shall mean any Person which is primarily engaged in the
----------
manufacture, distribution, rental or leasing of construction equipment and
"Competitor Affiliate" shall mean with respect to any Competitor (a) any other
--------------------
Person at the time directly or indirectly controlling, controlled by or under
direct or indirect common control with such Competitor, (b) any other Person of
which such Competitor at the time owns 25% or more on a consolidated basis of
the equity interest of such Person, and (c) any other Person which at the time
owns 25% or more of any class of the capital stock of such Competitor, provided
--------
that:
(a) the provision of investment advisory services by a Person to a
Plan which is owned or controlled by a Person which would otherwise be a
Competitor or Competitor Affiliate shall not of itself cause the Person
providing such services to be deemed to be a Competitor or Competitor
Affiliate;
(b) in no event shall an Institutional Holder be deemed a Competitor
or Competitor Affiliate unless such Institutional Holder controls, or is
controlled by, or is under common control with, a Person which is
primarily engaged in the manufacture, distribution, rental or leasing of
construction equipment; and
(c) an Institutional Holder which would otherwise be deemed a
Competitor or Competitor Affiliate pursuant to the foregoing
-40-
provisions of this definition by virtue of its ownership or control as a
portfolio investment of the equity Securities of any Person primarily
engaged in the manufacture, distribution, rental or leasing of
construction equipment shall not be deemed a Competitor or Competitor
Affiliate if such Institutional Holder has established "firewall" like-
--------
procedures which will prevent confidential information supplied to such
Institutional Holder by the Company from being transmitted or otherwise
made available to such Person.
"Consolidated Fixed Charges" for any period shall mean on a consolidated
--------------------------
basis the sum of (a) all Rentals (other than Rentals on Capitalized Leases)
payable during such period by the Company and its Restricted Subsidiaries
pursuant to Long-Term Leases, and (b) all Interest Expense on all Indebtedness
(including the interest component of Rentals on Capitalized Leases) of the
Company and its Restricted Subsidiaries payable during such period.
"Consolidated Net Income" for any period shall mean the gross revenues
-----------------------
of the Company and its Restricted Subsidiaries for such period less all expenses
----
and other proper charges (including taxes on income, whether payable by the
Company or its shareholders), determined on a consolidated basis after
eliminating earnings or losses attributable to outstanding Minority Interests,
but excluding in any event:
(a) any gains or losses on the sale or other disposition of
Investments or fixed or capital assets, and any taxes on such excluded
gains and any tax deductions or credits on account of any such excluded
losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Restricted Subsidiary accrued
prior to the date it became a Restricted Subsidiary;
(d) net earnings and losses of any corporation (other than a
Restricted Subsidiary), substantially all the assets of which have been
acquired in any manner by the Company or any Restricted Subsidiary,
realized by such corporation prior to the date of such acquisition;
-41-
(e) net earnings and losses of any corporation (other than a
Restricted Subsidiary) with which the Company or a Restricted Subsidiary
shall have consolidated or which shall have merged into or with the
Company or a Restricted Subsidiary prior to the date of such
consolidation or merger;
(f) net earnings of any business entity (other than a Restricted
Subsidiary) in which the Company or any Restricted Subsidiary has an
ownership interest unless such net earnings shall have actually been
received by the Company or such Restricted Subsidiary in the form of
cash distributions;
(g) any portion of the net earnings of any Restricted Subsidiary
which for any reason is unavailable for payment of dividends to the
Company or any other Restricted Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or write-up
of assets;
(i) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the
amount invested in such Subsidiary;
(j) any gain arising from the acquisition of any Securities of the
Company or any Restricted Subsidiary;
(k) any reversal of any contingency reserve, except to the extent
that provision for such contingency reserve shall have been made from
income arising during such period; and
(l) any other extraordinary gain or loss.
"Consolidated Net Income Available for Fixed Charges" for any period
---------------------------------------------------
shall mean the sum of (a) Consolidated Net Income during such period plus (to
----
the extent deducted in determining Consolidated Net Income), (b) all provisions
for any Federal, state or other income taxes made by the Company and its
Restricted Subsidiaries during such period and (c) Consolidated Fixed Charges
during such period.
-42-
"Consolidated Secured Indebtedness" shall mean all Indebtedness of the
---------------------------------
Company and its Restricted Subsidiaries which is secured by a mortgage, trust
deed, deed of trust, deed to secure debt, security agreement, pledge,
conditional sale or other title retention agreement or other like agreement
granting or conveying a Lien upon property, whether real, personal or mixed, of
the Company or any of its Restricted Subsidiaries.
"Consolidated Tangible Net Worth" shall mean as of the date of any
-------------------------------
determination thereof, the arithmetic sum of:
(a) the amount of the capital stock accounts (net of treasury stock,
at cost) plus (or minus in the case of deficit) the surplus and retained
---- -----
earnings of the Company and its Restricted Subsidiaries,
MINUS
-----
(b) the net book value, after deducting any reserves applicable
thereto, of all items of the following character which are included in
the assets of the Company and its Restricted Subsidiaries, to wit:
(1) the incremental increase in an asset resulting from any
reappraisal, revaluation or write-up of assets, provided that the
--------
incremental increase of any such reappraisal, revaluation or write-
up of assets need not be deducted in any computation of
"Consolidated Tangible Net Worth" if the Company's independent
-------------------------------
public accountants shall have concurred in such reappraisal,
revaluation or write-up;
(2) goodwill, patents, patent applications, permits, trademarks,
trade names, copyrights, licenses, franchises, experimental expense,
organizational expense, unamortized debt discount and expense, the
excess of cost of shares acquired over book value of related assets
and such other assets as are properly classified as "intangible
----------
assets" in accordance with GAAP, in any such case acquired after the
------
Closing Date; and
(3) Restricted Investments made following the Closing Date;
-43-
all determined in accordance with GAAP.
"Consolidated Total Assets" shall mean as of the date of any
-------------------------
determination thereof total assets of the Company and its Restricted
Subsidiaries determined on a consolidated basis in accordance with GAAP.
"CPI" shall mean the Consumer Price Index--U.S. City Average (1982-84 =
---
100) for All Items for All Urban Consumers as published by the Bureau of Labor
Statistics, provided that in the event the CPI shall hereafter be converted to a
--------
different standard reference base or otherwise revised, the determination of the
CPI Percentage Increase shall be made with the use of such conversion factor,
formula or table for converting the CPI as may be published by the Bureau of
Labor Statistics or, if said Bureau shall not publish the same, then with the
use of such conversion factor, formula or table as may be published by Xxxxxxxx
Xxxx, Inc. or failing such publication by any other nationally recognized
publisher of similar statistical information.
"CPI Percentage Increase" shall mean the amount obtained by multiplying
-----------------------
the percentage equal to the sum of the increases in the CPI from and including
the Base Year times the aggregate net book value of Investments within the
limitations of clause (c) of the definition of "Restricted Investments"
contained in this (S)8.1.
"Default" shall mean any event or condition the occurrence of which
-------
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"Designated Member of the European Community" shall mean any one of the
-------------------------------------------
following jurisdictions: Belgium, Denmark, France, Germany, Luxembourg, The
Netherlands, Switzerland and the United Kingdom.
"Environmental Law" shall mean any international, federal, state or
-----------------
local statute, law, regulation, order, consent decree, judgment, permit,
license, code, covenant, deed restriction, common law, treaty, convention,
ordinance or other requirement relating to public health, safety or the
environment, including, without limitation, those relating to releases,
discharges or emissions to air, water, land or groundwater, to the withdrawal or
use of groundwater, to the use and handling of polychlorinated biphenyls or
-44-
asbestos, to the disposal, treatment, storage or management of hazardous or
solid waste, or Hazardous Substances or crude oil, or any fraction thereof, or
to exposure to toxic or hazardous materials, to the handling, transportation,
discharge or release of gaseous or liquid Hazardous Substances and any
regulation, order, notice or demand issued pursuant to such law, statute or
ordinance, in each case applicable to the property of the Company and its
Subsidiaries or the operation, construction or modification of any thereof,
including without limitation, the following: the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, the Solid Waste Disposal as amended
by the Resource Conservation and Recovery Act of 1976 and the Hazardous and
Solid Waste Amendments of 1984, the Hazardous Materials Transportation Act, as
amended, the Federal Water Pollution Control Act, as amended by the Clean Water
Act of 1976, the Safe Drinking Water Control Act, the Clean Air Act of 1966, as
amended, the Toxic Substances Control Act of 1976, the Emergency Planning and
Community Right-to-Know Act of 1986, the National Environmental Policy Act of
1975, the Oil Pollution Act of 1990 and any similar or implementing state law,
and any state statute and any further amendments to these laws providing for
financial responsibility for cleanup or other actions with respect to the
release or threatened release of Hazardous Substances or crude oil, or any
fraction thereof, and all rules, regulations, guidance documents and
publications promulgated thereunder.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
-----
as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA shall be construed to also refer to any successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that is,
---------------
along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in section 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"Event of Default" shall have the meaning set forth in (S)6.1.
----------------
-45-
"GAAP" shall mean generally accepted accounting principles at the time.
----
"Guaranties" by any Person shall mean all obligations (other than
----------
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
---------------
without limitation, all obligations incurred through an agreement, contingent
or otherwise, by such Person: (a) to purchase such Indebtedness or obligation
or any property or assets constituting security therefor, (b) to advance or
supply funds (1) for the purchase or payment of such Indebtedness or
obligation, or (2) to maintain working capital or any balance sheet or income
statement condition or otherwise to advance or make available funds for the
purchase or payment of such Indebtedness or obligation, (c) to lease property
or to purchase Securities or other property or services primarily for the
purpose of assuring the owner of such Indebtedness or obligation of the ability
of the primary obligor to make payment of the Indebtedness or obligation, or
(d) otherwise to assure the owner of the Indebtedness or obligation of the
primary obligor against loss in respect thereof. For the purposes of all
computations made under this Agreement, a Guaranty in respect of any
Indebtedness for borrowed money shall be deemed to be Indebtedness equal to the
principal amount of such Indebtedness for borrowed money which has been
guaranteed, and a Guaranty in respect of any other obligation or liability or
any dividend shall be deemed to be Indebtedness equal to the maximum aggregate
amount of such obligation, liability or dividend.
"Hazardous Substance" shall mean any hazardous or toxic material,
-------------------
substance or waste, pollutant or contaminant which is regulated under any
statute, law, ordinance, rule or regulation of any local, state, regional or
federal authority having jurisdiction over the property of the Company and its
Subsidiaries or its use, including but not limited to any material, substance or
waste which is: (a) defined as a hazardous substance under Section 311 of the
Federal Water Pollution Control Act (33 U.S.C. (S)1317), as amended; (b)
regulated as a hazardous waste under Section 1004 or Section 3001 of the Federal
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act (42 U.S.C. (S)6901 et seq.), as amended; (c) defined as a
------
-46-
hazardous substance under Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. (S)9601 et seq.), as
------
amended; or (d) defined or regulated as a hazardous substance or hazardous waste
under any rules or regulations promulgated under any of the foregoing statutes.
"Indebtedness" of any Person shall mean and include all obligations of
------------
such Person which in accordance with GAAP shall be classified upon a balance
sheet of such Person as liabilities of such Person, and in any event shall
include all (a) obligations of such Person for borrowed money or which have been
incurred in connection with the acquisition of property or assets, (b)
obligations secured by any Lien upon property or assets owned by such Person,
even though such Person has not assumed or become liable for the payment of such
obligations, (c) obligations created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such
Person, notwithstanding the fact that the rights and remedies of the seller,
lender or lessor under such agreement in the event of default are limited to
repossession or sale of property, (d) Capitalized Rentals (e) Guaranties of
obligations of others of the character referred to in this definition, and (f)
obligations of such Person in respect of mandatorily redeemable Preferred Stock.
"Institutional Holder" shall mean any of the following Persons: (a) any
--------------------
bank, savings and loan association, savings institution, trust company or
national banking association, acting for its own account or in a fiduciary
capacity, (b) any charitable foundation, (c) any insurance company, (d) any
fraternal benefit society, (e) any pension, retirement or profit-sharing trust
or fund within the meaning of Title I of ERISA or for which any bank, trust
company, national banking association or investment adviser registered under
the Investment Advisers Act of 1940, as amended, is acting as trustee or agent,
(f) any investment company or business development company, as defined in the
Investment Company Act of 1940, as amended, (g) any small business investment
company licensed under the Small Business Investment Act of 1958, as amended,
(h) any broker or dealer registered under the Securities Exchange Act of 1934,
as amended, or any investment adviser registered under the Investment Advisers
Act of 1940, as amended, (i) any government, any public employees' pension or
retirement system, or any other government agency supervising the investment of
public funds, (j) any
-47-
other entity all of the equity owners of which are Institutional Holders or (k)
any other Person which may be within the definition of "qualified institutional
buyer" as such term is used in Rule 144A, as from time to time in effect,
promulgated under the Securities Act of 1933, as amended.
"Intercreditor Agreement" shall have the meaning set forth in (S)1.4.
-----------------------
"Interest Expense" of the Company and its Restricted Subsidiaries for
----------------
any period shall mean all interest and all amortization of debt discount and
expense on any particular Indebtedness (including, without limitation, payment-
in-kind, zero coupon and other like Securities) for which such calculations are
being made.
"Investments" shall mean all investments, in cash or by delivery of
-----------
property, made directly or indirectly in any property or assets or in any
Person, whether by acquisition of shares of capital stock, Indebtedness or
other obligations or Securities or by loan, advance, capital contribution or
otherwise.
"Lien" shall mean any interest in property securing an obligation owed
----
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
----
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting property. For the purposes of this
Agreement, the Company or a Subsidiary shall be deemed to be the owner of any
property which it has acquired or holds subject to a conditional sale agreement,
Capitalized Lease or other arrangement pursuant to which title to the property
has been retained by or vested in some other Person for security purposes and
such retention or vesting shall constitute a Lien.
"Long-Term Lease" shall mean any lease of real or personal property
---------------
(other than a Capitalized Lease) having an original term, including any period
-48-
for which the lease may be renewed or extended at the option of the lessor, of
more than one year.
"Make-Whole Amount" shall mean in connection with any prepayment or
-----------------
acceleration of the Notes the excess, if any, of (a) the aggregate present
value as of the date of such prepayment or payment of each dollar of principal
being prepaid or paid and the amount of interest (exclusive of interest accrued
to the date of prepayment or payment) that would have been payable in respect
of such dollar if such prepayment or payment had not been made, determined by
discounting such amounts at the Reinvestment Rate from the respective dates on
which they would have been payable, over (b) 100% of the principal amount of
the outstanding Notes being prepaid or paid. If the Reinvestment Rate (i) in
the case of the Series A Notes is equal to or higher than 6.82% per annum, (ii)
in the case of the Series B Notes is equal to or higher than 6.89% per annum,
(iii) in the case of the Series C Notes is equal to or higher than 7.04% per
annum or (iv) in the case of the Series D Notes is equal to or higher than
7.13% per annum, then the Make-Whole Amount shall be zero. For purposes of any
determination of the Make-Whole Amount:
"Reinvestment Rate" shall mean (1) the sum of 0.50%, plus the yield
----------------- ----
reported on page "USD" of the Bloomberg Financial Markets Services
Screen (or, if not available, any other nationally recognized trading
screen reporting on-line intraday trading in the United States
government Securities) at 11:00 A.M. (New York City, New York time) for
the United States government Securities having a maturity (rounded to
the nearest month) corresponding with the maturity date of the principal
of the Notes of the series being prepaid or paid or (2) in the event
that no nationally recognized trading screen reporting on-line intraday
trading in the United States government Securities is available,
Reinvestment Rate shall mean the sum of 0.50%, plus the arithmetic mean
----
of the yields for the two columns under the heading "Week Ending"
-----------
published in the Statistical Release under the caption "Treasury
--------
Constant Maturities" for the maturity (rounded to the nearest month)
-------------------
corresponding to the maturity date of the principal of the Notes of the
series being prepaid or paid. If no published maturity exactly
corresponds to the maturity date of the principal of the Notes of the
series being prepaid or paid, yields for the two published maturities
-49-
most closely corresponding to such Weighted Average Life to Maturity
shall be calculated pursuant to the immediately preceding sentence and
the Reinvestment Rate shall be interpolated or extrapolated from such
yields on a straight-line basis, rounding in each of such relevant
periods to the nearest month. For the purposes of calculating the
"Reinvestment Rate", the most recent Statistical Release published prior
-----------------
to the date of determination of the Make-Whole Amount shall be used.
"Statistical Release" shall mean the then most recently published
-------------------
statistical release designated "H.15(519)" or any successor publication
---------
which is published weekly by the Federal Reserve System and which
establishes yields on actively traded U.S. Government Securities
adjusted to constant maturities or, if such statistical release is not
published at the time of any determination hereunder, then such other
reasonably comparable index which shall be designated by the holders of
66-2/3% in aggregate principal amount of the outstanding Notes.
"Material" shall mean in relation to the business, operations, affairs,
--------
financial condition, assets, properties or prospects of the Company and its
Restricted Subsidiaries taken as a whole.
"Material Adverse Effect" shall mean a material adverse effect on (a)
-----------------------
the business, operations, affairs, financial condition, assets or properties of
the Company and its Restricted Subsidiaries taken as a whole, or (b) the ability
of the Company to perform its obligations under this Agreement, the Notes and
the Security Document, or (c) the validity or enforceability of this Agreement,
the Notes or the Security Document.
"Minority Interests" shall mean any shares of stock of any class of a
------------------
Restricted Subsidiary (other than directors' qualifying shares as required by
law) that are not owned by the Company and/or one or more of its Wholly-owned
Restricted Subsidiaries. Minority Interests shall be valued by valuing Minority
Interests constituting preferred stock at the voluntary or involuntary
liquidating value of such preferred stock, whichever is greater, and by valuing
Minority Interests constituting common stock at the book value of capital and
surplus applicable thereto adjusted, if necessary, to reflect any changes from
-50-
the book value of such common stock required by the foregoing method of valuing
Minority Interests in preferred stock.
"Multiemployer Plan" shall have the same meaning as in ERISA.
------------------
"Noteholder Notice" shall have the meaning set forth in (S)2.2(a).
-----------------
"Notes" shall have the meaning set forth in (S)1.1.
-----
"Overdue Rate" shall mean the lesser of (a) the maximum interest rate
------------
permitted by law and (b) 8.82% per annum in the case of the Series A Notes,
8.89% per annum in the case of the Series B Notes, 9.04% per annum in the case
of the Series C Notes and 9.13% per annum in the case of the Series D Notes.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
----
entity succeeding to any or all of its functions under ERISA.
"Person" shall mean an individual, partnership, limited liability
------
company, corporation, trust or unincorporated organization, and a government or
agency or political subdivision thereof.
"Plan" shall mean a "pension plan," as such term is defined in ERISA,
----
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Preferred Stock" shall mean in respect of any corporation, shares of
---------------
the capital stock of such corporation which are entitled to (a) preference or
priority over any other shares of the capital stock of such corporation in
respect of payment of dividends or (b) distribution of assets upon liquidation,
or both.
"Public Offering" shall mean any offer or sale of any of the Voting
---------------
Stock of the Company for which registration is required pursuant to Section 5 of
the Securities Act of 1933, as amended, or any successor provision thereto.
"Purchasers" shall have the meaning set forth in (S)1.1.
----------
-51-
"Rentals" shall mean and include as of the date of any determination
-------
thereof all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Company or a Restricted Subsidiary, as lessee or
sublessee under a lease of real or personal property, but shall be exclusive of
any amounts required to be paid by the Company or a Restricted Subsidiary
(whether or not designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes and similar charges. Fixed rents under
any so-called "percentage leases" shall be computed solely on the basis of the
-----------------
minimum rents, if any, required to be paid by the lessee regardless of sales
volume or gross revenues.
"Reportable Event" shall have the same meaning as defined in ERISA.
----------------
"Responsible Officer" shall mean the Chairman of the Board, the Chief
-------------------
Executive Officer or the Chief Financial Officer of the Company.
"Restricted Investments" shall mean all Investments, other than:
----------------------
(a) Investments by the Company and its Restricted Subsidiaries in
and to Restricted Subsidiaries, including any Investment in a
corporation which, after giving effect to such Investment, will become a
Restricted Subsidiary;
(b) Investments in property or assets to be used in the ordinary
course of the business of the Company and its Restricted Subsidiaries as
described in (S)5.5 of this Agreement;
(c) Investments of the Company existing as of the Closing Date and
described on Schedule II hereto, including, without limitation, notes
receivable from Affiliates existing on the Closing Date, plus, with
----
respect to notes receivable from Affiliates only, the CPI Percentage
Increase;
(d) Investments in commercial paper of corporations organized under
the laws of the United States or any state thereof maturing in 270 days
or less from the date of issuance which, at the
-52-
time of acquisition by the Company or any Restricted Subsidiary, is
accorded a rating of "A-2" or better by Standard & Poor's Ratings Group
---
or "P-2" by Xxxxx'x Investors Service, Inc.;
---
(e) Investments in direct obligations of the United States of
America or any agency or instrumentality of the United States of
America, the payment or guarantee in full of which constitutes a full
faith and credit obligation of the United States of America, in either
case, maturing within three years from the date of acquisition thereof;
(f) Investments in certificates of deposit and banker's acceptances
maturing within one year from the date of issuance thereof, either (1)
issued by a bank or trust company organized under the laws of the United
States or any State thereof, having capital, surplus and undivided
profits aggregating at least $100,000,000, provided that at the time of
--------
acquisition thereof by the Company or a Restricted Subsidiary, the
senior unsecured long-term debt of such bank or trust company or of the
holding company of such bank or trust company is rated "AA" or better by
Standard & Poor's Ratings Group or "Aa" or better by Xxxxx'x Investors
Service, Inc. or (2) issued by any bank or trust company organized under
the laws of the United States or any state thereof to the extent that
such Investments are fully insured by the Federal Depository Insurance
Corporation;
(g) Investments in repurchase agreements maturing in 90 days or less
from the date of issuance with respect to any Security described in
clause (e) of this definition entered into with a depository institution
or trust company acting as principal described in clause (f)(1) of this
definition if such repurchase agreements are by their terms to be
performed by the repurchase obligor and such repurchase agreements are
deposited with a bank or trust company of the type described in clause
(f)(1) of this definition;
(h) Investments in any money market fund which is classified as a
current asset in accordance with GAAP, the aggregate asset value of
which "marked to market" is at least $500,000,000 and which is managed
----------------
by a fund manager of recognized national standing, and
-53-
which invests substantially all of its assets in obligations described
in clauses (d) through (f) above; and
(i) Investments in readily-marketable obligations of indebtedness of
any State of the United States or any municipality organized under the
laws of any State of the United States or any political subdivision
thereof which, at the time of acquisition by the Company or any
Subsidiary, are accorded either of the two highest ratings by Standard &
Poor's Ratings Group or Xxxxx'x Investors Service, Inc. or another
nationally recognized credit rating agency of similar standard, which in
any such case mature no later than three years after the date of
acquisition thereof;
In valuing any Investments for the purpose of applying the applicable
limitations contained in this Agreement, such Investments shall be taken at the
original cost thereof, without allowance for any subsequent write-offs or
appreciation or depreciation therein, but less any amount repaid or recovered
in cash on account of capital or principal.
"Restricted Subsidiary" shall mean any Subsidiary (a) which is organized
---------------------
under the laws of the United States or any State thereof, Canada or any
Province thereof, any Designated Member of the European Community or Mexico;
(b) which conducts substantially all of its business and has substantially all
of its assets within the United States, Canada, any Member of the European
Community or Mexico; (c) of which more than 80% (by number of votes) of the
Voting Stock is beneficially owned, directly or indirectly, by the Company; and
(d) is designated as a Restricted Subsidiary on Schedule II attached hereto or
is designated as such in writing by the Company to each of the holders of the
Notes, provided, however, that no Unrestricted Subsidiary may be designated as
-----------------
a Restricted Subsidiary and no Restricted Subsidiary may be designated as an
Unrestricted Subsidiary if, at the time of such action and after giving effect
thereto: (i) the Company would not be permitted by the provisions of
(S)5.9(a)(3) or (4) to incur at least $1.00 of additional Indebtedness, or (ii)
a Default or Event of Default would exist, and provided, further, that no
-----------------
Unrestricted Subsidiary shall at any time after the Closing Date be designated a
Restricted Subsidiary if such Unrestricted Subsidiary shall have twice been
previously designated a Restricted Subsidiary, and no Restricted Subsidiary
shall at any time after the Closing
-54-
Date be designated as an Unrestricted Subsidiary if such Restricted Subsidiary
shall have twice been previously designated as an Unrestricted Subsidiary.
"Security" shall have the same meaning as in Section 2(1) of the
--------
Securities Act of 1933, as amended.
"Security Document" shall have the meaning set forth in (S)1.4.
-----------------
"Senior Indebtedness" shall mean all Indebtedness of the Company, other
-------------------
than Subordinated Indebtedness of the Company.
"Series A Notes" shall have the meaning set forth in (S)1.1.
--------------
"Series B Notes" shall have the meaning set forth in (S)1.1.
--------------
"Series C Notes" shall have the meaning set forth in (S)1.1.
--------------
"Series D Notes" shall have the meaning set forth in (S)1.1.
--------------
"Subordinated Indebtedness" shall mean (a) the Xxxxxxx School of
-------------------------
Performing Arts Notes and (b) all other Indebtedness of the Company which (i)
has, when issued, a weighted average life to maturity greater than the remaining
weighted average life to maturity of the Notes, (ii) provides by its terms that
payments or repayments may only be made pursuant to and within the limitations
of the terms of (S)5.11 of this Agreement, and (iii) is at all times evidenced
by a written instrument or instruments containing subordination provisions
substantially in the form set forth in Exhibit E attached hereto providing for
the subordination thereof to other Indebtedness of the Company, including,
without limitation, the Notes, or such other provisions as may be approved in
writing by the holders of at least 66-2/3% of the outstanding principal amount
of the Notes.
The term "subsidiary" shall mean as to any particular parent corporation
----------
any corporation of which more than 50% (by number of votes) of the Voting Stock
shall be beneficially owned, directly or indirectly, by such parent corporation.
The term "Subsidiary" shall mean a subsidiary of the Company.
----------
-55-
"Tax Dividend" shall have the meaning set forth in (S)5.11(b).
------------
"Tax Year" shall have the meaning set forth in (S)5.11(b).
--------
"Taxable Income" shall have the meaning set forth in (S)5.11(b).
--------------
"Unrestricted Subsidiary" shall mean any Subsidiary which is not
-----------------------
designated as a Restricted Subsidiary in Schedule II attached hereto or in
accordance with the definition of "Restricted Subsidiary".
---------------------
"Voting Stock" shall mean Securities of any class or classes, the
------------
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"Wholly-owned" when used in connection with any Subsidiary shall mean a
------------
Subsidiary of which all of the issued and outstanding shares of stock (except
shares required as directors' qualifying shares) and all Indebtedness for
borrowed money shall be owned by the Company and/or one or more of its
Wholly-owned Subsidiaries.
Section 8.2. Accounting Principles. Where the character or amount of any
----------------------------------
asset or liability or item of income or expense is required to be determined or
any consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with GAAP, to
the extent applicable, except where such principles are inconsistent with the
requirements of this Agreement.
Section 8.3. Directly or Indirectly. Where any provision in this
-----------------------------------
Agreement refers to action to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.
SECTION 9. MISCELLANEOUS.
Section 9.1. Registered Notes. The Company shall cause to be kept at its
-----------------------------
principal office a register for the registration and transfer of the Notes, and
the Company will register or transfer or cause to be registered or
-56-
transferred, as hereinafter provided, any Note issued pursuant to this
Agreement.
At any time and from time to time the holder of any Note which has been
duly registered as hereinabove provided may transfer such Note upon surrender
thereof at the principal office of the Company duly endorsed or accompanied by a
written instrument of transfer duly executed by the holder of such Note or its
attorney duly authorized in writing.
The Person in whose name any Note shall be registered shall be deemed
and treated as the owner and holder thereof for all purposes of this Agreement.
Payment of or on account of the principal, premium, if any, and interest on any
Note shall be made to or upon the written order of such holder.
Section 9.2. Exchange of Notes. At any time and from time to time, upon
------------------------------
surrender of such Note at its office, the Company will deliver in exchange
therefor, without expense to such holder, except as set forth below, a Note for
the same aggregate principal amount as the then unpaid principal amount of the
Note so surrendered, or Notes in the denomination of $1,000,000 (or such lesser
amount as shall constitute 100% of the Notes of such holder) or any amount in
excess thereof as such holder shall specify, dated as of the date to which
interest has been paid on the Note so surrendered or, if such surrender is prior
to the payment of any interest thereon, then dated as of the date of issue,
registered in the name of such Person or Persons as may be designated by such
holder, and otherwise of the same form and tenor as the Notes so surrendered for
exchange. The Company may require the payment of a sum sufficient to cover any
stamp tax or governmental charge imposed upon such exchange or transfer.
Section 9.3. Loss, Theft, Etc. of Notes. Upon receipt of evidence
---------------------------------------
satisfactory to the Company of the loss, theft, mutilation or destruction of any
Note, and in the case of any such loss, theft or destruction upon delivery of a
bond of indemnity in such form and amount as shall be reasonably satisfactory to
the Company, or in the event of such mutilation upon surrender and cancellation
of the Note, the Company will make and deliver without expense to the holder
thereof, a new Note, of like tenor, in lieu of such lost, stolen, destroyed or
mutilated Note. If the Purchaser or any
-57-
subsequent Institutional Holder is the owner of any such lost, stolen or
destroyed Note, then the affidavit of an authorized officer of such owner,
setting forth the fact of loss, theft or destruction and of its ownership of
such Note at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Note other than the written
agreement of such owner to indemnify the Company.
Section 9.4. Expenses, Stamp Tax Indemnity. Whether or not the
------------------------------------------
transactions herein contemplated shall be consummated, the Company agrees to pay
directly all of your out-of-pocket expenses in connection with the preparation,
execution and delivery of this Agreement, the Security Document and the
Intercreditor Agreement and the transactions contemplated hereby, including but
not limited to the charges and disbursements of Xxxxxxx and Xxxxxx, your special
counsel, duplicating and printing costs and charges for shipping the Notes,
adequately insured to you at your home office or at such other place as you may
designate, and all such expenses relating to any amendments, waivers or consents
pursuant to the provisions hereof (whether or not the same are actually executed
and delivered), including, without limitation, any such amendments, waivers, or
consents resulting from any work-out, renegotiation or restructuring relating to
the performance by the Company of its obligations under this Agreement, the
Security Document, the Intercreditor Agreement and the Notes. The Company also
agrees to pay, within five Business Days of receipt thereof, supplemental
statements of Xxxxxxx and Xxxxxx for disbursements unposted or not incurred as
of the Closing Date. The Company further agrees that it will pay and save you
harmless against any and all liability with respect to stamp and other taxes, if
any, which may be payable or which may be determined to be payable in connection
with the execution and delivery of this Agreement, the Security Document, the
Intercreditor Agreement or the Notes, whether or not any Notes are then
outstanding. The Company agrees to protect and indemnify you against any
liability for any and all brokerage fees and commissions payable or claimed to
be payable to any Person in connection with the transactions contemplated by
this Agreement, the Security Document or the Intercreditor Agreement. Without
limiting the foregoing, the Company agrees to pay the cost of obtaining the
private placement number for the Notes and authorizes the submission of such
information as may be required by
-58-
Standard & Poor's CUSIP Service Bureau for the purpose of obtaining such number.
Section 9.5. Powers and Rights Not Waived; Remedies Cumulative. No delay
--------------------------------------------------------------
or failure on the part of the holder of any Note in the exercise of any power or
right shall operate as a waiver thereof; nor shall any single or partial
exercise of the same preclude any other or further exercise thereof, or the
exercise of any other power or right, and the rights and remedies of the holder
of any Note are cumulative to, and are not exclusive of, any rights or remedies
any such holder would otherwise have.
Section 9.6. Notices. All communications provided for hereunder shall be
--------------------
in writing and, if to you, delivered or mailed prepaid by registered or
certified mail or overnight air courier, or by facsimile communication, in each
case addressed to you at your address appearing on Schedule I to this Agreement
or such other address as you or the subsequent holder of any Note initially
issued to you may designate to the Company in writing, and if to the Company,
delivered or mailed by registered or certified mail or overnight air courier, or
by facsimile communication, to the Company at 0000 Xxxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxxxx 00000, Attention: Chief Financial Officer, or to such other
address as the Company may in writing designate to you or to a subsequent holder
of the Note initially issued to you; provided, however, that a notice to you by
-------- -------
overnight air courier shall only be effective if delivered to you at a street
address designated for such purpose in Schedule I, and a notice to you by
facsimile communication shall only be effective if confirmed by transmission of
a copy thereof by prepaid overnight air courier, or, in either case, as you or a
subsequent holder of any Note initially issued to you may designate to the
Company in writing.
Section 9.7. Successors and Assigns. This Agreement shall be binding
-----------------------------------
upon the Company and its successors and assigns and shall inure to your benefit
and to the benefit of your successors and assigns, including each successive
holder or holders of any Notes.
Section 9.8. Survival of Covenants and Representations. All covenants,
------------------------------------------------------
representations and warranties made by the Company herein and in any
certificates delivered pursuant hereto, whether or not in connection with
-59-
the Closing Date, shall survive the closing and the delivery of this Agreement
and the Notes.
Section 9.9. Severability. Should any part of this Agreement for any
-------------------------
reason be declared invalid or unenforceable, such decision shall not affect the
validity or enforceability of any remaining portion, which remaining portion
shall remain in force and effect as if this Agreement had been executed with the
invalid or unenforceable portion thereof eliminated and it is hereby declared
the intention of the parties hereto that they would have executed the remaining
portion of this Agreement without including therein any such part, parts or
portion which may, for any reason, be hereafter declared invalid or
unenforceable.
Section 9.10. Governing Law. This Agreement and the Notes issued and
---------------------------
sold hereunder shall be governed by and construed in accordance with Illinois
law, including all matters of construction, validity and performance.
Section 9.11. Captions. The descriptive headings of the various Sections
----------------------
or parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
-60-
The execution hereof by you shall constitute a contract between us for
the uses and purposes hereinabove set forth, and this Agreement may be executed
in any number of counterparts, each executed counterpart constituting an
original but all together only one agreement.
U.S. RENTALS, INC.
By
Its
Accepted as of August 21, 1995.
[VARIATION]
By
--------------------------------
Its
-61-
ATTACHMENTS TO NOTE AGREEMENT:
Schedule I -- Names and Addresses of Purchasers and Amounts of Commitments
Schedule II -- Indebtedness; Liens Securing Indebtedness (including
Capitalized Leases); Subsidiaries; Restricted Subsidiaries as of
the Closing Date; Etc.
Exhibit A-1 -- Form of 6.82% Senior Secured Notes, Series A, Due August 21, 1999
Exhibit A-2 -- Form of 6.89% Senior Secured Notes, Series B, Due August 21, 2000
Exhibit A-3 -- Form of 7.04% Senior Secured Notes, Series C, Due August 21, 2001
Exhibit A-4 -- Form of 7.13% Senior Secured Notes, Series D, Due August 21, 2002
Exhibit B -- Representations and Warranties of the Company
Exhibit C -- Description of Special Counsel's Closing Opinion
Exhibit D -- Description of Closing Opinion of Counsel to the Company
Exhibit E -- Subordination Provisions Applicable to Subordinated Indebtedness
-62-
PRINCIPAL AMOUNT
NAMES AND ADDRESSES OF NOTES TO BE SERIES OF
OF PURCHASERS PURCHASED NOTES
MASSACHUSETTS MUTUAL LIFE $2,300,000 Series C
INSURANCE COMPANY $2,000,000 Series D
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxx
Xx. Xxxx X. Xxxxxxx
Securities Investment Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Rentals, Inc., 7.04% Senior Secured Notes, Series C, due August 21, 2001, PPN
90341*AC 3, principal, premium or interest" or "U.S. Rentals, Inc. 7.13% Senior
Secured Notes, Series D, Due August 21, 2002, PPN 90341*AD 1, principal,
premium or interest") to:
SCHEDULE I
(to Note Agreement)
Chase Manhattan Bank, N.A.
0 Xxxxx XxxxxXxxx Xxxxxx
Xxx Xxxx, XX 00000
ABA No. 000000000
For MassMutual IFM Traditional
Account No. 910-0000000
Re: Description of security, principal and interest split
With telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (000) 000-0000
Notices
All notices and communications to be addressed as first provided above,
except notices with respect to payments and corporate actions, to be addressed
Attention: Securities Custody and Collection Department, F381.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
I-2
PRINCIPAL AMOUNT
NAMES AND ADDRESSES OF NOTES TO BE SERIES OF
OF PURCHASERS PURCHASED NOTES
MASSACHUSETTS MUTUAL LIFE $2,300,000 Series C
INSURANCE COMPANY $2,000,000 Series D
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxx
Xx. Xxxx X. Xxxxxxx
Securities Investment Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Rentals, Inc., 7.04% Senior Secured Notes, Series C, due August 21, 2001, PPN
90341*AC 3, principal, premium or interest" or "U.S. Rentals, Inc. 7.13% Senior
Secured Notes, Series D, Due August 21, 2002, PPN 90341*AD 1, principal,
premium or interest") to:
I-3
Chase Manhattan Bank, N.A.
0 Xxxxx XxxxxXxxx Xxxxxx
Xxx Xxxx, XX 00000
ABA No. 000000000
For MassMutual IFM Non-Traditional
Account No. 910-0000000
Re: Description of security, principal and interest split
With telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (000) 000-0000
Notices
All notices and communications to be addressed as first provided above,
except notices with respect to payments and corporate actions, to be addressed
Attention: Securities Custody and Collection Department, F381.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
I-4
PRINCIPAL AMOUNT
NAMES AND ADDRESSES OF NOTES TO BE SERIES OF
OF PURCHASERS PURCHASED NOTES
MASSACHUSETTS MUTUAL LIFE $2,400,000 Series C
INSURANCE COMPANY $2,000,000 Series D
0000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxx
Xx. Xxxx X. Xxxxxxx
Securities Investment Division
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Rentals, Inc., 7.04% Senior Secured Notes, Series C, due August 21, 2001, PPN
90341*AC 3, principal, premium or interest" or "U.S. Rentals, Inc. 7.13% Senior
Secured Notes, Series D, Due August 21, 2002, PPN 90341*AD 1, principal,
premium or interest") to:
I-5
Chase Manhattan Bank, N.A.
0 Xxxxx XxxxxXxxx Xxxxxx
Xxx Xxxx, XX 00000
ABA No. 000000000
For MassMutual Pension Management
Account No. 910-0000000
Re: Description of security, principal and interest split
With telephone advice of payment to the Securities Custody and Collection
Department of Massachusetts Mutual Life Insurance Company at (000) 000-0000
Notices
All notices and communications to be addressed as first provided above,
except notices with respect to payments and corporate actions, to be addressed
Attention: Securities Custody and Collection Department, F381.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
I-6
PRINCIPAL AMOUNT
NAMES AND ADDRESSES OF NOTES TO BE SERIES OF
OF PURCHASERS PURCHASED NOTES
JEFFERSON-PILOT LIFE INSURANCE $5,000,000 Series B
COMPANY $3,000,000 Series C
100 North Xxxxxx $4,000,000 Series D
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Securities Administration 3630
Telefacsimile: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Rentals, Inc., 6.89% Senior Secured Notes, Series B, Due August 21, 2000, PPN
90341*AB 5, principal, premium or interest" or "U.S. Rentals, Inc., 7.04%
Senior Secured Notes, Series C, Due August 21, 2001, PPN 90341*AC 3, principal,
premium or interest" or "U.S. Rentals, Inc., 7.13% Senior Secured Notes, Series
D, Due August 21, 2002, PPN 90341*AD 1, principal, premium or interest", as the
case may be), to:
NationsBank of North Carolina (ABA #000 000 000)
Charlotte, North Carolina
(Greensboro office)
for credit to: Jefferson-Pilot Life Insurance Company
Account Number 000-000-000
Attention: Xxxxx Xxxxxxx (000) 000-0000
Notices
All notices and communications, including notices with respect to payments
and written confirmation of each such payment (including name and address of
bank transmitting payment), to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
I-7
Taxpayer I.D. Number: 00-0000000
I-8
PRINCIPAL AMOUNT
NAMES AND ADDRESSES OF NOTES TO BE SERIES OF
OF PURCHASERS PURCHASED NOTES
PRINCIPAL MUTUAL LIFE INSURANCE $10,000,000 Series A
COMPANY
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Attention: Investment Department--
Securities Division
Regarding Bond Number 1-B-60511
Telefacsimile: (000) 000-0000
Confirmation: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Rentals, Inc., 6.82% Senior Secured Notes, Series A, Due August 21, 1999, PPN
90341*AA 7, Bond Number 1-B-60511, principal, premium or interest") to:
Norwest Bank Iowa, N.A. (ABA #0730 0022 8)
0xx xxx Xxxxxx Xxxxxxx
Xxx Xxxxxx, Xxxx 00000
for credit to: Principal Mutual Life Insurance Company
General Account Number 014752
Notices
All notices concerning payment on or in respect of the Notes, to:
Principal Mutual Life Insurance Company
000 Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000-0000
Attention: Investment--
Accounting & Treasury--
Securities
Telefacsimile: (000) 000-0000
I-9
All notices and communications other than those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-000-0000
I-10
PRINCIPAL AMOUNT
NAMES AND ADDRESSES OF NOTES TO BE SERIES OF
OF PURCHASERS PURCHASED NOTES
PHOENIX HOME LIFE MUTUAL $5,000,000 Series D
INSURANCE COMPANY
Xxx Xxxxxxxx Xxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Private Placements Division
Telecopier Number: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Rentals, Inc., 7.13% Senior Secured Notes, Series D, Due August 21, 2002, PPN
90341*AD 1, principal, premium or interest") to:
Chase Manhattan Bank (ABA #021 0000 21)
BNF-SSG Private Income Processing/AC-9009000200
for credit to: Phoenix Home Life Mutual Insurance Company
Account Number G-05143
Notices
All notices and communications, including notices with respect to payments
and written confirmation of each such payment, to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
I-11
PRINCIPAL AMOUNT
NAMES AND ADDRESSES OF NOTES TO BE SERIES OF
OF PURCHASERS PURCHASED NOTES
PHOENIX HOME LIFE MUTUAL $3,000,000 Series D
INSURANCE COMPANY
Xxx Xxxxxxxx Xxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Private Placements Division
Telecopier Number: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Rentals, Inc., 7.13% Senior Secured Notes, Series D, Due August 21, 2002, PPN
90341*AD 1, principal, premium or interest") to:
Chase Manhattan Bank (ABA #021 0000 21)
BNF-SSG Private Income Processing/AC-9009000200
for credit to: Phoenix Home Life Mutual Insurance Company
Account Number G-05515
Notices
All notices and communications, including notices with respect to payments
and written confirmation of each such payment, to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
I-12
PRINCIPAL AMOUNT
NAMES AND ADDRESSES OF NOTES TO BE SERIES OF
OF PURCHASERS PURCHASED NOTES
PHOENIX AMERICAN LIFE $2,000,000 Series D
INSURANCE COMPANY
c/o Phoenix Home Life Mutual
Insurance Company
Xxx Xxxxxxxx Xxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Private Placements Division
Telecopier Number: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Rentals, Inc., 7.13% Senior Secured Notes, Series D, Due August 21, 2002, PPN
90341*AD1, principal, premium or interest") to:
Chase Manhattan Bank (ABA #021 0000 21)
BNF-SSG Private Income Processing/AC-9009000200
for credit to: Phoenix American Life Insurance Company
Account Number G-05464
Notices
All notices and communications, including notices with respect to payments
and written confirmation of each such payment, to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
I-13
PRINCIPAL AMOUNT
NAMES AND ADDRESSES OF NOTES TO BE SERIES OF
OF PURCHASERS PURCHASED NOTES
XXXXXXXXX XXXXXXXX LIFE INSURANCE $5,000,000 Series B
COMPANY OF AMERICA
00000 Xxxxxxxx Xxxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx Xxxxxxxx, Department R-12A
Phone: (000) 000-0000
Fax: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "U.S.
Rentals, Inc., 6.89% Senior Secured Notes, Series B, Due August 21, 2000, PPN
90341*AB 5, principal, premium or interest") to:
Comerica Bank, Det / 03
ABA Number 0000-0000-0
Account Number: 82043
Bnfac: 21585-98539, Master Trust
Notices
All notices and communications, including notices with respect to payments
and written confirmation of each such payment (including name and address of
bank transmitting payment), to:
Comerica Bank
Institutional Trust
000 Xxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx
I-14
Phone: (000) 000-0000
Fax: (000) 000-0000
Duplicate copies and all notices and communications to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: Xxxxxxx & Co.
Taxpayer I.D. Number: 00-0000000
I-15
DESCRIPTION OF DEBT, LEASES AND INVESTMENTS
1. Indebtedness (other than Capitalized Rentals) of the Company and its
Restricted Subsidiaries outstanding on the Closing Date is as follows:
($s in thousands)
NOTES PAYABLE As of 8/15/95
Revolving notes to Bank under Credit and Security Agreement,
interest payable monthly at varying rates tied to the
bank's money market rate and reference rate. $ 58,000
Demand note payable to CED, interest payable monthly at
prime less .75%. 20,000
Notes payable to Shareholder, assigned to The X.X. Xxxxxxx
School of Performing Arts, subordinated notes due
December 31, 2013 and 2014, interest payable quarterly at
a rate of prime plus 5%. 20,000
Demand notes payable to related parties. 3,885
Other notes payable. 1,060
--------
Total Indebtedness $102,945
========
2. Long-Term Leases of the Company and its Restricted Subsidiaries outstanding
on the Closing Date are as follows:
[See Attached Schedule II-B]
Capitalized Leases of the Company and its Restricted Subsidiaries
outstanding on the Closing Date are as follows:
None
SCHEDULE II
(to Note Agreement)
4. Investments of the Company and its Restricted Subsidiaries (other than
Subsidiaries) outstanding on the Closing Date, including without
limitation, notes receivable from Affiliates are as follows:
Yorkshire Enterprises L.P. $ 41,251.21
Kwickform America 992,459.15
Kippington Road 306,000.00
UKP 31.48
Claessen 3,267.25
Tolyco BV 351,905.63
Consortium 2000 Inc. 150,000.00
Subordinated Promissory
Notes of Consolidated
Electrical Distributors, Inc.
in face principal amounts of (current adjusted principal
$5,336,050 and $12,844.00 25,056,336 value plus accrued interest)
--------------
Total $26,901,250.72
II-2
SUBSIDIARIES OF THE COMPANY
1. RESTRICTED SUBSIDIARIES:
PERCENTAGE OF VOTING STOCK
NAME OF JURISDICTION OF OWNED BY COMPANY AND
SUBSIDIARY INCORPORATION EACH OTHER SUBSIDIARY
None
2. SUBSIDIARIES (OTHER THAN RESTRICTED SUBSIDIARIES):
PERCENTAGE OF VOTING STOCK
NAME OF JURISDICTION OF OWNED BY COMPANY AND
SUBSIDIARY INCORPORATION EACH OTHER SUBSIDIARY
None
Schedule II
(to Note Agreement)
U.S. RENTALS, INC.
6.82% Senior Secured Note, Series A,
Due August 21, 1999
No.
____________, ____
$
PPN 90341*AA 7
U.S. RENTALS, INC., a California corporation (the "Company"), for value
received, hereby promises to pay to
or registered assigns
on the twenty-first day of August, 1999
the principal amount of
DOLLARS ($______)
and to pay interest (computed on the basis of a 360-day year of twelve
30-day months) on the principal amount from time to time remaining unpaid
hereon at the rate of 6.82% per annum from the date hereof until maturity,
payable semiannually on the twenty-first of February and August in each year
(commencing on February 21, 1996) and at maturity. The Company agrees to pay
interest on overdue principal (including any overdue required or optional
prepayment of principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest, at the Overdue Rate after
the due date, whether by acceleration or otherwise, until paid. "Overdue Rate"
shall mean the lesser of (a) the maximum interest rate permitted by law and (b)
8.82% per annum.
Both the principal hereof and interest hereon are payable at the principal
office of the Company in Modesto, California in coin or currency of the United
States of America which at the time of payment shall be legal tender for the
payment of public and private debts. If any amount of principal,
EXHIBIT A-1
(to Note Agreement)
premium, if any, or interest on or in respect of this Note becomes due and
payable on any date which is not a Business Day, such amount shall be payable on
the immediately preceding Business Day. "Business Day" means any day other than
a Saturday, Sunday or other day on which banks in Los Angeles, California or New
York City, New York are required by law to close or are customarily closed.
This Note is one of the 6.82% Senior Secured Notes, Series A, due August
21, 1999 (the "Series A Notes") of the Company in the aggregate principal amount
of $10,000,000 which, together with the Company's $10,000,000 aggregate
principal amount 6.89% Senior Secured Notes, Series B, Due August 21, 2000 (the
"Series B Notes"), the Company's $10,000,000 aggregate principal amount 7.04%
Senior Secured Notes, Series C, Due August 21, 2001 (the "Series C Notes") and
the Company's $20,000,000 aggregate principal amount 7.13% Senior Secured Notes,
Series D, Due August 21, 2002 (the "Series D Notes", said Series D Notes
together with the Series A Notes, the Series B Notes and the Series C Notes are
hereinafter referred to collectively as the "Notes"), are issued or to be issued
under and pursuant to the terms and provisions of the separate Note Agreements,
each dated as of August 15, 1995 (the "Note Agreements"), entered into by the
Company with the original Purchasers therein referred to and this Note and the
holder hereof are entitled equally and ratably with the holders of all other
Notes outstanding under the Note Agreements to all the benefits provided for
thereby or referred to therein. Reference is hereby made to the Note Agreements
for a statement of such rights and benefits.
This Note and the holder hereof are also entitled equally and ratably with
the holders of all other Notes to the rights and benefits provided pursuant to
the terms and provisions of the Security Document and the Intercreditor
Agreement (as each such term is defined in the Note Agreements). Reference is
hereby made to each of the foregoing for a statement of the nature and extent
of the benefits and security for the Notes afforded thereby and the rights of
the holders of the Notes on the Company in respect thereof.
This Note and the other Notes outstanding under the Note Agreements may be
declared due prior to their expressed maturity dates and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Note Agreements.
A-1-2
The Notes are not subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
This Note and said Note Agreements are governed by and construed in
accordance with the laws of Illinois, including all matters of construction,
validity and performance.
U.S. RENTALS, INC.
By
Its
A-1-3
U.S. RENTALS, INC.
6.89% Senior Secured Note, Series B,
Due August 21, 2000
No.
____________, ____
$
PPN 90341*AB 5
U.S. RENTALS, INC., a California corporation (the "Company"), for value
received, hereby promises to pay to
or registered assigns
on the twenty-first day of August, 2000
the principal amount of
DOLLARS ($______)
and to pay interest (computed on the basis of a 360-day year of twelve
30-day months) on the principal amount from time to time remaining unpaid
hereon at the rate of 6.89% per annum from the date hereof until maturity,
payable semiannually on the twenty-first of February and August in each year
(commencing on February 21, 1996) and at maturity. The Company agrees to pay
interest on overdue principal (including any overdue required or optional
prepayment of principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest, at the Overdue Rate after
the due date, whether by acceleration or otherwise, until paid. "Overdue Rate"
shall mean the lesser of (a) the maximum interest rate permitted by law and (b)
8.89% per annum.
Both the principal hereof and interest hereon are payable at the principal
office of the Company in Modesto, California in coin or currency of the United
States of America which at the time of payment shall be legal tender for the
payment of public and private debts. If any amount of principal,
EXHIBIT A-2
(to Note Agreement)
premium, if any, or interest on or in respect of this Note becomes due and
payable on any date which is not a Business Day, such amount shall be payable on
the immediately preceding Business Day. "Business Day" means any day other than
a Saturday, Sunday or other day on which banks in Los Angeles, California or New
York City, New York are required by law to close or are customarily closed.
This Note is one of the 6.89% Senior Secured Notes, Series B, due August
21, 2000 (the "Series B Notes") of the Company in the aggregate principal amount
of $10,000,000 which, together with the Company's $10,000,000 aggregate
principal amount 6.82% Senior Secured Notes, Series A, Due August 21, 1999 (the
"Series A Notes"), the Company's $10,000,000 aggregate principal amount 7.04%
Senior Secured Notes, Series C, Due August 21, 2001 (the "Series C Notes") and
the Company's $20,000,000 aggregate principal amount 7.13% Senior Secured Notes,
Series D, Due August 21, 2002 (the "Series D Notes", said Series D Notes
together with the Series A Notes, the Series B Notes and the Series C Notes are
hereinafter referred to collectively as the "Notes"), are issued or to be issued
under and pursuant to the terms and provisions of the separate Note Agreements,
each dated as of August 15, 1995 (the "Note Agreements"), entered into by the
Company with the original Purchasers therein referred to and this Note and the
holder hereof are entitled equally and ratably with the holders of all other
Notes outstanding under the Note Agreements to all the benefits provided for
thereby or referred to therein. Reference is hereby made to the Note Agreements
for a statement of such rights and benefits.
This Note and the holder hereof are also entitled equally and ratably with
the holders of all other Notes to the rights and benefits provided pursuant to
the terms and provisions of the Security Document and the Intercreditor
Agreement (as each such term is defined in the Note Agreements). Reference is
hereby made to each of the foregoing for a statement of the nature and extent
of the benefits and security for the Notes afforded thereby and the rights of
the holders of the Notes on the Company in respect thereof.
This Note and the other Notes outstanding under the Note Agreements may be
declared due prior to their expressed maturity dates and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Note Agreements.
A-2-2
The Notes are not subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
This Note and said Note Agreements are governed by and construed in
accordance with the laws of Illinois, including all matters of construction,
validity and performance.
U.S. RENTALS, INC.
By
Its
A-2-3
U.S. RENTALS, INC.
7.04% Senior Secured Note, Series C,
Due August 21, 2001
No.
____________, ____
$
PPN 90341*AC 3
U.S. RENTALS, INC., a California corporation (the "Company"), for value
received, hereby promises to pay to
or registered assigns
on the twenty-first day of August, 2001
the principal amount of
DOLLARS ($______)
and to pay interest (computed on the basis of a 360-day year of twelve
30-day months) on the principal amount from time to time remaining unpaid
hereon at the rate of 7.04% per annum from the date hereof until maturity,
payable semiannually on the twenty-first of February and August in each year
(commencing on February 21, 1996) and at maturity. The Company agrees to pay
interest on overdue principal (including any overdue required or optional
prepayment of principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest, at the Overdue Rate after
the due date, whether by acceleration or otherwise, until paid. "Overdue Rate"
shall mean the lesser of (a) the maximum interest rate permitted by law and (b)
8.04% per annum.
Both the principal hereof and interest hereon are payable at the principal
office of the Company in Modesto, California in coin or currency of the United
States of America which at the time of payment shall be legal tender for the
payment of public and private debts. If any amount of principal,
EXHIBIT A-3
(to Note Agreement)
premium, if any, or interest on or in respect of this Note becomes due and
payable on any date which is not a Business Day, such amount shall be payable on
the immediately preceding Business Day. "Business Day" means any day other than
a Saturday, Sunday or other day on which banks in Los Angeles, California or New
York City, New York are required by law to close or are customarily closed.
This Note is one of the 7.04% Senior Secured Notes, Series C, Due August
21, 2001 (the "Notes") of the Company in the aggregate principal amount of
$10,000,000 which, together with the Company's $10,000,000 aggregate principal
amount 6.82% Senior Secured Notes, Series A, Due August 21, 1999 (the "Series A
Notes"), the Company's $10,000,000 aggregate principal amount 6.89% Senior
Secured Notes, Series B, Due August 21, 2000 (the "Series B Notes") and the
Company's $20,000,000 aggregate principal amount 7.13% Senior Secured Notes,
Series D, Due August 21, 2002 (the "Series D Notes", said Series D Notes
together with the Series A Notes, the Series B Notes and the Series C Notes are
hereinafter referred to collectively as the "Notes"), are issued or to be issued
under and pursuant to the terms and provisions of the separate Note Agreements,
each dated as of August 15, 1995 (the "Note Agreements"), entered into by the
Company with the original Purchasers therein referred to and this Note and the
holder hereof are entitled equally and ratably with the holders of all other
Notes outstanding under the Note Agreements to all the benefits provided for
thereby or referred to therein. Reference is hereby made to the Note Agreements
for a statement of such rights and benefits.
This Note and the holder hereof are also entitled equally and ratably with
the holders of all other Notes to the rights and benefits provided pursuant to
the terms and provisions of the Security Document and the Intercreditor
Agreement (as each such term is defined in the Note Agreements). Reference is
hereby made to each of the foregoing for a statement of the nature and extent
of the benefits and security for the Notes afforded thereby and the rights of
the holders of the Notes on the Company in respect thereof.
This Note and the other Notes outstanding under the Note Agreements may be
declared due prior to their expressed maturity dates and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Note Agreements.
A-3-2
The Notes are not subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
This Note and said Note Agreements are governed by and construed in
accordance with the laws of Illinois, including all matters of construction,
validity and performance.
U.S. RENTALS, INC.
By
Its
A-3-3
U.S. RENTALS, INC.
7.13% Senior Secured Note, Series D,
Due August 21, 2002
No.
____________, ____
$
PPN 90341*AD 1
U.S. RENTALS, INC., a California corporation (the "Company"), for value
received, hereby promises to pay to
or registered assigns
on the twenty-first day of August, 2002
the principal amount of
DOLLARS ($______)
and to pay interest (computed on the basis of a 360-day year of twelve
30-day months) on the principal amount from time to time remaining unpaid
hereon at the rate of 7.13% per annum from the date hereof until maturity,
payable semiannually on the twenty-first of February and August in each year
(commencing on February 21, 2002) and at maturity. The Company agrees to pay
interest on overdue principal (including any overdue required or optional
prepayment of principal) and premium, if any, and (to the extent legally
enforceable) on any overdue installment of interest, at the Overdue Rate after
the due date, whether by acceleration or otherwise, until paid. "Overdue Rate"
shall mean the lesser of (a) the maximum interest rate permitted by law and (b)
8.13% per annum.
Both the principal hereof and interest hereon are payable at the principal
office of the Company in Modesto, California in coin or currency of the United
States of America which at the time of payment shall be legal tender for the
payment of public and private debts. If any amount of principal,
EXHIBIT A-4
(to Note Agreement)
premium, if any, or interest on or in respect of this Note becomes due and
payable on any date which is not a Business Day, such amount shall be payable on
the immediately preceding Business Day. "Business Day" means any day other than
a Saturday, Sunday or other day on which banks in Los Angeles, California or New
York City, New York are required by law to close or are customarily closed.
This Note is one of the 7.13% Senior Secured Notes, Series D, due August
21, 2002 (the "Notes") of the Company in the aggregate principal amount of
$20,000,000 which, together with the Company's $10,000,000 aggregate principal
amount 6.82% Senior Secured Notes, Series A, Due August 21, 1999 (the "Series A
Notes"), the Company's $10,000,000 aggregate principal amount 6.89% Senior
Secured Notes, Series B, Due August 21, 2000 (the "Series B Notes") and the
Company's $10,000,000 aggregate principal amount 7.04% Senior Secured Notes,
Series C, Due August 21, 2001 (the "Series C Notes", said Series C Notes
together with the Series A Notes, the Series B Notes and the Series D Notes are
hereinafter referred to collectively as the "Notes"), are issued or to be issued
under and pursuant to the terms and provisions of the separate Note Agreements,
each dated as of August 15, 1995 (the "Note Agreements"), entered into by the
Company with the original Purchasers therein referred to and this Note and the
holder hereof are entitled equally and ratably with the holders of all other
Notes outstanding under the Note Agreements to all the benefits provided for
thereby or referred to therein. Reference is hereby made to the Note Agreements
for a statement of such rights and benefits.
This Note and the holder hereof are also entitled equally and ratably with
the holders of all other Notes to the rights and benefits provided pursuant to
the terms and provisions of the Security Document and the Intercreditor
Agreement (as each such term is defined in the Note Agreements). Reference is
hereby made to each of the foregoing for a statement of the nature and extent of
the benefits and security for the Notes afforded thereby and the rights of the
holders of the Notes on the Company in respect thereof.
This Note and the other Notes outstanding under the Note Agreements may be
declared due prior to their expressed maturity dates and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Note Agreements.
A-4-2
The Notes are not subject to prepayment or redemption at the option of the
Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreements.
This Note is registered on the books of the Company and is transferable
only by surrender thereof at the principal office of the Company duly endorsed
or accompanied by a written instrument of transfer duly executed by the
registered holder of this Note or its attorney duly authorized in writing.
Payment of or on account of principal, premium, if any, and interest on this
Note shall be made only to or upon the order in writing of the registered
holder.
This Note and said Note Agreements are governed by and construed in
accordance with the laws of Illinois, including all matters of construction,
validity and performance.
U.S. RENTALS, INC.
By
Its
A-4-3
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to you as follows:
1. Subsidiaries. Schedule II attached to the Agreements states the name of
each of the Company's Subsidiaries, its jurisdiction of incorporation and the
percentage of its Voting Stock owned by the Company and/or its Subsidiaries.
Those Subsidiaries listed in Section 1 of said Schedule II constitute Restricted
Subsidiaries. The Company and each Subsidiary has good and marketable title to
all of the shares it purports to own of the stock of each Subsidiary, free and
clear in each case of any Lien. All such shares have been duly issued and are
fully paid and non-assessable.
2. Corporate Organization and Authority. The Company, and each Restricted
Subsidiary,
(a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all Material licenses and
permits to own and operate its properties and to carry on its business as
now conducted and as presently proposed to be conducted; and
(c) is duly licensed or qualified and is in good standing as a foreign
corporation in each jurisdiction wherein the nature of the business
transacted by it or the nature of the property owned or leased by it makes
such licensing or qualification necessary.
3. Business and Property. The Private Placement Memorandum dated June 1995
(the "Memorandum") prepared by BA Securities, Inc. which in all Material
respects sets forth the business conducted and proposed to be conducted by the
Company and its Subsidiaries and the principal properties of the Company and its
Subsidiaries.
4. Financial Statements. (a) The consolidated balance sheets of the
Company and its consolidated Subsidiaries as of December 31 in each of the
EXHIBIT B
(to Note Agreement)
years 1990 to 1994, both inclusive, and the statements of income and retained
earnings and changes in financial position or cash flows for the fiscal years
ended on said dates, each accompanied by a report thereon containing an opinion
unqualified as to scope limitations imposed by the Company and otherwise
without qualification except as therein noted, by Price Waterhouse L.L.P., have
been prepared in accordance with GAAP consistently applied except as therein
noted, are correct and complete and present fairly the financial position of
the Company and its consolidated Subsidiaries as of such dates and the results
of their operations and changes in their cash flows for such periods. The
unaudited consolidated balance sheets of the Company and its consolidated
Subsidiaries as of June 30, 1995, and the unaudited statements of income and
retained earnings and cash flows for the six-month period ended on said date
prepared by the Company have been prepared in accordance with GAAP consistently
applied, are correct and complete and present fairly the financial position of
the Company and its consolidated Subsidiaries as of said date and the results
of their operations and changes in their cash flows for such period.
(b) Since December 31, 1994, there has been no change in the condition,
financial or otherwise, of the Company and its consolidated Subsidiaries as
shown on the consolidated balance sheet as of such date except changes in the
ordinary course of business, none of which individually or in the aggregate
would have a Material Adverse Effect.
5. Indebtedness; Insurance. Schedule II attached to the Agreements
correctly describes all Indebtedness, Long-Term Leases, Capitalized Leases and
Investments of the Company and its Restricted Subsidiaries outstanding on the
Closing Date. Said Schedule II also correctly describes the levels of
insurance and self-insurance of the Company and its Restricted Subsidiaries
existing on the Closing Date.
6. Full Disclosure. Neither the financial statements referred to in
paragraph 4 hereof nor the Agreements, the Memorandum or any other written
statement furnished by the Company to you in connection with the negotiation of
the sale of the Notes, contains any untrue statement of a Material fact or
omits a Material fact necessary to make the statements contained therein or
herein not Materially misleading. There is no fact
B-2
peculiar to the Company or its Subsidiaries which the Company has not disclosed
to you in writing which would have a Material Adverse Effect.
7. Pending Litigation. There are no proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Restricted Subsidiary in any court or before any governmental authority or
arbitration board or tribunal which would have a Material Adverse Effect.
8. Title to Properties. The Company and each Restricted Subsidiary has
good and marketable title in fee simple (or its equivalent under applicable
law) to all Material parcels of real property and has good title to all the
other Material items of property it purports to own, including that reflected
in the most recent balance sheet referred to in paragraph 4 hereof, except as
sold or otherwise disposed of in the ordinary course of business and except for
Liens permitted by the Agreements.
9. Patents and Trademarks. The Company and each Restricted Subsidiary owns
or possesses all Material patents, trademarks, trade names, service marks,
copyrights, licenses and rights with respect to the foregoing necessary for the
present conduct of its business, without any known conflict with the rights of
others.
10. Sale Is Legal and Authorized. The sale of the Notes and compliance by
the Company with all of the provisions of the Agreements, the Security
Document, the Intercreditor Agreement and the Notes --
(a) are within the corporate powers of the Company;
(b) will not violate any Material provisions of any law or any
Material order of any court or governmental authority or agency and will
not conflict with or result in any breach of any of the terms, conditions
or provisions of, or constitute a default under, the Articles of
Incorporation or By-laws of the Company or any indenture or other agreement
or instrument to which the Company is a party or by which it may be bound
or result in the imposition of any Liens or encumbrances on any Material
property of the Company; and
B-3
(c) have been duly authorized by proper corporate action on the part of
the Company (no action by the stockholders of the Company being required by
law, by the Articles of Incorporation or By-laws of the Company or
otherwise), executed and delivered by the Company and the Agreements, the
Security Document, the Intercreditor Agreement and the Notes constitute the
legal, valid and binding obligations, contracts and agreements of the
Company enforceable in accordance with their respective terms.
11. No Defaults. No Default or Event of Default has occurred and is
continuing. The Company is not in default in the payment of principal or
interest on any Indebtedness for borrowed money and is not in Material default
under any instrument or instruments or agreements under and subject to which
any Indebtedness for borrowed money has been issued and no Material event has
occurred and is continuing under the provisions of any such instrument or
agreement which with the lapse of time or the giving of notice, or both, would
constitute an event of default thereunder.
12. Governmental Consent. No approval, consent or withholding of objection
on the part of any regulatory body, state, Federal or local, is necessary in
connection with the execution and delivery by the Company of the Agreements,
the Security Document or the Intercreditor Agreement or the issuance, sale or
delivery of the Notes or compliance by the Company with any of the provisions
of the Agreements, the Security Document, the Intercreditor Agreement or the
Notes.
13. Taxes. All tax returns required to be filed by the Company or any
Restricted Subsidiary in any jurisdiction have, in fact, been filed, and all
taxes, assessments, fees and other governmental charges upon the Company or any
Restricted Subsidiary or upon any of their respective properties, income or
franchises, which are shown to be due and payable in such returns have been
paid. For all taxable years ending on or before December 31, 1990, the Federal
income tax liability of the Company and its Restricted Subsidiaries has been
satisfied and either the period of limitations on assessment of additional
Federal income tax has expired or the Company and its Restricted Subsidiaries
have entered into an agreement with the Internal Revenue Service closing
conclusively the total tax liability for the taxable year. The Company does
not know of any proposed additional tax assessment
B-4
against it for which adequate provision has not been made on its accounts, and
no material controversy in respect of additional Federal or state income taxes
due since said date is pending or to the knowledge of the Company threatened.
The provisions for taxes on the books of the Company and each Restricted
Subsidiary are adequate for all open years, and for its current fiscal period.
14. Use of Proceeds. The net proceeds from the sale of the Notes will be
used to refinance existing Indebtedness, to purchase new rental equipment and
for other corporate purposes. None of the transactions contemplated in the
Agreements (including, without limitation thereof, the use of proceeds from the
issuance of the Notes) will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulation issued pursuant
thereto, including, without limitation, Regulations G, T and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II. Neither the
Company nor any Subsidiary owns or intends to carry or purchase any "margin
stock" within the meaning of said Regulation G. None of the proceeds from the
sale of the Notes will be used to purchase, or refinance any borrowing the
proceeds of which were used to purchase, any "security" within the meaning of
the Securities Exchange Act of 1934, as amended.
15. Private Offering. Neither the Company, directly or indirectly, nor any
agent on its behalf has offered or will offer the Notes or any similar Security
to or has solicited or will solicit an offer to acquire the Notes or any similar
Security from or has otherwise approached or negotiated or will approach or
negotiate in respect of the Notes or any similar Security with any Person other
than the Purchasers and not more than sixteen other institutional investors,
each of whom was offered a portion of the Notes at private sale for investment.
Neither the Company, directly or indirectly, nor any agent on its behalf has
offered or will offer the Notes or any similar Security to or has solicited or
will solicit an offer to acquire the Notes or any similar Security from any
Person so as to bring the issuance and sale of the Notes within the provisions
of Section 5 of the Securities Act of 1933, as amended.
16. ERISA. The consummation of the transactions provided for in the
Agreements and compliance by the Company with the provisions thereof and the
Notes issued thereunder will not involve any prohibited transaction
B-5
within the meaning of ERISA or Section 4975 of the Code. Each Plan complies in
all material respects with all applicable statutes and governmental rules and
regulations, and (a) no Reportable Event has occurred and is continuing with
respect to any Plan, (b) neither the Company nor any ERISA Affiliate has
withdrawn from any Plan or Multiemployer Plan or instituted steps to do so, and
(c) no steps have been instituted to terminate any Plan. No condition exists or
event or transaction has occurred in connection with any Plan which could result
in the incurrence by the Company or any ERISA Affiliate of any material
liability, fine or penalty. No Plan maintained by the Company or any ERISA
Affiliate, nor any trust created thereunder, has incurred any "accumulated
funding deficiency" as defined in Section 302 of ERISA. The present value of all
benefits vested under all Plans equals, as of the last annual valuation date,
the value of the assets of the Plans allocable to such vested benefits. Neither
the Company nor any ERISA Affiliate has any contingent liability with respect to
any post-retirement "welfare benefit plan" (as such term is defined in ERISA)
except as has been disclosed to the Purchasers.
17. Compliance with Law. (a) Neither the Company nor any Restricted
Subsidiary (1) is in violation of any law, ordinance, franchise, governmental
rule or regulation to which it is subject; or (2) has failed to obtain any
license, permit, franchise or other governmental authorization necessary to the
ownership of its property or to the conduct of its business, which violation or
failure to obtain would have a Material Adverse Effect. Neither the Company
nor any Restricted Subsidiary is in default with respect to any order of any
court or governmental authority or arbitration board or tribunal which default
would have a Material Adverse Effect.
(b) Without limiting the provisions of clause (a) of this paragraph 17, the
Company is in compliance with all applicable Environmental Laws, the failure to
comply with which would have a Material Adverse Effect.
18. Investment Company Act. The Company is not, and is not directly or
indirectly controlled by or acting on behalf of any Person which is, required
to register as an "investment company" under the Investment Company Act of
1940, as amended.
B-6
19. Foreign Assets Control Regulations, etc. Neither the Company nor any
Affiliate of the Company is, by reason of being a "national" of "designated
foreign country" or a "specially designated national" within the meaning of the
Regulations of the Office of Foreign Assets Control, United States Treasury
Department (31 C.F.R., Subtitle B, Chapter V), or for any other reason, subject
to any restriction or prohibition under, or is in violation of, any Federal
statute or Presidential Executive Order, or any rules or regulations of any
department, agency or administrative body promulgated under any such statute or
order, concerning trade or other relations with any foreign country or any
citizen or national thereof or the ownership or operation of any property.
20. Lien Recordation. The Security Document (or financing statements or
similar notices thereof to the extent permitted or required by applicable law)
have been filed for record or recorded in all public offices wherein such
filing or recordation is necessary to perfect the security interest granted by
such Security Document in the collateral therein described as against creditors
of and purchasers from the Company and its Subsidiaries and the Security
Document create a valid and perfected first security interest in such
collateral effective as against creditors of and purchasers from the Company
and its Subsidiaries subject only to encumbrances expressly permitted by the
terms of the Agreement and such Security Document.
B-7
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of Xxxxxxx and Xxxxxx, special counsel to the
Purchasers, called for by (S)4.1 of the Note Agreements, shall be dated the
Closing Date and addressed to the Purchasers, shall be satisfactory in form and
substance to the Purchasers and shall be to the effect that:
1. The Company is a corporation, validly existing and in good standing
under the laws of the State of California and has the corporate power and
the corporate authority to execute and deliver the Note Agreements and to
issue the Notes.
2. The Note Agreements have been duly authorized by all necessary
corporate action on the part of the Company, have been duly executed and
delivered by the Company and constitute the legal, valid and binding
contracts of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in
a proceeding in equity or at law).
3. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
4. The issuance, sale and delivery of the Notes under the circumstances
contemplated by the Note Agreements does not, under existing law, require
the registration of the Notes under the Securities Act of 1933, as amended,
or the qualification of an indenture under the Trust Indenture Act of 1939,
as amended.
EXHIBIT C
(to Note Agreement)
The opinion of Xxxxxxx and Xxxxxx shall also state that the opinion of
Xxxxxxx X. Xxxxx, Esq. is satisfactory in scope and form to Xxxxxxx and Xxxxxx
and that, in their opinion, the Purchasers are justified in relying thereon.
In rendering the opinion set forth in paragraph 1 above, Xxxxxxx and Xxxxxx
may rely solely upon an examination of the Articles of Incorporation certified
by, and a certificate of good standing of the Company from, the Secretary of
State of the State of California, the By-laws of the Company and the general
business corporation law of the State of California. The opinion of Xxxxxxx and
Xxxxxx is limited to the laws of the State of Illinois, the general business
corporation law of the State of California and the Federal laws of the United
States.
With respect to matters of fact upon which such opinion is based, Xxxxxxx
and Xxxxxx may rely on appropriate certificates of public officials and
officers of the Company.
C-2
DESCRIPTION OF CLOSING OPINION OF COUNSEL TO THE COMPANY
The closing opinion of Xxxxxxx X. Xxxxx, Esq., counsel for the Company,
which is called for by (S)4.1 of the Note Agreements, shall be dated the Closing
Date and addressed to the Purchasers, shall be satisfactory in scope and form to
the Purchasers and shall be to the effect that:
1. The Company is a corporation, duly incorporated, validly existing
and in good standing under the laws of the State of State of California,
has the corporate power and the corporate authority to execute and perform
the Note Agreements, the Security Document and the Intercreditor Agreement
and to issue the Notes and has the full corporate power and the corporate
authority to conduct the activities in which it is now engaged and is duly
licensed or qualified and is in good standing as a foreign corporation in
each jurisdiction in which the character of the properties owned or leased
by it or the nature of the business transacted by it makes such licensing
or qualification necessary.
2. Each Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation
and is duly licensed or qualified and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it
or the nature of the business transacted by it makes such licensing or
qualification necessary and all of the issued and outstanding shares of
capital stock of each such Subsidiary have been duly issued, are fully paid
and non-assessable and are owned by the Company, by one or more
Subsidiaries, or by the Company and one or more Subsidiaries.
3. Each Note Agreement, the Security Document and the Intercreditor
Agreement have been duly authorized by all necessary corporate action on
the part of the Company, has been duly executed and delivered by the
Company and constitute the legal, valid and binding contracts of the
Company enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance or
EXHIBIT D
(to Note Agreement)
similar laws affecting creditors' rights generally, and general principles
of equity (regardless of whether the application of such principles is
considered in a proceeding in equity or at law).
4. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by
the Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors'
rights generally, and general principles of equity (regardless of whether
the application of such principles is considered in a proceeding in equity
or at law).
5. Each Security Document has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
contract of such Subsidiary enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in
a proceeding in equity or at law).
6. No approval, consent or withholding of objection on the part of, or
filing, registration or qualification with, any governmental body, Federal,
state or local, is necessary in connection with the execution, delivery and
performance of the Note Agreements, the Security Document, the
Intercreditor Agreement or the Notes.
7. The Security Document (or financing statements or similar notices
thereof to the extent permitted or required by applicable law) have been
filed for record or recorded in all public offices wherein such filing or
recordation is necessary to perfect the security interest granted by such
Security Document in the collateral therein described as against creditors
of and purchasers from the Company and its Subsidiaries and the Security
Document create a valid and perfected first security interest in such
collateral effective as against creditors of and purchasers from the
Company and its Subsidiaries subject only to
D-2
encumbrances expressly permitted by the terms of such Security Document.
8. The issuance and sale of the Notes and the execution, delivery and
performance by the Company of the Note Agreements, the Security Document
and the Intercreditor Agreement do not conflict with or result in any
breach of any of the provisions of or constitute a default under or result
in the creation or imposition of any Lien upon any of the property of the
Company pursuant to the provisions of the Articles of Incorporation or By-
laws of the Company or any agreement or other instrument known to such
counsel to which the Company is a party or by which the Company may be
bound.
9. The issuance, sale and delivery of the Notes under the circumstances
contemplated by the Note Agreements does not, under existing law, require
the registration of the Notes under the Securities Act of 1933, as amended,
or the qualification of an indenture under the Trust Indenture Act of 1939,
as amended.
10. The issuance of the Notes and the use of the proceeds of the sale
of the Notes in accordance with the provisions of and contemplated by the
Note Agreements do not violate or conflict with Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System.
11. There is no litigation pending or, to the best knowledge of such
counsel, threatened which in such counsel's opinion could reasonably be
expected to have a materially adverse effect on the Company's business or
assets or which would impair the ability of the Company to issue and
deliver the Notes or to comply with the provisions of the Note Agreements,
the Security Document and the Intercreditor Agreement, as the case may be.
The opinion of Xxxxxxx X. Xxxxx, Esq. shall cover such other matters
relating to the sale of the Notes as the Purchasers may reasonably request. With
respect to matters of fact on which such opinion is based, such counsel shall be
entitled to rely on appropriate certificates of public officials and officers of
the Company.
D-3
SUBORDINATION PROVISIONS APPLICABLE
TO SUBORDINATED INDEBTEDNESS
(a) The indebtedness evidenced by the subordinated notes*, any renewals or
extensions thereof, premium, if any, interest (including, without limitation,
any such interest accruing subsequent to the filing by or against the Company of
any proceeding brought under Chapter 11 of the Bankruptcy Code (11 U.S.C.
Section 100 et seq.)) and any fees, charges, expenses or other sums payable
under or in respect of the agreements pursuant to which such subordinated notes
were issued, shall at all times be wholly and unconditionally subordinate and
junior in right of payment to all principal, premium, if any, and interest
(including, without limitation, any such interest accruing subsequent to the
filing by or against the Company of any proceeding brought under Chapter 11 of
the Bankruptcy Code (11 U.S.C. Section 100 et seq.), whether or not such
interest is allowed as a claim pursuant to the provisions of such Chapter) and
all other fees, charges, expenses and other sums payable in respect of (1) the
Company's $10,000,000 aggregate principal amount 6.82% Senior Secured Notes,
Series A, Due August 21, 1999, $10,000,000 aggregate principal amount 6.89%
Senior Secured Notes, Series B, Due August 21, 2000, $10,000,000 7.04% Senior
Secured Notes, Series C, Due August 21, 2001 and $20,000,000 aggregate principal
amount 7.13% Senior Secured Notes, Series D, Due August 21, 2002 (collectively
the "Notes") issued pursuant to the separate and several Note Agreements, each
dated as of August 15, 1995 between the Company and Massachusetts Mutual Life
Insurance Company, Jefferson-Pilot Life Insurance Company, Principal Mutual Life
Insurance Company, Phoenix Home Life Mutual Insurance Company and Xxxxxxxxx
Xxxxxxxx Life Insurance Company and (2) any other indebtedness for money
borrowed of the Company not expressed to be subordinate or junior to any other
indebtedness of the Company (the indebtedness described in the preceding clauses
(1) and (2) is hereinafter called "Superior Indebtedness"), in the manner and
with the force and effect hereafter set forth:
(1) In the event of (i) any liquidation, dissolution or other winding
up of the Company, voluntary or involuntary, (ii) any execution, sale,
receivership, insolvency, bankruptcy, liquidation,
----------------
*Or debentures or other designation as may be appropriate.
EXHIBIT E
(to Note Agreement)
readjustment, reorganization, composition or other similar proceeding
relative to the Company or its property, (iii) any general assignment by
the Company for the benefit of creditors, or (iv) any distribution,
division, marshalling or application of any of the properties or assets of
the Company or the proceeds thereof to creditors, voluntary or involuntary,
and whether or not involving legal proceedings, then and in any event:
(A) all principal, premium, if any, any interest and all other
sums owing on all Superior Indebtedness shall first be paid in full in
cash before any payment or distribution of any kind or character,
whether in cash, property or securities (other than in securities,
including equity securities, or other evidences of indebtedness, the
payment of which is unconditionally subordinated, to at least the same
degree as the subordinated securities being paid, to the payment of all
Superior Indebtedness which may at the time be outstanding) shall be
made on indebtedness evidenced by the subordinated notes;
(B) any payment or distribution of any kind or character, whether
in cash, property or securities which would otherwise (but for the
terms hereof) be payable or deliverable in respect of the subordinated
notes, shall be paid or delivered directly to the holders of the
Superior Indebtedness, for application to the payment of the Superior
Indebtedness, until all Superior Indebtedness shall have been paid in
full, and the holders of the subordinated notes at the time outstanding
irrevocably authorize, empower and direct all receivers, trustees,
liquidators, conservators, fiscal agents and others having authority in
the premises to effect all such payments and deliveries;
(C) any payment or distribution of any kind or character, whether
in cash, property or securities which shall be made upon or in respect
of the subordinated notes shall be paid over to the holders of Superior
Indebtedness, pro rata, for application and payment thereof unless and
until such Superior Indebtedness shall have been paid or satisfied in
full; and
E-2
(D) notwithstanding the foregoing provisions, if for any reason
whatsoever any payment or distribution of any kind or character,
whether in cash, property or securities, should be received by a holder
of the subordinated notes before all such Superior Indebtedness is paid
in full, such payment or distribution shall be held in trust for the
benefit of, and shall be immediately paid or delivered by such holder
to, as the case may be, the holders of such Superior Indebtedness
remaining unpaid, or their representative or representatives, for
application to the payment of all such Superior Indebtedness, pro rata,
unless and until such Superior Indebtedness shall have been paid or
satisfied in full.
(2) In the event that the subordinated notes are declared or become due
and payable because of the occurrence of any event of default hereunder (or
under the agreement or indenture, as appropriate) or otherwise than at the
option of the Company, under circumstances when the foregoing clause (1)
shall not be applicable, then no amount shall be paid by the Company in
respect of the principal of, premium, if any, or interest on the
subordinated notes in excess of current interest payments as provided
herein prior to the 90th day after any holder of the Subordinated Notes has
given notice to the Company that such Subordinated Notes have been declared
or have become due and payable before their expressed maturity date, unless
and until all Superior Indebtedness shall have been paid in full in cash,
provided that if during such 90 day period the holders of the Superior
Indebtedness initiate legal proceedings to enforce the Company's
obligations in respect of the Superior Indebtedness, such period of non-
payment shall be tolled for so long as the holders of the Superior
Indebtedness continue to prosecute such legal proceedings.
(3) Upon the happening of any Superior Indebtedness Payment Default (as
defined below), the holders of the subordinated notes shall not be entitled
to receive any payment on account thereof during the period beginning on
the date such Senior Indebtedness Payment Default shall occur and ending
upon the earlier of (i) the date such Superior Indebtedness Payment Default
has been waived in writing by the holders of the related Superior
Indebtedness, (ii) the date
E-3
on which notice that such Superior Indebtedness Payment Default shall have
ceased to exist is given by any holder of the related Superior Indebtedness
to the Company, and (iii) the date on which such Superior Indebtedness
Payment Default has been cured or shall have ceased to exist. "Superior
Indebtedness Payment Default" shall mean any default or failure by the
Company to make any optional, required or mandatory prepayment or payment
of principal, premium, if any, or interest with respect to any Superior
Indebtedness.
(4) In case any default on any Superior Indebtedness other than a
default in respect of the payment of principal, premium, if any, or
interest in respect of such Superior Indebtedness ("Superior Indebtedness
Nonmonetary Event of Default") shall have occurred and be continuing with
respect to any Superior Indebtedness, no holder of the subordinated notes
shall be entitled to receive any payment on account thereof during the
period beginning on a Payment Blockage Commencement Date (as defined below)
and ending upon the earlier of (A) the date such Superior Indebtedness
Nonmonetary Event of Default has been waived in writing by the holders of
such Superior Indebtedness, (B) the date on which notice that such Superior
Indebtedness Nonmonetary Event of Default shall have ceased to exist is
given by the holders of such Superior Indebtedness to the Company, and (C)
the date on which such Superior Indebtedness Nonmonetary Event of Default
has been cured; provided, however, that (x) no more than one blockage
period under this paragraph (4) may occur during any period of 360
consecutive days, (y) blockage periods under this paragraph (4) shall not
be in effect for more than 150 days during any period of 360 consecutive
days, and (z) no facts or circumstances constituting a Superior
Indebtedness Nonmonetary Event of Default existing on any Payment Blockage
Commencement Date may be used as a basis for any subsequent blockage period
unless cured or waived. As used herein, the term "Payment Blockage
Commencement Date" shall mean the date on which written notice of a
Superior Indebtedness Nonmonetary Event of Default is given by any holder
of such Superior Indebtedness to the Company.
(b) If any payment or distribution of any kind or character (whether in
cash, securities or other property) or any security shall be received by any
E-4
holder of the subordinated notes in contravention of any of the terms of this
(S)___, such payment or distribution or security shall be held in trust for the
benefit of, and shall be paid over or delivered and transferred to, holders of
the Superior Indebtedness pro rata for application to the payment of all
Superior Indebtedness remaining unpaid, to the extent necessary to pay all such
Superior Indebtedness in full in cash. In the event of the failure of any
holder of the subordinated notes to endorse or assign any such payment,
distribution or security, any holder of the Superior Indebtedness or such
holder's representative is hereby irrevocably authorized to endorse or assign
the same.
(c) The holder of each subordinated note undertakes and agrees for the
benefit of each holder of Superior Indebtedness to execute, verify, deliver and
file any proofs of claim within 30 days before the expiration of the time to
file the same which any holder of Superior Indebtedness may at any time require
in order to prove and realize upon any rights or claims pertaining to the
subordinated notes and to effectuate the full benefit of the subordination
contained herein; and upon failure of the holder of any subordinated note so to
do, any such holder of Superior Indebtedness shall be deemed to be irrevocably
appointed the agent and attorney-in-fact of the holder of such note to execute,
verify, deliver and file any such proofs of claim.
(d) No right of any holder of any Superior Indebtedness to enforce
subordination as herein provided shall at any time or in any way be affected or
impaired by any failure to act on the part of the Company or the holders of
Superior Indebtedness, or by any noncompliance by the Company with any of the
terms, provisions and covenants of the subordinated notes or the agreement under
which they are issued, regardless of any knowledge thereof that any such holder
of Superior Indebtedness may have or be otherwise charged with.
(e) No holder of any subordinated notes will sell, assign, pledge, encumber
or otherwise dispose of any of its subordinated notes unless such sale,
assignment, pledge, encumbrance or disposition is made expressly subject to the
foregoing provisions.
(f) The Company agrees, for the benefit of the holders of Superior
Indebtedness, that in the event that any subordinated note is declared due and
E-5
payable before its expressed maturity because of the occurrence of a default
hereunder, (1) the Company will give prompt notice in writing of such happening
to the holders of Superior Indebtedness, (2) all Superior Indebtedness shall
forthwith become immediately due and payable upon demand, regardless of the
expressed maturity thereof and (3) the holders of such subordinated notes shall
not be entitled to receive any payment or distribution in respect thereof or
applicable thereto until all Superior Indebtedness at the time outstanding shall
have been paid in full in cash.
(g) The subordination effected by the foregoing provisions and the rights
created thereby of the holders of the Superior Indebtedness shall not be
affected by (1) any amendment of or addition or supplement to any Superior
Indebtedness or any instrument or agreement relating thereto, (2) any exercise
or non-exercise of any right, power or remedy under or in respect of any
Superior Indebtedness or any instrument or agreement relating thereto, or (3)
the giving or denial of any waiver, consent, release, indulgence, extension,
renewal, modification or delay or the taking or nontaking of any other action,
inaction or omission, in respect of any Superior Indebtedness or any instrument
or agreement relating thereto or to any securities relating thereto or any
guarantee thereof, whether or not any holder of any subordinated notes shall
have had notice or knowledge of any of the foregoing.
E-6
