EXHIBIT 10.20
RENTAL SERVICE CORPORATION OF CANADA LTD.
AS BORROWER
AND
THE FINANCIAL INSTITUTIONS LISTED
ON THE SIGNATURE PAGES
as Lenders
and
BT BANK OF CANADA
as Agent
________________________________________________________________________________
CREDIT AGREEMENT
August 21, 1998
________________________________________________________________________________
STIKEMAN, XXXXXXX
TABLE OF CONTENTS
BT BANK OF CANADA
CREDIT AGREEMENT
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms........................................ 1
Section 1.2 Gender and Number.................................... 29
Section 1.3 Headings, etc........................................ 29
Section 1.4 Currency............................................. 29
Section 1.5 Certain Phrases, etc................................. 29
Section 1.6 Accounting Terms..................................... 29
Section 1.7 Rateable Portion of Accommodations................... 29
Section 1.8 Incorporation of Schedules........................... 29
Section 1.9 Conflict............................................. 30
Section 1.10 Certificates......................................... 30
ARTICLE 2
CREDIT FACILITY
Section 2.1 Availability......................................... 30
Section 2.2 Commitments and Facility Limits...................... 31
Section 2.3 Use of Proceeds...................................... 31
Section 2.4 Mandatory Repayments and Reductions of Commitments... 31
Section 2.5 Mandatory Prepayment Where Borrowing Base Deficiency. 32
Section 2.6 Optional Prepayments and Reductions of Commitments... 32
Section 2.7 Fees................................................. 33
Section 2.8 Maintenance of Loan Account; Statements of Account... 33
Section 2.9 Payment Procedures................................... 33
Section 2.10 Defaulting Lenders................................... 37
Section 2.11 Sharing of Payments.................................. 38
Section 2.12 Collection of Accounts............................... 38
Section 2.13 Computations of Interest and Fees.................... 40
ARTICLE 3
ADVANCES
Section 3.1 The Advances......................................... 40
Section 3.2 Disbursement of Advances............................. 42
Section 3.3 Notices of Borrowing................................. 42
Section 3.4 Periodic Settlement of Agent Advances and Repayments. 43
Section 3.5 Authorized Officers and Agents....................... 44
Section 3.6 Conversions and Elections Regarding Advances......... 44
Section 3.7 Circumstances Requiring Prime Rate Pricing........... 45
Section 3.8 Interest on Advances................................. 46
(i)
ARTICLE 4
BANKERS' ACCEPTANCES
Section 4.1 Acceptances and Drafts...................................... 47
Section 4.2 Form of Drafts.............................................. 48
Section 4.3 Procedure for Drawing....................................... 48
Section 4.4 Presigned Draft Forms....................................... 49
Section 4.5 Payment, Conversion or Renewal of BA Instruments............ 49
Section 4.6 Circumstances Making Bankers' Acceptances Unavailable....... 50
ARTICLE 5
LETTERS OF CREDIT
Section 5.1 Letters of Credit........................................... 50
Section 5.2 Procedure for Issue......................................... 50
Section 5.3 Form of Letters of Credit................................... 51
Section 5.4 Revolving Credit Lenders' Participation..................... 51
Section 5.5 Reimbursements of Amounts Drawn............................. 51
Section 5.6 Payment by Lenders.......................................... 52
Section 5.7 Risk of Letters of Credit................................... 52
Section 5.8 Fees........................................................ 53
Section 5.9 Repayments.................................................. 54
ARTICLE 6
CONDITIONS OF LENDING
Section 6.1 Conditions Precedent to the Initial Accommodation........... 55
Section 6.2 Conditions Precedent to Accommodations and Conversions...... 58
Section 6.3 No Waiver................................................... 59
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
Section 7.1 Representations and Warranties.............................. 59
Section 7.2 Survival of Representations and Warranties.................. 65
Section 7.3 Representations and Warranties of the Agent and Lenders..... 65
ARTICLE 8
COVENANTS OF THE BORROWER
Section 8.1 Affirmative Covenants....................................... 65
Section 8.2 Negative Covenants.......................................... 76
Section 8.3 Security Covenants.......................................... 90
ARTICLE 9
EVENTS OF DEFAULT
Section 9.1 Events of Default........................................... 91
Section 9.2 Acceleration and Cash Collateralization..................... 93
Section 9.3 Rescission of Acceleration and Termination.................. 94
Section 9.4 Remedies.................................................... 94
(ii)
Section 9.5 Right of Setoff............................................. 95
Section 9.6 License for Use of Software and Other Intellectual Property. 96
Section 9.7 No Marshalling; Deficiencies; Remedies Cumulative........... 96
ARTICLE 10
THE AGENT AND THE LENDERS
Section 10.1 Authorization and Action................................... 97
Section 10.2 No Liability............................................... 98
Section 10.3 Accommodations by Agent.................................... 98
Section 10.4 Holding of Security; Sharing of Payments, etc.............. 98
Section 10.5 Lender Credit Decisions.................................... 99
Section 10.6 Indemnification............................................ 100
Section 10.7 Liability of the Lenders inter se.......................... 100
Section 10.8 Successor Agents........................................... 100
ARTICLE 11
MISCELLANEOUS
Section 11.1 Amendments, etc........................................... 100
Section 11.2 Waiver.................................................... 101
Section 11.3 Evidence of Debt and Accommodation Notices................ 102
Section 11.4 Notices, etc.............................................. 102
Section 11.5 Confidentiality........................................... 104
Section 11.6 Costs, Expenses and Indemnity............................. 105
Section 11.7 Taxes and Other Taxes..................................... 107
Section 11.8 Successors and Assigns.................................... 108
Section 11.9 Obligation of Lenders to Mitigate: Replacement of Lenders. 109
Section 11.10 Accommodations by Lenders................................. 111
Section 11.11 Rateable Payments......................................... 111
Section 11.12 Judgment Currency......................................... 112
Section 11.13 Interest on Amounts....................................... 112
Section 11.14 Governing Law............................................. 113
Section 11.15 Counterparts.............................................. 113
(iii)
CREDIT AGREEMENT
Credit Agreement dated August 21, 1998 among Rental Service Corporation of
Canada Ltd. as Borrower, the financial institutions that are listed on the
signature pages as Lenders, and BT Bank of Canada as Agent.
ARTICLE 1
INTERPRETATION
SECTION 1.1 DEFINED TERMS.
As used in this Agreement, the following terms have the following meanings:
"ACCOMMODATION" means (i) an Advance made by a Lender on the occasion of
any Borrowing, (ii) the creation and purchase of Bankers' Acceptances or
the purchase of completed Drafts by a Lender or by any other Person on the
occasion of any Drawing, and (iii) the issue of a Letter of Credit by a
Lender on the occasion of any Issue (each of which is a "TYPE" of
Accommodation).
"ACCOMMODATION NOTICE" means a Notice of Borrowing, a Drawing Notice, an
Issue Notice or an Election Notice, as the case may be.
"ACCOMMODATIONS OUTSTANDING" means, in relation to the Borrower and any
Lender at any time under the Credit Facility, an amount equal to the sum of
(i) the aggregate principal amount of all outstanding Advances made by the
Lender, (ii) the aggregate Face Amount of all outstanding Bankers'
Acceptances, completed Drafts and BA Equivalent Notes which the Lender has
purchased or arranged to have purchased, and (iii) the then outstanding
Letter of Credit Obligations; and in relation to the Borrower and all
Lenders means the sum of the Accommodations Outstanding to each Lender. In
determining Accommodations Outstanding, the foregoing amounts shall be
expressed in Canadian Dollars and each relevant U.S. Dollar amount shall be
converted, for purposes of such calculation, into its Equivalent Cdn. $
Amount, as of the relevant day.
"ACCOUNTS" means with respect to any Borrower or any Subsidiary of the
Borrower, "Accounts" as defined in the Security Agreement.
"ACQUISITION" means (i) the acquisition by the Borrower or any Subsidiary
of the Borrower 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 amalgamation of the Borrower or any
Subsidiary with any Person which is in the equipment rental business.
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"ADDITIONAL LOAN PARTIES" means the Parent Guarantor and all Restricted
Subsidiaries.
"ADVANCES" means advances made by a Lender under Article 3 and "ADVANCE"
means any one of such advances. Advances are denominated in Canadian
Dollars (a "CANADIAN DOLLAR ADVANCE") or in U.S. Dollars (a "U.S. DOLLAR
ADVANCE"). A Canadian Dollar Advance is designated a "CANADIAN PRIME RATE
ADVANCE" and a U.S. Dollar Advance may be designated a "EURODOLLAR RATE
ADVANCE" or a "BASE RATE (CANADA) ADVANCE". Canadian Prime Rate Advances
and Base Rate (Canada) Advances are referred to, collectively, as "FLOATING
RATE ADVANCES". Each of a Eurodollar Rate Advance, a Canadian Prime Rate
Advance and a Base Rate (Canada) Advance is a "TYPE" of Advance.
"AFFILIATE" has the meaning specified in the Business Corporations Act
(Ontario) on the date of this Agreement.
"AGENT" means BT Bank of Canada Ltd. as agent for the Lenders under this
Agreement, and any successor appointed pursuant to Section 10.9.
"AGENT ADVANCE PERIOD" is defined in Section 3.1(2).
"AGENT ADVANCES" is defined in Section 3.1(1).
"AGREEMENT" means this credit agreement and all schedules and instruments
in amendment or confirmation of it; and the expressions "ARTICLE" and
"SECTION" followed by a number mean and refer to the specified Article or
Section of this Agreement.
"APPLICABLE BASE RATE (CANADA) MARGIN" means, with respect to any
Accommodations Outstanding accruing interest at a rate based upon the Base
Rate (Canada) in accordance with Section 3.8, a rate per annum equal to (i)
for the period commencing on the Effective Date and ending on December 31,
1998, zero (-0-); and (ii) from and after January 1, 1999, 0.25%, provided
that, from and after January 1, 1999, if the Total Indebtedness Ratio for
the applicable period ending on the then most recent Quarterly
Determination Date (as shown on the quarterly Compliance Certificate
delivered pursuant to Section 8.1(a)) is within the ranges set out below
and no Default or Event of Default exists as of such Quarterly
Determination Date, the Applicable Base Rate (Canada) Margin shall be the
per annum rate set out opposite the applicable range indicated below:
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--------------------------------------------------------
APPLICABLE BASE RATE
TOTAL INDEBTEDNESS RATIO (CANADA) MARGIN
--------------------------------------------------------
Less than or equal
to 3.00:1 and greater
than 2.50:1 -0-
--------------------------------------------------------
Less than or equal
to 2.50:1 and greater
than 2.25:1 (0.25%)
--------------------------------------------------------
Less than or equal
to 2.25:1 and greater
than 1.75:1 (0.50%)
--------------------------------------------------------
Less than or equal
to 1.75:1 (0.75%)
--------------------------------------------------------
In the event of the delivery of a Compliance Certificate showing an
increase or decrease in the Total Indebtedness Ratio which requires a
change in the Applicable Base Rate (Canada) Margin, the change in the
Applicable Base Rate (Canada) Margin shall be effective from the first day
of the calendar month immediately following receipt of the Compliance
Certificate (provided that the Compliance Certificate is received by the
Agent no later than 3:00 P.M. Toronto time at least one (1) Business Day
prior to the first day of such calendar month) until the next such date on
which the Applicable Base Rate (Canada) Margin is subject to change
following the delivery of (or failure to deliver) a Compliance Certificate
showing an increase or decrease in the Total Indebtedness Ratio which
requires a change in the Applicable Base Rate (Canada) Margin. The failure
to deliver any Compliance Certificate by the date required under this
Agreement (after giving effect to any applicable grace period) shall
automatically cause the Applicable Base Rate (Canada) Margin to be the
maximum per annum rate for the applicable period described above, effective
as of the first day of the calendar month immediately following the date on
which the delivery of the Compliance Certificate was otherwise required.
"APPLICABLE CANADIAN PRIME RATE MARGIN" means, with respect to any
Accommodations Outstanding accruing interest at a rate based upon the
Canadian Prime Rate in accordance with Section 3.8, a rate per annum equal
to (i) for the period commencing on the Effective Date and ending on
December 31, 1998, 2.00%; and (ii) from and after January 1, 1999, 2.25%,
provided that, from and after January 1, 1999, if the Total Indebtedness
Ratio for the applicable period ending on the then most recent Quarterly
Determination Date (as shown on the quarterly Compliance Certificate
delivered pursuant to Section 8.1(a)) is within the ranges set out below
and no
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Default or Event of Default exists as of such Quarterly Determination Date,
the Applicable Canadian Prime Rate Margin shall be the per annum rate set
out opposite the applicable range indicated below:
---------------------------------------------------------
APPLICABLE CANADIAN PRIME
TOTAL INDEBTEDNESS RATIO RATE MARGIN
---------------------------------------------------------
Less than or equal
to 3.00:1 and greater
than 2.50:1 2.00%
---------------------------------------------------------
Less than or equal
to 2.50:1 and greater
than 2.25:1 1.75%
---------------------------------------------------------
Less than or equal
to 2.25:1 and greater
than 1.75:1 1.50%
---------------------------------------------------------
Less than or equal
to 1.75:1 1.25%
---------------------------------------------------------
In the event of the delivery of a Compliance Certificate showing an
increase or decrease in the Total Indebtedness Ratio which requires a
change in the Applicable Canadian Prime Rate Margin, the change in the
Applicable Canadian Prime Rate Margin shall be effective from the first day
of the calendar month immediately following receipt of the Compliance
Certificate (provided that the Compliance Certificate is received by the
Agent no later than 3:00 P.M. Toronto time at least one (1) Business Day
prior to the first day of such calendar month) until the next such date on
which the Applicable Canadian 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 Total Indebtedness Ratio which
requires a change in the Applicable Canadian Prime Rate Margin. The
failure to deliver any Compliance Certificate by the date required under
this Agreement (after giving effect to any applicable grace period) shall
automatically cause the Applicable Canadian Prime Rate Margin to be the
maximum per annum rate for the applicable period described above, effective
as of the first day of the calendar month immediately following the date on
which the delivery of the Compliance Certificate was otherwise required.
"APPLICABLE EURODOLLAR RATE MARGIN" means, with respect to any
Accommodations Outstanding accruing interest at the Eurodollar Rate in
accordance with Section 3.8, a rate per annum equal to (i) for the period
commencing on the Effective Date and ending on December 31, 1998, 1.50%;
and (ii) from and after January 1, 1999, 1.75%, provided that, from and
after
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January 1, 1999, if the Total Indebtedness Ratio for the applicable period
ending on the then most recent Quarterly Determination Date (as shown on
the quarterly Compliance Certificate delivered pursuant to Section 8.1(a))
is within the ranges set out below and no Default or Event of Default
exists as of such Quarterly Determination Date, the Applicable Eurodollar
Rate Margin shall be the per annum rate set out opposite the applicable
range indicated below:
---------------------------------------------------------------
APPLICABLE EURODOLLAR
TOTAL INDEBTEDNESS RATIO RATE MARGIN
---------------------------------------------------------------
Less than or equal
to 3.00:1 and greater
than 2.50:1 1.50%
---------------------------------------------------------------
Less than or equal
to 2.50:1 and greater
than 2.25:1 1.25%
---------------------------------------------------------------
Less than or equal
to 2.25:1 and greater
than 1.75:1 1.00%
---------------------------------------------------------------
Less than or equal
to 1.75:1 0.75%
---------------------------------------------------------------
In the event of the delivery of a Compliance Certificate showing an
increase or decrease in the Total Indebtedness Ratio which requires a
change in the Applicable Eurodollar Rate Margin, the change in the
Applicable Eurodollar Rate Margin shall be effective from the first day of
the calendar month immediately following receipt of the Compliance
Certificate (provided that the Compliance Certificate is received by the
Agent no later than 3:00 P.M. Toronto time at least one (1) Business Day
prior to the first day of such calendar month) 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 Total Indebtedness Ratio which requires a
change in the Applicable Eurodollar Rate Margin. The failure to deliver
any Compliance Certificate by the date required under this Agreement (after
giving effect to any applicable grace period) shall automatically cause the
Applicable Eurodollar Rate Margin to be the maximum per annum rate for the
applicable period described above, effective as of the first day of the
calendar month immediately following the date on which the delivery of the
Compliance Certificate was otherwise required.
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"APPLICABLE MARGINS" means, collectively, the Applicable Base Rate (Canada)
Margin, the Applicable Canadian Prime Rate Margin, the Applicable
Eurodollar Rate Margin and the Drawing Fee.
"APPROVED ACQUISITION" means the Fasco Acquisition, subject to the
satisfaction of the applicable conditions set forth in Section 6.1.
"ASSET SALE" means (i) any sale, lease, assignment, transfer or other
disposition of assets by the Borrower or any Subsidiary (including the
capital stock of any Subsidiary of the Borrower) which requires the consent
of the Majority Lenders or any sale and leaseback transaction (whether
permitted by Section 8.2(l) or otherwise consented to by the Majority
Lenders), (ii) any sale, assignment, transfer or other disposition by the
Parent Guarantor of any of the capital stock of the Borrower and (iii) any
event constituting, or which is deemed to be, an "ASSET SALE" (as defined
in the Senior Subordinated Note Indenture).
"ASSIGNEE" has the meaning specified in Section 11.8.
"AUDITORS" means a nationally recognized firm of independent public
accountants selected by the Borrower and reasonably satisfactory to the
Agent. For purposes of this Agreement, the firm of Ernst & Young LLP shall
be deemed to be satisfactory to the Agent.
"BANKERS' ACCEPTANCE" has the meaning specified in Section 4.1.
"BA EQUIVALENT NOTE" has the meaning specified in Section 4.3(3).
"BA INSTRUMENTS" means, collectively, Bankers' Acceptances, Drafts and BA
Equivalent Notes, and, in the singular, any one of them.
"BASE RATE (CANADA)" means, at any time, the rate of interest per annum
equal to the rate which the principal office of the Agent in Toronto,
Ontario announces from time to time as the reference rate of interest for
loans in U.S. Dollars to its Canadian borrowers.
"BENEFICIARY" means, in respect of any Letters of Credit, the beneficiary
named in the Letters of Credit.
"BORROWER" means, at any time, Rental Service Corporation of Canada Ltd.
and its successors and permitted assigns.
"BORROWING" means a borrowing consisting of one or more Advances.
"BORROWING BASE" means, at any time, the sum of (i) 85% of Eligible
Accounts of the Borrower and each Designated Restricted Subsidiary, plus
(ii) 85% of
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the aggregate value (computed at the lower of net book value (in accordance
with the Parent Guarantor's past practices) and orderly liquidation value)
of Eligible Rental Equipment of the Borrower and each Designated Restricted
Subsidiary, less (iii) Priority Accounts Payable, at such time, (iv) the
aggregate amount of all Indebtedness of the Borrower (other than
Accommodations Outstanding incurred pursuant to this Agreement and
Indebtedness to the Parent Guarantor or any of its Subsidiaries), and (v)
the aggregate amount of reserves, if any, established by the Agent under
Section 2.1 applicable to the Borrower.
"BORROWING BASE CERTIFICATE" means a certificate of the Borrower,
substantially in the form of Exhibit A, mathematically computing the
Borrowing Base and signed on behalf of the Borrower by its chief financial
officer or any other Financial Officer acceptable to the Agent.
"BUSINESS DAY" means any day of the year, other than a Saturday, Sunday or
other day on which banks are required or authorized to close in Toronto,
Ontario or Edmonton, Alberta and, where used in the context of (i) a
Eurodollar Rate Advance, also a day on which banks are not required or
authorized to close in New York City and dealings are carried on in the
London interbank market, and (ii) a Base Rate (Canada) Advance, also a day
on which banks are not required or authorized to close in New York City.
"CANADIAN DOLLARS", and "CDN. $" each means lawful money of Canada.
"CANADIAN PRIME RATE" means, at any time, the greater of (i) the rate of
interest per annum equal to the per annum rate of interest quoted,
published and commonly known as the "PRIME RATE" of the Agent established
at its main office in Toronto, Ontario as the reference rate of interest in
order to determine interest rates for loans in Canadian Dollars to its
Canadian borrowers, adjusted automatically with each quoted or published
change in such rate, all without the necessity of any notice to the
Borrower or any other Person, and (ii) the sum of (y) the average of the
rates per annum for Canadian Dollar bankers' acceptances having a term of
30 days that appears on the Reuters Screen CDOR Page as of 10:00 a.m.
(Toronto time) on the date of determination, as reported by the Agent (and
if such screen is not available, any successor or similar service as may be
selected by the Agent), and (z) .50%.
"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
-8-
shall exclude proceeds received in regard to 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 or
mixed) by a Person as lessee which, in conformity with GAAP, is accounted
for as a capital lease on the balance sheet of that Person.
"CASH EQUIVALENTS" means any of the following: (i) securities issued,
guaranteed or insured by the government of Canada or any province or 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
Canadian chartered bank or 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 Rating Group, a division of
McGraw Hill, Inc. ("S&P") 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 Canada or any province or the United States, any state thereof or the
District of Columbia (other than commercial paper issued by the Borrower 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 S&P 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
rating obtainable from S&P and Xxxxx'x Investors Services, Inc.
"CASUALTY LOSS" means (i) the loss, damage, or destruction of any asset
owned or used by any of the Borrower or its Subsidiaries, (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.
"CHANGE OF CONTROL" means, (y) with respect to the Parent Guarantor, the
occurrence of a Change of Control under the Parent Credit Agreement, or (z)
with respect to the Borrower any of the following events: (i) the Borrower
ceases to be a direct or indirect wholly-owned Subsidiary of the Parent
Guarantor, (ii) the Parent Guarantor's designees no longer represent a
majority of the Borrower's board of directors, or (iii) any sale, lease,
exchange
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or other transfer (in one transaction or series of related transactions) of
all or substantially all of the Borrower's property and assets.
"CLOSING DOCUMENT LIST" is defined in Section 6.1(d)(iii).
"COLLATERAL" means any and all property and assets in respect of which the
Agent or any Lender has or will have an Lien pursuant to a Security
Document to secure the Obligations.
"COLLATERAL ACCESS AGREEMENT" means any landlord agreement containing
substantially the terms set forth in Exhibit B (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 Inventory or Equipment in each
case in form and substance satisfactory to the Agent in its Permitted
Discretion.
"COLLATERAL ASSIGNMENT OF ACQUISITION AGREEMENT" means, with respect to the
Approved Acquisition and any Acquisition permitted by Section 8.2(b)(vii)
the consideration for which is $10,000,000 or more, a collateral assignment
executed by the Borrower or a Subsidiary of the Borrower which is a party
to such Acquisition in favor of the Agent, for the benefit of the Agent and
each of the Lenders, and, if the related purchase agreement(s) or escrow
agreement(s) do not expressly permit such assignment, acknowledged by each
Person selling shares or property in such Acquisition or any escrow agent,
with respect to the Borrower's or such Subsidiary's rights under such
purchase agreement(s) and such escrow agreement(s), in each case in
substantially the form of Exhibit C (with such modifications as may be
necessary to reflect the structure of such Acquisition), as any of the same
may be amended, restated, supplemented or otherwise modified in accordance
with the terms hereof and thereof.
"COLLECTION ACCOUNT" is defined in Section 2.12.
"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 (United States of
America) and any Person succeeding to the functions thereof.
"COMMITMENT" means, at any time, in respect of the Credit Facility, Cdn.
$28,000,000 as reduced pursuant to Article 2 and a "LENDER'S COMMITMENT"
means, at any time, the relevant amount designated as such opposite the
Lender's name on the signature pages, as reduced from time to time pursuant
to Article 2.
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"COMPLIANCE CERTIFICATE" means a certificate of the Borrower substantially
in the form of Exhibit D, signed on its behalf by its chief financial
officer or any other Financial Officer acceptable to the Agent.
"CONCENTRATION ACCOUNT" is defined in Section 2.12.
"CONSUMMATION DATE" means, with respect to any Acquisition or the
acquisition or formation of any Subsidiary of the Borrower, the date such
Acquisition or acquisition is consummated or the date when such Subsidiary
has been formed.
"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
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 DOCUMENTS" means this Agreement, the BA Instruments, the Security
Documents, the Hedging Agreements and all other documents in regard thereto
to be executed and delivered to the Agent or the Lenders, or both, by the
Borrower, the Restricted Subsidiaries and the other Additional Loan
Parties.
"CREDIT FACILITY" means, the credit facility to be made available to the
Borrower pursuant to Article 2 under this Agreement for the purposes
specified in Section 2.3.
"DEFAULT" means an event which, with the giving of notice or passage of
time, or both, would constitute an Event of Default.
"DEFAULTING LENDER" is defined in Section 2.10.
"DESIGNATED RESTRICTED SUBSIDIARY" has the meaning specified in Section
2.5(2).
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"DISBURSEMENT ACCOUNTS" means the Borrower's Canadian Dollar and U.S.
Dollar operating accounts maintained with the Disbursement Account Bank.
"DISBURSEMENT ACCOUNT BANK" means The Bank of Nova Scotia.
"DRAFT" means, at any time, a xxxx of exchange, within the meaning of the
Bills of Exchange Act (Canada), drawn by the Borrower on a Lender or any
other Person and bearing such distinguishing letters and numbers as the
Lender or the Person may determine, but which at such time has not been
completed as the payee or accepted by the Lender or the Person.
"DRAWING" means (i) the creation and purchase of Bankers' Acceptances by a
Lender or by any other Person pursuant to Article 4, or (ii) the purchase
of completed Drafts by a Lender or by any other Person pursuant to Article
4.
"DRAWING DATE" means any Business Day fixed for a Drawing pursuant to
Section 4.3.
"DRAWING FEE" means, with respect to each Draft drawn by the Borrower and
purchased by any Person on any Drawing Date calculated on the basis of the
term to maturity of the Draft and a year of 365 days, an amount equal to
the Applicable Eurodollar Rate Margin, in each case, of the aggregate Face
Amount of the Draft.
"DRAWING NOTICE" has the meaning specified in Section 4.3(1).
"DRAWING PRICE" means, in respect of Bankers' Acceptances or Drafts to be
purchased by a Lender or any other Person, the difference between (i) the
result (rounded to the nearest whole cent, with one-half of one cent being
rounded up) obtained by dividing the aggregate Face Amount of the Bankers'
Acceptances or Drafts by the sum of one plus the product of (x) the
Reference Discount Rate multiplied by (y) a fraction the numerator of which
is the number of days in the term of maturity of the Bankers' Acceptances
and the denominator of which is 365, and (ii) the applicable aggregate
Drawing Fee.
"EFFECTIVE DATE" means the date of this Agreement.
"ELECTION NOTICE" has the meaning specified in Section 3.6(3).
"ELIGIBLE ACCOUNTS" means Accounts of the Borrower and any Restricted
Subsidiary deemed by the Agent in the exercise of its Permitted Discretion
to be eligible for inclusion in the calculation of the Borrowing Base for
the Borrower and the Designated Restricted Subsidiaries, 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,
-12-
discounts, deductions, claims, credits, charges, or other allowances.
Whenever proceeds of an Accommodation are to be used by the Borrower,
immediately and directly, to purchase Accounts (including, without
limitation, in any Acquisition permitted hereunder or any merger of a
Person into the Borrower or any Designated Restricted Subsidiary
substantially simultaneously with an Acquisition of such Person 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 1.6 of the Security Agreement, (c) in
the case of an Acquisition (other than the Fasco Acquisition), the
satisfaction of the conditions set forth in Section 8.2(b)(vii), 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. Unless otherwise approved in writing by the Agent, an
Account shall not be an Eligible Account if:
(a) It arises out of a sale or lease made by the Borrower to an Affiliate;
or
(b) Its payment terms are longer than 30 days from date of invoice; or
(c) It is unpaid more than 90 days after the date of invoice; or
(d) 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
(e) The Account, together with all other Accounts of an account debtor
(and its Affiliates), exceeds 10% of the face value of all Accounts of
the Borrower and its Subsidiaries 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
(f) 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
(g) The Borrower has actual knowledge that the account debtor is (or its
assets are) the subject of an Insolvency Event; or
(h) The Account is not payable in U.S. Dollars or Canadian Dollars or the
account debtor for the Account is not located within Canada or the
continental United States, unless the Account is supported by an
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irrevocable letter of credit satisfactory to the Agent (as to form,
substance and issuer) and assigned to and directly drawable by the
Agent. Notwithstanding the immediately preceding sentence, an Account
shall not be an Eligible Account if the account debtor is located in
(i) 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 or, (ii) the Province of Newfoundland or the Northwest
Territories unless the Account of such account debtor is subject to a
valid and perfected first priority Lien in favour of the Agent and the
Lenders; or
(i) The sale to the account debtor is on a xxxx-and-hold, guaranteed sale,
sale-and-return, sale on approval or consignment basis or made
pursuant to any other written agreement providing for repurchase or
return; or
(j) 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
(k) The account debtor is Canada, the United States of America, any
province or 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 Financial Administration Act (Canada), the
Assignment of Claims Act of 1940, as amended (31 U.S.C. 3727 et seq.)
or any similar statute in such state or the District of Columbia, as
applicable; or
(l) 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
(m) The Account does not materially comply with all applicable
Requirements of Law; or
(n) 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
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(o) It is not assignable, is not subject to a valid and perfected first
priority Lien in favor of the Agent and the Lenders or does not
otherwise conform to the representations and warranties contained in
the Credit Documents, including, without limitation, the
representations and warranties in Section 2.1 of the Security
Agreement.
"ELIGIBLE RENTAL EQUIPMENT" 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 the
Borrower and the Designated Restricted Subsidiaries. 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
Parent Guarantor's current and historical accounting practice and with
reference to the most recent appraisals delivered pursuant to Section
8.1(b)(ii) of this Agreement. Whenever proceeds of an Accommodation are to
be used by the Borrower, immediately and directly, to purchase Rental
Equipment (including, without limitation, in any Acquisition permitted
hereunder or any merger of a Person into the Borrower or any Designated
Restricted Subsidiary substantially simultaneously with an Acquisition of
such Person 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 1.6 of the Security Agreement,
(c) in the case of an Acquisition other than the Fasco Acquisition, the
satisfaction of the conditions set forth in Section 8.2(b)(vii) 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. Unless otherwise approved in writing by the Agent, an item
of Rental Equipment shall not be included in Eligible Rental Equipment of
the Borrower if:
(a) It is not owned solely by the Borrower or a Designated Restricted
Subsidiary or the Borrower or a Designated Restricted Subsidiary does
not have good, valid and marketable title thereto or has consigned
such item to any other Person: or
(b) It is not located in the United States or Canada; or
(c) It is not subject to a valid and perfected first priority Lien in
favor of the Agent and the Lenders 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
-15-
(d) 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
(e) 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 2.1 of the Security Agreement; or
(f) it has been delivered to the Borrower or a Designated Restricted
Subsidiary, as the case may be, within the preceding 30 days unless
payment has been made or the supplier has waived or lost its rights to
repossession under the Bankruptcy and Insolvency Act (Canada) or any
similar legislation or law of general application including, without
limitation, in connection with rights of revindication.
"ENVIRONMENTAL LAWS" means all applicable laws, regulations, orders,
judgments, decisions of and agreements with a Governmental Entity and all
other statutory requirements relating to public health or the protection of
the environment and all authorizations, permits, consents, registrations
and approvals issued pursuant to such laws, agreements or statutory
requirements.
"ENVIRONMENTAL LIABILITIES" means all liabilities imposed by, under or
pursuant to Environmental Laws or which relate to the existence of
contaminants on, under or about any of the properties now or previously
used by the Borrower, any of the Restricted Subsidiaries or any Additional
Loan Party and which, in accordance with GAAP or U.S. GAAP, as appropriate,
must be disclosed in the consolidated financial statements of the Borrower,
any of the Restricted Subsidiaries or any Additional Loan Party.
"EQUIPMENT" means with respect to the Borrower or any Subsidiary of the
Borrower, "EQUIPMENT" as defined in the Security Agreement.
"EQUIVALENT CDN. $ AMOUNT" means, on any day with respect to any amount of
U.S. Dollars, the amount of Canadian Dollars which would be required to buy
such amount of U.S. Dollars using the rate quoted by the Agent in
accordance with its normal banking practice at approximately 12:00 noon
(Toronto time) on the day.
"EQUIVALENT U.S. $ AMOUNT" means, on any day with respect to any amount of
Canadian Dollars, the amount of U.S. Dollars which would be required to buy
such amount of Canadian Dollars using the rate quoted by the Agent in
-16-
accordance with its normal banking practice at approximately 12:00 noon
(Toronto time) on the day.
"EURODOLLAR INTEREST PERIOD" means, for each Eurodollar Rate Advance, a
period which commences (i) in the case of the initial Eurodollar Interest
Period, on the date the Advance is made or converted from another Type of
Accommodation, and (ii) in the case of any subsequent Eurodollar Interest
Period, on the last day of the immediately preceding Eurodollar Interest
Period, and which ends, in either case, on the day selected by the Borrower
in the applicable Notice of Borrowing or Election Notice. The duration of
each Eurodollar Interest Period shall be 1, 2, 3 or (unless a Lender shall
have notified the Agent that the Eurodollar Rate will not adequately
reflect the cost to such Lender of funding its Advance) 6 months (or such
shorter or longer period as may be approved by the Lenders making
Eurodollar Rate Advances), unless the last day of a Eurodollar Interest
Period would otherwise occur on a day other than a Business Day, in which
case the last day of such Eurodollar Interest Period shall be extended to
occur on the next Business Day, or if such extension would cause the last
day of such Eurodollar Interest Period to occur in the next calendar month,
the last day of such Eurodollar Interest Period shall occur on the
preceding Business Day.
"EURODOLLAR RATE" means, with respect to the Eurodollar Interest Period for
each Eurodollar Rate Advance 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%) 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 immediate available funds comparable to
the principal amount of the Eurodollar Rate Advance for which the
Eurodollar Rate is being determined with maturities comparable to the
Eurodollar Interest Period for which such Eurodollar Rate will apply as of
approximately 10.00 am New York city time two Business Days prior to the
commencement of such Eurodollar Interest Period.
"EVENT OF DEFAULT" has the meaning specified in Section 9.1.
"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,
-17-
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 Accommodations, (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 Security, releases of Collateral, and waivers, amendments, and
terminations of any of the Credit Documents.
"FACE AMOUNT" means (i) in respect of a BA Instrument, the amount payable
to the holder on its maturity, and (ii) in respect of a Letters of Credit,
the maximum amount which the issuing Person is contingently liable to pay
to the Beneficiary.
"FASCO" means FASCO Rentals Ltd.
"FASCO ACQUISITION" means the acquisition by the Borrower of all or
substantially all of the assets of Fasco.
"FASCO ACQUISITION AGREEMENT" means the agreement dated July 24, 1998,
between the Borrower, Fasco and the Seller Stockholders (as defined in the
Fasco Acquisition Agreement), relating to the Fasco Acquisition.
"FASCO ACQUISITION DOCUMENTS" means the Fasco Acquisition Agreement and all
other agreements, documents and instruments relating to the Fasco
Acquisition, including, without limitation, the Ancillary Agreements (as
defined in the Fasco Acquisition Agreement).
"FEDERAL FUNDS RATE" means, for any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight United States
Federal funds transactions with members of the Federal Reserve System
arranged by United States Federal funds brokers, as published for the day
(or, if the day is not a Business Day, for the preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published
for any day which is a Business Day, the average of the quotations for the
day on such transactions received by the Agent from three United States
Federal funds brokers of recognized standing selected by it.
"FEES" means the fees payable by the Borrower under this Agreement.
"FINANCIAL COVENANTS" means the covenants set forth in Sections 8.1, 8.2,
8.3 and 8.4 of the Parent Guarantor Credit Agreement.
"FINANCIAL OFFICER" means, with respect to the Borrower or any Additional
Loan Party, its chief financial officer, chief accounting officer,
treasurer or other officer of such Credit Party designated as such by its
chief financial officer, chief accounting officer or treasurer in a written
notice to the Agent.
-18-
"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 each of (i) the Parent Guarantor and its
Subsidiaries, and (ii) the Borrower and the Restricted Subsidiaries, in
each case, for the period specified, prepared in accordance with U.S. GAAP
or GAAP, as applicable, (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 current
practices, and prepared without footnotes).
"FISCAL YEAR" means the fiscal year of the Parent Guarantor and the
Borrower for accounting and tax purposes, which shall be the 12-month
period ending on December 31 of each calendar year.
"GAAP" means, at any time, accounting principles generally accepted in
Canada as recommended in the Handbook of the Canadian Institute of
Chartered Accountants at the relevant time applied on a consistent basis
(except for changes made with the prior written consent of the Agent and
approved by the Borrower's independent auditors in accordance with
promulgations of the Canadian Institute of Chartered Accountants).
"GOODS" means tangible personal property but excluding chattel paper,
documents of title, instruments, money and securities (as these terms are
defined in the Personal Property Security Act (Ontario) 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 (i) any federal, provincial, state,
municipal, local or other government, governmental or public department,
central bank, court, commission, board, bureau, agency or instrumentality,
domestic or foreign, (ii) any subdivision or authority of any of the
foregoing, or (iii) any quasi-governmental or private body exercising any
regulatory, expropriation or taxing authority under or for the account of
any of the above, in each case having jurisdiction over the Applicable
Persons.
-19-
"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.
"HEDGING AGREEMENTS" means (i) all currency exchange or interest rate swap
agreements, currency exchange or interest rate cap agreements or currency
exchange or interest rate collar agreements, between the Borrower or a
Restricted Subsidiary, as the case may be, and any Lender, in form and
substance acceptable to such Lender (ii) all other agreements or
arrangements between the Borrower or a Restricted Subsidiary, as the case
may be, and any Lender, in form and substance acceptable to such Lender,
designed to protect the Borrower or a Restricted Subsidiary against
fluctuations in currency exchange or interest rates and not for a
speculative investment, all as they may be amended, supplemented, modified
or restated from time to time.
"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 Hedging 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.
"INDEMNIFIED PERSON" has the meaning specified in Section 11.6(1).
"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
-20-
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 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 RATE AGREEMENT" means those Hedging Agreements designed to
protect the Borrower or a Restricted Subsidiary against fluctuations in
interest rates and not for a speculative investment, all as they may be
amended, supplemented, modified or restated from time to time, including
interest rate future, option, swap, collar 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" means all inventory now owned or hereafter acquired by the
Borrower or a Restricted Subsidiary, including (i) finished Goods held for
sale or lease, raw materials, new and unused production, packing and
shipping supplies, (ii) work in progress, (iii) all new and unused
maintenance items, and (iv) all other materials and supplies on hand to be
used or consumed or which might be used or consumed in the manufacture,
packing, shipping, advertising, selling, or furnishing of Goods.
"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 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.
"ISSUE" means an issue of a Letter of Credit by a Lender pursuant to
Article 5.
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"ISSUE DATE" has the meaning specified in Section 5.2(1).
"ISSUE LENDER" means, Bankers Trust Company or any other Lender acceptable
to the Agent in its capacity as issuer of any Letters of Credit which from
time to time issues Letters of Credit, in each case for the account of the
Borrower in accordance with Article 5, and, in the singular, any one of
them.
"ISSUE NOTICE" has the meaning specified in Section 5.2(1).
"JUDICIAL ORDER" has the meaning specified in Section 5.9(1).
"LENDERS" mean, collectively, BT Bank of Canada and The Bank of Nova
Scotia, any Person who may become a Lender pursuant to Section 11.8 and any
Person who may otherwise become a Lender under this Agreement and their
respective permitted successors and assigns, and, in the singular, any one
of them and shall include for such purposes the Agent in connection with
any Agent Advances.
"LENDING LIMIT" has the meaning specified in Section 2.2(1).
"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 Issue Lender has not
been reimbursed by the Borrower, by the Lenders or from the proceeds of
Advances deemed requested pursuant to Section 5.5(2), plus the aggregate
amount of all payments made by the Lenders to the Issue Lender in respect
of participations in Letters of Credit for which the Borrower has not
reimbursed the Lenders (other than with respect to outstanding Advances
deemed requested pursuant to Section 5.5(2)).
"LETTERS OF CREDIT" means a standby letter of credit issued or to be issued
by the Issue Lender for the account of the Borrower pursuant to Article 5.
"LIEN" means any mortgage, charge, pledge, hypothecation, security
interest, assignment, encumbrance, lien (statutory or otherwise), title
retention agreement or arrangement, or other encumbrance of any nature or
any other arrangement or condition that in substance secures payment or
performance of an obligation.
"LOAN ACCOUNT" is defined in Section 2.8.
"LOCKBOXES", "LOCKBOX AGREEMENTS" and "LOCKBOX BANKS" are defined in
Section 2.12.
"LOCKBOX AGREEMENTS" is defined in Section 2.12.
-22-
"MAJORITY LENDERS" means, at any particular time, those Lenders whose
Revolving Credit Proportionate Shares, in the aggregate, are greater than
fifty percent (50%).
"MANDATORY REDEEMABLE OBLIGATION" means an obligation of one or more of the
Borrower or any of its Subsidiaries (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 the Borrower or any of its Subsidiaries, or (iii) upon the
occurrence of a condition not solely within the control of the Borrower or
any of its Subsidiaries, such as a redemption required to be made out of
future earnings.
"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
the Parent Guarantor and its Subsidiaries, taken as a whole, or the
Borrower and its Subsidiaries, taken as a whole, (ii) the legality,
validity or enforceability of this Agreement or any other material Credit
Document, (iii) the ability of the Borrower, any of its Subsidiaries and
any Additional Loan Party, taken as a whole, to perform any material
obligations under the Credit Documents or of the Agent or the Lenders to
enforce the Accommodations Outstanding or any of the other Obligations or
to 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 the Borrower
or any of its Subsidiaries is a party (other than the Credit Documents) for
which breach, non-performance, cancellation or failure to renew could have
a Material Adverse Effect.
"NET CASH PROCEEDS" means, with respect to any Asset Sale, (i) the
aggregate amount of cash consideration received by the Borrower or
Additional Loan Party or such Subsidiary, as the case may be, in connection
with such transaction after deduction of all reasonable and customary fees,
costs and expenses directly incurred by the Borrower or Additional Loan
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 the Borrower or Additional Loan Party or such Subsidiary in
connection therewith and (ii) any other net proceeds which constitute or
are deemed "Net Cash Proceeds" (as defined in the Senior Subordinated Note
Indenture).
-23-
"NOTICE OF BORROWING" means a notice with respect to the Borrowing of
Advances substantially in the form of Exhibit E.
"OBLIGATIONS" means all present and future obligations and liabilities of
the Borrower and any Additional Loan Party arising under or in connection
with this Agreement or any other Credit Document, due or to become due to
the Agent or any Lender or any other Person entitled to indemnification
pursuant to Section 11.6, or (to the extent permitted by the Credit
Documents) any of their respective successors, transferees or assigns, and
shall include, without limitation, (i) the Accommodations Outstanding and
unpaid 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
11.6, (iv) the Obligations of the Parent Guarantor arising under the Parent
Guaranty, (v) the Obligations of the Restricted Subsidiaries under the
Credit Documents to which they are a party and (vi) all obligations and
liabilities of the Borrower to the Agent or any Lender in respect of
Hedging 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 CURRENCY" has the meaning specified in Section 11.11(1).
"OTHER CURRENCY" has the meaning specified in Section 11.11(1).
"PAID IN FULL", "PAY IN FULL" and "PAYMENT IN FULL" means, with respect to
the Obligations of the Borrower and any Additional Loan Party, (i) the
payment in full in cash of all Obligations of the Borrower and any
Additional Loan 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 Agreement, the repayment of the Accommodations, the
termination of Commitment and the expiration or cancellation of all
Letters of Credit) and (ii) with respect to Letters of Credit issued for
the account of the Borrower, 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 Agreement or the other Credit
Documents.
"PARENT GUARANTOR" means Rental Service Corporation, a Delaware
corporation.
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"PARENT GUARANTOR CREDIT AGREEMENT" means the Second Amended and Restated
Credit Agreement dated as of December 2, 1997 by and among RSC Center,
Inc., RSC Alabama, Inc., RSC Xxxxx Inc., RSC Industrial Corporation, RSC
Rents, Inc., and Xxxxxx Xxxxx Equipment, Inc., as Borrowers, Rental Service
Corporation, RSC Acquisition Corp., and RSC Holdings, Inc. as Parent
Guarantors, the Lenders set forth therein, Bankers Trust Company, as
Issuing Bank and BT Commercial Corporation, as Agent, as amended by the
First Amendment and Consent dated as of April 30, 1998, and as further
amended by the Second Amendment and Consent dated as of July 20, 1998, and
as in effect as of the Effective Date without giving effect to any further
amendments, restatements, modifications or waivers thereof or consent to
departures from the terms thereof following the Effective Date.
"PARTICIPANT" has the meaning specified in Section 11.8(3).
"PARENT GUARANTY" the guaranty of even date herewith executed by the Parent
Guarantor with respect to the Obligations of the Borrower.
"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 and the Lenders or the amount which the
Agent and the Lenders 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 the
Borrower or any Additional Loan Party or any Person on behalf of, and at
the request of, such Persons is incomplete, inaccurate or misleading in any
material respect; (iii) materially increases the likelihood of the
occurrence of an Insolvency Event involving the Borrower or an Additional
Loan 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 the 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 and its Designated
Restricted Subsidiaries, (c) changes in demand for, and pricing of, Rental
Equipment of the Borrower and its Designated Restricted Subsidiaries, (d)
changes in any concentration of risk with respect to Accounts or Rental
Equipment of the Borrower and its Subsidiaries 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 and its Designated
Restricted Subsidiaries. The burden of establishing lack of good faith
shall be on the Borrower and the Additional Loan Parties.
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"PERMITTED LIEN" shall have the meaning set forth in Section 8.2(d).
"PERMITTED SUBORDINATED INDEBTEDNESS" means the Senior Subordinated Notes
issued by the Parent Guarantor and the unsecured guarantee(s) thereof by
certain Persons, in each case on the terms set forth in the Senior
Subordinated Note Indenture.
"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 employee benefit plan (including pension plan), program or
arrangement maintained or contributed to by the Borrower or any of its
Subsidiaries, or with respect to which any of them may incur any liability.
"PPSA" means the Personal Property Security Act (Ontario) and similar
legislation in other jurisdictions.
"PRIORITY ACCOUNTS PAYABLE" means, at any time, the amount past due and
owed by the Borrower or any of the Restricted Subsidiaries or which they
have an obligation to remit to a Governmental Entity pursuant to any
applicable law, rule or regulation in respect of pension fund obligations,
unemployment insurance, goods and services taxes, sales taxes and other
taxes payable or to be remitted or withheld, workers' compensation and
other like charges and demands, in respect of which any Governmental Entity
may claim a security interest or other claim ranking or capable of ranking
in priority to the Security.
"PRODUCTIVE ASSETS" means assets of a kind then used or useable in the
business of the Borrower or its Subsidiaries as in existence on the
Effective Date or in lines of business reasonably related thereto (which
shall include assets consisting of the capital stock of an entity acquired
in an Acquisition permitted hereunder).
"PRO FORMA" means the unaudited Pro Forma opening balance sheet of the
Borrower dated June 30, 1998, and after giving effect to the consummation
of the Fasco Acquisition and the extensions of credit contemplated by this
Agreement, attached hereto as Schedule 1.1.
"PROJECTIONS" means the forecasted (i) condensed consolidated balance sheet
of the Parent Guarantor, (ii) condensed consolidated income statements of
the Parent Guarantor, (iii) condensed consolidated cash flow statements of
the Parent Guarantor, (iv) consolidated capitalization statements of the
Parent Guarantor and (v) compliance with the Financial Covenants, all
prepared by
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management of the Parent Guarantor on a basis consistent with the Parent
Guarantor's historical financial statements as delivered on or prior to the
Effective Date.
"PURCHASE MONEY LIENS" shall have the meaning ascribed thereto in Section
8.2(c)(iv).
"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.
"REFERENCE DISCOUNT RATE" means, in respect of any Bankers' Acceptances or
Drafts to be purchased by a Lender or any other Person pursuant to Article
4, the arithmetic average of the discount rates (calculated on an annual
basis and rounded to the nearest one-hundredth of 1%, with five-thousandths
of 1% being rounded up) quoted by the Agent at 9:30 a.m. (Toronto time) as
the discount rate at which the Agent would purchase, on the relevant
Drawing Date, its own Bankers' Acceptances or Drafts having an aggregate
Face Amount equal to and with a term to maturity the same as the Bankers'
Acceptances or Drafts to be acquired by the Lender or other Person on the
Drawing Date. If the discount rates cannot be calculated on any Business
Day on which they are required to be calculated the applicable discount
rate shall be the CDOR rate in effect on such day for bankers' acceptances
having a term to maturity the same as the applicable Bankers' Acceptances.
"RELEVANT REPAYMENT DATE" means, in respect of the repayment of all
Accommodations made under the Credit Facility, December 2,2002.
"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 Borrower and its Subsidiaries attributable to the rental of
Rental Equipment owned or leased by the Borrower and its Subsidiaries
during such twelve-month period by (ii) the average amount for such twelve-
month period of Rental Equipment owned or leased by the Borrower and its
Subsidiaries as of the last day of each month during such twelve-month
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period, determined on the basis of the Borrower or such Subsidiary's
original cost of such Rental Equipment.
"RENTAL EQUIPMENT UTILIZATION CURE DATE" is defined in Section 8.2(a).
"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 BANKS" are defined in Section 12.
"RESTRICTED SUBSIDIARIES" means any Subsidiary which executes and delivers
the guarantee, security and other agreements, documents and instruments
pursuant to Section 8.2(q).
"REVOLVING CREDIT PROPORTIONATE SHARE" means, in respect of any Lender at
any particular time, a fraction, expressed as a percentage, obtained by
dividing its Lender's Commitment by the Commitment or, if the Commitment
has then been terminated, by dividing (i) the sum of (A) the outstanding
Advances and BA Instruments 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 Issue Lender
in respect of its participations in Letters of Credit for which the
Borrower has not reimbursed such Lender (other than with respect to
outstanding Advances deemed requested pursuant to Section 5.5), by (ii) the
sum of (A) the aggregate amount of all Advances and BA Instruments then
outstanding, plus (B) the aggregate amount of all Lenders' unfunded
participations in outstanding Letters of Credit, plus (C) the aggregate
amount of all payments made by all Lenders to the Issue Lender in respect
of their respective participations in Letters of Credit for which the
Borrower has not reimbursed the Lenders (other than with respect to
outstanding Advances deemed requested pursuant to Section 5.5).
"SECURITY" means, at any time, the encumbrances in favour of the Agent or
the Lenders, or both, in the assets and properties of the Borrower, the
Restricted Subsidiaries or the Additional Loan Parties securing their
obligations under this Agreement and the other Credit Documents.
"SECURITY AGREEMENT" means (i) the Security Agreement of even date herewith
executed by the Borrower in favour of the Agent and the Lenders, in
substantially the form of Exhibit F-1 or F-2, as the same may be amended,
restated, supplemented or otherwise modified in accordance with the terms
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hereof and thereof, and (ii) any Security Agreement executed after the date
hereof by any Restricted Subsidiary in favour of the Agent and the Lenders,
in each case substantially in the form of Exhibit F-1 or F-2, as any of the
same may be amended, restated, supplemented or otherwise modified from to
time in accordance with the terms hereof and thereof.
"SECURITY DOCUMENTS" means the agreements described as such in Exhibit G
and any other security granted to the Agent or the Lenders, or both, as
security for the Obligations of the Borrower and the Additional Loan
Parties under this Agreement and the other Credit Documents.
"SENIOR SUBORDINATED NOTE INDENTURE" means the Indenture dated May 13, 1998
pursuant to which the Senior Subordinated Notes were issued by the Parent
Guarantor and guaranteed by certain of its Subsidiaries.
"SENIOR SUBORDINATED NOTES" means the unsecured Senior Subordinated Notes
issued by the Parent Guarantor pursuant to the Senior Subordinated Note
Indenture.
"SETTLEMENT DATE" is defined in Section 3.4.
"SUBSIDIARIES" means the Subsidiaries of the Borrower.
"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 11.7(1).
"TOTAL INDEBTEDNESS RATIO AS OF A QUARTERLY DETERMINATION DATE" means, for
purposes of determining the Applicable Base Rate (Canada) Margin, the
Applicable Canadian Prime Rate Margin, the Applicable Drawing Fee and the
Applicable Eurodollar Rate Margin, the Total Indebtedness Ratio as of a
Quarterly Determination Date as defined in the Parent Guarantor Credit
Agreement. The calculation of the Total Indebtedness Ratio shall be set
forth in an attachment to the Quarterly Compliance Certificates delivered
pursuant to Section 8.1(a)(iii) covering the periods for which such
adjustments are applicable and shall be in form and substance, reasonably
satisfactory to the Agent.
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"U.S. DOLLARS" and "U.S. $" means lawful money of the United States of
America.
"U.S. GAAP" means generally accepted accounting principles in the United
States of America as in effect from time to time.
SECTION 1.2 GENDER AND NUMBER.
Any reference in the Credit Documents to gender includes all genders and
words importing the singular number only include the plural and vice versa.
SECTION 1.3 HEADINGS, ETC.
The provision of a Table of Contents, the division of this Agreement into
Articles and Sections and the insertion of headings are for convenient reference
only and are not to affect the interpretation of this Agreement.
SECTION 1.4 CURRENCY.
All references in the Credit Documents to dollars, unless otherwise
specifically indicated, are expressed in Canadian currency.
SECTION 1.5 CERTAIN PHRASES, ETC.
In any Credit Document (i) (y) the words "INCLUDING" and "INCLUDES" mean
"INCLUDING (OR INCLUDES) WITHOUT LIMITATION" and (z) the phrase "THE AGGREGATE
OF", "THE TOTAL OF", "THE SUM OF", or a phrase of similar meaning means "THE
AGGREGATE (OR TOTAL OR SUM), WITHOUT DUPLICATION, OF", and (ii) in the
computation of periods of time from a specified date to a later specified date,
unless otherwise expressly stated, the word "FROM" means "FROM AND INCLUDING"
and the words "TO" and "UNTIL" each mean "TO BUT EXCLUDING".
SECTION 1.6 ACCOUNTING TERMS.
All accounting terms not specifically defined in this Agreement shall be
interpreted in accordance with GAAP.
SECTION 1.7 RATEABLE PORTION OF ACCOMMODATIONS.
References in this Agreement to a Lender's rateable portion of Advances,
Drawings, Drafts, Banker's Acceptances and Letters of Credit or rateable share
of payments of principal, interest, Fees or any other amount, shall mean and
refer to a rateable portion or share as nearly as may be rateable in the
circumstances, as determined in good faith by the Agent. Each such
determination by the Agent shall be prima facie evidence of such rateable share.
SECTION 1.8 INCORPORATION OF SCHEDULES.
The schedules and exhibits attached to this Agreement shall, for all
purposes of this Agreement, form an integral part of it.
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SECTION 1.9 CONFLICT.
The provisions of this Agreement prevail in the event of any conflict or
inconsistency between its provisions and the provisions of any of the other
Credit Documents. To the extent the provisions of the agreements as to loans
and advances and security therefore dated of even date herewith made by the
Borrower to each of the Lenders for the purposes of s. 427 of the Bank Act
(Canada), conflict or are inconsistent with, or confer rights on the Lenders not
covered by this Agreement or the Borrower's Security Agreement, this Agreement
and such Security Agreement shall control, provided that such paramountcy shall
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not be effective upon the Obligations being declared, or becoming automatically,
immediately due and payable in accordance with the provisions of Section 9.2(a)
of this Agreement.
SECTION 1.10 CERTIFICATES.
Any certificate required by the terms of this Agreement or any Credit
Documents to be given by an officer of the Borrower or any Additional Loan Party
for and on behalf of the Borrower or any Additional Loan Party shall be given
without any personal liability on the part of the officer giving the
certificate.
ARTICLE 2
CREDIT FACILITY
SECTION 2.1 AVAILABILITY.
(1) Each Lender severally agrees, on the terms and conditions of this
Agreement, to make Accommodations rateably to the Borrower in accordance
with its Lender's Commitment. Accommodations shall be made available as
(i) Advances pursuant to Article 3, (ii) Bankers' Acceptances pursuant to
Article 4, and (iii) Letters of Credit pursuant to Article 5.
(2) 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
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." In addition, the
Agent, in its reasonable discretion, may establish and increase reserves
against Eligible Accounts and Eligible Rental Equipment to the extent that
the Borrower and the Designated Restricted Subsidiaries have not obtained
PPSA financing change discharge statements or similar termination
statements within 90 days after the Consummation Date for any Acquisition
with respect to each PPSA financing statement or other filing covering
assets to be acquired, directly or indirectly, by the Borrower or any
Designated Restricted Subsidiary in such Acquisition,
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as shown on the PPSA searches delivered in connection with such Acquisition
pursuant to Section 8.2(b)(vii) (other than filings certified by the
Borrower as evidencing Liens which are permitted by Section 8.2(d)(iii) and
which secure Indebtedness permitted by Section 8.2(c)(iv)).
(3) The Agent shall give each Lender prompt notice of any (i) Accommodation
Notice received from the Borrower and of each Lender's rateable portion of
any Accommodation, and (ii) other notice received by it from the Borrower
under the Agreement.
SECTION 2.2 COMMITMENTS AND FACILITY LIMITS.
(1) The Accommodations Outstanding to all Lenders under the Credit Facility
shall not at any time exceed the lesser of (i) the Commitment, and (ii) the
Borrowing Base (the "LENDING LIMIT"). The Accommodations Outstanding to
each Lender under the Credit Facility shall not at any time exceed the
lesser of (iii) the Lender's Commitment, and (iv) the Lender's Revolving
Credit Proportionate Share of the Borrowing Base.
(2) The Credit Facility shall revolve and no payment under the Credit Facility
shall reduce the Commitment or any Lender's Commitment.
(3) A conversion from one Type of Accommodation or Advance to another Type of
Accommodation or Advance shall not constitute a repayment or prepayment.
SECTION 2.3 USE OF PROCEEDS.
The Borrower shall use the proceeds of Accommodations under the Credit Facility
to provide a portion of the purchase price of substantially all the assets of
Fasco and for future Acquisitions and Capital Expenditures, together with
related fees and expenses and to provide working capital for the Borrower.
SECTION 2.4 MANDATORY REPAYMENTS AND REDUCTIONS OF COMMITMENTS.
(1) The Borrower shall repay (subject to Section 9.1) the Accommodations
Outstanding under the Credit Facility, together with all accrued interest
and Fees and all other amounts payable in connection with the Credit
Facility on the Relevant Repayment Date.
(2) Upon consummation of any Asset Sale, the Borrower and any Additional Loan
Party, as applicable, shall commit in writing within 240 days after the
consummation of such Asset Sale to reinvest the Net Cash Proceeds resulting
therefrom and/or reduce the Commitment and shall so reinvest such Net Cash
Proceeds or reduce the Commitment within 330 days after the consummation of
such Asset Sale, as follows: (i) the Borrower shall, and shall cause its
Subsidiaries to, reinvest such Net Cash Proceeds in Productive Assets or
(ii) unless the Borrower shall have provided to the Agent evidence
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reasonably satisfactory to the Agent of the reinvestment described in
clause (i) above prior to the date which is 330 days after the consummation
of such Asset Sale, the Commitment shall be automatically reduced as of the
330th day after such consummation in an amount equal to any such Net Cash
Proceeds not reinvested pursuant to clause (i) (and the Borrower shall make
any payment required by Section 2.5(1) after giving effect to such
reduction).
SECTION 2.5 MANDATORY PREPAYMENT WHERE BORROWING BASE DEFICIENCY.
(1) If, on any day, the Accommodations Outstanding under the Credit Facility
exceed the Lending Limit (based on the most recently delivered Borrowing
Base Certificate and the Equivalent Cdn. $ Amount of the Accommodations
Outstanding in U.S. Dollars on that day), the Borrower shall within 2
Business Days of such day (i) prepay Borrowings, or (ii) pay such amount to
the Agent and irrevocably authorize and direct the Agent to apply such
payment to Eurodollar Rate Advances or as a repayment of the Borrower's
reimbursement obligation in respect of any Drawings or Issues on the next
maturity date; such that the Accommodations Outstanding, after giving
effect to the payment, do not exceed the Lending Limit.
(2) The Borrower may designate in writing from time to time a Restricted
Subsidiary which is (i) a wholly-owned Subsidiary of the Borrower, and (ii)
incorporated under the laws of Canada or a province thereof, as a
participant in the calculation of the Borrowing Base (a "DESIGNATED
RESTRICTED SUBSIDIARY") with a view to increasing the amount of Eligible
Accounts and Eligible Rental Equipment supporting the availability of
Accommodations under this Agreement.
(3) Upon receipt of a designation as provided for in Section 2.5(2) and the
granting of the Security and delivery of the documents and opinions
contemplated by Section 2.5(2) the Restricted Subsidiary will become a
Designated Restricted Subsidiary for purposes of this Agreement.
SECTION 2.6 OPTIONAL PREPAYMENTS AND REDUCTIONS OF COMMITMENTS.
If the Borrower has, upon the number of Business Days' notice to the Agent
specified in Exhibit H, delivered a notice to the Agent stating the proposed
date and aggregate principal amount of any reduction of the Lenders' Commitment,
it shall, on that date, pay to the Lenders the amount, if any, by which the
Accommodations Outstanding under the Credit Facility exceed the proposed reduced
Commitment. Each reduction shall be in an aggregate principal amount of Cdn.
$1,000,000 and increments of Cdn. $500,000 in the case of Accommodations
denominated in Canadian Dollars, and in an aggregate principal amount of U.S.
$1,000,000 and increments of U.S. $500,000 in the case of Accommodations
denominated in U.S. Dollars. Each reduction shall reduce each Lender's
Commitment proportionately in accordance with its Revolving Credit Proportionate
Share. The Borrower shall
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prepay the amount of any Drawing only on the maturity date for the relevant BA
Instrument.
SECTION 2.7 FEES.
(1) The Borrower agrees to pay to the Agent for the account of the Lenders in
accordance with their Revolving Credit Proportionate Shares a fee (the
"UNUSED LINE FEE"), accruing at the rate of 0.25% per annum on the average
daily amount by which the Commitment at the close of business on such day
exceeds the sum of Accommodations Outstanding, for the period commencing on
the Effective Date and ending on the Relevant Repayment Date, such Unused
Line Fee being payable monthly, in arrears, commencing on the first day of
the calendar month immediately following the Effective Date and on the
Relevant Repayment Date.
(2) The Borrower shall pay to the Agent for the account of the Lenders on a
rateable basis, an upfront fee (the "UPFRONT FEE") accruing at the rate of
0.25% of the final allocated Commitment of each Lender, payable on the
Effective Date.
(3) The Borrower shall pay to the Agent such other fees as have been agreed in
a letter agreement dated July 28, 1998, between the Agent and the Borrower.
SECTION 2.8 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF ACCOUNT.
The Agent shall maintain an account on its books in the name of the
Borrower (the "LOAN ACCOUNT" of the Borrower) in which the Borrower will be
charged with all Accommodations Outstanding made by the Agent or the Lenders to
the Borrower or for the Borrower's account, including the Advances, Bankers
Acceptances, completed Drafts, 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 the Borrower or its
Designated Restricted Subsidiaries. The Agent shall send the 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 Borrower.
SECTION 2.9 PAYMENT PROCEDURES.
(1) MANNER AND TIME OF PAYMENT.
(a) Unless otherwise expressly provided in this Agreement, all payments of
principal of and interest on the Accommodations Outstanding and other
Obligations (including, without limitation, Fees and Expenses) and any
other payments required to be made by the Borrower under the Agreement
which are payable to the Agent, the Lenders or the
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Issue Lender 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. Toronto 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 Issue
Lender, as the case may be; and funds received by the Agent not later
than 1:00 P.M. Toronto 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. The Borrower shall make each such
payment (i) in Canadian Dollars, if the Accommodation or other
Obligation was originally made in or has been converted to Canadian
Dollars, and (ii) in U.S. Dollars, if the Accommodation or other
Obligation was originally made in or has been converted to U.S.
Dollars. Payments actually received by the Agent for the account of
the Lenders or the Issue Lender, or any of them, shall be paid to them
by the Agent promptly after receipt thereof.
(b) Unless otherwise expressly provided in this Agreement, the Agent shall
make Accommodations and other payments to the Borrower under this
Agreement by crediting the relevant Disbursement Account (or causing
such Disbursement Account to be credited) with the amount of the
payment on the date the payment is to be made.
(2) APPORTIONMENT AND APPLICATION OF PAYMENTS.
(a) Subject to the provisions of Sections 3.5, 2.9(2)(b), 2.9(2)(c) and
2.10, all payments of principal and interest in respect of
Accommodations Outstanding, 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 Issue Lender as are entitled
thereto, in proportion to their respective Revolving Credit
Proportionate Shares, or as otherwise provided herein;
(b) Except as provided in Section 2.9(2)(c) and subject to the provisions
of Section 2.10, all such payments and any other amounts received by
the Agent from or for the benefit of a Borrower shall be applied
first, (A) if such payment or amount is in respect of principal or
interest on the Accommodations Outstanding, to pay principal of and
interest on any portion of the Accommodations 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 or (B) second, to pay the principal of the
Accommodations Outstanding (or any installment thereof) advanced
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to the Borrower which are then due and payable in the order described
hereinbelow and interest on such Accommodations Outstanding then due
and payable, ratably, based on the then outstanding balances of such
Accommodations Outstanding, 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
Accommodations Outstanding shall be applied first, to repay
outstanding Floating Rate Advances, and then to repay outstanding
Eurodollar Rate Advances with those Eurodollar Rate Advances which
have earlier expiring Eurodollar Interest Periods being repaid prior
to those which have later expiring Eurodollar Interest Periods, and
then to repay any other unpaid Accommodations Outstanding then due and
payable;
(c) Except as provided in Section 9.5, upon the termination of the
Commitment or the acceleration of the Obligations pursuant to Section
9.2 and until such time, if any, as such termination or acceleration
has been rescinded pursuant to Section 9.3, all payments and all
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 (in its capacity as such)
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 Issue Lender (in its capacity as such) under any of the
Credit Documents; third, to the payment of any Fees, Expenses or
indemnification Obligations due and payable to the Lenders under any
of the Credit Documents, ratably, based on the outstanding balances of
such Fees, Expenses and indemnification Obligations; fourth, to the
payment of interest due on the Accommodations Outstanding, ratably, in
accordance with the Lenders' respective Revolving Credit Proportionate
Share; fifth, to the payment of principal due on the Accommodations
Outstanding, ratably, in accordance with the Lenders' respective
Revolving Credit Proportionate Shares; sixth, to the payment of all
other Obligations due and payable to the Lenders, ratably, based on
the outstanding balances of such Obligations; and seventh, to the
payment of all other Obligations owing to any of the Agent, the Issue
Lender or any Lender, ratably, based on the outstanding balances of
such Obligations; and
(d) Subject to Sections 2.10 and 3.4, the Agent shall promptly distribute
to each Lender and the Issue Lender at its primary address set forth
on the signature page of this Agreement or in the Assignment and
Assumption Agreement by which it became a Lender or the Issue
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Lender, or at such other address as such Person 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 such Person 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.
(3) CHARGING OF LOAN ACCOUNT. The Agent, in its sole discretion subject only
to the terms of Section 2.9(2)(c) and this Section 2.9(3), may pay from the
proceeds of Advances and BA Instruments made to the Borrower hereunder,
whether made following a request by the Borrower pursuant to Section 3.1 or
Article 4 or a deemed request for an Advance as provided in this Section
2.9(3), all interest, Fees, Expenses and other payments to be made to the
Lenders 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. The Borrower hereby
irrevocably authorizes the Lenders to make Advances, which Advances shall
be Canadian Prime Rate Advances for such Obligations denominated in
Canadian Dollars and Base Rate (Canada) Advances for such Obligations
denominated in U.S. Dollars, 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 Advances so made shall be deemed to
have been requested by it pursuant to Section 3.1 as of the date of the
aforementioned notice. The Agent shall request Advances on behalf of the
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 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 2.9(3). On the proposed Borrowing date for such Advance, the
Lenders shall make the requested Advance in accordance with the procedures
and subject to the conditions specified in Section 3.1(3). 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
Advances.
(4) PAYMENTS ON NON-BUSINESS DAYS. Whenever any payment to be made by the
Borrower hereunder 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
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"EURODOLLAR 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.
SECTION 2.10 DEFAULTING LENDERS.
(1) A Lender who fails to pay the Agent its Revolving Credit Proportionate
Share of Accommodations (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 and the Borrower shall pay such amounts within five
Business Days. In addition, the Defaulting Lender or the Borrower shall
pay the Agent interest on such amount for each day from the date it was
made available by the Agent to the Borrower to the date it is recovered by
the Agent at a rate per annum equal to (i) the prevailing interbank rate
for late payments, if paid by the Defaulting Lender or (ii) the then
applicable rate of interest calculated under Section 3.8, 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.
(2) The failure of any Lender to fund its Revolving Credit Proportionate Share
of Accommodations (including Agent Advances) shall not relieve any other
Lender of its obligation to fund its Revolving Credit Proportionate Share
of Accommodations. Conversely, no Lender shall be responsible for the
failure of another Lender to fund its Revolving Credit Proportionate Share
of Accommodations.
(3) The Agent shall not be obligated to transfer to a Defaulting Lender any
payments made by the Borrower or any Additional Loan 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 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 Revolving Credit 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 2.10 shall remain effective with respect to such Lender until
the earlier of (w) such Lender shall have cured such default, (x) the
Obligations under this Agreement shall have been declared or shall have
become
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immediately due and payable, (y) the Commitment shall have been terminated
or (z) the Majority Lenders, the Agent and the Borrower shall have waived
such Lender's default in writing. The operation of this Section 2.10 shall
not be construed to increase or otherwise affect the Commitment of any
Lender, or relieve or excuse the performance by the Borrower or any
Additional Loan Party of its duties and obligations hereunder.
SECTION 2.11 SHARING OF PAYMENTS.
Subject to Sections 2.10 and 2.9(2), if any Lender obtains any payment in
excess of its Revolving Credit Proportionate Share, as applicable, of payments
on account of the Accommodations Outstanding owing to such Lender, or interest
thereon, it will immediately purchase, without warranty or recourse, from the
other Lenders, as applicable, an undivided interest and participation (which it
shall be deemed to have done simultaneously upon the receipt of such payment) in
their respective Accommodations Outstanding, as applicable, sufficient to cause
that Lender to share the excess payment ratably with all the other Lenders, as
applicable; 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
Borrower and the Additional Loan Parties agree that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.11 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 Borrower and the
Additional Loan parties in the amount of such participation.
SECTION 2.12 COLLECTION OF ACCOUNTS.
The Borrower shall, and shall cause each of its Designated Restricted
Subsidiaries to, 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 the Borrower
shall, and shall cause each of its Designated Restricted Subsidiaries to, 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). The Borrower, its Designated Restricted Subsidiaries, the Agent and
the financial institutions selected by the Borrower and acceptable to the Agent
(the "LOCKBOX BANKS") shall enter into agreements substantially in the form of
Exhibit I, 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") at a Lockbox Bank; provided, however, that from the date on which the
Borrower or a Designated Restricted Subsidiary opens
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for business (whether through an Acquisition or otherwise) a new rental yard in
an area not previously served by a rental yard of the Borrower or a Designated
Restricted Subsidiary until the earlier of (i) the 120th day thereafter and (ii)
the date a Lockbox for such new rental yard is established, the Borrower or such
Designated Restricted Subsidiary may maintain accounts into which the Borrower
or such Designated Restricted Subsidiary deposits Collections and proceeds of
Collateral for the new rental yard (individually, a "RESTRICTED ACCOUNT" and
collectively, the "RESTRICTED ACCOUNTS") with the financial institutions
selected by the Borrower and acceptable to the Agent (the "RESTRICTED ACCOUNT
BANKS"), and, within 15 Business Days after the opening of any such Restricted
Account, the Borrower or such Designated Restricted Subsidiary, as the case may
be, the Agent and such financial institutions shall enter into agreements with
respect to the respective Restricted Accounts substantially in the form of
Exhibit J (the "RESTRICTED ACCOUNT AGREEMENTS"). All Collections and other
amounts received or receivable by the Borrower or a Designated Restricted
Subsidiary 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 the
Borrower or such Designated Restricted Subsidiary. 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 the Borrower or a Designated Restricted Subsidiary shall be
wired each Business Day into the Borrower's concentration account maintained by
the Agent with the Disbursement Bank (such concentration account or such other
account as the Agent may approve in writing, the "CONCENTRATION ACCOUNT"). All
amounts received in the Concentration Account from the Lockbox Banks or the
Restricted Account Banks, in each case of the Borrower or a Designated
Restricted Subsidiary, shall be credited to the account of such Borrower and
applied and apportioned in accordance with Section 2.9. All Collections and
other proceeds of Collateral which are received directly by the Borrower or a
Designated Restricted Subsidiary shall be deemed to have been received by the
Borrower or such Designated Restricted Subsidiary as the Agent's trustee and,
upon the Borrower's or such Designated Restricted Subsidiary's receipt thereof,
such Person shall immediately transfer or cause to be transferred, all such
amounts into such Person's Collection Accounts (or, with respect to rental yards
for which a Lockbox has not yet been established, into such Person'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.
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SECTION 2.13 COMPUTATIONS OF INTEREST AND FEES.
(1) All computations of interest shall be made by the Agent taking into account
the actual number of days occurring in the period for which such interest
is payable and (i) if based on the Canadian Prime Rate, on the basis of a
year of 365 days, or (ii) if based on the Base Rate (Canada) or the
Eurodollar Rate, on the basis of a year of 360 days.
(2) All computations of Fees shall be made by the Agent on the basis of a year
of 360 days taking into account the actual number of days (including the
first day but excluding the last day) occurring in the period for which the
fees are payable.
(3) For purposes of the Interest Act (Canada), (i) whenever any interest or Fee
under this Agreement is calculated using a rate based on a year of 360 days
or 365 days, as the case may be, the rate determined pursuant to such
calculation, when expressed as an annual rate, is equivalent to (x) the
applicable rate based on a year of 360 days or 365 days, as the case may
be, (y) multiplied by the actual number of days in the calendar year in
which the period for which such interest or fee is payable (or compounded)
ends, and (z) divided by 360 or 365, as the case may be, (ii) the principle
of deemed reinvestment of interest does not apply to any interest
calculation under this Agreement, and (iii) the rates of interest
stipulated in this Agreement are intended to be nominal rates and not
effective rates or yields.
ARTICLE 3
ADVANCES
SECTION 3.1 THE ADVANCES.
(1) GENERALLY. Each Lender severally agrees, on the terms and conditions of
this Agreement, to make Advances to the Borrower under the Credit Facility,
from time to time on any Business Day prior to the Relevant Repayment Date.
Advances may be made available to the Borrower upon request (or deemed
request) by the Lenders pursuant to Section 3.1(3) ("LENDER ADVANCES") and
by the Agent acting on behalf of the Lenders pursuant to Section 3.1(2)
("AGENT ADVANCES"). Except as provided in Sections 3.1(2)(ii), 2.9(3), 3.6
and 3.7, all Borrowings shall be made only after receipt by the Agent of a
Notice of Borrowing, (i) not later than 1:00 P.M. Toronto time on the
Business Day prior to the proposed Borrowing date with respect to Lender
Advances of Canadian Prime Rate Advances and Base Rate (Canada) Advances
made after the Effective Date, (ii) not later than 1:00 P.M. Toronto time
on the third Business Day prior to the proposed Borrowing date with respect
to Lender Advances of Eurodollar Rate Advances after the Effective Date and
(iii) not later than 1:00 P.M. Toronto time on the Business Day prior to
the proposed Borrowing date with respect to Agent Advances of Canadian
Prime Rate
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Advances and Base Rate (Canada) Advances made after the Effective Date,
(ii) not later than 1:00 P.M. Toronto time on the third Business Day prior
to the proposed Borrowing date with respect to Lender Advances of
Eurodollar Rate Advances after the Effective Date and (iii) not later than
1:00 P.M. Toronto time on the Business Day prior to the proposed Borrowing
date with respect to Agent Advances of Canadian Prime Rate Advances and
Base Rate (Canada) Advances made after the Effective Date. Each Borrowing
shall, unless otherwise specifically provided herein, consist entirely of
the same Types of Advances made to the Borrower on the same day rateably by
the Lenders in accordance with their Revolving Credit Proportionate Shares.
Each Borrowing of Canadian Prime Rate Advances and Base Rate (Canada)
Advances for the Borrower requesting that Advances be made as, or converted
into, Canadian Prime Rate Advances and Base Rate (Canada) Advances, as the
case may be, shall be in an aggregate principal amount of not less than
$500,000 or an integral multiple of $100,000 in excess thereof. Each
Borrowing of Eurodollar Rate Advances for the Borrower requesting that
Advances be made or continued as, or converted into, Eurodollar Rate
Advances with the same Eurodollar Interest Period shall be in an aggregate
principal amount of not less than $1,000,000 or an integral multiple of
$500,000 in excess thereof. Subject to the foregoing limits, the Borrower
may request one or more Borrowings of Prime Rate Advances on the same
Business Day, but may request only one Borrowing of Eurodollar Rate
Advances (excluding continuations of Eurodollar Rate Advances) for any
Business Day;
(2) AGENT ADVANCES. 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 Canadian Prime Rate Advances or Base Rate
(Canada) Advances within the applicable time limits set forth in Section
3.1(1) 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 Canadian Prime Rate Advances or Base
Rate (Canada) Advances and may be made, at the election of the Agent,
without regard to the minimum principal amounts in Section 3.1(1). Agent
Advances will be subject to periodic settlement with the Lenders under
Section 3.4. For administrative convenience, the Agent may, but is not
obligated to, make Agent Advances in reliance upon the Borrower's actual or
deemed representations under Section 6.2 that the conditions for Borrowing
are satisfied. If the conditions for Borrowing under Section 6.2 cannot be
fulfilled, the Borrower 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
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fulfilled, no additional notice with respect to the same circumstances will
be effective to commence a new Agent Advance Period; and
(3) LENDER ADVANCES. If the Agent receives a Notice of Borrowing within the
applicable time limits for Lender Advances pursuant to Section 3.1(1) 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.
Subject to the reasonable determination by the Agent and Lenders that the
applicable conditions for borrowing contained in Article 6 are satisfied,
each Lender shall make available to the Agent at the Agent's address
specified on the signature page of this Agreement its Revolving Credit
Proportionate Share of such Borrowing in immediately available funds no
later than 2:00 P.M. Toronto 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 Revolving Credit Proportionate Share of the Borrowing
and in reliance upon that assumption, but without any obligation to do so,
may advance such Revolving Credit Proportionate Share on behalf of the
Lender.
SECTION 3.2 DISBURSEMENT OF ADVANCES.
The proceeds of Advances shall be transmitted by the Agent (i) to the
Disbursement Account upon advice received by the Agent from the Disbursement
Account Bank, as described in Section 3.1(2)(ii), directly to the Disbursement
Account, (ii) in the circumstances described in Section 5.5 directly to the
Issue Lender, (iii) in the circumstances described in Section 2.9(3), directly
to the applicable Lender and (iv) in all other circumstances, as requested by
the Borrower in its Notice of Borrowing.
SECTION 3.3 NOTICES OF BORROWING.
(1) GENERALLY. 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. Toronto time on the same
day. Once given, a Notice of Borrowing that requests a Lender Advance is
irrevocable by and binding on the Borrower.
(2) ADVANCES. Each Notice of Borrowing with respect to Advances 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
all Accommodations Outstanding of the Borrower as of the date of such
Notice of Borrowing, (iv) whether the proposed Borrowing will consist of
Agent Advances or Lender Advances, (v) the Type of Advances comprising the
Borrowing, together with the aggregate principal amount of all Advances of
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the Type requested by the Borrower to be made or continued as, or converted
into, Advances of such Type on the proposed Borrowing date, (vi) in the
case of Eurodollar Rate Advances, the requested Eurodollar Interest Period,
(vii) instructions for the disbursement of the proceeds of the proposed
Borrowing and (viii) whether the conditions for the requested Borrowing are
satisfied.
SECTION 3.4 PERIODIC SETTLEMENT OF AGENT ADVANCES AND REPAYMENTS.
(1) THE SETTLEMENT DATE. The amount of each Lender's Revolving Credit
Proportionate Share of Advances shall be computed weekly (or more
frequently in the Agent's discretion) and shall be adjusted upward or
downward based on all Advances (including Agent Advances) and repayments
received by the Agent as of 5:00 P.M. Toronto time on the last Business Day
of the period specified by the Agent (such date, the "SETTLEMENT DATE").
(2) 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 Advances (including Agent Advances) for the
period and the amount of repayments received for the period. As reflected
on the summary statement, subject to Section 2.10, 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 Revolving Credit Proportionate Share of
repayments received by the Agent during the period covered by the summary
statement), the amount of Advances made by each Lender shall be equal to
such Lender's Revolving Credit Proportionate Share of the aggregate amount
of Advances 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 Toronto time on a Business Day, such transfers
shall be made in immediately available funds no later than 3:00 P.M.
Toronto time that day; and, if received after 12:00 Noon Toronto time, then
no later than 3:00 P.M. Toronto 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.
(3) DISTRIBUTION OF INTEREST AND UNUSED LINE FEES. Interest on the Advances
(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
Revolving Credit Proportionate Share of Advances actually advanced by and
repaid to each Lender, and shall accrue from the date such Advances are so
advanced and to the date such Advances are either repaid by the Borrower or
actually settled under this Section 3.4. Promptly after the end of each
month, the Agent shall distribute to each Lender its Revolving Credit
Proportionate Share of the interest and Unused Line Fee accrued and paid
(or deemed paid)
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to the Agent during that month; provided, however, that the Agent shall
distribute interest on Eurodollar Rate Advances promptly after it is
received.
SECTION 3.5 AUTHORIZED OFFICERS AND AGENTS.
On the Effective Date, the Borrower shall deliver, and from time to time
thereafter the Borrower may deliver, to the Agent a certificate setting forth
the names of the officers, employees and agents authorized to request
Accommodation for the Borrower and to request a conversion or continuation of
any Accommodation, 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 Borrower in respect of all other matters
relating to the Credit Documents. The Agent, Lenders and Issue Lender shall be
entitled to rely conclusively on such officer's, employee's, or agent's
authority to request any such Accommodation, conversion or continuation until
the Agent receives written notice to the contrary. None of the Agent, any
Lender or the Issue Lender shall have any duty to verify the authenticity of the
signature appearing on any such certificate, written Notice of Borrowing, notice
of conversion, notice of continuation, or any other document, and, with respect
to an oral request for such Accommodation, conversion or 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 Borrower. None of the Agent, any
Lender or the Issue Lender shall incur any liability to the Borrower or any
other Person in acting upon any telephonic or facsimile notice referred to above
which the Agent, such Lender, or the Issue Lender believes to have been given by
a duly authorized officer or other person authorized to borrow on behalf of a
Borrower.
SECTION 3.6 CONVERSIONS AND ELECTIONS REGARDING ADVANCES.
(1) Each Advance shall initially be the Type of Advance specified in the
applicable Notice of Borrowing and shall bear interest at the rate
applicable to that Type of Advance until (i) in the case of a Eurodollar
Rate Advance, the end of the initial Eurodollar Interest Period specified
in the Borrowing Notice, (ii) in the case of a Floating Rate Advance, the
date on which the Advance is repaid in full or is changed to another Type
of Advance pursuant to Section 3.6(2) or (iii) in the case of any Advance,
it is converted to another Type of Accommodation pursuant to Section
3.6(2).
(2) The Borrower may elect to (i) change any Advance to another Type of Advance
in accordance with Section 3.6(3) or convert an Advance to another Type of
Accommodation upon the number of days notice specified in Exhibit K (y) in
the case of a Floating Rate Advance, as of any Business Day, and (z) in the
case of a Eurodollar Advance, as of the last day of the Eurodollar Interest
Period applicable to the Eurodollar Rate Advance and in a principal amount
equal to its equivalent currency amount (as determined by
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the Agent as of the date of the Accommodation Notice in accordance with the
relevant definitions of Equivalent Cdn. $ Amount and Equivalent U.S. $
Amount), or (ii) continue any Eurodollar Rate Advance for a further
Eurodollar Interest Period beginning on the last day of the then current
Eurodollar Interest Period in accordance with Section 3.6(3).
(3) Each election to change from one Type of Advance to another Type of Advance
or to continue a Eurodollar Rate Advance for a further Eurodollar Interest
Period shall be made on the number of days prior notice specified in
Exhibit K given, in each case, not later than 10:30 a.m. (Toronto time) by
the Borrower to the Agent. Each such notice (an "ELECTION NOTICE") shall
be given substantially in the form of Exhibit K and shall be irrevocable
and binding upon the Borrower. If the Borrower fails to deliver an
Election Notice to the Agent for any Eurodollar Rate Advance as provided in
this Section 3.6(3) the Eurodollar Rate Advance shall be converted (as of
the last day of the applicable Eurodollar Interest Period) to and be
outstanding as a Base Rate (Canada) Advance. The Borrower shall not select
a Eurodollar Interest Period which conflicts with the definition of
Eurodollar Interest Period in Section 1.1 or, in the opinion of the Agent,
with the repayment schedule in Section 2.4.
SECTION 3.7 CIRCUMSTANCES REQUIRING PRIME RATE PRICING.
If (i) by reason of circumstances affecting financial markets generally,
deposits of U.S. Dollars are unavailable to the Lenders in Canada, (ii) adequate
and fair means do not exist for ascertaining the applicable interest rate on the
basis provided in the definition of Eurodollar Rate or Base Rate (Canada), as
the case may be, (iii) the making or continuation of any U.S. Dollar Advances
has been made impracticable or unlawful (y) by the occurrence of a contingency
(other than a mere increase in rates payable by the Lender to fund the Advances)
affecting financial markets or institutions generally and which materially
adversely affects the funding of the Credit Facility at any interest rate
computed on the basis of the Eurodollar Rate or the Base Rate (Canada), as the
case may be, or (y) by reason of a change since the date of this Agreement in
any applicable law, order, treaty or official direction, or in the
interpretation thereof by any Governmental Entity (whether or not having the
force of law but, if not having the force of law, one with which a responsible
Canadian chartered bank would comply) affecting financial markets or
institutions generally and which results in the Eurodollar Rate or the Base Rate
(Canada), as the case may be, no longer representing the effective cost to the
Lenders of deposits in the market, then:
(a) The right of the Borrower to select any affected Type of Advance shall
be suspended until the circumstances causing the suspension no longer
exist and the Agent so notifies the Borrower;
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(b) If any affected Type of Advance is not yet outstanding, any applicable
Accommodation Notice shall be cancelled and the requested Advance
shall not be made;
(c) If a Eurodollar Rate Advance is already outstanding at any time when
the right of the Borrower to select Eurodollar Rate Advances is
suspended, it and all other Eurodollar Rate Advances in the same
Borrowing shall become Base Rate (Canada) Advances on the last day of
the then current Interest Period (or on such earlier date as may be
required to comply with any applicable law, rule, regulation, judgment
or order) or, if the Borrower does not have the right to select Base
Rate (Canada) Advances at such time, the Eurodollar Rate Advance shall
become a Canadian Prime Rate Advance on the last day of the then
current Eurodollar Interest Period applicable to it (or on such
earlier date as may be required to comply with any applicable law,
rule, regulation, judgment or order) in a principal amount equal to
the Equivalent Cdn. $ Amount of the Eurodollar Rate Advance determined
on the date on which the Advance becomes denominated in Canadian
Dollars; and
(d) If any U.S. Dollar Advance is already outstanding at any time when the
right of the Borrower to select U.S. Dollar Advances is suspended, it
and all other U.S. Dollar Advances included in the same Borrowing
shall become Canadian Prime Rate Advances (i) in the case of a
Eurodollar Rate Advance, on the last day of the then current
Eurodollar Interest Period (or on such earlier date as may be required
to comply with any applicable law, rule or regulation), and (ii) in
the case of a Base Rate (Canada) Advance, immediately, in a principal
amount equal, in each case, to the Equivalent Cdn. $ Amount of the
related U.S. Dollar Advance determined on the date on which the
Advance becomes denominated in Canadian Dollars.
SECTION 3.8 INTEREST ON ADVANCES.
(1) The Borrower shall pay interest on the unpaid principal amount of each
Advance from the date of the Advance until the principal amount of the
Advance is repaid in full, at the following rates per annum:
(a) If and so long as the Advance is a Canadian Prime Rate Advance, at a
rate per annum equal at all times to the sum of the Canadian Prime
Rate in effect from time to time plus the Applicable Canadian Prime
Rate Margin;
(b) If and so long as the Advance is a Base Rate (Canada) Advance, at a
rate per annum equal at all times to the Base Rate (Canada) in effect
from time to time plus the Applicable Base Rate (Canada) Margin;
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(c) If and so long as the Advance is a Eurodollar Rate Advance, at a rate
per annum equal, at all times during each Eurodollar Interest Period
for such Eurodollar Rate Advance, to the sum of the Eurodollar Rate
for such Eurodollar Interest Period plus the Applicable Eurodollar
Rate Margin; and
(d) Interest on Canadian Prime Rate Advances and Base Rate (Canada)
Advances shall be calculated and payable in arrears (i) on the first
Business Day of each month, and (ii) when the Advance becomes due and
payable in full, is repaid, or is converted to another Type of Advance
or Accommodation. Interest on Eurodollar Rate Advances shall be
calculated and payable (iii) on the ninetieth day, if any, of the
Eurodollar Interest Period, and (iv) on the last day of the Eurodollar
Interest Period.
ARTICLE 4
BANKERS' ACCEPTANCES
SECTION 4.1 ACCEPTANCES AND DRAFTS.
(1) Each Lender severally agrees, on the terms and conditions of this Agreement
and from time to time on any Business Day prior to the Relevant Repayment
Date (i) in the case of the Lender which is willing and able to accept
Drafts, to create acceptances ("BANKERS' ACCEPTANCES") by accepting Drafts
and to purchase such Bankers' Acceptances in accordance with Section
4.3(2), (ii) in the case of the Lender which is unwilling or unable to
accept Drafts, to purchase completed Drafts (which have not and will not be
accepted by the Lender or any other Lender) in accordance with Section
4.3(2), (iii) in the case of the Lender which has participated or assigned
all or any part of its interest in the Credit Facility to a Participant
which is willing and able to accept Drafts, to arrange for the creation of
Bankers' Acceptances by such Participant and for their purchase by such
Participant, to the extent of the participation or assignment, in
accordance with Section 4.3(2), and(iv) in the case of the Lender which has
participated or assigned all or any part of its interest in the Credit
Facility to a Participant which is unwilling or unable to accept Drafts, to
arrange for the purchase by the Participant of completed Drafts (which have
not and will not be accepted by such Lender or any other Lender), to the
extent of the participation or assignment, in accordance with Section
4.3(2).
(2) Each Drawing shall be in a minimum Face Amount and in an integral multiple
of the amount in Section 4.2 and shall consist of the creation and purchase
of Bankers' Acceptances or the purchase of Drafts on the same day, in each
case for the Drawing Price, effected or arranged by the Lenders in
accordance with Section 4.3 and their respective Lender's Commitment.
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(3) If the Agent determines that the Bankers' Acceptances to be created and
purchased or Drafts to be purchased on any Drawing (upon a conversion or
otherwise) will not be created and purchased rateably by the Lenders (or
any of their respective Participants) in accordance with Section 4.1(2) and
Section 4.3, then the requested Face Amount of Bankers' Acceptances and
Drafts shall be reduced to such lesser amount as the Agent determines will
permit rateable sharing and the amount by which the requested Face Amount
shall have been so reduced shall be converted or continued, as the case may
be, as a Canadian Prime Rate Advance under the Credit Facility to be made
contemporaneously with the Drawing.
SECTION 4.2 FORM OF DRAFTS.
Each Draft presented by the Borrower shall (i) be in a minimum amount of
Cdn. $1,000,000 and in an integral multiple of Cdn. $100,000, (ii) be dated the
date of the Drawing, and (iii) mature and be payable by the Borrower (in common
with all other Drafts presented in connection with such Drawing) on a Business
Day which occurs approximately 30, 60, 90 or 180 days (or longer period with the
consent of the Agent) at the election of the Borrower after the Drawing Date and
on or prior to the Relevant Repayment Date.
SECTION 4.3 PROCEDURE FOR DRAWING.
(1) Each Drawing shall be made on notice (a "DRAWING NOTICE") given by the
Borrower to the Agent not later than 11:00 a.m. (Toronto time) on the third
business day prior to the day of the proposed drawing. Each Drawing Notice
shall be in substantially the form Exhibit L, shall be irrevocable and
binding on the Borrower and shall specify (i) the Drawing Date, (ii) the
aggregate Face Amount of Drafts to be accepted and purchased (or purchased,
as the case may be), and (iii) the contract maturity date for the Drafts.
(2) Not later than 2:00 p.m. (Toronto time) on an applicable Drawing Date, each
Lender shall complete one or more Drafts in accordance with the Drawing
Notice and either accept the Drafts and purchase the Bankers' Acceptances
so created for the Drawing Price, or purchase the Drafts for the Drawing
Price. In each case, upon receipt of the Drawing Price and upon fulfilment
of the applicable conditions set forth in Article 6, the Agent shall make
funds available to the Borrower in accordance with Article 2.
(3) The Borrower shall, at the request of the Lender, issue one or more non-
interest bearing promissory notes (each a "BA EQUIVALENT NOTE") payable on
the date of maturity of the unaccepted Draft referred to below, in such
form as the Lender may specify and in a principal amount equal to the Face
Amount of, and in exchange for, any unaccepted Drafts which the Lender has
purchased or has arranged to have purchased in accordance with Section
4.3(2).
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(4) Bankers' Acceptances purchased by the Lender may be held by it for its own
account until the contract maturity date or sold by it at any time prior to
that date in any relevant Canadian market in such Person's sole discretion.
SECTION 4.4 PRESIGNED DRAFT FORMS.
To enable the Lenders and Participants to create Bankers' Acceptances or
complete Drafts in the manner specified in this Article 4, the Borrower shall in
accordance with the request of each Lender either (i) provide a power of
attorney to complete, sign, endorse and issue Bankers' Acceptances,
substantially in the form of Exhibit M; or (ii) supply each Lender with such
number of Drafts as it may reasonably request, duly endorsed and executed on
behalf of the Borrower. Each Lender will exercise such care in the custody and
safekeeping of Drafts as it would exercise in the custody and safekeeping of
similar property owned by it and will, upon request by the Borrower, promptly
advise the Borrower of the number and designations, if any, of uncompleted
Drafts held by it for the Borrower. The signature of any officer of the
Borrower on a Draft may be mechanically reproduced and BA Instruments bearing
facsimile signature shall be binding upon the Borrower as if they had been
manually signed. Even if the individuals whose manual or facsimile signature
appears on any BA Instrument no longer hold office at the date of signature, at
the date of its acceptance by the Lender or at any time after such date, any BA
Instrument so signed shall be valid and binding upon the Borrower.
SECTION 4.5 PAYMENT, CONVERSION OR RENEWAL OF BA INSTRUMENTS.
(1) Upon the maturity of a BA Instrument, the Borrower may (i) elect to issue a
replacement BA Instrument by giving a Drawing Notice in accordance with
Section 4.3(1), (ii) elect to have all or a portion of the Face Amount of
the BA Instrument converted to an Advance by giving a Notice of Borrowing
in accordance with Section 3.3, or (iii) pay, on or before 10:00 a.m.
(Toronto time) on the maturity date for the BA Instrument, an amount in
Canadian Dollars equal to the Face Amount of the BA Instrument
(notwithstanding that the Lender may be the holder of it at maturity). Any
such payment shall satisfy the Borrower's obligations under the BA
Instrument to which it relates and the relevant Lender or Participant shall
then be solely responsible for the payment of the BA Instrument.
(2) If the Borrower fails to pay any BA Instrument when due or issue a
replacement in the Face Amount of such BA Instrument pursuant to Section
4.5(1), the unpaid amount due and payable shall be converted to a Canadian
Prime Rate Advance made by the Lenders rateably under the applicable Credit
Facility and shall bear interest calculated and payable as provided in
Article 3. This conversion shall occur as of the due date and without any
necessity for the Borrower to give a Notice of Borrowing.
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SECTION 4.6 CIRCUMSTANCES MAKING BANKERS' ACCEPTANCES UNAVAILABLE.
(1) If, by reason of circumstances affecting the money market generally, there
is no market for Bankers' Acceptances (i) the right of the Borrower to
request a Drawing shall be suspended until the circumstances causing a
suspension no longer exist, and (ii) any Drawing Notice which is
outstanding shall be deemed to be a Notice of Borrowing requesting a
Borrowing comprised of Canadian Prime Rate Advances.
(2) The Agent shall promptly notify the Borrower of the suspension of the
Borrower's right to request a Drawing and of the termination of any
suspension.
ARTICLE 5
LETTERS OF CREDIT
SECTION 5.1 LETTERS OF CREDIT.
(1) The Issue Lender severally agrees, on the terms and conditions of this
Agreement and in reliance on the agreements of the other Lenders set forth
in Sections 5.4, 5.5 and 5.6, to issue Letters of Credit under the Credit
Facility for the account of the Borrower from time to time on any Business
Day prior to the fifth Business Day before the Relevant Repayment Date.
(2) The Issue Lender shall not be obligated to issue any Letter of Credit if
(i) the issuance of the requested Letter of Credit would cause the Letter
of Credit Obligations then outstanding to exceed Cdn. $2,000,000.00, or
(ii) the 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 Issue Lender any material
restriction, reserve, capital requirement, loss, cost or expense (for which
the Agent or the Issue Lender is not otherwise compensated) not in effect
or known as of the Effective Date.
SECTION 5.2 PROCEDURE FOR ISSUE.
(1) Each Issue shall be made on notice (an "ISSUE NOTICE") given by the
Borrower to the Agent not later than 11:00 a.m. (Toronto time) on the
number of days notice specified in Exhibit N. The Issue Notice shall be in
substantially the form of Exhibit N shall be irrevocable and binding on the
Borrower and shall specify (i) the requested date of Issue (the "ISSUE
DATE"), (ii) the Face Amount of the Letter of Credit, (iii) the expiration
date, and (iv) the name and address of the Beneficiary. The Borrower shall
not request any maturity date for any Letter of Credit which would be later
than 5 Business Days prior to the
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Relevant Repayment Date. The Agent shall, upon receipt of an Issue Notice,
provide a copy of the Issue Notice to the Issue Lender.
(2) Not later than 11:00 a.m. (Toronto time) on the Issue Date, the Issue
Lender shall issue a Letter of Credit completed in accordance with the
Issue Notice in the appropriate form. Upon receipt of the Letter of Credit
and upon fulfilment of the conditions set forth in Article 6, the Agent
shall deliver the Letter of Credit to or to the order of the Borrower.
(3) No Letters of Credit shall require that payment against a conforming draft
is to be made on the same Business Day upon which the draft was presented,
unless such presentation is made before 11:00 a.m. (Toronto time) on such
Business Day.
(4) Prior to the Issue Date, the Borrower shall provide a precise description
of the documents and the verbatim text of any certificates to be presented
by the Beneficiary which, if presented by the Beneficiary, would require
the Issue Lender, to make payment under the Letters of Credit. The Issue
Lender may, acting reasonably, require changes in any such document or
certificate for a Letter of Credit issued by it.
SECTION 5.3 FORM OF LETTERS OF CREDIT.
Each Letter of Credit (i) shall be dated the Issue Date, (ii) shall have an
expiration date on a Business Day which occurs no more than 360 days after the
Issue Date (but may be subject to renewal), and (iii) shall comply with the
definition of Letters of Credit.
SECTION 5.4 REVOLVING CREDIT 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 Issue Lender, 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 Issue Lender) in accordance with such
Lender's Revolving Credit Proportionate Share.
SECTION 5.5 REIMBURSEMENTS OF AMOUNTS DRAWN.
Upon notice from the Issue Lender of any drawing under any Letter of
Credit, the Agent shall notify the Borrower of such drawing not later than 11:00
a.m. (Toronto time) on the Business Day immediately prior to the date on which
the Issue Lender intends to honour such drawing, provided that the Agent's
failure to notify the Borrower shall not affect the obligations of the Borrower
hereunder. The Borrower will be deemed to have concurrently given a Notice of
Borrowing to the Agent pursuant to Section 3.2 for (i) a Canadian Prime Rate
Advance, in the case of a Letter of Credit denominated in Canadian Dollars, and
(ii) a Base Rate (Canada)
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Advance, in the case of a Letter of Credit denominated in U.S. Dollars, in each
case, in the amount of and at the time of such drawing, which Advances shall not
be subject to the conditions set forth in Section 6.2. The proceeds of such
Advances shall be applied directly by the Agent to reimburse the Issue Lender
for the amount of such drawing.
SECTION 5.6 PAYMENT BY LENDERS.
If the Advances referred to in Section 5.5 are not made in an amount
sufficient to reimburse the Issue Lender in full for the amount of any draw, the
Agent shall promptly notify each Lender 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 Issue Lender, the
amount of its participation in immediately available funds not later than 1:00
P.M. Toronto time on the next Business Day. If any Lender fails to make
available to the Agent the amount of such Lender's participation, the Issue
Lender shall be entitled to recover such amount on demand from such Lender
together with interest at the prevailing interbank rate for the first three
Business Days and thereafter at the Canadian Prime Rate in the case of a Letter
of Credit denominated in Canadian Dollars and at the Base Rate (Canada) in the
case of a Letter of Credit denominated in U.S. Dollars. For each Letter of
Credit, the Agent shall promptly distribute to each Lender which has funded the
amount of its participation its Revolving Credit Proportionate Share of all
payments subsequently received by the Agent from the Borrower in reimbursement
of honored drawings, including any interest thereon. If an Issue Lender
receives any such payment, the Issue Lender shall promptly pay the same to the
Agent, and the Agent shall distribute such payment in accordance with the
immediately preceding sentence.
SECTION 5.7 RISK OF LETTERS OF CREDIT.
(1) In determining whether to pay under a Letter of Credit, each Lender and the
Issue Lender shall be responsible only to determine that the documents and
certificates required to be delivered under the Letters of Credit have been
delivered and that they comply on their face with the requirements of the
Letter of Credit.
(2) The reimbursement obligation of the Borrower under any Letter of Credit
shall be unconditional and irrevocable and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances,
including (i) any lack of validity or enforceability of a Letter of Credit,
(ii) the existence of any claim, set-off, defence or other right which the
Borrower may have at any time against a Beneficiary, the Issue Lender or
any other Person, whether in connection with the Credit Documents and the
transactions contemplated therein or any other transaction (including any
underlying transaction between the Borrower and the Beneficiary), (iii) any
certificate or other document presented with a Letter of Credit proving to
be forged, fraudulent
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or invalid or any statement in it being untrue or inaccurate, (iv) the
existence of any act or omission or any misuse of, a Letter of Credit or
misapplication of proceeds by the Beneficiary, including any fraud in any
certificate or other document presented with a Letter of Credit in each
case (unless, before payment of a Letter of Credit, (x) the Borrower has
delivered to the Issue Lender a written notice of the fraud together with a
written request that it refuse to honour such drawing, (y) the fraud by the
Beneficiary has been established to the knowledge of the Issue Lender so as
to make the fraud clear or obvious to the Issue Lenders, and (z) in the
case of fraud in the underlying transaction between the Borrower and the
Beneficiary, the fraud is of such character as to make the demand for
payment by the Beneficiary under the Letter of Credit a fraudulent one),
(v) payment by the Issue Lender under the Letter of Credit against
presentation of a certificate or other document which does not comply with
the terms of the Letter of Credit unless such payment constitutes gross
negligence or wilful misconduct of the Issue Lender, or (vi) the existence
of a Default or Event of Default.
(3) The Issue Lender shall not be responsible for (i) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits under it or
proceeds of it, in whole or in part, which may prove to be invalid or
ineffective for any reason, (ii) errors, omissions, interruptions or delays
in transmission or delivery of any messages by mail, facsimile or
otherwise, (iii) errors in interpretation of technical terms, (iv) any loss
or delay in the transmission of any document required in order to make a
drawing, and (v) any consequences arising from causes beyond the control of
the Issue Lender, including the acts or omissions, whether rightful or
wrongful, of any Governmental Authority. None of the above shall affect,
impair, or prevent the vesting of any of the Issue Lender's rights or
powers under this Agreement. Any action taken or omitted by the Issue
Lender under or in connection with any Letter of Credit or the related
certificates, if taken or omitted in good faith, shall not put the Issue
Lender under any resulting liability to the Borrower provided that the
Issue Lender acts in accordance with the standards of reasonable care
specified in the Uniform Customs and Practice for Letters of Credit (1993
Revision), ICC Publication 500 (or any replacement publication).
SECTION 5.8 FEES.
(1) The Borrower shall pay to the Agent, for the benefit of the Lenders in
accordance with their respective Revolving Credit 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
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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 3.75 % per annum.
(2) The Borrower shall pay to the Issue Lender, upon the issuance, amendment or
transfer of each Letter of Credit issued by the Issue Lender and each
drawing made under it, the Issue Lender's standard and prevailing
documentary and administrative charges for issuing, amending, transferring
or drawing under, as the case may be, Letters of Credit of similar amount,
term and risk.
SECTION 5.9 REPAYMENTS.
(1) If the Borrower is required to repay the Accommodation in full pursuant to
Article 2 or Article 9, then the Borrower shall pay to the Agent an amount
equal to each Lender's contingent liability in respect of (i) any
outstanding Letter of Credit, and (ii) any Letter of Credit which is the
subject matter of any order, judgment, injunction or other such
determination (a "JUDICIAL ORDER") restricting payment under and in
accordance with such Letter of Credit or extending the Lender's liability
under such Letter of Credit beyond its stated expiration date. Payment in
respect of each Letter of Credit shall be due in the currency in which the
Letter of Credit is denominated.
(2) The Issue Lender shall, with respect to any Letter of Credit, upon the
later of:
(a) The date on which any final and non-appealable order, judgment or
other such determination has been rendered or issued either
terminating the applicable Judicial Order or permanently enjoining the
Lender from paying under such Letter of Credit; and
(b) The earlier of (i) the date on which either (x) the original
counterpart of the Letter of Credit is returned to the Lender for
cancellation, or (y) the Lender is released by the Beneficiary from
any further obligations, and (ii) the expiry (to the extent permitted
by any applicable law) of the Letter of Credit,
pay to the Borrower an amount equal to the difference between the amount
paid to the Issue Lender pursuant to Section 5.9(1) and the amounts paid by
the Issue Lender under the Letters of Credit.
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ARTICLE 6
CONDITIONS OF LENDING
SECTION 6.1 CONDITIONS PRECEDENT TO THE INITIAL ACCOMMODATION.
The obligation of each Lender to make its initial Accommodation under the
Credit Facility is subject to fulfilment, on or before the date hereof of the
following conditions precedent at the time the initial Accommodation is made
available:
(a) No Default or Event of Default has occurred or is continuing or would
arise immediately after giving effect to or as a result of the
Accommodation;
(b) The Accommodation will not violate any applicable law, order or
judgment binding on the Borrower or any Lender;
(c) The representations and warranties of the Borrower contained in
Article 7 and of the Additional Loan Parties contained in any other
Credit Document are true and correct on the date of the Accommodation
as if such representations and warranties were made on that date;
(d) The Agent has received, in form, substance, scope and dated a date
satisfactory to the Agent and its counsel and in sufficient quantities
for each Lender:
(i) Certified copies of (i) the charter documents and extracts from
the by-laws of the Borrower and each other Additional Loan Party
relating to the execution of documents, (ii) all resolutions of
the board of directors of the Borrower and each other Additional
Loan Party approving the borrowing and other matters
contemplated by this Agreement and the other Credit Documents,
and (iii) a list of the officers and directors authorized to
sign agreements together with their specimen signatures;
(ii) A certificate of status, compliance or like certificate with
respect to the Borrower and each Additional Loan Party issued by
the appropriate Governmental Authority of the jurisdiction of
its incorporation and of each jurisdiction in which it owns any
material assets or carries on any material business;
(iii) The Credit Documents specified in Exhibit O (the "CLOSING
DOCUMENT LIST");
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(iv) Evidence of registration of the Security Documents in such
jurisdictions as the Agent may require;
(v) All discharges, subordination agreements, waivers and
confirmations as may be required to ensure that all obligations
under the Credit Documents are secured by first priority Liens
on the property and assets of the Borrower, each Restricted
Subsidiary and, to the extent required by this Agreement, each
Additional Loan Party, with such exceptions as are permitted
pursuant to this Agreement or any of the other Credit
Documents;
(vi) Copies of the insurance policies required pursuant to Section
8.1(f) together with certificates of insurance showing the
Agent and Lenders as loss payees and named insured;
(vii) Complete and accurate copy of the Pro Forma and Projections;
(viii) Favourable opinions of counsel to the Borrower and each other
Additional Loan Party;
(ix) All environmental audits and reports obtained by the Borrower
or any Additional Loan Party in connection with the Fasco
Acquisition;
(x) appraisals of all Rental Equipment acquired in the Fasco
Acquisition; and
(xi) Such other certificates and documentation as the Agent may
reasonably request;
(g) The Lenders shall be satisfied upon a review of the Pro Forma and the
Projections that (i) the financial condition of the Borrower does not
differ in any material adverse respect from the conditions evidenced
by the financial information provided to the Agent prior to the date
hereof; (ii) the Borrower and each Additional Loan Party will be able
to comply with the covenants set forth in this Agreement; and (iii)
the Parent Guarantor will be able to comply with the Financial
Covenants;
(h) With respect to the Fasco Acquisition, the Agent shall be satisfied:
(i) in all material respects with the terms, conditions, form and
substance of the Fasco Acquisition and the Fasco Acquisition
Documents, including, without limitation, the equity and
corporate structure of the Borrower and its Subsidiaries after
giving effect thereto and the resolutions with respect to the
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Fasco Acquisition adopted by the respective boards of directors
(or equivalent) and, if applicable, the shareholders (or
equivalent) of the Borrower and Fasco and the other parties to
the respective Fasco Acquisition Agreements; and
(ii) that prior to or substantially simultaneously with the funding of
the Credit Facility, the Borrower shall have acquired all or
substantially all of the assets of Fasco pursuant to the Fasco
Acquisition Documents, in each case in compliance in all material
respects with all applicable Requirements of Law, and the Agent
shall have received such evidence as it may reasonably request
(A) of the consummation of the Fasco Acquisition for a purchase
price equal to approximately $10,580,000, (B) that the parties to
the Fasco Acquisition Agreements have complied in all material
respects with all applicable Requirements of Law in connection
with the Fasco Acquisition, (C) that all conditions precedent to,
and all consents necessary to permit, the Fasco Acquisition
pursuant to the Fasco Acquisition Documents shall have been
satisfied or delivered, or waived with the prior written consent
of the Agent to the extent the waiver of such conditions
precedent or the absence of such consents could reasonably be
expected to affect adversely the rights of the Agent, the Issue
Lender or any Lender, (D) that all representations and warranties
in the Fasco Acquisition Documents are true and correct in all
material respects and (E) that the Fasco Acquisition Agreements
have not been amended or modified without the prior written
consent of the Agent, to the extent such amendment or
modification could reasonably be expected to affect adversely the
rights of the Agent, the Issue Lender or any Lender, and are in
full force and effect.
(i) The Lenders have completed, to their satisfaction, a due diligence
review of the Borrower, the Restricted Subsidiaries and the business
of the Borrower, including a review of the capital structure of the
Borrower and the Material Contracts;
(j) All fees and other amounts (but as to Expenses, only those for which
the Borrower has received an invoice) then payable under the Credit
Documents have been paid in full; and
(k) There has not occurred, developed or come into effect or existence any
event, action, state, condition or major financial occurrence of
national or international consequence or any law, judgment, order,
inquiry or other occurrence of any nature whatsoever which materially
adversely
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affects, or is reasonably likely to materially adversely affect, the
financial, banking (including syndication markets) or capital markets
in Canada or the United States of America.
SECTION 6.2 CONDITIONS PRECEDENT TO ACCOMMODATIONS AND CONVERSIONS.
(1) The obligation of each Lender to make Accommodations or otherwise give
effect to any Accommodation Notice is subject to fulfilment of the
following conditions at the time of any Accommodation Notice or
Accommodation, as the case may be:
(a) No Default or Event of Default has occurred or is continuing or would
arise immediately after giving effect to or as a result of the
Accommodation or Accommodation Notice;
(b) The Accommodation will not violate any applicable law, judgment or
order;
(c) The representations and warranties of the Borrower contained in this
Credit Agreement and the other Credit Documents are true and correct
on the date of the Accommodation or Accommodation Notice as if they
were made on that date, except to the extent such representations and
warranties relate to an earlier date;
(d) 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; and
(e) To the extent all or any portion of the proceeds of any Accommodation
shall be used to finance, in full or in part, any Acquisition, the
Agent shall have received on or before the date such Acquisition is
consummated, all documents which, pursuant to Section 8.2(b)(vii) are
required to be delivered on or before such date, in each case in form
and substance reasonably satisfactory to the Agent (and to the extent
that the consent of the Majority Lenders is required for the
consummation of such Acquisition, such consent has been obtained and
the Agent shall have received evidence that all other conditions
precedent set forth in such consent have been satisfied).
(2) Each of the giving of any Accommodation Notice by the Borrower and the
acceptance by the Borrower of any Accommodation shall be deemed to
constitute a representation and warranty by the Borrower that, on the date
of such Accommodation Notice or Accommodation, as the case may be, and
after giving effect to it and to the application of any proceeds from it,
the statements set forth in Section 6.2(1)(a) to (e) are true and correct.
Each issuance by the Borrower of a cheque drawn against, or request for
transfer
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from, the Disbursement Account shall constitute a representation and
warranty that the statements set forth in Section 6.2(1)(a) to (e) are true
and correct.
(3) All references to Accommodation Notice in Sections 6.2(1)(c) to (e) and
6.2(2) (except as it relates to Section 6.2(1)(a) and (b)) are deemed to
exclude Election Notices.
SECTION 6.3 NO WAIVER.
The making of an Accommodation or otherwise giving effect to any
Accommodation Notice, without the fulfilment of one or more conditions set forth
in Section 6.1 or Section 6.2, shall not constitute a waiver of any condition
and the Agent and the Lenders reserve the right to require fulfilment of such
condition in connection with any subsequent Accommodation Notice or
Accommodation.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
SECTION 7.1 REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to each Lender, acknowledging and
confirming that each Lender is relying on such representations and warranties
without independent inquiry in entering into this Agreement and providing
Accommodations that:
(a) ORGANIZATION AND QUALIFICATION. The Borrower and each Restricted
Subsidiary (i) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction 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 qualified, authorized or in
good standing has not had and could not reasonably be expected to have
a Material Adverse Effect. Schedule 7.1(a) lists all jurisdictions in
which the Borrower and each Restricted Subsidiary is incorporated and
qualified to do business as a foreign corporation as of the Effective
Date;
(b) AUTHORITY. The Borrower and each of the Restricted Subsidiaries 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 Borrower and each of the Restricted Subsidiaries of any of the
Credit Documents has been taken;
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(c) ENFORCEABILITY. This Agreement is (and, upon execution and delivery
thereof, each other Credit Document will be) the legal, valid and
binding obligation of the Borrower and each of the Restricted
Subsidiaries which is a party thereto, enforceable in accordance with
their respective terms;
(d) NO CONFLICT. The execution, delivery and performance by the Borrower
and each of the Restricted Subsidiaries 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 non-compliance 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;
(e) CONSENTS AND FILINGS. No consent, authorization, permit, notice or
filing is required in connection with the execution, delivery and
performance of this Agreement, any Credit Document or the continuing
operations of the Borrower and each of its Restricted Subsidiaries,
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 and the Lenders against the Collateral;
(f) RIGHTS IN COLLATERAL; PRIORITY OF LIENS. On the Effective Date, the
Borrower and its Restricted Subsidiaries 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. The Liens granted to the Agent, for the benefit of
the Lenders, 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 Agreement and as
otherwise identified on Schedule 7.1(f), 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;
(g) FINANCIAL DATA. The Borrower and the Restricted Subsidiaries have
provided to the Agent and each of the Lenders complete and accurate
copies of (a) the audited consolidated financial statements for the
Parent Guarantor and its Subsidiaries as of December 31, 1997, (b) the
unaudited financial statements of the Parent Guarantor and its
Subsidiaries as of March 31, 1998, (c) the Pro Forma and (d) the
Projections. The Financial Statements described in clauses (a) and
(b)
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have been prepared in accordance with U.S. 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 the Parent Guarantor 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 Borrower or Restricted Subsidiaries or any Additional Loan
Party has any Contingent Obligation, contingent liability or liability
for taxes, long-term leases or commitments, which is not reflected (to
the extent required by U.S. GAAP consistently applied) in such
Financial Statements (other than the guarantee(s) of the Senior
Subordinated Notes by certain Subsidiaries of the Parent Guarantor).
The Pro Forma fairly presents on a pro forma basis the financial
condition of the Borrower on June 30, 1998, but after giving effect to
the consummation of the acquisitions and transactions described
therein and therein, and reflects on a pro forma basis those
liabilities reflected in the notes thereto and resulting from
consummation of the acquisitions and transactions described therein
and the transactions contemplated by the Credit Documents. 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;
(h) SUBSIDIARIES; OWNERSHIP OF STOCK. As of the Effective Date the
Borrower has no direct or indirect Subsidiaries. The Parent Guarantor
is the record and beneficial owner of all of the shares of capital
stock of the Borrower. There are no proxies, irrevocable or
otherwise, with respect to the shares of capital stock of the Borrower
or the Restricted Subsidiaries, and no equity securities of the
Borrower or any of the Restricted Subsidiaries are or may become
required 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. To the best of the Borrower's
knowledge, all of the shares in its capital so owned by the Parent
Guarantor are owned by the Parent Guarantor free and clear of any
Liens, other than Liens granted to the Agent and the Lenders pursuant
to the Credit Documents and Liens granted to the agent under the
Parent Guarantor Credit Agreement;
(i) NO JUDGMENTS OR LITIGATION. Except as set forth on Schedule 7.1(i), no
judgments, orders, writs or decrees are outstanding against the
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Borrower or any of the Restricted Subsidiaries nor is there now
pending or, to the best of the Borrower's knowledge after diligent
inquiry, threatened, any litigation, contested claim, investigation,
arbitration, or governmental proceeding by or against the Borrower or
any Restricted Subsidiary, 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;
(j) NO DEFAULTS. None of the Borrower nor any of the Restricted
Subsidiaries 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
Borrower nor any of the Restricted Subsidiaries knows of any dispute
regarding any such material indenture, contract, lease, agreement,
instrument or other commitment to which such Person is a party;
(k) LABOR MATTERS. Schedule 7.1(k), accurately sets forth all material
labor contracts to which any of the Borrower or a Restricted
Subsidiary 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 the Borrower
or any Restricted Subsidiary is a party;
(l) COMPLIANCE WITH LAW. None of the Borrower nor any Restricted
Subsidiary has violated or failed to comply with any Requirement of
Law, including, without limitation, environmental, health and safety
Requirements of Law, except for such Requirements of Law, the non-
compliance with which, in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect;
(m) PENSION PLANS. All contributions required pursuant to any Requirement
of Law have been made in respect of all pension plans of the Borrower
and each of the Restricted Subsidiaries and each such pension plan is
fully funded on an ongoing and termination basis;
(n) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as disclosed on Schedule
7.1(n), (i) none of the Borrower nor any Restricted Subsidiary 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 Borrower nor any Restricted
Subsidiary has filed any notice under any Requirement of
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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 Borrower nor any Restricted Subsidiary has knowledge
of any liability of the Borrower or a Restricted Subsidiary
(contingent or otherwise) for any release of any Hazardous Substance.
The Borrower and each Restricted Subsidiary has exercised reasonable
care and made such investigations as are reasonably necessary to
accurately complete all reports and questionnaires listed on Schedule
7.1(n), and provide all information, requested by the Agent or its
counsel;
(o) INTELLECTUAL PROPERTY; REAL PROPERTY. Each of the Borrower and the
Restricted Subsidiaries possesses such material assets, licenses,
patents, 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 7.1(o) sets
forth all Real Property of the Borrower and the Restricted
Subsidiaries as of the Effective Date;
(p) LICENSES AND PERMITS. Each of the Borrower and the Restricted
Subsidiaries 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;
(q) TAXES AND TAX RETURNS.
(i) Except as set forth on Schedule 7.1(q), each of the Borrower and
the Restricted Subsidiaries 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;
(ii) All taxes (including gross receipts, capital and franchise
taxes), assessments, fees and other governmental charges for
periods beginning prior to the Effective Date in regard to the
Borrower and the Restricted Subsidiaries have been timely paid
and none of the Borrower nor any of the Restricted Subsidiaries
has any material liability for such taxes (including penalties
and interest thereon) in excess of the amounts so paid or
reserves so established;
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(iii) Except as set forth in Schedule 7.1(q), no deficiencies for
such taxes have been claimed, proposed or assessed by any
taxing or other Governmental Authority against any of the
Borrower or the Restricted Subsidiaries and no tax liens have
been filed. Except as set forth in Schedule 7.1(q), 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 Borrower or
any of the Restricted Subsidiaries for taxes (including
penalties and interest thereon). Except as set forth in
Schedule 7.1(q), 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
Borrower or the Restricted Subsidiaries;
(iv) Except as set forth on Schedule 7.1(q), none of the Borrower
nor any Restricted Subsidiaries has any material obligation
under any written tax sharing agreement or agreement regarding
payments in lieu of taxes;
(r) MATERIAL CONTRACTS. Schedule 7.1(r), contains a true, correct and
complete list of all the Material Contracts currently in effect on the
date hereof. Except as described on Schedule 7.1(r), none of the
Material Contracts contains any material burdensome restrictions on
any of the Borrower or any of the Restricted Subsidiaries or any of
their respective properties, all of the Material Contracts are in full
force and effect, and no defaults currently exist thereunder;
(s) FASCO ACQUISITION. As of the Effective Date, all conditions precedent
to, and all consents necessary to permit, the Fasco Acquisition
pursuant to the Fasco Acquisition Documents have been satisfied or
delivered (except for such conditions precedent and consents which, if
not satisfied or obtained, could not reasonably be expected to affect
adversely the rights of the Agent, the Issue Lender or any Lender),
and no material breach of any term or provision of any Fasco
Acquisition Document has occurred and no action has been taken by any
competent authority which restrains, prevents or imposes material
adverse conditions upon, or seeks to restrain, prevent or impose
material adverse conditions upon, the Fasco Acquisition or the making
of any Accommodations Outstanding in connection therewith. As of the
Effective Date, the Borrower has acquired or will acquire
substantially all of the assets of Fasco in compliance in all material
respects with all applicable Requirements of Law;
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(t) ACCURACY AND COMPLETENESS OF INFORMATION. All factual information
furnished by or on behalf of any of the Borrower or any Restricted
Subsidiary in writing to the Agent, any Lender, or the Auditors for
purposes of or in connection with this 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; and
(u) 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.
SECTION 7.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties in this Agreement and in any
certificates or documents delivered to the Agent and the Lenders shall not merge
in or be prejudiced by and shall survive any Accommodation and shall continue in
full force and effect so long as any amounts are owing by the Borrower to the
Lenders under this Agreement.
SECTION 7.3 REPRESENTATIONS AND WARRANTIES OF THE AGENT AND LENDERS.
The Agent and each of the Lenders represents and warrants that it is not a
non-resident within the meaning of the Income Tax Act (Canada).
ARTICLE 8
COVENANTS OF THE BORROWER
SECTION 8.1 AFFIRMATIVE COVENANTS.
So long as any amount owing under this Agreement or any other Obligation
remains unpaid or any Lender has any obligation under this Agreement or any
other Credit Document, and unless consent is given in accordance with Section
11.1, the Borrower shall and, where required, shall cause each of its
Subsidiaries to comply with the following covenants:
(a) FINANCIAL REPORTING. The Borrower shall timely deliver to each
Lender the following information:
(i) 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 consolidated
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
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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 Parent Guarantor's consolidated financial
condition and results of operations for such Fiscal Year
(including in respect of the Borrower for such period) and a
comparison in reasonable detail to the Projections (or the then
most recent financial forecasts delivered pursuant to Section
8.1(a)(ii)) for such Fiscal Year, prepared by a Financial Officer
of the Parent Guarantor and the Borrower; and (v) a certificate
substantially in the form of Exhibit D with respect to the
Borrower and the Parent Guarantor together with attached
schedules of calculations demonstrating (A) compliance of the
Parent Guarantor with the Financial Covenants and determining
whether the Applicable Base Rate (Canada) Margin, Applicable
Canadian Prime Rate Margin, Applicable Eurodollar Rate Margin and
the Applicable Drawing Fee are to be adjusted due to a change in
the Total Indebtedness Ratio and (B) compliance of the Borrower
with subsections (a), (b)(vi), (b)(vii), (c), (f)(vi), (g) and
(k) of Section 8.2 (the "COMPLIANCE CERTIFICATE");
(ii) ANNUAL PROJECTIONS. Not later than 45 days after the end of each
Fiscal Year, beginning with the Fiscal Year ended 1998, (i) a
monthly budget and consolidating income statement of each of the
Borrower and the Parent Guarantor 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 Borrower's
and Parent Guarantor's 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 each of the Borrower and the Parent Guarantor up
to and including the Fiscal Year following the Relevant Repayment
Date, including, without limitation, forecasted (A) consolidated
condensed balance sheets, (B) condensed consolidated and
consolidating income statements, (C) condensed consolidated cash
flow statements, and (D) consolidated capitalization statements
and (E) calculations of the Financial Covenants, in each case for
such Fiscal Years;
(iii) 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 of each of the Borrower and
the Parent Guarantor, together with a certification by a
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Financial Officer of the Borrower and the Parent Guarantor, as
appropriate, that the Financial Statements for the then most
recently ended three calendar months delivered pursuant to
Section 8.1(a)(iv) have been prepared in accordance with U.S.
GAAP in respect of the Parent Guarantor's Financial Statements
and GAAP in respect of the Borrower's Financial Statements
(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 Parent
Guarantor's and the Borrower's current practices, as
appropriate); and
(iv) 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 Parent Guarantor's consolidated
financial condition and results of operations for such calendar
month and Fiscal Year to date (including in respect of the
Borrower for such periods) and a comparison in reasonable detail
to the budget and Projections (or the then most recent financial
forecasts delivered pursuant to Section 8.1(a)(ii)) for such
period, prepared by a Financial Officer of the Parent Guarantor
and the Borrower, as applicable;
(b) COLLATERAL AND OTHER REPORTING. The Borrower shall timely deliver to
the Agent the following certificates and reports:
(i) 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 the Borrower and
the Designated Restricted Subsidiaries substantially in the form
of Exhibit A (the "BORROWING BASE CERTIFICATE"), which shall (i)
detail the Eligible Accounts and the Eligible Rental Equipment,
in each case, of the Borrower and the Designated Restricted
Subsidiaries, 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 a Financial Officer 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; and (iii) have attached thereto
such additional schedules and other information as the Agent may
request;
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(ii) 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
Borrower and the Designated Restricted Subsidiaries by Xxxxx-
Xxxxxx or another appraiser reasonably satisfactory to the Agent
and consented to by the Borrower (which consent shall not
unreasonably be withheld), which shall describe the Borrower's
and each Designated Restricted Subsidiary's Rental Equipment by
category and by item (in reasonable detail) and report the
original cost, net book value, fair market value, auction value
and orderly liquidation value thereof;
(iii) MONTHLY ACQUISITION REPORTS. As soon as available, but not later
than 30 days after the end of each calendar month in each Fiscal
Year, and at any other time requested by the Agent, a report
summarizing each Acquisition consummated by the Borrower or any
Restricted Subsidiary during such calendar month, which report
shall include the following information with respect to each such
Acquisition: (i) any corporate, trade or fictitious trade name to
be used by the Borrower or such Restricted Subsidiary as a result
of such Acquisition and the jurisdictions in which such
corporate, trade or fictitious name shall be used; (ii) exact
street addresses of all offices and locations of all property
acquired by the Borrower or such Restricted Subsidiary
(including, without limitation, records with respect to Accounts
and general intangibles and originals of chattel paper) (other
than locations of customers of the Borrower or such Restricted
Subsidiary); (iii) to the extent located in jurisdictions
different from those described in clause (ii) above, each
jurisdiction where lessees of the Rental Equipment acquired by
the Borrower or such Restricted Subsidiary are located (to the
best knowledge of the Borrower); (iv) names and addresses of any
lessor or sublessor (other than the Borrower or Restricted
Subsidiary) of any location of the Borrower or any Restricted
Subsidiary described in clause (ii) above or of any mortgagee
holding a Lien on real property owned by the Borrower or any
Restricted Subsidiary with respect to any location described in
clause (ii) above; (v) legal name and address of each bailee,
processor, warehouseman, consignee, carrier, shipper or other
Person in possession with respect to any Equipment or Inventory
acquired, together with the address where such Equipment or
Inventory is held (other than Equipment or Inventory described in
clause (i) of Section 2.1(3) of the Security Agreement); and (vi)
any registered
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trademarks, trademark applications, service marks, service xxxx
applications, patents, patent applications, copyrights or other
intellectual property acquired in such Acquisition. The
information reported by the Borrower shall be deemed to modify
Exhibit F-1 and F-2, as applicable to this Agreement and the
exhibits to the Security Agreement. Notwithstanding the
foregoing, no such report shall be required for any Acquisition
for which the Borrower has delivered to the Agent the related
acquisition agreement and related schedules;
(iv) OTHER REPORTS. The Borrower 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 the Parent Guarantor, the Borrower or any Restricted
Subsidiary to holders of their respective Indebtedness or
securities or filed with the Commission or any similar
Governmental Authority or any stock exchange and all press
releases made available generally by the Parent Guarantor, the
Borrower or any Restricted Subsidiary to the public concerning
material developments in the business of any such Person, and all
notifications received by the Parent Guarantor, the Borrower or
any Restricted Subsidiary pursuant to the Securities Exchange Act
of 1934, as amended, and the rules promulgated thereunder and
applicable securities legislation of any other jurisdiction; and
(v) FURTHER ASSURANCES. When requested by the Agent, any further
information regarding the Collateral, business affairs and
financial condition of any of the Borrower or any Restricted
Subsidiary;
(c) NOTIFICATION REQUIREMENTS. The Borrower shall timely give the Agent
and each of the Lenders the following notices:
(i) 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 or
Financial Officer of the Borrower specifying the nature thereof
and the Borrower's proposed response thereto, each in reasonable
detail;
(ii) PROCEEDINGS OR ADVERSE CHANGES. Promptly, and in any event
within five Business Days after the Borrower becomes aware of (i)
any proceeding being instituted or threatened to be instituted by
or against the Borrower or any Restricted Subsidiary in any
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xxxxxxx, xxxxxxxxxx, xxxxx, local or foreign court or before any
commission or other regulatory body (federal, provincial, 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 the Borrower or
any Restricted Subsidiary or any of their respective properties
or assets, if the amount which is or may become payable by the
Borrower or any of the Restricted 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 Borrower or any such Restricted
Subsidiary;
(iii) ENVIRONMENTAL AND HEALTH AND SAFETY NOTICES. Promptly, and in any
event within 10 Business Days after receipt by the Borrower or
any Restricted Subsidiary 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 the Borrower or such
Restricted Subsidiary;
(iv) MATERIAL CONTRACTS. Promptly, and in any event within 10
Business Days after any Material Contract of the Borrower or any
Restricted Subsidiary 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); and
(v) GOVERNING DOCUMENTS. Subject to Section 8.2(q), 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).
(d) CORPORATE EXISTENCE. The Borrower shall, and shall cause each of its
Restricted Subsidiaries to, (i) maintain its corporate existence (except
to
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the extent permitted by Sections 8.2(f) or 8.2(h)), (ii)
maintain in full force and effect all licenses, bonds, franchises,
leases, trademarks and qualifications to do business, and all patents,
contracts and other rights necessary or advisable to the profitable
conduct of its 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
its operations to, the same general lines of business as conducted by
the Borrower and such Subsidiaries on the Effective Date and lines of
business reasonably related thereto.
(E) BOOKS AND RECORDS; INSPECTIONS. The Borrower agrees to maintain, and
to cause each of its Restricted Subsidiaries to maintain, books and
records pertaining to the Collateral in such detail, form and scope as
is consistent with good business practice. The Borrower agrees that
the Agent or its agents may enter upon the premises of the Borrower or
any of its Subsidiaries 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 11.1 or cured,
for the purposes of (i) inspecting and verifying the Collateral, (ii)
inspecting and/or copying (at the Borrower's expense) any and all
records pertaining thereto and (iii) discussing the affairs, finances
and business of the Borrower or such Subsidiary with any officers,
employees and directors of the Borrower or such Subsidiary or with the
Auditors.
(F) INSURANCE. The Borrower agrees to maintain, and to cause each of its
Restricted 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 8.1(f) 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 and the Lender'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 acceptable to the
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Agent, naming the Agent and the Lenders as loss payee thereunder and,
if required by the Agent, naming the Agent and the Lenders as
additional insureds under such policy; (ii) all policies relating to
general liability coverage shall contain an endorsement naming the
Agent and the Lenders as additional insureds 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 or the Lenders 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 Agent and the Lenders 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 Borrower 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 the
Borrower or any of its Subsidiaries 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 and the Lenders, 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 and the Lenders shall
constitute Accommodations Outstanding hereunder and be part of the
Obligations, payable as provided in this Agreement.
(G) TAXES AND CLAIMS. The Borrower agrees to pay, when due, and to cause
each of its Restricted Subsidiaries to pay when due, (a) all taxes
lawfully levied or assessed against the Borrower or any of its
Restricted 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 the Borrower's
or such Restricted Subsidiary's assets, prior to the time when any
penalty or fine shall be incurred with respect thereto; provided,
however, that no such taxes, assessments and governmental charges
referred to in clause (a) above or claims referred to in clause
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(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 the Borrower or any of its Restricted 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.
(H) COMPLIANCE WITH LAWS. The Borrower agrees to comply, and to cause
each of its Restricted 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
Borrower or such Restricted Subsidiary 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.
(I) FISCAL YEAR. The Borrower agrees, and shall cause each of its
Subsidiaries, to maintain their respective Fiscal Year as a year
ending December 31.
(J) MAINTENANCE OF PROPERTY. The Borrower agrees to keep, and to cause
each of its Restricted Subsidiaries to keep, all 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.
(K) COMPLIANCE WITH ENVIRONMENTAL LAWS.
(i) The Borrower shall comply, and cause each of its Restricted
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 Restricted
Subsidiaries to obtain, all environmental permits necessary for
its operations and properties; and conduct, and cause each of its
Restricted 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 under any such Requirements of Law; provided, however,
that neither the Borrower nor any Restricted Subsidiary shall be
required to undertake any such
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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.
(ii) The Borrower shall (i) employ, and cause each of its Restricted
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 Restricted 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 Restricted
Subsidiaries, operations and (iii) dispose of, and cause each of
its Restricted Subsidiaries to dispose of, any and all Hazardous
Substances only at facilities and with carriers that in the
reasonable belief of the Borrower are maintaining valid permits
where required under any applicable federal, provincial, state
and local environmental, health and safety Requirements of Law.
The Borrower shall obtain, and cause each of its Restricted
Subsidiaries to obtain, if required by any Requirement of Law,
certificates of disposal or similar certificates from all
contractors employed by the Borrower or any of its Restricted
Subsidiaries in connection with the transport or disposal of any
Hazardous Substances.
(L) COMPLIANCE WITH OPERATING LEASES. The Borrower shall make all
payments and otherwise perform, and cause each of its Restricted
Subsidiaries to make all payments and otherwise perform, in all
material respects, all of its obligations in respect of all Operating
Leases of the Borrower or any of its Restricted Subsidiaries, and use
its best efforts, and cause each of its Restricted 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. The Borrower
will give the Agent prompt notice of any lapse, termination,
forfeiture or cancellation of any material Operating Lease to which it
or any of its Restricted Subsidiaries is a party (whether or not in
accordance with the terms of such Operating Lease or this Agreement).
(M) COMPLIANCE WITH MATERIAL CONTRACTS. The Borrower shall perform and
observe, and cause each of its Restricted Subsidiaries to perform
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and observe, all material terms and provisions of the Material
Contracts to be performed or observed by it, maintain, and cause each
of its Restricted 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 Restricted Subsidiaries
to enforce, the Material Contracts to which it is a party in
accordance with their terms, and take, and cause each of its
Restricted 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.
(N) REAL PROPERTY; LANDLORD WAIVERS. The Borrower 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 the Borrower and each of its Restricted Subsidiaries
acquired after the Effective Date.
(O) DELIVERY OF DOCUMENTS AFTER EFFECTIVE DATE. The Borrower shall
execute and deliver, or shall cause the execution and delivery of, (a)
the agreements, documents, instruments, certificates and opinions
designated on the Closing Document List as items to be delivered after
the Effective Date within the time periods with respect to such items,
as set forth on the Closing Document List and (b) the agreements,
documents, instruments, certificates and opinions required to be
delivered after the Consummation Date of an Acquisition, within the
time periods with respect to such items, as required by Section
8.2(b)(vii), and any other agreements, documents, instruments,
certificates and opinions which the Agent may reasonably request in
connection with such Acquisition which are not required to be
delivered pursuant to Section 8.2(b)(vii) (including, without
limitation, in response to the information delivered by the Borrower
pursuant to Section 8.1(b)(iii)), within the time periods specified by
the Agent in such request.
(P) YEAR 2000 COMPLIANCE. Borrower will forthwith (i) initiate a review
and assessment of its and its Subsidiaries' business and operations
(including those affected by customers, suppliers and vendors) that
Borrower believes could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer applications used by the
Borrower or its Subsidiaries (or customers, suppliers and vendors) may
be unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date after December 31,
1999), (ii) develop a plan and time-line for addressing the Year 2000
Problem on a timely basis, and (iii) implement that plan substantially
in accordance with that time table. Borrower represents and warrants
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that its own computer applications that are material to its and its
Subsidiaries' business and operations will on a timely basis be able
to perform date-sensitive functions for all dates before and after
January 1, 2000 (that is be, "Year 2000 Compliant"). Borrower will
promptly notify the Agent in the event that Borrower discovers or
determines that any computer application (including those of its
customers, suppliers and vendors) that is material to its or its
Subsidiaries' business and operations will not be Year 2000 Compliant
as of January 1, 2000.
(Q) FURTHER ASSURANCES. The Borrower 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 and the Lenders on the Collateral.
SECTION 8.2 NEGATIVE COVENANTS.
So long as any amount owing under this Agreement or any other Obligation
remains unpaid or the Lender or the Agent has any obligation under this
Agreement or any other Credit Document and, unless consent is given in
accordance with Section 11.1, the Borrower shall comply with, and shall cause
each of its Subsidiaries, as applicable, to comply with, the following
covenants:
(A) MINIMUM RENTAL EQUIPMENT UTILIZATION. The Borrower 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 (the Borrower shall be
permitted to use the relevant historical financial information
included in the Fasco Acquisition Documents, determined in accordance
with GAAP, pertaining to Fasco's equipment rental business for the
portion of the initial twelve month period prior to the Consummation
Date of the Fasco Acquisition), to be less than 54%. 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 Borrower causes Rental Equipment Utilization, as
determined for the twelve-month period ending on the Rental Equipment
Utilization Cure Date, to be at least 54%.
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(B) CAPITAL EXPENDITURES AND INVESTMENTS. None of the Borrower or its
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 the Parent Guarantor, the
Borrower or any of its Subsidiaries, other than:
(i) Advances or loans made in the ordinary course of business not
to exceed $250,000 outstanding at any one time to any one
Person and $1,000,000 in the aggregate outstanding at any one
time;
(ii) Investments arising from (i) intercompany loans permitted by
Section 8.2(c)(vii), (ii) dividends and distributions permitted
by Section 8.2(q) and (iii) transfers permitted by Section
8.2(f)(iv);
(iii) Subject to the limits set forth in Section 8.2(o), Cash
Equivalents, provided that the Agent and the Lenders (i) have a
perfected Lien therein, or (ii) have a perfected Lien in any
deposit account in which the same are maintained;
(iv) Subject to the limits set forth in Section 8.2(o), deposits
with financial institutions, disclosed in Schedule 8.2(n) and
which are insured by the Canada Deposit Insurance Corporation
("CDIC") or a similar federal insurance program;
(v) Subject to the limits set forth in Section 8.2(o),
contributions to and payments of benefits under any Plan (in
accordance with the terms of the Plan) permitted by this
Agreement;
(vi) Capital Expenditures and Investments (other than Acquisitions),
in each case, directly related to, or in the same line of, the
business as conducted by the Borrower and its Subsidiaries as
of the Effective 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"):
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-------------------------------------------
Fiscal Year Maximum Amount
-------------------------------------------
1998 $ 7,000,000
-------------------------------------------
1999 $10,000,000
-------------------------------------------
2000 $15,000,000
-------------------------------------------
2001 $20,000,000
-------------------------------------------
2002 $25,000,000
-------------------------------------------
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 Borrower and its Subsidiaries during
such Fiscal Year with respect to the sale of Rental Equipment
(whether through the actual sale of such Rental 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 Capital Expenditures and Investments (other than
Acquisitions) made by the Borrower and its Subsidiaries under
this clause (f) in such immediately preceding Fiscal Year;
(vii) The Fasco Acquisition and other Acquisitions directly related
to, or in the same line of, the business as conducted by the
Borrower as of the Effective Date (after giving effect to the
Fasco Acquisition), provided that, with respect to Acquisitions
other than the Fasco Acquisition, the Borrower shall not, and
shall cause its Subsidiaries not to, without the approval of
the Majority Lenders:
(A) Make any Acquisition without giving the Agent written
notice thereof within three Business Days after the
execution of a letter of intent or other agreement of the
Borrower or such Subsidiary, as applicable, with respect
thereto, together with (A) a copy of the related letter of
intent or such other agreement (which, in either case,
shall contain, or be accompanied by, substantially the
same information as letters of intent delivered to the
agent under the Parent Guarantor Credit Agreement) and (B)
a list of all locations of the assets which will become
property of the Borrower or such Subsidiary, as
applicable, after giving effect to such Acquisition (other
than locations of Persons which will become customers of
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the Borrower or such Subsidiary after giving effect to
such Acquisition);
(B) Make any Acquisition unless the Borrower obtains each of
the following in connection therewith and delivers the
same to the Agent within the time periods set out below,
in each case in form and substance reasonably satisfactory
to the Agent: (A) each of the agreements, documents and
instruments set forth on Exhibit P which are required to
be delivered on or before the Consummation Date of such
Acquisition, within the time periods set forth thereon,
(B) to the extent any new Subsidiary of the Borrower is
formed or acquired in connection with such Acquisition,
all of the agreements, documents and instruments required
to be delivered pursuant to Section 8.2(q), within the
time periods set forth therein and (C) any other
agreements, documents, instruments, certificates or
opinions which the Agent may reasonably request prior to
the Consummation Date of such Acquisition;
(C) Make any Acquisition unless any new Subsidiary acquired or
formed in connection with such Acquisition is incorporated
under the laws of Canada or a province thereof;
(D) Make any single Acquisition (or series of related
Acquisitions) in any Fiscal Year in excess of $10,000,000;
and
(E) Make Acquisitions during the period from the Effective
Date until the Relevant Repayment Date, in an aggregate
amount in excess of the sum of $50,000,000 (excluding
consideration consisting of the common stock of the Parent
Guarantor and cash proceeds received by the Borrower from
the Parent Guarantor in consideration for common stock of
the Borrower issued to the Parent Guarantor);
(viii) Such other Investments as the Agent may approve in writing in
its reasonable discretion.
(C) ADDITIONAL INDEBTEDNESS. None of the Borrower or its Subsidiaries
shall directly or indirectly incur, create, assume or suffer to exist
any Indebtedness other than:
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(i) Indebtedness under the Credit Documents;
(ii) Indebtedness under Hedging Agreements entered into in the
ordinary course of business, provided that, with respect to
Interest Rate Agreements, the aggregate notional amount thereof
does not exceed an amount equal to 50% of the then outstanding
Indebtedness of the Borrower which is floating rate debt;
(iii) Indebtedness described on Schedule 8.2(c)(iii) and any
refinancing of such Indebtedness, so long as (A) the aggregate
principal amount of the Indebtedness so refinanced shall not be
increased, (B) the Indebtedness is incurred for the same
purpose as the Indebtedness so refinanced, (C) the refinancing
shall be on terms and conditions no more restrictive than the
terms and conditions of the Indebtedness to be refinanced and
(D) with respect to Indebtedness under Capital Leases and
Indebtedness secured by Purchase Money Liens, the principal
amount of such refinanced Indebtedness is permitted by Section
8.2(c)(iv);
(iv) In addition to the Indebtedness permitted under Section
8.2(c)(iii), (i) Indebtedness under Capital Leases and
Indebtedness secured by purchase money Liens on Equipment
acquired after the Effective Date ("PURCHASE MONEY LIENS") so
long as (A) each Purchase Money Lien shall attach only to the
property to be acquired and any sale or insurance proceeds
thereof (but excluding rental contracts covering such property
or any proceeds thereof) and (B) 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) the Liens granted in connection with such
Indebtedness shall attach only to the Equipment formerly
subject to the Purchase Money Lien and any sale or insurance
proceeds thereof (but excluding rental contracts covering such
property or any proceeds thereof), (B) the aggregate principal
amount of the Indebtedness so refinanced shall not be
increased, (C) the Indebtedness is incurred for the same
purpose as the Indebtedness so refinanced and (D) 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) of this Section 8.2(c)(iv) or
described in Section 8.2(c)(iii)(D) shall not exceed
$15,000,000 in the aggregate outstanding at any one time;
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(v) 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
8.1(g);
(vi) Indebtedness constituting Contingent Obligations permitted by
Section 8.2(e);
(vii) Indebtedness arising from intercompany loans (i) from any
Person which is a Restricted Subsidiary to the Borrower, (ii)
from any Restricted Subsidiary to another Restricted
Subsidiary; and (iii) from the Borrower to any Restricted
Subsidiary, provided, that (A) in the case of loans under
clauses (ii) and (iii) the aggregate principal amount of all
such loans shall not exceed $5,000,000 at any time outstanding,
(B) all such Indebtedness shall be evidenced by a promissory
note executed by the Person receiving such intercompany loans,
pursuant to a promissory note substantially in the form of
Exhibit Q, and (C) such Indebtedness shall be subordinated in
right of payment to the Obligations when due and payable; and
(viii) Indebtedness arising from intercompany loans from the Parent
Guarantor or any of its Subsidiaries, provided that the Parent
-------------
Guarantor or such Subsidiary, as the case may be, has first
executed and delivered to the Agent and the Lenders an
intercreditor agreement, in form and substance satisfactory to
the Agent and the Lenders acting reasonably, providing, inter
alia, that such Indebtedness is subordinated in right of
payment to the prior payment of the Accommodations Outstanding
and other Obligations when due and payable to the Agent, the
Issue Lender, the Lenders and any other Person under this
Agreement;
provided, however, that, the aggregate amount of all Indebtedness
-------- -------
permitted to be incurred under any of clauses (i) through (vi) above,
to the extent such Indebtedness constitutes "Indebtedness" under (and
as defined in) the Senior Subordinated Note Indenture, shall not
exceed the "Borrowing Base" (as defined in the Senior Subordinated
Note Indenture).
(d) LIENS. None of the Borrower or its Subsidiaries shall directly or
indirectly create, incur, assume, or suffer to exist any Lien on any
of its property now owned or hereafter acquired except (each of the
following being referred to herein as a "PERMITTED LIEN"):
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(i) Liens granted to the Agent and the Lenders under the Credit
Document;
(ii) Liens listed on Schedule 7.1(f);
(iii) Purchase Money Liens and Liens securing Indebtedness permitted
by Section 8.2(c)(iv), provided, that such Purchase Money Liens
and other Liens are created within 90 days after the incurrence
of the related indebtedness;
(iv) Liens of warehousemen, mechanics, materialmen, builders,
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 8.1(g), or which secure Indebtedness
permitted under Section 8.2(c)(v);
(v) 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 so long as any appropriate
legal proceedings which may have been duly initiated for the
review of such judgment shall not have been finally terminated
or the period within which such proceedings may be initiated
shall not have expired;
(vi) 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;
(vii) 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;
(viii) 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 the Borrower or any of its Subsidiaries;
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(ix) Leasehold interests of lessees of Rental Equipment leased in
the ordinary course of business;
(x) Interests of landlords in real property leased by the Borrower
or any of its Subsidiaries; and
(xi) Extensions, renewals, refundings or replacements of any of the
foregoing, provided that (A) 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, (B) 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 and (C) any Liens permitted under Section
8.2(d)(ii) securing Indebtedness described in Section
8.2(c)(iii)(D) shall be extended, renewed, refunded or replaced
only to the extent permitted by Section 8.2(c)(iv).
(e) CONTINGENT OBLIGATIONS. None of the Borrower or its 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 of the
Parent Guarantor and its Subsidiaries, given in connection with the
sale, purchase or lease of assets in transactions permitted by this
Agreement, and (ii) Contingent Obligations described on Schedule
8.2(e).
(f) SALE OF ASSETS. None of the Borrower or its 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 the Borrower and its Subsidiaries) with a book value
of less than $500,000 in the aggregate for the Borrower and its
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 Subsidiary of the Borrower to the
Borrower, provided that all such property remains subject to the
perfected, first priority Lien of the Agent and the Lenders, (v) cash
transfers from the Borrower to the Parent Guarantor, to the extent
permitted by Section 8.2(g) and (vi) other dispositions of assets of
the Borrower and its Subsidiaries, provided that (A) such dispositions
are made within the reasonable business judgment of the Borrower, (B)
at the time of such disposition, no Default or Event of Default has
occurred and is then continuing or
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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 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, or subject to a Lien in
favour of, the Agent, for the benefit of the Lenders, and (D) the
aggregate amount of all such dispositions (determined on the basis of
net book value) does not exceed (I) $2,000,000 in the aggregate for
Fiscal Year 1998 and (II) $3,000,000 in the aggregate for any Fiscal
Year thereafter; provided, further, that, with respect to any
disposition of the capital stock of any Restricted Subsidiary
permitted by this Section 8.2(f), (x) any such disposition shall be
for 100% of the issued and outstanding capital stock of such
Restricted Subsidiary and (y) all Obligations of such Restricted
Subsidiary shall be Paid In Full and all intercompany obligations of
such Restricted Subsidiary 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.
(g) RESTRICTED PAYMENTS.
(i) None of the Borrower or its Subsidiaries shall, directly or
indirectly, declare or pay any dividend (other than dividends
payable solely in common stock of the Borrower or its
Subsidiaries) 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 the Borrower or its
Subsidiaries 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 the
Borrower or its Subsidiaries; provided, however, that to the
extent permitted by applicable law:
(A) So long as no Default or Event of Default shall have
occurred and be continuing or occurs as a result thereof,
and only to the extent permitted by applicable Requirements
of Law, the Borrower may repurchase shares of capital stock
of the Parent Guarantor or warrants, options or rights to
purchase such shares issued to employees or directors of the
Borrower or its Subsidiaries or declare and pay a dividend
to the Parent Guarantor to allow it to make repurchases,
provided that
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the aggregate amount paid by the Borrower for such
repurchases shall not exceed $2,500,000 in any Fiscal Year;
(B) Any Subsidiary of the Borrower may declare and pay cash to
the Borrower or any Restricted Subsidiary (provided that to
the extent the payment is a loan, the loan is permitted by
Section 8.2(c)(vii);
(C) The Borrower may declare and pay to the Parent Guarantor
cash to the extent necessary to pay (I) general corporate,
accounting, legal, consulting, corporate reporting and
administrative expenses incurred in the ordinary course of
the Borrower's business consistent with past practice of the
Parent Guarantor and its Subsidiaries, (II) income and
franchise taxes, (III) costs and expenses and other amounts
payable in connection with this Agreement, the Fasco
Acquisition and any other Acquisition permitted hereby and
(IV) amounts permitted to be paid by the Borrower under
clause (A) above; provided that the cash payments permitted
to be made by the Borrower under this clause (C) shall not
exceed, in the aggregate, $1,000,000 in any Fiscal Year;
(D) The Borrower may declare and pay cash to the Parent
Guarantor, and any Subsidiary may declare and pay cash to
the Borrower or any Restricted Subsidiary (provided that to
the extent the payment is a loan, the loan is permitted by
Section 8.2(c)(vii)) to the extent necessary to enable the
Parent Guarantor to pay scheduled payments of principal and
interest (including additional interest at the rate
described in the definition of "Senior Subordinated Notes")
on the Senior Subordinated Notes, provided, that any payment
permitted under this clause (D) is payable and is paid no
earlier than one Business Day prior to the date when such
cash interest payment is due.
(ii) None of the Borrower or its Subsidiaries shall, directly or
indirectly, make any payment or prepayment of principal or,
premium, if any, or interest on, or redemption (including,
without limitation, by making payments to a sinking or analogous
fund) or repurchase of, or deposit to defease fully or partially
any of their respective covenants or obligations with respect to
any Mandatory Redeemable Obligation.
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(h) FUNDAMENTAL CHANGES. None of the Borrower or its 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 a series of
transactions, all or substantially all of such Person's business or
Property, whether now or hereafter acquired; provided, however, that
(a) the Borrower may amalgamate with or be wound-up or liquidated into
a Restricted Subsidiary and a Restricted Subsidiary may amalgamate
with or be wound-up or liquidated into another Restricted Subsidiary
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) the Borrower and each of
its Restricted Subsidiaries may enter into the transactions permitted
for such Persons under Section 8.2(f) and Section 8.2(p).
(i) ACCOUNTING CHANGES. None of the Borrower or its Subsidiaries shall
make any significant change in accounting treatment and reporting
practices except as required by GAAP.
(j) TERMINATION OF MATERIAL CONTRACTS; MODIFICATIONS OF GOVERNING
DOCUMENTS. None of the Borrower or its 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 Effective Date (or, in the case of Subsidiaries of the
Borrower formed or acquired after the Effective Date, as in effect on
the date the related Governing Documents are delivered to the Agent
pursuant to Section 8.2(c)), except (i) amendments to effect a change
of name of the Borrower or any of its Subsidiaries which are permitted
by the Security Agreement or (ii) other amendments which could not
reasonably be expected to impair the rights of the Agent or any of the
Lenders under the Credit Documents or with respect to the Collateral.
(k) RESTRICTION ON OPERATING LEASES. None of the Borrower or its
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 Borrower and its Subsidiaries
under all such leases would exceed (i) $1,000,000 in Fiscal Year 1998
and (ii) $2,000,000 in each Fiscal Year thereafter.
(l) SALE AND LEASEBACK TRANSACTIONS. None of the Borrower or its
Subsidiaries shall, directly or indirectly, become or remain liable as
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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 the Borrower or any of its Subsidiaries has
sold or transferred or intends to sell or transfer to any other
Person, except for transactions involving Real Property owned by the
Borrower or any of its Subsidiaries on the Effective 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.
(m) AFFILIATE TRANSACTIONS. None of the Borrower or its 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 the
Parent Guarantor, the Borrower or their respective Subsidiaries,
except in the ordinary course of, and pursuant to the reasonable
requirements of, the business of such Person, and upon fair and
reasonable terms no less favorable to such Person, than could be
obtained in a comparable arm's-length transaction with an unaffiliated
Person. Nothing contained in this Section 8.2(m) shall prohibit (i)
transactions permitted by Section 8.2(b)(ii), Section 8.2(c)(vii),
Section 8.2(f)(iv), Section 8.2(f)(v), or Section 8.2(g) and (ii)
customary directors' indemnifications and payment of customary
directors' fees.
(n) ADDITIONAL DEPOSIT AND SECURITIES ACCOUNTS. None of the Borrower or
its Subsidiaries shall, directly or indirectly, open, maintain or
otherwise have any checking, savings or other deposit accounts at any
bank or other financial institution, or any other account where money
is or may be deposited or maintained with any Person (including,
without limitation, any securities accounts), other than the
Disbursement Account and the accounts set forth on Schedule 8.2(n);
provided, however, that any Borrower or Restricted Subsidiary may
establish such an 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, a Restricted Account Agreement or an agreement that
grants Control over such account to the Agent, as applicable.
(o) EXCESS CASH. None of the Borrower or its Subsidiaries shall, directly
or indirectly, maintain in the aggregate in all deposit accounts and
securities accounts of the Borrower and its Subsidiaries (other than
the Disbursement Account and payroll accounts), total cash balances
and Investments permitted by Section 8.2(b)(iii), Section 8.2(b)(iv)
or Section 8.2(b)(v), in excess of $3,000,000 at any time during which
there
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are Accommodations Outstanding hereunder or the Agent or the Lenders
have any obligations under this Agreement.
(p) ADDITIONAL NEGATIVE PLEDGES. None of the Borrower or its Subsidiaries
shall, directly or indirectly, create or otherwise cause or suffer to
exist or become effective, directly or indirectly, (i) any prohibition
or restriction (including any agreement to provide equal and rateable
security to any other Person in the event a Lien is granted to or for
the benefit of the Agent and the Lenders) on the creation or existence
of any Lien upon the assets of the Borrower or its Subsidiaries or
(ii) any Contractual Obligation which may restrict or inhibit the
Agent's and the Lenders' 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 (A) in each case, (I)
with respect to specific Equipment encumbered to secure the Borrower's
or such Subsidiary's Indebtedness permitted by Section 8.2(c)(iv) or
obligations under an Operating Lease with respect to such Equipment
permitted by Section 8.2(k), (II) with respect to Real Property which
is the subject of an Operating Lease permitted by Section 8.2(k) or
(III) with respect to licenses and permits entered into or obtained in
the ordinary course of the Borrower's or such Subsidiary's business
which, by their terms, prohibit Liens of third parties and (B) the
terms of Indebtedness under the Parent Guarantor Credit Agreement (or
any replacement credit facility) or any Permitted Subordinated
Indebtedness may contain the prohibitions and restrictions described
in clause (i) above (other than an agreement to provide equal and
rateable security to the holders thereof in the event a Lien is
granted to or for the benefit of the Agent, for the benefit of the
Lenders)).
(q) ADDITIONAL SUBSIDIARIES. None of the Borrower or its Subsidiaries
shall, directly or indirectly, form or acquire any Subsidiaries,
except that the Borrower may form or acquire, Subsidiaries, provided,
that:
(i) The Borrower shall give the Agent written notice thereof (A) in
the case of a formation of new Subsidiary (other than in
connection with an Acquisition) at least 30 Business Days prior
to the Consummation Date of such formation, together with a list
of all locations of the assets of such Subsidiary after giving
effect to such formation or (B) in the case of an Acquisition,
within three Business Days after the execution of a letter of
intent or other agreement of the Borrower or the applicable
Subsidiary, together with (I) a copy of the related letter of
intent or such other agreement, and (II) a list of all locations
of the
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assets which will become property of the Borrower or such
applicable Subsidiary after giving effect to such Acquisition
(other than locations of Persons which will become customers of
the Borrower or its Restricted Subsidiaries after giving effect
to such Acquisition);
(ii) The Parent Guarantor or Borrower shall deliver to the Agent, or
cause its Subsidiary to deliver to the Agent, each of the
agreements, documents and instruments set forth on Exhibit R
within the time periods set forth thereon, provided that a
-------------
Subsidiary acquired in an Acquisition shall not be required to
become a Restricted Subsidiary if (A) the Borrower notifies the
Agent at least ten (10) Business Days prior to the Consummation
Date of such Acquisition that such Subsidiary will be
amalgamated into the Borrower or another Restricted Subsidiary,
or that such Subsidiary will be liquidated, dissolved or wound-
up and the assets of such Subsidiary transferred to the Borrower
or a Restricted Subsidiary, in each case, within five Business
Days after such Consummation Date and (B) such amalgamation,
liquidation, winding-up or dissolution is consummated within
five (5) Business Days after such Consummation Date;
(iii) Such Subsidiary is incorporated under the laws of Canada or a
province thereof;
(iv) Promptly upon the Agent's reasonable request therefor, the
Parent Guarantor or Borrower shall deliver any other
documentation pertaining to the Borrower and such Subsidiary,
taken as a whole; and
(v) Any other agreements, documents, instruments, certificates or
opinions which the Agent may reasonably request.
All agreements, documents, instruments, certificates and opinions delivered
pursuant to this Section 8.2(q) shall be in form and substance reasonably
satisfactory to the Agent. The Borrower expressly agrees that its Obligations
shall not be affected or diminished by the addition or release of any Restricted
Subsidiary hereunder, nor by any election by the Majority Lenders not to cause
any Subsidiary of the Borrower to become a Restricted Subsidiary. This
Agreement and the other Credit Documents shall be fully effective as to the
Borrower and any other Person which is or becomes a party hereto or thereto
regardless of whether any other Person becomes, fails to become or ceases to be
a party hereto or thereto.
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SECTION 8.3 SECURITY COVENANTS.
So long as any amount owing under this Agreement or any other Obligation
remains unpaid or the Lender has any obligation under this Agreement or any
other Credit Document, and unless consent is given in accordance with Section
11.1, the Borrower shall:
(a) STATUS OF ACCOUNTS COLLATERAL. With respect to the Collateral (i)
maintain books and records pertaining to the Collateral in such
detail, form and scope as the Majority Lenders reasonably require,
(ii) execute any instruments and take any steps required by the
Majority Lenders in order that all moneys due or to become due under
the contract are assigned to the Lenders and notice of such assignment
be given to the Governmental Entity, (iii) report immediately to the
Agent any matters materially adversely affecting the value,
enforceability or collectibility of the Collateral, taken as a whole,
and (iv) if any amount payable under or in connection with any account
in excess of Cdn. $25,000 is evidenced by a promissory note or other
instrument, immediately pledge, endorse, assign and deliver to the
Agent the promissory note or instrument, as additional Collateral;
(b) BUSINESS OUTSIDE CERTAIN JURISDICTIONS. At least 30 days prior to any
of the following changes becoming effective, notify the Agent in
writing of (i) any proposed change in the location of (w) any place of
business of the Borrower or any Restricted Subsidiary, (x) the chief
executive office or head office of the Borrower or any Restricted
Subsidiary, and (y) any place where tangible property of the Borrower
or any Restricted Subsidiary is stored or located (other than Rental
Equipment leased to a customer of the Borrower in the ordinary course
of business and located at all times in the jurisdictions set forth in
Schedule 7.1(a) as may be amended from time to time, and (ii) any
proposed change in the name of the Borrower or any Restricted
Subsidiary; and
(c) PERFECTION AND PROTECTION OF SECURITY INTEREST. Promptly cure or
cause to be cured any defects in the execution and delivery of any of
the Credit Documents or any defects in the validity or enforceability
or perfection of any of the Security and at its expense, execute and
deliver or cause to be executed and delivered, all such agreements,
instruments and other documents (including the filing of any financing
statements or financing change statements) as the Majority Lenders may
consider necessary or desirable to protect or otherwise perfect the
Security Interest.
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ARTICLE 9
EVENTS OF DEFAULT
SECTION 9.1 EVENTS OF DEFAULT.
The occurrence of any of the following events (each an "EVENT OF DEFAULT")
shall constitute an Event of Default under this Agreement:
(a) FAILURE TO PAY. The Borrower, any of its Subsidiaries or any
Additional Loan Party shall fail to pay (i) all or any portion of the
principal amount of any Accommodations Outstanding when due or (ii)
any other Obligation within five days after such Obligation is due and
payable;
(b) BREACH OF CERTAIN COVENANTS. The Borrower, any of its Subsidiaries,
or the Parent Guarantor shall fail to comply with any covenant
contained in (i) Section 8.1 and such failure continues for five days
after the occurrence thereof or (ii) Section 8.2, provided, that any
non-compliance with the first sentence of Section 8.2(a) shall not be
an Event of Default unless and until the Borrower 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 the Borrower or any of its Subsidiaries
or any Additional Loan Party in this Agreement or in any other Credit
Document (or in any statement or certificate given under this
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. The Borrower, or any of its Subsidiaries or any
Additional Loan Party shall fail to comply with any provisions
contained in any Credit Document to which such Person is a party,
other than as set forth in Sections 9.1(a), 9.1(b) or 9.1(c), and such
failure shall not have been remedied or waived within 10 days after
receipt by the Borrower of notice thereof from the Agent or any
Lender;
(e) DISSOLUTION. The Borrower, or any of its Subsidiaries or any
Additional Loan 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 judgement 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
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involving in any case an amount in excess of $1,000,000 shall be
entered or filed against the Borrower, any of its Subsidiaries or any
Additional Loan 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 of the Borrower, any of its Subsidiaries or any
Additional Loan Party shall become the subject of an Insolvency Event;
(h) CHANGE OF CONTROL. A Change of Control shall occur;
(i) CROSS DEFAULT. Any of the Borrower, any of its Subsidiaries or any
Additional Loan Parties 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 such Person 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 the Borrower, any of its Subsidiaries or any
Additional Loan Party (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof; or the holder of any
Lien (other than Liens upon property leased to the Borrower, any of
its Subsidiaries or any Additional Loan Party 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 the Borrower,
any of its Subsidiaries or any Additional Loan Party 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 the Borrower, any of its
Subsidiaries, or any Additional Loan 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; the
Borrower, any of its Subsidiaries, or any Additional Loan 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
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Agent and the Lenders 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 Canadian Federal Trademark and Patent Office and the United
States Patent and Trademark Office or, to the extent required to be
delivered on the Effective Date or thereafter pursuant to the Security
Agreement, the taking of possession of Negotiable Collateral (as
defined in the Securities Agreement (or any combination thereof) and
(ii) the Borrower, any of its Subsidiaries or any Additional Loan
Party, as applicable, 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 Agreement;
or
(k) PARENT GUARANTOR DEFAULTS. Without limiting in any manner Section
9.1(i), the Parent Guarantor shall fail to perform or comply with any
Financial Covenant, without giving effect to the benefit of any waiver
or consent to departure from such covenants by the Agent and/or the
Lenders under the Parent Guarantor Credit Agreement.
SECTION 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 Borrower or
any Additional Loan Parties:
(a) ACCELERATION.
(i) With respect to any Event of Default described in Section 9.1(g),
all Obligations shall automatically and without notice be
immediately due and payable without presentment, demand, protest
or any other action or obligation of the Agent or any Lender;
(ii) With respect to any Event of Default described in Section 9.1(a),
upon the written request, or with the written consent , of the
Majority Lenders, and by delivery of written notice to the
Borrower 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; and
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(iii) With respect to any other Event of Default, upon the written
request, or with the written consent, of the Majority Lenders,
and by delivery of written notice to the Borrower 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 Borrower from the
Agent, the Commitments of each of the Lenders shall be immediately
terminated (except with respect to any Event of Default described in
Section 9.1(g), in which case the Commitment shall automatically be
terminated without the necessity of any request of the Majority
Lenders or notice or other demand to any Borrower).
(c) CASH COLLATERALIZATION. On demand of the Agent or the Majority
Lenders, the Borrower shall immediately deposit with the Agent cash or
Cash Equivalents in an amount equal to 110% of the Letters of Credit
Obligations then outstanding.
SECTION 9.3 RESCISSION OF ACCELERATION AND TERMINATION.
After acceleration of the maturity of the Obligations or the termination of
the Commitment, if the Borrower pays all accrued interest and all principal due
on the Accommodations Outstanding (other than by reason of the acceleration) and
all Defaults and Events of Default are otherwise remedied or waived in
accordance with Section 11, (a) the Majority Lenders may elect, in their sole
discretion, to rescind the acceleration and (b) the Majority Lenders may elect,
in their sole discretion, to rescind the 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 (in the case of an acceleration of the
Obligations) and not to confer any right on the Borrower, even if the described
conditions for the election of the Majority Lenders may be met.
SECTION 9.4 REMEDIES.
Upon the occurrence and during the continuance of an Event of Default, the
Agent shall at the request of, or may the consent of, the Majority Lenders,
commence such legal action or other proceedings as the Majority Lenders, in
their sole discretion, deem expedient including, the commencement of enforcement
proceedings under the Credit Documents all without any additional notice,
presentation, demand, protest, notice of dishonour, entering into of possession
of any property or assets, or any other action or notice, all of which are
expressly waived by the Borrower and without limitation to the foregoing, may do
any or all of the following:
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(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 Borrower) such supplies or space of the Borrower,
any of its Subsidiaries or any Additional Loan Party at such Person'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 Borrower, any of its
Subsidiaries or any Additional Loan Party 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.
The Majority Lenders may instruct the Agent to exercise, or to refrain from
exercising, any right, remedy or power with respect to the Collateral available
to or conferred on the Agent hereunder or under any Collateral Document and in
connection therewith, to direct the time, method and place of conducting any
proceeding for any such right or remedy or exercising any such right or remedy,
or for the appointment of a receiver, or to instruct the Agent to take or
refrain from taking any other action with respect to the Collateral authorized
by this Agreement or any Collateral Document. Subject to provisions of Section
2.11, any Lender may bid or become a purchaser at any sale, free from any right
of redemption, which right is expressly waived by the Borrower. 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
Borrower will and will cause each of its Subsidiaries to assemble the Collateral
and make it available to the Agent at such locations as the Agent may specify,
whether at the premises of the Borrower, its Restricted Subsidiaries, or
elsewhere, and will make available to the Agent the premises and Facility of the
Borrower and its Restricted Subsidiaries for the purpose of the Agent's taking
possession of, removing or putting the Collateral in saleable form.
SECTION 9.5 RIGHT OF SETOFF.
In addition to and not in limitation of all rights of offset and any other
rights and remedies that the Agent or any Lender may have under applicable law,
upon the occurrence and during the continuance of any Event of Default, and
whether or
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not the Agent or any Lender has made any demand or the Obligations of the
Borrower have matured or are contingent, the Agent and each Lender shall have
the right to the fullest extent permitted by law (including general principles
of common-law) to set-off and to appropriate and apply to the payment of the
Obligations of the Borrower and its Subsidiaries (a) all deposits (general or
special, time or demand, provisional or final) and other obligations then or
thereafter owing by the Agent or such Lender to the Borrower or its
Subsidiaries, and (b) any moneys, credits or other property belonging to the
Borrower or its Subsidiaries, at any time held by or coming into the possession
of such Lender, the Agent or any of their respective Affiliates. If an
obligation is unascertained the Lender may, in good faith, estimate the
obligation and exercise its right of set-off in respect of the estimate, subject
to providing the Borrower with an accounting when the obligation is finally
determined. Each Lender exercising such rights shall notify the Agent thereof,
provided that the failure to give such notice shall not affect the validity of
the set-off and application and any amount received as a result of the exercise
of such rights shall be shared in accordance with Section 2.11.
SECTION 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, the Borrower and its
Subsidiaries 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
Borrower and its Subsidiaries Collateral, or any rights to any of the foregoing,
in completing production of, advertising for sale, and selling any of the
Borrower and its Subsidiaries Collateral, and the Borrower and its Subsidiaries
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 Borrower and its Subsidiaries prior
written notice.
SECTION 9.7 NO MARSHALLING; DEFICIENCIES; REMEDIES CUMULATIVE.
None of the Agent or the Lenders shall be under any obligation to marshal
any assets in favor of the Borrower, its Subsidiaries or Additional Loan 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 2.9(2)(c). The Borrower shall remain liable to the
Agent and the Lenders for any
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deficiencies, and the Agent and the Lenders in turn agree to remit to the
Borrower or its 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 Agreement, under any other Credit Document, at
equity or at law.
ARTICLE 10
THE AGENT AND THE LENDERS
SECTION 10.1 AUTHORIZATION AND ACTION.
(1) Each Lender irrevocably appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to it by the terms of this Agreement, together
with all powers reasonably incidental thereto. As to any matters not
expressly provided for by this Agreement, the Agent shall act or refrain
from acting (and shall be fully protected in so doing) upon the joint
instructions of the Majority Lenders which instructions shall be binding
upon all Lenders. The Agent shall not be required to take any action which
(i) would expose it to personal liability, (ii) is contrary to this
Agreement or any applicable law, rule, regulation, judgment or order, (iii)
would require it to become registered to do business in any jurisdiction,
or (iv) would subject it to taxation.
(2) The Lenders appoint the Agent as the holder of an irrevocable power of
attorney (within the meaning of the Civil Code of Quebec) for the purposes
of holding security on the properties and assets of the Borrower, the
Restricted Subsidiaries and the other Additional Loan Parties pursuant to
the laws of Quebec for the due payment and performance of their respective
obligations under the Credit Documents. The Agent agrees to act in such
capacity.
(3) The Agent shall have no duties or obligations other than as set out in this
Agreement and there shall not be construed against the Agent any implied
duties (including fiduciary duties), obligations or covenants. The Agent
may execute or perform, and may delegate the execution and performance of,
any of its powers, rights, discretions and duties under the Credit
Documents through or to any Persons designated by it. References in any
Credit Document to the Agent shall include references to any such Persons.
(4) The Agent is not obliged to (i) take or refrain from taking any action or
exercise or refrain from exercising any right or discretion under the
Credit Documents, or (ii) incur or subject itself to any cost in connection
with the Credit Documents, unless it is first specifically indemnified or
furnished with security by the Lenders, in form and substance satisfactory
to it (which may include further agreements of indemnity or the deposit of
funds).
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(5) The Agent shall promptly deliver to each Lender any notices, reports or
other communications contemplated in this Agreement which are intended for
the benefit of the Lenders.
SECTION 10.2 NO LIABILITY.
Neither the Agent nor its directors, officers, agents or employees shall be
liable to the Lender for any action taken or omitted to be taken by it or them
in connection with the Credit Documents except for its or their own gross
negligence or wilful misconduct. Without limiting the generality of the
foregoing, the Agent (i) may treat the Lender as the payee of amounts
attributable to its Commitment unless and until the Agent receives an agreement
in the form contemplated in Section 11.8(5), (ii) may consult with legal counsel
(including legal counsel for the Borrower), independent accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken by it in accordance with their advice, (iii) makes no warranty or
representation to the Lender and shall not be responsible to the Lender for the
form, substance, accuracy or completeness of any Credit Document or any other
documents or information made available to the Lenders, (iv) has no duty to
inspect the property or assets (including books and records) of the Borrower or
any other Person, (v) has no duty to ascertain or inquire as to the existence of
a Default or an Event of Default or the observance of any of the terms or
conditions of the Credit Documents, (vi) is not responsible to the Lender for
the execution, enforceability, genuineness, sufficiency or value of any of the
Credit Documents, and (vii) shall incur no liability by acting upon any notice,
certificate or other instrument believed by it to be genuine and signed or sent
by the proper Person.
SECTION 10.3 ACCOMMODATIONS BY AGENT.
The Agent has the same rights and powers under this Agreement with respect
to its Commitment as any other Lender and may exercise such rights and powers as
though it were not the Agent. The term "LENDER" or "LENDERS" shall, unless
otherwise expressly indicated, include the Agent in its individual capacity.
The Agent and its Affiliates may accept deposits from, lend money to, act as
trustee under indentures of, and generally engage in any kind of business with,
the Borrower, any of its subsidiaries, any Additional Loan Party or any Person
who may do business with or own securities of such Persons, all as if it were
not the Agent and without any duty to account to the Lenders.
SECTION 10.4 HOLDING OF SECURITY; SHARING OF PAYMENTS, ETC.
(1) The Security shall be held by the Agent for the rateable benefit of the
Lenders in accordance with its terms and any proceeds from any realization
of the Security shall be applied to the Accommodations Outstanding to each
Lender rateably (whether such Security is held in the name of the Agent or
in the name of any one or more of the Lenders and without regard to any
priority to which the Lender may otherwise be entitled under applicable
law).
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(2) Each Lender agrees with the other Lenders that (i) it will not, without the
prior consent of the other Lenders, take or obtain any Lien on any
properties or assets of the Borrower or any Additional Loan Party to secure
the Obligations of the Borrower under this Agreement, except for the
benefit of all Lenders or as may otherwise be required by law, and (ii)
notwithstanding the provisions of Section 32 of the Special Corporate
Powers Act (Quebec), the Agent may, as the Person holding the power of
attorney for the Lenders, acquire title to indebtedness secured by a
hypothec in its favour related to the Credit Documents.
(3) The Agent is authorized to release any Lien granted to or held by the
Agent, for the benefit of the Lenders, upon any Collateral (i) upon
termination of the Commitment and Payment In Full of all of the
Obligations, (ii) upon receipt of the proceeds of sales of the Collateral
permitted hereunder, together with a certificate of the Borrower or
Additional Loan Party, as appropriate, certifying, with appropriate
calculations where necessary, that such sale is permitted by this Agreement
or (iii) if the release can be and is approved by the Majority Lenders. At
such time, the Agent shall, upon the written request and at the expense of
the Borrower or Additional Loan Party, as appropriate, deliver to such
Person such instruments as are necessary to terminate the Liens on the
Collateral subject to such release or otherwise evidence and effectuate
such release. Any such delivery shall be without warranty by or recourse
to the Agent, except as to the absence of any prior assignments by the
Agent of its interest in the Collateral subject to such release, and shall
be at the expense of the Borrower or Additional Loan Party, as appropriate.
In addition, to the extent necessary upon the sale of the capital stock of
a Restricted Subsidiary in accordance with Section 3.2(f)(vi), the Agent is
authorized to release such Restricted Subsidiary from its Obligations under
the Credit Documents to which it is a party. The Agent may request, and
thereupon the Majority Lenders shall provide, confirmation of the Agent's
authority to execute and deliver releases with respect to the Collateral
and such Obligations of a Restricted Subsidiary whose capital stock has
been sold in accordance with Section 3.2(f)(vi), in each case as herein set
forth, and upon receipt of such approvals from the Majority Lenders, the
Agent shall execute and deliver such releases to the Borrower or Additional
Loan Party, as appropriate.
SECTION 10.5 LENDER CREDIT DECISIONS.
Each Lender acknowledges that it has, independently and without reliance
upon the Agent, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and
without reliance upon the Agent and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement.
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SECTION 10.6 INDEMNIFICATION.
Each Lender shall indemnify and save the Agent harmless (to the extent not
reimbursed by the Borrower) rateably in accordance with its Revolving Credit
Proportionate Share from any claim or loss suffered by, imposed upon or asserted
against the Agent as a result of, or arising out of, the Credit Documents or any
action taken or omitted by the Agent under the Credit Documents provided that no
Lender shall be liable for any part of such loss resulting from the gross
negligence or wilful misconduct of the Agent in its capacity as agent. Without
limiting the foregoing, each Lender shall reimburse the Agent upon demand for
its rateable share of any out-of-pocket expenses incurred by the Agent in
connection with the preparation, execution, administration or enforcement of, or
legal advice in respect of rights or responsibilities under, the Credit
Documents (to the extent not reimbursed by the Borrower).
SECTION 10.7 LIABILITY OF THE LENDERS INTER SE.
Each of the Lenders agrees with each of the other Lenders that, except as
otherwise expressly provided in this Agreement, none of the Lenders has or shall
have any duty or obligation, or shall in any way be liable to any of the other
Lenders in respect of the Credit Documents or any action taken or omitted to be
taken in connection with them.
SECTION 10.8 SUCCESSOR AGENTS.
The Agent may resign at any time by giving written notice to the Lenders
and the Borrower, such resignation to be effective upon the appointment of a
successor Agent. Upon notice of any resignation, the Majority Lenders have the
right to appoint a successor Agent who (at any time that no Event of Default has
occurred and is continuing) shall be acceptable to the Borrower, acting
reasonably. If no successor Agent is appointed or has accepted the appointment
within thirty days after the retiring Agent's notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
is a Lender. Upon the acceptance of the appointment by a successor Agent, the
successor 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 Agreement. After any
retiring Agent's resignation, the provisions of this Article 10 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1 AMENDMENTS, ETC.
(1) Subject to Section 11.1(2) and Section 11.1(3) no amendment or waiver of
any provision of any of the Credit Documents, nor consent to any departure
by
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the Borrower or any other Person from such provisions, is effective unless
in writing and approved by the Majority Lenders. Any amendment, waiver or
consent is effective only in the specific instance and for the specific
purpose for which it was given.
(2) Only written amendments, waivers or consents signed by all the Lenders
shall (i) increase the Lender's Commitment or subject the Lender to any
additional obligation, (ii) increase the Commitment, (iii) reduce the
principal or amount of, or interest on, any Accommodation Outstanding or
any Fees, (other than Fees that are exclusively for the account of the
Agent), (iv) postpone any date fixed for any scheduled payment of principal
of, or interest on, any Accommodation Outstanding or any Fees, (other than
Fees that are exclusively for the account of the Agent), (v) extend the
Relevant Repayment Date, (vi) change (y) the percentage of the Commitments
or outstanding Obligations, or any minimum requirement necessary for the
Majority Lenders to take action, or (z) the number or percentage of Lenders
required for the Lenders, or any of them, or the Agent to take any
action,(vii) change the definition of Majority Lenders or Revolving Credit
Proportionate Share, (viii) except as otherwise provided in this Agreement,
amend, any or consent to the departure of any provision of any of the
Security Documents or release any Liens in favour of the Agent or the
Lenders on all or substantially all of the Collateral, (vix) release the
Parent Guarantor from the Parent Guaranty (x) consent to any assignment by
the Borrower or Parent Guarantor of their respective rights or obligations
under the Credit Documents to which it is a party, or (xi) amend this
Section 11.1(2).
(3) Only written amendments, waivers or consents signed by the Agent in
addition to the Majority Lenders, shall affect the rights or duties of the
Agent under the Credit Documents.
SECTION 11.2 WAIVER.
(1) No failure on the part of any Lender or the Agent to exercise, and no
delay in exercising, any right under any of the Credit Documents shall
operate as a waiver of such right; nor shall any single or partial exercise
of any right under any of the Credit Documents preclude any other or
further exercise of such right or the exercise of any other right.
(2) Except as otherwise expressly provided in this Agreement, the covenants,
representations and warranties shall not merge on and shall survive the
initial Accommodation and, notwithstanding such initial Accommodation or
any investigation made by or on behalf of any party, shall continue in full
force and effect. The closing of this transaction shall not prejudice any
right of one party against any other party in respect of anything done or
omitted under this Agreement or in respect of any right to damages or other
remedies.
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SECTION 11.3 EVIDENCE OF DEBT AND ACCOMMODATION NOTICES.
(1) The indebtedness of the Borrower resulting from Accommodations under the
Credit Facility shall be evidenced by the records of the Lenders (or the
Agent acting on behalf of the Lenders) which shall constitute prima facie
evidence of such indebtedness, absent manifest error.
(2) Prior to the receipt of any Accommodation Notice, the Agent may act on the
basis of a notice by telephone (containing the same information as would be
contained in the Accommodation Notice) believed by it to be from an
authorized person representing the Borrower. In the event of a conflict
between the Agent's record of any Accommodation and the Accommodation
Notice, the Agent's record shall prevail, absent manifest error.
SECTION 11.4 NOTICES, ETC.
Any notice, direction or other communication to be given under this
Agreement shall, except as otherwise permitted, be in writing and given by
delivering it or sending it by facsimile or other similar form of recorded
communication addressed:
(a) To the Borrower at:
c/o Rental Service Corporation
0000 X. Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx Xxxxxx, Corporate Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxxx Xxxxx Verchere
0000 Xxxxxxx Xxxx Xxxx
000 0/xx/ Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx X. Xxxxxxxxxxx, Attorney
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxx, Attorney
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) To the Agent at:
BT Bank of Canada
Royal Bank Plaza
000 Xxx Xxxxxx
Xxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to:
BT Commercial Corporation
000 Xxxxx Xxxxx Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and, if to the Lenders, to them at the addresses shown on the signature pages.
Any such communication shall be deemed to have been validly and effectively
given if (i) personally delivered, on the date of such delivery if such date is
a Business Day and such delivery was made prior to 4:00 p.m. (Toronto time),
otherwise on the next Business Day, (ii) transmitted by facsimile or similar
means of recorded communication on the Business Day following the date of
transmission. Any party may change its address for service from time to time by
notice given in accordance with the foregoing and any subsequent notice shall be
sent to the party at its changed address.
SECTION 11.5 CONFIDENTIALITY.
Each Lender agrees that it will not disclose without the prior consent of
the Borrower or the Applicable Additional Loan Party any information with
respect to such Person or their Subsidiaries which is furnished pursuant to
this Agreement and which is designated by such Person to the Lenders in writing
as confidential, provided, that any Lender may disclose any such information (a)
to its Affiliates, 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
Accommodations or Commitments or any interest therein by such Lender, provided,
further, that, unless specifically prohibited by applicable law or court order
or unless such disclosure is made in connection with an examination or audit by
a governmental agency in the ordinary course of such Lender's business, each
Lender revealing confidential information pursuant to clause (c), (d) or (e) of
this Section 11.5 shall notify, as applicable, the Borrower or the relevant
Additional Loan Party of any request, summons or subpoena by any governmental
agency or representative thereof, or in connection
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with any litigation, for the disclosure of any such confidential information
prior to the disclosure of such information
SECTION 11.6 COSTS, EXPENSES AND INDEMNITY.
(1) The Borrower hereby indemnifies and agrees to defend and hold harmless the
Agent, the Issue Lender, and each of the Lenders and their respective
directors, officers, agents, employees and counsel (each an "INDEMNIFIED
PERSON") 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 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, any other Credit
Document or the transactions contemplated hereby, (ii) the issuance of the
Letters of Credit, (iii) the failure of the Issue Lender 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
the Borrower of the proceeds of the Accommodations, or (v) the Agent's or
the Lenders' entering into this Credit Agreement, the other Credit
Documents or any other agreements and documents relating hereto, (b) any
remedial or other action taken by the Borrower or any Additional Loan Party
or any of the Lenders in connection with compliance by the Borrower or any
Additional Loan Party or any of their Subsidiaries, or any of their
respective properties, with any federal, provincial or local environmental
laws, acts, rules, regulations, orders, directions, ordinances, criteria or
guidelines, (c) the presence of contaminants at, on or under, or the
discharge or reasonably likely discharge of contaminants from any of the
properties now or previously used by the Borrower or any Addition Loan
Party, or the breach or non-compliance with any Environmental Law by any
mortgagor, owner or lessee of such properties. In addition, the Borrower
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 (including,
without limiting the foregoing, in preserving the security interest in,
possession of, repairing, protecting, ensuring, preparing for disposition,
foreclosing, realizing, collecting, selling, transferring, delivering or
obtaining payment of the Collateral) and (z) obtaining any legal,
accounting or other advice (including remuneration of receivers) in
connection with any of the foregoing.
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(2) The Borrower agrees to reimburse the Agent's Expenses promptly on demand.
(3) If, with respect to the Lender, (i) any change in any law, rule,
regulation, judgment or order of general application, or any change in the
interpretation or application of such law, rule, regulation, judgment or
order, occurring or becoming effective after this date, or (ii) compliance
by the Lender with any direction, request or requirement (whether or not
having the force of law) of any Governmental Authority made or becoming
effective after the date, has the effect of causing any loss to the Lender
or reducing the Lender's rate of return by (w) increasing the cost to the
Lender of performing its obligations under this Agreement or in respect of
any Accommodations Outstanding (including the costs of maintaining any
capital, reserve or special deposit requirements but other than a reduction
resulting from a higher rate or from a change in the calculation of income
or capital tax relating to the Lender's income or capital in general), (x)
requiring the Lender to maintain or allocate any capital or additional
capital or affecting its allocation of capital in respect of its
obligations under this Agreement or in respect of any Accommodations
Outstanding, (y) reducing any amount payable to the Lender under this
Agreement or in respect of any Accommodations Outstanding by any material
amount, (z) causing the Lender to make any payment or to forego any return
on, or calculated by reference to, any amount received or receivable by the
Lender under this Agreement or in respect of any Accommodations
Outstanding, then the Lender may give notice to the Borrower specifying the
nature of the event giving rise to the loss and the Borrower shall, subject
to Section 11.9, on demand, pay such amounts as the Lender specifies is
necessary to compensate it for any such loss. A certificate as to the
amount of any such loss submitted in good faith by the Lender to the
Borrower shall be conclusive and binding for all purposes, absent manifest
error.
(4) The Borrower shall pay to each Lender on demand any amounts required to
compensate the Lender for any loss suffered or incurred by it as a result
of (i) any payment or prepayment being made in respect of a BA Instrument,
Letter of Credit or Advance other than on the maturity or expiration or on
the last day of an Eurodollar Interest Period applicable to it, or (ii) the
failure of the Borrower to make a payment or a mandatory repayment in the
manner and at the time specified in this Agreement. A certificate as to
the amount of any loss submitted in good faith by the Lender to the
Borrower shall be conclusive and binding for all purposes, absent manifest
error.
(5) The provisions of this Section 11.6 shall survive the termination of this
Agreement and the repayment of all Accommodations Outstanding. The
Borrower acknowledges that neither its obligation to indemnify nor any
actual indemnification by it of the Lender, the Agent or any other
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Indemnified Person in respect of such Person's losses for the legal fees
and expenses shall in any way affect the confidentiality or privilege
relating to any information communicated by such Person to its counsel.
SECTION 11.7 TAXES AND OTHER TAXES.
(1) All payments to the Lenders by the Borrower under any of the Credit
Documents shall be made free and clear of and without deduction or
withholding for any and all taxes, levies, imposts, deductions, charges or
withholdings and all related liabilities (all such taxes, levies, imposts,
deductions, charges, withholdings and liabilities being referred to as
"TAXES") imposed by Canada or the United States of America or any other
applicable jurisdiction (or any political subdivision or taxing authority
of it), unless such Taxes are required by applicable law to be deducted or
withheld. If the Borrower shall be required by applicable law to deduct or
withhold any such Taxes from or in respect of any amount payable under any
of the Credit Documents except, as provided in the next sentence, (i) the
amount payable shall be increased (and for greater certainty, in the case
of interest, the amount of interest shall be increased) as may be necessary
so that after making all required deductions or withholdings (including
deductions or withholdings applicable to any additional amounts paid under
this Section 11.7), the Lenders receive an amount equal to the amount they
would have received if no such deduction or withholding had been made, (ii)
the Borrower shall make such deductions or withholdings, and (iii) the
Borrower shall immediately pay the full amount deducted or withheld to the
relevant Governmental Entity in accordance with applicable law.
(2) The Borrower agrees to immediately pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges, financial
institutions duties, debits taxes or similar levies (all such taxes,
charges, duties and levies being referred to as "OTHER TAXES") which arise
from any payment made by the Borrower under any of the Credit Documents or
from the execution, delivery or registration of, or otherwise with respect
to, any of the Credit Documents.
(3) The Borrower shall indemnify the Lenders and the Agent for the full amount
of Taxes or Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable by the Borrower under
this Section 11.7) paid by the Lenders or the Agent and any liability
(including penalties, interest and expenses) arising from or with respect
to such Taxes or Other Taxes, whether or not they were correctly or legally
asserted. The Borrower will not be required to indemnify the Lenders for
any Taxes or Other Taxes imposed by reason of the Lender being connected
with Canada otherwise than merely by lending money to the Borrower pursuant
to this Agreement. Payment under this indemnification shall be made within
30
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days from the date the Agent or the relevant Lender, as the case may be,
make written demand for it. A certificate as to the amount of such Taxes
or Other Taxes submitted to the Borrower by the Agent or the relevant
Lender shall be conclusive evidence, absent manifest error, of the amount
due from the Borrower to the Agent or the Lenders, as the case may be.
(4) The Borrower shall furnish to the Agent and the Lenders the original or a
certified copy of a receipt evidencing payment of Taxes or Other Taxes made
by the Borrower within 30 days after the date of any payment of Taxes or
Other Taxes.
(5) The provisions of this Section 11.7 shall survive the termination of the
Agreement and the repayment of all Accommodations Outstanding.
SECTION 11.8 SUCCESSORS AND ASSIGNS.
(1) This Agreement shall become effective when executed by the Borrower, the
Agent and each Lender and after that time shall be binding upon and enure
to the benefit of the Borrower, the Lenders and the Agent and their
respective successors and permitted assigns.
(2) The Borrower shall not have the right to assign its rights or obligations
under this Agreement or any interest in this Agreement without the prior
consent of all the Lenders, which consent may be arbitrarily withheld.
(3) Any Lender may grant participations in all or any part of its interest in
the Credit Facility to one or more Persons (each a "PARTICIPANT") provided
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that (a) such interest or part of its interest, as the case may be, is not
----
less than $5,000,000, unless it is to another Lender (b) the Borrower, the
Parent Guarantor, the Agent, and the other Lenders shall continue to deal
solely and directly with such Lender and (c) no Participant shall have any
rights to approve any amendment or waiver or consent to any departure from
any provisions of this Agreement or any other Credit Document except to the
extent such amendment or waiver or departure would (i) increase the
Lender's Commitment of the Lender from whom the participant purchased its
participation interest, (ii) reduce the principal or amount of, or rate or
amount of interest on, any Accommodations Outstanding or any Fees subject
to such participation (other than by the payment or prepayment thereof),
(iii) postpone any date fixed for any scheduled payment of principal of, or
interest on, any Accommodations Outstanding or any Fees subject to the
participation interest or (iv) release all or a substantial portion of the
Collateral, other than when otherwise permitted under this Agreement. The
Lender may with the prior written consent of the Agent, and the payment of
$2,500 to the Agent assign all or any part of its interest in the Credit
Facility to one or more Persons (each an "ASSIGNEE"), provided that such
interest or part of its interest, as the case may be, is not less than
$5,000,000 unless it is to another
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Lender. The Lender granting a participation shall, unless otherwise
expressly provided in this Agreement, act on behalf of all of its
Participants in all dealings with the Borrower in respect of the Credit
Facility and no Participant shall have any voting or consent rights with
respect to any matter requiring the Lenders' consent. In the case of an
assignment, the Assignee shall have the same rights and benefits and be
subject to the same limitations under the Credit Documents as it would have
if it was the Lender.
(4) The Borrower shall at its cost and expense provide such certificates,
acknowledgements and further assurances in respect of this Agreement and
the Credit Facility as such Lender may reasonably require in connection
with any participation or assignment pursuant to this Section 11.8.
(5) In the case of an assignment, the Lender shall deliver to the Borrower and
the Borrower shall execute an assignment and assumption agreement
substantially in the form of Exhibit S by which the Assignee assumes the
obligations of the Lender and agrees to be bound by all the terms and
conditions of this Agreement, all as if the Assignee had been an original
party. Upon receipt by the Agent of the fee set forth in Section 11.8(3)
above, the assignment and assumption agreement, the assigning Lender and
the Borrower shall be released from their respective obligations under this
Agreement (to the extent of such assignment and assumption) and shall have
no liability or obligations to each other to such extent, except in respect
of matters arising prior to the assignment.
(6) Any assignment or grant of participation pursuant to this Section 11.8 will
not constitute a repayment by the Borrower to the assigning or granting
Lender of any Accommodation, nor a new Accommodation to the Borrower by the
Lender or by the Assignee or Participant, as the case may be, and the
parties acknowledge that the Borrower's obligations with respect to any
such Accommodations will continue and will not constitute new obligations.
SECTION 11.9 OBLIGATION OF LENDERS TO MITIGATE: REPLACEMENT OF LENDERS.
(1) Each Lender agrees that, as promptly as practicable after the officer of
such Lender responsible for administering the Accommodations of such Lender
becomes aware of any event or condition that would entitle such Lender to
receive payments under Section 11.6(3) or 11.7(1) or to cease making U.S.
Dollar Advances or Bankers' Acceptances available under Sections 3.7 and
4.6, respectively, such Lender will, to the extent not inconsistent with
the internal policies of such Lender 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 Accommodations of such
Lender through another lending or letter of credit office of such Lender or
(ii) take such other measures as such Lender may deem reasonable, if as a
result thereof the additional amounts which would otherwise be required to
be paid
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to such Lender pursuant to Sections 11.6(3) or 11.7(1) would be materially
reduced or the conditions rendering such Lender incapable of making U.S.
Dollar Advances or Bankers' Acceptances available under Sections 3.7 and
4.6, respectively, no longer would be applicable, and if, as determined by
such Lender in its sole discretion, the making, issuing, funding or
maintaining of such Commitments or Accommodations 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 Accommodations or the interests of such Lender;
provided that such Lender will not be obligated to utilize such other
lending or letter of credit office pursuant to this Section 11.9 unless the
Borrower agrees to pay all incremental expenses incurred by such Lender 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 Borrower
pursuant to this Section 11.9 (setting forth in reasonable detail the basis
for requesting such amount) submitted by such Lender to the Borrower (with
a copy to Agent) shall be conclusive absent manifest error.
(2) If the Borrower receives a notice pursuant to Section 11.6(3) or 11.7(1)
or a notice pursuant to Section 3.7 or 4.6 stating that a Lender is unable
to extend U.S. Dollar Advances or Bankers' Acceptances (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
Borrower has obtained a commitment from another Lender or an Assignee to
purchase at par such Lender's Accommodations Outstanding, 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 the Issue Lender with respect
to any Letters of Credit outstanding and (iv) such Lender to be replaced is
unwilling to withdraw the notice delivered to the Borrower, upon 30 days'
prior written notice to such Lender and the Agent, the Borrower may
require, at the Borrowers' expense, the Lender giving such notice to
assign, without recourse, all of its Accommodations Outstanding,
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 Assignee pursuant to the provisions of Section 11.8;
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 accrued interest on, all
outstanding Advances and Bankers' Acceptances, 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
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Issue Lender, all amounts as to which the replaced Lender is then in
default to the Issue Lender in respect of participations in Letters of
Credit, (x) the Borrower shall have paid to the Lender giving such notice
all amounts owing under Sections 11.6(2), 11.6(3), 11.6(4), 11.7(1) and
11.7(3), 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 repayment of
such replaced Lender's Accommodations and the termination of such replaced
Lender's Commitment) through such date of replacement, (y) the Borrower or
the applicable assignee shall have paid to the Agent the processing and
recordation fee required to be paid by Section 11.8(3) and (z) all of the
requirements for such assignment contained in Section 11.8, 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.
SECTION 11.10 ACCOMMODATIONS BY LENDERS.
The failure of the Lender to make an Accommodation shall not relieve any
other Lender of its obligations in connection with such Accommodation, but no
Lender is responsible for any other Lender's failure in respect of an
Accommodation. Unless the Agent receives notice from the Lender prior to the
date of any Accommodation that the Lender will not make its rateable portion of
the Accommodation available to the Agent, the Agent may assume that the Lender
has made its portion so available on the date of the Accommodation and may, in
reliance upon such assumption, make a corresponding amount available to the
Borrower. If the Lender has not made its rateable portion available to the
Agent, the Lender shall pay the corresponding amount to the Agent immediately
upon demand. If the Lender pays the corresponding amount to the Agent, the
amount so paid shall constitute the Lender's part of the Accommodation for
purposes of this Agreement. If the Lender does not pay the amount to the Agent
immediately upon demand and such amount has been made available to the Borrower,
the Borrower shall pay the corresponding amount to the Agent immediately upon
demand and any amount received and so reimbursed would not and will not
constitute an Accommodation. The Agent shall also be entitled to recover from
the Lender or the Borrower, as the case may be, interest on the corresponding
amount, for each day from the date the amount was made available to the Borrower
until the date it is repaid to the Agent, at a rate per annum equal to the
Agent's cost of funds.
SECTION 11.11 RATEABLE PAYMENTS.
Unless the Agent receives notice from the Borrower prior to the date on
which any payment is due to the Lenders that the Borrower will not make the
payment in full, the Agent may assume that the Borrower has made the payment in
full on that date and may, in reliance upon that assumption, distribute to each
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Lender on the due date an amount equal to the amount then due to the Lender. If
the Borrower has not made the payment in full, each Lender shall repay to the
Agent immediately upon demand the amount distributed to it together with
interest for each day from the date such amount was distributed to the Lender
until the date the Lender repays it to the Agent, at a rate per annum equal to
the Agent's cost of funds.
SECTION 11.12 JUDGMENT CURRENCY.
(1) If, for the purposes of obtaining judgment in any court, it is necessary to
convert a sum due to a Lender in any currency (the "ORIGINAL CURRENCY")
into another currency (the "OTHER CURRENCY"), the parties agree, to the
fullest extent that they may effectively do so, that the rate of exchange
used shall be that at which, in accordance with normal banking procedures,
such Lender could purchase the Original Currency with the Other Currency on
the Business Day preceding the day on which final judgment is given or, if
permitted by applicable law, on the day on which the judgment is paid or
satisfied.
(2) The obligations of the Borrower in respect of any sum due in the Original
Currency from it to the Lender under any of the Credit Documents shall,
notwithstanding any judgment in any Other Currency, be discharged only to
the extent that on the Business Day following receipt by the Lender of any
sum adjudged to be so due in the Other Currency, the Lender may, in
accordance with normal banking procedures, purchase the Original Currency
with such Other Currency. If the amount of the Original Currency so
purchased is less than the sum originally due to the Lender in the Original
Currency, the Borrower agrees, as a separate obligation and notwithstanding
the judgment, to indemnify the Lender, against any loss, and, if the amount
of the Original Currency so purchased exceeds the sum originally due to the
Lender in the Original Currency, the Lender shall remit such excess to the
Borrower.
SECTION 11.13 INTEREST ON AMOUNTS.
Except as may be expressly provided otherwise in this Agreement, all
amounts owed by the Borrower to the Agent and to any of the Lenders, which are
not paid when due (whether at stated maturity, on demand, by acceleration or
otherwise) shall bear interest (both before and after default and judgment),
from the date on which such amount is due until such amount is paid in full,
payable on demand, at a rate per annum equal at all times to (i) in the case of
an amount payable in U.S. Dollars, the sum of the Base Rate (Canada) in effect
from time to time, the maximum Applicable Base Rate (Canada) Margin and 2%, and
(ii) in the case of an amount payable in Canadian Dollars, the sum of the
Canadian Prime Rate in effect from time to time, the maximum Applicable Canadian
Prime Rate Margin and 2%.
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SECTION 11.14 GOVERNING LAW.
This Agreement shall be governed by and interpreted and enforced in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein.
SECTION 11.15 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and all of
such counterparts taken together shall be deemed to constitute one and the same
instrument.
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IN WITNESS WHEREOF the parties have executed this Agreement.
RENTAL SERVICE CORPORATION OF
CANADA LTD.
By: /s/ Xxxx Xxxxxxxx
-----------------------------
Authorized Signing Officer
COMMITMENTS THE LENDERS
Commitment: BT BANK OF CANADA
Cdn. $17,000,000
By: /s/ Xxxxxxx Xxxxxxxx
-----------------------------
Authorized Signing Officer
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Authorized Signing Officer
Address: Royal Bank Plaza,
North Tower, 000 Xxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxx
X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
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Commitment: THE BANK OF NOVA SCOTIA
Cdn. $11,000,000
By: /s/ Xxxx Xxxxxxx
--------------------------
Authorized Signing Officer
By: /s/ Xxxx Xxxxxx
--------------------------
Authorized Signing Officer
Address: 0000 Xxxxxx Xxxxxx,
000-0xx Xxxxxx X.X., Xxxxxxx, Xxxxxxx
X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X.X. Xxxxx
THE AGENT
BT BANK OF CANADA
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Authorized Signing Officer
By: /s/ Xxxxx Xxxx
--------------------------
Authorized Signing Officer
Address: Royal Bank Plaza, North
Tower, 000 Xxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx X0X 0X0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxx
