EXHIBIT 10.29
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AMENDED AND RESTATED
CREDIT AGREEMENT
$125,000,000.00
among
ACME ALABAMA, INC.
ACME DIXIE INC.
ACME XXXXX INC.
ACME RENTS, INC.
THE AIR & PUMP COMPANY
AND
XXXXXX XXXXX EQUIPMENT, INC.,
as Borrowers,
RENTAL SERVICE CORPORATION
RSC ACQUISITION CORP.
AND
RSC HOLDINGS, INC.,
as Parent Guarantors,
EACH OF THE FINANCIAL INSTITUTIONS
INITIALLY A SIGNATORY HERETO,
TOGETHER WITH THOSE ASSIGNEES
PURSUANT TO SECTION 12.8,
------------
as Lenders,
BANKERS TRUST COMPANY,
as Issuing Bank
and
BT COMMERCIAL CORPORATION,
as Agent.
DATED AS OF SEPTEMBER 24, 1996
TABLE OF CONTENTS
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Page
Article 1
DEFINITIONS
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1.1 General Definitions.............................................. 3
1.2 Accounting Terms and Determinations.............................. 31
1.3 Computation of Time Periods...................................... 31
1.4 Other Terms; Headings............................................ 32
Article 2
LOANS
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2.1 Commitments...................................................... 32
2.2 Borrowing of Loans............................................... 33
2.3 Disbursement of Loans............................................ 35
2.4 Notices of Borrowing............................................. 35
2.5 Authorized Officers and Agents................................... 36
2.6 Periodic Settlement of Agent Advances and
Repayments....................................................... 36
2.7 Sharing of Payments.............................................. 37
2.8 Defaulting Lenders............................................... 37
Article 3
LETTERS OF CREDIT
-----------------
3.1 Issuance of Letters of Credit.................................... 39
3.2 Terms of Letters of Credit....................................... 39
3.3 Notice of Issuance............................................... 39
3.4 Lenders' Participation........................................... 40
3.5 Payment of Amounts Drawn Under Letters of
Credit........................................................... 40
3.6 Payment by Lenders............................................... 40
3.7 Nature of Issuing Bank's Duties.................................. 41
3.8 Obligations Absolute............................................. 41
3.9 Agent's Execution of Applications and Other
Issuing Bank Documentation; Reliance on
Credit Agreement by Issuing Bank................................. 41
3.10 Additional Payments.............................................. 42
Article 4
COMPENSATION, REPAYMENT, REDUCTION
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AND EXTENSION OF COMMITMENTS
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4.1 Interest on Prime Rate Loans..................................... 43
4.2 Interest on Eurodollar Rate Loans................................ 43
i
4.3 Interest on Other Obligations.................................... 43
4.4 Unused Line Fee.................................................. 44
4.5 Letter of Credit Fees............................................ 44
4.6 Interest After Event of Default.................................. 44
4.7 Expenses......................................................... 45
4.8 Mandatory Payment; Reduction of Commitments...................... 45
4.9 [Intentionally Omitted].......................................... 46
4.10 Maintenance of Loan Account...................................... 46
4.11 Payment Procedures............................................... 46
4.12 Collection of Accounts........................................... 48
4.13 Calculations..................................................... 50
4.14 Special Provisions Relating to Eurodollar
Rate Loans....................................................... 50
4.15 Indemnification in Certain Events................................ 53
4.16 Taxes............................................................ 54
4.17 Obligation of Lenders and Issuing Banks to
Mitigate: Replacement of Lenders................................. 57
Article 5
CONDITIONS PRECEDENT
--------------------
5.1 Conditions to Effectiveness...................................... 59
5.2 Conditions Precedent to All Loans and Letters of Credit.......... 62
Article 6
REPRESENTATIONS AND WARRANTIES
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6.1 Organization and Qualification................................... 63
6.2 Authority........................................................ 63
6.3 Enforceability................................................... 63
6.4 No Conflict...................................................... 63
6.5 Consents and Filings............................................. 64
6.6 Government Regulation............................................ 64
6.7 Solvency......................................................... 64
6.8 Rights in Collateral............................................. 64
6.9 Financial Data................................................... 65
6.10 Subsidiaries; Ownership of Stock................................. 65
6.11 No Judgments or Litigation....................................... 66
6.12 No Defaults...................................................... 66
6.13 Labor Matters.................................................... 66
6.14 Compliance with Law.............................................. 66
6.15 ERISA............................................................ 66
6.16 Compliance with Environmental Laws............................... 67
6.17 Intellectual Property; Real Property............................. 67
6.18 Licenses and Permits............................................. 67
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6.19 Taxes and Tax Returns............................................ 67
6.20 Material Contracts............................................... 68
6.21 Refinanced Indebtedness.......................................... 68
6.22 Securities Activities............................................ 69
6.23 Accuracy and Completeness of Information......................... 69
6.24 No Change........................................................ 69
6.25 Fairness......................................................... 69
Article 7
AFFIRMATIVE COVENANTS
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7.1 Financial Reporting.............................................. 69
7.2 Collateral and Other Reporting................................... 71
7.3 Notification Requirements........................................ 71
7.4 Corporate Existence.............................................. 73
7.5 Books and Records; Inspections................................... 73
7.6 Insurance........................................................ 73
7.7 Taxes............................................................ 74
7.8 Compliance With Laws............................................. 75
7.9 Use of Proceeds.................................................. 75
7.10 Fiscal Year...................................................... 75
7.11 Maintenance of Property.......................................... 75
7.12 ERISA Documents.................................................. 76
7.13 Compliance With Environmental Laws............................... 76
7.14 Compliance with Operating Leases................................. 77
7.15 Compliance with Material Contracts............................... 77
7.16 Maintenance of Separate Existence................................ 77
7.17 Real Property; Landlord Waivers.................................. 78
7.18 Further Assurances............................................... 78
Article 8
NEGATIVE COVENANTS
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8.1 Minimum Rental Equipment Utilization............................. 78
8.2 Minimum Interest Coverage Ratio.................................. 79
8.3 Maximum Total Indebtedness Ratio................................. 79
8.4 Minimum EBITDA................................................... 80
8.5 Capital Expenditures............................................. 81
8.6 Additional Indebtedness.......................................... 83
8.7 Liens............................................................ 84
8.8 Contingent Obligations........................................... 85
8.9 Sale of Assets................................................... 85
8.10 Restricted Payments.............................................. 86
8.11 Fundamental Changes.............................................. 88
8.12 Accounting Changes............................................... 88
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8.13 Termination of Material Contracts and
Governing Documents.............................................. 89
8.14 Restriction on Operating Leases.................................. 89
8.15 Sale and Leaseback Transactions.................................. 89
8.16 Affiliate Transactions........................................... 89
8.17 Additional Bank Accounts......................................... 90
8.18 Excess Cash...................................................... 90
8.19 Additional Negative Pledges...................................... 90
8.20 Additional Subsidiaries.......................................... 90
Article 9
EVENTS OF DEFAULT AND REMEDIES
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9.1 Events of Default................................................ 92
9.2 Acceleration and Cash Collateralization.......................... 94
9.3 Rescission of Acceleration....................................... 95
9.4 Remedies......................................................... 95
9.5 Right of Setoff.................................................. 96
9.6 License for Use of Software and Other
Intellectual Property............................................ 96
9.7 No Marshalling; Deficiencies; Remedies
Cumulative....................................................... 96
Article 10
GUARANTY OF PARENT GUARANTORS
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10.1 Guaranty......................................................... 97
10.2 Guaranty Absolute................................................ 99
10.3 Enforcement; Application of Payments............................. 101
10.4 Waivers.......................................................... 101
10.5 Financial Information............................................ 103
10.6 Reinstatement.................................................... 103
10.7 Subrogation, Contribution, Etc................................... 104
10.8 Subordination.................................................... 104
10.9 Waivers.......................................................... 106
10.10 Termination...................................................... 106
10.11 Advice of Counsel................................................ 107
10.12 Collateral....................................................... 107
Article 11
THE AGENT
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11.1 Appointment of Agent............................................. 107
11.2 Nature of Duties of Agent........................................ 107
11.3 Lack of Reliance on Agent........................................ 107
11.4 Certain Rights of the Agent...................................... 108
11.5 Reliance by Agent................................................ 108
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11.6 Indemnification of Agent......................................... 108
11.7 The Agent in its Individual Capacity............................. 108
11.8 Successor Agent.................................................. 109
11.9 Collateral Matters; Releases from Credit
Documents........................................................ 109
11.10 Actions with Respect to Defaults................................. 110
Article 12
MISCELLANEOUS
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12.1 GOVERNING LAW.................................................... 110
12.2 SUBMISSION TO JURISDICTION....................................... 111
12.3 SERVICE OF PROCESS............................................... 111
12.4 JURY TRIAL....................................................... 111
12.5 LIMITATION OF LIABILITY.......................................... 111
12.6 Delays........................................................... 112
12.7 Notices.......................................................... 112
12.8 Assignments and Participations................................... 113
12.9 Confidentiality.................................................. 114
12.10 Indemnification.................................................. 115
12.11 Amendments and Waivers........................................... 116
12.12 Counterparts; Effectiveness...................................... 116
12.13 Severability..................................................... 117
12.14 Maximum Rate..................................................... 117
12.15 Entire Agreement; Successors and Assigns......................... 118
12.16 Schedules and Exhibits........................................... 118
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ANNEX
Annex I - List of Lenders and Commitment Amounts
EXHIBITS
Exhibit A - Form of Collateral Access Agreement
Exhibit B - [Intentionally Omitted]
Exhibit C - Form of Guaranty and Contribution
Agreement
Exhibit D - Form of Note
Exhibit E - Form of Notice of Borrowing
Exhibit F - Form of Notice of Continuation
Exhibit G - Form of Notice of Conversion
Exhibit H - [Intentionally Omitted]
Exhibit I - Pro Forma
Exhibit J - Projections
Exhibit K - Form of Security Agreement
Exhibit L - Form of Trademark Security Agreement
Exhibit M - Form of Letter of Credit Request
Exhibit N-1 - Form of Lockbox Agreement
Exhibit N-2 - Form of Restricted Account Agreement
Exhibit O - Form of Compliance Certificate
Exhibit P - Form of Borrowing Base Certificate
Exhibit Q - Form of Intercompany Subordinated Note
Exhibit R - Form of Assignment and Assumption
Agreement
SCHEDULES
Schedule A - Closing Document List
Schedule B - Real Property Locations
Schedule C - Insurance Policies and Programs
Schedule D - Disclosure Schedule
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CREDIT AGREEMENT
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THIS CREDIT AGREEMENT is entered into as of September 24, 1996 (as
amended, restated, supplemented or otherwise modified from time to time, this
"Credit Agreement"), among ACME ALABAMA, INC., an Alabama corporation ("Acme
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Alabama"), ACME DIXIE INC., a Delaware corporation ("Acme Dixie"), ACME XXXXX
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INC., a Delaware corporation ("Acme Xxxxx"), ACME RENTS, INC., a California
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corporation ("Acme Rents"), THE AIR & PUMP COMPANY, a Texas corporation ("Air &
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Pump") and XXXXXX XXXXX EQUIPMENT, INC., a Mississippi corporation ("Xxxxxx
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Xxxxx"; Acme Alabama, Acme Dixie, Acme Xxxxx, Acme Rents, Air & Pump, Xxxxxx
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Xxxxx and any Subsidiary of any Credit Party (capitalized terms used herein
without definition shall have the meanings set forth in Section 1.1) which is
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formed or acquired in accordance with Section 8.20 are referred to herein
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individually from time to time as a "Borrower" and collectively as the
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"Borrowers"), RENTAL SERVICE CORPORATION, a Delaware corporation (formerly known
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as Acme Acquisition Holdings Corp.) ("RSC"), RSC ACQUISITION CORP., a Delaware
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corporation (formerly known as Acme Acquisition Corp.) ("RSC Acquisition") and
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RSC HOLDINGS, INC., a Delaware corporation (formerly known as Acme Holdings
Inc.) ("RSC Holdings"); RSC, RSC Acquisition and RSC Holdings are referred to
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herein individually from time to time as a "Parent Guarantor" and collectively
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as the "Parent Guarantors"), each financial institution identified on Annex I
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(together with its successors and permitted assigns pursuant to Section 12.8, a
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"Lender"), BANKERS TRUST COMPANY, as Issuing Bank and BT COMMERCIAL CORPORATION
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("BTCC") acting as agent for the Lenders and the Issuing Bank (in such capacity,
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together with any successor agent appointed pursuant to Section 11.8, the
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"Agent").
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W I T N E S S E T H
- - - - - - - - - -
WHEREAS, RSC owns all of the issued and outstanding capital stock of
RSC Acquisition and RSC Holdings;
WHEREAS, RSC Acquisition owns all of the issued and outstanding
capital stock of each of Acme Alabama, Air & Pump and Xxxxxx Xxxxx;
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WHEREAS, RSC Holdings owns all of the issued and outstanding capital
stock of each of Acme Rents, Acme Xxxxx and Acme Xxxxx;
WHEREAS, the Borrowers and the Parent Guarantors (other than RSC)
entered into the Credit Agreement dated as of September 12, 1995 (as amended,
supplemented or otherwise modified up to the date hereof, the "Original Credit
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Agreement") with the Agent, the Issuing Bank and the financial institutions
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parties thereto as lenders (the "Original Lenders") pursuant to which the Agent,
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the Issuing Bank and the Original Lenders, as applicable, made Loans and Letters
of Credit (as defined therein) and other financial accommodations available to
the Borrowers on the terms and conditions set forth therein;
WHEREAS, certain shareholders of RSC plan to sell and RSC plans to
issue in a public offering up to 6,325,000 shares in the aggregate of RSC's
common stock (the "IPO"), the proceeds of which shall be applied to repay all
---
Indebtedness of RSC under the Citicorp Documents for an amount not in excess of
$13,500,000, redeem all outstanding preferred stock of RSC for an amount not in
excess of $38,000,000 and repay at least $10,000,000 in outstanding Loans under
the Original Credit Agreement;
WHEREAS, the Borrowers and the Parent Guarantors have requested that
the Original Credit Agreement be amended and restated, effective upon
consummation of the IPO and application of the proceeds thereof, to (among other
things) (i) increase the Commitments, (ii) extend the Expiration Date and (iii)
modify the rates of interest applicable to the Loans on the terms and conditions
described herein, and in connection therewith, RSC has agreed to become a Parent
Guarantor (and a Credit Party) under this Credit Agreement;
WHEREAS, in contemplation of the amendment and restatement of the
Original Credit Agreement, the Borrowers, the Parent Guarantors, the Issuing
Bank, the Original Lenders and the Lenders have entered into a Master Assignment
and Assumption Agreement dated as of the date hereof (the "Master Assignment
-----------------
Agreement"), pursuant to which, among other things, the Original Lenders have
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assigned their respective interests in the Original Credit Agreement to the
Lenders and the Lenders have assumed the obligations of the Original Lenders
thereunder;
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WHEREAS, upon consummation of the transactions contemplated by the
Master Assignment Agreement, the Lenders shall be the "Lenders" (as defined
therein) under the Original Credit Agreement;
WHEREAS, the Borrowers, the Parent Guarantors, the Agent, the Lenders
and the Issuing Bank desire to amend and restate the Original Credit Agreement
in its entirety to give effect to the terms and provisions set forth in this
Credit Agreement, it being understood and agreed that (i) with respect to any
date or time period occurring and ending prior to the Effective Date (as defined
below), the rights and obligations of the parties thereto shall be governed by
the Original Credit Agreement (including without limitation the Exhibits and
Schedules thereto) and other Credit Documents (as defined therein), which for
such purposes shall remain in full force and effect, (ii) with respect to any
date or time period occurring or ending on or after the Effective Date, the
rights and obligations of the parties hereto shall be governed by this Credit
Agreement (including without limitation the Exhibits and Schedules hereto)
and the other Credit Documents (as defined herein) and (iii) it is the intent of
the Borrowers, the Parent Guarantors, the Agent and the Lenders that the Lenders
and all other Holders are beneficiaries of the Collateral Documents and the
Obligations owing to such Persons are secured thereby;
NOW, THEREFORE, in consideration of the foregoing premises (each of
which is incorporated herein) and the mutual conditions and agreements set forth
herein, the parties hereto agree as follows:
Article 1
DEFINITIONS
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1.1 General Definitions. The meanings set forth below are applicable
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to both the singular and plural forms of the terms defined:
Accounts is defined in the Security Agreement.
--------
Acme Alabama is defined in the preamble to this Credit Agreement.
------------
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Acme Dixie is defined in the preamble to this Credit Agreement.
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Acme Xxxxx is defined in the preamble to this Credit Agreement.
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Acme Rents is defined in the preamble to this Credit Agreement.
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Acquisition means (i) the acquisition by any Credit Party or any
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Subsidiary of a Credit Party of eighty percent (80%) or more of the issued and
outstanding capital stock, or all or substantially all of the Rental Equipment
assets, of any Person and its Subsidiaries which are in the equipment rental
business and (ii) the merger of any Borrower with any Person which is in the
equipment rental business.
Adjusted Eurodollar Rate means, with respect to each Interest Period
------------------------
for any Eurodollar Rate Loan, the rate obtained by dividing (i) the Eurodollar
Rate for such Interest Period by (ii) a percentage (stated as a decimal) equal
to 100% minus the stated maximum rate of all reserves, if any, required to be
maintained against "Eurocurrency liabilities" as specified in Regulation D (or
against any other category of liabilities which includes deposits by reference
to which the interest rate on Eurodollar Rate Loans is determined or any
category of extensions of credit or other assets which includes loans by a non-
United States office of any Lender to United States residents).
Affiliate of a Person means another Person who directly or indirectly
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controls, is controlled by, is under common control with or is a director or
officer of such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.
Agent is defined in the preamble to this Credit Agreement.
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Agent Advance Period is defined in Section 2.2(b).
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Agent Advances is defined in Section 2.2(a).
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Air & Pump is defined in the preamble to this Credit Agreement.
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Applicable Eurodollar Rate Margin means (a) from the Effective Date
---------------------------------
until the first anniversary thereof, a rate per annum equal to 2.50%, provided
--- ----- --------
that if the Interest Coverage Ratio for December 31, 1996 and, thereafter, for
each of the then two most recent Quarterly Determination Dates (as shown on the
quarterly Compliance Certificates delivered pursuant to Section 7.1(c)) is
--------------
within the ranges set out below and no Default or Event of Default exists as of
either of such Quarterly Determination Dates, the Applicable Eurodollar Rate
Margin shall be the per annum rates set out opposite the applicable range
--- -----
indicated below:
INTEREST COVERAGE RATIO APPLICABLE EURODOLLAR
RATE MARGIN
-------------------------------------------------
Greater than 3.5:1 2.25%
and not more than
4.0:1
-------------------------------------------------
Greater than 4.0:1 2.00%
=================================================
and (b) from the first anniversary of the Effective Date, a rate per annum equal
--- -----
to 2.75%, provided that if the Interest Coverage Ratio for each of the then two
--------
most recent Quarterly Determination Dates (as shown on the quarterly Compliance
Certificates delivered pursuant to Section 7.1(c)) is within the ranges set out
--------------
below and no Default or Event of Default exists as of either of such Quarterly
Determination Dates, the Applicable
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Eurodollar Rate Margin shall be the per annum rates set out opposite the
--- -----
applicable range indicated below:
==================================================
INTEREST COVERAGE RATIO APPLICABLE EURODOLLAR
RATE MARGIN
--------------------------------------------------
Greater than 3.0:1 2.50%
and not more than
3.5:1
--------------------------------------------------
Greater than 3.5:1 2.25%
and not more than
4.0:1
--------------------------------------------------
Greater than 4.0:1 2.00%
==================================================
In the event of the delivery of a Compliance Certificate showing an increase or
decrease in the Interest Coverage Ratio requiring a change in the Applicable
Eurodollar Rate Margin, the change in the Applicable Eurodollar Rate Margin
shall be effective from the March 1, June 1, September 1 or December 1, as
applicable, immediately following receipt of the Compliance Certificate until
the next such date on which the Applicable Eurodollar Rate Margin is subject to
change following the delivery of (or failure to deliver) a Compliance
Certificate showing an increase or decrease in the Interest Coverage Ratio
requiring a change in the Applicable Eurodollar Rate Margin. The failure to
deliver any Compliance Certificate by the date required under the Credit
Agreement (after giving effect to any applicable grace period) shall
automatically cause the Applicable Eurodollar Rate Margin to be the maximum per
---
annum rates for the periods described in clauses (a) and (b) above, as
----- ----------- ---
applicable, effective as of the first day of the fiscal quarter immediately
following the date on which the delivery of the Compliance Certificate was
otherwise required.
Applicable Lending Office means, with respect to each Lender, such
-------------------------
Lender's Eurodollar Lending Office in the case of a Eurodollar Rate Loan, and
such Lender's Domestic Lending Office in the case of a Prime Rate Loan.
Applicable Prime Rate Margin means (a) from the Effective Date until
----------------------------
the first anniversary thereof, a rate per annum equal to 1.00%, provided that if
--- ----- --------
the Interest Coverage Ratio for December 31, 1996 and, thereafter, for each of
the then
-6-
two most recent Quarterly Determination Dates (as shown on the quarterly
Compliance Certificates delivered pursuant to Section 7.1(c)) is within the
--------------
ranges set out below and no Default or Event of Default exists as of either of
such Quarterly Determination Dates, the Applicable Prime Rate Margin shall be
the per annum rates set out opposite the applicable range indicated below:
--- -----
==============================================
INTEREST COVERAGE RATIO APPLICABLE PRIME
RATE MARGIN
-----------------------------------------------
Greater than 3.5:1 0.75%
and not more than
4.0:1
-----------------------------------------------
Greater than 4.0:1 0.50%
===============================================
and (b) from the first anniversary of the Effective Date, a rate per annum equal
--- -----
to 1.25%, provided that if the Interest Coverage Ratio for each of the then two
--------
most recent Quarterly Determination Dates (as shown on the quarterly Compliance
Certificates delivered pursuant to Section 7.1(c)) is within the ranges set out
--------------
below and no Default or Event of Default exists as of either of such Quarterly
Determination Dates, the Applicable Prime Rate Margin shall be the per annum
--- -----
rates set out opposite the applicable range indicated below:
===============================================
INTEREST COVERAGE APPLICABLE PRIME
RATIO RATE MARGIN
-----------------------------------------------
Greater than 3.0:1 1.00%
and not more than
3.5:1
-----------------------------------------------
Greater than 3.5:1 0.75%
and not more than
4.0:1
-----------------------------------------------
Greater than 4.0:1 0.50%
===============================================
In the event of the delivery of a Compliance Certificate showing an increase or
decrease in the Interest Coverage Ratio requiring a change in the Applicable
Prime Rate Margin, the change in the Applicable Prime Rate Margin shall be
effective from the March 1, June 1, September 1 or December 1, as applicable,
immediately
-7-
following receipt of the Compliance Certificate until the next such date on
which the Applicable Prime Rate Margin is subject to change following the
delivery of (or failure to deliver) a Compliance Certificate showing an increase
or decrease in the Interest Coverage Ratio requiring a change in the Applicable
Prime Rate Margin. The failure to deliver any Compliance Certificate by the date
required under the Credit Agreement (after giving effect to any applicable grace
period) shall automatically cause the Applicable Prime Rate Margin to be the
maximum per annum rates for the periods described in clauses (a) and (b) above,
--- ----- ------- --- ---
as applicable, effective as of the first day of the fiscal quarter immediately
following the date on which the delivery of the Compliance Certificate was
otherwise required.
Assignment and Assumption Agreement is defined in Section 12.8.
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Auditors means a nationally recognized firm of independent public
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accountants selected by the Credit Parties and reasonably satisfactory to the
Agent. For purposes of this Credit Agreement, the firm of Ernst & Young LLP
shall be deemed to be satisfactory to the Agent.
Average Market Capitalization means, for any period, an amount equal
-----------------------------
to (i) the sum of the products, for each Business Day during such period, of (A)
the number of issued and outstanding shares of RSC's common stock on such
Business Day, multiplied by (B) the Closing Price of RSC's common stock on such
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Business Day, divided by (ii) the number of Business Days in such period.
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Bankruptcy Code means Title 11 of the U.S. Code (11 U.S.C. (S)(S) 101
---------------
et seq.), as amended from time to time, and any successor statute.
-- ---
Benefit Plan means a "defined benefit plan" (as defined in Section
------------
3(35) of ERISA) for which any of the Credit Parties or any ERISA Affiliate has
been an "employer" (as defined in Section 3(5) of ERISA) within the past six
years.
Borrower is defined in the preamble to this Credit Agreement.
--------
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Borrowing means, except as provided in Section 4.14(c)(iii), a
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borrowing consisting of Loans of the same Type made, continued or converted on
the same day.
Borrowing Base of a Borrower means the sum of:
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(i) eighty-five percent (85%) of the value of Eligible Accounts
of the Borrower, plus
----
(ii) seventy-five percent (75%) of the value of Eligible Rental
Equipment of the Borrower, minus
-----
(iii) the aggregate amount of reserves, if any, established by
the Agent under Section 2.1(b) applicable to the Borrower.
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Borrowing Base Certificate is defined in Section 7.2(a).
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BTCC is defined in the preamble to this Credit Agreement.
----
Business Day means any day that is not a Saturday, Sunday or a day on
------------
which commercial banks in New York, New York are required or permitted by law to
be closed. When used in connection with Eurodollar Rate Loans, this definition
will also exclude any day on which commercial banks are not open for dealing in
U.S. dollar deposits in the London (England, U.K.) interbank market.
Notwithstanding the foregoing, when used in connection with the determination of
the Average Market Capitalization or the Closing Price, Business Day shall mean
a day on which the New York Stock Exchange is open for trading.
Capital Expenditures for a period means, the sum of all expenditures
--------------------
capitalized for Financial Statement purposes in accordance with GAAP (whether
payable in cash or other property or accrued as a liability), including the
capitalized portion of Capital Leases and that portion of Investments allocable
to property, plant or equipment. Capital Expenditures shall exclude proceeds of
a Casualty Loss applied to the repair or replacement of the property affected by
the Casualty Loss.
Capital Lease means any lease of any property (whether real, personal
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or mixed) by a Person as lessee which, in
-9-
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
Cash Equivalents means any of the following, so long as the Agent, for
----------------
the benefit of the Holders, has a perfected Lien therein and the same are
maintained in accounts in which the Agent, for the benefit of the Holders, has a
perfected Lien: (i) securities issued, guarantied or insured by the United
States or any of its agencies and having maturities of not more than one year;
(ii) certificates of deposit having maturities of not more than one year issued
by the Agent, Bankers Trust Company, any Lender or by a U.S. federal, state or
District of Columbia chartered commercial bank of recognized standing whose
capital and unimpaired surplus is in excess of $200,000,000 and whose short-term
commercial paper rating, or that of its parent holding company, is at least A-1
or the equivalent by Standard & Poor's Corporation and at least P-1 or the
equivalent by Xxxxx'x Investors Services, Inc.; (iii) readily marketable
commercial paper of any Lender or any corporation doing business in and
incorporated under the laws of the United States, any state thereof or the
District of Columbia (other than commercial paper issued by any Credit Party or
any Affiliate thereof), maturing no more than one year after the date of
issuance thereof and, at the time of acquisition, having a rating of at least A-
1 or the equivalent by Standard & Poor's Corporation and at least P-1 or the
equivalent by Xxxxx'x Investors Services, Inc.; and (iv) Investments in money-
market mutual funds (A) under management of an investment manager having under
its management total assets of $250,000,000 or more, (B) substantially all of
the assets of which are continuously invested in Investments of the type
described in clauses (i) through (iii) above and (C) which have the highest
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rating obtainable from Standard & Poor's Corporation and Xxxxx'x Investors
Services, Inc.
Casualty Loss means (i) the loss, damage, or destruction of any asset
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owned or used by any of the Credit Parties, (ii) the condemnation, confiscation,
or other taking, in whole or in part, of any such asset, or (iii) the
diminishment of such asset so as to render use for its intended purpose
impracticable or unreasonable.
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Change in Control means the occurrence of one or more of the following
-----------------
events:
(a) To the extent that Brentwood RSC Partners, L.P. is required to be
the beneficial owner of any of the Voting Power under clause (b) below,
----------
Brentwood RSC Partners, L.P. shall cease to be managed by one or more
members of Brentwood Associates;
(b) Brentwood RSC Partners, L.P. shall cease to be the legal and
beneficial owner of at least 35% of the Voting Power; provided, however,
-------- -------
that after the IPO, it shall not be a Change of Control if (i) the Average
Market Capitalization of RSC for the ninety day period ending on the date
of determination (as shown on an officer's certificate delivered to the
Agent and the Lenders, together with supporting calculations in reasonable
detail), is no less than one hundred twenty five million dollars
($125,000,000) and (ii) Brentwood RSC Partners, L.P. shall be the legal and
beneficial owner of at least the percentage of the Voting Power set out
below opposite the applicable period following the IPO:
==============================================================
APPLICABLE PERIOD MINIMUM PERCENTAGE OF
VOTING POWER
--------------------------------------------------------------
More than 90 (and not more 30%
than 180) days after the
IPO
--------------------------------------------------------------
More than 180 (and not more 20%
than 365) days after the
IPO
--------------------------------------------------------------
More than 365 (and not more 10%
than 548) days after the
IPO
--------------------------------------------------------------
More than 548 (and not more 5%
than 730) days after the
IPO
More than 730 days after 0%
the IPO
==============================================================
-11-
(The officer's certificate described above shall not be delivered at any
time a Default or Event of Default has occurred and is continuing and,
notwithstanding the proper delivery of any such officer's certificate, no
sale, transfer or other disposition of the Voting Power resulting in
Brentwood RSC Partners, L.P. ceasing to be the legal and beneficial owner
of the required percentage of the Voting Power in effect immediately prior
to the delivery of such officer's certificate shall occur at any time a
Default or Event of Default has occurred and is continuing.)
(c) Any Person or group (within the meaning of Rule 13d-5, as in
effect on the Effective Date, under the Securities Exchange Act of 1934, as
amended) shall be the beneficial owner of more than 30% of the Voting
Power;
(d) During any period of twelve consecutive calendar months ending
after the Effective Date, individuals who at the beginning of any such
twelve month period constituted the board of directors of RSC (together
with any new directors whose election by such board or whose nomination for
election by the shareholders of RSC was approved by a vote of a majority of
the directors still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) shall cease for any reason to constitute a majority of the board
of directors of RSC then in office; or
(e) RSC shall cease to be the legal and beneficial owner, directly or
indirectly, of all of the issued and outstanding capital stock of any other
Credit Party, except to the extent that the capital stock of a Borrower may
be sold in a transaction permitted under this Credit Agreement.
Citicorp means Citicorp USA, Inc., a Delaware corporation.
--------
Citicorp Documents means (i) the Citicorp Purchase Agreement and the
------------------
Notes and the Share Pledge Agreement (in each case, as defined in the Citicorp
Purchase Agreement), each as in effect on the Closing Date and each as modified
by that certain Agreement Regarding Prepayment and Repurchase dated June, 1996
between RSC and Citicorp, and (ii) any other agreement, document
-12-
or instrument governing the terms of Indebtedness arising under the Citicorp
Purchase Agreement.
Citicorp Purchase Agreement means that certain Note and Warrant
---------------------------
Purchase Agreement dated as of September 12, 1995 by and between RSC, as issuer,
and Citicorp, as purchaser.
Closing Date means September 12, 1995, the date on which the initial
------------
Loans were advanced under the Original Credit Agreement.
Closing Price means, with respect to RSC's common stock on any
-------------
Business Day, the closing sale price regular way on such Business Day or, in
case no such sale takes place on such Business Day, the average of the reported
closing bid and asked prices, regular way, in each case on the Nasdaq National
Market System, or, if such common stock is not listed or admitted to trading on
such exchange, on the principal national security exchange or quotation system
on which such common stock is quoted or listed or admitted to trading, or, if
not quoted or listed or admitted to trading on any national securities exchange
or quotation system, the average of the closing bid and asked prices of such
common stock on the over-the-counter market on the Business Day in question as
reported by the National Quotation Bureau or another reporting service
acceptable to the Agent and the Lenders, or if not so available, in such manner
as furnished by any National Association of Securities Dealers member firm
selected by RSC for such purpose and which is acceptable to the Agent and the
Majority Lenders.
Closing Document List is defined in Section 5.1(a).
--------------------- --------------
Code is defined in Section 1.4.
---- -----------
Collateral means the Accounts, the Inventory, the Equipment and other
----------
property identified as security for the Obligations under the Collateral
Documents.
Collateral Access Agreement means any landlord waiver substantially in
---------------------------
the form of Exhibit A (with such modifications as the Agent may approve in its
---------
Permitted Discretion), and any mortgagee waiver, bailee letter or any similar
acknowledgement agreement of any warehouseman or processor in possession of
-13-
Inventory or Equipment in each case in form and substance satisfactory to the
Agent in its Permitted Discretion.
Collateral Documents means the Security Agreement, the Trademark
--------------------
Security Agreement, the Lockbox Agreements, the Restricted Account Agreements
and all other contracts, instruments and other documents pursuant to which Liens
are now or hereafter granted to the Agent, for the benefit of the Holders, to
secure the Obligations or which are filed with any Governmental Authority or
delivered to any Person in order to perfect such Liens.
Collection Account is defined in Section 4.12.
------------------ ------------
Collections means all cash, funds, checks, notes, instruments and any
-----------
other form of remittance tendered by account debtors in payment of Accounts.
Commission means the Securities and Exchange Commission and any Person
----------
succeeding to the functions thereof.
Commitment of a Lender means its commitment to make Loans, to
----------
participate in Letters of Credit and to make settlements of Agent Advances
pursuant to the terms and conditions of this Credit Agreement, up to the
principal amount set forth opposite its name on Annex I or on the Assignment and
-------
Assumption Agreement by which it became a Lender, as such amount may be reduced
from time to time, and Commitments means the aggregate principal amount of the
-----------
Commitments of all of the Lenders, the maximum amount of which shall be
$125,000,000.
Commitment Letter means the commitment letter addressed to RSC
-----------------
Acquisition from BTCC dated July 1, 1996.
Compliance Certificate is defined in Section 7.1(a).
---------------------- --------------
Concentration Account is defined in Section 4.12.
--------------------- ------------
Contingent Obligation means any direct, indirect, contingent or non-
---------------------
contingent guaranty or other obligation or liability for the Indebtedness,
obligation or liability of another, except endorsements in the ordinary course
of business, if the primary purpose or intent thereof by the Person incurring
the obligation is to provide assurance to the obligee of such
-14-
Indebtedness, obligation or liability of another that such Indebtedness,
obligation or liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders thereof will be
protected (in whole or in part) against loss in respect thereof.
Contractual Obligation, as applied to any Person, means any provision
----------------------
of any securities issued by that Person or any indenture, mortgage, deed of
trust, security agreement, pledge agreement, guaranty, lease, contract,
undertaking, agreement or instrument to which that Person is a party or by which
it or any of its properties is bound, or to which it or any of its properties is
subject.
Credit Agreement is defined in the preamble to this Credit Agreement.
----------------
Credit Documents means, collectively, this Credit Agreement, the
----------------
Notes, the Letters of Credit, the Guaranty and Contribution Agreements, each of
the Collateral Documents and all other documents, agreements, instruments,
opinions and certificates (other than the Registration Statement) now or
hereafter executed and delivered in connection herewith or therewith, as
modified, amended, extended, restated or supplemented from time to time.
Credit Parties means, collectively, the Parent Guarantors, the
--------------
Borrowers and any other parties to the Credit Documents (except the Lenders, the
Issuing Bank, the Agent and issuers of opinions).
Default means an event, condition or default which with the giving of
-------
notice, the passage of time or both would be an Event of Default, provided, that
--------
any non-compliance with the first sentence of Section 8.1 shall be a Default
-----------
until the Rental Equipment Utilization Cure Date applicable to such non-
compliance.
Defaulting Lender is defined in Section 2.8.
----------------- -----------
Disbursement Account means the operating account maintained with the
--------------------
Disbursement Account Bank.
-15-
Disbursement Account Bank means Bankers Trust (Delaware).
-------------------------
Dollars and $ mean the lawful money of the United States.
------- -
Domestic Lending Office means, with respect to any Lender, the office
-----------------------
of such Lender specified as its "Domestic Lending Office" under its name on
Annex I hereto, as such annex may be amended from time to time.
-------
EBITA for a period means the consolidated net income or loss
-----
(excluding extraordinary gains and non-cash extraordinary losses) of the Credit
Parties for the period (i) plus all Interest Expense, income tax expense and
----
amortization (including amortization of any goodwill or other intangibles) for
the period and (ii) plus or minus any other non-cash charges (other than gains
-------------
or losses on sales of Equipment in the ordinary course of business) which have
been subtracted or added in calculating consolidated net income for the period.
EBITDA for a period means the consolidated net income or loss
------
(excluding extraordinary gains and non-cash extraordinary losses) of the Credit
Parties for the period (i) plus all Interest Expense, income tax expense,
----
depreciation and amortization (including amortization of any goodwill or other
intangibles) for the period and (ii) plus or minus any other non-cash charges
-------------
(other than gains or losses on sales of Equipment in the ordinary course of
business) which have been subtracted or added in calculating consolidated net
income for the period.
Effective Date is defined in Section 5.1(a).
-------------- --------------
Eligible Accounts of a Borrower means Accounts of that Borrower deemed
-----------------
by the Agent in the exercise of its Permitted Discretion to be eligible for
inclusion in the calculation of the Borrowing Base for that Borrower, including,
without limitation, Accounts arising from Rental Equipment revenues which have
been earned but not billed. In determining the amount to be so included, the
face amount of such Accounts shall be reduced by the amount of all returns,
discounts, deductions, claims, credits, charges, or other allowances. Whenever
proceeds of a Loan are to be used by a Borrower, immediately and directly, to
purchase Accounts (including, without limitation, in any
-16-
Acquisition permitted hereunder) then, subject to (a) such arrangements as the
Agent may reasonably request to insure that the proceeds are so used, (b) the
Borrower's compliance with Section 9 of the Security Agreement, (c) in the case
of an Acquisition, the satisfaction of the conditions set forth in Section 8.20,
------------
and (d) the satisfaction of all other conditions of eligibility, such Accounts
shall be added to Eligible Accounts for purposes of determining the Borrowing
Base of such Borrower. Unless otherwise approved in writing by the Agent, an
Account shall not be an Eligible Account if:
(i) it arises out of a sale or lease made by the Borrower to an
Affiliate; or
(ii) its payment terms are longer than 30 days from date of
invoice; or
(iii) it is unpaid more than 90 days after the date of invoice;
or
(iv) it is from the same account debtor or its Affiliate and
fifty percent (50%) or more of all Accounts from that account debtor (and
its Affiliates) are ineligible under clause (iii) above; or
------------
(v) the Account, together with all other Accounts of an account
debtor (and its Affiliates), exceeds 5% of the face value of all Accounts
of the Borrowers in the aggregate then outstanding, to the extent of such
excess, unless supported by an irrevocable letter of credit satisfactory to
the Agent (as to form, substance and issuer) and assigned to and directly
drawable by the Agent; or
(vi) the account debtor for the Account is a creditor or
supplier of the Borrower, has or has asserted a right of setoff, has
disputed its liability or made any claim with respect to the Account or any
other Account which has not been resolved, to the extent of the amount owed
by the Borrower to the account debtor or supplier, the amount of such
actual or asserted right of setoff or the amount of such dispute or claim,
as the case may be; or
-17-
(vii) the Borrower has actual knowledge that the account debtor
is (or its assets are) the subject of an Insolvency Event; or
(viii) the Account is not payable in Dollars or the account
debtor for the Account is not located within the continental United States,
unless the Account is supported by an irrevocable letter of credit
satisfactory to the Agent (as to form, substance and issuer) and assigned
to and directly drawable by the Agent; or
(ix) the sale to the account debtor is on a xxxx-and-hold,
guarantied sale, sale-and-return, sale on approval or consignment basis or
made pursuant to any other written agreement providing for repurchase or
return; or
(x) the Agent determines by its own credit analysis that
collection of the Account is uncertain or the Account may not be paid and
so notifies the Borrower; or
(xi) the account debtor is the United States of America, any
state thereof or the District of Columbia or any department, agency or
instrumentality of any of them, unless the Borrower duly assigns its rights
to payment of such Account to the Agent pursuant to the Assignment of
Claims Act of 1940, as amended (31 U.S.C. (S)(S) 3727 et seq.) or any
-- ---
similar statute in such state or the District of Columbia, as applicable;
or
(xii) the goods giving rise to such Account have not been
shipped and delivered to and accepted by the account debtor, the services
giving rise to such Account have not been performed and accepted, or the
Account otherwise does not represent a final sale or an enforceable lease
contract with respect to such goods; or
(xiii) the Account does not materially comply with all applicable
Requirements of Law; or
(xiv) the Account is subject to any adverse security deposit,
progress payment or other similar advance made by or for the benefit of the
applicable account debtor; or
-18-
(xv) it is not assignable, is not subject to a valid and
perfected first priority Lien in favor of the Agent, for the benefit of the
Holders, or does not otherwise conform to the representations and
warranties contained in the Credit Documents, including, without
limitation, the representations and warranties in Section 6 of the Security
---------
Agreement; or
(xvi) the account debtor is located in the state of New Jersey
or Minnesota and the Borrower has not filed and maintained effective
(unless exempt from the requirements for filing) a current Notice of
Business Activities Report with the State of New Jersey Division of
Taxation or a Minnesota Business Activity Report with the Minnesota
Department of Revenue, as applicable.
Eligible Assignee means a bank or other financial institution which is
-----------------
reasonably acceptable to the Agent.
Eligible Rental Equipment of a Borrower means the aggregate amount of
-------------------------
Rental Equipment deemed by the Agent in the exercise of its Permitted Discretion
to be eligible for inclusion in the calculation of the Borrowing Base for that
Borrower. In determining the amount to be so included, Rental Equipment shall
be valued at the lower of net book value or orderly liquidation value on a basis
consistent with the Borrower's current and historical accounting practice and
with reference to the most recent appraisals delivered pursuant to Section
-------
5.1(a)(iii) of the Original Credit Agreement or Section 7.2(b) of this
----------- --------------
Agreement. Whenever proceeds of a Loan are to be used by a Borrower,
immediately and directly, to purchase Rental Equipment (including, without
limitation, in any Acquisition permitted hereunder) then, subject to (a) such
arrangements as the Agent may reasonably request to insure that the proceeds are
so used, (b) compliance by the Borrower with Section 9 of the Security
---------
Agreement, (c) in the case of an Acquisition, the satisfaction of the conditions
set forth in Section 8.20, and (d) the satisfaction of all other conditions of
------------
eligibility, such Rental Equipment shall be added to Eligible Rental Equipment
for purposes of determining the Borrowing Base of such Borrower. Unless
otherwise approved in writing by the Agent, an item of Rental Equipment shall
not be included in Eligible Rental Equipment of a Borrower if:
-19-
(i) it is not owned solely by the Borrower or the Borrower
does not have good, valid and marketable title thereto or has consigned
such item to any other Person (other than another Borrower); or
(ii) it is not located in the United States; or
(iii) it is not subject to a valid and (except with respect to
Rental Equipment subject to certificate of title or ownership statutes in
states other than California for which certificates of title are not
required to be delivered pursuant to the Security Agreement and which are
not subject to Permitted Liens) perfected first priority Lien in favor of
the Agent, for the benefit of the Holders, except for Liens for unpaid rent
or normal and customary warehousing charges with respect to Rental
Equipment stored at a contract warehouse, subject to a Collateral Access
Agreement executed by the mortgagee, lessor or the contract warehouseman,
as the case may be, and segregated or otherwise separately identifiable
from goods of others, if any, stored on the premises; or
(iv) it consists of returned or rejected goods or goods in
transit to third parties (other than goods in transit to warehouse sites
covered by a Collateral Access Agreement or to a lessee in the ordinary
course of business); or
(v) it is unmerchantable or does not otherwise conform to the
representations and warranties contained in the Credit Documents,
including, without limitation, the representations and warranties in
Section 6 of the Security Agreement.
---------
Equipment is defined in the Security Agreement.
---------
ERISA means the Employee Retirement Income Security Act of 1974, 29
-----
U.S.C. (S)(S) 1000 et seq., amendments thereto, successor statutes, and
-- ---
regulations or guidance promulgated thereunder.
ERISA Affiliate means any Person required to be aggregated with a
---------------
Credit Party under Sections 414(b), (c), (m) or (o) of the Internal Revenue
Code.
-20-
Eurodollar Lending Office means, with respect to any Lender, the
-------------------------
office of such Lender specified as its "Eurodollar Lending Office" under its
name on Annex I, as such annex may be amended from time to time (or, if no such
-------
office is specified, its Domestic Lending Office), or such other office or
Affiliate of such Lender as such Lender may from time to time specify to the
Borrowers and the Agent.
Eurodollar Rate means, with respect to the Interest Period for each
---------------
Eurodollar Rate Loan comprising part of the same Borrowing, an interest rate per
---
annum equal to the rate (rounded upward to the nearest whole multiple of one-
-----
sixteenth (1/16) of one percent (1.00%) per annum, if such rate is not such a
---------
multiple) of the offered quotation, if any, to first class banks in the
Eurodollar market by Bankers Trust Company for U.S. dollar deposits of amounts
in immediately available funds comparable to the principal amount of the
Eurodollar Rate Loan for which the Eurodollar Rate is being determined with
maturities comparable to the Interest Period for which such Eurodollar Rate will
apply as of approximately 10:00 A.M. New York City time two Business Days prior
to the commencement of such Interest Period.
Eurodollar Rate Loan means a Loan that bears interest as provided in
--------------------
Section 4.2.
-----------
Event of Default is defined in Article 9.
---------------- ---------
Expenses means all reasonable costs and expenses of the Agent incurred
--------
in connection with the Credit Documents and the transactions contemplated
therein, including, without limitation, (i) the costs of conducting record
searches, examining collateral, opening bank accounts and lockboxes, depositing
checks, receiving and transferring funds (including charges for checks for which
there are insufficient funds), and other costs of administration and enforcement
of the rights of the Lenders under the Credit Documents, (ii) the fees and
expenses of legal counsel and paralegals (including the allocated cost of
internal counsel and paralegals), accountants, appraisers and other consultants,
experts or advisors retained by the Agent, (iii) fees and expenses incurred in
connection with the assignments of or sales of participations in the Loans, (iv)
the cost of title insurance premiums, real estate survey costs, fees and taxes
in connection with the filing of financing statements and (v) the costs of
preparing and recording Collateral Documents, releases
-21-
of Collateral, and waivers, amendments, and terminations of any of the Credit
Documents.
Expiration Date means the fifth anniversary of the Effective Date (or,
---------------
if not a Business Day, the immediately preceding Business Day).
Federal Funds Rate means, for any period, a fluctuating interest rate
------------------
per annum equal for each day during such period to the weighted average of the
---------
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day in New York, New York, for the next preceding
Business Day) in New York, New York by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day in New
York, New York, the average of the quotations for such day on such transactions
received by the Agent from three federal funds brokers of recognized standing
selected by the Agent.
Fee Letter means the fee letter addressed to RSC Acquisition from BTCC
----------
dated May 12, 1995.
Fees means, collectively, without duplication, the Unused Line Fee,
----
the Letter of Credit Fees, the Issuing Bank Fees and the fees payable pursuant
to the Fee Letter and the letters addressed to the Credit Parties from BTCC
dated July 1, 1996.
Financial Covenants means the covenants set forth in Sections 8.1,
------------------- ------------
8.2, 8.3, 8.4, 8.5(f) and 8.10.
--- --- --- ------ ----
Financial Statements means the consolidated and consolidating balance
--------------------
sheets, consolidated and consolidating statements of operations, consolidated
and Fiscal Year end consolidating statements of cash flows and consolidated and
Fiscal Year end consolidating statements of changes in shareholder's equity of
RSC and its Subsidiaries for the period specified, prepared in accordance with
GAAP (and, with respect to interim statements, subject to year-end audit
adjustments and reclassifications and month-end reconciliations, in each case to
the extent consistent with the Credit Parties' current practices, and prepared
without footnotes).
-22-
Fiscal Year means the fiscal year of the Credit Parties for accounting
-----------
and tax purposes, which shall be the 12-month period ending on December 31 of
each calendar year.
Foreign Lender is defined in Section 4.16(d)(i).
-------------- ------------------
GAAP means generally accepted accounting principles in the United
----
States as in effect from time to time.
Governing Documents means, with respect to any corporation, limited
-------------------
liability company or partnership (i) the articles/certificate of incorporation
(or the equivalent formation documents) of such corporation or limited liability
company, (ii) the partnership agreement executed by the partners in the
partnership, (iii) the by-laws (or the equivalent organizational documents) of
the corporation, limited liability company or partnership and (iv) any document
setting forth the designation, amount and/or relative rights, limitations and
preferences of any class or series of such corporation's capital stock or such
limited liability company's or partnership's equity or ownership interests.
Governmental Authority means any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
Guaranty and Contribution Agreement means (i) the Guaranty and
-----------------------------------
Contribution Agreement dated as of the Closing Date originally executed by Acme
Dixie, Acme Xxxxx, Acme Rents, Air & Pump and Xxxxxx Xxxxx with respect to the
Obligations of Acme Alabama, (ii) the Guaranty and Contribution Agreement dated
as of the Closing Date originally executed by Acme Alabama, Acme Xxxxx, Acme
Rents, Air & Pump and Xxxxxx Xxxxx with respect to the Obligations of Acme
Dixie, (iii) the Guaranty and Contribution Agreement dated as of the Closing
Date originally executed by Acme Alabama, Acme Dixie, Acme Rents, Air & Pump and
Xxxxxx Xxxxx with respect to the Obligations of Acme Xxxxx, (iv) the Guaranty
and Contribution Agreement dated as of the Closing Date originally executed by
Acme Alabama, Acme Dixie, Acme Xxxxx, Air & Pump and Xxxxxx Xxxxx with respect
to the Obligations of Acme Rents, (v) the Guaranty and Contribution Agreement
dated as of the Closing Date originally executed by Acme Alabama, Acme Dixie,
Acme Xxxxx, Acme Rents and Xxxxxx Xxxxx with respect to the
-23-
Obligations of Air & Pump, (vi) the Guaranty and Contribution Agreement dated as
of the Closing Date originally executed by Acme Alabama, Acme Dixie, Acme Xxxxx,
Acme Rents and Air & Pump with respect to the Obligations of Xxxxxx Xxxxx, (vii)
the Reaffirmation of Guaranty and Contribution Agreements dated as of the
Effective Date and entered into by the Borrowers with respect to the Guaranty
and Contribution Agreements referred to in clauses (i) through (vi) of this
----------- ----
definition, and (viii) any Guaranty and Contribution Agreement executed after
the date hereof by the Borrowers then party to this Credit Agreement with
respect to the Obligations of a Subsidiary of a Credit Party which becomes a
Borrower pursuant to Section 8.20, in each case in favor of the Agent, the
------------
Issuing Bank and the Lenders and in substantially the form of Exhibit C, as any
---------
of the same may be amended, restated, supplemented or otherwise modified in
accordance with the terms hereof and thereof.
Hazardous Substance means any waste, pollutant, hazardous substance,
-------------------
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste (including, without limitation, waste oil), radioactive
materials, asbestos (in any form or condition), polychlorinated biphenyls
(PCBs), or any constituent of any such substance or waste, and includes, but is
not limited to, these terms as defined in, or otherwise regulated by, federal,
state or local Requirements of Law.
Highest Lawful Rate means, at any given time during which any
-------------------
Obligations shall be outstanding hereunder, the maximum nonusurious interest
rate that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the Obligations, under the laws of the State of
New York (or the law of any other jurisdiction whose laws may be mandatorily
applicable notwithstanding other provisions of this Credit Agreement and the
other Credit Documents), or under applicable federal laws which may presently or
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than under the laws of the State of New York (or such other jurisdiction's)
law, in any case after taking into account, to the extent permitted by
applicable law, any and all relevant payments or charges under this Credit
Agreement and any other Credit Documents executed in connection herewith, and
any available exemptions, exceptions and exclusions.
-24-
Holder means any Person entitled to enforce any of the Obligations,
------
whether or not such Person holds any evidence of Indebtedness, including,
without limitation, (i) the Agent, (ii) each Lender, (iii) the Issuing Bank,
(iv) each Person entitled to indemnification pursuant to Section 12.10, (v) each
-------------
Lender in respect of all obligations and liabilities of the Borrowers to the
Lender as counterparty under Interest Rate Agreements permitted hereunder and
(vi) to the extent permitted by the Credit Documents, the successors,
transferees and assigns of any of the foregoing.
Indebtedness of a Person means, without duplication, (i) indebtedness
------------
for borrowed money or for the deferred purchase price of property or services
(other than trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices), whether on open account or
evidenced by a note, bond, debenture or similar instrument, (ii) obligations
under Capital Leases, (iii) reimbursement obligations for letters of credit,
banker's acceptances or other credit accommodations, (iv) liabilities, as
determined by the Agent, under any Interest Rate Agreement, (v) Contingent
Obligations, (vi) Mandatory Redeemable Obligations and (vii) obligations secured
by any Lien on that Person's property, even if that Person has not assumed such
obligations.
Insolvency Event means, with respect to any Person, the occurrence of
----------------
any of the following: (i) such Person shall be adjudicated insolvent or
bankrupt, or shall generally fail to pay or admit in writing its inability to
pay its debts as they become due, (ii) such Person shall seek dissolution or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for it or a substantial portion of its property, assets or business
or to effect a plan or other arrangement with its creditors, (iii) such Person
shall make a general assignment for the benefit of its creditors, or consent to
or acquiesce in the appointment of a receiver, trustee, custodian or liquidator
for a substantial portion of its property, assets or business, (iv) such Person
shall file a voluntary petition under any bankruptcy, insolvency or similar law
or (v) such Person, or a substantial portion of its property, assets or business
shall become the subject of an involuntary proceeding or petition for its
dissolution, reorganization, or the appointment of a receiver, trustee,
custodian or liquidator or shall become subject to any writ, judgment, warrant
of attachment, execution or similar
-25-
process, and any such proceeding, petition, writ, judgment, warrant of
attachment, execution or similar process described in this clause (v) shall not
----------
be released, vacated or stayed within 60 days after commencement, filing or
levy, as the case may be, or in any event by the date which is five days prior
to the date of any proposed sale thereunder, or any order for relief shall be
entered in any such proceeding.
Interest Coverage Ratio as of a Quarterly Determination Date means,
-----------------------
solely for purposes of determining the Applicable Eurodollar Rate Margin and the
Applicable Prime Rate Margin, the ratio of (i) EBITA to (ii) Interest Expense
(other than non-cash Interest Expense on Indebtedness under the Citicorp
Purchase Agreement) for the period specified below opposite the applicable
Quarterly Determination Date:
======================================================
QUARTERLY DETERMINATION PERIOD
DATE
------------------------------------------------------
On or before The twelve-month period
September 30, 1996 ending on that date
------------------------------------------------------
December 31, 1996 The fiscal quarter
ending on that date
------------------------------------------------------
March 31, 1997 The two fiscal quarters
ending on December 31,
1996 and on March 31,
1997
------------------------------------------------------
June 30, 1997 The three fiscal
quarters ending on
December 31, 1996,
March 31, 1997 and
June 30, 1997
------------------------------------------------------
After June 30, 1997 The twelve-month period
ending on that date
======================================================
Interest Expense means the consolidated expense of the Credit Parties
----------------
for interest on Indebtedness, including, without limitation, amortization of
original issue discount, incurrence fees (to the extent included in interest
expense), the interest portion of any deferred payment obligation and the
interest component of any Capital Lease.
-26-
Interest Period means for any Eurodollar Rate Loan to a Borrower the
---------------
period commencing on the date of such Borrowing and ending on the last day of
the period selected by the Borrower pursuant to the provisions of this Credit
Agreement. The duration of each such Interest Period shall be one, two, three
or (unless a Lender shall have notified the Agent that the Eurodollar Rate
determined by the Agent for the proposed Borrowing will not adequately reflect
the cost to the Lender of making or funding its Loan for the Borrowing) six
months, in each case as the Borrower may, in an appropriate Notice of Borrowing,
Notice of Continuation or Notice of Conversion, select; provided, however, that
-------- -------
the Borrower may not select any Interest Period that ends after the Expiration
Date. Whenever the last day of any Interest Period would otherwise occur on a
day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the immediately following Business Day; provided, however,
-------- -------
that if such extension would cause the last day of such Interest Period to occur
in the immediately following calendar month, the last day of such Interest
Period shall occur on the immediately preceding Business Day.
Interest Rate Agreement means any interest rate protection or hedge
-----------------------
agreement, including, without limitation, interest rate future, option, swap and
cap agreements.
Internal Revenue Code means the Internal Revenue Code of 1986,
---------------------
amendments thereto, successor statutes, and regulations or guidance (including
proposed regulations) promulgated thereunder.
Inventory is defined in the Security Agreement.
---------
Investment means all expenditures made and all liabilities incurred
----------
(including Contingent Obligations) for or in connection with the acquisition of
stock or Indebtedness of a Person, loans, advances, capital contributions or
transfers of property to a Person, or acquisition of assets from a Person (other
than the acquisition of individual items of Inventory and Equipment in the
ordinary course of business), including, without limitation, Acquisitions. In
determining the aggregate amount of Investments outstanding at any particular
time, (i) a guaranty shall be valued at not less than the principal amount
guaranteed; (ii) returns of capital (but only by repurchase, redemption,
retirement, repayment, liquidating dividend or liquidating
-27-
distribution) shall be deducted; (iii) earnings, whether as dividends, interest
or otherwise, shall not be deducted; and (iv) decreases in the market value
---
shall not be deducted.
---
IPO is defined in the recitals to this Credit Agreement.
---
Issuing Bank means Bankers Trust Company or any Lender, Affiliate of
------------
any Lender or other financial institution (acceptable to the Agent and the
applicable Borrower which has requested a Letter of Credit) which may at any
time issue or be requested to issue a Letter of Credit for the account of the
Borrower (or for the joint account of the Borrower and the Agent or any Lender)
under this Credit Agreement. If there is more than one Issuing Bank, all
references to "the Issuing Bank" shall be deemed to refer to each Issuing Bank
or to all Issuing Banks, as the context requires.
Issuing Bank Fees is defined in Section 4.5(b).
----------------- --------------
Lender is defined in the preamble to this Credit Agreement.
------
Lender Advances is defined in Section 2.2(a).
--------------- --------------
Letter of Credit Fees are defined in Section 4.5(a).
--------------------- --------------
Letter of Credit Obligations means the sum of the aggregate undrawn
----------------------------
amount of all Letters of Credit outstanding, plus the aggregate amount of all
----
drawings under Letters of Credit to the extent the Issuing Bank has not been
reimbursed by a Borrower, by the Lenders or from the proceeds of Loans deemed
requested pursuant to Section 3.5, plus the aggregate amount of all payments
----------- ----
made by the Lenders to the Issuing Bank in respect of participations in Letters
of Credit for which a Borrower has not reimbursed the Lenders (other than with
respect to outstanding Loans deemed requested pursuant to Section 3.5).
-----------
Letter of Credit Request is defined in Section 3.3.
------------------------ -----------
Letters of Credit means standby letters of credit issued for the
-----------------
account of a Borrower under Article 3 and all amendments, renewals, extensions
---------
or replacements thereof.
-28-
Lien means any lien, claim, charge, pledge, security interest,
----
assignment, hypothecation, deed of trust, mortgage, lease, conditional sale,
retention of title or other preferential arrangement having substantially the
same economic effect as any of the foregoing, whether voluntary or imposed by
law.
Loan is defined in Section 2.1(a).
---- --------------
Loan Account is defined in Section 4.10.
------------ ------------
Lockboxes, Lockbox Agreements and Lockbox Bank are defined in Section
--------- ------------------ ------------ -------
4.12.
----
Majority Lenders means those Lenders whose Proportionate Shares, in
----------------
the aggregate, are greater than fifty percent (50%).
Management Agreement means that certain Management Agreement dated as
--------------------
of September 12, 1995 among RSC and its Subsidiaries as amended, supplemented or
modified from time to time in accordance with this Agreement.
Mandatory Redeemable Obligation means an obligation of one or more
-------------------------------
Credit Parties (or guaranteed by any of them) which must be redeemed or repaid
(i) at a fixed or determinable date, whether by operation of sinking fund or
otherwise, (ii) at the option of any Person other than a Credit Party, or (iii)
upon the occurrence of a condition not solely within the control of a Credit
Party, such as a redemption required to be made out of future earnings. For
purposes of the Credit Documents, RSC Preferred Stock shall not constitute a
Mandatory Redeemable Obligation.
Margin Stock mean "margin stock" as defined in Regulation G and
------------
Regulation U.
Master Assignment Agreement is defined in the recitals to this Credit
---------------------------
Agreement.
Material Adverse Effect means any change or changes or effect or
-----------------------
effects that individually or in the aggregate are or are reasonably likely to be
materially adverse to (i) the business, prospects, operations, results of
operations, assets, liabilities or condition (financial or otherwise) of RSC and
its
-29-
Subsidiaries, taken as a whole, (ii) the legality, validity or enforceability of
this Credit Agreement or any other material Credit Document, (iii) the ability
of the Credit Parties, taken as a whole, to perform any material obligations
under the Credit Documents or of the Agent or the Lenders to enforce the
Obligations or realize upon the Collateral or (iv) the value of the Collateral
or the amount which the Agent or the Lenders would be likely to receive (after
giving consideration to delays in payment and costs of enforcement) in the
liquidation of such Collateral.
Material Contract means any Contractual Obligation to which a Credit
-----------------
Party is a party (other than the Credit Documents) for which breach,
nonperformance, cancellation or failure to renew could have a Material Adverse
Effect.
Multiemployer Plan means a "multiemployer plan" (as defined in Section
------------------
4001(a)(3) of ERISA) to which any Credit Party or any ERISA Affiliate has
contributed within the past six years or with respect to which the Credit Party
or ERISA Affiliate may incur any liability.
Net Cash Proceeds means, with respect to any sale, lease, transfer or
-----------------
other voluntary or involuntary disposition of any property of any Credit Party
or its Subsidiaries, the aggregate amount of cash consideration received by such
Credit Party or such Subsidiary in connection with such transaction after
deduction of all reasonable and customary fees, costs and expenses directly
incurred by such Credit Party or such Subsidiary in connection therewith,
including, without limitation, reasonable and customary underwriting discount,
brokerage or selling commissions, if any, and the reasonable fees and
disbursements of counsel paid by such Credit Party or such Subsidiary in
connection therewith.
Note means a promissory note of a Borrower payable to the order of any
----
Lender, substantially in the form of Exhibit D.
---------
Notice of Borrowing means a notice substantially in the form of
-------------------
Exhibit E.
---------
Notice of Continuation means a notice substantially in the form of
----------------------
Exhibit F.
---------
-30-
Notice of Conversion means a notice substantially in the form of
--------------------
Exhibit G.
---------
Obligations means all present and future obligations and liabilities
-----------
of any Credit Party arising under or in connection with this Credit Agreement or
any other Credit Document, due or to become due to the Agent, any Issuing Bank,
any Lender or any other Person entitled to indemnification pursuant to Section
-------
12.10, or (to the extent permitted by the Credit Documents) any of their
-----
respective successors, transferees or assigns, and shall include, without
limitation, (i) unpaid principal and interest hereunder (including interest
accruing on or after the occurrence of an Insolvency Event, whether or not
allowed as a claim in any proceeding relating to the Insolvency Event), (ii)
reimbursement obligations under Letters of Credit, (iii) Fees, Expenses and
indemnification and expense reimbursement obligations arising under Section
-------
12.10, (iv) the Obligations of the Parent Guarantors arising under Article 10 of
----- ----------
this Credit Agreement, (v) the Obligations of the Borrowers (in their capacity
as Guarantors) under the Guaranty and Contribution Agreements and (vi) all
obligations and liabilities of the Borrowers to any Lender in respect of
Interest Rate Agreements permitted hereunder.
Operating Lease means, as applied to any Person, any lease of any
---------------
property (whether real, personal or mixed) by that Person as lessee which is not
a Capital Lease.
Original Credit Agreement is defined in the recitals to this Credit
-------------------------
Agreement.
Original Lenders is defined in the recitals to this Credit Agreement.
----------------
Paid In Full, Pay In Full and Payment In Full means, with respect to
------------ ----------- ---------------
the Obligations of any Credit Party, (i) the payment in full in cash of all
Obligations of such Credit Party (other than, as of any date of payment, the
Obligations which are contingent and unliquidated and not due and owing and
which pursuant to the provisions of the Credit Documents survive the termination
of this Credit Agreement, the repayment of the Loans, the termination of the
Commitments and the expiration or cancellation of all Letters of Credit) and
(ii) with respect to Letters of Credit issued for the account of such Credit
Party,
-31-
the termination and surrender for cancellation of such Letters of Credit or the
delivery of cash, Cash Equivalents or other Collateral held as security for the
Obligations in respect of such Letters of Credit as required by this Credit
Agreement or the other Credit Documents.
Parent Guarantor is defined in the preamble to this Credit Agreement.
----------------
PBGC means the Pension Benefit Guaranty Corporation and any Person
----
succeeding to the functions thereof.
Permitted Discretion means the Agent's reasonable good faith judgment
--------------------
based upon any factor which it believes in good faith: (i) will or could
adversely affect the value of any Collateral, the enforceability or priority of
the Liens of the Agent, for the benefit of the Holders, thereon or the amount
which the Agent and the Holders would be likely to receive (after giving
consideration to delays in payment and costs of enforcement) in the liquidation
of such Collateral; (ii) reasonably suggests that any collateral report or
financial information delivered to the Agent by any Credit Party or any Person
on behalf of, and at the request of, any Credit Party is incomplete, inaccurate
or misleading in any material respect; (iii) materially increases the likelihood
of the occurrence of an Insolvency Event involving a Credit Party or any of the
Collateral or (iv) creates or reasonably could be expected to create a Default
or an Event of Default. In exercising such judgment with respect to a Borrower,
the Agent may reasonably consider such factors already included in or tested by
the definitions of "Eligible Accounts" or "Eligible Rental Equipment," as well
as any of the following: (a) the financial and business climate of the
Borrower's industry and general macroeconomic conditions, (b) changes in
collection history and dilution with respect to the Accounts of the Borrower,
(c) changes in demand for, and pricing of, Rental Equipment of the Borrower, (d)
changes in any concentration of risk with respect to Accounts or Rental
Equipment of the Borrower and (e) any other factors that change the credit risk
of lending to the Borrower on the security of the Accounts or Rental Equipment
of the Borrower. The burden of establishing lack of good faith shall be on the
Credit Parties.
Permitted Lien is defined in Section 8.7.
-------------- -----------
-32-
Person means any natural person, corporation, limited liability
------
company, limited partnership, general partnership, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust, business
trust or other organization, whether or not a legal entity, and any Governmental
Authority.
Plan means any Benefit Plan, Multiemployer Plan, Retiree Health Plan
----
or other employee benefit plan, program or arrangement maintained or contributed
to by a Credit Party or any ERISA Affiliate, or with respect to which any of
them may incur liability.
Prime Lending Rate means the rate which Bankers Trust Company
------------------
announces as its prime lending rate from time to time. The Prime Lending Rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Bankers Trust Company and each of the Lenders
may make commercial loans or other loans at rates of interest at, above or below
the Prime Lending Rate.
Prime Rate Loan means a Loan that bears interest as provided in
---------------
Section 4.1.
-----------
Pro Forma means the unaudited pro forma opening consolidated balance
---------
sheet of RSC contained in the Registration Statement, dated as of June 30, 1996,
and giving effect to the IPO and the extensions of credit contemplated by this
Credit Agreement, attached hereto as Exhibit I.
---------
Projections means the forecasted (i) condensed consolidated balance
-----------
sheet of RSC, (ii) condensed consolidated income statements of RSC, (iii)
condensed consolidated cash flow statements of RSC, (iv) consolidated
capitalization statements of RSC and (v) compliance with the Financial
Covenants, all prepared by management of the Credit Parties on a basis
consistent with the Credit Parties' historical Financial Statements for the
period commencing on the Effective Date and ending in 2001, together with
appropriate supporting details and a statement of underlying assumptions,
attached hereto as Exhibit J.
---------
Proportionate Share of a Lender means a fraction, expressed as a
-------------------
decimal, obtained by dividing its Commitment by the total Commitments of all the
Lenders or, if the Commitments
-33-
are terminated, by dividing (i) the sum of (A) the outstanding Loans made by
such Lender, plus (B) the amount of such Lender's unfunded participations in
----
outstanding Letters of Credit, plus (C) the amount of all payments made by such
----
Lender to the Issuing Bank in respect of its participations in Letters of Credit
for which a Borrower has not reimbursed such Lender (other than with respect to
outstanding Loans deemed requested pursuant to Section 3.5), by (ii) the sum of
-----------
(A) the aggregate amount of all Loans then outstanding plus (B) the amount of
----
all Lenders' unfunded participations in outstanding Letters of Credit, plus (C)
----
the amount of all payments made by all Lenders to the Issuing Bank in respect of
their respective participations in Letters of Credit for which a Borrower has
not reimbursed the Lenders (other than with respect to outstanding Loans deemed
requested pursuant to Section 3.5).
-----------
Purchase Money Liens is defined in Section 8.6.
-------------------- -----------
Quarterly Determination Date means, with respect to any period, each
----------------------------
March 31, June 30, September 30 and December 31 occurring during such period.
Real Property means, with respect to any Person, all of such Person's
-------------
present and future right, title and interest (including, without limitation, any
leasehold estate) in any plots, pieces or parcels of land, and any improvements,
buildings, structures and fixtures now or hereafter located or erected thereon
or attached thereto of every nature whatsoever.
Register is defined in Section 12.8.
-------- ------------
Registration Statement means the Registration Statement No. 333-0549
----------------------
on Form S-1 filed by RSC with the Commission on June 13, 1996, as amended by
amendments provided to the Agent pursuant to Section 5.1(a).
Regulations A, D, G, U, X and Z means Regulations A, D, G, U, X and Z,
------------------------- -
respectively, of the Board of Governors of the Federal Reserve System (or any
Governmental Authority succeeding to its functions), in each case as in effect
from time to time, and any successor regulations.
Reportable Event means any of the events described in Section 4043 of
----------------
ERISA and the regulations thereunder.
-34-
Rental Equipment of any Person means all goods held for rental by such
----------------
Person in the ordinary course of business and all used rental goods held for
sale by such Person in the ordinary course of business.
Rental Equipment Utilization means, for any twelve-month period, the
----------------------------
result (expressed as a percentage) obtained from dividing (i) the total revenue
of the Borrowers attributable to the rental of Rental Equipment owned or leased
by the Borrowers during such twelve-month period by (ii) the average amount for
such twelve-month period of Rental Equipment owned or leased by the Borrowers as
of the last day of each month during such twelve-month period, determined on the
basis of the applicable Borrower's original cost of such Rental Equipment.
Rental Equipment Utilization Cure Date is defined in Section 8.1.
-------------------------------------- -----------
Requirement of Law means (i) the Governing Documents of a Person, (ii)
------------------
any law, treaty, rule, regulation, order or determination of an arbitrator,
court or other Governmental Authority or (iii) any franchise, license, lease,
permit, certificate, authorization, qualification, easement, right of way, right
or approval binding on a Person or any of its property.
Restricted Account, Restricted Account Agreements and Restricted
------------------ ----------------------------- ----------
Account Bank are defined in Section 4.12.
------------ ------------
Retiree Health Plan means an "employee welfare benefit plan" within
-------------------
the meaning of Section 3(1) of ERISA that provides benefits to persons after
termination of employment, other than as required by Section 601 of ERISA.
RSC is defined in the preamble to this Credit Agreement.
---
RSC Acquisition is defined in the preamble to this Credit Agreement.
---------------
RSC Acquisition Borrowers is defined in Section 10.1(b).
------------------------- ---------------
-35-
RSC Holdings is defined in the preamble to this Credit Agreement.
------------
RSC Holdings Borrowers is defined in Section 10.1(a).
---------------------- ---------------
RSC Preferred Stock means any series of preferred stock of RSC with
-------------------
respect to which there is no obligation of RSC or any of its Subsidiaries of the
type described in the first sentence of the definition of Mandatory Redeemable
Obligation other than the mandatory redemption obligations of RSC contained in,
and subject to the conditions set forth in, RSC's Governing Documents as in
effect on the Closing Date.
Security Agreement means the Amended and Restated Security and Pledge
------------------
Agreement of even date herewith originally executed by the Parent Guarantors and
the Borrowers in favor of the Agent, for the benefit of the Holders, in
substantially the form of Exhibit K, as the same may be amended, restated,
---------
supplemented or otherwise modified in accordance with the terms hereof and
thereof.
Settlement Date is defined in Section 2.6.
--------------- -----------
Subsidiary of a Person means any corporation, limited liability
----------
company, general or limited partnership or other Person of which securities or
other ownership interests having ordinary voting power to elect or appoint a
majority of the board of directors, managers or other Persons performing similar
functions with respect to such corporation, limited liability company, general
or limited partnership or other Person are at the time directly or indirectly
owned or controlled by such Person, one or more of the other subsidiaries of
such Person or any combination thereof.
Taxes is defined in Section 4.16(a).
----- ---------------
Termination Event means (i) a Reportable Event with respect to any
-----------------
Benefit Plan or Multiemployer Plan; (ii) the withdrawal of a Credit Party or any
ERISA Affiliate from a Benefit Plan during a plan year in which it was a
"substantial employer" (as defined in Section 4001(a)(2) of ERISA); (iii) the
providing of notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041(c) of ERISA); (iv) the institution by
the PBGC of proceedings to terminate a
-36-
Benefit Plan or Multiemployer Plan; (v) any event or condition (A) which might
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan or Multiemployer Plan
or (B) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA; or (vi) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of a Credit Party or any ERISA
Affiliate from a Multiemployer Plan.
Trademark Security Agreement means the Amended and Restated Trademark
----------------------------
Security Agreement of even date herewith originally executed by the Parent
Guarantors and the Borrowers in favor of the Agent, for the benefit of the
Holders, in substantially the form of Exhibit L, as the same may be amended,
---------
restated, supplemented or otherwise modified in accordance with the terms hereof
and thereof.
Type means, in reference to a Loan, that it is a Eurodollar Rate Loan
----
or a Prime Rate Loan.
Unused Line Fee is defined in Section 4.4.
--------------- -----------
Voting Power means the total voting power of all issued and
------------
outstanding shares of capital stock of RSC entitled to vote generally in the
election of directors.
Xxxxxx Xxxxx is defined in the preamble to this Credit Agreement.
------------
1.2 Accounting Terms and Determinations. Unless otherwise defined or
-----------------------------------
specified herein, all accounting terms used in this Credit Agreement shall be
construed in accordance with GAAP, applied on a basis consistent in all material
respects with the audited Financial Statements for the Fiscal Year ending
December 31, 1995. All accounting determinations for purposes of determining
compliance with the Financial Covenants shall be made in accordance with GAAP as
in effect on the Closing Date and applied on a basis consistent in all material
respects with the audited Financial Statements for the Fiscal Year ending
December 31, 1995. The Financial Statements required to be delivered hereunder
from and after the Closing Date, and all financial records, shall be maintained
in accordance with GAAP, provided, that interim Financial Statements shall be
--------
subject to year-end
-37-
audit adjustments and reclassifications and month-end reconciliations, in each
case to the extent consistent with the current practices of the Credit Parties,
and may be prepared without footnotes. If GAAP shall change from the basis used
in preparing the audited Financial Statements for the Fiscal Year ending
December 31, 1995 delivered to the Agent, the Compliance Certificate required to
be delivered pursuant to Section 7.1 shall, at the election of the Credit
-----------
Parties or upon the request of the Majority Lenders, include calculations
setting forth the adjustments necessary to demonstrate how the Credit Parties
are in compliance with the Financial Covenants and Section 8.9(vi) based upon
---------------
GAAP as in effect on the Closing Date.
1.3 Computation of Time Periods. In this Credit Agreement, in the
---------------------------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding". Periods of days referred to in this Credit Agreement
shall be counted in calendar days unless Business Days are expressly prescribed.
Any period determined hereunder by reference to a month or months or year or
years shall end on the day in the relevant calendar month in the relevant year,
if applicable, immediately preceding the date numerically corresponding to the
first day of such period, provided that if such period commences on the last day
--------
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month during which such period is to end), such period
shall, unless otherwise expressly required by the other provisions of this
Credit Agreement, end on the last day of the calendar month.
1.4 Other Terms; Headings. Terms used herein that are defined in the
---------------------
Uniform Commercial Code in effect in the State of New York (the "Code") shall
----
have the meanings given in the Code. Each of the words "hereof," "herein," and
"hereunder" refer to this Credit Agreement as a whole. An Event of Default
shall "continue" or be "continuing" until such Event of Default has been waived
in accordance with Section 12.11 or cured (to the extent such Event of Default
-------------
can be cured). References to Articles, Sections, clauses, Annexes, Schedules
and Exhibits are internal references to this Credit Agreement and to its
attachments, unless otherwise specified. The headings and the Table of Contents
are for convenience only and shall not affect
-38-
the meaning or construction of any provision of this Credit Agreement.
Article 2
LOANS
-----
2.1 Commitments.
-----------
(a) Subject to the terms and conditions set forth in this Credit
Agreement, on and after the Effective Date and to the Expiration Date, each
Lender severally agrees to make revolving loans and advances to the Borrowers
("Loans") in an amount not to exceed at any time its Proportionate Share of the
------- ---
lesser of (i) the total Commitments and (ii) the sum of the Borrowing Bases of
---------
the Borrowers, minus, in each case, the then outstanding Letter of Credit
-----
Obligations. In addition to the limitations set forth in the preceding
sentence, the amount of Loans outstanding to any Borrower shall not exceed at
any time the Borrowing Base of that Borrower, minus the Letter of Credit
-----
Obligations with respect to Letters of Credit issued for the account of that
Borrower. The Loans outstanding under the Original Credit Agreement on the
Effective Date shall automatically, without further action, be deemed to be
Loans outstanding under this Credit Agreement, except to the extent repaid in
accordance with the terms hereof on such date.
(b) The Agent may, but shall not be obligated to, rely on each
Borrowing Base Certificate and any other schedules or reports in determining the
eligibility of Accounts and Rental Equipment. The Agent, in the exercise of its
Permitted Discretion, may (i) establish and increase or decrease reserves
against Eligible Accounts and Eligible Rental Equipment, (ii) reduce the advance
rates provided for in the definition of "Borrowing Base," or restore such
advance rates to any level equal to or below the advance rates in effect as of
the date of this Credit Agreement and (iii) reasonably impose additional
restrictions (or eliminate the same) to the standards of eligibility set forth
in the definitions of "Eligible Accounts" and "Eligible Rental Equipment."
(c) Subject to the provisions of this Credit Agreement, each Borrower
may repay any outstanding Loan made to
-39-
that Borrower on any day which is a Business Day and any amounts so repaid may
be reborrowed, up to the amount available under Section 2.1(a) at the time of
--------------
such Borrowing, to the Expiration Date.
2.2 Borrowing of Loans.
------------------
(a) Borrowings. Loans may be made available to the Borrower
----------
requesting (or deemed to have requested) the Loans by the Lenders pursuant to
Section 2.2(c) ("Lender Advances") and by the Agent acting on behalf of the
-------------- ---------------
Lenders pursuant to Section 2.2(b) ("Agent Advances"). Except as provided in
-------------- --------------
Sections 2.2(b)(ii), 4.11(c) and 4.14, all Borrowings shall be made only after
------------------- ------- ----
receipt by the Agent of a Notice of Borrowing (i) on the Effective Date, in the
case of a Borrowing on the Effective Date, (ii) not later than 1:00 P.M. New
York City time on the Business Day which is the proposed Borrowing date with
respect to Lender Advances of Prime Rate Loans made after the Effective Date,
(iii) not later than 1:00 P.M. New York City time on the third Business Day
prior to the proposed Borrowing date with respect to Lender Advances of
Eurodollar Rate Loans after the Effective Date and (iv) not later than 1:00 P.M.
New York City time on the Business Day which is the proposed Borrowing date with
respect to Agent Advances of Prime Rate Loans made after the Effective Date.
Each Borrowing shall, unless otherwise specifically provided herein, consist
entirely of Loans of the same Type. Borrowings of Prime Rate Loans on the same
Business Day shall be in an aggregate principal amount for all Borrowers
requesting that Loans be made as, or converted into, Prime Rate Loans on such
Business Day of not less than $1,000,000 or an integral multiple of $500,000 in
excess thereof. Borrowings of Eurodollar Rate Loans on the same Business Day
shall be in an aggregate principal amount for all Borrowers requesting that
Loans be made or continued as, or converted into, Eurodollar Rate Loans with the
same Interest Period on such Business Day of not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof. Subject to the foregoing
limits, each Borrower may request one or more Borrowings of Prime Rate Loans on
the same Business Day, but may request only one Borrowing of Eurodollar Rate
Loans (excluding continuations of Eurodollar Rate Loans) for any Business Day
(which shall be funded simultaneously with all Loans requested to be made as, or
converted into, Eurodollar Rate Loans requested by the other Borrowers on such
Business Day). All new Loans made on the Effective Date shall
-40-
initially be Prime Rate Loans and thereafter may be continued as Prime Rate
Loans or converted into Eurodollar Rate Loans, in the manner provided in Section
-------
4.14(b) and subject to the conditions therein set forth and in Section 5.2. All
------- -----------
Loans outstanding on the Effective Date and not repaid under the Original Credit
Agreement shall remain outstanding hereunder as the same Type of Loan, but shall
bear interest at the rates provided herein from the Effective Date.
(b) Agent Advances of Loans. After the Effective Date, the
-----------------------
Agent is authorized by the Lenders, but is not obligated, to make Agent Advances
for its own account (i) upon receiving any Notice of Borrowing requesting Lender
Advances or Agent Advances constituting Prime Rate Loans within the applicable
time limits set forth in Section 2.2(a) or (ii) upon advice received by the
--------------
Agent on a Business Day from the Disbursement Account Bank that the face amount
of checks drawn on the Disbursement Account, which have been or will be
presented for payment on that day exceeds the amount of funds then available in
the Disbursement Account. All Agent Advances will be Prime Rate Loans and may
be made, at the election of the Agent, without regard to the minimum principal
amounts in Section 2.2(a). Agent Advances will be subject to periodic
--------------
settlement with the Lenders under Section 2.6. For administrative convenience,
-----------
the Agent may, but is not obligated to, make Agent Advances in reliance upon the
Borrowers' actual or deemed representations under Section 5.2 that the
-----------
conditions for borrowing are satisfied. If the conditions for Borrowing under
Section 5.2 cannot be fulfilled, the Borrower which requested the Borrowing
-----------
shall in its Notice of Borrowing or otherwise give immediate notice thereof
(specifying the circumstances which prevent the conditions from being fulfilled)
to the Agent, with a copy to each of the Lenders, and the Agent may, but is not
obligated to, continue to make Agent Advances for 20 Business Days from the date
the Agent first receives such Notice of Borrowing, or until sooner instructed by
the Majority Lenders to cease (the "Agent Advance Period"). Once notice is
--------------------
given by a Borrower that circumstances exist which prevent the conditions to
borrowing from being fulfilled, no additional notice with respect to the same
circumstances will be effective to commence a new Agent Advance Period.
(c) Lender Advances of Loans. If the Agent receives a Notice of
------------------------
Borrowing within the applicable time limits
-41-
for Lender Advances pursuant to Section 2.2(a) and does not intend to fund such
--------------
requested Borrowing as an Agent Advance, the Agent shall give each Lender prompt
notice by telephone or facsimile transmission of a Notice of Borrowing that
requests Lender Advances of Loans. Subject to the reasonable determination by
the Agent and the Lenders that the applicable conditions for borrowing contained
in Article 5 are satisfied, each Lender shall make available to the Agent at the
---------
Agent's address specified in Annex I its Proportionate Share of such Borrowing
-------
in immediately available funds no later than 2:00 P.M. New York City time on the
date of receipt of the Notice of Borrowing. Unless the Agent receives contrary
written notice prior to the date of any such Borrowing, it is entitled to assume
that each Lender will make available its Proportionate Share of the Borrowing
and in reliance upon that assumption, but without any obligation to do so, may
advance such Proportionate Share on behalf of the Lender.
2.3 Disbursement of Loans. The proceeds of Loans shall be
---------------------
transmitted by the Agent (a) to the Disbursement Account upon advice received by
the Agent from the Disbursement Account Bank, as described in Section
-------
2.2(b)(ii), directly to the Disbursement Account, (b) in the circumstances
described in Section 3.5, directly to the applicable Issuing Bank, (c) in the
-----------
circumstances described in Section 4.11(c), directly to the applicable Holder
---------------
and (d) in all other circumstances, as requested by the Borrower in its Notice
of Borrowing.
2.4 Notices of Borrowing. Notices of Borrowing may be given by
--------------------
telephone or facsimile transmission or in writing, and, if by telephone,
confirmed by a written Notice of Borrowing delivered to the Agent by facsimile
transmission promptly, but in no event later than 4:00 P.M. New York City time
on the same day. Each Notice of Borrowing shall specify (i) the proposed
Borrowing date (which shall be a Business Day), (ii) the amount of the proposed
Borrowing, (iii) the aggregate principal amount of Loans and Letter of Credit
Obligations of all Borrowers as of the date of such Notice of Borrowing, (iv)
the aggregate principal amount of Loans and Letter of Credit Obligations of the
Borrower requesting the Borrowing as of the date of such Notice of Borrowing,
(v) whether the proposed Borrowing will consist of Agent Advances or Lender
Advances, (vi) whether the proposed Borrowing will be of Prime Rate Loans or
Eurodollar Rate Loans, together with the aggregate principal amount of all Loans
of the
-42-
Type requested by the Borrowers to be made or continued as, or converted into,
Loans of such Type on the proposed Borrowing date, (vii) in the case of
Eurodollar Rate Loans, the requested Interest Period, (viii) instructions for
the disbursement of the proceeds of the proposed Borrowing and (ix) whether the
conditions for the requested Borrowing are satisfied. Once given, a Notice of
Borrowing that requests a Lender Advance is irrevocable by and binding on the
Credit Parties.
2.5 Authorized Officers and Agents. On the Effective Date, the
------------------------------
Borrowers shall deliver, and from time to time thereafter any Borrower may
deliver, to the Agent a certificate setting forth the names of the officers,
employees and agents authorized to request Loans and Letters of Credit for each
Borrower and to request a conversion or continuation of any Loan, in each
instance containing a specimen signature of each such officer, employee or
agent. The officers, employees and agents so authorized shall also be
authorized to act for the applicable Borrower in respect of all other matters
relating to the Credit Documents. The Agent, Lenders and Issuing Bank shall be
entitled to rely conclusively on such officer's, employee's, or agent's
authority to request such Loan or Letter of Credit or such conversion or until
the Agent receives written notice to the contrary. None of the Agent, the
Lenders or the Issuing Bank shall have any duty to verify the authenticity of
the signature appearing on any such certificate, written Notice of Borrowing,
Notice of Conversion or Notice of Continuation, or any other document, and, with
respect to an oral request for such a Loan or Letter of Credit or such
conversion/continuation, the Agent shall have no duty to verify the identity of
any person representing himself or herself as one of the officers, employees or
agents authorized to make such request or otherwise to act on behalf of the
applicable Borrower. None of the Agent, the Lenders or the Issuing Bank shall
incur any liability to any Borrower or any other Person in acting upon any
telephonic or facsimile notice referred to above which the Agent, such Lender,
or the Issuing Bank believes to have been given by a duly authorized officer or
other person authorized to borrow on behalf of a Borrower.
2.6 Periodic Settlement of Agent Advances and Repayments.
----------------------------------------------------
(a) The Settlement Date. The amount of each Lender's
-------------------
Proportionate Share of Loans shall be computed weekly
-43-
(or more frequently in the Agent's discretion) and shall be adjusted upward or
downward based on all Loans (including Agent Advances) and repayments received
by the Agent as of 5:00 P.M. New York City time on the last Business Day of the
period specified by the Agent (such date, the "Settlement Date").
---------------
(b) Summary Statements; Settlements of Principal. The Agent
--------------------------------------------
shall deliver to each of the Lenders promptly after the Settlement Date a
summary statement of the amount of outstanding Loans (including Agent Advances)
for the period and the amount of repayments received for the period. As
reflected on the summary statement, subject to Section 2.8, each Lender shall
-----------
transfer to the Agent, or the Agent shall transfer to each Lender, such amounts
as are necessary to insure that, after giving effect to all such transfers
(including each Lender's Proportionate Share of repayments received by the Agent
during the period covered by the summary statement), the amount of Loans made by
each Lender shall be equal to such Lender's Proportionate Share of the aggregate
amount of Loans outstanding as of such Settlement Date. If the summary statement
requires transfers to be made to the Agent by the Lenders and is received prior
to 12:00 Noon New York City time on a Business Day, such transfers shall be made
in immediately available funds no later than 3:00 P.M. New York City time that
day; and, if received after 12:00 Noon New York City time, then no later than
3:00 P.M. New York City time on the next Business Day. The obligation of each
Lender to transfer such funds is irrevocable, unconditional and without recourse
to or warranty by the Agent.
(c) Distribution of Interest and Unused Line Fees. Interest on
---------------------------------------------
the Loans (including Agent Advances) together with the amount of the Unused Line
Fee, shall be allocated by the Agent to each Lender in accordance with the
Proportionate Share of Loans actually advanced by and repaid to each Lender, and
shall accrue from the date such Loans are so advanced and to the date such Loans
are either repaid by a Borrower or actually settled under this Section 2.6.
-----------
Promptly after the end of each month, the Agent shall distribute to each Lender
its Proportionate Share of the interest and Unused Line Fee accrued and paid (or
deemed paid) to the Agent during that month; provided, however, that the Agent
-------- -------
shall distribute interest on Eurodollar Rate Loans promptly after it is
received.
-44-
2.7 Sharing of Payments. If any Lender obtains any payment in excess
-------------------
of its Proportionate Share of payments on account of the Loans or Letter of
Credit Obligations, it will immediately purchase, without warranty or recourse,
from the other Lenders an undivided interest and participation (which it shall
be deemed to have done simultaneously upon the receipt of such payment) in their
respective Loans and Letter of Credit participations sufficient to cause that
Lender to share the excess payment ratably with all the other Lenders; provided,
--------
however, that if all or part of such excess payment received by the purchasing
-------
party is thereafter recovered from it, those purchases shall be rescinded and
the purchase prices paid for such participations shall be returned to such party
to the extent necessary to adjust for such recovery, but without interest except
to the extent the purchasing party is required to pay interest in connection
with such recovery. The Credit Parties agree that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.7 may, to the
-----------
fullest extent permitted by law, exercise all its rights of payment (including,
subject to Section 9.5, the right of setoff) with respect to such participation
-----------
as fully as if such Lender were the direct creditor of the Credit Parties in the
amount of such participation.
2.8 Defaulting Lenders.
------------------
(a) A Lender who fails to pay the Agent its Proportionate Share
of any Loans (including Agent Advances) made available by the Agent on such
Lender's behalf, or who fails to pay any other amount owing by it to the Agent
(in either case, in accordance with the terms of this Agreement), is a
"Defaulting Lender." The Agent may recover all such amounts owing by a
-----------------
Defaulting Lender on demand. If the Defaulting Lender does not pay such amounts
on the Agent's demand, the Agent shall promptly notify the Borrower which
requested the Loans, and the Borrower shall pay such amounts within five
Business Days. In addition, the Defaulting Lender or the Borrowers shall pay
the Agent interest on such amount for each day from the date it was made
available by the Agent to the applicable Borrower to the date it is recovered by
the Agent at a rate per annum equal to (i) the Federal Funds Rate, if paid by
---------
the Defaulting Lender or (ii) the then applicable rate of interest calculated
under Section 4.1, if paid by the Borrower; plus, in each case, the Expenses and
----------- ----
losses, if any, incurred as a result of the Defaulting Lender's failure to
perform its obligations.
-45-
(b) The failure of any Lender to fund its Proportionate Share of
any Loan (including Agent Advances) shall not relieve any other Lender of its
obligation to fund its Proportionate Share of such Loan. Conversely, no Lender
shall be responsible for the failure of another Lender to fund its Proportionate
Share of a Loan.
(c) The Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by a Credit Party to the Agent for the Defaulting
Lender's benefit; nor shall a Defaulting Lender be entitled to the sharing of
any payments hereunder. Amounts payable to a Defaulting Lender shall instead be
paid to or retained by the Agent. The Agent may hold and, in its discretion,
re-lend to the applicable Borrower the amount of all such payments received or
retained by it for the account of such Defaulting Lender. For purposes of
voting or consenting to matters with respect to the Credit Documents and
determining Proportionate Shares, such Defaulting Lender shall be deemed not to
be a "Lender" and, for such purposes solely, such Lender's Commitment shall be
deemed to be zero (-0-). This Section 2.8 shall remain effective with respect
-----------
to such Lender until (x) the Obligations under this Credit Agreement shall have
been declared or shall have become immediately due and payable, (y) the
Commitments shall have been terminated or (z) the Majority Lenders, the Agent
and the Borrowers shall have waived such Lender's default in writing. The
operation of this Section 2.8 shall not be construed to increase or otherwise
-----------
affect the Commitment of any Lender, or relieve or excuse the performance by any
Credit Party of its duties and obligations hereunder.
Article 3
LETTERS OF CREDIT
-----------------
3.1 Issuance of Letters of Credit. Subject to the terms and
-----------------------------
conditions hereunder and in reliance on the representations and warranties of
the Credit Parties set forth herein, the Agent shall from time to time cause the
Issuing Bank to issue Letters of Credit hereunder at the request of a Borrower
and for its account, as more specifically described below. The Letters of
Credit outstanding under the Original Credit Agreement on the Effective Date
shall automatically, without further action, be deemed to be Letters of Credit
outstanding under this
-46-
Credit Agreement. The Agent shall not be obligated to cause the Issuing Bank to
issue any Letter of Credit if:
(a) Issuance of the requested Letter of Credit (i) would cause
the Letter of Credit Obligations then outstanding to exceed $2,000,000.00, (ii)
would cause the sum of the Loans plus the Letter of Credit Obligations then
----
outstanding to exceed the lesser of (x) the total Commitments then in effect and
-------------
(y) the aggregate of the Borrowing Bases then in effect or (iii) would cause the
sum of the Loans made to the Borrower requesting the Letter of Credit plus the
----
Letter of Credit Obligations then outstanding with respect to Letters of Credit
issued for the account of the Borrower to exceed the Borrowing Base of the
Borrower then in effect; or
(b) Issuance of the Letter of Credit is enjoined, restrained or
prohibited by any Governmental Authority, Requirement of Law or any request or
directive of any Governmental Authority (whether or not having the force of law)
or would impose upon the Agent or the Issuing Bank any material restriction,
reserve, capital requirement, loss, cost or expense (for which the Agent or the
Issuing Bank is not otherwise compensated) not in effect or known as of the
Closing Date.
3.2 Terms of Letters of Credit. The proposed amount, terms and
--------------------------
conditions, and form of each Letter of Credit (and of any drafts or acceptances
thereunder) shall be subject to approval by the Agent and the Issuing Bank. The
term of each Letter of Credit shall not exceed 360 days, but may be subject to
annual renewal. No Letter of Credit shall have an expiry date later than five
Business Days prior to the Expiration Date.
3.3 Notice of Issuance. A request for issuance of a Letter of
-------------------
Credit (a "Letter of Credit Request") may be given by telephone or facsimile
------------------------
transmission or in writing in substantially the form of Exhibit M, and, if by
---------
telephone, confirmed by a written Letter of Credit Request delivered to the
Agent by facsimile transmission promptly, but in no event later than 4:00 P.M.
New York City time on the same day. A Letter of Credit Request must be received
by the Agent no later than 1:00 P.M. New York City time at least five (5)
Business Days (or such shorter period as may be agreed to by the Issuing Bank)
in advance of the proposed date of issuance. Such Letter of Credit Request shall
be irrevocable unless and until such request is
-47-
denied by the applicable Issuing Bank and shall specify (i) the stated amount of
the Letter of Credit requested, (ii) the effective date (which shall be a
Business Day) of issuance of such Letter of Credit, (iii) the date on which such
Letter of Credit is to expire (which shall be a Business Day and no later than
five Business Days prior to the Expiration Date), (iv) the Person for whose
benefit such Letter of Credit is to be issued, (v) other relevant terms of such
Letter of Credit, (vi) the aggregate principal amount of Loans and Letter of
Credit Obligations of all Borrowers as of the date of such Letter of Credit
Request, (vii) the aggregate principal amount of Loans and Letter of Credit
Obligations of the Borrower requesting the Letter of Credit as of the date of
such Letter of Credit Request, (viii) the aggregate Letter of Credit Obligations
of all Borrowers as of the date of such Letter of Credit Request and (ix)
whether the conditions for the requested Letter of Credit are satisfied.
3.4 Lenders' Participation. Immediately upon issuance or amendment
----------------------
of any Letter of Credit, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Issuing Bank, without recourse
or warranty, an undivided interest and participation in all rights and
obligations under such Letter of Credit (other than fees and other amounts owing
to the Issuing Bank) in accordance with such Lender's Proportionate Share.
3.5 Payment of Amounts Drawn Under Letters of Credit. Upon notice
------------------------------------------------
from the Issuing Bank of any drawing under any Letter of Credit, the Agent shall
notify the Borrowers of such drawing not later than 11:00 A.M. on the Business
Day immediately prior to the date on which the Issuing Bank intends to honor
such drawing, provided that the Agent's failure to notify the Borrowers shall
--------
not affect the obligations of any Borrower hereunder. The Borrower for whose
account the Letter of Credit was issued will be deemed to have concurrently
given a Notice of Borrowing to the Agent for Prime Rate Loans in the amount of
and at the time of such drawing, which Loans shall not be subject to the
conditions set forth in Section 5.2. The proceeds of such Loans shall be
-----------
applied directly by the Agent to reimburse the Issuing Bank for the amount of
such drawing.
3.6 Payment by Lenders. If Loans are not made in an amount
------------------
sufficient to reimburse the Issuing Bank in full for the amount of any draw, the
Agent shall promptly notify each Lender
-48-
of the unreimbursed amount of such drawing and of such Lender's respective
participation therein. Each Lender shall make available to the Agent, for the
account of the Issuing Bank, the amount of its participation in immediately
available funds not later than 1:00 P.M. New York City time on the next Business
Day. If any Lender fails to make available to the Agent the amount of such
Lender's participation, the Issuing Bank shall be entitled to recover such
amount on demand from such Lender together with interest at the Federal Funds
Rate for the first three Business Days and thereafter at the Prime Lending Rate.
For each Letter of Credit, the Agent shall promptly distribute to each Lender
which has funded the amount of its participation its Proportionate Share of all
payments subsequently received by the Agent from the Borrowers in reimbursement
of honored drawings, including any interest thereon. If an Issuing Bank receives
any such payment, the Issuing Bank shall promptly pay the same to the Agent, and
the Agent shall distribute such payment in accordance with the immediately
preceding sentence.
3.7 Nature of Issuing Bank's Duties. In determining whether to pay
-------------------------------
under any Letter of Credit, the Issuing Bank shall be responsible only to
determine that the documents and certificates required to be delivered under
that Letter of Credit have been delivered and that they comply on their face
with the requirements of that Letter of Credit. As among the Borrowers, the
Issuing Bank and each other Lender, the Borrowers assume all risks of the acts
and omissions of the Issuing Bank, except for such actions or omissions that
result from the gross negligence or willful misconduct of the Issuing Bank, or
misuse of the Letters of Credit by the respective beneficiaries of such Letters
of Credit. Any action taken or omitted to be taken by the Issuing Bank under or
in connection with any Letter of Credit, if taken or omitted in the absence of
gross negligence or willful misconduct, shall not create for the Issuing Bank
any liability to any Borrower, the Agent or any Lender.
3.8 Obligations Absolute. The obligations of the Borrowers to
--------------------
reimburse the Issuing Bank for drawings honored under the Letters of Credit and
the obligations of the Lenders under Sections 3.5 and 3.6 shall be unconditional
------------ ---
and irrevocable and shall be paid strictly in accordance with the terms of this
Credit Agreement under all circumstances including, without limitation, the fact
that a Default or an Event of Default shall have occurred and be continuing,
provided, in each case, that
--------
-49-
payment by the Issuing Bank under the applicable Letter of Credit shall not have
constituted gross negligence or willful misconduct of the Issuing Bank under the
circumstances in question (as determined by a final judgment of a court of
competent jurisdiction).
3.9 Agent's Execution of Applications and Other Issuing Bank
--------------------------------------------------------
Documentation; Reliance on Credit Agreement by Issuing Bank. The Agent shall be
-----------------------------------------------------------
authorized to execute, deliver and perform on behalf of the Lenders such letter
of credit applications, letter of credit modifications and consents and other
undertakings for the benefit of the Issuing Bank as may be reasonably necessary
or appropriate in connection with the issuance or modification of Letters of
Credit requested by a Borrower hereunder. The Lenders, the Agent and the
Borrowers all expressly agree that the terms of this Article 3 and various other
---------
provisions of this Credit Agreement identifying the Issuing Bank are also
intended to benefit the Issuing Bank and the Issuing Bank shall be entitled to
enforce the provisions hereof which are for its benefit.
3.10 Additional Payments. If by reason of (a) any change after the
-------------------
date hereof in any Requirement of Law or any change after the date hereof in the
interpretation, administration or application by any Governmental Authority of
any Requirement of Law or (b) compliance by the Issuing Bank or any Lender with
any direction, request or requirement (whether or not having the force of law)
of any Governmental Authority or monetary authority after the date hereof
including, without limitation, Regulation D:
(i) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letters of Credit issued by
the Issuing Bank or participations therein purchased by any Lender; or
(ii) there shall be imposed on the Issuing Bank or any Lender any
other condition regarding this Section 3.10, any Letter of Credit or any
------------
participation therein;
and the result of the foregoing is to increase directly or indirectly the cost
to the Issuing Bank or any Lender of issuing, making or maintaining any Letter
of Credit or of purchasing or maintaining any participation therein, or to
reduce the amount
-50-
receivable in respect thereof by the Issuing Bank or any Lender, then, and in
any such case, the Issuing Bank or such Lender may, at any time within 180 days
after the additional cost is incurred or the amount received is reduced, notify
the Borrowers (unless such change or compliance arose or became effective
retrospectively, in which case such Lender or Issuing Bank shall not be limited
to such 180-day period so long as such Lender or Issuing Bank has given such
notice to the Borrowers no later than 180 days from the date such change or
compliance became applicable to such Lender or Issuing Bank), and the Borrowers
shall pay on demand such amounts as the Issuing Bank or such Lender may specify
to be necessary to compensate the Issuing Bank or such Lender for such
additional cost or reduced receipt, together with interest on such amount from
10 days after the date of such demand until payment in full thereof at a rate
equal at all times to the Prime Lending Rate per annum. The determination by
---------
the Issuing Bank or any Lender, as the case may be, of any amount due pursuant
to this Section 3.10, as set forth in a certificate setting forth the
------------
calculation thereof in reasonable detail, shall, in the absence of manifest or
demonstrable error, be final and conclusive and binding on all of the parties
hereto.
Article 4
COMPENSATION, REPAYMENT, REDUCTION
----------------------------------
AND EXTENSION OF COMMITMENTS
----------------------------
4.1 Interest on Prime Rate Loans. Subject to Section 4.6, each
---------------------------- -----------
Borrower shall pay to the Agent for the account of the Lenders in accordance
with their respective Proportionate Shares, on the first Business Day of each
month and on the Expiration Date, interest on Prime Rate Loans made to or for
the account of the Borrower, calculated monthly in arrears at an interest rate
per annum equal to the Prime Lending Rate plus the Applicable Prime Rate Margin
--------- ----
on the average net balances owing to the Agent and the Lenders at the close of
business each day during such month. The rate hereunder shall change each day
the Prime Lending Rate or the Applicable Prime Rate Margin changes.
4.2 Interest on Eurodollar Rate Loans. Subject to Section 4.6,
--------------------------------- -----------
interest on Eurodollar Rate Loans shall be payable by the Borrower for whose
account the Loans were made on the last day of each Interest Period with respect
to such Eurodollar Rate
-51-
Loans (and, in the case of any Eurodollar Rate Loan with an Interest Period of
six months, on the three-month anniversary of the commencement of that Interest
Period), at the date of conversion of such Eurodollar Rate Loans (or a portion
thereof) to a Prime Rate Loan and at maturity of such Eurodollar Rate Loans at
an interest rate per annum equal during the Interest Period for such Eurodollar
---------
Rate Loans to the Adjusted Eurodollar Rate for the Interest Period in effect for
such Eurodollar Rate Loans plus the Applicable Eurodollar Rate Margin. The rate
----
hereunder shall change each day the Applicable Eurodollar Rate Margin changes.
After maturity of such Eurodollar Rate Loans (whether by acceleration or
otherwise), interest shall be payable upon demand. The Agent, upon determining
the Adjusted Eurodollar Rate for any Interest Period, shall promptly notify the
Borrowers and the Lenders by telephone (confirmed promptly in writing) or in
writing thereof. Each determination by the Agent of the Adjusted Eurodollar Rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
4.3 Interest on Other Obligations. Subject to Section 4.6, the
----------------------------- -----------
Borrowers jointly and severally agree to pay to the Agent for the account of the
Lenders in accordance with their respective Proportionate Shares, on the first
Business Day of each month, interest on all other Obligations owing to such
Lenders, calculated monthly in arrears at an interest rate per annum equal to
---------
the Prime Lending Rate plus the Applicable Prime Rate Margin on the average net
----
balances owing to the Agent and the Lenders at the close of business each day
during such month. The rate hereunder shall change each day the Prime Lending
Rate or the Applicable Prime Rate Margin changes.
4.4 Unused Line Fee. The Borrowers jointly and severally agree to
---------------
pay to the Agent, for the account of the Lenders in accordance with their
respective Proportionate Shares, a fee (the "Unused Line Fee"), accruing at the
---------------
rate of 0.50% per annum on the average daily amount by which the Commitments at
---------
the close of business on such day exceeds the sum of (a) the outstanding
principal amount of the Loans, plus (b) the outstanding Letter of Credit
----
Obligations, for the period commencing on the Closing Date and ending on the
Expiration Date, such Unused Line Fee being payable (x) monthly, in arrears,
commencing on the first day of the calendar month immediately following the
Effective Date and (y) on the Expiration Date.
-52-
4.5 Letter of Credit Fees.
---------------------
(a) Each Borrower for whose account a Letter of Credit has been
issued shall pay to the Agent, for the benefit of the Lenders in accordance with
their respective Proportionate Shares, on the first day of each month a fee (the
"Letter of Credit Fee"), calculated at a rate per annum equal to the Applicable
-------------------- ---------
Eurodollar Rate Margin on the daily weighted average amount of Letter of Credit
Obligations outstanding during the immediately preceding month with respect to
Letters of Credit issued for the account of the Borrower. The rate hereunder
shall change each day the Applicable Eurodollar Rate Margin changes.
Notwithstanding the foregoing, Letter of Credit Fees on Letter of Credit
Obligations outstanding after the occurrence and during the continuance of an
Event of Default shall be payable on demand at a rate equal to 4.75% per annum.
---------
(b) Each Borrower for whose account a Letter of Credit is to be
(or has been) issued shall also pay the customary charges, fees and expenses of
Bankers Trust Company for the issuance, administration and negotiation of each
Letter of Credit (if Bankers Trust Company is the Issuing Bank), and the Agent
shall be entitled to charge to the Loan Account of that Borrower such fees,
charges and expenses of the Issuing Bank (if not Bankers Trust Company) as and
when incurred by the Agent, any Lender or the Issuing Bank (in each case, the
"Issuing Bank Fees").
-----------------
(c) Each determination by the Agent of Letter of Credit Fees,
Issuing Bank Fees and other fees, charges and expenses under this Section 4.5
-----------
shall be conclusive and binding for all purposes, absent manifest error.
4.6 Interest After Event of Default. From the date of occurrence of
-------------------------------
an Event of Default until the earlier of (i) the date all Obligations have been
Paid In Full or (ii) the date as of which such Event of Default is waived or
cured, each Borrower shall be obligated to pay to the Lenders interest on all
outstanding Obligations (other than Eurodollar Rate Loans) calculated at a rate
per annum equal to the Prime Lending Rate plus 3.25%. In the case of Eurodollar
--------- ----
Rate Loans, at the time any such increase in the interest rate is effective
under this Section 4.6, each Borrower shall be obligated to pay to the Lenders
-----------
interest on all outstanding Eurodollar Rate Loans
-53-
calculated at a rate per annum equal to the Adjusted Eurodollar Rate for the
---------
Interest Period, in each case, in effect for such Eurodollar Rate Loans plus
----
4.75%. Upon the expiration of the Interest Period in effect such Eurodollar
Rate Loans shall thereupon become Prime Rate Loans and shall thereafter bear
interest payable upon demand at a rate per annum equal to the Prime Lending Rate
---------
plus 3.25%. Nothing in this Section 4.6 prohibits the right of the Lenders to
---- -----------
waive any such increase in the interest rate.
4.7 Expenses. The Borrowers jointly and severally agree to reimburse
--------
the Agent's Expenses promptly upon demand.
4.8 Mandatory Payment; Reduction of Commitments.
-------------------------------------------
(a) Mandatory Payment. Except during the Agent Advance Period,
-----------------
each Borrower shall, without notice or demand of any kind, immediately make such
repayments of the Loans to the extent necessary to reduce (i) the aggregate
outstanding principal amount of all Loans to an amount less than or equal to
the lesser of (A) the total Commitments and (B) the sum of the Borrowing Bases
-------------
of all Borrowers, minus, in each case, the then outstanding Letter of Credit
-----
Obligations and (ii) the aggregate outstanding principal amount of Loans made to
or for the account of that Borrower to an amount less than or equal to the
Borrowing Base of that Borrower, minus the then outstanding Letter of Credit
-----
Obligations with respect to Letters of Credit issued for the account of that
Borrower.
(b) Reduction of Commitments. On the Expiration Date, the Commitment
------------------------
of each Lender shall automatically terminate and may not be reinstated. Upon
not less than three (3) Business Days' prior written notice to the Agent (which
the Agent shall promptly transmit to each Lender), the Borrowers may permanently
reduce in part or terminate in whole the Commitments at any time and from time
to time without premium or penalty, provided that the Borrowers shall have made
--------
whatever payment may be required to reduce the sum of the principal amount of
the Loans, plus the Letter of Credit Obligations to an amount less than or equal
----
to the Commitments as reduced or terminated. Any partial reduction must be in
an aggregate amount for all the Lenders of not less than $1,000,000 (and in
increments of $500,000 in excess of such amount), and shall reduce the
Commitment of each Lender proportionately in accordance with its Proportionate
Share. Any
-54-
notice of termination or reduction given to the Agent under this Section 4.8(b)
--------------
shall be irrevocable and shall specify the date (which shall be a Business Day)
of such termination or reduction and, with respect to a partial reduction, the
aggregate principal amount thereof. Once reduced, no portion of the Commitments
may be reinstated.
4.9 [Intentionally Omitted]
4.10 Maintenance of Loan Account; Statements of Account. The Agent
--------------------------------------------------
shall maintain an account on its books in the name of each Borrower (the "Loan
----
Account" of that Borrower) in which the Borrower will be charged with all Loans
-------
and advances made by the Agent or the Lenders to the Borrower or for the
Borrower's account, including the Loans, the Letter of Credit Obligations, the
Fees, the Expenses and any other Obligations. The Loan Account will be credited
with all payments received by the Agent from the Borrower or for the Borrower's
account, including all amounts received in such Borrower's Concentration Account
from any Lockbox Bank or Restricted Account Bank maintained by such Borrower.
The Agent shall send each Borrower a monthly statement reflecting the activity
in its Loan Account. Absent manifest error, each monthly statement shall be an
account stated and shall be final, conclusive and binding on the Borrowers.
4.11 Payment Procedures.
------------------
(a) Manner and Time of Payment. All payments of principal of and
--------------------------
interest on the Loans and other Obligations (including, without limitation, Fees
and Expenses) which are payable to the Agent, the Lenders or the Issuing Bank
shall be made without condition or reservation of right, and, with respect to
payments made other than from application of deposits in the Concentration
Account, in immediately available funds, delivered to the Agent not later than
1:00 P.M. New York City time on the date and at the place due, to such account
of the Agent as it may designate, for the account of the Agent, the Lenders or
the Issuing Bank, as the case may be; and funds received by the Agent not later
than 1:00 P.M. New York City time on any given Business Day shall be credited
against payment to be made that day and funds received by the Agent after that
time shall be deemed to have been paid on the immediately following Business
Day. Payments actually received by the Agent for the account of the
-55-
Lenders or the Issuing Bank, or any of them, shall be paid to them by the Agent
promptly after receipt thereof.
(b) Apportionment and Application of Payments.
-----------------------------------------
(i) Subject to the provisions of Section 2.8, all payments of
-----------
principal and interest in respect of outstanding Loans, all payments of Fees and
Expenses and all other payments in respect of any other Obligations, shall be
allocated among such of the Lenders and the Issuing Bank as are entitled
thereto, in proportion to their respective Proportionate Shares or otherwise as
provided herein.
(ii) Except as provided in Section 4.11(b)(iii) with respect to
--------------------
payments and proceeds of Collateral received after the occurrence of an Event of
Default and subject to the provisions of Section 2.8, all such payments and any
-----------
other amounts received by the Agent from or for the benefit of a Borrower shall
be applied first, to pay principal of and interest on any portion of the Loans
-----
to the Borrower which the Agent may have advanced on behalf of any Lender
(including Agent Advances) for which the Agent has not then been reimbursed by
such Lender or the Borrower, second, to pay the principal of the Loans advanced
------
to the Borrower which are then due and payable in the order described
hereinbelow and interest on such Loans then due and payable, ratably, based on
the then outstanding balances of the such Loans, third, to pay all other
-----
Obligations then due and payable by the Borrower, ratably, and fourth, as the
------
Borrower so designates. All such principal and interest payments in respect of
Loans shall be applied first, to repay outstanding Prime Rate Loans and then to
----- ----
repay outstanding Eurodollar Rate Loans with those Eurodollar Rate Loans which
have earlier expiring Interest Periods being repaid prior to those which have
later expiring Interest Periods.
(iii) Except as provided in Section 9.5, after the occurrence and
-----------
during the continuance of an Event of Default, all payments and proceeds of
Collateral received by the Agent shall be applied in the following order:
first, to the payment of any Fees, Expenses or other Obligations due and payable
-----
to the Agent under any of the Credit Documents, including Agent Advances and any
other amounts advanced by the Agent on behalf of the Lenders; second, to the
------
payment of any Fees, expenses or other Obligations due and payable to the
Issuing Bank
-56-
under any of the Credit Documents; third, to the ratable payment of
-----
any Fees, Expenses or other Obligations due and payable to the Lenders under any
of the Credit Documents other than those Obligations specifically referred to in
this Section 4.11(b)(iii); fourth, to the ratable payment of interest due on the
-------------------- ------
Loans; and, fifth, to the ratable payment of principal due on the Loans.
-----
(iv) Subject to Sections 2.6 and 2.8, the Agent shall promptly
------------ ---
distribute to each Lender and Issuing Bank at its primary address set forth on
Annex I or in the Assignment and Assumption Agreement by which it became a
-------
Lender or Issuing Bank, or at such other address as a Lender, an Issuing Bank or
other Holder may request in writing, such funds as such Person may be entitled
to receive; provided, however, that the Agent shall under no circumstances be
-------- -------
bound to inquire into or determine the validity, scope or priority of any
interest or entitlement of any Holder and may suspend all payments or seek
appropriate relief (including, without limitation, instructions from the
Majority Lenders or an action in the nature of interpleader) in the event of any
doubt or dispute as to any apportionment or distribution contemplated hereby.
(c) Charging of Loan Account. The Agent, in its sole discretion
------------------------
subject only to the terms of this Section 4.11(c), may pay from the proceeds of
---------------
Loans made to a Borrower hereunder, whether made following a request by the
Borrower pursuant to Section 2.2 or a deemed request as provided in this Section
----------- -------
4.11(c), all interest, Fees, Expenses and other payments to be made hereunder
-------
and under the other Credit Documents if and to the extent such payment is not
made when due hereunder; provided, however, that the Agent shall give the
-------- -------
Borrower at least three days' written notice of the amount payable prior to the
payment date of any such payment, the payment date of which is not otherwise
specified hereunder. Each Borrower hereby irrevocably authorizes the Lenders to
make Loans, which Loans shall be Prime Rate Loans, in each case, upon notice
from the Agent as described in the following sentence for the purpose of paying
such Obligations, and agrees that all such Loans so made shall be deemed to have
been requested by it pursuant to Section 2.2 as of the date of the
-----------
aforementioned notice. The Agent shall request Loans on behalf of a Borrower as
described in the immediately preceding sentence by notifying the Lenders by
telecopy, telegram or other similar form of transmission (which notice the Agent
shall thereafter promptly
-57-
transmit to the Borrower), of the amount and date of the proposed Borrowing and
that such Borrowing is being requested on the Borrower's behalf pursuant to this
Section 4.11(c). On the proposed Borrowing date for such Loan, the Lenders shall
-------
make the requested Loans in accordance with the procedures and subject to the
conditions specified in Section 2.2(c). The Borrower's obligations to the Agent
--------------
and the Lenders with respect to such payments shall be discharged by the Agent's
receipt of the proceeds of such Loans.
(d) Payments on Non-Business Days. Whenever any payment to be made
-----------------------------
by a Borrower hereunder or under the Notes is stated to be due on a day which is
not a Business Day, the payment shall instead be due on the immediately
following Business Day (except as set forth in the proviso to the third sentence
of the definition of "Interest Period" with respect to payments due on the
immediately preceding Business Day), and any such extension of time shall be
included in the computation of the payment of interest and Fees hereunder.
4.12 Collection of Accounts. Each Borrower shall maintain at all times
----------------------
a lockbox (individually, a "Lockbox" and collectively, the "Lockboxes") and
------- ---------
shall have instructed all account debtors on its Accounts and all obligors with
respect to any proceeds of Collateral to remit all Collections and all such
proceeds to such Lockboxes (and each Borrower shall use its best efforts to
cause all account debtors and all obligors with respect to proceeds of
Collateral to remit Collections and such proceeds to such Lockboxes). Each
Borrower, the Agent and the financial institutions selected by such Borrower and
acceptable to the Agent (the "Lockbox Banks" of such Borrower) shall enter
-------------
into agreements substantially in the form of Exhibit N, or such other form as
---------
the Agent may approve (the "Lockbox Agreements"), which among other things shall
------------------
provide for the opening of an account for the deposit of Collections and
proceeds of Collateral (a "Collection Account" of such Borrower) at a Lockbox
------------------
Bank; provided, however, that from the date on which any Borrower opens for
-------- -------
business (whether through an Acquisition or otherwise) a new rental yard in an
area not previously served by a rental yard of a Borrower until the earlier of
(i) the 120th day thereafter and (ii) the date a Lockbox for such new rental
yard is established, that Borrower may maintain accounts into which such
Borrower deposits Collections and proceeds of Collateral for the new rental yard
(individually, a "Restricted Account" and
------------------
-58-
collectively, the "Restricted Accounts") with the financial institutions
-------------------
selected by such Borrower and acceptable to the Agent (the "Restricted Account
------------------
Banks" of such Borrower), and such Borrower, the Agent and such financial
-----
institutions shall enter into agreements substantially in the form of
Exhibit N-2 (the "Restricted Account Agreements"). All Collections and other
----------- -----------------------------
amounts received or receivable by a Borrower from any account debtor, in
addition to all other cash and proceeds of Collateral received from any other
source, shall upon receipt be deposited into a Collection Account or a
Restricted Account, as the case may be, of such Borrower. Except with respect to
the replacement of a Restricted Account Agreement with a Lockbox Agreement,
termination or modification of such arrangements shall be subject to approval by
the Agent. Upon the terms and subject to the conditions set forth in the Lockbox
Agreements or the Restricted Account Agreements, as the case may be, all
available amounts held in each Collection Account or Restricted Account, as the
case may be, of a Borrower shall be wired or, with the consent of the Agent,
sent via the automated clearing house system each Business Day into such
Borrower's concentration account maintained by the Agent with Bankers Trust
Company (such concentration account or such other account as the Agent may
approve in writing, the "Concentration Account" of such Borrower). All amounts
---------------------
received in the Concentration Account from the Lockbox Banks or the Restricted
Account Banks, in each case of the applicable Borrower, shall be credited to the
account of such Borrower and applied and apportioned in accordance with Section
-------
4.11. All Collections and other proceeds of Collateral which are received
----
directly by any Borrower shall be deemed to have been received by the Borrower
as the Agent's trustee and, upon the Borrower's receipt thereof, the Borrower
shall immediately transfer or cause to be transferred, all such amounts into
such Borrower's Collection Accounts (or, with respect to rental yards for which
a Lockbox has not yet been established, into such Borrower's Restricted Accounts
for those rental yards) in their original form, together with such endorsements
thereon as are necessary or appropriate to permit their immediate deposit into
such Collection Accounts or Restricted Accounts, as the case may be.
4.13 Calculations. All calculations of (i) interest hereunder and (ii)
------------
Fees, including, without limitation, Unused Line Fees and Letter of Credit Fees,
shall be made by the Agent, on the basis of a year of 360 days for the actual
number of days
-59-
elapsed (including the first day but excluding the last day) occurring in the
period for which such interest or Fees are payable. Each determination by the
Agent of an interest rate, Fee or other payment hereunder shall be conclusive
and binding for all purposes, absent manifest error.
4.14 Special Provisions Relating to Eurodollar Rate Loans.
----------------------------------------------------
(a) Continuation. With respect to any Borrowing consisting of
------------
Eurodollar Rate Loans, the Borrower for whose account the Borrowing has been
made may (so long as no Default or Event of Default has occurred and is
continuing), subject to the provisions of Section 4.14(c), elect to maintain
---------------
such Borrowing or any portion thereof as consisting of Eurodollar Rate Loans by
selecting a new Interest Period for such Borrowing, which new Interest Period
shall commence on the last day of the immediately preceding Interest Period.
Each selection of a new Interest Period shall be made pursuant to a Notice of
Continuation given not later than 1:00 P.M. New York City time on the third
Business Day prior to the date of any such continuation relating to Eurodollar
Rate Loans, by the applicable Borrower to the Agent. Such Notice of
Continuation shall be by telephone or facsimile transmission, and if by
telephone, promptly confirmed in writing, in each case specifying (i) the date
of such continuation, (ii) the aggregate amount of Loans subject to such
continuation and (iii) the duration of the selected Interest Period. The
applicable Borrower may elect to maintain more than one Borrowing consisting of
Eurodollar Rate Loans by combining such Borrowings into one Borrowing and
selecting a new Interest Period pursuant to this Section 4.14(a), provided that
--------------- --------
all such Borrowings to be so combined shall have Interest Periods ending on the
same date. If the applicable Borrower shall fail to submit a Notice of
Continuation or select a new Interest Period for all or any portion of any
Eurodollar Rate Loans in accordance with this Section 4.14(a), that portion of
---------------
such Loans for which no Notice of Continuation has been submitted or no Interest
Period has been selected will automatically, on the last day of the then
existing Interest Period therefore, convert into Prime Rate Loans. The Agent
shall give each Lender prompt notice by telephone or facsimile transmission of
each Notice of Continuation. Borrowings of Eurodollar Rate Loans on the same
Business Day shall be in an aggregate principal amount for all Borrowers
requesting that Loans be made or continued as, or converted into,
-60-
Eurodollar Rate Loans with the same Interest Period on such Business Day of not
less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof.
(b) Conversion. Each Borrower may on any Business Day (so long as no
----------
Default or Event of Default has occurred and is continuing) pursuant to a Notice
of Conversion given to the Agent, and subject to the provisions of Section
-------
4.14(c), convert the entire amount of or a portion of all Prime Rate Loans made
-------
to or for the account of the Borrower into Eurodollar Rate Loans; provided,
--------
however, that, upon conversion of any Prime Rate Loans into Eurodollar Rate
-------
Loans, the Borrower shall pay accrued interest to the date of conversion on the
principal amount converted. Each such Notice of Conversion shall be given not
later than 1:00 P.M. New York City time on the third Business Day prior to the
date of any proposed conversion into Eurodollar Rate Loans. Subject to the
restrictions specified above, each Notice of Conversion shall be by telephone or
facsimile transmission, and if by telephone, promptly confirmed in writing, in
each case specifying (i) the requested date of such conversion, (ii) the
aggregate amount of Loans to be converted and (iii) the duration of the Interest
Period of such Loan. Borrowings of Eurodollar Rate Loans on the same Business
Day shall be in an aggregate principal amount for all Borrowers requesting that
Loans be made or continued as, or converted into, Eurodollar Rate Loans with the
same Interest Period on such Business Day of not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof. Borrowings of Prime Rate
Loans (other than Agent Advances) on the same Business Day shall be in an
aggregate principal amount for all Borrowers requesting that Loans be made as,
or converted into, Prime Rate Loans on such Business Day of not less than
$1,000,000 or an integral multiple of $500,000 in excess thereof. Subject to
the foregoing limits, each Borrower may request one or more Borrowings of Prime
Rate Loans on the same Business Day, but may request only one Borrowing of
Eurodollar Rate Loans (excluding continuations of Eurodollar Rate Loans) for any
Business Day (which shall be funded simultaneously with all Loans requested to
be made as, or converted into, Eurodollar Rate Loans requested by the other
Borrowers for such Business Day).
(c) Certain Limitations on Eurodollar Rate Loans. The right of each
--------------------------------------------
Borrower to maintain, select, continue or convert Eurodollar Rate Loans shall be
limited as follows:
-61-
(i) If the Agent is advised by Bankers Trust Company that it is
not offering U.S. dollar deposits (in the applicable amounts) in the London
interbank market, or the Agent determines that adequate and fair means do
not otherwise exist for ascertaining the Eurodollar Rate for Eurodollar
Rate Loans comprising any requested Borrowing, continuation or conversion,
the right of the Borrowers to select or maintain Eurodollar Rate Loans for
such Borrowing or any subsequent Borrowing shall be suspended until the
Agent shall notify the Borrowers and the Lenders that the circumstances
causing such suspension no longer exist, and each Loan comprising such
Borrowing shall be made as a Prime Rate Loan.
(ii) If the Majority Lenders shall, at least one Business Day
before the date of any requested Borrowing, continuation or conversion,
notify the Agent (whereupon the Agent will notify the Borrowers) that the
Eurodollar Rate for Loans comprising such Borrowing will not adequately
reflect the cost to such Lenders of making or funding their respective
Loans for such Borrowing, the right of the Borrowers to select Eurodollar
Rate Loans for such Borrowing shall be suspended until the Agent shall
notify the Borrowers and the Lenders that the circumstances causing such
suspension no longer exist, and each Loan comprising such Borrowing shall
be made as a Prime Rate Loan; provided, however, that the right of the
-------- -------
Borrowers to select Eurodollar Rate Loans for such Borrowing will continue
if the Borrowers agree to reimburse each Lender for such additional amounts
as are necessary (as reasonably determined by such Lender in its sole
discretion) to adequately reflect the cost of making such Eurodollar Rate
Loans.
(iii) If at any time any Lender determines (which determination
shall, absent manifest error, be conclusive and binding on all parties)
that the making, continuation or conversion of any Loan as a Eurodollar
Rate Loan has become unlawful or impermissible by reason of compliance by
that Lender with any law, governmental rule, regulation or order of any
Governmental Authority or monetary authority (whether or not having the
force of law or whether or not noncompliance would result in costs or
penalties), then, and in any such event, such Lender may
-62-
give notice of that determination in writing, to the Borrowers and the
Agent and the Agent shall promptly transmit the notice to each other
Lender. Until such Lender gives notice otherwise, the right of the
Borrowers to select Eurodollar Rate Loans from that Lender shall be
suspended and each Eurodollar Rate Loan outstanding from that Lender shall
automatically and immediately convert to a Prime Rate Loan.
(iv) There shall not be outstanding at any one time more than
four Borrowings of Eurodollar Rate Loans for any Borrower or more than
twenty-four Borrowings of Eurodollar Rate Loans for all Borrowers.
(v) No Agent Advance shall be made as a Eurodollar Rate Loan.
(d) Compensation. (i) Each Notice of Continuation and Notice of
------------
Conversion shall be irrevocable by and binding on the Credit Parties. In the
case of any Borrowing, continuation or conversion that the related Notice of
Borrowing, Notice of Continuation or Notice of Conversion specifies is to be
comprised of Eurodollar Rate Loans, the Borrowers shall jointly and severally
indemnify each Lender against any loss, cost or expense incurred by such Lender,
upon written request by such Lender, as a result of any failure to fulfill, on
or before the date for such Borrowing, continuation or conversion specified in
such Notice of Borrowing, Notice of Continuation or Notice of Conversion, the
applicable conditions set forth in Article 5, including, without limitation, any
---------
loss (excluding loss of anticipated profits), cost or expense incurred
by reason of the liquidation or re-employment of deposits or other funds
acquired by such Lender to fund the Loan to be made by such Lender as part of
such Borrowing, continuation or conversion.
(ii) If any payment of principal of, or conversion or continuation
of, any Eurodollar Rate Loan is made other than on the last day of the Interest
Period for such Loan as a result of a payment, prepayment, conversion or
continuation of such Loan or acceleration of the maturity of the Notes pursuant
to Article 9 or for any other reason, the Borrower for whose account the Loan
---------
has been made shall, upon written demand by any Lender (with a copy of such
demand to the Agent), pay to the Agent for the account of such Lender any
amounts required to
-63-
compensate such Lender for any additional losses, costs or expenses which it may
reasonably incur as a result of such payment, including, without limitation, any
loss (including loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Loan.
(iii) Calculation of all amounts payable to a Lender under this
Section 4.14(d) shall be made as though such Lender elected to fund all
---------------
Eurodollar Rate Loans by purchasing U.S. dollar deposits in its Eurodollar
Lending Office's interbank eurodollar market.
4.15 Indemnification in Certain Events. If after the date hereof,
---------------------------------
either (i) any change in or in the interpretation, administration or application
of any Requirement of Law is introduced, including, without limitation, with
respect to reserve requirements, applicable to the Agent, to any of the Lenders,
or to Bankers Trust Company, Bankers Trust (Delaware) or any other banking or
financial institution from whom any of the Lenders borrows funds or obtains
credit (a "Funding Bank"), or (ii) the Agent, a Funding Bank or any of the
------------
Lenders complies with any future guideline or request from any central bank or
other Governmental Authority made after the date hereof or (iii) the Agent, a
Funding Bank or any of the Lenders determines that the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof has or would have the effect described
below, or the Agent, a Funding Bank or any of the Lenders complies with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, and in the
case of any event set forth in this clause (iii), such adoption, change
------------
or compliance is made after the date hereof and has or would have the direct or
indirect effect of reducing the rate of return on any of the Lenders' capital as
a consequence of its obligations hereunder to a level below that which such
Lender could have achieved but for such adoption, change or compliance (taking
into consideration the Agent's or such Funding Bank's or Lender's policies as
the case may be with respect to capital adequacy) by an amount deemed by such
Lender to be material, or any of the foregoing events described in clauses (i),
-----------
(ii) or
----
-64-
(iii) increases the cost to the Agent, the Issuing Bank or any of the
-----
Lenders of (A) funding or maintaining its Commitment or (B) issuing, making or
maintaining any Letter of Credit or of purchasing or maintaining any
participation therein, or reduces the amount receivable in respect thereof by
the Agent, the Issuing Bank or any Lender, then the Borrowers jointly and
severally agree to pay to the Agent, upon demand by the Agent and for the
account of each applicable Lender or, as applicable, the Issuing Bank or a
Funding Bank, additional amounts sufficient to indemnify the Lenders against
such increase in cost or reduction in amount receivable; provided that the
--------
calculation of such amount is set forth in reasonable detail in a written
statement delivered to the Borrowers by the Agent (or such Lender, the Issuing
Bank or Funding Bank) not later than 180 days after the incurrence of such
costs, which statement shall be conclusive absent manifest error (unless such
adoption, change or compliance arose or became effective retrospectively, in
which case the Agent, such Lender, Issuing Bank or Funding Bank shall not be
limited to such 180-day period so long as such Person has given such notice to
the Borrowers no later than 180 days from the date such adoption, change or
compliance became applicable to such Person).
4.16 Taxes.
-----
(a) Payment of Taxes. Except as specifically provided to the
----------------
contrary in Section 4.16(b) or Section 4.16(d)(iii), any and all payments by a
--------------- --------------------
Credit Party hereunder or under any Note or other document evidencing any
Obligations shall be made free and clear of, and without reduction for, any and
all present or future taxes, levies, imposts, deductions, charges, withholdings,
and all stamp or documentary taxes, excise taxes, ad valorem taxes and other
taxes imposed on the value of the assets of any Credit Party or any Subsidiary
of a Credit Party, charges or levies which arise from the execution, delivery or
registration, or from payment or performance under, or otherwise with respect
to, any of the Credit Documents or the Commitments and all other liabilities
with respect thereto excluding, in the case of each Lender, the Issuing Bank and
the Agent, taxes imposed on or measured by net income or overall gross receipts
and capital and franchise taxes imposed on it by (i) the United States, (ii) the
Governmental Authority of the jurisdiction in which such Lender's Domestic
Lending Office or Eurodollar Lending Office, as applicable, is
-65-
located or any political subdivision thereof or (iii) the Governmental Authority
in which such Person is organized, managed and controlled or is otherwise doing
business or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, charges and withholdings being hereinafter referred
to as "Taxes"). If a Credit Party shall be required by law to withhold or deduct
-----
any Taxes from or in respect of any sum payable hereunder or under any such Note
or document to any Lender, the Issuing Bank or the Agent, (x) the sum payable to
such Lender, the Issuing Bank, or the Agent shall be increased as may be
necessary so that after making all required withholding or deductions (including
withholding or deductions applicable to additional sums payable under this
Section 4.16) such Lender, the Issuing Bank or the Agent (as the case may be)
------------
receives an amount equal to the sum it would have received had no such
withholding or deductions been made, (y) the Credit Parties shall make such
withholding or deductions, and (z) the Credit Parties shall pay the full amount
withheld or deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) Indemnification. The Borrowers jointly and severally agree (and,
---------------
in the case of payments made by the Parent Guarantors pursuant to Article 10,
----------
the Parent Guarantors jointly and severally agree) to indemnify each Lender, the
Issuing Bank and the Agent against, and reimburse each on demand for, the full
amount of all Taxes imposed because of any change in any Requirement of Law or
any change in the interpretation, administration or application by any
Governmental Authority of any Requirement of Law arising after the date hereof
(in the case of the Agent and any Lender or Issuing Bank listed on the signature
pages hereof) or the date of the Assignment and Assumption Agreement pursuant to
which such other Lender or Issuing Bank became a Lender or Issuing Bank (in the
case of each other Lender or Issuing Bank), including, without limitation, any
Taxes imposed by any Governmental Authority on amounts payable under this
Section 4.16 and any additional income or franchise taxes resulting therefrom,
------------
actually incurred or paid by such Lender, the Issuing Bank or the Agent (as the
case may be) or any of their respective Affiliates and any liability (including
penalties, interest, and reasonable out-of-pocket expenses paid to third
parties) arising therefrom or with respect thereto; provided, that the
--------
calculation of such amount is set forth in reasonable detail in a written
statement delivered to the Borrowers (or, if applicable, the Parent Guarantors)
by the Agent
-66-
or such Lender or Issuing Bank and, solely with respect to amounts payable by
the Borrowers under this Section 4.16, such statement is delivered not later
------------
than 180 days after the incurrence of such Taxes or liabilities (unless such
change arose or became effective retrospectively, in which case the Agent, such
Lender or Issuing Bank shall not be limited to such 180-day period so long as
such Person has given such notice to the Borrowers no later than 180 days from
the date such change became applicable to such Person), which statement shall,
absent manifest error, be final, conclusive and binding upon all parties hereto.
(c) Receipts. Promptly upon the request of the Agent therefor, each
--------
Credit Party will furnish to the Agent the original or a certified copy of a
receipt evidencing payment of Taxes by such Credit Party.
(d) Foreign Bank Certifications.
---------------------------
(i) Each Lender that is not created or organized under the laws of
the United States or a political subdivision thereof (a "Foreign Lender") shall
--------------
deliver to the Borrowers and the Agent on the Effective Date (or the date on
which such Foreign Lender becomes a Lender pursuant to Section 12.8) a true and
------------
accurate certificate executed in duplicate by a duly authorized officer of such
Foreign Lender to the effect that such Foreign Lender is eligible to receive
payments hereunder and under the Notes without deduction or withholding of
United States federal income tax (A) under the provisions of an applicable tax
treaty concluded by the United States (in which case the certificate shall be
accompanied by two duly completed copies of IRS Form 1001 (or any successor or
substitute form or forms)), (B) under Sections 1442(c)(1) and 1442(a) of the
Internal Revenue Code (in which case the certificate shall be accompanied by two
duly completed copies of IRS Form 4224 (or any successor or substitute form or
forms)), or (C) due to such Foreign Lender's not being a "bank" as such term is
used in Section 881(c)(3)(A) of the Internal Revenue Code (in which case, the
certificate shall be accompanied by two accurate and complete original signed
copies of IRS Form W-8 (or any successor or substitute form or forms)).
(ii) Each Foreign Lender further agrees to deliver to the Borrowers
and the Agent, from time to time, a true
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and accurate certificate executed in duplicate by a duly authorized officer of
such Foreign Lender before or promptly upon the occurrence of any event
requiring a change in the most recent certificate previously delivered by it to
the Borrowers and the Agent pursuant to this Section 4.16(d). Each certificate
---------------
required to be delivered pursuant to this Section 4.16(d)(ii) shall certify as
-----------
to one of the following:
(A) that such Foreign Lender can continue to receive payments
hereunder and under the Notes without deduction or withholding of United
States federal income tax;
(B) that such Foreign Lender cannot continue to receive payments
hereunder and under the Notes without deduction or withholding of United
States federal income tax as specified therein but does not require
additional payments pursuant to Section 4.16(a) because it is entitled to
---------------
recover the full amount of any such deduction or withholding from a source
other than the Borrowers; or
(C) that such Foreign Lender is no longer capable of receiving
payments hereunder and under the Notes without deduction or withholding of
United States federal income tax as specified therein and that it is not
capable of recovering the full amount of the same from a source other than
the Borrowers.
Each Foreign Lender agrees to deliver to the Borrowers and the Agent further
duly completed copies of the above-mentioned IRS forms on or before the earlier
of (x) the date that any such form expires or becomes obsolete or otherwise is
required to be resubmitted as a condition to obtaining an exemption from
withholding from United States federal income tax and (y) fifteen (15) days
after the occurrence of any event requiring a change in the most recent form
previously delivered by such Foreign Lender to the Borrowers and Agent, unless
any change in any Requirement of Law, or official interpretation thereof which
would render such form inapplicable or which would prevent the Foreign Lender
from duly completing and delivering such form has occurred prior to the date on
which any such delivery would otherwise be required and the Foreign Lender
promptly advises the Borrowers
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that it is not capable of receiving payments hereunder and under the Notes
without any deduction or withholding of United States federal income tax.
(iii) The Credit Parties shall not be required to pay any
additional amount to any Foreign Lender under Section 4.16(b) if such Foreign
---------------
Lender shall have failed to satisfy the requirements of Section 4.16(d)(i), it
------------------
being agreed and understood that nothing in this Section 4.16(d)(iii) shall
--------------------
relieve the Credit Parties of their obligations to pay any additional amounts
pursuant to Section 4.16(b) in the event that, as a result of any change after
---------------
the date of such satisfaction in any Requirement of Law or any change after the
date of such satisfaction in the interpretation, administration or application
by any Governmental Authority of any Requirement of Law, such Foreign Lender is
no longer capable of receiving payments hereunder and under the Notes without
any deduction or withholding of United States federal income tax.
4.17 Obligation of Lenders and Issuing Banks to Mitigate: Replacement of
-------------------------------------------------------------------
Lenders.
-------
(a) Each Lender and Issuing Bank agrees that, as promptly as
practicable after the officer of such Lender or Issuing Bank responsible for
administering the Loans or Letters of Credit of such Lender or Issuing Bank, as
the case may be, becomes aware of any event or condition that would entitle such
Lender or Issuing Bank to receive payments under Section 3.10, 4.15 or 4.16 or
------------ ---- ----
to cease making Eurodollar Rate Loans under Section 4.14(c)(iii), such Lender or
--------------------
Issuing Bank will, to the extent not inconsistent with the internal policies of
such Lender or Issuing Bank and any applicable legal or regulatory restrictions,
use reasonable efforts (i) to make, issue, fund or maintain the Commitments of
such Lender or the affected Loans or Letters of Credit of such Lender or Issuing
Bank through another lending or letter of credit office of such Lender or
Issuing Bank or (ii) take such other measures as such Lender or Issuing Bank may
deem reasonable, if as a result thereof the additional amounts which would
otherwise be required to be paid to such Lender or Issuing Bank pursuant to
Section 3.10, 4.15 or 4.16 would be materially reduced or the conditions
------------ ---- ----
rendering such Lender incapable of making Eurodollar Rate Loans under Section
-------
4.14(c)(iii) no longer would be applicable, and if, as determined by such Lender
------------
or Issuing Bank in its sole discretion,
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the making, issuing, funding or maintaining of such Commitments or Loans or
Letters of Credit through such other lending or letter of credit office or in
accordance with such other measures, as the case may be, would not otherwise
materially adversely affect such Commitments or Loans or Letters of Credit or
the interests of such Lender or Issuing Bank; provided that such Lender or
--------
Issuing Bank will not be obligated to utilize such other lending or letter of
credit office pursuant to this Section 4.17(a) unless the Borrowers agree to pay
---------------
all incremental expenses incurred by such Lender or Issuing Bank as a result of
utilizing such other lending or letter of credit office. A certificate as to the
amount of any such expenses payable by the Borrowers pursuant to this Section
-------
4.17(a) (setting forth in reasonable detail the basis for requesting such
-------
amount) submitted by such Lender or Issuing Bank to the Borrowers (with a copy
to Agent) shall be conclusive absent manifest error.
(b) If the Borrowers receive a notice pursuant to Section 3.10, 4.15
------------ ----
or 4.16 or a notice pursuant to Section 4.14(c)(iii) stating that a Lender is
---- --------------------
unable to extend Eurodollar Rate Loans (for reasons not generally applicable to
the Majority Lenders), so long as (i) no Default or Event of Default shall have
occurred and be continuing, (ii) the Borrowers have obtained a commitment from
another Lender or an Eligible Assignee to purchase at par such Lender's Loans,
Commitments, participations in Letters of Credit, obligations to make
settlements of advances made by the Agent on such Lender's behalf (including
Agent Advances), accrued interest and Fees and to assume all obligations of the
Lender to be replaced under the Credit Documents, (iii) at such time the Lender
to be replaced is not an Issuing Bank with respect to any Letters of Credit
outstanding and (iv) such Lender to be replaced is unwilling to withdraw the
notice delivered to the Borrowers, upon 30 days' prior written notice to such
Lender and the Agent, the Borrowers may require, at the Borrowers' expense and
subject to Section 4.14(d), the Lender giving such notice to assign, without
---------------
recourse, all of its Loans, Commitments, participations in Letters of Credit,
obligations to make settlements of advances made by the Agent on such Lender's
behalf (including Agent Advances), accrued interest and Fees to such other
Lender or Eligible Assignee pursuant to the provisions of Section 12.8(b);
---------------
provided that, prior to or concurrently with such replacement (w) such assignee
--------
shall have paid (I) to the Lender being replaced, an amount equal to the sum of
the principal amount of, and all
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accrued interest on, all outstanding Loans of, and all accrued and theretofore
unpaid, Fees owing to, such replaced Lender, (II) to the Agent, all amounts as
to which the replaced Lender is then in default to the Agent in respect of
advances made by the Agent on such Lender's behalf (including Agent Advances)
and (III) to the Issuing Bank, all amounts as to which the replaced Lender is
then in default to the Issuing Bank in respect of participations in Letters of
Credit, (x) the Borrowers shall have paid to the Lender giving such notice all
amounts owing under Sections 3.10, 4.14(c)(iii), 4.15 and 4.16 and all
------------- ------------ ---- ----
outstanding Obligations (other than obligations required to be paid by such
assignee and Obligations which, as of the date of assignment, are contingent and
unliquidated and not due and owing and which pursuant to the provisions of the
Credit Documents survive the termination of such replaced Lender's Commitment)
through such date of replacement, (y) the Borrowers or the applicable assignee
shall have paid to the Agent the processing and recordation fee required to be
paid by Section 12.8(b) and (z) all of the requirements for such assignment
---------------
contained in Section 12.8(b), including, without limitation, the consent of the
---------------
Agent and the receipt by the Agent of an executed Assignment and Assumption
Agreement and other supporting documents, shall have been fulfilled.
Article 5
CONDITIONS PRECEDENT
--------------------
5.1 Conditions to Effectiveness. This Credit Agreement shall become
----------------------------
effective on the date (the "Effective Date") on or before September 30, 1996 on
--------------
which all of the following conditions precedent shall have been simultaneously
satisfied or waived:
(a) Documents. The Agent shall have received on or before the
---------
Effective Date all of the following, each in form and substance satisfactory to
the Agent (and the Agent shall not have received notice from any Lender party
hereto on the Effective Date that the same are not satisfactory to such Lender):
(i) this Credit Agreement, the Notes and all other
agreements, documents, instruments,
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certificates and opinions relating to the loan and other credit
transactions contemplated by this Credit Agreement and described in
the Closing Document List attached hereto as Schedule A (the "Closing
---------- -------
Document List"), each duly executed where appropriate; each of
-------------
Borrowers and Parent Guarantors hereby directs their counsel to
prepare and deliver to the Agent, the Lenders and the Issuing Bank the
respective opinions described in the Closing Document List;
(ii) a solvency certificate for the Credit Parties on a
combined basis, duly executed by the chief financial officer or
treasurer of each Credit Party, dated the Effective Date and giving
effect to the IPO and the financing transactions contemplated under
this Credit Agreement;
(iii) a Notice of Borrowing for each Borrower dated the
Effective Date or, if any Borrower does not desire to borrow Loans on
the Effective Date, a certificate of the chief executive officer,
chief financial officer or treasurer of each Credit Party executed and
delivered on behalf of such Credit Party certifying that all
conditions precedent have been met and (after giving effect to the IPO
and the financing transactions contemplated under this Credit
Agreement) no Default or Event of Default has occurred or is
continuing;
(iv) a Borrowing Base Certificate for each Borrower (as of
August 31, 1996) and giving effect to the IPO and the financing
transactions contemplated under this Credit Agreement, adequately
supporting the Loans requested to be made or outstanding, and the
Letters of Credit requested to be issued or outstanding, on the
Effective Date and showing sufficient borrowing availability
appropriate, in the judgment of the Agent, to support the overall
business and working capital requirements of the Borrowers; and
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(v) such additional documentation as the Agent may
reasonably request.
The funding by any Lender of the Loans requested to be made on the
Effective Date shall constitute evidence that the documents delivered pursuant
to this Section 5.1(a) are satisfactory to such Lender.
--------------
(b) Master Assignment Agreement. The Master Assignment Agreement
---------------------------
shall have been executed and delivered to the Agent by all parties thereto, and
the Transfer Date (as defined therein) shall have occurred.
(c) The IPO; Redemption of Preferred Stock; Repayment of Citicorp
-------------------------------------------------------------
Indebtedness and Release of Liens. All aspects of the IPO shall have been
---------------------------------
consummated in compliance with all applicable Requirements of Law, the
Registration Statement and this Credit Agreement and the other Credit Documents,
and RSC shall have received net proceeds from the IPO in an aggregate amount
sufficient to redeem all of its outstanding preferred stock, repay in full all
Indebtedness and other obligations under the Citicorp Documents and repay at
least $10,000,000 in principal amount of outstanding Loans under the Original
Credit Agreement. All outstanding preferred stock of RSC shall have been
redeemed, and the aggregate consideration paid or payable to the holders of the
preferred stock in connection with the redemption shall not exceed $38,000,000.
The Indebtedness under the Citicorp Documents shall have been paid in full, and
all obligations of each Credit Party under the Citicorp Documents (other than
the obligations of RSC under Sections 15.3 and 15.9 of the Citicorp Purchase
Agreement and Sections 11 and 15 of the Share Pledge Agreement (as defined in
the Citicorp Purchase Agreement)) shall have been terminated. The aggregate
consideration paid or payable to the holders of Indebtedness under the Citicorp
Documents in connection with the termination of the obligations of the Credit
Parties thereunder shall not exceed $13,500,000. All Liens created under or in
connection with the Citicorp Documents shall have been released, and the
certificates evidencing the capital stock of RSC Acquisition and RSC Holdings,
together with stock powers pertaining thereto, shall have been delivered to the
Agent, for the benefit of the Holders. The Agent shall have received, for the
account of the Lenders, a repayment of at least $10,000,000 in principal amount
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of Loans outstanding under the Original Credit Agreement from the proceeds of
the IPO.
(d) No Legal Impediments. No law, regulation, order, judgment or
--------------------
decree of any Governmental Authority shall, and the Agent shall not have
received any notice that litigation is pending or threatened which is likely to,
enjoin, prohibit or restrain the consummation of the transactions evidenced by
the Credit Documents or the IPO, except for such laws, regulations, orders or
decrees, or pending or threatened litigation that in the aggregate could not
reasonably be expected to result in a Material Adverse Effect.
(e) Financial Statements. Complete and accurate copies of the Pro
--------------------
Formas and the Projections shall have been delivered to the Agent. After review
of the foregoing, the Agent shall be satisfied, in its sole discretion, that (x)
the financial condition of the Credit Parties does not differ in any material
adverse respect from the condition evidenced by the financial information
provided to the Agent prior to the date of the Commitment Letter and (y) the
Credit Parties will be able to comply with the Financial Covenants.
(f) No Change in Financial Markets. Since the date of the Commitment
------------------------------
Letter, there shall not have occurred a substantial impairment of the financial
markets generally that is reasonably likely to affect materially and adversely
the transactions contemplated hereby, in each case as determined by the Agent
and each Lender in its sole discretion.
(g) Fees and Expenses. All Fees, and all Expenses as to which the
-----------------
Credit Parties have received an invoice, in each case which are payable on or
before the Effective Date shall have been paid.
5.2 Conditions Precedent to All Loans and Letters of Credit. The
-------------------------------------------------------
obligation of each Lender to fund its Proportionate Share of any requested Loan
or of the Agent to cause the Issuing Bank to issue any requested Letter of
Credit is subject to the conditions precedent set forth below. Each Notice of
Borrowing and each Letter of Credit Request, and each issuance by a Borrower of
a check drawn against, or request for transfer from, the Disbursement Account,
shall constitute a representation and warranty that such conditions are
satisfied.
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(a) All representations and warranties contained in this Credit
Agreement and the other Credit Documents shall be true and correct on and as of
the date of such Notice of Borrowing and the date of the Borrowing requested
thereunder, the date of such Letter of Credit Request and the date of issuance
of the Letter of Credit requested pursuant thereto, or issuance of a check drawn
against or request for transfer from the Disbursement Account, as if then made,
other than representations and warranties that relate solely to an earlier date;
(b) No Default or Event of Default shall have occurred and is
continuing, or would result from the making of the requested Loan or the
issuance of the requested Letter of Credit; and
(c) No change, occurrence, event or development or event involving a
prospective change that is reasonably likely to have a Material Adverse Effect
shall have occurred and be continuing.
Article 6
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Agent and the Lenders to enter into this Credit Agreement and
to make the Loans and other financial accommodations described herein, and to
induce the Issuing Bank to issue Letters of Credit, the Credit Parties hereby
represent and warrant to the Agent, the Lenders and the Issuing Bank that the
following are true, correct and complete. Such representations and warranties,
and all other representations and warranties made by any Credit Party in any
other Credit Document, shall survive the execution and delivery of the Credit
Documents.
6.1 Organization and Qualification. Each Credit Party (i) is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation, (ii) has the power and authority to own its
properties and assets and to transact the businesses in which it presently is,
or proposes to be, engaged and (iii) is duly qualified and is authorized to do
business and is in good standing in each jurisdiction where it presently is, or
proposes to be, engaged in business, except in jurisdictions where the failure
to be so
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qualified, authorized or in good standing has not had and could not reasonably
be expected to have a Material Adverse Effect. Schedule D, Part 6.1 lists all
--------------------
jurisdictions in which each Credit Party is incorporated and qualified to do
business as a foreign corporation as of the Effective Date.
6.2 Authority. Each Credit Party has the requisite corporate power
---------
and authority to execute, deliver and perform each of the Credit Documents to
which it is a party. All corporate action necessary for the execution, delivery
and performance by the Credit Parties of any of the Credit Documents has been
taken.
6.3 Enforceability. This Credit Agreement is (and, upon execution
--------------
and delivery thereof, each other Credit Document will be) the legal, valid and
binding obligation of each Credit Party which is a party thereto, enforceable in
accordance with their respective terms.
6.4 No Conflict. The execution, delivery and performance by each
-----------
Credit Party of each Credit Document to which it is a party are not in
contravention of any Requirement of Law or any Contractual Obligation to which
it is a party or by which it or any of its properties are bound, except, in each
case, for such Requirements of Law or Contractual Obligations the noncompliance
with which will not result in a Material Adverse Effect, and will not, except as
permitted hereby, result in the imposition of any Liens upon any of its
properties.
6.5 Consents and Filings. No consent, authorization, permit, notice
--------------------
or filing is required in connection with the execution, delivery and performance
of this Credit Agreement, any Credit Document or the continuing operations of
the Credit Parties, except (i) those that have been obtained or made and (ii)
filings necessary to create, perfect or retain the perfection or priority of
Liens of the Agent, for the benefit of the Holders, against the Collateral.
6.6 Government Regulation. None of the Credit Parties is subject to
---------------------
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, the Investment Company Act of 1940, or
any other Requirement of Law that limits its ability to incur indebtedness or
its ability
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to consummate the transactions contemplated in this Credit Agreement and the
other Credit Documents.
6.7 Solvency. After giving effect to the transactions contemplated
--------
by this Credit Agreement and the consummation of the IPO, (a) the fair market
value of the assets of the Credit Parties and their respective Subsidiaries, on
a combined basis, is in excess of the total amount of their liabilities
(including, without limitation, contingent liabilities); (b) the present fair
saleable value of the assets of the Credit Parties and their respective
Subsidiaries, on a combined basis, is greater than their probable liability on
their existing debts as such debts become absolute and matured; (c) the Credit
Parties and their respective Subsidiaries, on a combined basis, are then able
and expect to be able to pay their debts (including, without limitation,
contingent debts and other commitments) as they mature; and (d) the Credit
Parties and their respective Subsidiaries, on a combined basis, have capital
sufficient to carry on their respective businesses as conducted and as proposed
to be conducted.
6.8 Rights in Collateral; Priority of Liens. On the Effective Date,
---------------------------------------
after giving effect to the release of Liens created pursuant to the Citicorp
Documents, the Credit Parties have good and marketable title to all property
which constitutes part of the Collateral, free and clear of any and all Liens in
favor of third parties, other than Permitted Liens. Upon the taking of
possession of the share certificates and stock powers delivered to the Agent
pursuant to Section 5.1(b), and the taking of additional actions, to the extent
--------------
required, for perfection of Liens in proceeds of Collateral and Collateral
acquired after the date hereof, the Liens granted to the Agent, for the benefit
of the Holders, pursuant to the Credit Documents constitute valid and
enforceable first, prior and perfected Liens on the Collateral securing the
Obligations, subject only to Permitted Liens. Except for filings in favor of
the Agent relating to this Credit Agreement and as otherwise identified on
Schedule D, Part 8.7, no financing statement, registration, notation of Lien on
--------------------
certificate of title or ownership, filing or other instrument similar in effect
covering all or any part of the Collateral is on file with any Governmental
Authority on the Effective Date.
6.9 Financial Data. The Credit Parties have provided to the Agent
--------------
and each of the Lenders complete and accurate copies
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of (a) the audited consolidated financial statements for RSC and its
Subsidiaries as of December 31, 1995, (b) the unaudited financial statements of
RSC and its Subsidiaries as of June 30, 1996, (c) the Pro Forma and (d) the
Projections. Such Financial Statements have been prepared in accordance with
GAAP consistently applied throughout the periods involved except as stated
therein and fairly present the respective consolidated financial positions,
results of operations and cash flows of RSC and its Subsidiaries for each of the
periods covered, subject in the case of clause (b) to audit adjustments and
reclassification and month-end reconciliations. None of the Credit Parties has
any Contingent Obligation, contingent liability or liability for taxes, long-
term leases or commitments, which is not reflected (to the extent required by
GAAP consistently applied) in such Financial Statements. The Pro Forma fairly
presents on a pro forma basis the financial condition of RSC and its
--- -----
Subsidiaries as of June 30, 1996 but after giving effect to the IPO, and
reflects on a pro forma basis those liabilities reflected in the notes thereto
--- -----
and resulting from consummation of the transactions contemplated by the Credit
Documents and the IPO. The Projections and the assumptions expressed in the Pro
Forma are reasonable based on the information available to the Credit Parties at
the time so furnished.
6.10 Subsidiaries; Ownership of Stock. The only direct or indirect
--------------------------------
Subsidiaries of the Credit Parties are those listed on Schedule D, Part 6.10.
---------------------
RSC is the record and beneficial owner of all of the shares of capital stock of
each of the other Parent Guarantors. RSC has no Subsidiaries other than the
other Parent Guarantors and the Borrowers. RSC Acquisition is the record and
beneficial owner of all of the shares of capital stock of each of Acme Alabama,
Air & Pump and Xxxxxx Xxxxx, and RSC Acquisition has no other Subsidiaries
(other than Subsidiaries permitted to be created or acquired under Section 8.20
------------
as to which all actions required by Section 8.20 have been taken). RSC Holdings
------------
is the record and beneficial owner of all of the shares of capital stock of each
of Acme Xxxxx, Acme Xxxxx and Acme Rents, and RSC Holdings has no other
Subsidiaries (other than Subsidiaries permitted to be created or acquired under
Section 8.20 as to which all actions required by Section 8.20 have been taken).
------------ ------------
There are no proxies, irrevocable or otherwise, with respect to the shares of
capital stock of any Credit Party, and other than as set forth on Schedule D,
-----------
Part 6.10 with respect to RSC, no equity securities of any Credit Party are or
---------
may become required
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to be issued by reason of any options, warrants, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of any capital stock of any
such Person, and there are no contracts, commitments, understandings or
arrangements by which any such Person is or may become bound to issue additional
shares of its capital stock or securities convertible into or exchangeable for
such shares. All of such shares so owned by any Credit Party are owned by such
Person free and clear of any Liens, other than Liens granted to the Agent, for
the benefit of the Holders, pursuant to the Credit Documents.
6.11 No Judgments or Litigation. Except as set forth on Schedule D,
-------------------------- -----------
Part 6.11, no judgments, orders, writs or decrees are outstanding against any
---------
Credit Party nor is there now pending or, to the best of the Credit Parties'
knowledge after diligent inquiry, threatened, any litigation, contested claim,
investigation, arbitration, or governmental proceeding by or against any of the
Credit Parties, in each case, except for such judgments, orders, writs, decrees,
litigation, contested claims, investigations, arbitrations or governmental
proceedings that (i) in the aggregate could not reasonably be expected to result
in a Material Adverse Effect and (ii) occurred within the ordinary course of
business.
6.12 No Defaults. None of the Credit Parties is in default under any
-----------
term of any material indenture, contract, lease, agreement, instrument or other
commitment to which any of them is a party or by which any of them is bound.
None of the Credit Parties knows of any dispute regarding any such material
indenture, contract, lease, agreement, instrument or other commitment to which
such Credit Party is a party.
6.13 Labor Matters. Schedule D, Part 6.13 accurately sets forth all
------------- ---------------------
material labor contracts to which any of the Credit Parties is a party and their
dates of expiration. There are no existing or threatened strikes, lockouts or
other disputes relating to any collective bargaining or similar agreement to
which any Credit Party is a party.
6.14 Compliance with Law. None of the Credit Parties has violated or
-------------------
failed to comply with any Requirement of Law, including, without limitation,
ERISA and environmental, health and safety Requirements of Law, except for such
Requirements of
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Law, the noncompliance with which, in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
6.15 ERISA. None of the Credit Parties or the ERISA Affiliates
-----
maintains or contributes to any Plan, other than those listed on Schedule D,
-----------
Part 6.15. Each Credit Party and each ERISA Affiliate has fulfilled all
---------
material contribution obligations for each Plan (including obligations related
to the minimum funding standards of ERISA and the Internal Revenue Code). No
Termination Event has occurred nor has any other event occurred that may result
in a Termination Event. None of the Credit Parties or the ERISA Affiliates
thereof, nor any fiduciary of any Plan, is subject to any direct or indirect
material liability with respect to any Plan under any Requirement of Law or
agreement. None of the Credit Parties or the ERISA Affiliates is required to
provide security to any Plan under Section 401(a)(29) of the Internal Revenue
Code. None of the Credit Parties or the ERISA Affiliates has engaged in any
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Internal Revenue Code for which a statutory or class exemption is not available
or a private exemption has not been previously obtained from the Department of
Labor.
6.16 Compliance with Environmental Laws. Except as disclosed on
----------------------------------
Schedule D, Part 6.16, (i) none of the Credit Parties is the subject of any
---------------------
proceeding by any Governmental Authority or citizens group or investigation
relating to the violation of any environmental, health or safety Requirement of
Law, or asserting potential liability arising from the actual or threatened
disposal by any Person of any Hazardous Substance; (ii) none of the Credit
Parties has filed any notice under any Requirement of Law with respect to the
treatment, storage, disposal, spill or release of a Hazardous Substance other
than storage of petrochemical products in the ordinary course of business, as
disclosed to the Agent; and (iii) none of the Credit Parties has knowledge of
any liability of the Credit Parties (contingent or otherwise) for any release of
any Hazardous Substance. The Credit Parties have exercised reasonable care and
made such investigations as are reasonably necessary to accurately complete all
reports and questionnaires, and provide all information, requested by the Agent
or its counsel.
6.17 Intellectual Property; Real Property. Each of the Credit
------------------------------------
Parties possesses such material assets, licenses, patents,
-80-
patent applications, copyrights, service marks, trademarks and trade names as
are necessary or advisable to continue to conduct its present and proposed
business activities. Schedule B sets forth all Real Property of the Credit
----------
Parties as of the Effective Date.
6.18 Licenses and Permits. Each of the Credit Parties has obtained and
--------------------
holds in full force and effect, all franchises, licenses, leases, permits,
certificates, authorizations, qualifications, easements, rights of way and other
rights and approvals which are necessary or advisable for the operation of its
business as presently conducted and as proposed to be conducted.
6.19 Taxes and Tax Returns.
---------------------
(a) Except as set forth on Schedule D, Part 6.19, each Credit Party
---------------------
has timely filed all tax returns it is required to file. The information filed
is complete and accurate in all material respects. All deductions taken in such
tax returns are appropriate and in accordance with applicable laws and
regulations, except deductions that may have been disallowed but are being
challenged in good faith and for which adequate reserves have been made in
accordance with GAAP.
(b) All taxes (including gross receipts, capital and franchise
taxes), assessments, fees and other governmental charges for periods beginning
prior to the Effective Date have been timely paid and none of the Credit Parties
has any material liability for such taxes (including penalties and interest
thereon) in excess of the amounts so paid or reserves so established.
(c) Except as set forth in Schedule D, Part 6.19, no deficiencies for
---------------------
such taxes have been claimed, proposed or assessed by any taxing or other
Governmental Authority against any Credit Party and no tax liens have been
filed. Except as set forth in Schedule D, Part 6.19, there are no pending or
---------------------
threatened audits, investigations or claims for or relating to any liability for
taxes and there are no matters under discussion with any Governmental Authority
which could result in a material additional liability of the Credit Parties for
taxes (including penalties and interest thereon). Schedule D, Part 6.19 sets
---------------------
forth the year through which the federal income tax returns of
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each of the Credit Parties has been audited by the Internal Revenue Service
(which audits have been closed), or the year through which the period during
which any assessments may be made by the Internal Revenue Service has expired
without waiver or extension. Except as set forth in Schedule D, Part 6.19, no
---------------------
material extension of a statute of limitations relating to taxes, assessments,
fees or other governmental charges is in effect with respect to any of the
Credit Parties.
(d) Except as set forth on Schedule D, Part 6.19, none of the
---------------------
Credit Parties has any material obligation under any written tax sharing
agreement or agreement regarding payments in lieu of taxes.
6.20 Material Contracts. Schedule D, Part 6.20, contains a true,
------------------ ---------------------
correct and complete list of all the Material Contracts currently in effect on
the date hereof. Except as described on Schedule D, Part 6.20, none of the
---------------------
Material Contracts contains any material burdensome restrictions on any of the
Credit Parties or any of their respective properties, all of the Material
Contracts are in full force and effect, and no defaults currently exist
thereunder.
6.21 Refinanced Indebtedness. After giving effect to the application
-----------------------
of proceeds of the IPO in accordance with this Credit Agreement, the
Indebtedness of the Credit Parties under the Citicorp Documents and all accrued
and unpaid interest thereon shall be paid in full in accordance with the express
provisions of the Citicorp Documents, such that the Credit Parties have been or
will be upon payment in full of such Indebtedness irrevocably released from all
liability and Contractual Obligations with respect thereto other than customary
continuing indemnities provided for in the Citicorp Documents. Any and all Liens
securing such Indebtedness have been released or provision for release of such
Liens satisfactory to the Agent has been made.
6.22 Securities Activities. None of the Credit Parties is engaged in
---------------------
the business of extending credit for the purpose of purchasing or carrying
Margin Stock.
6.23 Accuracy and Completeness of Information. All factual
----------------------------------------
information furnished by or on behalf of any of the Credit Parties in writing to
the Agent, any Lender, or the
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Auditors for purposes of or in connection with the Original Credit Agreement,
this Credit Agreement or any Credit Documents, or any transaction contemplated
hereby or thereby is or will be true and accurate in all material respects on
the date as of which such information is dated or certified and not incomplete
by omitting to state any material fact necessary to make such information not
misleading at such time.
6.24 No Change. There has been no development or event or any
---------
prospective development or event, which has had or could reasonably be expected
to have a Material Adverse Effect.
6.25 Fairness. The transactions contemplated by the Credit Documents
--------
are fair to the Credit Parties.
Article 7
AFFIRMATIVE COVENANTS
---------------------
Until termination of this Credit Agreement and payment and
satisfaction of all Obligations due hereunder, each Credit Party shall comply
with, and, where required, shall cause each of its Subsidiaries to comply with,
the following covenants:
7.1 Financial Reporting. The Credit Parties shall timely deliver to
-------------------
each Lender the following information:
(a) Annual Financial Statements. As soon as available, but not
---------------------------
later than 120 days after the end of each Fiscal Year: (i) annual unaudited
consolidating and audited consolidate d Financial Statements; (ii) a comparison
in reasonable detail to the prior year audited Financial Statements; (iii) the
Auditors' unqualified opinion, "Management Letter" and statement indicating that
the Auditors have not obtained knowledge of the existence of any Default or
Event of Default during their audit; (iv) a narrative discussion of the Credit
Parties' consolidated financial condition and results of operations for such
Fiscal Year and a comparison in reasonable detail to the Projections (or the
then most recent financial forecasts delivered pursuant to Section 7.1(b)) for
--------------
such Fiscal Year, prepared by the chief financial officer or treasurer of each
Credit Party; and (v) a certificate substantially in the form of Exhibit O with
---------
an attached schedule of calculations
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demonstrating compliance with the Financial Covenants and Section 8.9(vi) (the
---------------
"Compliance Certificate").
-----------------------
(b) Annual Projections. Not later than 45 days after the end of each
------------------
Fiscal Year, beginning with the Fiscal Year ended 1996, (i) a monthly budget and
consolidating income statement for the then current Fiscal Year and (ii) a
consolidated plan and financial forecast (including the assumptions on which the
plan and financial forecast are based), prepared in accordance with the Credit
Parties' normal accounting procedures applied on a consistent basis and in
substantially the form of the Projections, for the then current Fiscal Year and
each succeeding Fiscal Year of the Credit Parties up to and including the Fiscal
Year following the Fiscal Year which includes the Expiration Date, including,
without limitation, forecasted (A) consolidated condensed balance sheets, (B)
condensed consolidated and consolidating income statements, (C) condensed
consolidated cash flow statements, (D) consolidated capitalization statements
and (E) calculations of Financial Covenants, in each case for such Fiscal Years.
(c) Quarterly Compliance Certificate. As soon as available, but not
--------------------------------
later than 45 days after the end of each fiscal quarter in each Fiscal Year, a
Compliance Certificate, together with a certification by the chief financial
officer or treasurer of each Credit Party that the Financial Statements for the
then most recently ended three calendar months delivered pursuant to Section
-------
7.1(d) have been prepared in accordance with GAAP (prepared without footnotes
------
and subject to year-end audit adjustments and reclassifications and month-end
reconciliations, in each case, to the extent consistent with the Credit Parties'
current practices).
(d) Monthly Financial Statements. As soon as available, but not later
----------------------------
than 30 days after the end of each calendar month in each Fiscal Year: (i)
Financial Statements as of the end of such month and for the Fiscal Year through
the end of such month; (ii) a comparison in reasonable detail to the Financial
Statements for the corresponding periods of the prior Fiscal Year; and (iii) a
narrative discussion of the Credit Parties' consolidated financial condition and
results of operations for such calendar month and Fiscal Year to date and a
comparison in reasonable detail to the budget and Projections (or the then most
recent financial forecasts delivered pursuant to
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Section 7.1(b)) for such period, prepared by the chief financial officer or
--------------
treasurer of each Credit Party.
7.2 Collateral and Other Reporting. The Credit Parties shall timely
------------------------------
deliver to the Agent the following certificates and reports:
(a) Monthly Borrowing Base Certificates. Monthly, within ten days
-----------------------------------
after the last day of each month, and at any other time requested by the Agent:
a borrowing base certificate for each Borrower substantially in the form of
Exhibit P (the "Borrowing Base Certificate"), which shall (i) detail the
--------- --------------------------
Eligible Accounts and Eligible Rental Equipment of the Borrower as of the last
day of each month (or as of such other date as the Agent may request); (ii) be
prepared by or under the supervision of the chief financial officer or treasurer
of the Borrower and certified by such officer subject only to adjustment upon
completion of the normal year-end and interim audits of physical Inventory and
Rental Equipment of that Borrower; and (iii) have attached thereto such
additional schedules and other information as the Agent may request.
(b) Appraisals. When requested by the Agent, and in any event at
----------
least once during each 365-day period after the Effective Date and each
anniversary thereof, a report of Rental Equipment of the Borrowers by Xxxxx-
Xxxxxx or another appraiser reasonably satisfactory to the Agent and consented
to by the Borrowers (which consent shall not unreasonably be withheld), which
shall describe each Borrower's Rental Equipment by category and by item (in
reasonable detail) and report the fair market value and orderly liquidation
value).
(c) Other Reports. The Credit Parties shall deliver or cause to be
-------------
delivered to the Agent and the Lenders copies of all Financial Statements,
reports and notices, if any, sent or made available generally by any Credit
Party to holders of their respective Indebtedness or securities or filed with
the Commission and all press releases made available generally by any Credit
Party to the public concerning material developments in the business of any such
Person, and all notifications received by any Credit Party pursuant to the
Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder.
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(d) Further Assurances. When requested by the Agent, any further
------------------
information regarding the Collateral, business affairs and financial condition
of any of the Credit Parties.
7.3 Notification Requirements. The Credit Parties shall timely give
-------------------------
the Agent and each of the Lenders the following notices:
(a) Notice of Defaults. Promptly, and in any event within five days
------------------
after becoming aware of the occurrence of a Default or Event of Default, a
certificate of the chief executive officer, chief financial officer or treasurer
of each Credit Party specifying the nature thereof and the Credit Parties'
proposed response thereto, each in reasonable detail.
(b) Proceedings or Adverse Changes. Promptly, and in any event
------------------------------
within five Business Days after any Credit Party becomes aware of (i) any
proceeding being instituted or threatened to be instituted by or against any
Credit Party or any Subsidiary of a Credit Party in any federal, state, local or
foreign court or before any commission or other regulatory body (federal, state,
local or foreign), except for threatened or pending proceedings which in the
aggregate could not reasonably be expected to result in an Event of Default or a
Material Adverse Effect, (ii) any order, judgment or decree being entered
against any Credit Party or any of its Subsidiaries or any of their respective
properties or assets, if the amount which is or may become payable by any Credit
Party or any of its Subsidiaries in connection with all such orders, judgments
or decrees then outstanding, exceeds confirmed insurance coverage by more than
$1,000,000, or (iii) any actual or prospective change, development or event
which has had or could reasonably be expected to have a Material Adverse Effect
other than general economic conditions, a written statement describing such
proceeding, order, judgment, decree, change, development or event and any action
being taken with respect thereto by the Credit Party or any such Subsidiary.
(c) ERISA Notices. (i) Promptly, and in any event within 10 Business
-------------
Days after any Credit Party or any ERISA Affiliate knows or has reason to know
that a Termination Event has occurred, a written statement of the chief
financial officer or treasurer of such Credit Party describing such Termination
Event and any action that is being taking with respect thereto
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by any of the Credit Parties or any ERISA Affiliate, and any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC (the
Credit Parties and the ERISA Affiliates shall be deemed to know all facts known
by the administrator of any Benefit Plan of which it is the plan sponsor); (ii)
promptly, and in any event within five Business Days after the filing thereof
with the Internal Revenue Service, a copy of each funding waiver request filed
with respect to any Benefit Plan and all communications received by any Credit
Party or any ERISA Affiliate with respect to such request; and (iii) promptly,
and in any event within five Business Days after receipt by any Credit Party or
any ERISA Affiliate, a copy of any notice of the PBGC's intention to terminate a
Benefit Plan or to have a trustee appointed to administer a Benefit Plan, copies
of each such notice.
(d) Environmental and Health and Safety Notices. Promptly, and in
-------------------------------------------
any event within 10 Business Days after receipt by any Credit Party of any
notice, complaint or order alleging actual or prospective violation of any
environmental, health or safety Requirement of Law or alleging responsibility
for costs of a cleanup, together with a copy of such notice, complaint, or order
and a written statement describing any action being taken with respect thereto
by any Credit Party.
(e) Material Contracts. Promptly, and in any event within 10
------------------
Business Days after any Material Contract of any Credit Party is terminated or
amended or any new Material Contract is entered into, a written statement
describing such event and explaining any actions being taken with respect
thereto (and, if requested by the Agent, copies of such amendments or new
contracts).
(f) Governing Documents. Within 10 Business Days after the filing
-------------------
thereof with any Governmental Authority, copies of any new Governing Document
(or any amendment or modification of an existing Governing Document).
7.4 Corporate Existence. Each Credit Party shall, and shall cause
-------------------
each of its Subsidiaries to, (i) maintain its corporate existence (except to the
extent permitted by Section 8.9 or 8.11), (ii) maintain in full force and effect
----------- ----
all licenses, bonds, franchises, leases, trademarks and qualifications to do
business, and all patents, contracts and
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other rights necessary or advisable to the profitable conduct of their
businesses, provided, however, that any such licenses, bonds, franchises,
-------- -------
leases, trademarks, qualifications, patents, contracts and other rights may be
terminated if such termination does not have a Material Adverse Effect and (iii)
continue in, and limit their operations to, the same general lines of business
as conducted by the Credit Parties and such Subsidiaries on the Closing Date and
lines of business reasonably related thereto.
7.5 Books and Records; Inspections. Each Credit Party agrees to
------------------------------
maintain, and to cause each of its Subsidiaries to maintain, books and records
pertaining to the Collateral in such detail, form and scope as is consistent
with good business practice. Each Credit Party agrees that the Agent or its
agents may enter upon the premises of any Credit Party or any Subsidiary of any
Credit Party at any time and from time to time, during normal business hours and
upon 24 hours' prior notice, and at any time at all on and after the occurrence
of a Default which continues beyond the expiration of any grace or cure period
applicable thereto, and which has not otherwise been waived pursuant to Section
-------
12.11 or cured, for the purposes of (i) inspecting and verifying the Collateral,
-----
(ii) inspecting and/or copying (at the Credit Party's expense) any and all
records pertaining thereto and (iii) discussing the affairs, finances and
business of the Credit Party with any officers, employees and directors of the
Credit Party or with the Auditors.
7.6 Insurance. Each Credit Party agrees to maintain, and to cause
---------
each of its Subsidiaries to maintain, general liability insurance, third party
property damage insurance and replacement value insurance on the Collateral
under the insurance policies and programs listed on Schedule C or substantially
----------
similar policies and programs with insurance companies maintaining a Best's
Rating of A or better (or, as to workers' compensation or similar insurance,
insurance in an insurance fund or by self-insurance authorized by the
jurisdiction in which its operations are carried on) and in such amounts and
covering such risks as are at all times satisfactory to the Agent in its
commercially reasonable judgment. All such policies shall contain such
provisions as the Agent may reasonably require to fully protect the Agent's
interest in the Collateral and to any payments to be made under such policies,
including, without limitation, the following: (i) all policies covering the
Collateral shall contain an endorsement, in form and substance
-88-
acceptable to the Agent, naming the Agent, for the benefit of the Holders, as
loss payee thereunder and, if required by the Agent, naming the Agent as an
additional insured under such policy; (ii) all policies relating to general
liability coverage shall contain an endorsement naming the Agent as an
additional insured under such policy; (iii) all such policies shall contain an
endorsement which negates the "other insurance" clause in the policy and a
statement that the insurance being provided is primary and any insurance carried
by the Agent is neither primary nor contributory; and (iv) all such policies,
endorsements thereto or an independent instrument furnished to the Agent shall
provide that the applicable insurance company will give the Agent at least 30
days' written notice (or, in the case of non-payment of premiums, at least 10
days' written notice) before any such policy or policies of insurance shall be
altered adversely to the interests of the Holders or cancelled, except for
notices of annual renewals which do not adversely affect the rights of the Agent
or the Lenders, and that no act, whether willful or negligent, or default of the
Credit Party or any other Person shall affect the right of the Agent to recover
under such policy or policies of insurance in case of loss or damage. In the
event any Credit Party at any time or times hereafter shall fail to obtain or
maintain any of the policies or insurance required herein or to pay any premium
in whole or in part relating thereto, then the Agent, without waiving or
releasing any obligations or resulting Event of Default hereunder, may at any
time or times thereafter (but shall be under no obligation to do so) obtain and
maintain such policies of insurance and pay such premiums and take any other
action with respect thereto which the Agent deems advisable. All sums so
disbursed by the Agent shall constitute Agent Advances hereunder and be part of
the Obligations, payable as provided in this Credit Agreement.
7.7 Taxes and Claims. Each Credit Party agrees to pay, when due, and
----------------
to cause each of its Subsidiaries to pay when due, (a) all taxes lawfully levied
or assessed against such Credit Party, any of its Subsidiaries or any of the
Collateral before any penalty or interest accrues thereon and (b) all claims
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which by law have or
may become a Lien (other than a Permitted Lien) upon any of such Credit Party's
or such Subsidiary's assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided, however, that no such
-------- -------
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taxes, assessments and governmental charges referred to in clause (a) above or
----------
claims referred to in clause (b) above (unless such taxes, assessments,
----------
governmental charges or claims have become a federal or state tax or ERISA Lien
on any of the assets of such Credit Party or any of its Subsidiaries) need be
paid so long as (w) being contested in good faith by appropriate proceedings
diligently instituted and conducted, (x) the Agent has been notified thereof,
and (y) such reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made therefor.
7.8 Compliance With Laws. Each Credit Party agrees to comply, and to
--------------------
cause each of its Subsidiaries to comply, with all Requirements of Law
applicable to the Collateral or any part thereof, or to the operation of its
business or its assets generally, unless (i) the Credit Party contests any such
Requirements of Law in a reasonable manner and in good faith or (ii) such
failure to comply with such Requirements of Law could not, in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
7.9 Use of Proceeds. The Loans shall be used by the Borrowers for
---------------
working capital, Investments, loans, dividends and distributions from the
Borrowers to the Credit Parties to the extent permitted by Article 8,
---------
Acquisitions and other lawful general corporate purposes, in each case to the
extent consistent with the requirements of this Credit Agreement. The proceeds
of the IPO shall be disbursed in accordance with Section 5.1(b). None of the
--------------
Borrowers shall use any portion of the proceeds of any such Loans for the
purpose of purchasing or carrying any Margin Stock in any manner which violates
the provisions of Regulation G, Regulation U or Regulation X or for any other
purpose in violation of any applicable statute or regulation, or of the terms
and conditions of this Credit Agreement. Each Borrower and each Parent
Guarantor hereby acknowledges that the restrictions as to use of proceeds in
this Credit Agreement or any of the other Credit Documents are commercially
reasonable and made in good faith.
7.10 Fiscal Year. Each Credit Party agrees to maintain its Fiscal
-----------
Year as a year ending December 31.
7.11 Maintenance of Property. Each Credit Party agrees to keep, and
-----------------------
to cause each of its Subsidiaries to keep, all
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property useful and necessary to their respective businesses in good working
order and condition (ordinary wear and tear excepted) in accordance with their
past operating practices and not to commit or suffer any waste with respect to
any of their properties.
7.12 ERISA Documents. Each Credit Party will cause to be delivered
---------------
to the Agent, upon the Agent's request, each of the following: (i) a copy of
each Plan (or, where any such plan is not in writing, complete description
thereof) (and if applicable, related trust agreements or other funding
instruments) and all amendments thereto, all written interpretations thereof and
written descriptions thereof that have been distributed to employees or former
employees of the Credit Party or its Subsidiaries; (ii) the most recent
determination letter issued by the Internal Revenue Service with respect to each
Benefit Plan; (iii) for the three most recent plan years, Annual Reports on Form
5500 Series required to be filed with any Governmental Authority for each
Benefit Plan; (iv) all actuarial reports prepared for the last three plan years
for each Benefit Plan; (v) a listing of all Multiemployer Plans, with the
aggregate amount of the most recent annual contributions required to be made by
the Credit Party or any ERISA Affiliate to each such plan and copies of the
collective bargaining agreements requiring such contributions; (vi) any
information that has been provided to the Credit Party or any ERISA Affiliate
regarding withdrawal liability under any Multiemployer Plan; and (vii) the
aggregate amount of the most recent annual payments made to former employees of
the Credit Party or any ERISA Affiliate under any Retiree Health Plan.
7.13 Compliance With Environmental Laws.
----------------------------------
(a) Each Credit Party shall comply, and cause each of its
Subsidiaries to comply, with all environmental, health and safety Requirements
of Law applicable to its operations and properties other than such non-
compliance of which would have no Material Adverse Effect; obtain, and cause
each of its Subsidiaries to obtain, all environmental permits necessary for its
operations and properties; and conduct, and cause each of its Subsidiaries to
conduct, any investigation, study, sampling and testing, and undertake any
cleanup, removal, remedial or other action necessary to remove and clean up all
Hazardous Substances from any of its properties, to the extent required
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under any such Requirements of Law; provided, however, that neither such Credit
-------- -------
Party nor any Subsidiaries of such Credit Party shall be required to undertake
any such cleanup, removal, remedial or other action to the extent that its
obligation to do so is being contested in good faith and by proper proceedings
and appropriate reserves are being maintained with respect to such
circumstances.
(b) Each Credit Party shall (i) employ, and cause each of its
Subsidiaries to employ, in connection with its use of Real Property, appropriate
technology to maintain compliance in all material respects with any applicable
environmental, health and safety Requirements of Law, (ii) maintain in all
material respects, and cause each of its Subsidiaries to obtain and maintain in
all material respects, any and all permits required by applicable environmental,
health and safety Requirements of Law in connection with its or its
Subsidiaries, operations and (iii) dispose of, and cause each of its
Subsidiaries to dispose of, any and all Hazardous Substances only at facilities
and with carriers that in the reasonable belief of the Credit Party are
maintaining valid permits under the Resource Conservation and Recovery Act of
1976, 42 U.S.C. (S)(S) 6901 et seq., any amendments thereto, any successor
-- ---
statutes, and any regulations promulgated thereunder, and any applicable state
and local environmental, health and safety Requirements of Law. Such Credit
Party shall use its best efforts, and cause each of its Subsidiaries to use its
best efforts, to obtain certificates of disposal from all contractors employed
by such Credit Party or any of its Subsidiaries in connection with the transport
or disposal of any Hazardous Substances.
7.14 Compliance with Operating Leases. Each Credit Party shall make
--------------------------------
all payments and otherwise perform, and cause each of its Subsidiaries to make
all payments and otherwise perform, in all material respects, all of its
obligations in respect of all Operating Leases of such Credit Party or any of
its Subsidiaries, and use its best efforts, and cause each of its Subsidiaries
to use its best efforts, to keep, and to take all action to keep, such Operating
Leases in full force and effect and not allow any such Operating Leases to lapse
or be terminated or any rights to renew such Operating Leases to be forfeited or
cancelled other than any such failure which would have no Material Adverse
Effect. Such Credit Party will give the Agent prompt notice of any lapse,
termination, forfeiture or
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cancellation of any material Operating Lease to which it is a party (whether or
not in accordance with the terms of such Operating Lease or this Credit
Agreement).
7.15 Compliance with Material Contracts. Each Credit Party shall
----------------------------------
perform and observe, and cause each of its Subsidiaries to perform and observe,
all material terms and provisions of the Material Contracts to be performed or
observed by it, maintain, and cause each of its Subsidiaries to maintain, the
Material Contracts to which it is a party in full force and effect during their
respective stated terms, enforce, and cause each of its Subsidiaries to enforce,
the Material Contracts to which it is a party in accordance with their terms,
and take, and cause each of its Subsidiaries to take, all such action to such
ends as may from time to time be reasonably requested by the Agent other than
any such failure which would have no Material Adverse Effect.
7.16 Maintenance of Separate Existence. Except with respect to
---------------------------------
transactions permitted by Section 8.11, each Borrower will do all things
------------
necessary to maintain its corporate existence separate and apart from each
Parent Guarantor, including, without limitation, (a) practicing and adhering to
corporate formalities, such as maintaining appropriate corporate books and
records; (b) assuring that RSC has at least one corporate director who is not an
officer, director or employee of such Borrower or the Parent Guarantors; (c)
maintaining all of its deposit and other bank accounts and all of its assets
separate from those of each Parent Guarantor; (d) maintaining all of its
financial records separate and apart from those of any other Person and ensuring
that any of RSC's consolidated Financial Statements or public information for
such Borrower on a consolidated basis contain appropriate disclosures concerning
the Borrower's separate existence; (e) except with respect to the corporate
headquarters in Scottsdale, Arizona, maintaining business locations separate and
apart from those of each Parent Guarantor; and (f) accounting for all of its
liabilities separately from those of each Parent Guarantor.
7.17 Real Property; Landlord Waivers. Each Credit Party having a
-------------------------------
leasehold interest in Real Property shall use its best efforts to deliver, or
cause to be delivered, to the Agent, Collateral Access Agreements from the
landlords on all Real Property leasehold interests of such Credit Party acquired
after the Closing Date.
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7.18 Further Assurances. Each Credit Party shall take, and shall
------------------
cause each of its Subsidiaries to take, all such further actions and execute all
such further documents and instruments as the Agent may at any time reasonably
determine in its sole discretion to be necessary or desirable to further carry
out and consummate the transactions contemplated by the Credit Documents, to
cause the execution, delivery and performance of the Credit Documents to be duly
authorized and to perfect or protect the Liens (and the priority status thereof)
of the Agent, for the benefit of the Holders, on the Collateral.
Article 8
NEGATIVE COVENANTS
------------------
Until termination of this Credit Agreement and payment and
satisfaction of all Obligations due hereunder, the Credit Parties shall comply
with, and shall cause each of its Subsidiaries to comply with, the following
covenants:
8.1 Minimum Rental Equipment Utilization. The Borrowers shall not
------------------------------------
permit Rental Equipment Utilization, as determined as of each Quarterly
Determination Date in each Fiscal Year for the twelve-month period ending on
such Quarterly Determination Date, to be less than 57.5%. Notwithstanding the
foregoing, any non-compliance with the previous sentence shall be deemed to be
cured if, as of the last day of the calendar month immediately following the
fiscal quarter with respect to which such non-compliance occurred (the "Rental
------
Equipment Utilization Cure Date"), the Borrowers cause Rental Equipment
-------------------------------
Utilization, as determined for the twelve-month period ending on the Rental
Equipment Utilization Cure Date, to be at least 57.5%.
8.2 Minimum Interest Coverage Ratio. The Credit Parties shall not
-------------------------------
permit the ratio of (i) EBITA to (ii) Interest Expense (other than non-cash
Interest Expense on Indebtedness under the Citicorp Purchase Agreement) as
determined as of each Quarterly Determination Date occurring during the periods
set out below, for the twelve-month period ending on such Quarterly
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Determination Date, to be less than the ratio set out opposite such period
below:
MINIMUM RATIO
PERIOD
September 30, 1996 -
September 29, 1997 2.5x
September 30, 1997 -
September 29, 1998 2.6x
September 30, 1998 -
September 29, 1999 2.7x
September 30, 1999 -
September 29, 2000 2.8x
September 30, 2000 -
June 30, 2001 2.9x
8.3 Maximum Total Indebtedness Ratio. The Credit Parties shall not
--------------------------------
permit the ratio of (i) the aggregate amount of all Indebtedness of the Credit
Parties outstanding on each Quarterly Determination Date set out below or at any
time thereafter prior to the immediately following Quarterly Determination Date
set out below, to (ii) EBITDA, as determined as of each Quarterly Determination
Date set out below for the
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twelve-month period ending on such Quarterly Determination Date, to be greater
than the ratio set out opposite such date below:
MAXIMUM RATIO
QUARTERLY
DETERMINATION DATE
September 30, 1996 2.6x
December 31, 1996 2.5x
March 31, 1997 2.7x
June 30, 1997 2.8x
September 30, 1997 2.5x
December 31, 1997 2.3x
March 31, 1998 2.4x
June 30, 1998 2.5x
September 30, 1998 2.3x
December 31, 1998 2.1x
March 31, 1999 2.2x
June 30, 1999 2.3x
September 30, 1999 2.2x
December 31, 1999 2.0x
March 31, 2000 2.1x
June 30, 2000 2.2x
September 30, 2000 2.1x
December 31, 2000 1.9x
March 31, 2001 2.0x
June 30, 2001 2.1x
8.4 Minimum EBITDA. The Credit Parties shall not permit EBITDA, as
--------------
determined as of each Quarterly Determination Date set out below for the twelve-
month period ending on such
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Quarterly Determination Date, to be less than the amount set out opposite such
date below:
MINIMUM AMOUNT
QUARTERLY
DETERMINATION DATE
September 30, 1996 $28,300,000
December 31, 1996 $29,300,000
March 31, 1997 $30,200,000
June 30, 1997 $31,300,000
September 30, 1997 $32,400,000
December 31, 1997 $33,500,000
March 31, 1998 $34,300,000
June 30, 1998 $35,200,000
September 30, 1998 $36,300,000
December 31, 1998 $37,200,000
March 31, 1999 $37,700,000
June 30, 1999 $38,300,000
September 30, 1999 $39,000,000
December 31, 1999 $39,500,000
March 31, 2000 $40,100,000
June 30, 2000 $40,700,000
September 30, 2000 $41,300,000
December 31, 2000 $41,900,000
March 31, 2001 $42,500,000
June 30, 2001 $43,100,000
8.5 Capital Expenditures and Investments. None of the Credit Parties
------------------------------------
or their respective Subsidiaries shall, directly or indirectly, make or incur
any Capital Expenditures or make any Investment in any Person, whether in cash,
securities, or other property of any kind including, without limitation, any
Subsidiary or Affiliate of any Credit Party, other than:
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(a) Advances or loans made in the ordinary course of business not to
exceed $150,000 outstanding at any one time to any one Person and $300,000 in
the aggregate outstanding at any one time;
(b) Investments arising from (i) intercompany loans permitted by
Section 8.6(g), (ii) dividends and distributions permitted by Section 8.10 and
-------------- ------------
(iii) transfers permitted by Section 8.9(iv) or 8.9(v);
--------------- ------
(c) Cash Equivalents;
(d) Deposits with financial institutions, disclosed in Schedule D,
-----------
Part 8.17, and which are insured by the Federal Deposit Insurance Corporation
---------
("FDIC") or a similar federal insurance program;
------
(e) contributions to and payments of benefits under any Plan (in
accordance with the terms of the Plan) permitted by this Credit Agreement;
(f) Investments and Capital Expenditures, in each case, directly
related to, or in the same line of, the business as conducted by the Credit
Parties as of the Closing Date, the aggregate amount of which shall not exceed,
in any Fiscal Year set out below, the amount set out opposite such Fiscal Year
(the "Maximum Expenditure Amount"):
--------------------------
MAXIMUM AMOUNT
FISCAL YEAR
1996 $63,000,000
1997 $66,000,000
1998 $69,000,000
1999 $72,000,000
Thereafter $75,000,000
provided, however, that the Maximum Expenditure Amount for any Fiscal Year may
-------- -------
be increased by (i) the aggregate amount of cash proceeds (net of any bona fide
costs of sale with respect thereto) received by the Credit Parties and their
respective Subsidiaries during such Fiscal Year with respect to the sale of
Rental Equipment (whether through the actual sale of such Rental
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Equipment or the sale of stock of the Person owning such Rental Equipment) and
(ii) an amount equal to twenty-five percent (25%) of the excess, if any, of (x)
the Maximum Expenditure Amount for the immediately preceding Fiscal Year, over
(y) the actual amount of Investments and Capital Expenditures made by the Credit
Parties and their respective Subsidiaries under this clause (f) in such
----------
immediately preceding Fiscal Year; provided, further, however, that the Credit
-------- ------- -------
Parties and their respective Subsidiaries shall not make any single Acquisition
(or series of related Acquisitions) for which the consideration exceeds
$15,000,000 and shall not make Acquisitions for which the consideration exceeds
an aggregate amount of $20,000,000 in any Fiscal Year, excluding in each case,
for purposes of this proviso, consideration consisting of the common stock of
-------
RSC or cash proceeds received immediately and directly from the issuance thereof
(other than pursuant to the IPO); and
(g) Such other Investments as the Agent may approve in writing in its
reasonable discretion.
8.6 Additional Indebtedness. None of the Credit Parties or their
-----------------------
respective Subsidiaries shall directly or indirectly incur, create, assume or
suffer to exist any Indebtedness other than:
(a) Indebtedness under the Credit Documents;
(b) Indebtedness under Interest Rate Agreements entered into in the
ordinary course of business, provided that the aggregate notional amount thereof
--------
does not exceed an amount equal to 50% of the then outstanding Indebtedness of
the Borrowers which is floating rate debt;
(c) Indebtedness described on Schedule D, Part 8.6, and any
--------------------
refinancing of such Indebtedness, so long as (i) the aggregate principal amount
of the Indebtedness so refinanced shall not be increased, (ii) the Indebtedness
is incurred for the same purpose as the Indebtedness so refinanced and (iii) the
refinancing shall be on terms and conditions no more restrictive than the terms
and conditions of the Indebtedness to be refinanced;
(d) In addition to the Indebtedness permitted under Section 8.6(c),
--------------
(i) Indebtedness under Capital Leases and
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Indebtedness secured by purchase money Liens on Equipment acquired after the
date of this Credit Agreement ("Purchase Money Liens") so long as (A) such
--------------------
Indebtedness shall be from parties and on terms and conditions satisfactory to
the Agent, (B) each Purchase Money Lien shall attach only to the property to be
acquired and (C) the Indebtedness incurred shall not exceed eighty percent (80%)
of the purchase price of the item or items of Equipment purchased and (ii) any
refinancing of Indebtedness secured by Purchase Money Liens so long as (A) such
Indebtedness shall be from parties and on terms and conditions satisfactory to
the Agent, (B) the Liens granted in connection with such Indebtedness shall
attach only to the Equipment formerly subject to the Purchase Money Lien, (C)
the aggregate principal amount of the Indebtedness so refinanced shall not be
increased, (D) the Indebtedness is incurred for the same purpose as the
Indebtedness so refinanced and (E) the refinancing shall be on terms and
conditions no more restrictive than the terms and conditions of the Indebtedness
to be refinanced; provided, however, that the Indebtedness permitted by clauses
-------- ------- -------
(i) and (ii) shall not exceed $5,000,000 in the aggregate outstanding at any one
--- ----
time;
(e) Indebtedness in respect of taxes, assessments, governmental
charges and claims for labor, materials or supplies, to the extent that payment
thereof is not required pursuant to Section 7.7;
-----------
(f) Indebtedness constituting Contingent Obligations permitted by
Section 8.8; and
-----------
(g) Indebtedness arising from intercompany loans from any Credit
Party to any other Credit Party, provided, that (i) all such Indebtedness shall
--------
be evidenced by a promissory note executed by the Borrower receiving such
intercompany loan, pursuant to a promissory note in substantially the form of
Exhibit Q, (ii) such Indebtedness shall be subordinated in right of payment to
---------
the Obligations when due and payable and (iii) the promissory notes evidencing
such Indebtedness shall be pledged to the Agent, for the benefit of the Holders,
pursuant to the Security Agreement.
8.7 Liens. None of the Credit Parties or their respective
-----
Subsidiaries shall directly or indirectly create, incur, assume, or suffer to
exist any Lien on any of its property
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now owned or hereafter acquired except (each of the following being referred to
herein as a "Permitted Lien"):
--------------
(a) Liens granted to the Agent, for the benefit of the Holders, under
the Credit Document;
(b) Liens listed on Schedule D, Part 8.7;
--------------------
(c) Purchase Money Liens and Liens securing Indebtedness permitted by
Section 8.6(d);
--------------
(d) Liens of warehousemen, mechanics, materialmen, workers,
repairmen, common carriers, or landlords, liens for taxes, assessments or other
governmental charges, and other similar Liens arising by operation of law for
amounts that are not yet due and payable, to the extent that payment thereof is
not required by Section 7.7, or which secure Indebtedness permitted under
-----------
Section 8.6(e);
--------------
(e) Attachment or judgment Liens not to exceed an aggregate of
$1,000,000, excluding amounts (i) bonded to the reasonable satisfaction of the
Agent or (ii) covered by insurance to the reasonable satisfaction of the Agent;
(f) Deposits or pledges to secure obligations under workmen's
compensation, social security or similar laws, or under unemployment insurance,
not to exceed an aggregate of $1,000,000;
(g) Deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in the ordinary
course of business not to exceed an aggregate of $1,000,000;
(h) Easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not materially detract
from the value of the property subject thereto or materially interfere with the
ordinary conduct of the business of any of the Credit Parties;
(i) Leasehold interests of lessees of Rental Equipment leased in the
ordinary course of business;
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(j) Interests of landlords in real property leased by any Credit
Party; and
(k) Extensions, renewals, refundings or replacements of any of the
foregoing, provided that any such extension, renewal, refunding or replacement
--------
of a Lien shall be limited to the property covered by the Lien extended,
renewed, refunded or replaced and that the obligations secured by any such
extension, renewal, refunding or replacement Lien shall be in an amount not
greater than the amount, and on terms and conditions no more restrictive than
the terms and conditions, of the obligations then secured by the Lien extended,
renewed, refunded or replaced.
8.8 Contingent Obligations. None of the Credit Parties or their
----------------------
respective Subsidiaries shall directly or indirectly incur, assume, or suffer to
exist any Contingent Obligation, other than (i) indemnities entered into in the
ordinary course of business, consistent with past practice, given in connection
with the sale, purchase or lease of assets in transactions permitted by this
Credit Agreement and (ii) Contingent Obligation described on Exhibit D, Part
---------------
8.8.
---
8.9 Sale of Assets. None of the Credit Parties or their respective
--------------
Subsidiaries shall, directly or indirectly, sell, lease, assign, transfer or
otherwise dispose of any assets other than (i) Inventory and Equipment in the
ordinary course of business, (ii) items of property (other than capital stock of
a Credit Party) with a book value of less than $100,000 in the aggregate for the
Credit Parties and their respective Subsidiaries during any Fiscal Year, (iii)
obsolete or worn out property disposed of in the ordinary course of business,
(iv) transfers of property from any Credit Party to any Borrower, provided that
--------
all such property remains subject to the perfected, first priority Lien of the
Agent, for the benefit of the Holders, (v) cash transfers from the Borrowers to
the Parent Guarantors and among the Parent Guarantors, to the extent permitted
by Section 8.10 and (vi) other dispositions of assets of the Credit Parties,
------------
provided that (A) such dispositions are made within the reasonable business
--------
judgment of such Credit Party, (B) at the time of such disposition, no Default
or Event of Default has occurred and is then continuing or would result
therefrom, (C) the aggregate consideration shall be paid at the time of
disposition and (I) 80% of such consideration shall be in cash
-102-
and Cash Equivalents and (II) all consideration consisting of promissory notes
(the principal amount of which shall not exceed $2,500,000 in the aggregate
outstanding at any one time) and Cash Equivalents shall be pledged and delivered
to the Agent, for the benefit of the Holders, in accordance with the Security
Agreement and (D) the aggregate amount of all such dispositions (determined on
the basis of net book value) does not exceed (I) $15,000,000 in the aggregate
for the period commencing on the Closing Date and ending on December 31, 1996,
(II) $7,500,000 in the aggregate for each of Fiscal Years 1997 and 1998, and
(III) $10,000,000 in the aggregate for any Fiscal Year thereafter; provided,
--------
further, that, with respect to any disposition of the capital stock of any
-------
Borrower permitted by this Section 8.9, (x) any such disposition shall be for
-----------
100% of the issued and outstanding capital stock of such Borrower and (y) all
Obligations of such Borrower shall be Paid In Full and all intercompany
obligations of such Borrower shall be paid in full, prior to, or concurrently
with (subject to such arrangements as the Agent may reasonably request to insure
that the proceeds of such disposition are so used), the consummation of such
disposition. Nothing in this Section 8.9 shall be deemed to permit sale,
-----------
transfer or other disposition of the capital stock of RSC Acquisition or RSC
Holdings.
8.10 Restricted Payments.
-------------------
(a) None of the Credit Parties or their respective Subsidiaries shall,
directly or indirectly, declare or pay any dividend (other than dividends
payable solely in common stock of a Credit Party) on, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, defeasance, retirement or other acquisition of, any shares
of any class of capital stock of a Credit Party or any warrants, options or
rights to purchase any such capital stock, whether now or hereafter outstanding,
or make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of a Credit Party or
any of its Subsidiaries; provided, however, that to the extent permitted by
-------- -------
applicable law:
(i) so long as no Default or Event of Default shall have occurred
and be continuing or occurs as a result thereof, each Credit Party may
repurchase shares of RSC capital stock or warrants,
-103-
options or rights to purchase such shares (other than shares,
warrants, options or rights held by Brentwood RSC Partners, L.P.)
which are issued and outstanding as of the Closing Date or issued to
employees of any Credit Party after the Closing Date, provided that
the aggregate amount paid by all Credit Parties for such repurchases
shall not exceed $1,500,000 in any Fiscal Year;
(ii) the other Parent Guarantors may declare and pay cash to RSC
(provided that to the extent the payment is a loan, any promissory
notes evidencing such loans are delivered to the Agent, for the
benefit of the Holders, pursuant to the Security Agreement) to the
extent necessary to enable RSC to pay (A) RSC's general corporate
expenses, accounting, legal, consulting, corporate reporting and
administrative expenses incurred in the ordinary course of RSC's
business consistent with past practice in an aggregate amount for all
Parent Guarantors not to exceed $2,000,000 in any Fiscal Year,
provided that commencing with Fiscal Year 1997, such amount shall be
--------
increased by $200,000 for such Fiscal Year and each Fiscal Year
thereafter, (B) RSC's income and franchise taxes, (C) costs and
expenses and other amounts payable in connection with this Credit
Agreement and the IPO, to the extent permitted by clause (iii) below
------------
and (D) amounts permitted to be paid by a Credit Party under clause
------
(i) above, provided that the cash payments permitted under this clause
--- -------- ------
(ii) are payable and are paid no earlier than two Business Days prior
----
to the date when the payments described in subclauses (A) through (D)
-------------- ---
are due;
(iii) the Borrowers may declare and pay cash to RSC Acquisition
and RSC Holdings (provided to the extent such payments are loans, such
loans are evidenced by the promissory note described in Section
-------
8.6(h)), to the extent necessary to enable RSC Acquisitions and RSC
------
Holdings to pay (A) the amounts permitted to be paid to RSC under
clause (ii) above, (B) on the Effective Date, an aggregate amount not
-----------
in excess of $4,000,000 to pay costs and expenses incurred in
connection with the IPO and the amendment and restatement of the
Original Credit Agreement, (C) general corporate expenses, corporate
reporting and
-104-
administrative expenses of RSC Holdings (and of the Borrowers
which are paid by RSC Holdings) incurred in the ordinary course of
business of RSC Holdings or the Borrowers, as the case may be, in each
case consistent with past practice and in an aggregate amount for all
Borrowers not to exceed (I) $8,500,000 in Fiscal Year 1996, (II)
$9,250,000 in Fiscal Year 1997, (III) $10,000,000 in Fiscal Year 1998,
(IV) $11,000,000 in Fiscal Year 1999, (V) $12,000,000 in Fiscal Year
2000 and (VI) $13,000,000 in Fiscal Year 2001, (D) income and
franchise taxes of RSC Holdings (and of the Borrowers which are paid
by RSC Holdings) and (E) RSC Acquisition's general corporate expenses,
franchise tax obligations, accounting, legal, consulting, corporate
reporting and administrative expenses (including, without limitation,
the fees and expenses payable to Brentwood RSC Partners, L.P.
permitted to be paid by Section 8.16(ii)) incurred in the ordinary
----------------
course of RSC Acquisition's business consistent with past practice in
an aggregate amount for all Borrowers not to exceed $2,000,000 in any
Fiscal Year, provided, further, that commencing with Fiscal Year 1997,
-------- -------
such amount shall be increased by $200,000 for such Fiscal Year and
each Fiscal Year thereafter, and provided, that the payments permitted
--------
under this clause (iii) are payable and are paid no earlier than two
------------
Business Days prior to the date when the payments described in
subclauses (A) through (E) are due; and
-------------- ---
(iv) RSC may apply the proceeds of the IPO to redeem (A) all RSC
Preferred Stock outstanding on the Effective Date, for cash in an
aggregate amount up to $38,000,000, and (B) the warrants to purchase
common stock of RSC granted to Citicorp, for cash in an aggregate
amount up to $13,500,000 minus the amount required to repay in full
-----
all outstanding indebtedness under the Citicorp Documents.
(b) None of the Credit Parties or their respective Subsidiaries shall,
directly or indirectly, make any optional payment or prepayment on or redemption
(including, without limitation, by making payments to a sinking or analogous
fund) or repurchase of any Indebtedness of any Person (other than
-105-
Indebtedness pursuant to this Credit Agreement) or of any Mandatory Redeemable
Obligation.
8.11 Fundamental Changes. None of the Credit Parties or their
-------------------
respective Subsidiaries shall enter into any merger or consolidation, liquidate,
wind-up or dissolve (or suffer any liquidation or dissolution), or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or substantially all of such Person's business or Property,
whether now or hereafter acquired; provided, however, that (a) the Borrowers may
-------- -------
merge with each other if the Agent receives at least 30 Business Days' prior
written notice thereof and all actions required to be taken pursuant to the
Collateral Documents have been taken and (b) each Credit Party may enter into
the transactions permitted for such Credit Party under Sections 8.9 and 8.20.
------------ ----
8.12 Accounting Changes. None of the Credit Parties or their
------------------
respective Subsidiaries shall make any significant change in accounting
treatment and reporting practices except as required by GAAP.
8.13 Termination of Material Contracts and Governing Documents. None
---------------------------------------------------------
of the Credit Parties or their respective Subsidiaries shall (a) cancel or
terminate any Material Contract or amend or otherwise modify any Material
Contract, or waive any default or breach of any Material Contract, or take any
other action in connection with any Material Contract that in each case would
have a Material Adverse Effect, or (b) amend or otherwise modify any of its
Governing Documents as in effect on the Closing Date, except (i) amendments to
effect a change of name of a Credit Party which is permitted by the Security
Agreement or (ii) other amendments which could not reasonably be expected to
impair the rights of the Agent or any Holder under the Credit Documents or with
respect to the Collateral.
8.14 Restriction on Operating Leases. None of the Credit Parties or
-------------------------------
their respective Subsidiaries shall become or remain liable in any way, whether
directly or by assignment or as a guarantor or other surety, for the obligations
of the lessee under any Operating Lease, if the aggregate annual amount of all
rents paid by the Credit Parties and their Subsidiaries under all such leases
would exceed (i) $10,000,000 in each of Fiscal Years
-106-
1996 and 1997, (ii) $15,000,000 in each of Fiscal Years 1998 and 1999 and (iii)
$20,000,000 in each Fiscal Year thereafter.
8.15 Sale and Leaseback Transactions. None of the Credit Parties or
-------------------------------
their respective Subsidiaries shall, directly or indirectly, become or remain
liable as lessee or as guarantor or other surety with respect to any lease of
any property whether real or personal or mixed or whether now owned or hereafter
acquired which any Credit Party or Subsidiary of a Credit Party has sold or
transferred or intends to sell or transfer to any other Person, except for
transactions involving Real Property owned by any Credit Party on the Closing
Date with respect to which the documents executed in connection therewith do not
provide the purchaser/lessor with recourse to any property other than the
property being purchased and leased.
8.16 Affiliate Transactions. None of the Credit Parties or their
----------------------
respective Subsidiaries shall, directly or indirectly, enter into any
transaction (including, without limitation, the purchase, sale or exchange of
property or the rendering of any service) with any Subsidiary or Affiliate of a
Credit Party, except in the ordinary course of, and pursuant to the reasonable
requirements of, the business of such Credit Party or Subsidiary or Affiliate,
as the case may be, and upon fair and reasonable terms no less favorable to such
Credit Party, Subsidiary or Affiliate than could be obtained in a comparable
arm's-length transaction with an unaffiliated Person. Nothing contained in this
Section 8.16 shall prohibit (i) transactions permitted by Section 8.5(b),
------------ --------------
8.6(g), 8.9(iv), 8.9(v) or 8.10 and (ii) the Credit Parties' payment to
------ ------- ------ ----
Brentwood RSC Partners, L.P. of (A) a management fee in an amount not to exceed
$240,000 in any Fiscal Year, (B) transaction fees with respect to Acquisitions,
in an amount not to exceed four and one-half percent (4.50%) of the purchase
price of the assets acquired and (C) reasonable expense reimbursements in
connection with activities involving the Credit Parties incurred in the ordinary
course of business consistent with past practice.
8.17 Additional Bank Accounts. None of the Credit Parties or their
------------------------
respective Subsidiaries shall, directly or indirectly, open, maintain or
otherwise have any checking, savings or other accounts at any bank or other
financial institution, or any other account where money is or may be deposited
or maintained with any Person, other than the
-107-
Disbursement Account and the accounts set forth on Schedule D, Part 8.17;
---------------------
provided, however, that any Borrower may establish such account upon 10 Business
-------- -------
Days' prior written notice thereof, and, except to the extent otherwise
permitted by the Agent, subject such account and the related financial
institution to a Lockbox Agreement.
8.18 Excess Cash. None of the Credit Parties or their respective
-----------
Subsidiaries shall, directly or indirectly, maintain in the aggregate in all
deposit accounts of the Credit Parties and their Subsidiaries (other than the
Disbursement Account and payroll accounts), total cash balances and Investments
permitted by Section 8.5(c), 8.5(d) or 8.5(e), in excess of $2,500,000 at any
-------------- ------ ------
time during which any Loans are outstanding hereunder.
8.19 Additional Negative Pledges. None of the Credit Parties or their
---------------------------
respective Subsidiaries shall, directly or indirectly, create or otherwise cause
or suffer to exist or become effective, directly or indirectly, (a) any
prohibition or restriction (including any agreement to provide equal and ratable
security to any other Person in the event a Lien is granted to or for the
benefit of the Agent, for the benefit of the Holders) on the creation or
existence of any Lien upon the assets of the Credit Parties or their
Subsidiaries or (b) any Contractual Obligation which may restrict or inhibit the
Agent's and the Holders' rights or ability to sell or otherwise dispose of, or
exercise rights conferred pursuant to the Credit Documents with respect to, the
Collateral or any part thereof after the occurrence of an Event of Default
except, in each case, (i) with respect to specific Equipment encumbered to
secure a Credit Party's or such Subsidiary's Indebtedness permitted by Section
-------
8.6(d) or obligations under an Operating Lease with respect to such Equipment
------
permitted by Section 8.14, (ii) with respect to Real Property which is the
------------
subject of an Operating Lease permitted by Section 8.14 or (iii) with respect to
------------
licenses and permits entered into or obtained in the ordinary course of the
Credit Party's or Subsidiary's business which, by their terms, prohibit Liens of
third parties.
8.20 Additional Subsidiaries. None of the Credit Parties shall,
-----------------------
directly or indirectly, form or acquire any Subsidiaries, except that RSC
Acquisition and RSC Holdings may form, and the Borrowers may form or acquire,
Subsidiaries, provided, that (i) the applicable Parent Guarantor or Borrower
--------
-108-
gives the Agent written notice thereof at least 30 Business Days prior to the
consummation of such formation or acquisition (the "Consummation Date"), (ii) in
-----------------
the case of an acquisition of a Subsidiary, the applicable Borrower shall
deliver, together with such notice, (A) an officer's certificate stating that
such acquisition constitutes an Acquisition and is permitted by Section 8.5(f),
--------------
(B) to the extent available, the most recent annual and monthly Financial
Statements for such Subsidiary which would have been required to be delivered if
such Subsidiary had been an original party to this Credit Agreement which shall
be audited to the extent available (it being understood that no Credit Party
shall have any obligation to cause any Financial Statements to be prepared), (C)
a pro forma consolidated balance sheet for RSC, giving effect to such
Acquisition and any proposed extensions of credit to such Subsidiary on the
Consummation Date, (D) the forecasts and projections required by Section 7.1(c)
--------------
with respect to such Subsidiary and giving effect to such Acquisition, (E) a
solvency certificate for RSC Acquisition and its Subsidiaries if such Subsidiary
is a Subsidiary of RSC Acquisition or for RSC Holdings and its Subsidiaries if
such Subsidiary is a Subsidiary of RSC Holdings, in either case in substantially
the form of the solvency certificate delivered for such Credit Parties pursuant
to Section 5.1(a)(ii), giving effect to such Acquisition and any proposed
------------------
extensions of credit to such Subsidiary on the Consummation Date and (F) any
appraisal obtained by, or delivered to, such Borrower with respect to the Rental
Equipment of such Subsidiary, in each case in form and substance satisfactory to
the Agent, (iii) promptly upon the Agent's reasonable request therefor, the
applicable Parent Guarantor or Borrower shall deliver any documentation
pertaining to such Subsidiary and the Credit Parties and such Subsidiary, taken
as a whole and (iv) on or before the Consummation Date, (A) such new Subsidiary
shall become a Borrower under this Credit Agreement, shall execute and deliver a
Note to each Lender, shall become a party to each Guaranty and Contribution
Agreement with respect to the Obligations of the other Borrowers in accordance
with the terms thereof, shall become a party to the Security Agreement in
accordance with the terms thereof, shall become a party to the intercompany
promissory note described in Section 8.6(g) in accordance with the terms
--------------
thereof, shall become a party to the Management Agreement in accordance with the
terms thereof and shall execute and deliver such other Credit Documents and
other documents as the Agent may reasonably request (including, to the extent
such Subsidiary requests a Borrowing or
-109-
an issuance of a Letter of Credit on the Consummation Date, a Notice of
Borrowing, a Letter of Credit Request, a Borrowing Base Certificate and all
other documentation required by this Credit Agreement or otherwise reasonably
requested by the Agent (including, by way of example, escrow funding agreements
and a funds flow memorandum)) and (B) each existing Borrower shall execute and
deliver a Guaranty and Contribution Agreement with respect to the Obligations of
such new Borrower.
Article 9
EVENTS OF DEFAULT AND REMEDIES
------------------------------
9.1 Events of Default. The occurrence of any of the following events
-----------------
shall constitute an Event of Default hereunder:
(a) Failure to Pay. Any Credit Party shall fail to pay (i) all or
--------------
any portion of the principal amount of any Loan when due or (ii) any other
Obligation within five days after such Obligation is due and payable.
(b) Breach of Certain Covenants. Any Credit Party or any Subsidiary
---------------------------
of a Credit Party shall fail to comply with any covenant contained in (i)
Article 7 and such failure continues for five days after the occurrence thereof
---------
or (ii) Article 8, provided, that any non-compliance with the first sentence of
--------- --------
Section 8.1 shall not be an Event of Default unless and until the Borrowers have
-----------
failed to cure such non-compliance as of the Rental Equipment Utilization Cure
Date applicable thereto.
(c) Breach of Representation or Warranty. Any representation or
------------------------------------
warranty made or deemed to be made by any Credit Party in this Credit Agreement
or in any other Credit Document (and in any statement or certificate given under
this Credit Agreement or any other Credit Document), shall be false or
misleading in any material respect when made or deemed to be made.
(d) Other Defaults. Any Credit Party shall fail to comply with any
--------------
provisions contained in any Credit Document to which such Credit Party is a
party, other than as set forth in Section 9.1(b) or 9.1(c), and such failure
-------------- ------
shall not have been
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remedied or waived within 10 days after receipt by the Credit Parties of notice
thereof from the Agent or any Lender.
(e) Dissolution. Any Credit Party shall dissolve, wind up or
-----------
otherwise cease its business unless permitted hereunder.
(f) Judgments and Attachments. Any money judgment, arbitration award
-------------------------
(other than a money judgment or award covered by insurance, but only if the
insurer has admitted liability with respect to such money judgment), writ or
warrant of attachment, or similar process involving in any case an amount in
excess of $1,000,000 shall be entered or filed against any Credit Party or any
of their respective assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of 60 days.
(g) Insolvency Event. Any Credit Party shall become the subject of
----------------
an Insolvency Event.
(h) Change of Control. A Change of Control shall occur or a Person
-----------------
or Persons shall acquire, directly or indirectly, or obtain a Lien on any of the
capital stock of any Credit Party (other than RSC), other than the Liens granted
to the Agent, for the benefit of the Holders, pursuant to the Loan Documents.
(i) Cross Default. Any Credit Party or any of their respective
-------------
Subsidiaries shall fail to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) with respect
to any Indebtedness (other than an Obligation) of any Credit Party or any of
their respective Subsidiaries aggregating $1,000,000 or more; or any breach,
default or event of default shall occur, or any other condition shall exist
under any Contractual Obligation pertaining to any such Indebtedness, if the
effect thereof is to cause an acceleration, mandatory redemption or other
required repurchase of such Indebtedness, or permit the holder(s) of such
Indebtedness to accelerate the maturity of any such Indebtedness or require a
redemption or other repurchase of such Indebtedness; or any such Indebtedness
shall be otherwise declared to be due and payable (by acceleration or otherwise)
or required to be prepaid, redeemed or otherwise repurchased by any Credit Party
or any of their respective Subsidiaries (other than by a regularly
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scheduled required prepayment) prior to the stated maturity thereof; or the
holder of any Lien (other than Liens upon property leased to any Credit Party or
any of their respective Subsidiaries which were created by the lessor prior to
the commencement of the lease), in any amount, shall commence foreclosure of
such Lien upon property of any Credit Party or any of their respective
Subsidiaries having an aggregate value in excess of $1,000,000 and such
foreclosure shall continue against such property to a date less than thirty days
prior to the date of the proposed foreclosure sale.
(j) Failure of Enforceability of Credit Documents; Security. Any
-------------------------------------------------------
covenant, agreement or obligation of any Credit Party contained in or evidenced
by any of the Credit Documents shall cease to be enforceable, or shall be
determined to be unenforceable, in accordance with its terms; any Credit Party
shall deny or disaffirm its obligations under any of the Credit Documents or any
Liens granted in connection therewith; or, any Liens granted to the Agent, for
the benefit of the Holders, in any of the Collateral shall be determined to be
void, voidable, invalid or (unless (i) such Liens cannot, under applicable law,
be perfected by the filing of financing statements, the recording of security
agreements and the required cover sheets with the United States Patent and
Trademark Office or, to the extent required to be delivered on the Closing Date
or thereafter pursuant to the Security Agreement, the taking of possession of
instruments, investment property or certificates of title (or any combination
thereof) and (ii) the applicable Credit Party is not expressly required, or has
not been notified by the Agent that it is expressly required, in accordance with
the Credit Documents, to take such other actions under applicable law which
would be sufficient to perfect such Liens) unperfected, are subordinated or not
given the priority contemplated by this Credit Agreement.
(k) Termination Event. Any Termination Event occurs which could
-----------------
reasonably be expected to subject any Credit Party or ERISA Affiliate to
liability in excess of $1,000,000.
(l) Waiver Application. The plan administrator of any Benefit Plan
------------------
applies under Section 412(d) of the Internal Revenue Code for a waiver of the
minimum funding standards of Section 412(a) of the Internal Revenue Code and the
Agent believes that the substantial business hardship upon which the
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application for the waiver is based could subject any Credit Party or ERISA
Affiliate to liability in excess of $1,000,000.
(m) RSC Subsidiaries. RSC shall, directly or indirectly, form or
----------------
acquire any Subsidiary other than (i) RSC Acquisition, (ii) RSC Holdings and
(iii) Subsidiaries of RSC Acquisition, RSC Holdings or any Borrower permitted to
be formed or acquired pursuant to Section 8.20.
------------
9.2 Acceleration and Cash Collateralization. Upon the occurrence and
---------------------------------------
during the continuance of an Event of Default, the Agent may take any or all of
the following actions, without prejudice to the rights of the Agent or any
Lender to enforce its claims against the Credit Parties:
(a) Acceleration. Upon the written request, or with the written
------------
consent, of the Majority Lenders, and by delivery of written notice to the
Borrowers from the Agent, all Obligations shall be declared to be immediately
due and payable without presentment, demand, protest or any other action or
obligation of the Agent or any Lender.
(b) Termination of Commitments. Upon the written request of the
--------------------------
Majority Lenders, and by delivery of written notice to the Borrowers from the
Agent, the Commitments shall be immediately terminated (except with respect to
any Event of Default set forth in Section 9.1(g), in which case the Commitments
--------------
shall automatically be terminated without the necessity of any request of the
Majority Lenders or notice or other demand to any Borrower) and, at all times
thereafter, all Loans made by any Lender pursuant to this Credit Agreement shall
be at such Lender's sole discretion unless the termination of the Commitments
has been rescinded pursuant to Section 9.3.
-----------
(c) Cash Collateralization. On demand of the Agent or the Majority
----------------------
Lenders, the Borrowers shall immediately deposit with the Agent cash or Cash
Equivalents in an amount equal to 110% of the Letter of Credit Obligations then
outstanding.
9.3 Rescission of Acceleration. After acceleration of the maturity
--------------------------
of the Loans or the termination of the Commitments, if the Borrowers pay all
accrued interest and all principal due (other than by reason of the
acceleration) and all Defaults and
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Events of Default are otherwise remedied or waived in accordance with
Section 12.11, the Majority Lenders may elect, in their sole discretion, to
-------------
rescind the acceleration or termination and return any cash collateral. This
Section 9.3 is intended only to bind all of the Lenders to a decision of the
-----------
Majority Lenders and not to confer any right on the Borrowers, even if the
described conditions for the Majority Lenders' election may be met.
9.4 Remedies. Upon the occurrence and during the continuance of an
--------
Event of Default, the Agent may do any or all of the following:
(a) remove all documents, instruments, files and records
(including the copying of any computer records) relating to the Collateral
or use (at the expense of the Credit Parties) such supplies or space of any
Credit Party at the Credit Party's place of business necessary to properly
administer and collect the Accounts thereon;
(b) accelerate or extend the time of payment, compromise, issue
credits, or bring suit on the Accounts (in the name of the Borrowers or the
Lenders) and otherwise administer and collect the Accounts;
(c) sell, assign and deliver the Collateral and any returned,
reclaimed or repossessed merchandise, with or without advertisement, at
public or private sale, for cash, on credit or otherwise; and
(d) foreclose the Liens created pursuant to the Credit Documents
by any available procedure, or take possession of any or all of the
Collateral without judicial process and enter any premises where any
Collateral may be located for the purpose of taking possession of or
removing the same.
Any Lender may bid or become a purchaser at any sale, free from any right of
redemption, which right is expressly waived by the Credit Parties. If notice of
intended disposition of any Collateral is required by law, it is agreed that
five Business Days notice shall constitute reasonable notification. The Credit
Parties will assemble the Collateral and make it available to the Agent at such
locations as the Agent may specify, whether at the premises of the Credit
Parties or elsewhere, and will make
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available to the Agent the premises and facilities of the Credit Parties for the
purpose of the Agent's taking possession of, removing or putting the Collateral
in saleable form.
9.5 Right of Setoff. In addition to and not in limitation of all
---------------
rights of offset that the Agent, any Lender or the Issuing Bank may have under
applicable law, upon the occurrence and during the continuance of any Event of
Default, and whether or not the Agent, any Lender or the Issuing Bank has made
any demand or the Obligations of any Credit Party have matured, the Agent, each
Lender and the Issuing Bank shall have the right to appropriate and apply to the
payment of the Obligations of such Credit Party (a) all deposits and other
obligations then or thereafter owing by the Agent, such Lender or the Issuing
Bank to such Credit Party and (b) any moneys, credits or other property
belonging to any Credit Party, at any time held by or coming into the possession
of such Lender, the Issuing Bank, the Agent or any of their respective
Affiliates. Each Lender or the Issuing Bank exercising such rights shall notify
the Agent thereof and any amount received as a result of the exercise of such
rights shall be shared in accordance with Section 2.7.
-----------
9.6 License for Use of Software and Other Intellectual Property.
------------------------------------------------------------
Unless expressly prohibited by the licensor thereof, if any, the Agent is hereby
granted a license to use, without charge, each Credit Party's computer programs,
software, printouts and other computer materials, technical knowledge or
processes, data bases, materials, trademarks, registered trademarks, trademark
applications, service marks, registered service marks, service xxxx
applications, patents, patent applications, trade names, rights of use of any
name, labels, fictitious names, inventions, designs, trade secrets, goodwill,
registrations, copyrights, copyright applications, permits, licenses,
franchises, customer lists, credit files, correspondence, and advertising
materials or any property of a similar nature, as it pertains to the respective
Credit Party's Collateral, or any rights to any of the foregoing, in completing
production of, advertising for sale, and selling any of the respective Credit
Party's Collateral, and each Credit Party's rights under all licenses and
franchise agreements shall inure to the Agent's benefit. The Agent agrees not
to use any such license prior to the occurrence of an Event of Default without
giving the Credit Parties prior notice.
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9.7 No Marshalling; Deficiencies; Remedies Cumulative. None of the
-------------------------------------------------
Agent, the Lenders or the Issuing Bank shall be under any obligation to xxxxxxxx
any assets in favor of any Credit Party or any other party or against or in
payment of any or all of the Obligations. The net cash proceeds resulting from
the Agent's exercise of any of the foregoing rights to liquidate all or
substantially all of the Collateral (after deducting all of the Agent's Expenses
related thereto) shall be applied by the Agent to the payment of the
Obligations, whether due or to become due, in the order specified in Section
-------
4.11(b)(iii). The Credit Parties shall remain liable to the Agent, the Issuing
------------
Bank and the Lenders for any deficiencies, and the Agent, the Issuing Bank and
the Lenders in turn agree to remit to the Credit Parties or their successors or
assigns, any surplus resulting therefrom. The foregoing remedies are not
intended to be exhaustive and the full or partial exercise of any of them shall
not preclude the full or partial exercise of any other available remedy under
this Credit Agreement, under any other Credit Document, at equity or at law.
Article 10
GUARANTY OF PARENT GUARANTORS
-----------------------------
10.1 Guaranty.
--------
(a) For value received and in consideration of any Loan, advance or
financial accommodation of any kind whatsoever heretofore, now or hereafter
made, given or granted by the Agent, the Lenders or the Issuing Bank to Acme
Rents, Acme Xxxxx, Acme Xxxxx or any other Subsidiary of RSC Holdings which
becomes a Borrower under this Credit Agreement (collectively, the "RSC Holdings
------------
Borrowers"), RSC Holdings unconditionally guarantees for the benefit of each
---------
Holder the full and prompt payment when due, whether at maturity or earlier, by
reason of acceleration or otherwise, and at all times thereafter, of all of the
Obligations of the RSC Holdings Borrowers (including, without limitation,
interest accruing following an Insolvency Event of any RSC Holdings Borrower, at
the applicable rate specified in this Credit Agreement, whether or not such
interest is allowed as a claim in bankruptcy). At any time after the occurrence
and during the continuance of an Event of Default, RSC Holdings shall pay to the
Agent, for the benefit of the Holders, on demand and
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in immediately available funds, the full amount of the Obligations of the RSC
Holdings Borrowers (including any portion thereof which is not yet due and
payable). RSC Holdings further agrees to pay to the Agent, for the benefit of
the Holders, on demand and in immediately available funds, (i) all losses
(including, without limitation, lost profits), fees, costs and expenses
(including, without limitation, all court costs and reasonable attorneys' and
paralegals' fees, costs and expenses) paid or incurred by any Holder in: (A)
enforcing or defending such Person's rights under or in respect of this Credit
Agreement, the other Credit Documents or any other document or instrument now or
hereafter executed and delivered in connection herewith, (B) in collecting all
or any part of the Obligations of the RSC Holdings Borrowers or RSC Holdings,
(C) in foreclosing or otherwise collecting upon the Collateral for the
Obligations of the RSC Holdings Borrowers or RSC Holdings or any part thereof
and (D) obtaining any legal, accounting or other advice in connection with any
of the foregoing and (ii) interest on (A) the Obligations of the RSC Holdings
Borrowers which do not constitute interest, (B) to the extent permitted by
applicable law, the Obligations of the RSC Holdings Borrowers which constitute
interest, and (C) the expenses described in clause (i) above, from the date of
----------
demand hereunder until paid in full at the per annum rate of interest described
in Section 4.6. RSC Holdings hereby agrees that its guaranty under this Article
----------- -------
10 is an absolute guaranty of payment and is not a guaranty of collection.
--
(b) For value received and in consideration of any Loan, advance or
financial accommodation of any kind whatsoever heretofore, now or hereafter
made, given or granted by the Agent, the Lenders or the Issuing Bank to Acme
Alabama, Air & Pump, Xxxxxx Xxxxx or any other Subsidiary of RSC Acquisition
which becomes a Borrower under this Credit Agreement (collectively, the "RSC
---
Acquisition Borrowers"), RSC Acquisition unconditionally guarantees for the
---------------------
benefit of each Holder the full and prompt payment when due, whether at maturity
or earlier, by reason of acceleration or otherwise, and at all times thereafter,
of all of the Obligations of the RSC Acquisition Borrowers (including, without
limitation, interest accruing following an Insolvency Event of any RSC
Acquisition Borrower, at the applicable rate specified in this Credit Agreement,
whether or not such interest is allowed as a claim in bankruptcy). At any time
after the occurrence and during the continuance of an Event of Default, RSC
Acquisition shall pay to the Agent, for the benefit of the
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Holders, on demand and in immediately available funds, the full amount of the
Obligations of the RSC Acquisition Borrowers (including any portion thereof
which is not yet due and payable). RSC Acquisition further agrees to pay to the
Agent, for the benefit of the Holders, on demand and in immediately available
funds, (i) all losses (including, without limitation, lost profits), fees, costs
and expenses (including, without limitation, all court costs and reasonable
attorneys' and paralegals' fees, costs and expenses) paid or incurred by any
Holder in: (A) enforcing or defending such Person's rights under or in respect
of this Credit Agreement, the other Credit Documents or any other document or
instrument now or hereafter executed and delivered in connection herewith, (B)
in collecting all or any part of the Obligations of the RSC Acquisition
Borrowers or RSC Acquisition, (C) in foreclosing or otherwise collecting upon
the Collateral for the Obligations of the RSC Acquisition Borrowers or RSC
Acquisition or any part thereof and (D) obtaining any legal, accounting or other
advice in connection with any of the foregoing and (ii) interest on (A) the
Obligations of the RSC Acquisition Borrowers which do not constitute interest,
(B) to the extent permitted by applicable law, the Obligations of the RSC
Acquisition Borrowers which constitute interest, and (C) the expenses described
in clause (i) above, from the date of demand hereunder until paid in full at the
----------
per annum rate of interest described in Section 4.6. RSC Acquisition hereby
-----------
agrees that its guaranty under this Article 10 is an absolute guaranty of
----------
payment and is not a guaranty of collection.
(c) For value received and in consideration of any Loan, advance or
financial accommodation of any kind whatsoever heretofore, now or hereafter
made, given or granted by the Agent, the Lenders or the Issuing Bank to any
Borrower under this Credit Agreement, RSC unconditionally guarantees for the
benefit of each Holder the full and prompt payment when due, whether at maturity
or earlier, by reason of acceleration or otherwise, and at all times thereafter,
of all of the Obligations of the Borrowers (including, without limitation,
interest accruing following an Insolvency Event of any Borrower, at the
applicable rate specified in this Credit Agreement, whether or not such interest
is allowed as a claim in bankruptcy). At any time after the occurrence and
during the continuance of an Event of Default, RSC shall pay to the Agent, for
the benefit of the Holders, on demand and in immediately available funds, the
full amount of the
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Obligations of the Borrowers (including any portion thereof which is not yet due
and payable). RSC further agrees to pay to the Agent, for the benefit of the
Holders, on demand and in immediately available funds, (i) all losses
(including, without limitation, lost profits), fees, costs and expenses
(including, without limitation, all court costs and reasonable attorneys' and
paralegals' fees, costs and expenses) paid or incurred by any Holder in: (A)
enforcing or defending such Person's rights under or in respect of this Credit
Agreement, the other Credit Documents or any other document or instrument now or
hereafter executed and delivered in connection herewith, (B) in collecting all
or any part of the Obligations of the Borrowers or RSC, (C) in foreclosing or
otherwise collecting upon the Collateral for the Obligations of the Borrowers or
RSC or any part thereof and (D) obtaining any legal, accounting or other advice
in connection with any of the foregoing and (ii) interest on (A) the Obligations
of the Borrowers which do not constitute interest, (B) to the extent permitted
by applicable law, the Obligations of the Borrowers which constitute interest,
and (C) the expenses described in clause (i) above, from the date of demand
----------
hereunder until paid in full at the per annum rate of interest described in
Section 4.6. RSC hereby agrees that its guaranty under this Article 10 is an
----------- ----------
absolute guaranty of payment and is not a guaranty of collection.
10.2 Guaranty Absolute. Each of the Parent Guarantors agrees that its
-----------------
Obligations under the Credit Documents are independent of the Obligations of the
Borrowers and any other guarantor of all or any part of the Obligations
guaranteed by such Parent Guarantor, and a separate action or actions may be
brought and prosecuted against such Parent Guarantor whether or not any action
is brought against any Borrower or any of such other guarantors and whether or
not any Borrower is joined in any such action or actions. The liability of each
Parent Guarantor under the Credit Documents shall be absolute and unconditional,
and shall not be affected or released in any way, irrespective of:
(a) the validity, enforceability, avoidance, novation or
subordination of any of the Obligations or any of the Credit Documents;
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(b) the absence of any attempt by, or on behalf of, any Holder to
collect, or to take any other action to enforce, all or any part of the
Obligations whether from or against any Borrower, any other guarantor of
the Obligations or any other Person;
(c) the election of any remedy by, or on behalf of, any Holder with
respect to all or any part of the Obligations;
(d) the waiver, consent, extension, forbearance or granting of any
indulgence by, or on behalf of, any Holder with respect to any provision of
any of the Credit Documents;
(e) the failure of the Agent to take any steps to perfect and maintain
its security interest in, or to preserve its rights to, any security or
collateral for the Obligations;
(f) the election by, or on behalf of, any Holder in any proceeding
instituted under Chapter 11 of the Bankruptcy Code, of the application of
Section 1111(b)(2) of the Bankruptcy Code;
(g) any borrowing or grant of a security interest by any Borrower, as
debtor-in-possession, under Section 364 of the Bankruptcy Code;
(h) the disallowance, under Section 502 of the Bankruptcy Code, of all
or any portion of the claims of any Holder for repayment of all or any part
of the Obligations or any expenses described in Section 10.1;
------------
(i) any refusal of payment by any Holder, in whole or in part, from
any obligor or guarantor in connection with any of the Obligations, whether
or not with notice to, or further asset by, or any reservation of rights
against, the Parent Guarantors;
(j) any change, restructuring or termination of the corporate
structure or existence of any Credit Party, or any modification,
compounding, compromise, settlement or release by the Agent, any Lender,
the Issuing Bank or any other
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Person (or by operation of law or otherwise), collection or other
liquidation of the Obligations or the liability of any Credit Party, or of
the Collateral, in whole or in part; or
(k) any other circumstance (other than payment in cash of the
Obligations of, and guaranteed by, such Parent Guarantor) which might
otherwise constitute a legal or equitable discharge or defense of any
Borrower, any Parent Guarantor or any other guarantor of such Obligations.
10.3 Enforcement; Application of Payments. Upon the occurrence and
------------------------------------
during the continuance of an Event of Default, the Agent may proceed directly
and at once, without notice, against the Parent Guarantors to obtain performance
of and to collect and recover the full amount, or any portion, of the
Obligations guaranteed by such Parent Guarantor, without first proceeding
against the applicable Borrowers or any other Person, or against any security or
collateral for the Obligations. Subject only to the terms and provisions of
this Credit Agreement, the Agent shall have the exclusive right to determine the
application of payments and credits, if any, from the Parent Guarantor, the
Borrowers or from any other Person on account of the Obligations or any other
liability of the Parent Guarantor to any Holder, without affecting the liability
of the Parent Guarantors hereunder.
10.4 Waivers. (a) Each of the Parent Guarantors hereby waives:
-------
(i) diligence, presentment, demand of payment (except as
expressly required under this Article 10), filing of claims with a
----------
court in the event of receivership or bankruptcy of any Borrower,
protest or notice with respect to the Obligations, all setoffs and
counterclaims and all presentments, demands for performance, notices
of nonperformance, protests, notices of protest, notices of dishonor
and notices of acceptance of this Credit Agreement, the benefits of
all statutes of limitation, and all other demands (except as expressly
required under this Article 10) whatsoever (and shall not require that
----------
the same be made on any Borrower as a condition precedent to the
Parent Guarantor's obligations hereunder);
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(ii) all notices of the existence, creation or incurring of new
or additional indebtedness, arising either from additional loans
extended to any Borrower or otherwise;
(iii) all notices that the principal amount, or any portion
thereof, and/or any interest on any instrument or document evidencing
all or any part of the Obligations is due (except as expressly
required under this Article 10), notices of any and all proceedings to
----------
collect from the maker, any endorser or any other guarantor of all or
any part of the Obligations, or from any other Person, and, to the
extent permitted by law, notices of exchange, sale, surrender or other
handling of any security or collateral given to the Agent to secure
payment of all or any part of the Obligations; and
(iv) any defense based upon any Requirement of Law which
provides that the obligation of a surety must be neither larger in
amount nor in other respects more burdensome than that of the
principal;
(b) Each of the Parent Guarantors understands that it shall be liable
for the full amount of its liability under this Credit Agreement,
notwithstanding foreclosure of any real property by trustee sale or any other
reason impairing the right of such Parent Guarantor or any Holder, to proceed
against any Borrower or its property. Each Parent Guarantor hereby waives, in
accordance with Section 2856 of the California Civil Code, (i) all rights and
defenses arising out of an election of remedies by the creditor (a Holder), even
though that election of remedies, such as nonjudicial foreclosure with respect
to security for a guaranteed obligation, has destroyed such Parent Guarantor's
rights of subrogation and reimbursement against the principal (the Borrowers) by
the operation of Section 580d of the California Code of Civil Procedure or
otherwise and (ii) without limiting the generality of the foregoing or any other
provision hereof, all rights and benefits under California Civil Code Sections
2787 to 2855, inclusive, 2899 and 3433 (or any similar law in any other
jurisdiction). No other provision of this Article 10 shall be construed as
----------
limiting the generality of any of the covenants and waivers set forth in this
Section 10.4(b). In accordance with Section 12.1 below, this Credit Agreement
--------------- ------------
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shall be governed by, and shall be construed and enforced in accordance with,
the internal laws (as opposed to the conflicts of laws provisions other than
those contained in New York General Obligations Law Section 5-1401) and
decisions of the State of New York. This Section 10.4(b) and other referenced
---------------
provisions of California law are included solely out of an abundance of caution,
and shall not be construed to mean that any of the referenced provisions of
California law are in any way applicable to this Credit Agreement or to any of
the Obligations.
(c) The Holders, either themselves or acting through the Agent, are
hereby authorized, without notice or demand and without affecting the liability
of the Parent Guarantors hereunder, from time to time, (i) to renew, extend,
accelerate or otherwise change the time for payment of, or other terms relating
to, all or any part of the Obligations, or to otherwise modify, amend or change
the terms of any of the Credit Documents; (ii) to accept partial payments on all
or any part of the Obligations; (iii) to take and hold security or collateral
for the payment of all or any part of the Obligations, the guaranty of the
Parent Guarantors, or any other guaranties of all or any part of the Obligations
or other liabilities of the Borrowers, (iv) to exchange, enforce, waive and
release any such security, collateral or guaranties; (v) to apply such security
or collateral and direct the order or manner of sale thereof as in their
reasonable discretion they may determine; and (vi) to settle, release, exchange,
enforce, waive, compromise or collect or otherwise liquidate all or any part of
the Obligations, the guaranty of the Parent Guarantors, any other guaranty of
all or any part of the Obligations, and any security or collateral for the
Obligations or for any such guaranty. Any of the foregoing may be done in any
manner, without affecting or impairing the Obligations of the Parent Guarantors
hereunder.
10.5 Financial Information. Each of the Parent Guarantors hereby
---------------------
assumes responsibility for keeping itself informed of the financial condition of
the applicable Borrowers and any and all endorsers and/or other guarantors of
all or any part of the Obligations guaranteed by such Parent Guarantor, and of
all other circumstances bearing upon the risk of nonpayment of such Obligations,
or any part thereof, that diligent inquiry would reveal, and each of the Parent
Guarantors hereby agrees that none of the Holders shall have any duty to advise
such Parent Guarantor of information known to any of them regarding
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such condition or any such circumstances. In the event a Holder, in its sole
discretion, undertakes at any time or from time to time to provide any such
information to any Parent Guarantor, such Holder shall be under no obligation
(a) to undertake any investigation not a part of its regular business routine,
(b) to disclose any information which such Holder, pursuant to accepted or
reasonable commercial finance or banking practices, wishes to maintain
confidential or (c) to make any other or future disclosures of such information
or any other information to any Parent Guarantor.
10.6 Reinstatement. Each of the Parent Guarantors agrees that, to the
-------------
extent that any Borrower, such Parent Guarantor or any other guarantor of all or
any part of the Obligations guaranteed by such Parent Guarantor makes a payment
or payments to any Holder, or such Holder receives any proceeds of Collateral,
which payment or payments or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to such Borrower, such Parent Guarantor, such other guarantor or any
other Person, or their respective estates, trustees, receivers or any other
party under any bankruptcy law, state or federal law, common law or equitable
cause, then, to the extent of such payment or repayment, the part of the
Obligations guaranteed by such Parent Guarantor which has been paid, reduced or
satisfied by such amount shall be reinstated and continued in full force and
effect as of the time immediately preceding such initial payment, reduction or
satisfaction.
10.7 Subrogation, Contribution, Etc. Until the Obligations have been
-------------------------------
paid in full in cash and the Commitments have been terminated, each Parent
Guarantor hereby agrees not to assert (a) any claim, right or remedy, direct or
indirect, that such Parent Guarantor now has or may hereafter have against any
Borrower or any of its assets in connection with such Parent Guarantor's
guaranty of the Obligations or the performance by such Parent Guarantor of its
obligations hereunder, in each case whether such claim, right or remedy arises
in equity, under contract, by statute (including, without limitation, under
Section 509 of the Bankruptcy Code or Section 2847, 2848 or 2849 of the
California Civil Code), under common law or otherwise and including without
limitation (i) any right of subrogation, reimbursement or indemnification that
such Parent Guarantor now has or may hereafter have against any Borrower, (ii)
any right to
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enforce, or to participate in, any claim, right or remedy any
Holder now has of may hereafter have against any Borrower and (iii) any benefit
of, and any right to participate in, any collateral or security now or hereafter
held by Agent, any Lender or the Issuing Bank, and (b) any right of contribution
such Parent Guarantor may have against any other guarantor (including any other
Parent Guarantor) of any of the Obligations (including, without limitation, any
such right of contribution under Section 2848 of the California Civil Code).
Each Parent Guarantor further agrees that, to the extent the foregoing agreement
with respect to its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent jurisdiction
to be void or voidable for any reason, any rights of subrogation, reimbursement
or indemnification such Parent Guarantor may have against any Borrower or
against any collateral or security, and any rights of contribution such
Guarantor may have against any such other guarantor, shall be subordinated to
the payment of the Obligations as set forth in Section 10.8.
------------
10.8 Subordination. Each of the Parent Guarantors agrees that any and
-------------
all claims of such Parent Guarantor against any Borrower, any endorser or any
other guarantor of all or any part of the Obligations, or against any of their
respective properties, shall be subordinate and subject in right of payment to
the prior payment, in full and in cash, of all Obligations. Notwithstanding any
right of any Parent Guarantor to ask, demand, xxx for, take or receive any
payment from any Borrower, all rights, liens and security interests of such
Parent Guarantor, whether now or hereafter arising and howsoever existing, in
any assets of any Borrower (whether constituting part of the security or
collateral given to any Lender, the Issuing Bank or the Agent to secure payment
of all or any part of the Obligations or otherwise) shall be and hereby are
subordinated to the rights of the Holders and the Agent in those assets. Except
as permitted by this Credit Agreement, the Parent Guarantors shall have no right
to possession of any such asset or to foreclose upon any such asset, whether by
judicial action or otherwise, unless and until all of the Obligations shall have
been fully paid in cash and the Commitments have been terminated. If all or any
part of the assets of any Borrower, or the proceeds thereof, are subject to any
distribution, division or application to the creditors of such Borrower, whether
partial or complete, voluntary or involuntary, and whether by reason of
liquidation, bankruptcy,
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arrangement, receivership, assignment for the benefit of creditors or any other
action or proceeding, or if the business of such Borrower is dissolved or
(except as permitted by this Credit Agreement) if substantially all of the
assets of such Borrower are sold, then, and in any such event, any payment or
distribution of any kind or character, either in cash, securities or other
property, which shall be payable or deliverable upon or with respect to any
Indebtedness of any such Borrower to any Parent Guarantor ("Borrower
--------
Indebtedness" of such Borrower) shall be paid or delivered directly to the Agent
------------
for application on any of the Obligations, due or to become due, until such
Obligations shall have first been fully paid in cash. Each of the Parent
Guarantors irrevocably authorizes and empowers the Agent to demand, xxx for,
collect and receive every such payment or distribution and give acquittance
therefor and to make and present for and on behalf of such Parent Guarantor such
proofs of claim and take such other action, in the Agent's own name or in the
name of such Parent Guarantor or otherwise, as the Agent may deem necessary or
advisable for the enforcement of this Credit Agreement. The Agent may vote such
proofs of claim in any such proceeding, receive and collect any and all
dividends or other payments or disbursements made on Borrower Indebtedness in
whatever form the same may be paid or issued and apply the same on account of
any of the Obligations. Should any payment, distribution, security or instrument
or proceeds thereof be received by any Parent Guarantor upon or with respect to
any Borrower Indebtedness prior to the payment in full in cash of all of the
Obligations and the termination of the Commitments, such Parent Guarantor shall
receive and hold the same in trust, as trustee, for the benefit of the Holders,
and shall forthwith deliver the same to the Agent, for the benefit of the
Holders, in precisely the form received (except for the endorsement or
assignment of such Parent Guarantor where necessary), for application to any of
the Obligations, due or not due, and, until so delivered, the same shall be held
in trust by such Parent Guarantor as the property of the Agent, for the benefit
of the Holders. If such Parent Guarantor fails to make any such endorsement or
assignment to the Agent, the Agent or any of its officers or employees are
hereby irrevocably authorized to make the same. Each of the Parent Guarantors
agrees that until the Obligations have been paid in full in cash and the
Commitments have been terminated, such Parent Guarantor will not assign or
transfer to any Person any claim such Parent Guarantor has or may have against
any Borrower.
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10.9 Waivers. Failure by any Holder at any time or times hereafter to
-------
require strict performance by any Borrower, any Parent Guarantor, any other
guarantor of all or any part of the Obligations or any other Person of any of
the provisions, warranties, terms and conditions contained in any of the Credit
Documents now or at any time or times hereafter executed by such Persons and
delivered to the Agent, any Lender or the Issuing Bank shall not waive, affect
or diminish any right of the Agent or such Holder at any time or times hereafter
to demand strict performance thereof and such right shall not be deemed to have
been waived by any act or knowledge of the Agent or such Holder, or their
respective agents, officers or employees, unless such waiver is contained in an
instrument in writing, directed and delivered to the applicable Borrower or
Parent Guarantor, specifying such waiver, and is signed by the party or parties
necessary to give such waiver under this Credit Agreement. No waiver of any
Event of Default by the Agent, any Lender or the Issuing Bank shall operate as a
waiver of any other Event of Default or the same Event of Default on a future
occasion, and no action by the Agent or such Holder permitted hereunder shall in
any way affect or impair the Agent's or such Holder's rights and remedies or the
Obligations of the Parent Guarantors under this Credit Agreement. Any
determination by a court of competent jurisdiction of the amount of any
principal and/or interest owing by any Borrower to any Holder shall be
conclusive and binding on the applicable Parent Guarantor irrespective of
whether such Parent Guarantor was a party to the suit or action in which such
determination was made.
10.10 Termination. The guaranty of each Parent Guarantor shall
-----------
continue in full force and effect and may not be terminated or otherwise revoked
until the Obligations shall have been fully paid in cash and the Commitments
shall have been terminated. Each of the Parent Guarantors hereby expressly
waives the benefits of Section 2815 of the California Civil Code (or any similar
law in any other jurisdiction) purporting to allow a guarantor to revoke a
continuing guaranty with respect to any transactions occurring after the date of
the guaranty. If, notwithstanding the foregoing, any Parent Guarantor shall
have any right under applicable law to terminate or revoke its guaranty of the
Obligations, such Parent Guarantor agrees that such termination or revocation
shall not be effective until a written notice of such revocation or termination,
specifically referring hereto, signed by such Parent Guarantor, is actually
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received by the Agent. Such notice shall not affect the right and power of any
Lender, the Issuing Bank or the Agent to enforce rights arising prior to receipt
thereof by the Agent. If the Agent, any Lender or the Issuing Bank grants loans
or takes other action after such Parent Guarantor terminates or revokes its
guaranty of the Obligations but before the Agent receives such written notice,
the rights of such Holder with respect thereto shall be the same as if such
termination or revocation had not occurred.
10.11 Advice of Counsel. Each of the Parent Guarantors represents
-----------------
and warrants that it has consulted with its legal counsel regarding all waivers
under this Article 10, including without limitation those under Section 10.4,
---------- ------------
that it believes that it fully understands all rights that it is waiving and the
effect of such waivers, that it assumes the risk of any misunderstanding that it
may have regarding any of the foregoing, and that it intends that such waivers
shall be a material inducement to the Agent, the Lenders and the Issuing Bank to
extend the indebtedness guaranteed hereby.
10.12 Collateral. Each of the Parent Guarantors hereby
----------
acknowledges and agrees that its Obligations under this Credit Agreement are
secured pursuant to the terms and provisions of the Collateral Documents to
which it is a party.
Article 11
THE AGENT
---------
11.1 Appointment of Agent.
--------------------
(a) Each Lender and the Issuing Bank hereby designates BTCC as its
Agent and irrevocably authorizes the Agent to take action on its behalf under
the Credit Documents, to exercise the powers and perform the duties described
therein, and to exercise such other powers reasonably incidental thereto. The
Agent may perform any of its duties through its agents or employees.
(b) Other than the Borrowers' rights under Section 11.8, this Article
------------ -------
11 is for the benefit of the Agent, the Issuing Bank and the Lenders only. The
--
Agent shall act only
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for the Lenders and assumes no obligation to or agency or trust relationship
with any Credit Party.
11.2 Nature of Duties of Agent. The Agent has no duties or
-------------------------
responsibilities except those expressly set forth in the Credit Documents.
Neither the Agent nor any of its officers, directors, employees or agents shall
be liable for any action taken or omitted hereunder or in connection herewith.
The duties of the Agent shall be mechanical and administrative in nature. The
Agent shall not have a fiduciary relationship to the Issuing Bank, any Lender or
any participant of any Lender.
11.3 Lack of Reliance on Agent. Independently and without reliance
-------------------------
upon the Agent, each Lender, the Issuing Bank and each Holder has made and shall
continue to make its own independent investigation and analysis of the content
and validity of the Credit Documents or of the performance and creditworthiness
of the Credit Parties thereunder. The Agent assumes no responsibility and
undertakes no obligation to make inquiry with respect to such matters, unless
specifically requested to do so in writing by a Lender.
11.4 Certain Rights of the Agent. The Agent may request instructions
---------------------------
from the Majority Lenders at any time. If the Agent requests instructions from
the Majority Lenders with respect to any action or inaction, the Agent shall be
entitled to await instructions from the Majority Lenders before such action or
inaction. Neither the Issuing Bank, any Lender or any other Holder shall have
any right of action based upon the Agent's action or inaction in response to
instructions from the Majority Lenders.
11.5 Reliance by Agent. The Agent may rely upon written or telephonic
-----------------
communication it believes to be genuine and to have been signed, sent or made by
the proper person. The Agent may obtain the advice of legal counsel (including,
for matters concerning the Credit Parties, counsel for the Credit Parties),
independent public accountants and other experts selected by it and shall have
no liability for action or inaction in good faith based upon such advice.
11.6 Indemnification of Agent. To the extent the Agent is not
------------------------
reimbursed and indemnified by the Credit Parties, each Lender will reimburse and
indemnify the Agent, to the extent of
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its Proportionate Share (without giving effect to any adjustments under Section
-------
2.8), for any and all liabilities, obligations, losses, damages, penalties,
---
actions, judgments, suits, costs, expenses (including counsel fees and
disbursements) or disbursements of any kind or nature whatsoever (including all
Expenses) which may be imposed on, incurred by or asserted against the Agent in
performing its duties hereunder or otherwise relating to the Credit Documents,
unless resulting from the Agent's gross negligence or willful misconduct.
11.7 The Agent in its Individual Capacity. In its individual
------------------------------------
capacity, the Agent shall have the same rights and powers hereunder as any other
Lender and may exercise them as though it was not performing the duties
specified herein. The terms "Lenders," "Majority Lenders," or any similar terms
shall, unless the context clearly otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may accept deposits from,
lend money to, acquire equity interests in, and generally engage in any kind of
banking, trust, financial advisory or other business with the Credit Parties or
any Affiliate of the Credit Parties as if it were not performing the duties
specified herein, and may accept fees and other consideration from the Credit
Parties for services in connection with this Credit Agreement and otherwise
without having to account for the same to the Lenders.
11.8 Successor Agent.
---------------
(a) The Agent may, upon 30 days' notice to the Lenders and the
Borrowers, resign by giving written notice thereof to the Lenders and the
Borrowers. The Agent's resignation shall be effective upon the appointment of a
successor Agent.
(b) Upon receipt of the Agent's resignation, the Majority Lenders may
appoint a successor Agent. Unless an Event of Default shall have occurred and
be continuing at the time of such appointment, the successor Agent shall be
subject to approval by the Borrowers, which approval shall not be unreasonably
withheld and shall be given or denied to the Majority Lenders within 10 Business
Days after the Borrowers' receipt of notice of a proposed successor Agent. If a
successor Agent has not accepted its appointment within 30 days after date of
the Agent's resignation notice, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent.
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(c) Upon its acceptance of the agency hereunder, a successor Agent
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations under this Credit Agreement. The retiring Agent
shall continue to have the benefit of this Article 11 for any action or inaction
----------
while it was Agent.
(d) Any resignation of the Agent pursuant to this Section 11.8 shall
------------
also constitute the resignation of Bankers Trust Company as Issuing Bank (to the
extent provided in Section 12.8(f)), and any successor Agent appointed pursuant
---------------
to this Section 11.8 shall, upon its acceptance of such appointment, become the
------------
successor Issuing Bank or shall have made arrangements for a successor Issuing
Bank to issue Letters of Credit pursuant to the terms of this Credit Agreement.
11.9 Collateral Matters; Releases from Credit Documents.
--------------------------------------------------
(a) Each Lender and the Issuing Bank, and each Holder by accepting
the benefits of the Credit Documents, authorizes and directs the Agent to enter
into the Collateral Documents for the benefit of the Holders. Except as
otherwise set forth herein, any action or exercise of powers by the Majority
Lenders under the Credit Documents, together with such other powers as are
reasonably incidental thereto, shall be authorized and binding upon all of the
Holders. Prior to an Event of Default, without notice to or consent from any
Holder, the Agent may take any action necessary or advisable to perfect and
maintain the perfection of the Liens in favor of the Agent, for the benefit of
the Holders, upon the Collateral.
(b) The Agent is authorized to release any Lien granted to or held by
the Agent, for the benefit of the Holders, upon any Collateral (i) upon
termination of the Commitments and Payment In Full of all of the Obligations,
(ii) upon receipt of the proceeds of sales of the Collateral permitted hereunder
or (iii) if the release can be and is approved by the Majority Lenders. In
addition, to the extent necessary upon the sale of the capital stock of a
Borrower in accordance with Section 8.9(vi), the Agent is authorized to release
---------------
such Borrower from its Obligations under the Credit Documents to which such
Borrower is a party. The Agent may request, and thereupon the
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Lenders shall provide, confirmation of the Agent's authority to execute and
deliver releases with respect to the Collateral and such Obligations of a
Borrower whose capital stock has been sold used in accordance with Section
-------
8.9(vi) as herein set forth, and upon receipt of such approvals from the Lenders
-------
as are required by Section 12.11, the Agent shall execute and deliver such
-------------
releases to the Borrowers.
(c) The Agent shall have no obligation to assure that the Collateral
exists or is owned by the Credit Parties or their respective Subsidiaries, that
such Collateral is cared for, protected or insured, or that the Liens of the
Agent, for the benefit of the Holders, in the Collateral have been created,
perfected, or have any particular priority. With respect to the Collateral, the
Agent may act in any manner it may deem appropriate, in its sole discretion,
given the Agent's own interest in the Collateral as one of the Lenders, and it
shall have no duty or liability whatsoever to the Lenders, except for its gross
negligence or willful misconduct.
11.10 Actions with Respect to Defaults. In addition to the
--------------------------------
Agent's right to take actions on its own accord as permitted under this Credit
Agreement, the Agent shall take such action with respect to a Default or Event
of Default as shall be directed by the Majority Lenders. Until the Agent shall
have received such directions, the Agent may act (or not act) as it deems
advisable and in the best interests of the Lenders.
Article 12
MISCELLANEOUS
-------------
12.1 GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF
-------------
THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND ANY DISPUTE ARISING OUT
OF OR IN CONNECTION WITH THIS CREDIT AGREEMENT OR ANY OF THE CREDIT DOCUMENTS,
WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE GOVERNED BY
THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS OTHER THAN
THOSE CONTAINED IN NEW YORK GENERAL OBLIGATIONS LAW Section 5-1401) AND
DECISIONS OF THE STATE OF NEW YORK EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF
LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE LIENS
GRANTED PURSUANT TO, OR ANY OF THE REMEDIES PROVIDED WITH RESPECT
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TO, ANY PARTICULAR COLLATERAL, MAY BE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
12.2 SUBMISSION TO JURISDICTION. ALL DISPUTES AMONG THE CREDIT
--------------------------
PARTIES, THE ISSUING BANK AND THE LENDERS (OR THE AGENT ACTING ON THEIR BEHALF),
WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY
BY STATE AND FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK, AND THE COURTS TO
WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT THE AGENT, ON
-------- -------
BEHALF OF THE HOLDERS, SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, TO PROCEED AGAINST THE CREDIT PARTIES OR THEIR RESPECTIVE
PROPERTY IN ANY LOCATION REASONABLY SELECTED BY THE AGENT IN GOOD FAITH TO
ENABLE THE AGENT TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF THE AGENT. EACH OF THE CREDIT PARTIES AGREES THAT IT
WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY
PROCEEDING BROUGHT BY THE AGENT. EACH OF THE CREDIT PARTIES WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE AGENT HAS
COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.
12.3 SERVICE OF PROCESS. EACH OF THE CREDIT PARTIES HEREBY
------------------
IRREVOCABLY DESIGNATES CSC NETWORKS AS THE DESIGNEE, APPOINTEE AND AGENT OF SUCH
CREDIT PARTY TO RECEIVE, FOR AND ON BEHALF OF SUCH CREDIT PARTY, SERVICE OF
PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS CREDIT AGREEMENT OR ANY OTHER CREDIT DOCUMENT. IT IS UNDERSTOOD
THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY
FORWARDED BY MAIL TO THE CREDIT PARTIES, BUT FAILURE OF THE CREDIT PARTIES TO
RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.
12.4 JURY TRIAL. THE CREDIT PARTIES, THE AGENT, THE ISSUING BANK AND
----------
THE LENDERS EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY. INSTEAD, ANY
DISPUTES WILL BE RESOLVED IN A BENCH TRIAL.
12.5 LIMITATION OF LIABILITY. NONE OF THE AGENT, THE ISSUING BANK OR
-----------------------
THE LENDERS SHALL HAVE ANY LIABILITY TO THE CREDIT PARTIES (WHETHER SOUNDING IN
TORT, CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY THE CREDIT PARTIES OR THEIR
RESPECTIVE SUBSIDIARIES, AND EACH OF THE CREDIT PARTIES HEREBY WAIVES AND
RELEASES ANY CLAIMS, IN CONNECTION WITH, ARISING OUT OF, OR IN
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ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THE CREDIT
DOCUMENTS, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH,
UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE JUDGMENT OR COURT ORDER
BINDING ON THE AGENT, THE ISSUING BANK OR ANY SUCH LENDER, THAT THE LOSSES WERE
THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE, WILLFUL
MISCONDUCT, BREACH OF CONTRACT OR KNOWING OR GROSSLY NEGLIGENT VIOLATIONS OF
APPLICABLE REQUIREMENTS OF LAW. EACH OF THE CREDIT PARTIES AGREES NOT TO ASSERT
ANY CLAIM AGAINST ANY OF THE AGENT, THE ISSUING BANK, ANY LENDER OR ANY OTHER
HOLDER ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR
PUNITIVE DAMAGES ARISING OUT OF, OR IN ANY WAY IN CONNECTION WITH, THE
COMMITMENTS, THE OBLIGATIONS OR ANY OTHER MATTERS GOVERNED BY THIS CREDIT
AGREEMENT OR THE OTHER CREDIT DOCUMENTS.
12.6 Delays. No delay or omission of the Agent, the Issuing Bank or
------
the Lenders to exercise any right or remedy hereunder shall impair any such
right or operate as a waiver thereof.
12.7 Notices. Except as otherwise provided herein, all notices and
-------
correspondences hereunder shall be in writing and sent by certified or
registered mail, return receipt requested, by facsimile transmission or by
overnight delivery service, with all charges prepaid, as follows:
(a) if to the Agent, the Issuing Bank or any of the Lenders, to
BT Commercial Corporation
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Sidley & Austin
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, III
Telecopier No.: (000) 000-0000
(b) if to the Credit Parties, to
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c/o Rental Service Corporation
00000 Xxxxx Xxxxxx Xxxx, #000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Telecopier No.: (000) 000-0000.
All such notices and correspondence shall be deemed given (i) if sent by
certified or registered mail, three Business Days after being postmarked, (ii)
if sent by overnight delivery service, when received at the above stated
addresses or when delivery is refused and (iii) if sent by facsimile
transmission, upon receipt of such transmission.
12.8 Assignments and Participations.
------------------------------
(a) Credit Party Assignment. None of the Credit Parties shall assign
-----------------------
this Credit Agreement or any of the Credit Documents, or any rights or
obligations hereunder, without the prior written consent of the Agent and the
Lenders.
(b) Lender Assignments. Each Lender may assign to one or more
------------------
Eligible Assignees all, or a percentage interest in all, of its rights and
obligations under this Credit Agreement, the Notes and the other Credit
Documents, with the consent of the Agent (which shall not be unreasonably
withheld), and upon execution and delivery to the Agent, for its acceptance and
recording in the Register, of an agreement in substantially the form of Exhibit
-------
R (an "Assignment and Assumption Agreement"), together with surrender of any
- -----------------------------------
Note or Notes subject to such assignment and a processing and recordation fee of
$2,500. No such assignment shall be for less than $5,000,000 of the Commitments
unless it is to another Lender. This Section 12.8(b) does not apply to branches
---------------
and Affiliates of a Lender, it being understood that a Lender may make, carry or
transfer Loans and other Obligations in any amount at or for the account of any
of its branch offices or Affiliates without consent of the Agent or payment of
any recordation fee.
(c) Agent's Register. The Agent shall maintain a register of the
----------------
names and addresses of the Lenders, their Commitments, and the principal amount
of their Loans (the "Register"). The Agent shall also maintain a copy of each
--------
Assignment and Assumption Agreement delivered to and accepted by it and modify
the Register to give effect to each Assignment and
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Assumption Agreement. Upon its receipt of each Assignment and Assumption
Agreement and surrender of the affected Note or Notes, the Agent will give
prompt notice thereof to the Borrowers and deliver to the Borrowers a copy of
the Assignment and Assumption Agreement and the surrendered Note or Notes.
Within ten days after its receipt of such notice, the Borrowers shall execute
and deliver to the Agent a new Note or Notes to the order of the Eligible
Assignee in the amount of the Commitment or Commitments assumed by it and to the
assignor in the amount of the Commitment or Commitments retained by it, if any.
Such new Note or Notes shall re-evidence the Indebtedness outstanding under the
surrendered Note or Notes and shall be dated as of the Closing Date. The Agent
shall be entitled to rely upon the Register exclusively for purposes of
identifying the Lenders hereunder.
(d) Lender Participations. Each Lender may sell participations
---------------------
(without the consent of the Agent, the Credit Parties or any other Lender) to
one or more parties in or to all or a portion of its rights and obligations
under this Credit Agreement, the Notes and the other Credit Documents.
Notwithstanding a Lender's sale of a participation interest, its obligations
hereunder shall remain unchanged. The Credit Parties, the Agent, and the other
Lenders shall continue to deal solely and directly with such Lender. No
participant shall have rights to approve any amendment or waiver of this Credit
Agreement or any Credit Document except to the extent such amendment or waiver
would (i) increase the Commitment of the Lender from whom the participant
purchased its participation interest, (ii) reduce the principal of, or rate or
amount of interest on the Loans subject to such participation (other than by the
payment or prepayment thereof), (iii) postpone any date fixed for any payment of
principal of, or interest on, the Loans subject to the participation interest or
(iv) release all or a substantial portion of the Collateral, other than when
otherwise permitted hereunder.
(e) Lenders' Creation of Security Interests. Notwithstanding any
---------------------------------------
other provision set forth in this Credit Agreement, any Lender may at any time,
without consent of the Agent or the payment of any fee, create a security
interest in all or any portion of its rights under this Credit Agreement
(including, without limitation, Obligations owing to it and any Note held by it)
in favor of any Federal Reserve Bank in accordance with Regulation A.
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(f) Assignments by BTCC. If BTCC ceases to be a Lender under this
-------------------
Credit Agreement by virtue of any assignment made pursuant to this Section 12.8,
------------
then, as of the effective date of such cessation, Bankers Trust Company's
obligations to issue Letters of Credit pursuant to Article 3 shall terminate and
---------
Bankers Trust Company shall be an Issuing Bank hereunder only with respect to
outstanding Letters of Credit issued prior to such date.
12.9 Confidentiality. Each Lender agrees that it will not disclose
---------------
without the prior consent of the Credit Parties any information with respect to
the Credit Parties or their Subsidiaries which is furnished pursuant to this
Credit Agreement and which is designated by the Credit Parties to the Lenders in
writing as confidential, provided, that any Lender may disclose any such
--------
information (a) to its employees, auditors, or counsel, or to another Lender if
the disclosing Lender or such disclosing Lender's holding or parent company in
its sole discretion determines that any such party should have access to such
information, (b) as has become generally available to the public, (c) as may be
required or appropriate in any report, statement or testimony submitted to any
Governmental Authority having or claiming to have jurisdiction over such Lender,
(d) as may be required or appropriate in response to any summons or subpoena or
in connection with any litigation, (e) in order to comply with any Requirement
of Law and (f) to any prospective or actual transferee or participant in
connection with any contemplated transfer or participation of any of the Notes
or Commitments or any interest therein by such Lender, provided, further, that,
-------- -------
unless specifically prohibited by applicable law or court order, each Lender
revealing confidential information pursuant to clause (c), (d) or (e) of this
---------- --- ---
Section 12.9 shall notify the Credit Parties of any request, summons or subpoena
------------
by any governmental agency or representative thereof, or in connection with any
litigation, for the disclosure of any such confidential information prior to the
disclosure of such information.
12.10 Indemnification; Reimbursement of Expenses of Collection.
--------------------------------------------------------
The Borrowers hereby jointly and severally indemnify and agree to defend and
hold harmless the Agent, the Issuing Bank and each of the Lenders and their
respective directors, officers, agents, employees and counsel from and against
any and all losses, claims, damages, liabilities, deficiencies, judgments or
expenses incurred by any of them (except to the extent that it is
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finally judicially determined to have resulted from their own gross negligence
or willful misconduct) arising out of or by reason of (a) any litigation,
investigations, claims or proceedings which arise out of or are in any way
related to (i) this Credit Agreement or the transactions contemplated hereby,
(ii) the issuance of the Letters of Credit, (iii) the failure of the Issuing
Bank to honor a drawing under any Letter of Credit, as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto government or Governmental Authority, (iv) any actual or proposed use by
any Person at any time party hereto as a Borrower of the proceeds of the Loans,
(v) the Agent's or the Lenders' entering into this Credit Agreement, the other
Credit Documents or any other agreements and documents relating hereto or (vi)
any aspect of the financial restructuring of RSC Holdings and its Subsidiaries
pursuant to the plan of reorganization confirmed by order of the United States
Bankruptcy Court for the District of Delaware entered on August 24, 1995,
including, without limitation, amounts paid in settlement, court costs and the
fees and disbursements of counsel incurred in connection with any such
litigation, investigation, claim or proceeding or any advice rendered in
connection with any of the foregoing and (b) any remedial or other action taken
by a Credit Party or any of the Lenders in connection with compliance by a
Credit Party or any of its Subsidiaries, or any of their respective properties,
with any federal, state or local environmental laws, acts, rules, regulations,
orders, directions, ordinances, criteria or guidelines. In addition, the
Borrowers shall, upon demand, pay to the Agent and any Lender all costs and
expenses (including the reasonable fees and disbursements of counsel and other
professionals) paid or incurred by the Agent or such Lender in (w) enforcing or
defending its rights under or in respect of this Credit Agreement, the other
Credit Documents or any other document or instrument now or hereafter executed
and delivered in connection herewith, (x) in collecting all or any part of the
Obligations, (y) in foreclosing or otherwise collecting upon the Collateral or
any part thereof and (z) obtaining any legal, accounting or other advice in
connection with any of the foregoing.
12.11 Amendments and Waivers. No amendment or waiver of any
----------------------
provision of this Credit Agreement, any part of Schedule D, or any other Credit
----------
Document shall be effective
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unless in writing and signed by the Majority Lenders (or by the Agent on their
behalf), except that:
(a) the consent of all the Lenders is required to (i) increase the
Commitments, (ii) reduce the principal of, or interest on, the Notes, any
Letter of Credit Obligations or any Fees hereunder (other than Fees that
are exclusively for the account of the Agent or the Issuing Bank), (iii)
postpone any date fixed for any payment in respect of principal of, or
interest on, the Notes, any Letter of Credit reimbursement obligations or
any Fees hereunder, (iv) change the percentage of the Commitments, or any
minimum requirement necessary for the Lenders or the Majority Lenders to
take any action hereunder, (v) amend or waive this Section 12.11(a), or
----------------
change the definition of Majority Lenders or Proportionate Share or (vi)
other than as expressly provided herein or in any Collateral Document
release any Liens in favor of the Agent, for the benefit of the Holders, on
all or a substantial portion of the Collateral;
(b) the consent of the Agent or the Issuing Bank, as the case may be,
shall be required for any amendment, waiver or consent affecting the rights
or duties of the Agent or the Issuing Bank under any Credit Document, in
addition to the consent of the Lenders otherwise required by this Section
-------
12.11; and
-----
(c) no consent is needed to amend Schedule D, Parts 6.1, 6.10 and
-------------------------------
6.13, Exhibits A, D, E and F to the Security Agreement or Exhibits A and B
----
to the Trademark Security Agreement or for the Agent to execute releases
with respect to Liens and Obligations pursuant to Section 11.9(b), to the
---------------
extent such amendments and releases pertain to actions expressly permitted
to be taken under the Credit Documents.
The consent of the Borrowers shall not be required for any amendment,
modification or waiver of the provisions of Article 11 (other than Section
---------- -------
11.8). The Borrowers and the Lenders hereby authorize the Agent to modify this
Credit Agreement by unilaterally amending or supplementing Annex I to reflect
-------
assignments of the Commitments.
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12.12 Counterparts; Effectiveness. This Credit Agreement and any
----------------------------
waiver or amendment hereto may be executed in any number of counterparts and by
the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. On the Effective Date, this Credit
Agreement shall become effective in accordance with the recitals to this Credit
Agreement.
12.13 Severability. In case any provision in or obligation under
------------
this Credit Agreement or the Notes or the other Credit Documents shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
12.14 Maximum Rate. Notwithstanding anything to the contrary
------------
contained elsewhere in this Credit Agreement or in any other Credit Document,
the Credit Parties, the Agent, the Issuing Bank and the Lenders hereby agree
that all agreements among them under this Credit Agreement and the other Credit
Documents, whether now existing or hereafter arising and whether written or
oral, are expressly limited so that in no contingency or event whatsoever shall
the amount paid, or agreed to be paid, to the Agent, the Issuing Bank or any
Lender for the use, forbearance, or detention of the money loaned to the
Borrowers and evidenced hereby or thereby or for the performance or payment of
any covenant or obligation contained herein or therein, exceed the Highest
Lawful Rate. If due to any circumstance whatsoever, fulfillment of any
provisions of this Credit Agreement or any of the other Credit Documents at the
time performance of such provision shall be due shall exceed the Highest Lawful
Rate, then, automatically, the obligation to be fulfilled shall be modified or
reduced to the extent necessary to limit such interest to the Highest Lawful
Rate, and if from any such circumstance the Agent, the Issuing Bank or any
Lender should ever receive anything of value deemed interest by applicable law
which would exceed the Highest Lawful Rate, such excessive interest shall be
applied to the reduction of the principal amount then outstanding hereunder or
on account of any other then outstanding Obligations and not to the payment of
interest, or if such excessive interest exceeds the principal unpaid balance
then outstanding hereunder and such other then outstanding
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Obligations, such excess shall be refunded to the Borrowers. All sums paid or
agreed to be paid to the Agent, the Issuing Bank or any Lender for the use,
forbearance, or detention of the Obligations and other Indebtedness of the
Borrowers to the Agent, the Issuing Bank or any Lender, to the extent permitted
by applicable law, shall be amortized, prorated, allocated and spread throughout
the full term of such Indebtedness, until payment in full thereof, so that the
actual rate of interest on account of all such Indebtedness does not exceed the
Highest Lawful Rate throughout the entire term of such Indebtedness. The terms
and provisions of this Section 12.14 shall control every other provision of this
-------------
Credit Agreement and all agreements among the Credit Parties, the Agent and the
Lenders.
12.15 Entire Agreement; Successors and Assigns. This Credit
----------------------------------------
Agreement and the Other Credit Documents constitute the entire agreement among
the Credit Parties, the Agent, the Issuing Bank and the Lenders, supersedes any
prior agreements among them, and shall bind and benefit the Credit Parties, the
Agent, the Issuing Bank and the Lenders and their respective successors and
permitted assigns. The successors of any Credit Party shall include, without
limitation, a receiver, trustee and debtor-in-possession of or for such Credit
Party.
12.16 Schedules and Exhibits. The schedules and exhibits attached
----------------------
to this Credit Agreement are incorporated herein and shall be considered a part
of this Credit Agreement for the purposes stated herein.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Credit
Agreement to be executed and delivered by their proper and duly authorized
officers as of the date set forth above.
BORROWERS: ACME ALABAMA, INC.,
---------
an Alabama corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
Treasurer and Secretary
ACME DIXIE INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
Vice President, Chief Financial Officer and Secretary
ACME XXXXX INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
Secretary and Chief Financial Officer
ACME RENTS, INC.,
a California corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
Secretary and Chief Financial Officer
THE AIR & PUMP COMPANY,
a Texas corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-----------------------
Xxxxxxx X. Xxxxxxxx
-S-1-
Vice President, Treasurer and Secretary
XXXXXX XXXXX EQUIPMENT, INC.,
a Mississippi corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxx
Vice President, Treasurer and Secretary
PARENT RENTAL SERVICE CORPORATION,
------
GUARANTORS: a Delaware corporation
-----------
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxx
Chief Financial Officer and Secretary
RSC ACQUISITION CORP.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxx
Chief Financial Officer and Secretary
RSC HOLDINGS, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxx
Vice President, Chief Financial Officer and Secretary
AGENT: BT COMMERCIAL CORPORATION,
-----
as Agent
By: /s/ Xxxxxx Sun
-------------------------
Vice President
-S-2-
ISSUING BANK: BANKERS TRUST COMPANY
------------
By: /s/ Xxxxxx Xxxxxxxx
-------------------------
Vice President
LENDERS: BT COMMERCIAL CORPORATION
-------
By: /s/ Xxxxxx Sun
-------------------------
Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /s/ Xxxxxxx Xxxxx
-------------------------
Assistant Secretary
CONGRESS FINANCIAL CORPORATION
By: /s/ Xxxxxx Xxxxxxx
-------------------------
Vice President
GIBRALTAR CORPORATION OF AMERICA
By: /s/ Xxxxxx Xxxxxxxx
-------------------------
Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxx Xxxx
-------------------------
Vice President
SANWA BANK CALIFORNIA
-S-3-
By: /s/ Xxxxxx X. Arco
-------------------------
Vice President
NATIONSBANK OF TEXAS, N.A.
By: /s/ Xxxx X. Xxxxxxx
-------------------------
Vice President
-S-4-
ANNEX I
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LENDERS AND COMMITMENT AMOUNTS
AS OF SEPTEMBER 24, 1996
Commitment
----------
Name and Address of Lender
--------------------------
Bankers Trust Commercial Corporation $15,000,000.00
Domestic Lending Office:
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxx
Telecopy No: 000-000-0000
Eurodollar Lending Office:
00 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxxx
Telecopy No: 000-000-0000
The CIT Group/Business Credit, Inc. $26,500,000.00
Domestic Lending Office:
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx XX 00000
Attention: Xxxxxx Xxxxx
Telecopier No: 000-000-0000
Eurodollar Lending Office:
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx XX 00000
Attention: Xxxxxx Xxxxx
Telecopier No: 000-000-0000
Congress Financial Corporation $20,000,000.00
Domestic Lending Office:
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx XX 00000
Attention: Xxxxxx Xxxxxxx
Telecopy No: 000-000-0000
Eurodollar Lending Office:
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx XX 00000
Attention: Xxxxxx Xxxxxxx
Telecopy No: 000-000-0000
Gibraltar Corporation of America $13,500,000.00
Domestic Lending Office:
000 Xxxxx Xxxxxx, Xxxx 0000
Xxx Xxxx XX 00000
Attention: Xxxxx Xxxxxxxx
Telecopier No: 000-000-0000
Eurodollar Lending Office:
000 Xxxxx Xxxxxx, Xxxx 0000
Xxx Xxxx XX 00000
Attention: Xxxxx Xxxxxxxx
Telecopier No: 000-000-0000
Union Bank of California, N.A. $15,000,000.00
Domestic Lending Office:
Commercial Finance Division
00 Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
Telecopy No: 000-000-0000
Eurodollar Lending Office:
Commercial Finance Division
00 Xxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxx
Telecopy No: 000-000-0000
Sanwa Bank California $20,000,000.00
Domestic Lending Office:
000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy No: 000-000-0000
Eurodollar Lending Office:
000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy No: 000-000-0000
NationsBank of Texas, N.A. $ 15,000,000.00
Domestic Lending Office:
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
Telecopy No.: 000-000-0000
Eurodollar Lending Office:
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxx
Telecopy No.: 000-000-0000
Total Commitments: $125,000,000.00
===============
