RENTAL AGREEMENT
THIS RENTAL AGREEMENT, dated as of January 31, 2003 (this
“Agreement”), is by and between Boston Rental Partners LLC, a Delaware
limited liability company with its principal place of business at 000 Xxxx
Xxxxxx Xxxxxxxxx, XX 00000 (“Boston Rental”) and NationsRent
Inc., a Delaware corporation with its principal place of business at 000 X. Xxx
Xxxx, Xx. Xxxxxxxxxx, XX 00000 (“NationsRent”, with Boston
Rental and NationsRent being collectively referred to as the
“Parties”). Initially capitalized terms used and not defined in
this Agreement have the meanings ascribed to them in the Term Sheet (as defined
below).
WHEREAS, Boston Rental is the owner of, or is leasing, certain equipment
and is willing to rent or sub-rent the same to NationsRent on the terms and
conditions hereinafter set forth for rental by NationsRent to its customers in
the ordinary and normal course of its business;
WHEREAS, in accordance with the Term Sheet Regarding Settlement Program
which was approved by the Bankruptcy Court (“Term Sheet”), the
parties are entering into this Agreement, which shall serve as a “Rental
Contract” as described in Section IV. C. of the Term Sheet;
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
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During the Term for a given item of Equipment, Boston Rental agrees to rent to
NationsRent, and NationsRent agrees to rent from Boston Rental, subject to the
terms of this Agreement, the items of equipment (together with all accessories,
attachments, and replacements thereto) identified in various schedules, the form
of which will be substantially as set forth in Exhibit A hereto (each, a
“Schedule”) (collectively, the “Equipment”
and, individually, each an “item of Equipment”). Each Schedule
must be signed by the Parties and incorporate this Agreement by reference. As
used herein, the term “Term Commencement Date” with respect to each
item of Equipment covered by this Agreement shall be as set forth on Exhibit A
hereto. NationsRent is responsible for all costs of loading, packing,
transportation, shipping and freight with respect to the Equipment. From and
after the Term Commencement Date, during the Term and until the Equipment is
returned to Boston Rental, NationsRent agrees that all risk of loss of the
Equipment shall be on NationsRent.
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This Agreement shall commence upon execution by the parties and shall remain in
effect so long as any item of Equipment remains on rent to NationsRent. The
initial rent term for each item of Equipment shall commence on the Term
Commencement Date and shall continue until the first anniversary of said Term
Commencement Date (the “Initial Rent Term”). Upon the
expiration of the Initial Rent Term for a given item of Equipment, the Initial
Rent Term for such item of Equipment shall thereafter be automatically renewed
on a month-to-month basis for successive one month periods (with each such
monthly period being referred to as a “Renewal Term”; and with
the Initial Rent Term and each Renewal Term for a given item of Equipment being
referred to as the “Term” for such item of Equipment) unless:
(i) either Party gives the other at least thirty (30) days advance written
notice of its intent to terminate the Term for a given item of Equipment, in
which case, subject to Sections 6, 8 and 10 hereof, the Term for such item of
Equipment will terminate on the thirtieth day after the date of such termination
notice; or (ii) this Agreement is terminated in accordance with Section
8; provided, however, that, if NationsRent elects to terminate
the Agreement as to any given item of Equipment that is being returned to Boston
Rental, NationsRent will pay to Boston Rental a return fee equal to 5% of the
Acquisition Cost (as defined in the Term Sheet) of such item of Equipment (as
reasonably determined by Boston Rental in accordance with the Term Sheet).
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For each item of Equipment, NationsRent shall pay the monthly rental payment
specified in Exhibit A hereto (each, a “Monthly Rent Payment”).
Boston Rental shall invoice NationsRent on the “Rent Commencement
Date” as set forth on Exhibit A hereto and thereafter on a monthly basis
for each Monthly Rent Payment. NationsRent agrees to pay all invoices issued by
Boston Rental in accordance with the terms thereof, which terms, if related to
an item of Equipment rented by Boston Rental, reasonably reflect the terms upon
which Boston Rental is renting such item; provided, however, that to the extent
that any provision of any such invoice conflicts with any of the provisions of
this Agreement, the provisions of this Agreement will control. Boston Rental
shall also invoice NationsRent on a monthly basis for (i) such additional
Monthly Rent Payments as are permitted by Section 10 hereof; (ii) up to three
percent (3.0%) of any other Acquisition Costs (as defined in the Term Sheet) not
set forth on Exhibit A hereto related to any given item of Equipment, but
without duplication to any Acquisition Costs paid by NationsRent under this
Agreement or any similar rental agreement with Boston Rental; and (iii) any
other amounts due and payable under this Agreement. To the extent that
NationsRent does not pay any Monthly Rental Payment or any other amount due
under this Agreement when due and owing, NationsRent agrees to pay Boston Rental
1.5% per month interest on such delinquent amounts, but not to exceed, however,
the maximum permitted by applicable law.
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The Equipment shall remain at all times during the Term of
this Agreement and thereafter the sole and exclusive property of Boston Rental.
NationsRent shall execute such documents and undertake such action as Boston
Rental may reasonably request to protect, verify, reflect and assure Boston
Rental’s title to and ownership of the Equipment. NationsRent agrees that:
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a) |
it shall not, by either act or omission, in any way adversely
affect Boston Rental's title to and ownership of the Equipment; |
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b) |
it shall not allow any lien or encumbrance to be placed
against the Equipment (other than mechanics' liens and materialmen's liens, for
which NationsRent shall have a 30 day cure period to have released); provided,
however, that NationsRent's leasehold interest and its rights under this
Agreement may be subject to a lien in connection with the Credit Agreement;
and |
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c) |
it shall indemnify and hold Boston Rental harmless from and against any
claim, demand, or loss which may affect Boston Rental's title to and ownership
of the Equipment. |
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“Credit Agreement” means (i) that certain
Amended and Restated Debtor In Possession Revolving Credit Agreement, dated as
of December 31, 2002 (the “DIP”), by and among NationsRent, its
subsidiaries party thereto, General Electric Capital Corporation, as
administrative agent, syndication agent, and co-agent, and the other
institutions party thereto; and (ii) any and all related amendments, amendment
and restatements, waivers, consents, increases, refinancings or successor
financings (including, without limitation, any so-called “exit
financings” or subsequent financings), in each case, regardless of whether
such Credit Agreement is with the same or different lenders, regardless of
whether the aggregate principal amount outstanding under such Credit Agreement
is greater than the maximum amount permitted under the DIP, and regardless of
whether the maturity date of such Credit Agreement is greater than the maturity
date with respect to the DIP. |
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NationsRent shall be entitled to sub-rent the Equipment to
others. However, in so doing, NationsRent shall:
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a) |
upon the request of Boston Rental, advise Boston Rental of the
location of the Equipment and of the identity of the user/sub-renter of the
Equipment; |
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b) |
upon the request of Boston Rental, make available to Boston Rental
for inspection during regular business hours and upon reasonable notice the
originals or certified copies of any and all Rental Agreements (as defined
below) which NationsRent may enter into with any user/sub-renter of the
Equipment; |
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c) |
as soon as practicable advise Boston Rental of any material loss
or damage to any item of Equipment; |
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d) |
not allow any user or any other individual or entity to make any
alteration, modification or change to the Equipment, without the prior written
consent of Boston Rental; |
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e) |
permit the Equipment to be operated only by competent and trained
operators and require at all times the Equipment to be operated in accordance
with the applicable manuals and instructions; and |
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f) |
without the prior written consent of Boston Rental, not enter into
any Rental Agreements (as defined below) whereby any user/sub-renter is granted
or deemed to acquire a purchase option, a right to purchase or any right or
interest in any item of Equipment, except the right to use such item of
Equipment under said Rental Agreements (as defined below). |
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NationsRent shall be entitled to sublease or rent any or all items
of Equipment to unrelated third-parties in the ordinary course of its business
(it being understood and acknowledged by Boston Rental that NationsRent’s
primary business is the leasing and rental of equipment, including the items of
Equipment, to unrelated third-parties) pursuant to a rental agreement (the
“Rental Agreement”); provided, however, that each
such Rental Agreement must contain language in substantially in the form set
forth on Exhibit B hereto. Accordingly, the rights of any sub-renter
shall be subject to and subordinate to all the terms of this Agreement, and to
the interest of Boston Rental thereunder in the Equipment, including the
covenants set forth in Section 6 and Boston Rental’s rights set forth in
Sections 8 and 9. No Rental Agreement shall permit the sub-renter to take any
action not permitted to be taken by NationsRent under this Agreement in respect
of the Equipment.
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| 6. |
Responsiblity of NationsRent |
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NationsRent shall, during the Term of this Agreement, be solely and
absolutely responsible to Boston Rental for any loss, theft, destruction or
damage to the Equipment. By reason of such, NationsRent agrees that:
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a) |
it will (i) insure each item of Equipment with such insurer or
insurers, for such amounts, and in accordance with such terms as are consistent
with NationsRent's normal and ordinary practices; (ii) name Boston Rental as an
additional insured on NationsRent liability insurance; (iii) deliver to Boston
Rental prior to the Rent Commencement Date, and upon any renewals or changes to
such insurance, certificates of insurance naming Boston Rental as a loss payee
or an additional insured, as the case may be, under such insurance policies; and
(iv) reimburse Boston Rental for the premiums (in an amount not to exceed
$50,000 per year) related to any additional insurance with respect to the
Equipment for periods during the Term in the amount specified as the "Loss
Value" on Exhibit A for each item of Equipment; |
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b) |
in the event of damage to any item of Equipment which can be
repaired, NationsRent shall be responsible for repairing the same and for all
costs and expenses relating thereto and there shall be no waiver or reduction of
NationsRent's obligation to pay to Boston Rental the Monthly Rent Payments under
Section 3 hereof during the period such item of Equipment is damaged; |
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c) |
in the event of the damage to any item of Equipment which is
damaged beyond repair, the loss of any item of Equipment, or the sale of any
item of Equipment, NationsRent shall pay to Boston Rental the sum of (i) the
amount specified as the "Loss Value" on Exhibit A; plus (ii) any unpaid other
Acquisition Costs (as defined in the Term Sheet) with respect to such item of
Equipment (as reasonably determined by Boston Rental in accordance with the Term
Sheet); minus (iii) any Monthly Rental Payments made by NationsRent with respect
to such item of Equipment within thirty (30) days of the occurrence of such
damage, loss or sale. Upon such payment and the payment of any other amounts due
with respect to that item of Equipment, the Term of this Agreement with respect
to that item of Equipment shall terminate, and good and marketable title to such
item of Equipment will be deemed automatically transferred by Boston Rental to
NationsRent free and clear of all liens caused by Boston Rental; |
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d) |
keep and maintain the Equipment in good and operable condition;
including but not limited to the following NationsRent responsibilities: |
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Maintenance:
NationsRent shall be responsible for any and all maintenance as defined in the
applicable ANSI standard and as required by the manufacturer of the
Equipment. |
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Inspections:
NationsRent shall be responsible for all frequent, annual, and pre-delivery
inspections as defined in the applicable ANSI standard and as required by the
manufacturer of the Equipment. |
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Bulletins: NationsRent agrees to perform all future safety and service
bulletins of which it is made aware by the manufacturer of the Equipment, by
Boston Rental, or by any other source. |
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Training:
NationsRent shall provide all operator training as required in the applicable
ANSI standard. |
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Manuals: NationsRent agrees to keep all operators and maintenance manuals
and the applicable ANSI Manual of Responsibilities with the
Equipment. |
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Records Retention: NationsRent agrees to retain all Equipment records,
including all inspections, maintenance, and service. |
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Modifications: NationsRent agrees that any alterations, modifications or
changes shall not be done without prior written permission from the original
manufacturer. |
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Replacement Parts: NationsRent agrees that all replacement parts required
must be identical or equivalent to the original Equipment parts. |
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Notification of Incidents: NationsRent agrees that it will as soon as
practicable report to Boston Rental’s Product Safety & Reliability
Department all incidents involving the Equipment which come to its attention and
which result in personal injury or substantial property damage. NationsRent
shall investigate such incidents and defend any claims resulting therefrom;
NationsRent shall provide a Boston Rental representative with a report of such
investigation. |
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All parts that NationsRent replaces and any alterations or additions that
NationsRent makes to the Equipment shall become Boston Rental’s
property. |
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e) |
NationsRent shall use, maintain and operate the Equipment lawfully
and exclusively in connection with its business operations and for the purpose
for which the Equipment was designed and intended. NationsRent acknowledges and
agrees that all Equipment is rented for business purposes only, and, except in
the ordinary and normal course of business, not for personal, family or
household use by NationsRent or its employees or affiliates. NationsRent shall
take any necessary actions to preserve all of NationsRent's and Boston Rental's
rights under any applicable warranties. Upon the request of Boston Rental,
NationsRent shall advise Boston Rental of the location of the Equipment. No item
of Equipment shall be taken by NationsRent, or permitted by NationsRent to be
taken, outside of the United States of America. |
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f) |
NationsRent further agrees it shall indemnify and hold Boston
Rental and its affiliates harmless from and against any claim, demand, expense,
costs, damages or loss including attorneys' fees resulting from injury or damage
(including, without limitation, personal injury or death) resulting from the use
of the Equipment or in any way connected with the breach by NationsRent of any
term of this Agreement or by NationsRent's failure to fully and timely perform
all obligations imposed by the Agreement. |
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g) |
NationsRent shall reimburse Boston Rental for, and shall indemnify
and hold Boston Rental harmless from and against (on an after-tax basis), all
taxes (including, but not limited to, use, sales and personal property taxes),
fees, permits and the like, together with any penalties, fines or interest
thereon, which may be levied, imposed or assessed at any time on any person or
entity by reason of the delivery, ownership, possession, operation, maintenance,
use, leasing or subleasing of the Equipment or otherwise arising by reason of
this Agreement, excluding, however, taxes based on or measured by the net income
of Boston Rental. |
| 7. |
Condition of the Equipment |
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NationsRent acknowledges that the Equipment may be either new or
used equipment. BOSTON RENTAL MAKES NO WARRANTY AS TO THE EQUIPMENT AND FURTHER
BOSTON RENTAL DOES HEREBY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING
BUT NOT LIMITED TO ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. IT IS HEREBY ACKNOWLEDGED AND AGREED THAT THE EQUIPMENT IS RENTED
“AS IS.”
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If Boston Rental receives from a provider of Equipment to it any
warranty (express or implied) as to an item of Equipment, then a limited right
to such warranty rights during the Term of such item of Equipment shall be
deemed included in the rental of such item of Equipment by Boston Rental to
NationsRent, to the extent not prohibited by the acquisition agreement between
Boston Rental and such Equipment provider.
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| 8. |
Termination of the Agreement |
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Boston Rental shall have the right to immediately and without notice
terminate this Agreement and the rent terms of the Equipment upon the occurrence
of any of the following events:
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a) |
if NationsRent fails to make any payment due under this Agreement
within fifteen (15) days of the applicable due date; |
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b) |
if NationsRent fails to timely and completely perform any
provision of this Agreement, which failure remains uncured for a period of 30
days following Boston Rental's notice to NationsRent of the same; |
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c) |
the failure of NationsRent to pay when due (after giving effect to
any grace or required notices) any amounts due to Boston Rental under any other
rental agreement between Boston Rental and NationsRent that is entered into
pursuant to the Term Sheet; |
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d) |
if an event of default occurs under the Credit Agreement and the
indebtedness thereunder is accelerated. |
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As and to the extent this Agreement is terminated pursuant to
Section 8 of this Agreement, Boston Rental may, in its sole discretion, do any
one or more of the following:
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a) |
demand that NationsRent return the Equipment to Boston Rental in
accordance with Section 10 hereof; |
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b) |
enter upon the premises where the Equipment is located and take
immediate possession of and remove the same, all without liability to Boston
Rental or its agents for such entry; |
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c) |
exercise any other right or remedy which may be available to it
under the Uniform Commercial Code or any other applicable law or proceed by
appropriate court action to enforce the terms or to recover damages for the
breach hereof or to rescind this Agreement as to any or all Equipment. |
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In addition, NationsRent shall be liable for all reasonable legal
fees and other costs and expenses resulting from the termination or the exercise
of Boston Rental’s remedies, including placing any item of Equipment in the
condition required by Section 10 hereof. No remedy referred to in this Section
is intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to Boston Rental at law or
in equity. To the extent permitted by applicable law, NationsRent hereby waives
any rights now or hereafter conferred by statute or otherwise which may
otherwise limit or modify any of Boston Rental’s rights or remedies under
this Section, or which may require any notice by Boston Rental to NationsRent of
the taking of any action or exercising any rights (or intending to take any
action or to exercise any rights) granted or permitted hereunder. Termination of
this Agreement shall not affect or alter NationsRent’s obligations under
Sections 3, 4, 5, 6, 7, 9, 10 and 12 of this Agreement, which Sections the
parties agree shall survive termination of this Agreement.
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Upon termination of this Agreement as to any item of Equipment
pursuant to Sections 2 or 8, NationsRent shall immediately, at its own cost and
expense, return the Equipment to a location designated by Boston Rental within
the Continental United States of America. The Equipment so returned shall be in
good and operable condition and in the same condition as at the commencement of
the Initial Rent Term, normal wear and tear excepted (normal wear and tear shall
be based on an eight (8) hour day, a five (5) day week, and a twenty (20) day
month, unless NationsRent paid all Excess Use Payments in which case normal wear
and tear shall be based on the actual periods of use). NationsRent shall notify
Boston Rental of any use in excess of such basis, with NationsRent to pay for
such excess use at the rate of 150% of the Monthly Rent Payment specified in
Exhibit A pro-rated for the applicable period of such excess use
(“Excess Use Payments”). The receipt by Boston Rental of the
return of any item of Equipment shall not relieve NationsRent of its obligations
to make: (i) the Monthly Rent Payments due under Section 3 and any Excess Use
Payments under this Section 10 as to such item of Equipment for the rent term
prior to such return to Boston Rental and (ii) such additional Monthly Rent
Payments subsequent to such return to Boston Rental for the period required to
effect any repairs or service to place the item of Equipment in the condition
required by this sentence. NationsRent shall pay to Boston Rental an amount
equal to the costs and expenses incurred by Boston Rental in so placing any such
item of Equipment in the condition required by the preceding sentence. In all
instances where NationsRent is returning the Equipment to Boston Rental,
NationsRent shall give Boston Rental written notice thereof and such notice
shall be delivered to Boston Rental by NationsRent at least 30 days prior to the
expected date of return by NationsRent. The Term of this Agreement with respect
to an item of Equipment to be returned pursuant to this Section shall continue
until that item of Equipment is returned and placed in the condition required by
this Section, and all other provisions of this Agreement shall continue to
apply.
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| 11. |
Right to Inspect and Performance of NationsRent’s
Obligations |
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Boston Rental shall have the right, during regular business hours
and upon reasonable advanced written notice, to enter upon the premises of
NationsRent (or any of its affiliated companies) or the premises of third
parties to inspect the Equipment and applicable inspection, operating,
maintenance and repair records related to the Equipment to assure that
NationsRent has complied with and is complying with the terms of this Agreement.
If NationsRent fails to perform any of its obligations hereunder, Boston Rental
may perform any act or make any payment that Boston Rental deems reasonably
necessary for the maintenance and preservation of the Equipment and Boston
Rental’s interests therein; provided, however, that the performance of any
act or payment by Boston Rental shall not be deemed a waiver of, or re-rent
from, the obligation at issue. All sums so paid by Boston Rental, together with
expenses (including reasonable legal fees and costs) incurred by Boston Rental
in connection therewith, shall be paid to Boston Rental by NationsRent
immediately upon demand, as additional rent for the Equipment.
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a) |
This Agreement shall be interpreted in accordance with and
governed by the laws of the State of New York. BOSTON RENTAL AND NATIONSRENT
CONSENT TO THE JURISDICTION OF THE BANKRUPTCY COURT, AND WAIVE ANY OBJECTION
RELATING TO IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY
PROCEEDING IN ANY SUCH COURT. |
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b) |
If any provision of this Agreement is prohibited by or declared
invalid, illegal or unenforceable under the laws of any state or other
jurisdiction, this Agreement shall be considered divisible as to such provision
and all other provisions of this Agreement shall remain in full force and
effect. |
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c) |
This Agreement shall be binding upon, and shall inure to the
benefit of the parties and their respective heirs, successors and assignees;
provided, however, that, except as otherwise provided in this Agreement,
NationsRent's rights and obligations hereunder cannot be assigned, in whole or
in part, directly or indirectly, by NationsRent, by operation of law or
otherwise, to any person or entity without the prior written consent of Boston
Rental, which consent may be withheld in its sole and absolute discretion.
Boston Rental shall have the right to assign, sell and/or transfer this
Agreement, the Equipment and any interest or part thereof, provided that any
such assignment, sale and/or transfer shall be made subject to the rights of
NationsRent hereunder. Any such assignment, sale and/or transfer to an affiliate
of Boston Rental may be made without the consent of NationsRent; any such
assignment, sale and/or transfer to a party that is not an affiliate of Boston
Rental may be made with the prior written consent of NationsRent, which consent
shall not be unreasonably withheld. |
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d) |
This Agreement (and the Term Sheet and the Bankruptcy Court order
approving the Term Sheet) contains the entire and only agreement between Boston
Rental and NationsRent with respect to the Equipment and may not be varied,
modified or amended except in writing signed by an authorized representative of
each party. |
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e) |
Failure of either party at any time to require performance of any
provisions of this Agreement shall not affect the right of that party to require
full performance of such provision or any other provision of this Agreement at
any time thereafter, and the waiver by either party of a breach of any provision
shall not constitute a waiver or nullify the effectiveness of any subsequent
breach of such provision or any other provision of this Agreement. |
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f) |
All notices under this Agreement shall be in writing and shall be
delivered by certified mail, postage prepaid to the addresses set forth at the
beginning of this Agreement. All notices to be given to Boston Rental by
NationsRent shall be sent to the attention of Xxxxx X. Xxxx, Managing Member at
the address of Boston Rental. All notices to be given to NationsRent by Boston
Rental shall be sent to the attention of Xxxx Xxxxxxx, Vice President and
Treasurer at the address of NationsRent. |
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g) |
This Agreement may be executed in two or more counterparts; each
of which shall be deemed an original, but all of which shall constitute one and
the same instrument. The parties understand and agree that the transactions
covered by this Agreement may be accomplished in reliance on the facsimile or
electronically transmitted signatures of NationsRent and Boston Rental on
documents. Each party authorizes the other to rely on such signatures and
warrants that the same are authorized and genuine. Boston Rental and NationsRent
each agrees to provide the original signatures represented by facsimile or
electronically transmitted signatures to the other party promptly upon
request. |
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h) |
The following Exhibit A and Exhibit B are attached hereto, are
incorporated herein and made a part hereof. |
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above-written.
NationsRent, Inc.
By: ________________________________
Name: ______________________________
Title: _______________________________ |
Boston Rental Partners, LLC
By: ________________________________
Name: ______________________________
Title: _______________________________ |
Exhibit A
Form of Schedule
This
Schedule No. ____, dated as of ___________ __, 200_ (this
“Schedule”), is being executed and delivered pursuant to that
certain Rental Agreement (the “Agreement”), dated as of January
__, 2003, by and between Boston Rental Partners, LLC, a Delaware limited
liability company (“Boston Rental”), and NationsRent, Inc., a
Delaware corporation (“NationsRent”).
| 1. |
This Schedule is entered into pursuant to Section 1 of the
Agreement, and the Agreement is incorporated hereby by reference. |
| 2. |
The equipment described on Schedule 1 hereto is Equipment
(as defined in the Agreement) and is subject to the terms and conditions of the
Agreement. |
IN
WITNESS WHEREOF, the parties have executed this Schedule as of the date first
written above.
NationsRent, Inc.
By: ________________________________
Name: ______________________________
Title: _______________________________ |
Boston Rental Partners, LLC
By: ________________________________
Name: ______________________________
Title: _______________________________ |
Schedule 1
Equipment
Item(s) of Equipment |
Term Commencement
Date |
Rent Commencement
Date |
Monthly Rent
Payment |
Loss
Value |
Exhibit B
Sublease/SubRental Agreement
Language
This rental agreement/sublease/contract and all of
customer’s rights in and to the equipment rented/leased hereunder are
subject and subordinate to any rights, title, and interests of all and any
persons who have financed or leased such equipment for NationsRent, Inc., or its
subsidiaries pursuant to certain agreements or instruments. Customer’s
rights in and to the equipment will terminate, at the option of the person(s)
who financed or leased such equipment, upon the occurrence of any event of
default under such agreements or instruments.
TERM SHEET REGARDING
EQUIPMENT SETTLEMENT PROGRAM
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This Term Sheet Regarding Equipment Settlement
Program (this “Term Sheet”), dated as of December 23, 2002, is
intended to set forth the general terms and conditions pursuant to which Boston
Rental Partners, LLC, a Delaware limited liability company (“Boston
Rental”), NationsRent, Inc., a Delaware corporation
(“Parent”), and the subsidiaries of Parent (collectively with
Parent, “NationsRent”; with Boston Rental and NationsRent
collectively referred to as the “Parties”) would consummate
certain Transactions (as defined below). The Parties have entered into this Term
Sheet to establish a program (the “Program”) with respect to
the Transactions to accomplish the following purposes and
objectives: |
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A. |
To set forth the Parties' shared objective of the Transactions;
and |
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B. |
To delineate the Parties' roles and responsibilities in
implementing the Program. |
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The principal objective of the Program shall be to
facilitate the renting, leasing, purchasing, or financing of new and used
inventory and equipment by NationsRent (the “Transactions”)
through: (i) the purchase by Boston Rental of certain purchase money financing
agreements, finance leases, and operating leases with respect to inventory and
equipment (with any such inventory or equipment being referred to as
“Equipment”) to which NationsRent is a party (collectively, the
“Current Agreements”) from the lender or the lessor under such
Current Agreements (each, a “Lender”); and (ii) the purchase by
Boston Rental of new and used Equipment that either: (A) was subject to a
Current Agreement that was rejected by NationsRent; or (B) if not subject to
such a Current Agreement, is substantially similar to Equipment that was subject
to a Current Agreement that was rejected by NationsRent, in each case, with the
objective of: (a) renting such Equipment to NationsRent pursuant to rental
contracts (each, a “Rental Contract”) at rental rates equal to
or less than the fair market value for such Equipment (which fair market value
the Parties agree is less than the current rates paid by NationsRent with
respect to the Equipment under the Current Agreements); and (b) at the time of
the confirmation of NationsRent’s plan of reorganization (the
“Plan”), transferring such Rental Contracts and the Equipment
subject thereto to NationsRent for consideration which will permit Boston Rental
to recover its investment and expenses (including financing costs) with respect
to such Equipment. |
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Boston Rental is a newly formed Delaware limited liability company formed
exclusively for the purpose of effecting the Program and the Transactions.
Boston Rental is owned exclusively by Phoenix Rental Partners, LLC
(“Phoenix”) and Baupost Capital LLC. The owners of Boston
Rental own a significant portion of NationsRent’s senior secured bank debt
and also own unsecured pre-petition claims against NationsRent. Neither Boston
Rental nor its owners are current lessors to NationsRent, but an affiliate of
Phoenix leases real property to NationsRent. |
| IV. |
Roles and Responsibilities With Respect To The
Transactions |
| |
In implementing the Program and the Transactions, the Parties will work
cooperatively and will use their commercially reasonable efforts to carry-out
the objectives set forth in this Term Sheet and to consummate the Transactions
prior to the effective date of the Plan, in the manner generally described
below. |
|
A. |
Boston Rental intends to acquire a portfolio of Equipment suitable
for use in NationsRent's business. Such Equipment will be acquired as described
in Section II above; provided, however, that, if specific items of
Equipment subject to Current Agreements cannot be acquired for the fair market
value by Boston Rental through direct negotiations with Lenders, Boston Rental
may acquire substantially similar Equipment and make this Equipment available to
NationsRent pursuant to one or more Rental Contracts. The Parties will work
together to mutually identify Current Agreements and Equipment that may be
candidates for such acquisition. |
|
B. |
Boston Rental will finance its Equipment acquisitions by means
of: |
|
1. |
Capital provided by Phoenix and Baupost. |
|
2. |
Secured third-party equipment financing, from one or more
lenders. |
|
3. |
Vendor Financing, from one or more equipment manufacturers. |
|
C. |
Boston Rental intends to offer the Equipment to NationsRent on a
rental basis, in accordance with the terms of a Rental Contract, the general
economic terms of which are set forth on Annex A hereto and the general
terms and conditions of which are set forth on Annex B hereto, but in
each case, which will be mutually negotiated and agreed upon by the Parties on
an arms' length basis and will be at rental rates equal to or less than the fair
market value therefor (which fair market value the Parties agree is less than
the current rates paid by NationsRent with respect under the Current
Agreements). |
|
D. |
NationsRent intends to satisfy certain of its Equipment needs by
renting Equipment from Boston Rental as described in Section IV.C above.
Each Party will comply with the terms and conditions of the Rental Contract,
which will provide, among other things, that NationsRent will promptly pay all
amounts due to Boston Rental under the Rental Contract. |
|
E. |
NationsRent may, if permitted by the United States Bankruptcy
Court for the District of Delaware (the “Bankruptcy Court”),
reject, terminate, or assign to a third-party various of the Current Agreements,
and will arrange for the return or transfer of the Equipment subject thereto to
the respective Lenders or assignees and, where appropriate, the filing of a
UCC-3 termination statement for any UCC financing statement filed in connection
with such Equipment. |
|
F. |
It is the intention of the Parties that subsequent to the
emergence of NationsRent from bankruptcy, NationsRent may acquire (by
acquisition, merger or otherwise) (the “Acquisition”) Boston
Rental or all of its assets and liabilities for an amount in cash equal to the
equity capital contributed to Boston Rental plus the assumption of all
indebtedness of Boston Rental plus expenses, including, in each case, financing
costs, all as generally described on Annex A hereto. Nothing herein
contained however shall require NationsRent to consummate such Acquisition. |
| V. |
Conditions Precedent to the Program |
| |
It shall be a condition precedent to the Program and the Transactions that the
Parties obtain the requisite approval of the Bankruptcy Court of this Term
Sheet; provided, however, that it is the parties’ intention
not to obtain Bankruptcy Court approval with respect to any specific Transaction
after this Term Sheet has received Bankruptcy Court approval. |
| |
The Parties shall consult with each other and shall
agree in advance with regard to the form and substance of any press release or
other public disclosure relating to this Term Sheet and to the Program and the
Transactions, whether to their employees, the media or the general public, in
each case, except that nothing in this Term Sheet shall prohibit a disclosure by
NationsRent of this Term Sheet or its contents: (i) as may be required by law;
(ii) in connection with NationsRent’s chapter 11 proceedings (including,
without limitation, the preparation, filing, and distribution of the Plan and
related Disclosure Statement); and (iii) to (A) those individuals who are
NationsRent’s officers, directors, employees, or advisors; (B) the members
of the official committee of unsecured creditors of NationsRent; and (C)
NationsRent’s prepetition and postpetition senior secured lenders, in each
case, who have a need to know of such matters. |
| |
The Parties agree that this Term Sheet will remain in effect until the earliest
to occur of (i) June 30, 2004, (ii) 90 days following the confirmation of
NationsRent’s Plan, or (iii) the acquisition of Boston Rental by
NationsRent or by its affiliate. |
| VIII. |
Governing Law; Entire Agreement; Survival |
| |
This Term Sheet shall be governed by, construed and enforced in accordance with
the laws of the State of New York, without regard to conflicts of laws
principles. This Term Sheet constitutes the entire agreement between the Parties
with regard to the subject matter hereof and supersedes all prior agreements
between the Parties with regard to the subject matter hereof. This Term Sheet
may not be amended or modified except by a writing signed by the
Parties. |
| |
The Transactions will be consummated as promptly as
reasonably practicable following the satisfaction of the conditions set forth
herein. |
BOSTON RENTAL PARTNERS, LLC
By: ________________________________
Name: ______________________________
Title: _______________________________ |
NATIONSRENT, INC.
By: ________________________________
Name: ______________________________
Title: _______________________________ |
Annex A
General Economic Terms
| A. |
NationsRent will pay for the Equipment on a "break even" basis
(with respect to Rental Contracts, in the form of rent payable monthly in
advance, and with respect to purchases of Equipment at the end of the term of
such Rental Contracts, in the form of purchase price). |
| B. |
In general, subject to Section IV.C of the Term Sheet, with
respect to rent paid under Rental Contracts, "break even" shall mean with
respect to any item of Equipment purchased by Boston Rental, a monthly rate not
to exceed three percent (3.0%) of the Acquisition Cost of such item of
Equipment. |
| |
“Acquisition Cost” means, subject to Section IV.C of the
Term Sheet: (i) Boston Rental’s actual out-of-pocket purchase cost for such
item of Equipment; plus (ii) any repair or make ready cost or positioning
cost for such item of Equipment; plus (iii) any reasonable out-of-pocket
expenses related to the acquisition of such item of Equipment, such as due
diligence, inspection, or legal costs; plus (iv) any other expense incurred by
Boston Rental, directly or indirectly, in connection with the Acquisition, the
Transactions or the Program, including any cost of capital. |
| C. |
In general, with respect to the acquisition by NationsRent of any
given item of Equipment subject to a Rental Contract upon the effective date of
the Plan, "break even" shall mean: (i) the Acquisition Cost for such item of
Equipment; plus (ii) actual out of pocket expenses paid by Boston Rental with
respect to such item of Equipment under the credit facility or other debt
financing (including interest, points, etc.); plus (iii) a market rate of return
on the capital funding with respect to such item of Equipment; minus (iv) 100%
of rent paid by NationsRent under the Rental Contract for such given item of
Equipment. |
Annex B
General Terms of Rental Contract
| A. |
Term. In general, the term for each Rental Contract shall
commence on the date that NationsRent receives the Equipment subject thereto and
the applicable conditions precedent have been satisfied. Subject to the
consummation of the Acquisition, such term will continue for a minimum of twelve
months, after which time, either party may cancel the Rental Contract upon 30
days advance written notice, with, in the case of a cancellation by NationsRent,
a cancellation/return fee equal to 5% of the Acquisition Cost for such item of
Equipment payable by NationsRent to Boston Rental. |
| B. |
Condition Precedent. A condition precedent to NationsRent's
obligations under each Rental Contract will be that the Current Agreement to
which the Equipment (or the Equipment that is being substituted) is subject is
terminated, and that NationsRent is fully and completely released from its
obligations under such Current Agreement. |
| C. |
Rent. Rent will be payable by NationsRent as described in
Annex A; provided, however, that certain reasonable
surcharges agreed to by the Parties may be assessed for excessive use of the
Equipment. |
| D. |
Quiet Enjoyment. Boston Rental will retain title to the
Equipment and Boston Rental will covenant that NationsRent will have quiet
enjoyment of all of the Equipment at all times during the term of the Rental
Contract. |
| E. |
Use. NationsRent will be permitted to rent the Equipment to
third-parties in the normal and ordinary course of business; provided,
however, that the rights of such third-parties in the Equipment will be
subordinate to Boston Rental's rights in the Equipment. |
| F. |
Covenants. NationsRent will covenant to: (i) insure the
Equipment at specified values agreed upon by the Parties, which insurance will
name Boston Rental as a "loss payee"; (ii) obtain general liability insurance at
specified values agreed upon by the Parties, which insurance will name Boston
Rental as an additional insured; and (iii) keep the Equipment in good operation
and repair, in accordance with industry standards, normal wear and tear
excepted. |
| G. |
Termination. In addition to the termination rights
specified in paragraph A above, any Rental Contract will be terminable by Boston
Rental if NationsRent fails to make any payment of rent due under such Rental
Contract within ten (10) days after the applicable due date. The Rental
Contracts will contain certain other termination events as may be mutually
agreed upon by the Parties. |
| H. |
Inspection Rights. Boston Rental will have the right to
inspect the Equipment, at NationsRent's sole cost and expense, at such times as
may be mutually agreed upon by the Parties. |
| I. |
Other. The Rental Contract will contain such other terms
and conditions as may be mutually be agreed upon by the Parties. |
