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EXHIBIT 10.1
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CREDIT AGREEMENT
DATED AS OF MAY 15, 1996,
AMONG
RENTX INDUSTRIES, INC.,
THE LENDERS
PARTY HERETO,
AND
XXXXXX TRUST AND SAVINGS BANK,
INDIVIDUALLY AND AS AGENT
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TABLE OF CONTENTS
SECTION DESCRIPTION PAGE
SECTION 1. THE CREDITS. ............................................... 1
Section 1.1. Revolving Credit. ....................................... 1
Section 1.2. Revolving Credit Loans. ................................. 1
Section 1.3. Term Credit. ............................................ 2
Section 1.4. Manner and Disbursement of Loans. ....................... 3
SECTION 2. INTEREST AND CHANGE IN CIRCUMSTANCES. ...................... 4
Section 2.1. Interest Rate Options. .................................. 4
Section 2.2. Minimum LIBOR Portion Amounts. .......................... 5
Section 2.3. Computation of Interest. ................................ 5
Section 2.4. Manner of Rate Selection. ............................... 5
Section 2.5. Change of Law. .......................................... 5
Section 2.6. Unavailability of Deposits or Inability to
Ascertain Adjusted LIBOR. ............................. 6
Section 2.7. Taxes and Increased Costs. .............................. 6
Section 2.8. Change in Capital Adequacy Requirements. ................ 7
Section 2.9. Funding Indemnity ....................................... 7
Section 2.10. Lending Branch. ......................................... 8
Section 2.11. Discretion of Lenders as to Manner of Funding. .......... 8
SECTION 3. FEES, PREPAYMENTS, TERMINATIONS, AND APPLICATIONS. ......... 8
Section 3.1. Fees. ................................................... 8
Section 3.2. Voluntary Prepayments. .................................. 9
Section 3.3. Mandatory Prepayments. .................................. 10
Section 3.4. Terminations. ........................................... 10
Section 3.5. Place and Application of Payments. ...................... 10
Section 3.6. Notations. .............................................. 11
SECTION 4. COLLATERAL. ................................................ 12
Section 4.1. Generally ............................................... 12
Section 4.2. Liens on After Acquired Real Property ................... 12
Section 4.3. Further Assurances ...................................... 12
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SECTION DESCRIPTION PAGE
SECTION 5. DEFINITIONS; INTERPRETATION. ............................... 13
Section 5.1. Definitions. ............................................ 13
Section 5.2. Interpretation. ......................................... 24
SECTION 6. REPRESENTATIONS AND WARRANTIES. ............................ 24
Section 6.1. Organization and Qualification .......................... 24
Section 6.2. Subsidiaries ............................................ 24
Section 6.3. Corporate Authority and Validity of Obligations ......... 25
Section 6.4. Use of Proceeds; Margin Stock ........................... 25
Section 6.5. Financial Reports ....................................... 25
Section 6.6. No Material Adverse Change .............................. 26
Section 6.7. Full Disclosure ......................................... 26
Section 6.8. Good Title .............................................. 26
Section 6.9. Litigation and Other Controversies ...................... 26
Section 6.10. Taxes ................................................... 26
Section 6.11. Approvals ............................................... 26
Section 6.12. Affiliate Transactions .................................. 27
Section 6.13. Investment Company; Public Utility Holding Company ...... 27
Section 6.14. ERISA ................................................... 27
Section 6.15. Compliance with Laws .................................... 27
Section 6.16. Other Agreements ........................................ 28
Section 6.17. No Default .............................................. 28
SECTION 7. CONDITIONS PRECEDENT ....................................... 28
Section 7.1. All Advances. ........................................... 28
Section 7.2. Initial Advance ......................................... 29
SECTION 8. COVENANTS .................................................. 30
Section 8.1. Maintenance of Business ................................. 30
Section 8.2. Maintenance of Properties ............................... 30
Section 8.3. Taxes and Assessments ................................... 31
Section 8.4. Insurance ............................................... 31
Section 8.5. Financial Reports ....................................... 31
Section 8.6. Inspection .............................................. 33
Section 8.7. Rental Inventory Leases ................................. 33
Section 8.8. Store Leases ............................................ 33
Section 8.9. Senior Funded Debt to Annualized EBITDA ................. 33
Section 8.10. Actual EBITDA ........................................... 33
Section 8.11. Overhead to Revenue Ratio ............................... 34
Section 8.12. Store Openings .......................................... 34
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SECTION DESCRIPTION PAGE
Section 8.13. Indebtedness for Borrowed Money ......................... 34
Section 8.14. Liens ................................................... 34
Section 8.15. Investments, Loans, Advances and Guaranties ............. 35
Section 8.16. Acquisitions ............................................ 36
Section 8.17. Mergers, Consolidations and Sales ....................... 37
Section 8.18. Maintenance of Subsidiaries ............................. 37
Section 8.19. Dividends and Certain Other Restricted Payments ......... 37
Section 8.20. Subordinated Debt ....................................... 38
Section 8.21. ERISA ................................................... 38
Section 8.22. Compliance with Laws .................................... 38
Section 8.23. Burdensome Contracts With Affiliates .................... 38
Section 8.24. No Changes in Fiscal Year ............................... 39
Section 8.25. Formation of Subsidiaries ............................... 39
Section 8.26. Change in the Nature of Business ........................ 39
Section 8.27. BACE Management Agreement ............................... 39
SECTION 9. EVENTS OF DEFAULT AND REMEDIES ............................. 39
Section 9.1. Events of Default. ...................................... 39
Section 9.2. Non-Bankruptcy Defaults. ................................ 42
Section 9.3. Bankruptcy Defaults ..................................... 42
SECTION 10. THE AGENT .................................................. 42
Section 10.1. Appointment and Authorization. .......................... 42
Section 10.2. Rights as a Lender ...................................... 43
Section 10.3. Standard of Care ........................................ 43
Section 10.4. Costs and Expenses ...................................... 44
Section 10.5. Indemnity ............................................... 44
SECTION 11. MISCELLANEOUS. ............................................. 44
Section 11.1. Withholding Taxes ....................................... 44
Section 11.2. Non-Business Days. ...................................... 45
Section 11.3. No Waiver, Cumulative Remedies. ......................... 45
Section 11.4. Waivers, Modifications and Amendments ................... 46
Section 11.5. Costs and Expenses ...................................... 46
Section 11.6. Documentary Taxes. ...................................... 47
Section 11.7. Survival of Representations. ............................ 47
Section 11.8. Survival of Indemnities. ................................ 47
Section 11.9. Participations .......................................... 47
Section 11.10. Assignment Agreements ................................... 47
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SECTION DESCRIPTION PAGE
Section 11.11. Notices ................................................. 48
Section 11.12. Construction ............................................ 49
Section 11.13. Headings ................................................ 49
Section 11.14. Severability of Provisions. ............................. 49
Section 11.15 Counterparts. ........................................... 49
Section 11.16. Entire Understanding .................................... 49
Section 11.17. Binding Nature, Governing Law, Etc ...................... 49
Section 11.18. Submission to Jurisdiction; Waiver of Jury Trial ........ 50
Signature .................................................................. 50
Exhibit A - Revolving Credit Note
Exhibit B - Term Note
Exhibit C - Compliance Certificate
Schedule 6.2 - Subsidiaries
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CREDIT AGREEMENT
To each of the Lenders party hereto:
Ladies and Gentlemen:
The undersigned, RentX Industries, Inc., a Delaware corporation (the
"Company"), applies to you for your several commitments, subject to the terms
and conditions hereof and on the basis of the representations and warranties
hereinafter set forth, to extend credit to the Company, all as more fully
hereinafter set forth.
SECTION 1. THE CREDITS.
Section 1.1. Revolving Credit. (a) General Terms. Subject to the terms
and conditions hereof, each Lender severally agrees to extend a revolving
credit (the "Revolving Credit") to the Company which may be availed of by the
Company from time to time during the period from and including the date hereof
to but not including the Revolving Credit Termination Date, at which time the
commitments of the Lenders to extend credit under the Revolving Credit shall
expire. The maximum amount of the Revolving Credit which each Lender agrees to
extend to the Company shall be as set forth opposite such Lender's signature
hereto under the heading "Revolving Credit Commitment" or as otherwise
provided in Section 11.10 hereof, as such amount may be reduced pursuant
hereto. The Revolving Credit may be utilized by the Company in the form of
Revolving Credit Loans, all as more fully hereinafter set forth; provided,
however, that the aggregate principal amount of Revolving Credit Loans
outstanding at any one time shall not exceed the lesser of (x) the Revolving
Credit Commitments or (y) the Revolver Advance Limit as then determined and
computed. During the period from and including the date hereof to but not
including the Revolving Credit Termination Date, the Company may use the
Revolving Credit Commitments by borrowing, repaying and reborrowing Revolving
Credit Loans in whole or in part, all in accordance with the terms and
conditions of this Agreement. The obligations of the Lenders hereunder are
several and not joint, and no Lender shall under any circumstances be
obligated to extend credit under the Revolving Credit in excess of its
Revolving Credit Commitment.
(b) Use of Proceeds. The Company shall use the proceeds of the Revolving
Credit Loans solely for working capital purposes, including the purchase of
rental inventory and covering costs of opening of Start-Up Stores, in each case
in the ordinary course of business.
Section 1.2. Revolving Credit Loans. Subject to the terms and conditions
hereof, the Revolving Credit may be availed of by the Company in the form of
loans (individually a "Revolving Credit Loan" and collectively the "Revolving
Credit Loans"). Each Borrowing of Revolving Credit Loans shall be made ratably
by the Lenders in accordance with their Percentages of the Revolving Credit
Commitments. Each Borrowing of Revolving Credit Loans shall be in an amount of
$25,000 or such greater amount which is an
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integral multiple of $1,000; provided, however, that a Borrowing of Revolving
Credit Loans which bears interest with reference to the Adjusted LIBOR shall
be in such greater amount as is required by Section 2 hereof. Each Borrowing
of Revolving Credit Loans shall be further subject to the limitations
contained in Section 1.1(b) above. All Revolving Credit Loans made by a Lender
shall be made against and evidenced by a single Revolving Credit Note of the
Company (individually a "Revolving Credit Note" and collectively the
"Revolving Credit Notes") payable to the order of such Lender in the amount of
its Revolving Credit Commitment, with each Revolving Credit Note to be in the
form (with appropriate insertions) attached hereto as Exhibit A. Each
Revolving Credit Note shall be dated the date of issuance thereof, be
expressed to bear interest as set forth in Section 2 hereof, and be expressed
to mature on the Revolving Credit Termination Date. Without regard to the
principal amount of each Revolving Credit Note stated on its face, the actual
principal amount at any time outstanding and owing by the Company on account
thereof shall be the sum of all advances then or theretofore made thereon less
all payments of principal actually received.
Section 1.3. Term Credit. (a) General Terms. Subject to the terms and
conditions hereof, each Lender severally agrees to make loans (individually a
"Term Loan" and collectively the "Term Loans") to the Company in a cumulative
amount not exceeding such Lender's commitment set forth opposite such Lender's
signature hereto under the heading "Term Loan Commitment" or as otherwise
provided in Section 11.10 hereof; provided, however, that notwithstanding
anything herein to the contrary, (i) the aggregate amount of Term Loans
outstanding at any one time shall not exceed the Term Credit Earnings Limit as
then determined and computed and (ii) the aggregate cumulative amount of Term
Loans made after the date hereof shall not exceed the Term Loan Commitments.
There may be multiple Borrowings under the Term Loan Commitments which shall
be made ratably by the Lenders in accordance with their Percentage of the Term
Loan Commitments and which shall be made, if at all, before the Term Credit
Termination Date, at which time the commitments of the Lenders to make Term
Loans under the Term Loan Commitments shall expire. Each Borrowing of Term
Loans shall be in a minimum amount of $1,000,000; provided, however, that a
Borrowing of Term Loans which bears interest with reference to the Adjusted
LIBOR shall be in such greater amount as is required by Section 2 hereof. Each
Borrowing of Term Loans shall be further subject to the limitations contained
in Section 1.3(b) below. All Term Loans made by each Lender to the Company
shall be evidenced by a single Term Note of the Company (individually a "Term
Note" and collectively the "Term Notes") payable to the order of such Lender
in the amount of its Term Loan Commitment, with each Term Note to be in the
form (with appropriate insertions) attached hereto as Exhibit B. Each Term
Note shall be dated the date of issuance thereof, be expressed to bear
interest as set forth in Section 2 hereof, and be expressed to mature on the
Term Credit Termination Date. Without regard to the principal amount of each
Term Note stated on its face, the actual principal amount at any time
outstanding and owing by the Company on account thereof shall be the sum of
all advances then or theretofore made thereon less all payments of principal
actually received. No amount paid or prepaid on the Term Loans may be
reborrowed.
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(b) Use of Proceeds. The Company shall use the proceeds of the Term Loans
solely for Permitted Acquisitions. No Borrowing of Term Loans shall be
permitted if after giving effect thereto, the aggregate principal amount of
Term Loans made on a cumulative basis would exceed 60% of the aggregate cost,
including closing costs, on a cumulative basis of all the Permitted
Acquisitions closed on and at any time after the date hereof.
Section 1.4. Manner and Disbursement of Loans. The Company shall give
written or telephonic notice to the Agent (which notice shall be irrevocable
once given and, if given by telephone, shall be promptly confirmed in writing)
by no later than 11:00 a.m. (Chicago time) on the date the Company requests
that any Borrowing of Loans be made to it under the Commitments, and the Agent
shall promptly notify each Lender of the Agent's receipt of each such notice.
Each such notice shall specify the date of the Borrowing of Loans requested
(which must be a Business Day), the type of Loan being requested, and the
amount of such Borrowing. Each Borrowing of Loans shall initially constitute
part of the applicable Domestic Rate Portion except to the extent the Company
has otherwise timely elected that such Borrowing, or any part thereof,
constitute part of a LIBOR Portion as provided in Section 2 hereof. The Company
agrees that the Agent may rely upon any written or telephonic notice given by
any person the Agent in good faith believes is an Authorized Representative
without the necessity of independent investigation and, in the event any
telephonic notice conflicts with the written confirmation, such telephonic
notice shall govern if the Agent and the Lenders have acted in reliance
thereon. Not later than 1:00 p.m. (Chicago time) on the date specified for any
Borrowing of Loans to be made hereunder, each Lender shall make the proceeds of
its Loan comprising part of such Borrowing available to the Agent in Chicago,
Illinois in immediately available funds. Subject to the provisions of Section 7
hereof, the proceeds of each Loan shall be made available to the Company at the
principal office of the Agent in Chicago, Illinois, in immediately available
funds, upon receipt by the Agent from each Lender of its Percentage of such
Borrowing. Unless the Agent shall have been notified by a Lender prior to 1:00
p.m. (Chicago time) on the date a Borrowing is to be made hereunder that such
Lender does not intend to make the proceeds of its Loan available to the Agent,
the Agent may assume that such Lender has made such proceeds available to the
Agent on such date and the Agent may in reliance upon such assumption make
available to the Company a corresponding amount. If such corresponding amount
is not in fact made available to the Agent by such Lender and the Agent has
made such amount available to the Company, the Agent shall be entitled to
receive such amount from such Lender forthwith upon the Agent's demand,
together with interest thereon in respect of each day during the period
commencing on the date such amount was made available to the Company and ending
on but excluding the date the Agent recovers such amount at a rate per annum
equal to the effective rate charged to the Agent for overnight federal funds
transactions with member banks of the federal reserve system for each day as
determined by the Agent (or in the case of a day which is not a Business Day,
then for the preceding day). If such amount is not received from such Lender by
the Agent immediately upon demand, the Company will, on demand, repay to the
Agent the proceeds of such Loan attributable to such Lender with interest
thereon at a rate per annum equal to the interest rate applicable to the
relevant Loan, but without such payment being considered a payment or
prepayment of a LIBOR Portion, so that the Company will have no liability under
Section 2.9 hereof with respect to such payment.
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SECTION 2. INTEREST AND CHANGE IN CIRCUMSTANCES.
Section 2.1. Interest Rate Options. (a) Portions. Subject to the terms and
conditions of this Section 2, portions of the principal indebtedness evidenced
by the Notes (all of the indebtedness evidenced by Notes of the same type
bearing interest at the same rate for the same period of time being hereinafter
referred to as a "Portion") may, at the option of the Company, bear interest
with reference to the Domestic Rate ("Domestic Rate Portions") or with
reference to the Adjusted LIBOR ("LIBOR Portions"), and Portions may be
converted from time to time from one basis to another. All of the indebtedness
evidenced by Notes of the same type which is not part of a LIBOR Portion shall
constitute a single Domestic Rate Portion. All of the indebtedness evidenced by
Notes of the same type which bears interest with reference to a particular
Adjusted LIBOR for a particular Interest Period shall constitute a single LIBOR
Portion. Each Lender shall have a ratable interest in each Portion based on its
Percentage. Anything contained herein to the contrary notwithstanding, the
obligation of the Lenders to create, continue or effect by conversion any LIBOR
Portion shall be conditioned upon the fact that at the time no Default or Event
of Default shall have occurred and be continuing. The Company hereby promises
to pay interest on each Portion at the rates and times specified in this
Section 2.
(b) Domestic Rate Portion. Each Domestic Rate Portion shall bear interest
at the rate per annum equal to the Domestic Rate as in effect from time to
time, provided that if a Domestic Rate Portion or any part thereof is not paid
when due (whether by lapse of time, acceleration or otherwise) such Portion
shall bear interest, whether before or after judgment, until payment in full
thereof at the rate per annum determined by adding 2% to the interest rate
which would otherwise be applicable thereto from time to time. Interest on
each Domestic Rate Portion shall be payable monthly in arrears on the last day
of each month in each year (commencing June 30, 1996) and at maturity of the
applicable Notes, and interest after maturity (whether by lapse of time,
acceleration or otherwise) shall be due and payable upon demand. Any change in
the interest rate on the Domestic Rate Portions resulting from a change in the
Domestic Rate shall be effective on the date of the relevant change in the
Domestic Rate.
(c) LIBOR Portions. Each LIBOR Portion shall bear interest for each
Interest Period selected therefor at a rate per annum determined by adding two
and one-half percent (2-1/2%) to the Adjusted LIBOR for such Interest Period,
provided that if any LIBOR Portion is not paid when due (whether by lapse of
time, acceleration or otherwise) such Portion shall bear interest, whether
before or after judgment, until payment in full thereof through the end of the
Interest Period then applicable thereto at the rate per annum determined by
adding 2% to the interest rate which would otherwise be applicable thereto,
and effective at the end of such Interest Period such LIBOR Portion shall
automatically be converted into and added to the applicable Domestic Rate
Portion and shall thereafter bear interest at the interest rate applicable to
such Domestic Rate Portion after default. Interest on each LIBOR Portion shall
be due and payable on the last day of each Interest Period applicable thereto
and, with respect to any Interest Period applicable to a LIBOR Portion in
excess of 3 months, on the date occurring every 3 months after the date such
Interest Period began and at the end of such Interest Period, and interest
after maturity (whether by lapse of time,
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acceleration or otherwise) shall be due and payable upon demand. The Company
shall notify the Agent on or before 11:00 a.m. (Chicago time) on the third
Business Day preceding the end of an Interest Period applicable to a LIBOR
Portion whether such LIBOR Portion is to continue as a LIBOR Portion, in which
event the Company shall notify the Agent of the new Interest Period selected
therefor, and in the event the Company shall fail to so notify the Agent, such
LIBOR Portion shall automatically be converted into and added to the
applicable Domestic Rate Portion as of and on the last day of such Interest
Period. The Agent shall promptly notify each Lender of each notice received
from the Company pursuant to the foregoing provision.
Section 2.2. Minimum LIBOR Portion Amounts. Each LIBOR Portion shall be in
an amount equal to $1,000,000 or such greater amount which is an integral
multiple of $10,000.
Section 2.3. Computation of Interest. All interest on the Notes shall be
computed on the basis of a year of 360 days for the actual number of days
elapsed.
Section 2.4. Manner of Rate Selection. The Company shall notify the Agent
by 11:00 a.m. (Chicago time) at least 3 Business Days prior to the date upon
which the Company requests that any LIBOR Portion be created or that any part
of the applicable Domestic Rate Portion be converted into a LIBOR Portion
(each such notice to specify in each instance the amount thereof and the
Interest Period selected therefor), and the Agent shall promptly notify each
Lender of each notice received from the Company pursuant to the foregoing
provision. If any request is made to convert a LIBOR Portion into another type
of Portion available hereunder, such conversion shall only be made so as to
become effective as of the last day of the Interest Period applicable thereto.
All requests for the creation, continuance and conversion of Portions under
this Agreement shall be irrevocable. Such requests may be written or oral and
the Agent is hereby authorized to honor telephonic requests for creations,
continuances and conversions received by it from any person the Agent in good
faith believes to be an Authorized Representative without the necessity of
independent investigation, the Company hereby indemnifying the Agent and the
Lenders from any liability or loss ensuing from so acting.
Section 2.5. Change of Law. Notwithstanding any other provisions of this
Agreement or any Note, if at any time any Lender shall determine in good faith
that any change in applicable laws, treaties or regulations or in the
interpretation thereof makes it unlawful for such Lender to create or continue
to maintain any LIBOR Portion, it shall promptly so notify the Agent (which
shall in turn promptly notify the Company and the other Lenders) and the
obligation of such Lender to create, continue or maintain any such LIBOR
Portion under this Agreement shall terminate until it is no longer unlawful
for such Lender to create, continue or maintain such LIBOR Portion. The
Company, on demand, shall, if the continued maintenance of any such LIBOR
Portion is unlawful, thereupon prepay the outstanding principal amount of the
affected LIBOR Portion, together with all interest accrued thereon and all
other amounts payable to affected Lender with respect thereto under this
Agreement; provided, however, that the Company may elect
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to convert the principal amount of the affected Portion into another type of
Portion available hereunder, subject to the terms and conditions of this
Agreement.
Section 2.6. Unavailability of Deposits or Inability to Ascertain
Adjusted LIBOR. Notwithstanding any other provision of this Agreement or any
Note, if prior to the commencement of any Interest Period, the Required
Lenders shall determine in good faith that deposits in the amount of any LIBOR
Portion scheduled to be outstanding during such Interest Period are not
readily available to such Lenders in the relevant market or, by reason of
circumstances affecting the relevant market, adequate and reasonable means do
not exist for ascertaining Adjusted LIBOR, then such Lenders shall promptly
give notice thereof to the Agent (which shall in turn promptly notify the
Company and the other Lenders) and the obligations of the Lenders to create or
effect by conversion any such LIBOR Portion in such amount and for such
Interest Period, or to continue an existing LIBOR Portion beyond its current
Interest Period for such new Interest Period, in each case shall terminate
until deposits in such amount and for the Interest Period selected by the
Company shall again be readily available in the relevant market and adequate
and reasonable means exist for ascertaining Adjusted LIBOR.
Section 2.7. Taxes and Increased Costs. With respect to any LIBOR
Portion, if any Lender shall determine in good faith that any change after the
date hereof in any applicable law, treaty, regulation or guideline (including,
without limitation, Regulation D of the Board of Governors of the Federal
Reserve System) or any new law, treaty, regulation or guideline, or any
interpretation of any of the foregoing by any governmental authority charged
with the administration thereof or any central bank or other fiscal, monetary
or other authority having jurisdiction over such Lender or its lending branch
or the LIBOR Portions contemplated by this Agreement (whether or not having
the force of law), shall:
(i) impose, increase, or deem applicable any reserve, special deposit
or similar requirement against assets held by, or deposits in or for the
account of, or loans by, or any other acquisition of funds or
disbursements by, such Lender which is not in any instance already
accounted for in computing the interest rate applicable to such LIBOR
Portion;
(ii) subject such Lender, any LIBOR Portion or a Note to the extent
it evidences such a Portion to any tax (including, without limitation, any
United States interest equalization tax or similar tax however named
applicable to the acquisition or holding of debt obligations and any
interest or penalties with respect thereto), duty, charge, stamp tax, fee,
deduction or withholding in respect of this Agreement, any LIBOR Portion
or a Note to the extent it evidences such a Portion, except such taxes as
may be measured by the overall net income or gross receipts of such Lender
or its lending branches and imposed by the jurisdiction, or any political
subdivision or taxing authority thereof, in which such Lender's principal
executive office or its lending branch is located;
(iii) change the basis of taxation of payments of principal and
interest due from the Company to such Lender hereunder or under a Note to
the extent it evidences any LIBOR Portion
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(other than by a change in taxation of the overall net income or gross
receipts of such Lender or its lending branches); or
(iv) impose on such Lender any penalty with respect to the foregoing
or any other condition regarding this Agreement, any LIBOR Portion, or its
disbursement, or a Note to the extent it evidences any LIBOR Portion;
and such Lender shall determine in good faith that the result of any of the
foregoing is to increase the cost (whether by incurring a cost or adding to a
cost) to such Lender of creating or maintaining any LIBOR Portion hereunder or
to reduce the amount of principal or interest received or receivable by such
Lender (without benefit of, or credit for, any prorations, exemption, credits
or other offsets available under any such laws, treaties, regulations,
guidelines or interpretations thereof), then the Company shall pay on demand
to such Lender from time to time as specified by such Lender such additional
amounts as such Lender shall reasonably determine are sufficient to compensate
and indemnify it for such increased cost or reduced amount. If a Lender makes
such a claim for compensation, it shall provide to the Company (with a copy to
the Agent) a certificate setting forth the computation of the increased cost
or reduced amount as a result of any event mentioned herein in reasonable
detail and such certificate shall be conclusive if reasonably determined.
Section 2.8. Change in Capital Adequacy Requirements. If any Lender shall
reasonably determine that the adoption after the date hereof of any applicable
law, rule or regulation regarding capital adequacy, or any change in any
existing law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof,
or compliance by such Lender (or any of its branches) or any corporation
controlling such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on such Lender's or such corporation's capital, as the case
may be, as a consequence of such Lender's obligations hereunder or for the
credit which is the subject matter hereof to a level below that which such
Lender or such corporation could have achieved but for such adoption, change
or compliance (taking into consideration such Lender's or such corporation's
policies with respect to liquidity and capital adequacy) by an amount
reasonably deemed by such Lender to be material, then from time to time,
within fifteen (15) days after demand by such Lender, the Company shall pay to
such Lender such additional amount or amounts reasonably determined by such
Lender as will compensate such Lender for such reduction.
Section 2.9. Funding Indemnity. In the event any Lender shall incur any
loss, cost or expense (including, without limitation, any loss (including loss
of profit), cost or expense incurred by reason of the liquidation or
re-employment of deposits or other funds acquired or contracted to be acquired
by such Lender to fund or maintain its part of any LIBOR Portion or the
relending or reinvesting of such deposits or other funds or amounts paid or
prepaid to such Lender) as a result of:
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(i) any payment of a LIBOR Portion on a date other than the last day
of the then applicable Interest Period for any reason, whether before or
after default, and whether or not such payment is required by any
provisions of this Agreement; or
(ii) any failure by the Company to create, borrow, continue or effect
by conversion a LIBOR Portion on the date specified in a notice given
pursuant to this Agreement;
then, upon the demand of such Lender, the Company shall pay to such Lender
such amount as will reimburse such Lender for such loss, cost or expense. If a
Lender requests such a reimbursement, it shall provide to the Company (with a
copy to the Agent) a certificate setting forth the computation of the loss,
cost or expense giving rise to the request for reimbursement in reasonable
detail and such certificate shall be conclusive if reasonably determined.
Section 2.10. Lending Branch. Each Lender may, at its option, elect to
make, fund or maintain its pro rata share of the Loans hereunder at the
branches or offices specified on the signature pages hereof or on any
Assignment Agreement executed and delivered pursuant to Section 11.10 hereof
or at such of its branches or offices as such Lender may from time to time
elect.
Section 2.11. Discretion of Lenders as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Lender
shall be entitled to fund and maintain its funding of all or any part of its
Notes in any manner it sees fit, it being understood, however, that for the
purposes of this Agreement all determinations hereunder (including, without
limitation, determinations under Sections 2.6, 2.7 and 2.9 hereof) shall be
made as if each Lender had actually funded and maintained each LIBOR Portion
during each Interest Period applicable thereto through the purchase of
deposits in the relevant market in the amount of its pro rata share of such
LIBOR Portion, having a maturity corresponding to such Interest Period, and
bearing an interest rate equal to the LIBOR for such Interest Period.
SECTION 3. FEES, PREPAYMENTS, TERMINATIONS, AND APPLICATIONS.
Section 3.1. Fees. (a) Commitment Fee on Term Credit. For the period from
and including the date hereof to but not including the Term Credit Termination
Date, the Company shall pay to the Agent for the account of the Lenders a
commitment fee at the rate of 1/2 of 1% per annum (computed on the basis of a
year of 360 days for the actual number of days elapsed) on the average daily
unused amount (the Term Loan Commitments to be deemed used in an amount equal
to the principal of each Term Loan made thereunder, whether or not subsequently
repaid) of the Term Credit Commitments (whether or not available). Such
commitment fee shall be payable quarterly in arrears on the last day of each
June, September, December, and March in each year (commencing June 30, 1996)
and on the Term Credit Termination Date.
(b) Commitment Fee on Revolving Credit. For the period from and including
the date hereof to but not including the Revolving Credit Termination Date,
the Company shall pay to the Agent for the
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account of the Lenders a commitment fee at the rate of 1/2 of 1% per annum
(computed on the basis of a year of 360 days for the actual number of days
elapsed) on the average daily unused portion (the Revolving Credit Commitments
to be deemed used at any time in an amount equal to the principal of the
Revolving Credit Loans then outstanding) of the Revolving Credit Commitments
(whether or not available). Such commitment fee shall be payable quarterly in
arrears on the last day of each June, September, December and March in each
year (commencing June 30, 1996) and on the Revolving Credit Termination Date.
(c) Agent's Fee. On the date hereof, and on the date occurring on each
anniversary of the date hereof when any credit, or commitment to extend
credit, is outstanding hereunder, the Company shall pay to the Agent, for its
own use and benefit, an Agent's fee as mutually agreed upon by the Company and
the Agent (it being understood and agreed no such Agent's fee is payable as of
the date hereof and that no such fee shall be due unless and to the extent the
Company in its discretion agrees to be liable for one).
(d) Closing Fee. The Company shall pay to the Agent for the ratable
account of the Lenders party hereto as of the date hereof, a non-refundable
closing fee equal to $150,000, with $75,000 of such fee to be payable on or
before the date hereof and the balance of $75,000 to be due and payable on or
before the earlier of (x) the maturity of the Revolving Credit Notes (whether
by lapse of time, acceleration or otherwise) or (y) an initial public offering
of debt or equity securities issued by the Company or any Subsidiary.
(e) Audit Fees. The Company shall pay to the Agent for its own use and
benefit charges for audits of the Collateral performed by the Agent or its
agents or representatives in such amounts as the Agent may from time to time
request (the Agent acknowledging and agreeing that such charges shall be
computed in the same manner as it at the time customarily uses for the
assessment of charges for similar collateral audits); provided, however, that
in the absence of any Default or Event of Default, the Company shall not be
required to pay the Agent for more than one such audit per calendar year.
Section 3.2. Voluntary Prepayments. The Company shall have the privilege
of prepaying the Revolving Credit Notes and the Term Notes in whole or in part
(but if in part, then in a minimum amount of $25,000 or such greater amount
which is an integral multiple of $1,000 as to any particular class of Notes
being prepaid, provided that no such prepayment shall reduce any LIBOR Portion
to an amount less than $1,000,000 or such greater amount which is an integral
multiple of $10,000) at any time upon 1 Business Day's prior notice to the
Agent (such notice if received subsequent to 11:00 a.m. (Chicago time) on a
given day to be treated as though received at the opening of business on the
next Business Day), which shall promptly so notify the Lenders, by paying to
the Agent for the account of the Lenders the principal amount to be prepaid
and (i) if such a prepayment prepays the Term Notes in full, accrued interest
thereon to the date of prepayment, (ii) if such a prepayment prepays the
Revolving Credit Notes in full and is accompanied by the termination in whole
of the Revolving Credit Commitments, accrued interest thereon to the date of
prepayment and (iii) any amounts due to the Lenders under Section 2.9 hereof.
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Section 3.3. Mandatory Prepayments. (a) Revolver Advance Limit. The
Company covenants and agrees that if at any time the then unpaid principal
balance of the Revolving Credit Notes shall be in excess of the Revolver
Advance Limit as then determined and computed, the Company shall, within 2
Business Days after demand from the Agent, pay over the amount of such excess
to the Agent for the account of the Lenders as and for a mandatory prepayment
on such Obligations until payment in full thereof.
(b) Term Credit Earnings Limit. The Company covenants and agrees that if
at any time the sum of the then unpaid principal balance of the Term Loans
shall be in excess of the Term Credit Earnings Limit as then determined and
computed, the Company shall, within 2 Business Days after demand from the
Agent, pay over the amount of such excess to the Agent for the account of the
Lenders as and for a mandatory prepayment on such Obligations until payment in
full thereof.
Section 3.4. Terminations. The Company shall have the right at any time
and from time to time, upon 3 Business Days' prior notice to the Agent (which
shall promptly so notify the Lenders), to ratably terminate without premium or
penalty and in whole or in part (but if in part, then in an aggregate amount
not less than $100,000 or such greater amount which is an integral multiple of
$100,000) either the Revolving Credit Commitments or the Term Credit
Commitments, provided that the Commitments may not be reduced to an amount
less than the aggregate principal amount of the Loans then outstanding
thereunder. Any termination of the Commitments pursuant to this Section may
not be reinstated.
Section 3.5. Place and Application of Payments. All payments of
principal, interest, fees and all other Obligations payable hereunder and
under the other Loan Documents shall be made to the Agent at its office at 000
Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx (or at such other place as the Agent may
specify) on the date any such payment is due and payable. Payments received by
the Agent after 11:00 a.m. (Chicago time) shall be deemed received as of the
opening of business on the next Business Day. All such payments shall be made
in lawful money of the United States of America, in immediately available
funds at the place of payment, without set-off or counterclaim and without
reduction for, and free from, any and all present or future taxes, levies,
imposts, duties, fees, charges, deductions, withholdings, restrictions and
conditions of any nature imposed by any government or any political
subdivision or taxing authority thereof (but excluding any taxes imposed on or
measured by the net income of any Lender). Except as herein provided, all
payments shall be received by the Agent for the ratable account of the Lenders
and shall be promptly distributed by the Agent ratably to the Lenders in
accordance with their respective Percentages. No amount paid or prepaid on the
Term Notes may be reborrowed, and partial prepayments of the Term Notes shall
be applied in the inverse order of their maturities. Unless the Company
otherwise directs, principal payments on Notes of a given type shall be first
applied to the Domestic Rate Portion of such Notes until payment in full
thereof, with any balance applied to the LIBOR Portions of the relevant Notes
in the order in which their Interest Periods expire. All payments (whether
voluntary or required) shall be accompanied by any amount due the Lenders
under Section 2.9 hereof, but no acceptance of such a payment without
requiring
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payment of amounts due under Section 2.9 shall preclude a later demand by the
Lenders for any amount due them under Section 2.9 in respect of such payment.
Anything contained herein to the contrary notwithstanding, all payments
and collections received in respect of the Obligations and all proceeds of the
Collateral received, in each instance, by the Agent or any of the Lenders after
the occurrence of an Event of Default shall be remitted to the Agent and
distributed as follows:
(a) first, to the payment of any outstanding reasonable costs and
expenses incurred by the Agent in monitoring, verifying, protecting,
preserving or enforcing the Liens on the Collateral, and in protecting,
preserving or enforcing rights under this Agreement or any of the other
Loan Documents, and in any event including all costs and expenses of a
character which the Company has agreed to pay under Section 11.5 hereof
(such funds to be retained by the Agent for its own account unless it has
previously been reimbursed for such costs and expenses by the Lenders, in
which event such amounts shall be remitted to the Lenders to reimburse
them for payments theretofore made to the Agent);
(b) second, to the payment of any outstanding interest or other fees
or amounts due under this Agreement or any of the other Loan Documents
other than for principal, pro rata as among the Agent and the Lenders in
accord with the amount of such interest and other fees or amounts owing
each;
(c) third, to the payment of the principal of the Notes, pro rata as
among the Lenders in accord with the then respective unpaid principal
balances of the Notes;
(d) fourth, to the Agent and the Lenders pro rata in accord with the
amounts of any other indebtedness, obligations or liabilities of the
Company owing to them and secured by the Collateral Documents unless and
until all such indebtedness, obligations and liabilities have been fully
paid and satisfied; and
(e) fifth, to the Company or to whomever the Agent reasonably
determines to be lawfully entitled thereto.
Section 3.6. Notations. Each Loan made against a Note, the status of all
amounts evidenced by a Note as constituting part of the Domestic Rate Portion
or a LIBOR Portion, and, in the case of any LIBOR Portion, the rates of
interest and Interest Periods applicable to such Portions shall be recorded by
the relevant Lender on its books and records or, at its option in any
instance, endorsed on a schedule to its Note and the unpaid principal balance
and status, rates and Interest Periods so recorded or endorsed by such Lender
shall, absent manifest error, be prima facie evidence in any court or other
proceeding brought to enforce such Note of the principal amount remaining
unpaid thereon, the status of the Loan or Loans evidenced thereby and the
interest rates and Interest Periods applicable thereto; provided that the
failure of a
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Lender to record any of the foregoing shall not limit or otherwise affect the
obligation of the Company to repay the principal amount of each Note together
with accrued interest thereon. Prior to any negotiation of a Note, a Lender
shall record on a schedule thereto the status of all amounts evidenced thereby
as constituting part of the applicable Domestic Rate Portion or a LIBOR
Portion and, in the case of any LIBOR Portion, the rates of interest and the
Interest Periods applicable thereto.
SECTION 4. COLLATERAL.
Section 4.1. Generally. The payment and performance of the Obligations
shall be secured by valid and enforceable Liens in favor of the Agent for the
benefit of the Lenders on (a) all of the Company's now existing or hereafter
arising or acquired accounts, general intangibles, inventory, equipment and all
other goods, chattel paper, instruments, documents and certain other assets and
property of the Company as more fully described in the Security Agreement
(provided such Lien shall not extend to rental inventory or equipment subject
to a Capitalized Lease or purchase money financing in each case permitted by
this Agreement if the terms of such Capitalized Lease or other financing
prohibit the Company's grant of a Lien on such Collateral to secure the
Obligations) and (b) at least 66-2/3% of the issued and outstanding Voting
Stock of the Company, together with all related rights and properties, as more
fully described in the Stock Pledge Agreements.
Section 4.2. Liens on After Acquired Real Property. In the event that the
Company hereafter acquires a fee interest in any real property with a value
which the Required Lenders in good xxxxx xxxx material, it will execute and
deliver to the Agent or a security trustee therefor a mortgage or deed of trust
acceptable in form and substance to the Agent for the purpose of granting to
the Agent a lien on such real property to secure the Notes and the other
Obligations, will pay all costs and expenses incurred by the Agent in recording
such mortgage or deed of trust and will at its expense supply to the Agent (i)
a mortgagee's policy of title insurance from a title insurer reasonably
acceptable to the Agent insuring the validity of such mortgage or deed of trust
and its status as a first lien (subject to liens permitted by this Agreement)
on the real property encumbered thereby, (ii) an ALTA survey prepared by a
licensed surveyor of each parcel of such real property, (iii) a report of an
independent firm of environmental engineers acceptable to the Agent concerning
the environmental hazards and matters with respect to such real property, (iv)
an appraisal of such real property in form and substance acceptable to the
Agent, (v) an opinion of counsel in form and substance acceptable to the Agent
and in any event covering the scope of the matters set forth in Section 7.2(e)
hereof and (vi) any and all other documents, reports and things as the Agent
may reasonably request in connection with the mortgage of such real property.
Section 4.3. Further Assurances. The Company covenants and agrees that it
shall comply with all the terms and conditions of each of the Collateral
Documents and that it shall, at any time and from time to time as requested by
the Agent or the Required Lenders, execute and deliver such further instruments
and do such acts and things as the Agent or the Required Lenders may deem
necessary or desirable to provide for or protect or perfect the Lien of the
Agent in the Collateral.
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Section 5.1. Definitions. The following terms when used herein shall have
the following meanings:
"A to Z Washington Acquisition" means (i) the acquisition by the Company
of the Voting Stock of A to Z Rentals and Sales, Inc., a Washington Corporation
("A to Z Washington"), pursuant to a Stock Purchase Agreement between the
Company, Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxxx and related parties in the same or
substantially the same form of the April 14, 1996 draft furnished to the Agent
and (ii) the substantially concurrent merger of A to Z Washington with and into
the Company, with the Company being the corporation surviving such merger.
"Acquired Store" means a retail rental store which commenced operations
under prior ownership before the Company acquired ownership of the same.
"Acquisition" means (i) the acquisition of all or any substantial part of
the Property or business of any other firm or corporation or (ii) any
acquisition of a majority of the common stock or other equity interest in any
other firm or corporation.
"Adjusted Actual EBITDA" shall mean, with reference to any period (the
"measurement period"), the sum (without duplication) of (i) the EBITDA of the
Company and its Subsidiaries during the entire measurement period on a
consolidated basis to the extent attributable to Acquired Stores owned by the
Company for the entire measurement period and (ii) in the case of each Acquired
Store not owned by the Company during the entire measurement period, the EBITDA
of the Company and its Subsidiaries attributable to each such Acquired Store
during each full calendar quarter within such measurement period which
commenced and was completed in each case while the Company owned such Acquired
Store and (iii) the Corporate Overhead of the Company and its Subsidiaries to
the extent deducted in computing the EBITDA amount in clauses (i) or (ii)
above.
"Adjusted Base EBITDA" shall mean, in each comparison to Adjusted Actual
EBITDA for any measurement period (as "measurement period" is defined with
respect to such Adjusted Actual EBITDA), the EBITDA attributable to each
Acquired Store which the Company owned as of the close of such measurement
period, but computed for the calendar period corresponding to such measurement
period but occurring in the twelve calendar months preceding the Company's
acquisition of such Acquired Store.
"Adjusted LIBOR" means a rate per annum determined by the Agent in
accordance with the following formula:
Adjusted LIBOR = LIBOR
-----------------------
100%-Reserve Percentage
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"Reserve Percentage" means, for the purpose of computing Adjusted LIBOR,
the maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental or other special reserves) imposed by the
Board of Governors of the Federal Reserve System (or any successor) under
Regulation D on Eurocurrency liabilities (as such term is defined in Regulation
D) for the applicable Interest Period as of the first day of such Interest
Period, but subject to any amendments to such reserve requirement by such Board
or its successor, and taking into account any transitional adjustments thereto
becoming effective during such Interest Period. For purposes of this
definition, LIBOR Portions shall be deemed to be Eurocurrency liabilities as
defined in Regulation D without benefit of or credit for prorations, exemptions
or offsets under Regulation D. "LIBOR" means, for each Interest Period, (a) the
LIBOR Index Rate for such Interest Period, if such rate is available, and (b)
if the LIBOR Index Rate cannot be determined, the arithmetic average of the
rates of interest per annum (rounded upward, if necessary, to the nearest
1/100th of 1%) at which deposits in U.S. Dollars in immediately available funds
are offered to the Agent at 11:00 a.m. (London, England time) 2 Business Days
before the beginning of such Interest Period by 3 or more major banks in the
interbank eurodollar market selected by the Agent for a period equal to such
Interest Period and in an amount equal or comparable to the applicable LIBOR
Portion scheduled to be outstanding from the Agent during such Interest Period.
"LIBOR Index Rate" means, for any Interest Period, the rate per annum (rounded
upwards, if necessary, to the next higher one hundred-thousandth of a
percentage point) for deposits in U.S. Dollars for a period equal to such
Interest Period which appears on the Telerate Page 3750 as of 11:00 a.m.
(London, England time) on the date 2 Business Days before the commencement of
such Interest Period. "Telerate Page 3750" means the display designated as
"Page 3750" on the Telerate Service (or such other page as may replace Page
3750 on that service or such other service as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
British Banker's Association Interest Settlement Rates for U.S. Dollar
deposits). Each determination of LIBOR made by the Agent shall be conclusive
and binding on the Company and the Lenders absent manifest error.
"Affiliate" means any Person directly or indirectly controlling or
controlled by, or under direct or indirect common control with, another Person.
A Person shall be deemed to control another Person for the purposes of this
definition if such Person possesses, directly or indirectly, the power to
direct, or cause the direction of, the management and policies of the other
Person, whether through the ownership of voting securities, common directors,
trustees or officers, by contract or otherwise; provided that, in any event for
purposes of this definition, (a) any Person that owns, directly or indirectly,
15% or more of the securities having the ordinary voting power for the election
of directors or governing body of a corporation or 15% or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to control such
corporation or other Person and (b) BACE Investments, BACE Industries shall
each be deemed an Affiliate of the Company if and so long as such Person owns,
directly or indirectly, any equity interest in the Company.
"Agent" means Xxxxxx Trust and Savings Bank and any successor thereto
appointed pursuant to Section 10.1 hereof.
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"Agreement" means this Credit Agreement, as the same may be amended,
modified or restated from time to time in accordance with the terms hereof.
"Assignment Agreements" is defined in Section 11.10 hereof.
"Authorized Representative" means those persons shown on the list of
officers provided by the Company pursuant to Section 7.2(a) hereof or on any
update of any such list provided by the Company to the Agent, or any further or
different officer of the Company so named by any Authorized Representative of
the Company in a written notice to the Agent.
"BACE Industries" means Bace Industries, LLC, a Colorado limited liability
company.
"BACE Investments" means BACE Investments, LLC, a Colorado limited
liability company.
"BACE Management Agreement" means that certain Management Agreement dated
as of May 1, 1996 by and between Bace Industries and the Company.
"Borrowing" means the total of Loans of a single type made to the Company
by all the Lenders on a single date under the Revolving Credit Commitments or
the Term Loan Commitments, and if such Loans are to be part of a LIBOR Portion,
for a single Interest Period. Borrowings of Loans are made and maintained
ratably from each of the Lenders according to their Percentages of the
applicable Commitments.
"Business Day" means any day other than a Saturday or Sunday on which
banks are not authorized or required to close in Chicago, Illinois and, when
used with respect to LIBOR Portions, a day on which banks are also dealing in
United States Dollar deposits in London, England and Nassau, Bahamas.
"Capital Lease" means any lease of Property which in accordance with GAAP
is required to be capitalized on the balance sheet of the lessee.
"Capitalized Lease Obligation" means the amount of the liability shown on
the balance sheet of any Person in respect of a Capital Lease determined in
accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute thereto.
"Collateral" means all properties, rights, interests and privileges from
time to time subject to the Liens granted to the Agent for the benefit of the
Lenders by the Collateral Documents.
"Collateral Documents" means the Security Agreement, the Stock Pledge
Agreements and all other mortgages, deeds of trust, security agreements,
assignments, financing statements and other documents as shall from time to
time secure the Obligations.
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"Commitments" means and includes the Revolving Credit Commitments and the
Term Loan Commitments.
"Company" is defined in the introductory paragraph hereof.
"Controlled Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Company or any of its Subsidiaries, are treated as a
single employer under Section 414 of the Code.
"Corporate Overhead" shall mean, with reference to any period, the salary,
general, administrative and overhead expense of the Company and its
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP to the extent deducted in computing their Net Income on a
consolidated basis during such period, but in any event excluding therefrom any
such expense which is attributable exclusively to any single retail rental
store or any particular regional group of retail rental stores.
"Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default.
"Domestic Rate" means, for any day, the greater of (i) the rate of
interest announced by the Agent from time to time as its prime commercial rate,
as in effect on such day (it being understood and agreed that such rate may not
be the Agent's best or lowest rate); and (ii) the sum of (x) the rate
determined by the Agent to be the average (rounded upwards, if necessary, to
the next higher 1/100 of 1%) of the rates per annum quoted to the Agent at
approximately 10:00 a.m. (Chicago time) (or as soon thereafter as is
practicable) on such day (or, if such day is not a Business Day, on the
immediately preceding Business Day) by two or more Federal funds brokers
selected by the Agent for the sale to the Agent at face value of Federal funds
in an amount equal or comparable to the principal amount owed to the Agent for
which such rate is being determined, plus (y) 1/2 of 1%.
"Domestic Rate Portions" is defined in Section 2.1(a) hereof.
"EBITDA" means, for any Person and with reference to any period, the Net
Income of such Person for such period plus all amounts deducted in arriving at
such Net Income amount in respect of (i) Interest Expense for such period, plus
(ii) federal, state and local income taxes for such period, plus (iii) all
amounts properly charged for depreciation of fixed assets and amortization of
intangible assets during such period on the books of such Person, plus (iv) the
aggregate amount of management fees, non-operating expenses and excess
compensation in each case paid to each former owner of each Acquired Store
during such period, plus (v) the compensation paid to BACE Industries during
such period under the BACE Management Agreement.
"Edgewater" means The Edgewater Private Equity Fund II, L.P., a Delaware
limited partnership.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute thereto.
"Event of Default" means any event or condition identified as such in
Section 9.1 hereof.
"GAAP" means (a) with respect to the Company and its Subsidiaries,
generally accepted accounting principles as in effect from time to time,
applied by the Company and its Subsidiaries on a basis consistent with the
preparation of the Company's most recent financial statements furnished to the
Lenders pursuant to Section 6.5 hereof and (b) with respect to any other
Person, the accounting principles used in preparing the most recent financial
statements furnished to the Lenders for such Person.
"Indebtedness for Borrowed Money" means for any Person (without
duplication) (i) all indebtedness created, assumed or incurred in any manner by
such Person representing money borrowed (including by the issuance of debt
securities), (ii) all indebtedness for the deferred purchase price of property
or services (other than trade accounts payable arising in the ordinary course
of business which are not more than 60 days past due, deferred compensation to
officers and employees and accrued management fees), (iii) all indebtedness
secured by any Lien upon Property of such Person, whether or not such Person
has assumed or become liable for the payment of such indebtedness, (iv) all
Capitalized Lease Obligations of such Person and (v) all obligations of such
Person on or with respect to letters of credit, bankers' acceptances and other
extensions of credit whether or not representing obligations for borrowed
money.
"Interest Expense" means, for any Person and with reference to any period,
the sum of all interest charges (including imputed interest charges with
respect to Capitalized Lease Obligations and all amortization of debt discount
and expense) with respect to all Indebtedness for Borrowed Money of such Person
(including in the case of the Company, without limitation, the Zodiac Debt)
during such period determined in accordance with GAAP.
"Interest Period" means, with respect to any LIBOR Portion, the period
commencing on, as the case may be, the creation, continuation or conversion
date with respect to such LIBOR Portion and ending 1, 2, 3 or 6 months
thereafter as selected by the Company in its notice as provided herein;
provided, however, that all of the foregoing provisions relating to Interest
Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day which is not
a Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless in the case of an Interest Period for a
LIBOR Portion the result of such extension would be to carry such Interest
Period into another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the final maturity date of
the relevant Notes;
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(iii) the interest rate to be applicable to each Portion for each
Interest Period shall apply from and including the first day of such
Interest Period to but excluding the last day thereof; and
(iv) no Interest Period may be selected if after giving effect
thereto the Company will be unable to make a principal payment scheduled
to be made during such Interest Period without paying part of a LIBOR
Portion on a date other than the last day of the Interest Period
applicable thereto.
For purposes of determining an Interest Period, a month means a period starting
on one day in a calendar month and ending on a numerically corresponding day in
the next calendar month, provided, however, if an Interest Period begins on the
last day of a month or if there is no numerically corresponding day in the
month in which an Interest Period is to end, then such Interest Period shall
end on the last Business Day of such month.
"Investment Agreement" means that certain Investment Agreement dated as of
May 15, 1996 by and among the Company, Mesirow, Edgewater, BACE Investments and
any other Purchasers party thereto.
"Lender" means Xxxxxx Trust and Savings Bank, the other signatories hereto
(other than the Company) and all other lenders becoming parties hereto pursuant
to Section 11.10 hereof.
"LIBOR Portions" is defined in Section 2.1(a) hereof.
"Lien" means any mortgage, lien, security interest, pledge, charge or
encumbrance of any kind in respect of any Property, including the interests of
a vendor or lessor under any conditional sale, Capital Lease or other title
retention arrangement.
"Loan Documents" means this Agreement, the Notes, the Collateral Documents
and each other instrument or document to be delivered hereunder or thereunder
or otherwise in connection therewith.
"Loans" means and includes Revolving Credit Loans and the Term Loans.
"Mesirow" means Mesirow Capital Partners VI, an Illinois limited
partnership.
"Net Income" means, for any Person and with reference to any period, the
net income (or net loss) of such Person for such period as computed in
accordance with GAAP, and, without limiting the foregoing, after deduction from
gross income of all expenses and reserves, including reserves for all taxes on
or measured by income, but excluding any extraordinary or non-recurring profits
and extraordinary or non-recurring losses and also excluding any taxes on such
profits and any tax credits on account of such losses.
"Notes" means and includes the Revolving Credit Notes and the Term Notes.
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"Obligations" means all obligations of the Company to pay principal and
interest on the Loans, all fees and charges payable hereunder, and all other
payment obligations of the Company arising under or in relation to any Loan
Document, in each case whether now existing or hereafter arising, due or to
become due, direct or indirect, absolute or contingent, and howsoever
evidenced, held or acquired.
"Operating Lease" means any lease of Property which is not a Capital
Lease.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to any or all of its functions under ERISA.
"Percentage" means, for each Lender, the percentage of the relevant
Commitments represented by such Lender's Commitment or, if the Commitments have
been terminated, the percentage held by such Lender of the aggregate principal
amount of all outstanding Obligations.
"Permitted Acquisition" means the Company's acquisition of an Acquired
Store which complies with Section 8.16 hereof.
"Person" means an individual, partnership, corporation, association,
trust, unincorporated organization or any other entity or organization,
including a government or agency or political subdivision thereof.
"Plan" means any employee pension benefit plan covered by Title IV of
ERISA or subject to the minimum funding standards under Section 412 of the Code
that either (i) is maintained by a member of the Controlled Group for employees
of a member of the Controlled Group, or (ii) is maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which a member of the Controlled Group
is then making or accruing an obligation to make contributions or has within
the preceding five plan years made contributions.
"Portion" is defined in Section 2.1(a) hereof.
"Pro forma Adjusted Cash Flow" shall mean, for any period (the "relevant
period"), the EBITDA of the Company and its Subsidiaries during such relevant
period on a consolidated basis, adjusted as follows to give pro forma effect to
any Permitted Acquisitions and the opening of Start-Up Stores:
(a) The EBITDA of each Acquired Store resulting from a Permitted
Acquisition during the relevant period shall be included in such Pro forma
Adjusted Cash Flow in an amount equal to the sum (without duplication) of
(i) the actual EBITDA attributable to such Acquired Store during the
period commencing on the date of the closing of the relevant Permitted
Acquisition and ending with the close of relevant period and (ii) the sum
of (1) the actual EBITDA attributable to such Acquired Store for a period
(such period for such Acquired Store being hereinafter referred as the
"pre-
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acquisition period") commencing at the beginning of the relevant period
and ending on the date of the closing of the relevant Permitted
Acquisition and (2) the aggregate amount paid during such pre-acquisition
period to acquire rental inventory and equipment for such Acquired Store
to the extent the amount so paid was expensed rather than capitalized in
computing the EBITDA of such Acquired Store during such pre-acquisition
period;
(b) The EBITDA attributable to each Start-Up Store which commenced
operations in a calendar month no more than 12 calendar months prior to
the close of the relevant period shall be included in such Pro forma
Adjusted Cash Flow in an amount equal to the product of (i) 25% and (ii)
the aggregate amount expended on a cumulative basis over the period ending
with the close of the relevant period to purchase rental inventory and
equipment for such Start-Up Store (for such purposes, the amount so
expended to mean the hard invoiced costs of such inventory and equipment
and delivery costs and to exclude the cost of inventory and equipment
acquired as a result of a Permitted Acquisition);
(c) The EBITDA attributable to each Start-Up Store which commenced
operations in a calendar month greater than 12 but no more than 24
calendar months prior to the close of the relevant period shall be
included in such Pro forma Adjusted Cash Flow in an amount equal to the
sum of (i) the product of (1) 25% and (2) the aggregate amount expended on
a cumulative basis over the period ending immediately prior to the 13th
calendar month (the "13th calendar month") following the calendar month in
which such Start-Up Store commenced operations, to purchase rental
inventory and equipment such Start-Up Store (for such purposes, the amount
so expended to mean the hard invoiced costs of such inventory and
equipment and delivery costs and to exclude the cost of inventory and
equipment acquired as a result of a Permitted Acquisition) and (3) a
fraction, the numerator of which is the number of full calendar months in
the relevant period completed prior to such 13th calendar month and the
denominator of which is 12, and (ii) the actual EBITDA attributable to
such Start-Up Store for a period commencing at the beginning of such 13th
calendar month and ending with the close of the relevant period; and
(d) The EBITDA attributable to each Start-Up Store which commenced
operations in a calendar month 24 calendar months or more prior to the
close of the relevant period shall be included in such Pro forma Adjusted
Cash Flow in an amount equal to the actual EBITDA attributable to such
Start-Up Store during the relevant period.
"Pro forma Adjusted Revenues" shall mean, for any period (the "relevant
period"), the gross revenues of the Company and its Subsidiaries during such
relevant period on a consolidated basis attributable to all stores, but with
such gross revenues to be adjusted as follows to give pro forma effect to the
opening of Start-Up Stores:
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(a) The gross revenues of each Start-Up Store which commenced
operations in a calendar month no more than 12 calendar months prior to
the close of the relevant period shall be included in such Pro forma
Adjusted Revenues in an amount equal to 80% of the aggregate amount
expended on a cumulative basis to purchase rental inventory and equipment
for such Start-Up Store (for such purposes, the amount so expended to mean
the hard invoiced cost of such inventory and equipment and delivery costs
and to exclude the cost of inventory and equipment acquired as a result of
a Permitted Acquisition);
(b) The gross revenues of each Start-Up Store which commenced
operations in a calendar month greater than 12 but no more than 24
calendar months prior to the close of the relevant period shall be
included in such Pro forma Adjusted Revenues in an amount equal to the sum
of (i) the actual gross revenues attributable to such Start-Up Store
during the period beginning at the commencement of the 13th calendar month
(the "thirteenth calendar month") following the calendar month in which
such Start-Up Store commenced operations and ending with the close of the
relevant period and (ii) the product of (1) 80% of the aggregate amount
expended on a cumulative basis prior to such 13th calendar month to
purchase rental inventory and equipment for such Start-Up Store (for such
purposes, the amount so expended to mean the hard invoiced cost of such
inventory and equipment and delivery costs and to exclude the cost of
inventory and equipment acquired as a result of a Permitted Acquisition)
and (2) a fraction, the numerator of which is the number of full calendar
months in the relevant period completed prior to such 13th calendar month
and the denominator of which is 12; and
(c) The Adjusted Pro forma Revenues attributable to each Start-Up
Store which commenced operations in a calendar month, 24 calendar months
or more prior to the close of the relevant period shall be included in
such Pro forma Adjusted Revenues in an amount equal to the actual gross
revenues attributable to such Start-Up Store during the relevant period.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Required Lenders" means, as of the date of determinations thereof, those
Lenders holding at least 65% of the Commitments or, in the event that no
Commitments are outstanding hereunder, holding at least 65% in aggregate
principal amount of the Loans and credit risk on the Letters of Credit
outstanding hereunder.
"Revolver Advance Limit" shall mean as of any time, the sum of (i)
$200,000 and (ii) 60% of the aggregate amount expended by the Company and its
Subsidiaries on a cumulative basis after the date hereof to purchase rental
inventory and equipment for Acquired and Start-Up Stores (for such purposes,
the amount expended to mean the hard invoiced cost of such inventory and
equipment and delivery costs and to exclude the cost of inventory and equipment
acquired as a result of a Permitted Acquisition).
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"Revolving Credit" is defined in Section 1.1 hereof.
"Revolving Credit Commitments" means the commitments of the Lenders to
extend credit under the Revolving Credit in the amounts set forth opposite
their signatures hereto under the heading "Revolving Credit Commitment" and
opposite their signatures on Assignment Agreements delivered pursuant to
Section 11.10 hereof under the heading "Revolving Credit Commitment", as such
amounts may be reduced pursuant hereto.
"Revolving Credit Loan" is defined in Section 1.2 hereof.
"Revolving Credit Note" is defined in Section 1.2 hereof.
"Revolving Credit Termination Date" means May 15, 1998, or such earlier
date on which the Revolving Credit Commitments are terminated in whole pursuant
to Section 3.4, 9.2 or 9.3 hereof.
"Security Agreement" means that certain Security Agreement dated as of May
15, 1996 from the Company to the Agent.
"Senior Funded Debt" means, at any time the same is to be determined, the
aggregate of all Indebtedness for Borrowed Money of the Company and its
Subsidiaries at such time, plus all Indebtedness for Borrowed Money of any
other Person which is directly or indirectly guaranteed by the Company or any
of its Subsidiaries or which the Company or any of its Subsidiaries has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which the Company or any of its Subsidiaries has otherwise assured a creditor
against loss; provided, however, that in no event shall Senior Funded Debt
include any Subordinated Debt.
"Start-Up Store" means a retail rental store which commences operations
after the Company acquires ownership of the same.
"Stock Pledge Agreements" means those three certain Pledge Agreements,
each dated as of May 15, 1996 to the Agent from BACE Investments, Edgewater and
Mesirow, respectively and each pledge agreement encumbering Voting Stock in the
Company from any other pledgor in the same or substantially the same form as
any of the foregoing.
"Subordinated Debt" means (i) any Indebtedness for Borrowed Money which is
subordinated in right of payment to the prior payment of the Loans and the
other Obligations, pursuant to subordination provisions approved in writing by
the Agent and Required Lenders in their sole discretion and is otherwise
pursuant to documentation that is, and which is in an amount that is, and which
contains interest rates, payment terms, maturities, amortization schedules,
covenants, defaults, remedies and other material terms that are in form
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and substance, in each case satisfactory to the Agent and Required Lenders in
their sole discretion and (ii) the Zodiac Debt.
"Subsidiary" means any corporation or other Person more than 50% of the
outstanding ordinary voting shares or other equity interests of which is at the
time directly or indirectly owned by the Company, by one or more of its
Subsidiaries, or by the Company and one or more of its Subsidiaries.
"Term Credit Earnings Limit" shall mean as of any time, the product of (x)
Pro forma Adjusted Cash Flow for the twelve most recently completed calendar
months and (y) 3.0.
"Term Credit Termination Date" means May 15, 1998, or such earlier date on
which the Term Credit Commitments are terminated in whole pursuant to Section
3.4, 9.2 or 9.3 hereof.
"Term Loan Commitments" means the commitments of the Lenders to make the
Term Loans in the amounts set forth opposite their signatures hereto under the
heading "Term Loan Commitment" and opposite their signatures on Assignment
Agreements delivered pursuant to Section 11.10 hereof under the heading "Term
Loan Commitment", as such amounts may be reduced pursuant hereto.
"Term Note" is defined in Section 1.3 hereof.
"Term Loan" is defined in Section 1.3 hereof.
"Unfunded Vested Liabilities" means, for any Plan at any time, the amount
(if any) by which the present value of all vested nonforfeitable accrued
benefits under such Plan exceeds the fair market value of all Plan assets
allocable to such benefits, all determined as of the then most recent valuation
date for such Plan, but only to the extent that such excess represents a
potential liability of a member of the Controlled Group to the PBGC or the Plan
under Title IV of ERISA.
"Voting Stock" of any Person means capital stock of any class or classes
or other equity interests (however designated) having ordinary voting power for
the election of directors or similar governing body of such Person, other than
stock or other equity interests having such power only by reason of the
happening of a contingency.
"Welfare Plan" means a "welfare plan" as defined in Section 3(1) of ERISA.
"Wholly-Owned Subsidiary" means a Subsidiary of which all of the issued
and outstanding shares of capital stock (other than directors' qualifying
shares as required by law) or other equity interests are owned by the Company
and/or one or more Wholly-Owned Subsidiaries within the meaning of this
definition.
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"Zodiac Acquisition" means the acquisition by the Company of the assets of
Zodiac Rentals, Inc. and Zodiac Rentals, Inc. III pursuant to the Zodiac
Purchase Agreement.
"Zodiac Debt" means the deferred cash purchase price payable by the
Company for the Zodiac Acquisition pursuant to the second paragraph of Section
2.3(a) of the Zodiac Purchase Agreement.
"Zodiac Purchase Agreement" means that certain Asset Purchase Agreement
dated as of April 3, 1996 by and among Zodiac Rentals, Inc., Zodiac Rentals,
Inc. III and individuals affiliated with such firms and the Company.
Section 5.2. Interpretation. The foregoing definitions are equally
applicable to both the singular and plural forms of the terms defined. The
words "hereof", "herein", and "hereunder" and words of like import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All references to time of day herein
are references to Chicago, Illinois time unless otherwise specifically
provided. Where the character or amount of any asset or liability or item of
income or expense is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of this
Agreement, it shall be done in accordance with GAAP except where such
principles are inconsistent with the specific provisions of this Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Agent and the Lenders as
follows:
Section 6.1. Organization and Qualification. The Company is duly
organized, validly existing and in good standing as a corporation under the
laws of the State of Delaware, has full and adequate corporate power to own its
Property and conduct its business as now conducted, and is duly licensed or
qualified and in good standing in each jurisdiction in which the nature of the
business conducted by it or the nature of the Property owned or leased by it
requires such licensing or qualifying, except where the failure to be so
licensed or qualified, in the aggregate, would not have a material adverse
effect on the business or financial condition of the Company.
Section 6.2. Subsidiaries. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated or organized, as the case may be, has full and adequate power to
own its Property and conduct its business as now conducted, and is duly
licensed or qualified and in good standing in each jurisdiction in which the
nature of the business conducted by it or the nature of the Property owned or
leased by it requires such licensing or qualifying, except where the failure to
be so licensed or qualified, in the aggregate, would not have a material
adverse effect on the business or financial condition of such Subsidiary.
Schedule 6.2 hereto identifies each Subsidiary, the jurisdiction of its
incorporation or organization, as the case may be, the percentage of issued and
outstanding shares of each class of its capital stock or other equity interests
owned by the Company and the Subsidiaries
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and, if such percentage is not 100% (excluding directors' qualifying shares as
required by law), a description of each class of its authorized capital stock
and other equity interests and the number of shares of each class issued and
outstanding. All of the outstanding shares of capital stock and other equity
interests of each Subsidiary are validly issued and outstanding and fully paid
and nonassessable and all such shares and other equity interests indicated on
Schedule 6.2 as owned by the Company or a Subsidiary are owned, beneficially
and of record, by the Company or such Subsidiary free and clear of all Liens.
There are no outstanding commitments or other obligations of any Subsidiary to
issue, and no options, warrants or other rights of any Person to acquire, any
shares of any class of capital stock or other equity interests of any
Subsidiary.
Section 6.3. Corporate Authority and Validity of Obligations. The Company
has full right and authority to consummate each Permitted Acquisition, to enter
into this Agreement and the other Loan Documents, to make the borrowings herein
provided for, to issue its Notes in evidence thereof, to grant to the Agent the
Liens described in the Collateral Documents, and to perform all of its
obligations hereunder and under the other Loan Documents. The Loan Documents
delivered by the Company have been duly authorized, executed and delivered by
the Company and constitute valid and binding obligations of the Company
enforceable in accordance with their terms except as enforceability may be
limited by bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law); and this Agreement and the other Loan
Documents do not, nor does the performance or observance by the Company of any
of the matters and things herein or therein provided for, contravene or
constitute a default under any provision of law or any judgment, injunction,
order or decree binding upon the Company or any provision of the charter,
articles of incorporation or by-laws of the Company or any covenant, indenture
or agreement of or affecting the Company or any of its Properties, or result in
the creation or imposition of any Lien on any Property of the Company except
for the Lien granted in favor of the Agent pursuant to the Collateral
Documents.
Section 6.4. Use of Proceeds; Margin Stock. The Company shall use the
proceeds of the Loans solely as permitted under Sections 1.1(b) and 1.3(b)
hereof. Neither the Company nor any Subsidiary is engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of any Loan or any other extension of
credit made hereunder will be used to purchase or carry any such margin stock
or to extend credit to others for the purpose of purchasing or carrying any
such margin stock.
Section 6.5. Financial Reports. The proforma financial statements for the
Company and its Subsidiaries, heretofore furnished to the Lenders, fairly
present in all material respects the consolidated financial condition of the
Company and its Subsidiaries as at said dates and the consolidated results of
their operations and cash flows for the periods then ended in conformity with
GAAP applied on a consistent basis. Neither the Company nor any Subsidiary has
contingent liabilities which are material to it other than as indicated on such
financial statements or, with respect to future periods, on the financial
statements furnished pursuant to Section 8.5 hereof.
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Section 6.6. No Material Adverse Change. Since the date of the most recent
financial statements delivered to the Lenders pursuant to Section 8.5(a)
hereof, there has been no change in the condition (financial or otherwise) or
business prospects of the Company or any Subsidiary except those occurring in
the ordinary course of business, none of which individually or in the aggregate
have been materially adverse.
Section 6.7. Full Disclosure. To the best knowledge and belief of the
Company after due inquiry, the written statements and information furnished to
the Lenders in connection with the negotiation of this Agreement and the other
Loan Documents and the commitments by the Lenders to provide all or part of the
financing contemplated hereby do not contain any untrue statements of a
material fact or omit a material fact necessary to make the material statements
contained herein or therein not misleading, the Lenders acknowledging that as
to any projections furnished to Lenders, the Company only represents that the
same were prepared on the basis of assumptions and estimates the Company
believed to be reasonable.
Section 6.8. Good Title. The Company and its Subsidiaries each have good
and defensible title to their assets as reflected on the most recent
consolidated balance sheet of the Company and its Subsidiaries furnished to the
Lenders (except for sales of assets by the Company and its Subsidiaries in the
ordinary course of business), subject to no Liens other than such thereof as
are permitted by Section 8.14 hereof.
Section 6.9. Litigation and Other Controversies. There is no litigation or
governmental proceeding or labor controversy pending, nor to the knowledge of
the Company threatened, against the Company or any Subsidiary which if
adversely determined would (a) impair the validity or enforceability of, or
impair the ability of the Company to perform its obligations under, this
Agreement or any other Loan Document or (b) result in any material adverse
change in the financial condition, Properties, business or operations of the
Company or any Subsidiary.
Section 6.10. Taxes. All tax returns required to be filed by the Company
or any Subsidiary in any jurisdiction for any material tax liability have, in
fact, been filed, and all taxes, assessments, fees and other governmental
charges upon the Company or any Subsidiary or upon any of their respective
Properties, income or franchises, which are shown to be due and payable in such
returns, have been paid, except to the extent payment of the same is being
contested by appropriate proceedings which prevent enforcement of the matter
under contest and do not interfere with the conduct of the Company's business
in the ordinary course. The Company does not know of any proposed additional
tax assessment against it or its Subsidiaries for which adequate provision in
accordance with GAAP has not been made on its accounts. Adequate provisions in
accordance with GAAP for taxes on the books of the Company and each Subsidiary
have been made for all open years, and for its current fiscal period.
Section 6.11. Approvals. No authorization, consent, license, or exemption
from, or filing or registration with, any court or governmental department,
agency or instrumentality, nor any approval or consent of the stockholders of
the Company or any other Person, is or will be necessary to the valid
execution, delivery or performance by the Company of this Agreement or any
other Loan Document other
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than (i) such of the foregoing as have already been obtained and remain in full
force and effect or (ii) where the failure to obtain such of the foregoing
would not reasonably be expected to have and does not actually have a material
adverse effect on the financial condition, Properties, business or operations
of the Company and its Subsidiaries taken as a whole.
Section 6.12. Affiliate Transactions. Neither the Company nor any
Subsidiary is a party to any contracts or agreements with any of its Affiliates
on terms and conditions which are less favorable to the Company or such
Subsidiary than would be usual and customary in similar contracts or agreements
between Persons not affiliated with each other, other than the BACE Management
Agreement.
Section 6.13. Investment Company; Public Utility Holding Company. Neither
the Company nor any Subsidiary is an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended, or a "public utility holding company" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 6.14. ERISA. The Company and each other member of its Controlled
Group has fulfilled its obligations under the minimum funding standards of and
is in compliance in all material respects with ERISA and the Code to the extent
applicable to it and has not incurred any liability to the PBGC or a Plan under
Title IV of ERISA other than a liability to the PBGC for premiums under Section
4007 of ERISA. Neither the Company nor any Subsidiary has any contingent
liabilities with respect to any post-retirement benefits under a Welfare Plan,
other than liability for continuation coverage described in article 6 of Title
I of ERISA.
Section 6.15. Compliance with Laws. The Company and each of its
Subsidiaries are in compliance with the requirements of all federal, state and
local laws, rules and regulations applicable to or pertaining to their
Properties or business operations (including, without limitation, the
Occupational Safety and Health Act of 1970, the Americans with Disabilities Act
of 1990, and laws and regulations establishing quality criteria and standards
for air, water, land and toxic or hazardous wastes and substances),
non-compliance with which would be reasonably likely to have or actually does
have a material adverse effect on the financial condition, Properties, business
or operations of the Company and its Subsidiaries taken as a whole. Neither the
Company nor any Subsidiary has received notice to the effect that its
operations are not in compliance with any of the requirements of applicable
federal, state or local environmental, health and safety statutes and
regulations or are the subject of any governmental investigation evaluating
whether any remedial action is needed to respond to a release of any toxic or
hazardous waste or substance into the environment, which non-compliance or
remedial action would be reasonably likely to have or actually does have a
material adverse effect on the financial condition, Properties, business or
operations of the Company and its Subsidiaries taken as a whole.
Section 6.16. Other Agreements. Neither the Company nor any Subsidiary is
in default under the terms of any covenant, indenture or agreement of or
affecting the Company, any Subsidiary or any of their
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Properties, which default if uncured would have a material adverse effect on
the financial condition, Properties, business or operations of the Company or
its Subsidiaries taken as a whole.
Section 6.17. No Default. No Default or Event of Default has occurred and
is continuing.
SECTION 7. CONDITIONS PRECEDENT.
The obligation of the Lenders to make any Loan under this Agreement is
subject to the following conditions precedent:
Section 7.1. All Advances. As of the time of the making of each extension
of credit (including the initial extension of credit) hereunder:
(a) each of the representations and warranties set forth in Section 6
hereof and in the other Loan Documents shall be true and correct as of
such time, except to the extent the same expressly relate to an earlier
date;
(b) the Company shall be in full compliance with all of the terms and
conditions of this Agreement and of the other Loan Documents, and no
Default or Event of Default shall have occurred and be continuing or would
occur as a result of making such extension of credit;
(c) in the case of the extension of each Revolving Credit Loan, after
giving effect to such Loan, the aggregate principal amount of all
Revolving Credit Loans outstanding under this Agreement shall not exceed
the lesser of (i) the Revolving Credit Commitments and (ii) the Revolver
Advance Limit as then determined and computed;
(d) in the case of the extension of each Term Loan, after giving
effect to such Loan and any Permitted Acquisition to be financed thereby,
the aggregate cumulative principal amount of all Term Loans made under
this Agreement shall not exceed the lesser of (i) the Term Credit
Commitments and (ii) the Term Credit Earnings Limit as then determined and
computed on a pro forma basis assuming the closing of such Permitted
Acquisition;
(e) the Lenders shall have received such information as the Agent or
any Lender shall reasonably request to satisfy the Agent and the Required
Lenders that the foregoing conditions have been satisfied; and
(f) such extension of credit shall not violate any order, judgment or
decree of any court or other authority or any provision of law or
regulation applicable to the Agent or any Lender (including, without
limitation, Regulation U of the Board of Governors of the Federal Reserve
System) as then in effect.
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The Company's request for any Loan shall constitute its warranty as to the
facts specified in subsections (a) through (e), both inclusive, above.
Section 7.2. Initial Advance. At or prior to the making of the initial
extension of credit hereunder, the following conditions precedent shall also
have been satisfied:
(a) the Agent shall have received the following for the account of
the Lenders (each to be properly executed and completed) and the same
shall have been approved as to form and substance by the Agent and the
Lenders:
(i) the Notes;
(ii) the Security Agreement, together with any financing
statements requested by the Agent in connection therewith;
(iii) the Pledge Agreement, together with certificates
evidencing all of the issued and outstanding capital stock of the
Company to be pledged pursuant thereto and blank stock powers
therefor;
(iv) copies (executed or certified, as may be appropriate) of
all legal documents or proceedings taken in connection with the
execution and delivery of this Agreement and the other Loan Documents
to the extent the Agent or its counsel may reasonably request;
(v) an incumbency certificate containing the name, title and
genuine signatures of each of the Company's Authorized
Representatives;
(vi) evidence of insurance required by Section 8.4 hereof;
(vii) landlords' lien waivers in connection with the Property of
the Company located in leased premises (provided that this condition
shall be deemed satisfied in the case of each landlord not affiliated
with the Company or any party to a Permitted Acquisition if the
Company is unable despite its reasonable best efforts to obtain such
a waiver);
(viii) copy of BACE Management Agreement; and
(ix) copy of the Investment Agreement.
(b) the Agent shall have received for itself and for the Lenders the
initial fees called for hereby;
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(c) each Lender shall have received such valuations and
certifications as it may require in order to satisfy itself as to the
value of the Collateral, the financial condition of the Company and its
Subsidiaries, and the lack of material contingent liabilities of the
Company and its Subsidiaries;
(d) the Company shall have obtained written commitments satisfactory
to the Lenders in their sole discretion from third parties committing them
to make at least $8,500,000 in cash equity contributions to the Company;
(e) legal matters incident to the execution and delivery of this
Agreement and the other Loan Documents and to the transactions
contemplated hereby shall be satisfactory to each Lender and its counsel;
and the Agent shall have received for the account of the Lenders the
favorable written opinion of counsel for the Company in form and substance
satisfactory to each Lender and its counsel;
(f) the Agent shall have received for the account of the Lenders a
good standing certificate for the Company (dated as of the date no earlier
than 15 days prior to the date hereof) from the office of the secretary of
state of the state of its incorporation and each state in which it is
qualified to do business as a foreign corporation;
(g) the Liens granted to the Agent under the Collateral Documents
shall have been perfected in a manner satisfactory to each Lender and its
counsel; and
(h) the Agent shall have received for the account of the Lenders such
other agreements, instruments, documents, certificates and opinions as the
Agent or the Lenders may reasonably request.
SECTION 8. COVENANTS.
The Company agrees that, so long as any credit is available to or in use
by the Company hereunder, except to the extent compliance in any case or cases
is waived in writing by the Required Lenders:
Section 8.1. Maintenance of Business. The Company shall, and shall cause
each Subsidiary to, preserve and maintain its existence, except to the extent a
Subsidiary merges into the Company to effect a Permitted Acquisition or any
other merger permitted by Section 8.17 hereof. The Company shall, and shall
cause each Subsidiary to, preserve and keep in force and effect all licenses,
permits and franchises necessary to the proper conduct of its business, except
to the extent a Subsidiary merges into the Company to effect a Permitted
Acquisition or any other merger permitted by Section 8.17 hereof.
Section 8.2. Maintenance of Properties. The Company shall maintain,
preserve and keep those items of property, plant and equipment in adequate
repair, working order and condition necessary for the
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conduct of business in the ordinary course (ordinary wear and tear excepted)
and shall from time to time make all needful and proper repairs, renewals,
replacements, additions and betterments thereto so that at all times the
efficiency thereof shall be fully preserved and maintained, and shall cause
each Subsidiary to do so in respect of Property owned or used by it.
Section 8.3. Taxes and Assessments. The Company shall duly pay and
discharge, and shall cause each Subsidiary to duly pay and discharge, all
taxes, rates, assessments, fees and governmental charges upon or against it or
its Properties, in each case before the same become delinquent and before
penalties accrue thereon, unless and to the extent that the same are being
contested in good faith and by appropriate proceedings which prevent
enforcement of the matter under contest and adequate reserves are provided
therefor.
Section 8.4. Insurance. The Company shall insure and keep insured, and
shall cause each Subsidiary to insure and keep insured, with recognized and
responsible insurance companies, all insurable Property owned by it which is of
a character usually insured by Persons similarly situated and operating like
Properties against loss or damage from such hazards and risks, and in such
amounts, as are insured by Persons similarly situated and operating like
Properties; and the Company shall insure, and shall cause each Subsidiary to
insure, such other hazards and risks (including employers' and public liability
risks) with recognized and responsible insurance companies as and to the extent
usually insured by Persons similarly situated and conducting similar
businesses. The Company shall in any event maintain insurance on the Collateral
to the extent required by the Collateral Documents. The Company shall upon
request furnish to the Agent and any Lender a certificate setting forth in
summary form the nature and extent of the insurance maintained pursuant to this
Section.
Section 8.5. Financial Reports. The Company shall, and shall cause each
Subsidiary to, maintain a standard system of accounting in accordance with GAAP
and shall furnish to the Agent, each Lender and each of their duly authorized
representatives such information respecting the business and financial
condition of the Company and its Subsidiaries as the Agent or such Lender may
reasonably request; and without any request, shall furnish to the Lenders:
(a) as soon as available, and in any event within 30 days after the
close of each month, a copy of the consolidated and consolidating balance
sheet of the Company and its Subsidiaries as of the last day of such
period and the consolidated and consolidating statements of income,
retained earnings and cash flows of the Company and its Subsidiaries for
the month and for the fiscal year-to-date period then ended, each in
reasonable detail and (commencing with the financial statements for May of
1997) showing in comparative form the figures for the corresponding date
and period in the previous fiscal year, prepared by the Company in
accordance with GAAP and certified to by its President, Executive Vice
President or chief financial officer;
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(b) as soon as available, and in any event within 90 days after the
close of each annual accounting period of the Company, a copy of the
consolidated and consolidating balance sheet of the Company and its
Subsidiaries as of the last day of the period then ended and the
consolidated and consolidating statements of income, retained earnings and
cash flows of the Company and its Subsidiaries for the period then ended,
and accompanying notes thereto, each in reasonable detail and showing
(commencing with the financial statements for May of 1997) in comparative
form the figures for the previous fiscal year, accompanied by an
unqualified opinion thereon of Ernst & Young or another firm of
independent public accountants of recognized national standing, selected
by the Company and satisfactory to the Required Lenders, to the effect
that the financial statements have been prepared in accordance with GAAP
and present fairly in accordance with GAAP the consolidated financial
condition of the Company and its Subsidiaries as of the close of such
fiscal year and the results of their operations and cash flows for the
fiscal year then ended and that an examination of such accounts in
connection with such financial statements has been made in accordance with
generally accepted auditing standards and, accordingly, such examination
included such tests of the accounting records and such other auditing
procedures as were considered necessary in the circumstances;
(c) within the period provided in subsection (b) above, the written
statement of the accountants who certified the audit report thereby
required that in the course of their audit they have obtained no knowledge
of any Default or Event of Default, or, if such accountants have obtained
knowledge of any such Default or Event of Default, they shall disclose in
such statement the nature and period of the existence thereof;
(d) promptly after receipt thereof, any additional written reports,
management letters or other detailed information contained in writing
concerning significant aspects of the Company's or any Subsidiary's
operations and financial affairs given to it by its independent public
accountants;
(e) as soon as available, and in any event within 15 days prior to
the end of each fiscal year of the Company, a copy of the Company's
consolidated and consolidating business plan for the following fiscal
year, such business plan to show the Company's projected consolidated and
consolidating revenues, expenses, and balance sheet on month-by-month
basis, such business plan to be in reasonable detail prepared by the
Company and in form reasonably satisfactory to the Required Lenders; and
(f) promptly after knowledge thereof shall have come to the attention
of any responsible officer of the Company, written notice of any
threatened or pending litigation or governmental proceeding or labor
controversy against the Company or any Subsidiary which, if adversely
determined, would materially and adversely effect the financial condition,
Properties, business or operations of the Company or any Subsidiary or of
the occurrence of any Default or Event of Default hereunder.
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Each of the financial statements furnished to the Lenders pursuant to
subsections (a) and (b) of this Section shall be accompanied by a written
certificate in the form attached hereto as Exhibit C signed by the President,
Executive Vice President or chief financial officer of the Company to the
effect that to the best of such officer's knowledge and belief no Default or
Event of Default has occurred during the period covered by such statements or,
if any such Default or Event of Default has occurred during such period,
setting forth a description of such Default or Event of Default and specifying
the action, if any, taken by the Company to remedy the same. Such certificate
shall also set forth the calculations supporting such statements in respect of
Sections 8.7, 8.8, 8.9, 8.10, 8.11 and 8.12 of this Agreement.
Section 8.6. Inspection. The Company shall, and shall cause each
Subsidiary to, permit the Agent, each Lender and each of their duly authorized
representatives and agents to visit and inspect any of the Properties,
corporate books and financial records of the Company and each Subsidiary, to
examine and make copies of the books of accounts and other financial records of
the Company and each Subsidiary, and to discuss the affairs, finances and
accounts of the Company and each Subsidiary with, and to be advised as to the
same by, its officers, employees and independent public accountants (and by
this provision the Company hereby authorizes such accountants to discuss with
the Agent and such Lenders the finances and affairs of the Company and of each
Subsidiary) at such reasonable times and reasonable intervals as the Agent or
any such Lender may designate; provided, however, that prior to any Default or
Event of Default, neither the Agent nor any Lender shall exercise their
visitation and inspection rights under this Section without prior notice to the
Company.
Section 8.7. Rental Inventory Leases. The Company shall not, nor shall it
permit any Subsidiary to, acquire the use or possession of any Property under a
lease or similar arrangement, whether or not the Company or any Subsidiary has
the express or implied right to acquire title to or purchase such Property, at
any time if, after giving effect thereto, the aggregate value of such Property
so acquired (excluding real property used for retail rental store locations)
would at any time exceed $1,500,000.
Section 8.8. Store Leases. The Company shall not, and shall not permit any
Subsidiary to, acquire the use of or possession of any real property to be used
as a retail rental store location under any lease or similar arrangement which
has a term (excluding renewal terms exercisable at the discretion of the
lessee) that is over five calendar years in length; provided, however, that the
foregoing shall not restrict nor operate to prevent the Company from entering
into leases or similar arrangements for such real property each with a term
(excluding renewal terms exercisable at the discretion of the lessee) not
exceeding seven calendar years in length if, after giving effect thereto, the
aggregate amount of fixed rentals and other consideration payable by the
Company and its Subsidiaries during any calendar year by the Company and its
Subsidiaries under all such leases and similar arrangements with terms
(excluding such renewal terms) in excess of five calendar years would not
exceed 10% of the aggregate amount of fixed rentals and other considerations
payable by the Company under all such leases and similar arrangements of
whatever term.
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Section 8.9. Senior Funded Debt to Annualized EBITDA. The Company shall,
as of the last day of each calendar month, maintain the ratio of Senior Funded
Debt on such date to Pro forma Adjusted Cash Flow for the twelve calendar
months then ended in an amount not greater than 3.0 to 1.
Section 8.10. Actual EBITDA. The Company shall, as of the last day of each
calendar quarter (commencing with the calendar quarter ending December 31,
1996), maintain the ratio (the "Cash Flow Shrinkage Ratio") of Adjusted Actual
EBITDA for the four calendar quarters then ended to the relevant Adjusted Base
EBITDA in an amount not less than 0.85 to 1 (provided that the Cash Flow
Shrinkage Ratio shall be computed: as of December 31, 1996, for the period of
two calendar quarters then ended; and as of March 31, 1997, for the period of
three calendar quarters then ended).
Section 8.11. Overhead to Revenue Ratio. The Company shall, as of the last
day of each August, November, February and May of each calendar year
(commencing with the calendar month ending August 31, 1996), maintain the ratio
(the "Overhead Ratio") of (x) the aggregate amount expended by the Company and
its Subsidiaries for Corporate Overhead during the twelve calendar months then
ended to (y) Pro forma Adjusted Revenues for the same period of twelve calendar
months in an amount not greater than 0.05 to 1 through May 31, 1997 and 0.04 to
1 at all times thereafter (provided that the Overhead Ratio shall be computed:
as of August 31, 1996, for the period of three calendar months then ended; as
of November 30, 1996, for the period of six calendar months then ended; and as
of February 28, 1997, for the period of nine calendar months then ended).
Section 8.12. Store Openings. The Company shall not, nor shall it permit
any Subsidiary to, commence the operation of any Start-Up Store if immediately
after giving effect thereto, the ratio of (x) the number of Start-Up Stores
then operating and owned by the Company to (y) the number of all retail rental
stores (not just Start-Up Stores) then operating and owned by the Company would
exceed 0.25 to 1.
Section 8.13. Indebtedness for Borrowed Money. The Company shall not, nor
shall it permit any Subsidiary to, issue, incur, assume, create or have
outstanding any Indebtedness for Borrowed Money; provided, however, that the
foregoing shall not restrict nor operate to prevent:
(a) the Obligations of the Company owing to the Agent and the Lenders
hereunder;
(b) purchase money indebtedness and Capitalized Lease Obligations
secured by Liens permitted by Section 8.14(e) hereof in an aggregate
amount not to exceed $1,500,000 at any one time outstanding;
(c) Subordinated Debt representing the deferred purchase price paid
by the Company and its Subsidiaries for Permitted Acquisitions; and
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(d) indebtedness not otherwise permitted by this Section aggregating
not more than $100,000 at any one time outstanding.
Section 8.14. Liens. The Company shall not, nor shall it permit any
Subsidiary to, create, incur or permit to exist any Lien of any kind on any
Property owned by the Company or any Subsidiary; provided, however, that the
foregoing shall not apply to nor operate to prevent:
(a) Liens arising by statute in connection with worker's
compensation, unemployment insurance, old age benefits, social security
obligations, taxes, assessments, statutory obligations or other similar
charges, good faith cash deposits in connection with tenders, contracts or
leases to which the Company or any Subsidiary is a party or other cash
deposits required to be made in the ordinary course of business, provided
in each case that the obligation is not for borrowed money and that the
obligation secured is not overdue or, if overdue, is being contested in
good faith by appropriate proceedings which prevent enforcement of the
matter under contest and adequate reserves have been established therefor;
(b) mechanics', workmen's, materialmen's, landlords', carriers', or
other similar Liens arising in the ordinary course of business with
respect to obligations which are not due or which are being contested in
good faith by appropriate proceedings which prevent enforcement of the
matter under contest;
(c) the pledge of assets for the purpose of securing an appeal, stay
or discharge in the course of any legal proceeding, provided that the
aggregate amount of liabilities of the Company and its Subsidiaries
secured by a pledge of assets permitted under this subsection, including
interest and penalties thereon, if any, shall not be in excess of $100,000
at any one time outstanding;
(d) the Liens granted in favor of the Agent for the benefit of the
Lenders pursuant to the Collateral Documents;
(e) Liens on property of the Company or any of its Subsidiaries
created solely for the purpose of securing indebtedness permitted by
Section 8.13(b) hereof, representing or incurred to finance, refinance or
refund the purchase price of Property, provided that no such Lien shall
extend to or cover other Property of the Company or such Subsidiary other
than the respective Property so acquired, and the principal amount of
indebtedness secured by any such Lien shall at no time exceed the original
purchase price of such Property; and
(f) the Liens described on Schedule 8.14 hereto.
Section 8.15. Investments, Loans, Advances and Guaranties. The Company
shall not, nor shall it permit any Subsidiary to, directly or indirectly, make,
retain or have outstanding any investments (whether
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through purchase of stock or obligations or otherwise) in, or loans or advances
(other than for travel advances and other similar cash advances made to
employees in the ordinary course of business) to, any other Person, or be or
become liable as endorser, guarantor, surety or otherwise for any debt,
obligation or undertaking of any other Person, or otherwise agree to provide
funds for payment of the obligations of another, or supply funds thereto or
invest therein or otherwise assure a creditor of another against loss, or apply
for or become liable to the issuer of a letter of credit which supports an
obligation of another, or subordinate any claim or demand it may have to the
claim or demand of any other Person; provided, however, that the foregoing
shall not apply to nor operate to prevent:
(a) investments in direct obligations of the United States of America
or of any agency or instrumentality thereof whose obligations constitute
full faith and credit obligations of the United States of America,
provided that any such obligations shall mature within one year of the
date of issuance thereof;
(b) investments in commercial paper rated at least P-1 by Xxxxx'x
Investors Services, Inc. and at least A-1 by Standard & Poor's Corporation
maturing within 270 days of the date of issuance thereof;
(c) investments in certificates of deposit issued by any United
States commercial bank having capital and surplus of not less than
$100,000,000 which have a maturity of one year or less;
(d) endorsement of items for deposit or collection of commercial
paper received in the ordinary course of business;
(e) trade credit extended on ordinary trade terms in the ordinary
course of business; and
(f) investments, loans, advances and guarantees not otherwise
permitted by this Section aggregating not more than $200,000 at any one
time outstanding.
In determining the amount of investments, loans, advances and guarantees
permitted under this Section, investments shall always be taken at the original
cost thereof (regardless of any subsequent appreciation or depreciation
therein), loans and advances shall be taken at the principal amount thereof
then remaining unpaid, and guarantees shall be taken at the amount of
obligations guaranteed thereby.
Section 8.16. Acquisitions. The Company will not, nor will it permit any
Subsidiary to, make or commit to make any Acquisition; provided, however, that
the Company may make one or more Acquisitions of a retail rental business (and
Acquisitions of the capital stock of any corporation, or the equity interests
in any partnership or other firm, in each case engaged primarily in the retail
rental business if substantially concurrent with such Acquisition, the
corporation, partnership or firm so acquired merges or dissolves into the
Company) if:
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(a) the Company promptly informs the Lenders of all principal terms
and conditions applicable to the Acquisition and furnishes the Lenders
such other information regarding the Acquisition as the Agent or any
Lender shall reasonably request;
(b) the Company demonstrates that on a pro forma basis after giving
effect to the subject Acquisition, the Company will continue to comply
with all the terms and conditions of the Loan Documents, such
demonstration to require even without request from any Lender that the
Company provide each Lender no later than 30 days prior to the closing of
such Acquisition (i) a certificate signed by the President, Executive Vice
President or the chief financial officer of the Company in the form of
Exhibit C attached hereto prepared on a pro forma basis after giving
effect to the closing of such Acquisition and (ii) pro forma financial
projections for the twelve months following the subject Acquisition;
(c) after giving effect to such Acquisition, at least 40% of the
aggregate consideration paid by the Company and its Subsidiaries for such
Acquisition and all other Acquisitions closed on and at any time after the
date hereof on a cumulative basis (including as such consideration, the
assumption by the Company or any Subsidiary of any Indebtedness for
Borrowed Money of each Person acquired) will have been funded out of the
proceeds of substantially concurrent cash equity contributions to the
Company, or to the extent the Required Lenders in their sole discretion
agree, the proceeds of Subordinated Debt issued by the Company or any
Subsidiary;
(d) the Board of Directors or other governing body of the Person
whose assets or capital stock is being so acquired has approved the terms
of the Acquisition;
(e) at the time of such Acquisition and immediately giving effect
thereto, no Default or Event of Default shall have occurred or be
continuing; and
(f) except in the case of the Zodiac Acquisition and the A to Z
Washington Acquisition, the Required Lenders in their sole discretion
shall have provided their written consent to such Acquisition.
Section 8.17. Mergers, Consolidations and Sales. The Company shall not,
nor shall it permit any Subsidiary to, be a party to any merger or
consolidation, or sell, transfer, lease or otherwise dispose of all or any
substantial part of its Property, including any disposition of Property as part
of a sale and leaseback transaction, or in any event sell or discount (with or
without recourse) any of its notes or accounts receivable; provided, however,
that this Section shall not apply to nor operate to prevent (x) the Company or
any Subsidiary from selling its inventory and equipment in the ordinary course
of its business or (y) any Subsidiary from merging into the Company to effect a
Permitted Acquisition. A sale or other disposition of 5% or more of the total
assets of the Company shall be deemed "substantial" for the foregoing purposes.
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Section 8.18. Maintenance of Subsidiaries. The Company shall not assign,
sell or transfer, or permit any Subsidiary to issue, assign, sell or transfer,
any shares of capital stock of a Subsidiary; provided that the foregoing shall
not operate to prevent the issuance, sale and transfer to any person of any
shares of capital stock of a Subsidiary solely for the purpose of qualifying,
and to the extent legally necessary to qualify, such person as a director of
such Subsidiary.
Section 8.19. Dividends and Certain Other Restricted Payments. The Company
will not during any fiscal year (a) declare or pay any dividends on or make any
other distributions in respect of any class or series of its capital stock
(other than dividends payable solely in its capital stock) or (b) directly or
indirectly purchase, redeem or otherwise acquire or retire any of its capital
stock; provided, however, that the Company may, in the ordinary course,
purchase or redeem common capital stock of the Company from its employees under
currently existing employee stock repurchase agreements or similar agreements
entered into with the Company's employees in the ordinary course of business if
at the time of each such purchase or redemption and immediately after giving
effect thereto, (i) no Default or Event of Default shall occur or be continuing
and (ii) the aggregate amount so expended in any calendar year does not exceed
the sum of $200,000 plus the proceeds received by the Company during such year
under key man life insurance policies maintained by the Company for such
purpose.
Section 8.20. Subordinated Debt. The Company will not, and will not permit
any Subsidiary to, amend or modify the terms and conditions applicable to any
Subordinated Debt, except that the Company may agree to a decrease in the
interest rate or premium applicable thereto or to a deferral of repayment of
any of principal of or interest or premium on any Subordinated Debt beyond the
due date applicable thereto as of the date such indebtedness is initially
approved by the Required Lenders. The Company will not, and will not permit any
Subsidiary to, make any payment of principal, interest or premium, if any, on
or in respect of any Subordinated Debt or otherwise acquire, prepay or retire
any such Subordinated Debt prior to the maturities thereof or prior to any
other times required for payment thereof as are in force and effect as of the
date such indebtedness is initially approved by the Required Lenders.
Section 8.21. ERISA. The Company shall, and shall cause each Subsidiary
to, promptly pay and discharge all obligations and liabilities arising under
ERISA of a character which if unpaid or unperformed might result in the
imposition of a Lien against any of its Properties. The Company shall, and
shall cause each Subsidiary to, promptly notify the Agent and each Lender of
(i) the occurrence of any reportable event (as defined in ERISA) with respect
to a Plan, (ii) receipt of any notice from the PBGC of its intention to seek
termination of any Plan or appointment of a trustee therefor, (iii) its
intention to terminate or withdraw from any Plan, and (iv) the occurrence of
any event with respect to any Plan which would result in the incurrence by the
Company or any Subsidiary of any material liability, fine or penalty, or any
material increase in the contingent liability of the Company or any Subsidiary
with respect to any post-retirement Welfare Plan benefit.
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Section 8.22. Compliance with Laws. The Company shall, and shall cause
each Subsidiary to, comply in all respects with the requirements of all
federal, state and local laws, rules, regulations, ordinances and orders
applicable to or pertaining to their Properties or business operations,
non-compliance with which could have a material adverse effect on the financial
condition, Properties, business or operations of the Company or any Subsidiary
or could result in a material Lien upon any of their Property.
Section 8.23. Burdensome Contracts With Affiliates. The Company shall not,
nor shall it permit any Subsidiary to, enter into any contract, agreement or
business arrangement (other than the BACE Management Agreement) with any of its
Affiliates (other than with Wholly-Owned Subsidiaries) on terms and conditions
which are less favorable to the Company or such Subsidiary than would be usual
and customary in similar contracts, agreements or business arrangements between
Persons not affiliated with each other.
Section 8.24. No Changes in Fiscal Year. Neither the Company nor any
Subsidiary shall change its fiscal year from its present basis without the
prior written consent of the Required Lenders.
Section 8.25. Formation of Subsidiaries. Except for existing Subsidiaries
designated on Schedule 6.2 hereto, the Company shall not, nor shall it permit
any Subsidiary to, form or acquire any Subsidiary without the prior written
consent of the Required Lenders.
Section 8.26. Change in the Nature of Business. The Company shall not, and
shall not permit any Subsidiary to, engage in any business or activity if as a
result the general nature of the business of the Company or any Subsidiary
would be changed in any material respect from the general nature of the
business engaged in by the Company or such Subsidiary on the date of this
Agreement.
Section 8.27. BACE Management Agreement. The Company will not, and will
not permit any Subsidiary to, amend or modify any provision of the BACE
Management Agreement relating to the compensation payable to BACE and any of
its Affiliates.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES.
Section 9.1. Events of Default. Any one or more of the following shall
constitute an "Event of Default" hereunder:
(a) default for five days or more in the payment when due of all or
any part of the principal of or interest on any Note (whether at the
stated maturity thereof or at any other time provided for in this
Agreement) or of any reimbursement obligation owing under any Application
or of any fee or other Obligation payable by the Company hereunder or
under any other Loan Document; or
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(b) default in the observance or performance of any covenant set
forth in Sections 8.5(f), 8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.13, 8.14,
8.15, 8.16, 8.17, 8.19 or 8.20 hereof or of any provision of any Loan
Document requiring the maintenance of insurance on the Collateral subject
thereto or dealing with the use or remittance of proceeds of Collateral;
or
(c) default in the observance or performance of any other provision
hereof or of any other Loan Document which is not remedied within 30 days
after the earlier of (i) the date on which such failure shall first become
known to any officer of the Company or (ii) written notice thereof is
given to the Company by the Agent or any Lender; or
(d) any representation or warranty made by the Company herein or in
any other Loan Document, or in any statement or certificate furnished by
it pursuant hereto or thereto, or in connection with any extension of
credit made hereunder, proves untrue in any material respect as of the
date of the issuance or making thereof; or
(e) any event occurs or condition exists (other than those described
in subsections (a) through (d) above) which is specified as an event of
default under any of the other Loan Documents, or any of the Loan
Documents shall for any reason not be or shall cease to be in full force
and effect, or any of the Loan Documents is declared to be null and void,
or any of the Collateral Documents shall for any reason fail to create a
valid and perfected first priority Lien in favor of the Agent in any
Collateral aggregating $50,000 or more in value purported to be covered
thereby except as expressly permitted by the terms thereof, or the Stock
Pledge Agreements taken together shall for any reason fail to create a
valid and perfected first priority Lien in favor of the Agent on at least
66-2/3% of the issued and outstanding Voting Stock of the Company; or
(f) default shall occur under any Indebtedness for Borrowed Money
aggregating $100,000 or more issued, assumed or guaranteed by the Company
or any Subsidiary, or under any indenture, agreement or other instrument
under which the same may be issued, and such default shall continue for a
period of time sufficient to permit the acceleration of the maturity of
any such Indebtedness for Borrowed Money (whether or not such maturity is
in fact accelerated), or any such Indebtedness for Borrowed Money shall
not be paid when due (whether by lapse of time, acceleration or otherwise
and any grace period applicable to such default in payment (but in no
event in excess of 5 days) shall have lapsed); or
(g) any judgment or judgments, writ or writs, or warrant or warrants
of attachment, or any similar process or processes in an aggregate amount
in excess of $100,000 shall be entered or filed against the Company or any
Subsidiary or against any of their Property and which remains unvacated,
unbonded, unstayed or unsatisfied for a period of 30 days; or
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(h) any agreement purporting to subordinate payment of any
Subordinated Debt to the prior payment of any Loan or any other
Obligations shall purport to be terminated or shall cease to have any
force or effect; or
(i) the Company or any Subsidiary makes any payment or other
distribution on account of the principal of or interest on any
Subordinated Debt or any other indebtedness, which payment or distribution
as prohibited under the terms of any instrument subordinating such
indebtedness to the prior payment of the Loans or any of the other
Obligations; or
(j) the Company or any member of its Controlled Group shall fail to
pay when due an amount or amounts aggregating in excess $100,000 which it
shall have become liable to pay to the PBGC or to a Plan under Title IV of
ERISA; or notice of intent to terminate a Plan or Plans having aggregate
Unfunded Vested Liabilities in excess of $100,000 (collectively, a
"Material Plan") shall be filed under Title IV of ERISA by the Company or
any other member of its Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings
under Title IV of ERISA to terminate or to cause a trustee to be appointed
to administer any Material Plan or a proceeding shall be instituted by a
fiduciary of any Material Plan against the Company or any member of its
Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such
proceeding shall not have been dismissed within 30 days thereafter; or a
condition shall exist by reason of which the PBGC would be entitled to
obtain a decree adjudicating that any Material Plan must be terminated; or
(k) dissolution or termination of the existence of the Company or any
Subsidiary (except for the merger of a Subsidiary into the Company to
effect a Permitted Acquisition); or
(l) the Company shall not have obtained on or before November 15,
1996 (the "Financing Deadline") from one or more commercial banks their
written commitments (subject to no conditions precedent to funding other
than those customarily required by prudent lenders similarly situated
extending like credit) for their participation in additional credit to be
extended on the terms and conditions of this Agreement (except to the
extent the Lenders and the Company in their discretion shall agree to
other terms) which when taken together with the Commitments then in effect
hereunder would aggregate at least $35,000,000; or
(m) BACE Investments, Mesirow and Edgewater, taken collectively,
shall at any time and for any reason cease to own, both legally and
beneficially, at least 51% of the issued and outstanding Voting Stock of
the Company; or
(n) the Company or any Subsidiary shall (i) have entered
involuntarily against it an order for relief under the United States
Bankruptcy Code, as amended, (ii) not pay, or admit in writing its
inability to pay, its debts generally as they become due, (iii) make an
assignment for the benefit of
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creditors, (iv) apply for, seek, consent to, or acquiesce in, the
appointment of a receiver, custodian, trustee, examiner, liquidator or
similar official for it or any substantial part of its Property, (v)
institute any proceeding seeking to have entered against it an order for
relief under the United States Bankruptcy Code, as amended, to adjudicate
it insolvent, or seeking dissolution, winding up, liquidation,
reorganization, arrangement, adjustment or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors or fail to file an answer or other pleading denying the
material allegations of any such proceeding filed against it, (vi) take
any corporate action in furtherance of any matter described in parts (i)
through (v) above, or (vii) fail to contest in good faith any appointment
or proceeding described in Section 9.1(o) hereof; or
(o) a custodian, receiver, trustee, examiner, liquidator or similar
official shall be appointed for the Company or any Subsidiary or any
substantial part of any of their Property, or a proceeding described in
Section 9.1(n)(v) shall be instituted against the Company or any
Subsidiary, and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 60 days.
Section 9.2. Non-Bankruptcy Defaults. When any Event of Default described
in subsection (a) through (m), both inclusive, of Section 9.1 has occurred and
is continuing, the Agent shall, upon the request of the Required Lenders, by
notice to the Company, take one or more of the following actions:
(a) terminate the obligations of the Lenders to extend any further
credit hereunder on the date (which may be the date thereof) stated in
such notice;
(b) declare the principal of and the accrued interest on the Notes to
be forthwith due and payable and thereupon the Notes, including both
principal and interest and all fees, charges and other Obligations payable
hereunder and under the other Loan Documents, shall be and become
immediately due and payable without further demand, presentment, protest
or notice of any kind; and
(c) enforce any and all rights and remedies available to it under the
Loan Documents or applicable law.
Section 9.3. Bankruptcy Defaults. When any Event of Default described in
subsection (n) or (o) of Section 9.1 has occurred and is continuing, then the
Notes, including both principal and interest, and all fees, charges and other
Obligations payable hereunder and under the other Loan Documents, shall
immediately become due and payable without presentment, demand, protest or
notice of any kind, and the obligations of the Lenders to extend further credit
pursuant to any of the terms hereof shall immediately terminate. In addition,
the Agent may exercise any and all remedies available to it under the Loan
Documents or applicable law.
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SECTION 10. THE AGENT
Section 10.1. Appointment and Authorization. Each Lender hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers hereunder and under the other Loan Documents as are
designated to the Agent by the terms hereof and thereof together with such
powers as are reasonably incidental thereto. The Lenders expressly agree that
the Agent is not acting as a fiduciary of the Lenders in respect of the Loan
Documents, the Company or otherwise, and nothing herein or in any of the other
Loan Documents shall result in any duties or obligations on the Agent or any of
the Lenders except as expressly set forth herein. The Agent may resign at any
time by sending 20 days prior written notice to the Company and the Lenders. In
the event of any such resignation, the Required Lenders may appoint a new agent
after consultation with the Company, which shall succeed to all the rights,
powers and duties of the Agent hereunder and under the other Loan Documents.
Any resigning Agent shall be entitled to the benefit of all the protective
provisions hereof with respect to its acts as an agent hereunder, but no
successor Agent shall in any event be liable or responsible for any actions of
its predecessor. If the Agent resigns and no successor is appointed, the rights
and obligations of such Agent shall be automatically assumed by the Required
Lenders and (i) the Company shall be directed to make all payments due each
Lender hereunder directly to such Lender and (ii) the Agent's rights in the
Collateral Documents shall be assigned without representation, recourse or
warranty to the Lenders as their interests may appear.
Section 10.2. Rights as a Lender. The Agent has and reserves all of the
rights, powers and duties hereunder and under the other Loan Documents as any
Lender may have and may exercise the same as though it were not the Agent and
the terms "Lender" or "Lenders" as used herein and in all of such documents
shall, unless the context otherwise expressly indicates, include the Agent in
its individual capacity as a Lender.
Section 10.3. Standard of Care. The Lenders acknowledge that they have
received and approved copies of the Loan Documents and such other information
and documents concerning the transactions contemplated and financed hereby as
they have requested to receive and/or review. The Agent makes no
representations or warranties of any kind or character to the Lenders with
respect to the validity, enforceability, genuineness, perfection, value, worth
or collectibility hereof or of the Notes or any of the other Obligations or of
any of the other Loan Documents or of the Liens provided for thereby or of any
other documents called for hereby or thereby or of the Collateral. The Agent
need not verify the worth or existence of the Collateral and may rely
exclusively on reports of the Company in computing the Term Credit Earnings
limit and Revolver Advance Limit. Neither the Agent nor any director, officer,
employee, agent or representative thereof (including any security trustee
therefor) shall in any event be liable for any clerical errors or errors in
judgment, inadvertence or oversight, or for action taken or omitted to be taken
by it or them hereunder or under the other Loan Documents or in connection
herewith or therewith except for its or their own gross negligence or willful
misconduct. The Agent shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, certificate,
warranty, instruction or statement (oral or written) of anyone (including
anyone in good faith believed by it to be authorized to act on
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behalf of the Company), unless it has actual knowledge of the untruthfulness of
same. The Agent may execute any of its duties hereunder by or through
employees, agents, and attorneys-in-fact and shall not be answerable to the
Lenders for the default or misconduct of any such agents or attorneys-in-fact
selected with reasonable care. The Agent shall be entitled to advice of counsel
concerning all matters pertaining to the agencies hereby created and its duties
hereunder, and shall incur no liability to anyone and be fully protected in
acting upon the advice of such counsel. The Agent shall be entitled to assume
that no Default or Event of Default exists unless notified to the contrary by a
Lender. The Agent shall in all events be fully protected in acting or failing
to act in accord with the instructions of the Required Lenders. Upon the
occurrence of an Event of Default hereunder, the Agent shall take such action
with respect to the enforcement of the Liens on the Collateral and the
preservation and protection thereof as it shall be directed to take by the
Required Lenders but unless and until the Required Lenders have given such
direction the Agent shall take or refrain from taking such actions as it deems
appropriate and in the best of interest of all Lenders. The Agent shall in all
cases be fully justified in failing or refusing to act hereunder unless it
shall be indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by the Agent by reason of taking or
continuing to take any such action. The Agent may treat the owner of any Note
as the holder thereof until written notice of transfer shall have been filed
with the Agent signed by such owner in form satisfactory to the Agent. Each
Lender acknowledges that it has independently and without reliance on the Agent
or any other Lender and based upon such information, investigations and
inquiries as it deems appropriate made its own credit analysis and decision to
extend credit to the Company. It shall be the responsibility of each Lender to
keep itself informed as to the creditworthiness of the Company and the Agent
shall have no liability to any Lender with respect thereto.
Section 10.4. Costs and Expenses. Each Lender agrees to reimburse the
Agent for all costs and expenses suffered or incurred by the Agent or any
security trustee in performing its duties hereunder and under the other Loan
Documents, or in the exercise of any right or power imposed or conferred upon
the Agent hereby or thereby, to the extent that the Agent is not promptly
reimbursed for same by the Company or out of the Collateral, all such costs and
expenses to be borne by the Lenders ratably in accordance with the amounts of
their respective Commitments. If any Lender fails to reimburse the Agent for
such Lender's share of any such costs and expenses, such costs and expenses
shall be paid pro rata by the remaining Lenders, but without in any manner
releasing the defaulting Lender from its liability hereunder.
Section 10.5. Indemnity. The Lenders shall ratably indemnify and hold the
Agent, and its directors, officers, employees, agents and representatives
(including as such any security trustee therefor) harmless from and against any
liabilities, losses, costs and expenses suffered or incurred by them hereunder
or under the other Loan Documents or in connection with the transactions
contemplated hereby or thereby, regardless of when asserted or arising, except
to the extent they are promptly reimbursed for the same by the Company or out
of the Collateral and except to the extent that any event giving rise to a
claim was caused by the gross negligence or willful misconduct of the party
seeking to be indemnified. If any Lender defaults in its obligations hereunder,
its share of the obligations shall be paid pro rata by the remaining Lenders,
but without in any manner releasing the defaulting Lender from its liability
hereunder.
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SECTION 11. MISCELLANEOUS.
Section 11.1. Withholding Taxes. (a) Payments Free of Withholding. Except
as otherwise required by law and subject to Section 11.1(b) hereof, each
payment by the Company under this Agreement and under any other Loan Document
shall be made without withholding for or on account of any present or future
taxes (other than overall net income taxes on the recipient) imposed by or
within the jurisdiction in which the Company is domiciled, any jurisdiction
from which the Company makes any payment, or (in each case) any political
subdivision or taxing authority thereof or therein. If any such withholding is
so required, the Company shall make the withholding, pay the amount withheld to
the appropriate governmental authority before penalties attach thereto or
interest accrues thereon and forthwith pay such additional amount as may be
necessary to ensure that the net amount actually received by each Lender and
the Agent free and clear of such taxes (including such taxes on such additional
amount) is equal to the amount which that Lender or the Agent (as the case may
be) would have received had such withholding not been made. If the Agent or any
Lender pays any amount in respect of any such taxes, penalties or interest, the
Company shall reimburse the Agent or such Lender for that payment on demand in
the currency in which such payment was made. If the Company pays any such
taxes, penalties or interest, it shall deliver official tax receipts evidencing
that payment or certified copies thereof to the Lender or Agent on whose
account such withholding was made (with a copy to the Agent if not the
recipient of the original) on or before the thirtieth day after payment.
(b) U.S. Withholding Tax Exemptions. Each Lender that is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code)
shall submit to the Company and the Agent on or before the earlier of the date
the initial Borrowing is made hereunder and 30 days after the date hereof, two
duly completed and signed copies of either Form 1001 (relating to such Lender
and entitling it to a complete exemption from withholding under the Code on all
amounts to be received by such Lender, including fees, pursuant to the Loan
Documents and the Loans) or Form 4224 (relating to all amounts to be received
by such Lender, including fees, pursuant to the Loan Documents and the Loans)
of the United States Internal Revenue Service. Thereafter and from time to
time, each Lender shall submit to the Company and the Agent such additional
duly completed and signed copies of one or the other of such Forms (or such
successor forms as shall be adopted from time to time by the relevant United
States taxing authorities) as may be (i) requested by the Company in a written
notice, directly or through the Agent, to such Lender and (ii) required under
then-current United States law or regulations to avoid or reduce United States
withholding taxes on payments in respect of all amounts to be received by such
Lender, including fees, pursuant to the Loan Documents or the Loans.
(c) Inability of Bank to Submit Forms. If any Lender determines, as a
result of any change in applicable law, regulation or treaty, or in any
official application or interpretation thereof, that it is unable to submit to
the Company or the Agent any form or certificate that such Lender is obligated
to submit pursuant to subsection (b) of this Section 11.1 or that such Lender
is required to withdraw or cancel any such form or certificate previously
submitted or any such form or certificate otherwise becomes ineffective or
inaccurate, such Lender shall promptly notify the Company and Agent of such
fact and the Lender shall to that extent
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not be obligated to provide any such form or certificate and will be entitled
to withdraw or cancel any affected form or certificate, as applicable.
Section 11.2. Non-Business Days. If any payment hereunder becomes due and
payable on a day which is not a Business Day, the due date of such payment
shall be extended to the next succeeding Business Day on which date such
payment shall be due and payable. In the case of any payment of principal
falling due on a day which is not a Business Day, interest on such principal
amount shall continue to accrue during such extension at the rate per annum
then in effect, which accrued amount shall be due and payable on the next
scheduled date for the payment of interest.
Section 11.3. No Waiver, Cumulative Remedies. No delay or failure on the
part of any Lender or on the part of any holder of any of the Obligations in
the exercise of any power or right shall operate as a waiver thereof or as an
acquiescence in any default, nor shall any single or partial exercise of any
power or right preclude any other or further exercise thereof or the exercise
of any other power or right. The rights and remedies hereunder of the Lenders
and any of the holders of the Obligations are cumulative to, and not exclusive
of, any rights or remedies which any of them would otherwise have.
Section 11.4. Waivers, Modifications and Amendments. Any provision hereof
or of any of the other Loan Documents may be amended, modified, waived or
released and any Default or Event of Default and its consequences may be
rescinded and annulled upon the written consent of the Required Lenders;
provided, however, that without the consent of all Lenders no such amendment,
modification or waiver shall increase the amount or extend the term of any
Lender's Commitment or reduce the amount of any principal of or interest rate
applicable to, or extend the maturity of, any Obligation owed to it or reduce
the amount of the fees to which it is entitled hereunder or release any
substantial (in value) part of the collateral security afforded by the
Collateral Documents (except in connection with a sale or other disposition
required to be effected by the provisions hereof or of the Collateral
Documents) or change this Section or change the definition of "Required
Lenders" or change the number of Lenders required to take any action hereunder
or under any of the other Loan Documents. No amendment, modification or waiver
of the Agent's protective provisions shall be effective without the prior
written consent of the Agent.
Section 11.5. Costs and Expenses. The Company agrees to pay on demand the
reasonable costs and expenses of the Agent in connection with the negotiation,
preparation, execution and delivery of this Agreement, the other Loan Documents
and the other instruments and documents to be delivered hereunder or
thereunder, and in connection with the recording or filing of any of the
foregoing, and in connection with the transactions contemplated hereby or
thereby, and in connection with any consents hereunder or waivers or amendments
hereto or thereto, including the fees and expenses of Messrs. Xxxxxxx and
Xxxxxx, counsel for the Agent, with respect to all of the foregoing (whether or
not the transactions contemplated hereby are consummated). The Company further
agrees to pay to Agent and the Lenders and any other holders of the Obligations
all reasonable costs and expenses (including court costs and attorneys' fees),
if any, incurred or paid by the Agent, the Lenders or any other holders of the
Obligations in connection with any Default or
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Event of Default or in connection with the enforcement of this Agreement or any
of the other Loan Documents or any other instrument or document delivered
hereunder or thereunder. The Company further agrees to indemnify and save the
Lenders, the Agent and any security trustee for the Lenders harmless from any
and all liabilities, losses, costs and expenses incurred by the Lenders or the
Agent in connection with any action, suit or proceeding brought against the
Agent, or any security trustee or any Lender by any Person (but excluding
attorneys' fees for litigation solely between the Lenders to which the Company
is not a party) which arises out of the transactions contemplated or financed
hereby or out of any action or inaction by the Agent, any security trustee or
any Lender hereunder or thereunder, except for such thereof as is caused by the
gross negligence or willful misconduct of the party seeking to be indemnified.
The provisions of this Section and the protective provisions of Section 2
hereof shall survive payment of the Obligations.
Section 11.6. Documentary Taxes. The Company agrees to pay on demand any
documentary, stamp or similar taxes payable in respect of this Agreement or any
other Loan Document, including interest and penalties, in the event any such
taxes are assessed, irrespective of when such assessment is made and whether or
not any credit is then in use or available hereunder.
Section 11.7. Survival of Representations. All representations and
warranties made herein or in any of the other Loan Documents or in certificates
given pursuant hereto or thereto shall survive the execution and delivery of
this Agreement and the other Loan Documents, and shall continue in full force
and effect with respect to the date as of which they were made as long as any
credit is in use or available hereunder.
Section 11.8. Survival of Indemnities. All indemnities and other
provisions relative to reimbursement to the Agent and the Lenders of amounts
sufficient to protect the yield of the Agent and the Lenders with respect to
the Loans, including, but not limited to, Sections 2.7, 2.8 and 2.9 hereof,
shall survive the termination of this Agreement and the payment of the
Obligations.
Section 11.9. Participations. Any Lender may grant participations in its
extensions of credit hereunder to any other Lender or other lending institution
(a "Participant"), provided that (i) no Participant shall thereby acquire any
direct rights under this Agreement, (ii) no Lender shall agree with a
Participant not to exercise any of such Lender's rights hereunder without the
consent of such Participant except for rights which under the terms hereof may
only be exercised by all Lenders and (iii) no sale of a participation in
extensions of credit shall in any manner relieve the selling Lender of its
obligations hereunder.
Section 11.10. Assignment Agreements. Each Lender may, from time to time
upon at least 5 Business Days' prior written notice to the Agent, assign to
other commercial lenders part of its rights and obligations under this
Agreement (including without limitation the indebtedness evidenced by the Notes
then owned by such assigning Lender, together with an equivalent proportion of
its Commitments to make Loans hereunder) pursuant to written agreements
executed by such assigning Lender, such assignee lender or lenders, the Company
and the Agent, which agreements shall specify in each instance the portion of
the
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indebtedness evidenced by the Notes which is to be assigned to each such
assignee lender and the portion of the Commitments of the assigning Lender to
be assumed by it (the "Assignment Agreements"); provided, however, that (i)
each such assignment shall be of a constant, and not a varying, percentage of
the assigning Lender's rights and obligations under this Agreement and the
assignment shall cover the same percentage of such Lender's Commitments, Loans
and Notes; (ii) unless the Agent otherwise consents, the aggregate amount of
the Commitments, Loans and Notes of the assigning Lender being assigned
pursuant to each such assignment (determined as of the effective date of the
relevant Assignment Agreement) shall in no event be less than $5,000,000 and
shall be an integral multiple of $1,000,000; (iii) the Agent and the Company
must each consent, which consent shall not be unreasonably withheld, to each
such assignment to a party which was not an original signatory of this
Agreement; and (iv) the assigning Lender must pay to the Agent a processing and
recordation fee of $2,500 and any out-of-pocket attorneys' fees and expenses
incurred by the Agent in connection with such Assignment Agreement. Upon the
execution of each Assignment Agreement by the assigning Lender thereunder, the
assignee lender thereunder, the Company and the Agent and payment to such
assigning Lender by such assignee lender of the purchase price for the portion
of the indebtedness of the Company being acquired by it, (i) such assignee
lender shall thereupon become a "Lender" for all purposes of this Agreement
with Commitments in the amounts set forth in such Assignment Agreement and with
all the rights, powers and obligations afforded a Lender hereunder, (ii) such
assigning Lender shall have no further liability for funding the portion of its
Commitments assumed by such other Lender and (iii) the address for notices to
such assignee Lender shall be as specified in the Assignment Agreement executed
by it. Concurrently with the execution and delivery of such Assignment
Agreement, the Company shall execute and deliver Notes to the assignee Lender
in the respective amounts of its Commitments under the Revolving Credit and the
Term Credit and new Notes to the assigning Lender in the respective amounts of
its Commitments under the Revolving Credit and the Term Credit after giving
effect to the reduction occasioned by such assignment, all such Notes to
constitute "Notes" for all purposes of this Agreement and of the other Loan
Documents.
Section 11.11. Notices. Except as otherwise specified herein, all notices
hereunder shall be in writing (including, without limitation, notice by
telecopy) and shall be given to the relevant party at its address or telecopier
number set forth below, in the case of the Company, or on the appropriate
signature page hereof, in the case of the Lenders and the Agent, or such other
address or telecopier number as such party may hereafter specify by notice to
the Agent and the Company given by United States certified or registered mail,
by telecopy or by other telecommunication device capable of creating a written
record of such notice and its receipt. Notices hereunder to the Company shall
be addressed to:
0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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With a copy to (in case of notices of default):
X. Xxxxx Xxxxxxx
Xxxxxxx and Xxxxxx, LLC
000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Each such notice, request or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section and a confirmation of such telecopy has been received
by the sender, (ii) if given by mail, five (5) days after such communication is
deposited in the mail, certified or registered with return receipt requested,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the addresses specified in this Section; provided that any notice given
pursuant to Section 1 or Section 2 hereof shall be effective only upon receipt.
Section 11.12. Construction. The parties hereto acknowledge and agree that
this Agreement and the other Loan Documents shall not be construed more
favorably in favor of one than the other based upon which party drafted the
same, it being acknowledged that all parties hereto contributed substantially
to the negotiation of this Agreement and the other Loan Documents. NOTHING
CONTAINED HEREIN SHALL BE DEEMED OR CONSTRUED TO PERMIT ANY ACT OR OMISSION
WHICH IS PROHIBITED BY THE TERMS OF ANY OF THE OTHER LOAN DOCUMENTS, THE
COVENANTS AND AGREEMENTS CONTAINED HEREIN BEING IN ADDITION TO AND NOT IN
SUBSTITUTION FOR THE COVENANTS AND AGREEMENTS CONTAINED IN THE OTHER LOAN
DOCUMENTS.
Section 11.13. Headings. Section headings used in this Agreement are for
convenience of reference only and are not a part of this Agreement for any
other purpose.
Section 11.14. Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. All rights, remedies and powers provided in this Agreement and
the other Loan Documents may be exercised only to the extent that the exercise
thereof does not violate any applicable mandatory provisions of law, and all
the provisions of this Agreement and the other Loan Documents are intended to
be subject to all applicable mandatory provisions of law which may be
controlling and to be limited to the extent necessary so that they will not
render this Agreement or the other Loan Documents invalid or unenforceable.
Section 11.15 Counterparts. This Agreement may be executed in any number
of counterparts, and by different parties hereto on separate counterpart
signature pages, and all such counterparts taken together shall be deemed to
constitute one and the same instrument.
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Section 11.16. Entire Understanding. This Agreement together with the
other Loan Documents constitute the entire understanding of the parties with
respect to the subject matter hereof and any prior agreements, whether written
or oral, with respect thereto are superseded hereby except for prior
understandings related to fees payable to the Agent upon the initial closing of
the transactions contemplated hereby.
Section 11.17. Binding Nature, Governing Law, Etc. This Agreement shall be
binding upon the Company and its successors and assigns, and shall inure to the
benefit of the Agent and the Lenders and the benefit of their successors and
assigns, including any subsequent holder of an interest in the Obligations. The
Company may not assign its rights hereunder without the written consent of the
Lenders. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Section 11.18. Submission to Jurisdiction; Waiver of Jury Trial. The
Company hereby submits to the non-exclusive jurisdiction of the United States
District Court for the Northern District of Illinois and of any Illinois State
court sitting in the City of Chicago for purposes of all legal proceedings
arising out of or relating to this Agreement, the other Loan Documents or the
transactions contemplated hereby or thereby. The Company irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum. THE COMPANY, THE AGENT, AND EACH LENDER
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED THEREBY.
Upon your acceptance hereof in the manner hereinafter set forth, this
Agreement shall constitute a contract between us for the uses and purposes
hereinabove set forth.
Dated as of this 15th day of May, 1996.
RENTX INDUSTRIES, INC.
By /s/ XXXXX X. XXXXXXXX
-----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Vice President
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Accepted and Agreed to at Chicago, Illinois as of the day and year last
above written.
Each of the Lenders hereby agrees with each other Lender that if it should
receive or obtain any payment (whether by voluntary payment, by realization
upon collateral, by the exercise of rights of set-off or banker's lien, by
counterclaim or cross action, or by the enforcement of any rights under this
Agreement, any of the other Loan Documents or otherwise) in respect of the
Obligations in a greater amount than such Lender would have received had such
payment been made to the Agent and been distributed among the Lenders as
contemplated by Section 3.5 hereof then in that event the Lender receiving such
disproportionate payment shall purchase for cash without recourse from the
other Lenders an interest in the Obligations of the Company to such Lenders in
such amount as shall result in a distribution of such payment as contemplated
by Section 3.5 hereof. In the event any payment made to a Lender and shared
with the other Lenders pursuant to the provisions hereof is ever recovered from
such Lender, the Lenders receiving a portion of such payment hereunder shall
restore the same to the payor Lender, but without interest.
Amount and Percentage of Commitments:
Revolving Credit Term Loan
Commitment: Commitment:
$1,380,000 $7,620,000
XXXXXX TRUST AND SAVINGS BANK
By /s/ XXXXXX X. XXXXX
----------------------------------
Name: Xxxxxx X. Xxxxx
---------------------------------
Title: Vice President
--------------------------------
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Emerging Majors-West
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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Revolving Credit Term Loan
Commitment: Commitment:
$920,000 $5,080,000
LASALLE NATIONAL BANK
By /s/ XXXXX XXXXX
------------------------------------
Name: Xxxxx Xxxxx
---------------------------------
Title: Vice President
--------------------------------
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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EXHIBIT A
RENTX INDUSTRIES, INC.
REVOLVING CREDIT NOTE
Chicago, Illinois
$_______________ May __, 1996
On the Revolving Credit Termination Date, for value received, the
undersigned, RENTX INDUSTRIES, INC., a Delaware corporation (the "Company"),
hereby promises to pay to the order of _______________ (the "Lender"), at the
principal office of Xxxxxx Trust and Savings Bank in Chicago, Illinois, the
principal sum of (i) _______________________ and no/100 Dollars ($___________),
or (ii) such lesser amount as may at the time of the maturity hereof, whether
by acceleration or otherwise, be the aggregate unpaid principal amount of all
Revolving Credit Loans owing from the Company to the Lender under the Revolving
Credit provided for in the Credit Agreement hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate Portion"
and "LIBOR Portions" as such terms are defined in that certain Credit Agreement
dated as of May 15, 1996, between the Company, Xxxxxx Trust and Savings Bank,
individually and as Agent thereunder, and the other Lenders which are now or
may from time to time hereafter become parties thereto (said Credit Agreement,
as the same may be amended, modified or restated from time to time, being
referred to herein as the "Credit Agreement") made and to be made to the
Company by the Lender under the Revolving Credit provided for under the Credit
Agreement, and the Company hereby promises to pay interest at the office
described above on each loan evidenced hereby at the rates and at the times and
in the manner specified therefor in the Credit Agreement.
Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part of the
Domestic Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion,
the interest rate and Interest Period applicable thereto shall be endorsed by
the holder hereof on a schedule to this Note or recorded on the books and
records of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees that
in any action or proceeding instituted to collect or enforce collection of this
Note, the entries so endorsed on a schedule to this Note or recorded on the
books and records of the holder hereof shall, absent manifest error, be prima
facie evidence of the unpaid principal balance of this Note, the status of each
such loan from time to time as part of the Domestic Rate Portion or a LIBOR
Portion, and, in the case of any LIBOR Portion, the interest rate and Interest
Period applicable thereto.
59
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement. All capitalized terms used herein without definition shall
have the same meanings herein as such terms are defined in the Credit
Agreement.
The Company hereby promises to pay all reasonable costs and expenses
(including attorneys' fees) suffered or incurred by the holder hereof in
collecting this Note or enforcing any rights in any collateral therefor. The
Company hereby waives presentment for payment and demand. THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
RENTX INDUSTRIES, INC.
By
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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60
EXHIBIT B
RENTX INDUSTRIES, INC.
TERM NOTE
Chicago, Illinois
$_______________ May __, 1996
On the Term Credit Termination Date, for value received, the undersigned,
RENTX INDUSTRIES, INC., a Delaware corporation (the "Company"), hereby promises
to pay to the order of _______________ (the "Lender"), at the principal office
of Xxxxxx Trust and Savings Bank in Chicago, Illinois, the principal sum of (i)
_______________________ and no/100 Dollars ($___________), or (ii) such lesser
amount as may at the time of the maturity hereof, whether by acceleration or
otherwise, be the aggregate unpaid principal amount of all Term Loans owing
from the Company to the Lender under the Term Credit provided for in the Credit
Agreement hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate Portion"
and "LIBOR Portions" as such terms are defined in that certain Credit Agreement
dated as of May 15, 1996, between the Company, Xxxxxx Trust and Savings Bank,
individually and as Agent thereunder, and the other Lenders which are now or
may from time to time hereafter become parties thereto (said Credit Agreement,
as the same may be amended, modified or restated from time to time, being
referred to herein as the "Credit Agreement") made and to be made to the
Company by the Lender under the Term Credit provided for under the Credit
Agreement, and the Company hereby promises to pay interest at the office
described above on each loan evidenced hereby at the rates and at the times and
in the manner specified therefor in the Credit Agreement.
Each loan made under the Term Credit provided for in the Credit Agreement
by the Lender to the Company against this Note, any repayment of principal
hereon, the status of each such loan from time to time as part of the Domestic
Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion, the
interest rate and Interest Period applicable thereto shall be endorsed by the
holder hereof on a schedule to this Note or recorded on the books and records
of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees that
in any action or proceeding instituted to collect or enforce collection of this
Note, the entries so endorsed on a schedule to this Note or recorded on the
books and records of the holder hereof shall, absent manifest error, be prima
facie evidence of the unpaid principal balance of this Note, the status of each
such loan from time to time as part of the Domestic Rate Portion or a LIBOR
Portion, and, in the case of any LIBOR Portion, the interest rate and Interest
Period applicable thereto.
61
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement. All capitalized terms used herein without definition shall
have the same meanings herein as such terms are defined in the Credit
Agreement.
The Company hereby promises to pay all reasonable costs and expenses
(including attorneys' fees) suffered or incurred by the holder hereof in
collecting this Note or enforcing any rights in any collateral therefor. The
Company hereby waives presentment for payment and demand. THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
RENTX INDUSTRIES, INC.
By
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
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62
EXHIBIT C
COMPLIANCE CERTIFICATE
To: Xxxxxx Trust and Savings Bank, as
Agent under, and the Lenders party
to, the Credit Agreement described
below
This Compliance Certificate is furnished to the Agent and the Lenders
pursuant to that certain Credit Agreement dated as of May 15, 1996, by and
among RentX Industries, Inc. (the "Company") and you (the "Credit Agreement").
Unless otherwise defined herein, the terms used in this Compliance Certificate
have the meanings ascribed thereto in the Credit Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected _________________________________ of the Company;
2. I have reviewed the terms of the Credit Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of the Company and its Subsidiaries during the
accounting period covered by the attached financial statements;
3. The examinations described in paragraph 2 did not disclose, and I have
no knowledge of, the existence of any condition or the occurrence of any event
which constitutes a Default or Event of Default during or at the end of the
accounting period covered by the attached financial statements or as of the
date of this Certificate, except as set forth below;
4. The financial statements required by Section 8.5 of the Credit
Agreement and being furnished to you concurrently with this Certificate are
true, correct and complete as of the date and for the periods covered thereby;
and
5. The Attachment hereto sets forth financial data and computations
evidencing the Company's compliance with certain covenants of the Credit
Agreement, all of which data and computations are, to the best of my knowledge,
true, complete and correct and have been made in accordance with the relevant
Sections of the Credit Agreement.
63
Described below are the exceptions, if any, to paragraph 3 by listing, in
detail, the nature of the condition or event, the period during which it has
existed and the action which the Company has taken, is taking, or proposes to
take with respect to each such condition or event:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
The foregoing certifications, together with the computations set forth in
the Attachment hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered this _________ day of
__________________ 19___.
-----------------------------------
,
-------------------- --------------
(Print or Type Name) (Title)
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64
ATTACHMENT TO COMPLIANCE CERTIFICATE
RENTX INDUSTRIES, INC.
Compliance Calculations for Credit Agreement
Dated as of May 15, 1996
Calculations as of _____________, 19___
________________________________________________________________________________
A. Revolver Store Advance Limit (Section 1.1)
1. Aggregate principal of Revolving
Credit Loans $________
2. Cumulative amount expended
on rental inventory and equipment for
Acquired and Start-Up Stores $________
3. Line A2 multiplied by .60 $________
4. Sum of Line A3 and $200,000 $________
5. Per Section 1.1 Line A4 must
be less than Line A1
Company is in compliance? (Circle yes or no) Yes/No
=========
B. Term Credit Earnings Limit (Section 1.3)
1. Aggregate amount of Term Loans $________
2. Net Income as defined $________
3. Amounts deducted in arriving at
Net Income in respect of
(a) Interest Expense $________
(b) Taxes $________
(c) Depreciation and amortization $________
(d) Aggregate management fees,
non-operating expenses, excess
compensation and etc. $________
65
4. Sum of Lines B2, B3(a), (b), (c)
and (d) ("EBITDA") $________
5. Pro forma adjustments in respect of:
(a) Actual EBITDA of Acquired Stores
determined in accordance with lines
B3 and B4 during the:
(i) period after the Permitted
Acquisition Closing $________
(ii) pre-acquisition period
(including expenditures for
rental inventory and equipment) $________
(b) For Start-Up Stores commencing
operations within 12 months of
close of relevant period: .25x
aggregate expended amount for
rental inventory and equipment $________
(c) For Start-Up Stores commencing
operations more than months but
less than 24 months of close of
relevant period:
(i) .25x the aggregate amount
expended prior to the 13th
calendar month to purchase
rental inventory and equipment
further multiplied by ___/12 $________
(ii) Actual EBITDA for Start-Up
Stores beginning with 13th
calendar month $________
(d) Actual EBITDA of Start-Up Stores
which commence operations 24
calendar months or more prior to
the close of the relevant period $________
6. Sum of Lines B4, B5(a)(i) and (ii),
B5(b), B5(c)(i) and (ii) and B5(d)
("Pro forma Adjusted Cash Flow") $________
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66
7. 3x Line B6 ("Term Credit Earnings Limit") $________
8. Per Section 1.3 Line B1 must not exceed
Line B7
Company is in compliance? (circle yes or no) Yes/No
=========
C. Inventory Leases (Section 8.7)
Per Section 8.7, the value of property leased
shall not exceed $1,500,000
Company is in compliance? (circle yes or no) Yes/No
=========
D. Store Leases (Section 8.8)
Per Section 8.8, the value of property leased
with a term greater than 5 years shall not be
greater than 10% of the value of all leased
property.
Company is in compliance? (circle yes or no) Yes/No
=========
E. Senior Funded Debt Ratio (Section 8.9)
1. Senior Funded Debt as defined $________
2. Pro forma Adjusted Cash Flow (Line B6) $________
3. Ratio of Line E1 to Line E2 :1.0
=========
4. Per Section 8.9 Line E3 may not be
greater than 3.0:1.0
=========
5. Company is in compliance? (circle yes or no) Yes/No
=========
F. Actual EBITDA (Section 8.10)
1. EBITDA of Acquired Stores owned for
duration of measurement period $________
2. EBITDA of Acquired Stores not owned for
duration of measurement period as
determined for quarters while owned $________
3. Corporate Overhead deducted in F1 and F2 $________
4. Sum of Lines F1, F2 and F3
("Adjusted Actual EBITDA:) $________
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67
5. EBITDA (Line B4) $________
6. EBITDA of Acquired Stores for
period as per definition
of "Adjusted Base EBITDA" $________
7. Ratio of Line F4 to Line F6
("Cash Flow Shrinkage Ratio") :1.0
=========
8. Per Section 8.10 Cash Flow Shrinkage
Ratio must not be less than .85:1.0
=========
9. Company is in compliance? (circle yes or no) Yes/No
=========
G. Overhead to Revenue Ratio (Section 8.11)
1. Aggregate Corporate Overhead as defined $________
2. For each Start-Up Store commencing
operations within 12 months prior to the
close of the relevant period: .80x aggregate
amount expended for rental inventory
and equipment $________
3. For each Start-Up Store commencing
operations within more than 12 months
but less than 24 months prior to the close
of the relevant period: gross revenues
for period up to 13th calendar month
plus .80x aggregate amount expended for
rental inventory and equipment $________
4. Gross revenues at each Start-Up Store
commencing operations more than 24
months prior to the close of the relevant
period $________
5. Sum of Line G2, G3 and G4 $________
6. Ratio of G1 to G5 ("Overhead Ratio") :1.0
=========
7. Per Section 8.11 Overhead Ratio shall not
be greater than :1.0
=========
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68
8. Company is in compliance (circle yes or no) Yes/No
=========
H. Store Openings (Section 8.12)
1. Number of Start-Up Stores _________
2. Number of all rental stores _________
3. Ratio of H1 to H2 :1.0
=========
4. Per Section 8.12, Company may not
commence the operations of a new
Start-Up Store if Line 3 exceeds .25 to 1
=========
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69
SCHEDULE 6.2
SUBSIDIARIES
JURISDICTION OF PERCENTAGE
NAME INCORPORATION OWNERSHIP
==== --------------- ----------
NONE
70
SCHEDULE 8.14
PERMITTED LIENS
Secured Party Collateral
------------- ----------
Makita U.S.A., Inc. Makita merchandise and parts which are purchased on
open account.
Xxx Oil Company Oil storage and pumping equipment leased by Zodiac
Rentals.
Xxxxxx Corporation Xxxxxx merchandise and parts which are purchased on
open account.
Nagata America Corporation Consigned inventory from Nagata and maintenance
parts for such inventory.
71
RENTX INDUSTRIES, INC.
FIRST AMENDMENT TO CREDIT AGREEMENT
Xxxxxx Trust and Savings Bank
Chicago, Illinois
LaSalle National Bank
Chicago, Illinois
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of May
15, 1996 (the "Credit Agreement") currently in effect by and among, RentX
Industries, Inc., a Delaware corporation (the "Company"), and you (the
"Lenders"). All capitalized terms used herein without definition shall have
the same meanings herein as such terms have in the Credit Agreement.
The Company hereby applies to the Lenders to increase the amount of the
Revolving Credit Commitments, to increase the amount of the Term Loan
Commitments, to extend the Revolving Credit Termination Date, to extend the
Term Credit Termination Date, to amend certain of the financial covenants
contained therein, to add Bank One, Chicago, N.A. as a Lender under the Credit
Agreement and to make certain other amendments to the Credit Agreement, and the
Lenders are willing to do so under the terms and conditions set forth in this
Amendment.
1. INCREASE OF COMMITMENT AMOUNTS.
The amount of each Lender's Commitment set forth opposite its name on its
signature page to the Credit Agreement shall be amended and as so amended shall
be restated as follows:
AMOUNT OF REVOLVING AMOUNT OF TERM
LENDER CREDIT COMMITMENT CREDIT COMMITMENT
Xxxxxx Trust and Savings Bank $2,142,857.14 $15,000,000.00
LaSalle National Bank $1,428,571.43 $10,000,000.00
2. ADDITION OF NEW LENDER.
Upon the satisfaction of the conditions precedent set forth in Section 5
hereof, the Credit Agreement shall be and hereby is amended as follows:
2.01. Bank One, Chicago, N.A. (herein, the "New Lender") shall have all
the rights, benefits, duties and obligations of a Lender under the Credit
Agreement and the Collateral
72
Documents. The New Lender agrees that it will perform all of the duties and
obligations which by the terms of the Credit Agreement and the Collateral
Documents are required to be performed by it as a Lender with Commitments as of
the date it first becomes a New Lender as follows:
Term Credit Commitment: $10,000,000.00
Revolving Credit Commitment: $ 1,428,571.43
Accordingly, all references in the Credit Agreement and the Collateral
Documents to the terms "Lender" and "Lenders" shall be deemed to include, and
be a reference to, the New Lender.
2.02. All references in the Credit Agreement and the Collateral Documents
to the Notes or any of them shall be deemed to include, and be a reference to,
the Revolving Credit Note and the Term Note issued pursuant hereto by the
Company to the New Lender.
2.03. The New Lender shall be deemed a Lender signatory to the Credit
Agreement and the following address and Commitments shall be deemed to appear
on the Lenders' signature page in the Credit Agreement as so amended for the
New Lender:
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Revolving Credit Commitment: $1,428,571.43
Term Loan Commitment: $10,000,000.00
3. AMENDMENTS.
3.01. The third sentence of Section 1.1 of the Credit Agreement is hereby
amended in its entirety and as so amended shall be restated to read as follows:
"The Revolving Credit may be utilized by the Company in
the form of Revolving Credit Loans, all as more fully
hereinafter set forth; provided, however, that the
aggregate principal amount of Revolving Credit Loans
outstanding at any one time shall not exceed the lesser of
(x) the Revolving Credit Commitments or (y) the Revolver
Advance Limit as then determined and computed or (z) the
excess (if any) of the Maximum Available Credit over the
aggregate cumulative principal amount of Term Loans
extended hereunder (whether or not subsequently repaid)."
3.02. The first sentence of Section 1.3(a) of the Credit Agreement is
hereby amended in its entirety and as so amended shall be restated to read as
follows:
"Subject to the terms and conditions hereof, each Lender
severally agrees to make loans (individually a "Term Loan"
and collectively the "Term Loans") to the Company in a
cumulative amount not
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73
exceeding such Lender's commitment set forth opposite such
Lender's signature hereto under the heading "Term Loan
Commitment" or as otherwise provided in Section 11.10
hereof, as such amount may be reduced pursuant hereto;
provided, however, that (i) the aggregate amount of Term
Loans outstanding at any one time shall not exceed the
Term Credit Earnings Limit as then determined and computed
and (ii) the aggregate cumulative amount of Term Loans
made on and after May 15, 1996 shall at no time exceed the
excess of the Term Loan Commitments over the principal
amount of Revolving Credit Loans then outstanding."
3.03. The third sentence of Section 1.3(a) of the Credit Agreement is
hereby amended in its entirety and as so amended shall be restated to read as
follows:
"Each Borrowing of Term Loans shall be in a minimum amount
of $250,000; provided, however, that a Borrowing of Term
Loans which bears interest with reference to the Adjusted
LIBOR shall be in such greater amount as is required by
Section 2 hereof."
3.04. Section 1 of the Credit Agreement is hereby amended by inserting
immediately at the end of Section 1.4 thereof, a new Section 1.5 which reads as
follows:
"Section 1.5. Maximum Available Credit. Notwithstanding
anything herein to the contrary, the maximum amount of
credit available under the Lenders' Commitments shall in
no event exceed the Maximum Available Credit. For the
purposes of calculating the amount of credit available in
accordance with the immediately preceding sentence, a Term
Loan shall be deemed outstanding even if such Term Loan
has been made and subsequently repaid. Accordingly, the
sum of (i) the principal amount of the Term Loans made on
and after May 15, 1996 (whether or not subsequently
repaid) and (ii) the principal amount of the Revolving
Credit Loans at any one time outstanding shall in no event
at any time exceed the Maximum Available Credit as then
determined and computed."
3.05. Sections 3.1(a) and 3.1(b) of the Credit Agreement are hereby
amended in their entireties and as so amended are restated to read as follows:
"Section 3.1. Fees. (a) Commitment Fee. For the period
from and including the date on which the First Amendment
hereto becomes effective to but not including the later of
the Revolving Credit Termination Date or the Term Credit
Termination Date, the Company shall pay to the Agent for
the account of the Lenders a commitment fee at the rate of
1/2 of 1% per annum (computed on the basis of a year of
360 days for the actual number of days elapsed) on the
average daily unused amount (the Maximum Available Credit
to be
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74
deemed used as of any day in an amount equal to the sum of
(i) the principal of each Term Loan made on or prior to
such date, whether or not subsequently repaid, and (ii)
the principal amount of Revolving Credit Loans outstanding
as of the close of such day) of the Maximum Available
Credit (whether or not available). Such commitment fee
shall be payable quarterly in arrears on the last day of
each June, September, December, and March in each year
(commencing December 31, 1996) and on the later of such
Termination Dates.
(b) [Intentionally Omitted]"
3.06. Sections 3.1(d) is hereby amended in its entirety and as so amended
is restated to read as follows:
(d) Closing Fee. The Company paid to the Agent as of the
date hereof a closing fee of $75,000 for the account of
the following Lenders and the following amounts: $45,000
to Xxxxxx Trust and Savings Bank ("Xxxxxx"); and $30,000
to LaSalle National Bank ("LaSalle"). On the date the
First Amendment to this Agreement becomes effective, the
Company shall pay an additional closing fee of $100,000 to
the Agent for the account of the following Lenders in the
following amounts: $30,000 to Xxxxxx; $20,000 to LaSalle;
and $50,000 to Bank One, Chicago, N.A. ("Bank One"). On
or before the earlier of (x) the maturity of the Revolving
Credit Notes (whether by lapse of time, acceleration or
otherwise) or (y) an initial public offering of debt or
equity securities issued by the Company or any Subsidiary,
the Company shall pay an additional closing fee equal to
$175,000 to the Agent for the account of the Lenders in
the following amounts: $75,000 to Xxxxxx; $50,000 to
LaSalle; and $50,000 to Bank One. Such closing fees shall
be deemed fully earned and nonrefundable upon the Lenders'
acceptance of the First Amendment to this Agreement."
3.07. Section 3.3(a) of the Credit Agreement is hereby amended in its
entirety and as so amended is restated to read as follows:
"Section 3.3. Mandatory Prepayments. (a) Revolver
Advance Limit. The Company covenants and agrees that if
at any time the then unpaid principal balance of the
Revolving Credit Notes shall be in excess of the lesser of
(i) the Revolver Advance Limit as then determined and
computed or (ii) the Revolving Credit Commitments at such
time, the Company shall, within 2 Business Days after
demand from the Agent, pay the amount of such excess to
the Agent for the account of the Lenders as and for a
mandatory prepayment on such Obligations until payment in
full thereof."
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75
3.08. Section 3.4 of the Credit Agreement is hereby amended in its
entirety and as so amended is restated to read as follows:
"Section 3.4. Terminations. (a) Voluntary. The Company
shall have the right at any time and from time to time,
upon 3 Business Days' prior notice to the Agent (which
shall promptly so notify the Lenders), to ratably
terminate without premium or penalty and in whole or in
part (but if in part, then in an aggregate amount not less
than $100,000 or such greater amount which is an integral
multiple of $100,000) either the Revolving Credit
Commitments or the Term Credit Commitments, provided that
the Commitments may not be reduced to an amount less than
the aggregate principal amount of the Loans then
outstanding thereunder.
(b) Mandatory. The Revolving Credit Commitments of the
Lenders shall be concurrently and ratably reduced, dollar
for dollar, by the aggregate cumulative principal amount
of Term Loans made on and after May 15, 1996 (whether or
not subsequently repaid) in excess of $30,000,000.
(c) Maximum Available Credit. Each reduction in any
Commitment, whether voluntary or mandatory, such that the
sum of the Commitments after giving effect to such
reduction is less than the Maximum Available Credit shall
effect a concurrent reduction in the Maximum Available
Credit so as to equal such sum of the Commitments.
(d) Generally. Any termination of the Commitments
pursuant to this Section may not be reinstated."
3.09. Section 5.1 of the Credit Agreement is hereby amended by adding
thereto the following new definition:
"'Eligible Account' means each account receivable of the
Company that:
(a) arises out of the sale or lease by the Company of
inventory delivered to and accepted by, or out of the
rendition of services fully performed by the Company and
accepted by, the account debtor on such account
receivable, and in each case such account receivable
otherwise represents a final sale;
(b) is an asset of the Company to which it has good and
marketable title, is freely assignable, is subject to a
perfected, first priority Lien in favor of the Agent, and
is free and clear of any other Lien other than Liens
permitted by Section 8.14 hereof;
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76
(c) the account debtor thereon is not a Subsidiary or
Affiliate of the Company;
(d) is not unpaid more than ninety (90) days after the
original due date of the applicable invoice; and
(e) neither the Agent nor the Required Lenders in the
reasonable exercise of their discretion have deemed such
account receivable ineligible due to uncertainty as to the
creditworthiness of the account debtor or because the
Agent or Required Lenders otherwise in the reasonable
exercise of their discretion have deemed the collateral
value to the Lenders of such account receivable to be
impaired or the Lenders' ability to realize such value to
be insecure."
3.10. Section 5.1 of the Credit Agreement is hereby amended by adding
thereto the following new definition:
"'Maximum Available Credit' shall mean $35,000,000 as
such amount may be reduced pursuant to Section 3.4
hereof."
3.11. The definition of "EBITDA" appearing in Section 5.1 of the Credit
Agreement is hereby amended by adding a new sentence at the end thereof which
reads as follows:
"Notwithstanding anything herein to the contrary, EBITDA
for any Person and with reference to any period, shall
exclude any gain to such Person from the sale of rental
inventory to the extent more than 20% of the EBITDA of
such Person over such period would otherwise be
attributable to such gains."
3.12. Subsections (b) and (c) of the definition of "Proforma Adjusted Cash
Flow" appearing in Section 5.1 of the Credit Agreement are hereby amended in
their entireties and as so amended are restated to read as follows:
"(b) The EBITDA attributable to each Start-Up Store
which commenced operations in a calendar month no more
than 12 calendar months prior to the close of the relevant
period shall be included in such Pro forma Adjusted Cash
Flow in an amount equal to the greater of (x) the actual
EBITDA attributable to such Start-Up Store during the
relevant period or (y) the product of (i) 25% and (ii) the
aggregate amount expended on a cumulative basis over the
period ending with the close of the relevant period to
purchase rental inventory and equipment for such Start-Up
Store (for such purposes, the amount so expended to mean
the hard invoiced costs of such inventory and equipment
and delivery costs and to exclude the cost of inventory
and equipment acquired as a result of a Permitted
Acquisition);
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77
(c) The EBITDA attributable to each Start-Up Store
which commenced operations in a calendar month greater
than 12 but no more than 24 calendar months prior to the
close of the relevant period shall be included in such Pro
forma Adjusted Cash Flow in an amount equal to the sum of
(i) the greater of (x) the actual EBITDA attributable to
such Start-Up Store over the period (the "initial period")
beginning on the date such Start-Up Store commenced
operations and ending immediately prior to the thirteenth
calendar month (the "13th calendar month") following the
calendar month in which such Start-Up Store commenced
operations or (y) the product of (1) 25% and (2) the
aggregate amount expended on a cumulative basis over the
same initial period to purchase rental inventory and
equipment for such Start-Up Store (for such purposes, the
amount so expended to mean the hard invoiced costs of such
inventory and equipment and delivery costs and to exclude
the cost of inventory and equipment acquired as a result
of a Permitted Acquisition) and (3) a fraction, the
numerator of which is the number of full calendar months
in the relevant period completed prior to such 13th
calendar month and the denominator of which is 12, and
(ii) the actual EBITDA attributable to such Start-Up Store
for a period commencing at the beginning of such 13th
calendar month and ending with the close of the relevant
period; and"
3.13. The definition of "Revolver Advance Limit" appearing in Section 5.1
of the Credit Agreement is hereby amended and as so amended shall be restated
in its entirety to read as follows:
"'Revolver Store Advance Limit' shall mean as of any
time, the sum of (i) 70% of the then unpaid amount of the
Company's Eligible Accounts and (ii) 60% of the aggregate
amount expended by the Company and its Subsidiaries during
the twelve most recently completed calendar months to
purchase rental inventory and equipment for Acquired and
Start-Up Stores (for such purposes, the amount expended to
mean the hard invoiced cost of such inventory and
equipment and delivery costs and to exclude the cost of
inventory and equipment acquired as a result of a
Permitted Acquisition).
3.14. The definition of "Revolving Credit Termination Date" appearing in
Section 5.1 of the Credit Agreement is hereby amended and as so amended shall
be restated in its entirety to read as follows:
"'Revolving Credit Termination Date' means May 31, 1999,
or such earlier date on which the Revolving Credit
Commitments are terminated in whole pursuant to Section
3.4, 9.2 or 9.3 hereof."
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78
3.15. The definition of "Term Credit Termination Date" appearing in
Section 5.1 of the Credit Agreement is hereby amended and as so amended shall
be restated in its entirety to read as follows:
"'Term Credit Termination Date' means May 31, 1999, or
such earlier date on which the Term Credit Commitments are
terminated in whole pursuant to Section 3.4, 9.2 or 9.3
hereof."
3.16. Sections 7.1(c) and 7.1(d) of the Credit Agreement are hereby
amended in their entireties and as so amended are restated to read as follows:
"(c) in the case of the extension of each Revolving Credit Loan,
after giving effect to such Loan, the aggregate principal amount of all
Revolving Credit Loans outstanding under this Agreement shall not exceed
the lesser of (i) the Revolving Credit Commitments and (ii) the Revolver
Advance Limit as then determined and computed and (iii) the excess (if
any) of the Maximum Available Credit over the aggregate cumulative
principal amount of Term Loans made on and after May 15, 1996 (whether or
not subsequently repaid);
(d) in the case of the extension of each Term Loan, after giving
effect to such Loan and any Permitted Acquisition to be financed thereby,
(i) the aggregate cumulative principal amount of all Term Loans made on
and after May 15, 1996 shall not exceed the Term Credit Commitments less
the principal amount of Revolving Credit Loans then outstanding and (ii)
the aggregate principal amount of Term Loans then outstanding at such time
shall not exceed the Term Credit Earnings Limit as then determined and
computed on a pro forma basis assuming the closing of such Permitted
Acquisition;"
3.17. Section 8.5(a) of the Credit Agreement is hereby amended by striking
the phrase "and in any event within 30 days" appearing in the first line
thereof and inserting therefor the phrase "and in any event within 45 days".
3.18. Section 8.7 of the Credit Agreement is hereby amended in its
entirety and as so amended is restated to read as follows:
"Section 8.7. Rental Inventory Leases. The Company shall
not, nor shall it permit any Subsidiary to, acquire the
use or possession of any Property under a lease or similar
arrangement, whether or not the Company or any Subsidiary
has the express or implied right to acquire title to or
purchase such Property, at any time if, after giving
effect thereto, the aggregate value of such Property so
acquired (excluding real property used for retail rental
store locations) would, when taken together with the
amount then outstanding on the purchase money indebtedness
and Capitalized Lease Obligations in each case permitted
by Section 8.13(b) hereof, at any time aggregate more than
$5,000,000."
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3.19. Section 8.13(b) of the Credit Agreement is hereby amended in its
entirety and as so amended is restated to read as follows:
"(b) purchase money indebtedness and Capitalized
Lease Obligations secured by Liens permitted by Section
8.14(e) hereof in an amount which, when taken together
with the value of the property leased as permitted by
Section 8.7 hereof, would not aggregate more than
$5,000,000 at any one time outstanding;"
3.20. Section 8.16(b) of the Credit Agreement is hereby amended by
striking the phrase "no later than 30 days prior to the closing" appearing in
the fourth and fifth lines thereof and inserting therefor the phrase "no later
than 15 days prior to the closing".
3.21. Section 8.16(b) shall be amended by inserting the following
parenthetical immediately at the end thereof:
"(provided that no such proforma financial projections
shall be required for any Acquisition the total
consideration for which is less than or equal to
$2,000,000; further provided that the total consideration
for all Acquisitions since and including the last
Acquisition for which no such proforma financial
projections have been provided aggregates $5,000,000 or
less)".
3.22. Section 8.16(f) of the Credit Agreement is hereby amended in its
entirety and as so amended is restated to read as follows:
"(f) in the case of any Acquisition the total
consideration of which is greater than or equal to
$13,000,000, the Required Lenders in their sole discretion
shall have provided their written consent to such
Acquisition (for purposes of this subsection (f) and
subsection (b) above, "consideration" for an Acquisition
to have the same meaning as in subsection (c) hereof)."
3.23. Section 11.11 of the Credit Agreement is hereby amended by striking
the second sentence appearing therein and inserting therefor the following:
"Notices hereunder to the Company shall be addressed to:
0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
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With a copy to
Xxxx XxxXxxxxx
BACE Industries LLC
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to (in case of notices of default):
X. Xxxxx Xxxxxxx
Xxxxxxx and Xxxxxx, LLC
000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000"
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
3.24. Schedule 8.14 to the Credit Agreement by adding the following to
such Schedule in the appropriate columns thereof:
Secured Party Collateral
------------- ----------
AEL Leasing Co., Inc. Specific equipment purchased through the use of AEL
financing
3.25. Section 10.3 of the Credit Agreement is hereby amended by inserting
immediately following the sixth sentence thereof, the following text:
"Nothing contained in the immediately preceding sentence
shall in any way impair or otherwise affect any claim the
Agent or any Lender may have against any such agent or
attorney-in-fact for any such default or misconduct."
4. LOAN BY NEW LENDER.
If upon this Amendment becoming effective there are Loans outstanding
under the Credit Agreement, then in that event anything contained in the Credit
Agreement to the contrary notwithstanding, substantially concurrent with this
Amendment becoming effective there shall be such nonratable Borrowings and
repayments under the Credit Agreement, as amended hereby, so that, after giving
effect thereto, the percentages of all Lenders' Commitments in use are
identical; provided, however, that if there are LIBOR Portions outstanding on
such date which, if prepaid, would require the Company to make a payment under
Section 2.9 hereof, then in that event and to that extent the Company may defer
such adjusting refunding Borrowings until the end of the Interest Period
applicable to such LIBOR Portions and all LIBOR Loans made and repaid during
such deferral period shall be allocated in accordance with
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81
each Lender's percentage of the Commitments. The parties hereto understand and
acknowledge and agree that the percentage of the New Lender's Commitments in
use in the form of LIBOR Portions may, upon the effectiveness of this
Amendment, be less than the percentage of the other Lenders' Commitments in use
in the form of LIBOR Portions.
5. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of all
of the following conditions precedent:
5.01. The Company, the Agent and the Lenders shall have executed and
delivered this Amendment.
5.02. The Company shall have executed Notes in favor of each Lender in the
forms attached hereto as Exhibits A and B, with each Note to a Lender to be
dated as of the date of its issuance and in a face amount equal to the relevant
Commitment of such Lender after giving effect to this Amendment.
5.03. The Company shall have obtained written commitments satisfactory to
the Lenders in their sole discretion from third parties committing them to make
or evidence that such third parties have previously made at least $15,000,000
in cash equity contributions to the Company.
5.04. No Default or Event of Default shall have occurred and be continuing
as of the date this Amendment would otherwise take effect.
5.05. Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Lenders and their counsel; and the
Lenders shall have received the favorable written opinion of counsel for the
Company in form and substance satisfactory to the Lenders and their counsel.
5.06. The Company shall have delivered to the Agent a copy of the
Company's Articles of Incorporation, as currently in effect, certified by the
Secretary or Assistant Secretary of the Company.
5.07. The Company shall have delivered to the Agent a letter from the
Secretary or Assistant Secretary of the Company, in form and substance
satisfactory to the Agent and the Lenders, stating the total number of
outstanding capital shares of every class of the Company which are issued and
outstanding before and after giving effect to the Acquisition of U-Rent.
Upon the effectiveness of this Amendment, each Lender (other than Bank One
Chicago, N.A.) shall promptly return to the Company the Notes issued to that
Lender which are being replaced by the Notes contemplated by this Amendment.
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82
6. REPRESENTATIONS.
In order to induce the Lenders to execute and deliver this Amendment, the
Company hereby represents to the Lenders that as of the date hereof, the
representations and warranties set forth in Section 6 of the Credit Agreement
are and shall be and remain true and correct (except that for purposes of this
paragraph, (i) the representations contained in Section 6.3 shall be deemed to
include this Amendment as and when it refers to Loan Documents and (ii) the
representations contained in Section 6.5 shall be deemed to refer to the most
recent financial statements of the Company delivered to the Lenders) and the
Company is in full compliance with all of the terms and conditions of the
Credit Agreement and no Default or Event of Default has occurred and is
continuing under the Credit Agreement or shall result after giving effect to
this Amendment.
7. MISCELLANEOUS.
7.01. The Company acknowledges and agrees that all of the Collateral
Documents to which it is a party remain in full force and effect for the
benefit and security of, among other things, the Revolving Credit Loans and
Term Loans as modified hereby. The Company further acknowledges and agrees
that all references in such Collateral Documents to the Revolving Credit Loans
and Term Loans shall be deemed a reference to the Revolving Credit Loans and
Term Loans as so modified. The Company further agrees to execute and deliver
any and all instruments or documents as may be required by the Agent or
Required Lenders to confirm any of the foregoing.
7.02. Except as specifically amended herein, the Credit Agreement shall
continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection
therewith, or in any certificate, letter or communication issued or made
pursuant to or with respect to the Credit Agreement, any reference in any of
such items to the Credit Agreement being sufficient to refer to the Credit
Agreement as amended hereby.
7.03. This Amendment may be executed in any number of counterparts, and by
the different parties on different counterpart signature pages, all of which
taken together shall constitute one and the same agreement. Any of the parties
hereto may execute this Amendment by signing any such counterpart and each of
such counterparts shall for all purposes be deemed to be an original. This
Amendment shall be governed by the internal laws of the State of Illinois.
7.04. The Company agrees to pay all reasonable out-of-pocket costs and
expenses incurred by the Lenders in connection with the preparation, execution
and delivery of this Amendment and the documents and transactions contemplated
hereby, including the reasonable fees and expenses of counsel for the Lenders
with respect to the foregoing.
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Dated as of October 28, 1996.
RENTX INDUSTRIES, INC.
By /s/ XXXXXXX X. XXXXX
----------------------------------
Its Pr. Sec.
------------------------------
Accepted and agreed to in Chicago, Illinois as of the date and year last
above written.
XXXXXX TRUST AND SAVINGS BANK
By /s/ X. X. XXXXXX
----------------------------------
Its Vice President
------------------------------
LASALLE NATIONAL BANK
By /s/ XXXXXXX
----------------------------------
Its Vice President
------------------------------
BANK ONE, CHICAGO, N.A.
By /s/ XXXXXX X. XXXXXX
----------------------------------
Its Vice President
------------------------------
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EXHIBIT A
RENTX INDUSTRIES, INC.
REVOLVING CREDIT NOTE
Chicago, Illinois
$_______________ ____________, 1996
On the Revolving Credit Termination Date, for value received, the
undersigned, RENTX INDUSTRIES, INC., a Delaware corporation (the "Company"),
hereby promises to pay to the order of _______________ (the "Lender"), at the
principal office of Xxxxxx Trust and Savings Bank in Chicago, Illinois, the
principal sum of (i) _______________________ and no/100 Dollars ($___________),
or (ii) such lesser amount as may at the time of the maturity hereof, whether
by acceleration or otherwise, be the aggregate unpaid principal amount of all
Revolving Credit Loans owing from the Company to the Lender under the Revolving
Credit provided for in the Credit Agreement hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate Portion"
and "LIBOR Portions" as such terms are defined in that certain Credit Agreement
dated as of May 15, 1996, between the Company, Xxxxxx Trust and Savings Bank,
individually and as Agent thereunder, and the other Lenders which are now or
may from time to time hereafter become parties thereto (said Credit Agreement,
as the same may be amended, modified or restated from time to time, being
referred to herein as the "Credit Agreement") made and to be made to the
Company by the Lender under the Revolving Credit provided for under the Credit
Agreement, and the Company hereby promises to pay interest at the office
described above on each loan evidenced hereby at the rates and at the times and
in the manner specified therefor in the Credit Agreement.
Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part of the
Domestic Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion,
the interest rate and Interest Period applicable thereto shall be endorsed by
the holder hereof on a schedule to this Note or recorded on the books and
records of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees
that in any action or proceeding instituted to collect or enforce collection of
this Note, the entries so endorsed on a schedule to this Note or recorded on
the books and records of the holder hereof shall, absent manifest error, be
prima facie evidence of the unpaid principal balance of this Note, the status
of each such loan from time to time as part of the Domestic Rate Portion or a
LIBOR Portion, and, in the case of any LIBOR Portion, the interest rate and
Interest Period applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred
85
to therein, to which reference is hereby made for a statement thereof. This
Note may be declared to be, or be and become, due prior to its expressed
maturity, voluntary prepayments may be made hereon, and certain prepayments are
required to be made hereon, all in the events, on the terms and with the
effects provided in the Credit Agreement. All capitalized terms used herein
without definition shall have the same meanings herein as such terms are
defined in the Credit Agreement.
This Note is issued in substitution for and in replacement of that certain
Revolving Credit Note of the Company dated May 15, 1996 payable to the order of
the Lender in the face principal amount of $______________.*
The Company hereby promises to pay all reasonable costs and expenses
(including attorneys' fees) suffered or incurred by the holder hereof in
collecting this Note or enforcing any rights in any collateral therefor. The
Company hereby waives presentment for payment and demand. THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
RENTX INDUSTRIES, INC.
By
------------------------------------
Name:
---------------------------------
Title:
--------------------------------
----------------------------
* Delete from Bank One Note.
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EXHIBIT B
RENTX INDUSTRIES, INC.
TERM NOTE
Chicago, Illinois
$_______________ ____________, 1996
On the Term Credit Termination Date, for value received, the undersigned,
RENTX INDUSTRIES, INC., a Delaware corporation (the "Company"), hereby promises
to pay to the order of _______________ (the "Lender"), at the principal office
of Xxxxxx Trust and Savings Bank in Chicago, Illinois, the principal sum of (i)
_______________________ and no/100 Dollars ($___________), or (ii) such lesser
amount as may at the time of the maturity hereof, whether by acceleration or
otherwise, be the aggregate unpaid principal amount of all Term Loans owing
from the Company to the Lender under the Term Credit provided for in the Credit
Agreement hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate Portion"
and "LIBOR Portions" as such terms are defined in that certain Credit Agreement
dated as of May 15, 1996, between the Company, Xxxxxx Trust and Savings Bank,
individually and as Agent thereunder, and the other Lenders which are now or
may from time to time hereafter become parties thereto (said Credit Agreement,
as the same may be amended, modified or restated from time to time, being
referred to herein as the "Credit Agreement") made and to be made to the
Company by the Lender under the Term Credit provided for under the Credit
Agreement, and the Company hereby promises to pay interest at the office
described above on each loan evidenced hereby at the rates and at the times and
in the manner specified therefor in the Credit Agreement.
Each loan made under the Term Credit provided for in the Credit Agreement
by the Lender to the Company against this Note, any repayment of principal
hereon, the status of each such loan from time to time as part of the Domestic
Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion, the
interest rate and Interest Period applicable thereto shall be endorsed by the
holder hereof on a schedule to this Note or recorded on the books and records
of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees
that in any action or proceeding instituted to collect or enforce collection of
this Note, the entries so endorsed on a schedule to this Note or recorded on
the books and records of the holder hereof shall, absent manifest error, be
prima facie evidence of the unpaid principal balance of this Note, the status
of each such loan from time to time as part of the Domestic Rate Portion or a
LIBOR Portion, and, in the case of any LIBOR Portion, the interest rate and
Interest Period applicable thereto.
This Note is issued by the Company under the terms and provisions of the
Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary
prepayments
87
may be made hereon, and certain prepayments are required to be made hereon, all
in the events, on the terms and with the effects provided in the Credit
Agreement. All capitalized terms used herein without definition shall have the
same meanings herein as such terms are defined in the Credit Agreement.
This Note is issued in substitution for and in replacement of that certain
Revolving Credit Note of the Company dated May 15, 1996 payable to the order of
the Lender in the face principal amount of $______________.*
The Company hereby promises to pay all reasonable costs and expenses
(including attorneys' fees) suffered or incurred by the holder hereof in
collecting this Note or enforcing any rights in any collateral therefor. The
Company hereby waives presentment for payment and demand. THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
RENTX INDUSTRIES, INC.
By
------------------------------------
Name:
---------------------------------
Title:
--------------------------------
----------------------------
* Delete from Bank One Note.
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RentX Industries, Inc.
Second Amendment To Credit Agreement
Xxxxxx Trust and Savings Bank Bank One, Chicago, N.A.
Chicago, Illinois Evanston, Illinois
LaSalle National Bank
Chicago, Illinois
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
May 15, 1996 (as amended, the "Credit Agreement") currently in effect by and
among, RentX Industries, Inc., a Delaware corporation (the "Company"), and you
(the "Lenders"). All capitalized terms used herein without definition shall
have the same meanings herein as such terms have in the Credit Agreement.
The Company hereby applies to the Lenders to amend certain of the
financial covenants contained in the Credit Agreement and to make certain other
amendments to the Credit Agreement, and the Lenders are willing to do so under
the terms and conditions set forth in this Amendment.
1. Amendments.
Upon satisfaction of the conditions precedent set forth in Section 2
hereof, the Credit Agreement shall be and hereby is amended (effective as of
December 31, 1996) as follows:
1.01. Section 8.9 of the Credit Agreement is hereby amended in its
entirety and as so amended is restated to read as follows:
"Section 8.9. Leverage Ratio. The Company shall, as
of the last day of each calendar month specified below,
maintain its Leverage Ratio as of such date at no greater than
(i) 3.75 to 1 as of the last day of each calendar month
occurring during the Company's fiscal quarters ending in
January, April and July of each year, commencing on January
31, 1997 and (ii) 3.25 to 1 as of the last day of each month
occurring during the fiscal quarter of the Company ending in
October of each year, commencing on October 31, 1997."
1.02. Subsection (b) of Section 8.16 of the Credit Agreement shall
be amended by inserting the phrase "except in connection with the the Company's
acquisition of substantially
89
all of the assets of each of Xxxx Rental & Sales on February 14, 1997 and
Central Virginia, Inc. on March 14, 1997," at the beginning thereof.
1.03. Section 8.16(c) of the Credit Agreement is hereby amended in
its entirety and as so amended is restated to read as follows:
"(c) after giving effect to such Acquisition, at least the
Required Percentage (the term "Required Percentage" as used
herein shall mean (i) forty percent (40%) for each
Acquisitions occurring from and including May 15, 1996 through
and including February 14, 1997 and (ii) thirty-five percent
(35%) for each Acquisition occurring thereafter) of the
aggregate consideration paid by the Company and its
Subsidiaries for such Acquisition and all other Acquisitions
closed on and at any time after the date hereof on a
cumulative basis (including as such consideration, the
assumption by the Company or any Subsidiary of any
Indebtedness for Borrowed Money of each Person acquired) will
have been funded out of the proceeds of substantially
concurrent cash equity contributions to the Company, or to the
extent the Required Lenders in their sole discretion agree,
the proceeds of Subordinated Debt issued by the Company or any
Subsidiary;"
1.04. Section 8.5(a) of the Credit Agreement is hereby amended by
striking the phrase "and in any event within 45 days after the close of each
month" appearing therein and substituting therefor the phrase "and in any event
(i) for the month of January, 1997, within 75 days, (ii) for the months
February through October, 1997, within 60 days and (iii) for each month
thereafter, within 45 days after the close of each such month".
1.05. Section 8.5(b) of the Credit Agreement is hereby amended by
adding the phrase "(except and only for the annual accounting period ending in
January, 1997, for which the time period shall be 120 days)" immediately after
the phrase "and in any event within 90 days after the close of each annual
accounting period of the Company" appearing therein.
1.06. The second sentence of Section 8.5 of the Credit Agreement is
hereby amended in its entirety and as so amended is restated to read as
follows:
"Each of the financial statements furnished to the Lenders
pursuant to subsection (a) of this Section which are required
to be submitted at the end of each fiscal month of the Company
shall be accompanied by a written certificate in the form
attached hereto as Exhibit C-1 and each of the financial
statements furnished to the Lenders pursuant to subsections
(a) and (b) of this Section which are required to be submitted
at the end of each fiscal quarter or fiscal year of the
Company shall be accompanied by a written certificate in the
form attached hereto as Exhibit C-2. Each such certificate
shall be signed by the President, Executive Vice
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90
President or chief financial officer of the Company to the
effect that to the best of such officer's knowledge and belief
no Default or Event of Default has occurred during the period
covered by such statements or, if any such Default or Event of
Default has occurred during such period, setting forth a
description of such Default or Event of Default and specifying
the action, if any, taken by the Company to remedy the same."
1.07. Section 2.1(c) of the Credit Agreement is hereby amended by
striking the percentage "two and one-half percent (2-1/2%)" appearing in the
second and third lines thereof and inserting therefor "the LIBOR Margin".
1.08. Section 5.1 of the Credit Agreement is hereby amended by
adding thereto the following new definition:
"LIBOR Margin" shall mean the rate specified for
LIBOR Portions below at each Level of the Leverage Ratio
specified below:
Level Level I Level II
Leverage Ratio Less than or equal to 3.0 to 1 Greater Than 3.0 to 1
LIBOR Margin 2.50% 2.75%
Not later than ten (10) Business Days after the deadline for
receipt by the Lenders of the financial statements called for
by Section 8.5(a) hereof for October of each year (such date
which is ten Business Days after such deadline being
hereinafter referred to as the "Margin Adjustment Date"), the
Agent shall determine the Leverage Ratio as of October 31 of
such year and shall promptly notify the Company and the
Lenders of such determination and of any change in the LIBOR
Margin resulting therefrom. Each such change in the LIBOR
Margin shall be effective from (but not including) the related
Margin Adjustment Date with respect to all LIBOR Portions
outstanding on such date, and such new LIBOR Margin as
determined by the Agent in accordance with this Section shall
be conclusive and binding on the Company absent manifest
error. From the date the Second Amendment to this Agreement
becomes effective through and including the first Margin
Adjustment Date to occur thereafter, the Applicable Margin
shall be that set forth at Level II above. Anything contained
herein to the contrary notwithstanding, the LIBOR Margin shall
be the highest LIBOR Margin set forth herein during the
continuance of: (x) any Event of Default or (y) any Default
by the Company in
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91
supplying the financial statements required by Section 8.5
hereof by the deadlines expressed in such Section."
1.09. Section 8.7 of the Credit Agreement is hereby amended by
striking the amount "$5,000,000" appearing therein and inserting therefor the
amount $10,000,000".
1.10. Section 8.13(b) of the Credit Agreement is hereby amended by
striking the amount "$5,000,000" appearing therein and inserting therefor the
amount $10,000,000".
1.11. The following definitions appearing in Section 5.1 of the
Credit Agreement shall each be amended in their entirety and as so amended
shall be restated to read as follows:
"Adjusted Actual EBITDA" shall mean, with reference to any
period (the "measurement period"), the sum (without duplication) of
(i) the EBITDA of the Company and its Subsidiaries during the entire
measurement period on a consolidated basis to the extent attributable
to Acquired Stores owned by the Company for the entire measurement
period and (ii) in the case of each Acquired Store not owned by the
Company during the entire measurement period, the Adjusted Base EBITDA
of each such Acquired Store during each full calendar month within
such measurement period which commenced and was completed in each case
prior to the Company's acquisition of such Acquired Store and (iii)
the Corporate Overhead of the Company and its Subsidiaries to the
extent deducted in computing the EBITDA amount in clauses (i) or (ii)
above.
"Adjusted Base EBITDA" shall mean, in each comparison to
Adjusted Actual EBITDA for any measurement period (as "measurement
period" is defined with respect to such Adjusted Actual EBITDA), the
EBITDA of each Acquired Store which the Company owned as of the close
of such measurement period, but occurring in the twelve full calendar
months most recently completed prior to the Company's acquisition of
such Acquired Store.
"Term Credit Earnings Limit" shall mean as of any time, the
product of (x) Pro forma Adjusted Cash Flow for the twelve most
recently completed calendar months and (y) an amount equal to (i) 3.75
during the Company's fiscal quarters ending in January, April and July
of each year and (ii) 3.25 during the Company's fiscal quarters ending
in October of each year.
1.12. The following new definitions are inserted in Section 5.1 of
the Credit Agreement in the appropriate alphabetical locations:
"Excess Cash" means as of any time the same is to be
determined, (i) during the period from December 1, 1996 through
January 31, 1997, the aggregate amount of cash on hand of the Company
and its Subsidiaries as determined on a consolidated basis in
accordance with GAAP and (ii) at all other times, the amount (if any)
of
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92
which (a) the aggregate amount of cash on hand of the Company and its
Subsidiaries as determined on a consolidated basis in accordance with
GAAP exceeds (b) $250,000.
"Level I" means with respect to any Margin Adjustment Date,
the Company's Leverage Ratio as of the October 31 date most recently
preceding such Margin Adjustment Date, is less than or equal to 3.0 to
1.
"Level II" means with respect to any Margin Adjustment Date,
the Company's Leverage Ratio as of the October 31 date most recently
preceding such Margin Adjustment Date, is greater than 3.0 to 1.
"Leverage Ratio" means as of any time the same is to be
determined, the ratio of (x) the amount (if any) by which (i) Senior
Funded Debt on such date exceeds (ii) Excess Cash on such date to (y)
Pro forma Adjusted Cash Flow for the twelve calendar months then
ended.
1.13. Exhibit C to the Credit Agreement shall be amended in its
entirety and as so amended is restated to read as set forth on Schedule I
hereto.
2. Conditions Precedent.
The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:
2.01. The Company, the Agent and the Lenders shall have executed and
delivered this Amendment.
2.02. No Default or Event of Default shall have occurred and be
continuing as of the date this Amendment would otherwise take effect.
2.03. Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Lenders and their counsel; and the
Lenders shall have received the favorable written opinion of counsel for the
Company in form and substance satisfactory to the Lenders and their counsel.
2.04. The Company shall have delivered to the Agent a Certificate of
the Secretary or Assistant Secretary of the Company containing resolutions of
the Company's Board of Directors authorizing the execution and delivery of this
amendment and certifying that there has been no amendment to the Company's
Certificate of Incorporation since May 29, 1996, other than the Amendments to
the Company's Certificate of Incorporation filed on December 18, 1996 and
January 30, 1997, respectively, with the Delaware Secretary of State, copies of
which are attached to such Certificate of the Secretary.
2.05. The Agent shall have received an amendment fee from the
Company in an aggregate amount equal to $30,000, payable to each Lender in an
amount equal to $10,000.
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93
Upon the satisfaction of all of the foregoing conditions precedent,
this Amendment shall take effect as of December 31, 1996.
3. Representations.
In order to induce the Lenders to execute and deliver this Amendment,
the Company hereby represents to the Lenders that as of the date hereof, the
representations and warranties set forth in Section 6 of the Credit Agreement
are and shall be and remain true and correct (except that for purposes of this
paragraph, (i) the representations contained in Section 6.3 shall be deemed to
include this Amendment as and when it refers to Loan Documents and (ii) the
representations contained in Section 6.5 shall be deemed to refer to the most
recent financial statements of the Company delivered to the Lenders) and the
Company is in full compliance with all of the terms and conditions of the
Credit Agreement and no Default or Event of Default has occurred and is
continuing under the Credit Agreement or shall result after giving effect to
this Amendment.
4. Miscellaneous.
4.01. The Company acknowledges and agrees that all of the Collateral
Documents to which it is a party remain in full force and effect for the
benefit and security of, among other things, the Revolving Credit Loans and
Term Loans as modified hereby. The Company further acknowledges and agrees
that all references in such Collateral Documents to the Revolving Credit Loans
and Term Loans shall be deemed a reference to the Revolving Credit Loans and
Term Loans as so modified. The Company further agrees to execute and deliver
any and all instruments or documents as may be required by the Agent or
Required Lenders to confirm any of the foregoing.
4.02. Except as specifically amended herein, the Credit Agreement
shall continue in full force and effect in accordance with its original terms.
Reference to this specific Amendment need not be made in the Credit Agreement,
the Notes, or any other instrument or document executed in connection
therewith, or in any certificate, letter or communication issued or made
pursuant to or with respect to the Credit Agreement, any reference in any of
such items to the Credit Agreement being sufficient to refer to the Credit
Agreement as amended hereby.
4.03. This Amendment may be executed in any number of counterparts,
and by the different parties on different counterpart signature pages, all of
which taken together shall constitute one and the same agreement. Any of the
parties hereto may execute this Amendment by signing any such counterpart and
each of such counterparts shall for all purposes be deemed to be an original.
This Amendment shall be governed by the internal laws of the State of Illinois.
4.04. The Company agrees to pay all reasonable out-of-pocket costs
and expenses incurred by the Lenders in connection with the preparation,
execution and delivery of this Amendment and the documents and transactions
contemplated hereby, including the reasonable fees and expenses of counsel for
the Lenders with respect to the foregoing.
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94
Dated as of April 16, 1997, but effective as of December 31, 1996
RENTX INDUSTRIES, INC.
By /s/ XXXXXXX X. XXXXXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxxxxx
Its Vice President
------------------------------
Accepted and agreed to in Chicago, Illinois as of the date and year
last above written.
XXXXXX TRUST AND SAVINGS BANK
By /s/ [ILLEGIBLE]
--------------------------------------
Its Vice President
------------------------------
LASALLE NATIONAL BANK
By /s/ [ILLEGIBLE]
--------------------------------------
Its Vice President
------------------------------
BANK ONE, CHICAGO, N.A.
By /s/ [ILLEGIBLE]
--------------------------------------
Its Vice President
------------------------------
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95
RENTX INDUSTRIES, INC.
THIRD AMENDMENT TO CREDIT AGREEMENT
Xxxxxx Trust and Savings Bank Bank One, Illinois, N.A.
Chicago, Illinois (formerly known as Bank One,
LaSalle National Bank Chicago, N.A.)
Chicago, Illinois Chicago, Illinois
Ladies and Gentlemen:
Reference is hereby made to that certain Credit Agreement dated as of
May 15, 1996 (the "Credit Agreement"), as amended and currently in effect by
and among, RentX Industries, Inc., a Delaware corporation (the "Company"), and
you (the "Lenders"). All capitalized terms used herein without definition shall
have the same meanings herein as such terms have in the Credit Agreement.
The Company hereby applies to the Lenders to increase the amount of
the Revolving Credit Commitments, to increase the amount of the Term Loan
Commitments, to amend certain of the financial covenants contained therein, and
to make certain other amendments to the Credit Agreement, and the Lenders are
willing to do so under the terms and conditions set forth in this Amendment.
1. INCREASE OF COMMITMENT AMOUNTS.
The amount of Xxxxxx Trust and Savings Bank's Commitment set forth
opposite its name on its signature page to the Credit Agreement shall be
amended and as so amended shall be restated as follows:
AMOUNT OF REVOLVING AMOUNT OF TERM
LENDER CREDIT COMMITMENT CREDIT COMMITMENT
Xxxxxx Trust and Savings Bank $2,763,265.29 $19,342,857.00
2. AMENDMENTS.
2.1 Section 3.4(b) of the Credit Agreement is hereby amended in
its entirety and as so amended is restated to read as follows:
"(b) Mandatory. The Revolving Credit Commitments of the
Lenders shall be concurrently and ratably reduced, dollar for
dollar, by the aggregate cumulative principal amount of Term
Loans made by the Lenders, taken together, on and after May
15, 1996 (whether or not subsequently repaid) in excess of
$33,722,448.85.
96
2.2 Section 8.8 of the Credit Agreement is hereby amended in its
entirety and as so amended is restated to read as follows:
"Section 8.8. Store Leases. The Company shall not,
and shall not permit any Subsidiary to, acquire the use of or
possession of any real property to be used as a retail rental
store location under any lease or similar arrangement which
has a term (excluding renewal terms exercisable at the
discretion of the lessee) that is over seven calendar years in
length; provided, however, that the foregoing shall not
restrict nor operate to prevent the Company from entering into
leases or similar arrangements for such real property each
with a term (excluding renewal terms exercisable at the
discretion of the lessee) not exceeding 15 calendar years in
length if, after giving effect thereto, the aggregate amount
of fixed rentals and other consideration payable by the
Company and its Subsidiaries during any calendar year by the
Company and its Subsidiaries under all such leases and similar
arrangements with terms (excluding such renewal terms) in
excess of seven calendar years would not exceed 15% of the
aggregate amount of fixed rentals and other consideration
payable by the Company under all such leases and similar
arrangements of whatever term."
2.3 Section 8.13 of the Credit Agreement is hereby amended (i) by
deleting the word "and" appearing at the end of Subsection (c) thereof, (ii) by
deleting the period appearing at Subsection (d) thereof and substituting
therefor "; and" and (iii) adding thereto a new Subsection (e) which reads as
follows:
"(e) the Investor Subordinated Debt if and so long as
the same constitutes Subordinated Debt."
2.4 Section 1.3(b) of the Credit Agreement is hereby amended in
its entirety and as so amended as restated to read as follows:
"(b) Use of Proceeds. After the effective date of the Third
Amendment to this Agreement the Company shall use the proceeds
of the Term Loan solely for Permitted Acquisitions and the
purchase of rental inventory for use by the Company or any of
its Subsidiaries in the ordinary course of business and the
payment of out-of-pocket costs of opening Start-Up Stores,
incurred by the Company and its Subsidiaries in the ordinary
course of business. After the effective date of the Third
Amendment to this Agreement, no borrowing of Term Loans used
to finance a Permitted Acquisition shall be permitted if after
giving effect thereto, the aggregate principal amount of Term
Loans made on a cumulative basis on and after the effective
date of
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97
the Third Amendment to this Agreement to fund Permitted
Acquisitions would exceed 65% of the aggregate cost to the
Company and its Subsidiaries, including closing costs, on a
cumulative basis of all the Permitted Acquisitions closed on
at any time after the date hereof. After the effective date of
the Third Amendment to this Agreement, no borrowing of Term
Loans to purchase such rental inventory or pay such costs of
opening Start-Up Stores shall be permitted if after giving
effect thereto, the aggregate principal amount of all Term
Loans used to purchase such rental inventory or pay such costs
would exceed 65% of the aggregate amount expended by the
Company and its Subsidiaries, on a cumulative basis on and at
any time after the date hereof, to purchase such rental
inventory or pay such costs of opening Start-Up Stores."
2.5 Section 3.3(b) of the Credit Agreements is hereby amended in
its entirety and as so amended as restated to read as follows:
"(b) Term Credit Earnings Limit. The Company covenants and
agrees that if at any time the sum of the then unpaid
principal balance of the Term Loans shall be in excess of the
sum of (i) the Term Credit Earnings Limit as then determined
and computed and (ii) the Term Start-Up Advance Limit as then
determined and computed, the Company shall, within 2 Business
Days after demand from the Agent, pay over the amount of such
excess to the Agent for the ratable account of the Lenders as
and for a mandatory prepayment on such Obligations until
payment in full thereof."
2.6 Section 5.1 of the Credit Agreement is hereby amended by
adding thereto the following new definitions in their appropriate alphabetical
locations:
"'Investor Subordinated Debt' means the Subordinated Debt
which may be issued by the Company following the effective
date of the Third Amendment to this Agreement on the terms or
substantially the terms contained in that certain term sheet
dated as of July 31, 1997 which has previously been forwarded
to the Lenders in an aggregate principal amount not exceeding
$3,000,000.
'Term Start-Up Advance Limit' shall mean as of any time, 65%
of the aggregate amount expended by the Company and its
Subsidiaries on a cumulative basis after the effective date of
the Third Amendment to this Agreement to purchase rental
inventory and equipment for Acquired and Start-Up Stores (for
such purposes, the amount expended to mean the hard invoice
cost of such inventory and
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98
equipment and the delivery cost thereof and to exclude the
amount expended to acquire rental inventory and equipment as
part of a Permitted Acquisition)."
2.7 The first sentence of Section 1.3(a) of the Credit Agreement
is hereby amended in its entirety and as so amended shall be restated to read
as follows:
"Subject to the terms and conditions hereof, each Lender
severally agrees to make loans (individually a "Term Loan" and
collectively the "Term Loans") to the Company in a cumulative
amount not exceeding such Lender's commitment set forth
opposite such Lender's signature hereto under the heading
"Term Loan Commitment" or as otherwise provided in Section
11.10 hereof, as such amount may be reduced pursuant hereto;
provided, however, that (i) the aggregate amount of Term Loans
outstanding at any one time shall not exceed the sum of (x)
the Term Credit Earnings Limit as then determined and
computed, plus (y) the Term Start-Up Advance Limit as then
determined and computed and (ii) the aggregate cumulative
amount of Term Loans made on and after May 15, 1996 shall at
no time exceed the excess of the Term Loan Commitments over
the principal amount of Revolving Credit Loans then
outstanding."
2.8 Section 7.1(d) of the Credit Agreement is hereby amended in
its entirety and as so amended is restated to read as follows:
(d) in the case of the extension of each Term
Loan, after giving effect to such Loan and any Permitted
Acquisition or purchase of rental inventory or payment of
costs of opening of a Start-Up Store, as the case may be, to
be financed thereby, (i) the aggregate cumulative principal
amount of all Term Loans made on and after May 15, 1996 shall
not exceed the Term Credit Commitments less the principal
amount of Revolving Credit Loans then outstanding and (ii) the
aggregate principal amount of Term Loans then outstanding at
such time shall not exceed the sum of (x) the Term Credit
Earnings Limit as then determined and computed on a pro forma
basis after giving effect to any Permitted Acquisition
financed thereby, if appropriate, plus (y) the Term Start-Up
Advance Limit as then determined and computed on a pro forma
basis after giving effect to any purchase of rental inventory
or equipment financed thereby, as appropriate;"
2.9 The following definitions appearing in Section 5.1 of the
Credit Agreement shall each be amended in their entirety and as so amended
shall be restated to read as follows:
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99
"'Maximum Available Credit' shall mean $39,342,857 as such
amount may be reduced pursuant to Section 3.4 hereof.
'Revolver Store Advance Limit' shall mean as of any time, the
sum of (i) 70% of the then unpaid amount of the Company's Eligible
Accounts and (ii) 65% of the aggregate amount expended by the Company
and its Subsidiaries during the twelve most recently completed
calendar months to purchase rental inventory and equipment for
Acquired and Start-Up Stores (for such purposes, the amount expended
to mean the hard invoiced cost of such inventory and equipment and the
delivery cost thereof and to exclude the amount expended to acquire
rental inventory and equipment as part of a Permitted Acquisition).
'Term Credit Earnings Limit' shall mean as of any time, the
product of (x) Pro forma Adjusted Cash Flow for the twelve most
recently completed calendar months and (y) an amount equal to (i) 4.40
during the Company's fiscal quarters ending July 31, 1997 and October
31, 1997 and (ii) thereafter (commencing with the Company's fiscal
quarter ending on January 31, 1998) (a) 3.75 during each of the
Company's fiscal quarters ending January 31, 1998 and April 30, 1998,
and (b) 3.00 during each of the Company's fiscal quarters ending
thereafter (commencing with the Company's fiscal quarter ending on
July 31, 1998)."
2.10 Section 8.9 of the Credit Agreement is hereby amended in its
entirety and as so amended is restated to read as follows:
"Section 8.9. Leverage Ratio. The Company shall, as of the
last day of each fiscal quarter of the Company specified below,
maintain its Leverage Ratio as of such date at no greater than (i)
4.40 to 1 as of the last day of each of the Company's fiscal quarters
ending on July 31, 1997 and October 31, 1997 and (ii) thereafter
(commencing with the Company's fiscal quarter ending on January 31,
1998) (a) 3.75 to 1 as of the last day of each of the Company's fiscal
quarters ending on January 31, 1998 and April 30, 1998 of each year
and (b) 3.00 to 1 as of the last day of each fiscal quarter of the
Company ending thereafter (commencing with the Company's fiscal
quarter ending on July 31, 1998)."
2.11 Section 8.11 of the Credit Agreement is hereby amended in its
entirety and as so amended is restated to read as follows:
"Section 8.11. Overhead to Revenue Ratio. The Company shall,
as of the last day of each July, October, January and April of each
calendar year (commencing with the calendar month ending July 31,
1997), maintain the ratio (the "Overhead Ratio") of (x) the aggregate
amount expended by the Company and its Subsidiaries for Corporate
Overhead during the twelve calendar months then ended to (y) Pro forma
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100
Adjusted Revenues for the same period of twelve calendar months in an
amount not greater than 0.0525 to 1."
2.12 The introductory clause of Section 8.16 of the Credit
Agreement is hereby amended in its entirety and as so amended is restated to
read as follows:
"Section 8.16. Acquisitions. The Company will not, nor will
it permit any Subsidiary to, make or commit to make any Acquisition;
provided, however, that the Company may make one or more Acquisitions
of a retail rental business (and Acquisitions of the capital stock of
any corporation, or the equity interests in any partnership or other
firm, in each case engaged primarily in the retail rental business)
if:"
2.13 Section 3.1(d) is hereby amended in its entirety and as so
amended is restated to read as follows:
"(d) Closing Fee. The Company paid to the Agent as of the date
hereof a closing fee of $75,000 for the account of the following
Lenders in the following amounts: $45,000 to Xxxxxx Trust and Savings
Bank ("Xxxxxx"); and $30,000 to LaSalle National Bank ("LaSalle"). On
the date the First Amendment to this Agreement became effective, the
Company paid an additional closing fee of $100,000 to the Agent for
the account of the following Lenders in the following amounts:
$30,000 to Xxxxxx; $20,000 to LaSalle; and $50,000 to Bank One,
Chicago, N.A. ("Bank One"). On or before the earlier of (x) the
maturity of the Revolving Credit Notes (whether by lapse of time,
acceleration or otherwise) or (y) an initial public offering of debt
or equity securities issued by the Company or any Subsidiary, the
Company shall pay an additional closing fee equal to $175,000 to the
Agent for the account of the Lenders in the following amounts: $75,000
to Xxxxxx; $50,000 to LaSalle; and $50,000 to Bank One. Such aforesaid
closing fees were deemed fully earned and nonrefundable upon the
Lenders' acceptance of the First Amendment to this Agreement. On the
date the Third Amendment to this Agreement becomes effective, the
Company shall pay an additional closing fee of $21,714.29 to the Agent
for the account of Xxxxxx. On or before the earlier of (x) the
maturity of the Revolving Credit Notes (whether by lapse of time,
acceleration or otherwise) or (y) an initial public offering of debt
or equity securities issued by the Company or any Subsidiary, the
Company shall pay an additional closing fee equal to $21,714.29 to the
Agent for the account of Xxxxxx. The additional closing fee due by
virtue of the immediately preceding sentence shall be deemed fully
earned and nonrefundable upon the Lenders' acceptance of the Third
Amendment to this Agreement."
2.14 Section 8. 16(c) of the Credit Agreement is hereby amended in
its entirety and as so amended is restated to read as follows:
"(c) after giving effect to such Acquisition, at least the
Required Percentage (the term "Required Percentage" as used
herein shall mean (i) forty percent (40%) for each
Acquisitions occurring from and
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101
including May 15, 1996 through and including February 14, 1997
and (ii) thirty-five percent (35%) for each Acquisition
occurring thereafter) of the aggregate consideration paid by
the Company and its Subsidiaries for such Acquisition and all
other Acquisitions closed on and at any time after the date
hereof on a cumulative basis (including as such consideration,
the assumption by the Company or any Subsidiary of any
Indebtedness for Borrowed Money of each Person acquired) will
have been funded out of the proceeds of cash equity
contributions to the Company or proceeds from the Investor
Subordinated Debt, or to the extent the Required Lenders in
their sole discretion agree, the proceeds of other
Subordinated Debt issued by the Company or any Subsidiary;"
2.15 Section 8.5(b) of the Credit Agreement is hereby amended by
adding the phrase "(except and only for the annual accounting period ending in
January, 1997, for which the time period shall be 220 days)" immediately after
the phrase "and in any event within 90 days after the close of each annual
accounting period of the Company" appearing therein.
2.16 Section 4.1 of the Credit Agreement is hereby amended by
adding the following proviso immediately preceding the period appearing at the
end of such Section:
"; provided, however, that clause (b) above shall be of no
force or effect after the closing of any initial public
offering by the Company of its equity securities so long as
the cash proceeds received by the Company from such initial
public offering are an amount greater than or equal to
$20,000,000 (net of (x) the aggregate amount expended by the
Company and its Subsidiaries directly out of the proceeds of
such offering for the redemption or other repurchase of their
capital stock and (y) reasonable fees, commissions and
underwriting discounts directly incurred and payable by the
Company or any Subsidiary as a result of such initial public
offering)"
2.17 Section 9.1(e) of the Credit Agreement is hereby amended by
inserting the phrase ", prior to the closing of any initial public offering by
the Company of its equity securities from which the cash proceeds received by
the Company from such initial public offering are an amount greater than or
equal to $20,000,000 (net of (x) the aggregate amount expended by the Company
and its Subsidiaries directly out of the proceeds of such offering for the
redemption or other repurchase of their capital stock and (y) reasonable fees,
commissions and underwriting discounts directly incurred and payable by the
Company or any Subsidiary as a result of such initial public offering)," after
the word "or" and before the word "the" appearing in the eighth line thereof.
2.18 Section 9.1(m) of the Credit Agreement is hereby amended by
inserting the phrase "prior to the closing of any initial public offering by
the Company of its equity securities from which
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102
the cash proceeds received by the Company from such initial public offering are
in an amount greater than or equal to $20,000,000 (net of (x) the aggregate
amount expended by the Company and its Subsidiaries directly out of the
proceeds of such offering for the redemption or other repurchase of their
capital stock and (y) reasonable fees, commissions and underwriting discounts
directly incurred and payable by the Company or any Subsidiary as a result of
such initial public offering)," at the beginning thereof.
2.19 The definition of "BACE Management Agreement" appearing in
Section 5.1 of the Credit Agreement is hereby amended by adding the phrase ",
as amended by the First Amendment to Consulting Agreement dated as of August 1,
1997 by and between BACE Industries and the Company" immediately preceding the
period appearing at the end of such Section.
2.20. Section 8.1 of the Credit Agreement is amended by striking the
phrase "to effect a Permitted Acquisition" appearing in the sixth and seventh
lines thereof.
2.21 Sections 8.5(a), (b) and (e) of the Credit Agreement are
hereby amended by striking the phrase "and consolidating" wherever it appears
therein.
2.22 Section 8.17 of the Credit Agreement is hereby amended by
striking the phrase "to effect a Permitted Acquisition" appearing in the eighth
line thereof.
2.23 Section 9.1(k) of the Credit Agreement is hereby amended and
as so amended shall be restated in its entirety to read as follows:
"(k) dissolution or termination of the existence of the
Company or any Subsidiary (except for the merger or
liquidation of a Subsidiary into the Company permitted by
Section 8.1 hereof); or"
2.24 Section 8.7 of the Credit Agreement is hereby amended in its
entirety and as so amended is restated to read as follows:
"Section 8.7. Rental Inventory Leases. The Company shall not,
nor shall it permit any Subsidiary to, acquire the use or
possession of any Property under a lease or similar
arrangement, whether or not the Company or any Subsidiary has
the express or implied right to acquire title to or purchase
such Property, at any time if, after giving effect thereto,
the aggregate value of such Property so acquired (excluding
real property used for retail rental store locations and the
Company's offices and rental equipment to the extent held
under consignment, split rental or similar arrangements)
would, when taken together with the amount then outstanding on
the purchase money indebtedness and Capitalized Lease
Obligations in each case permitted by Section 8.13(b) hereof,
at any time aggregate more than $10,000,000."
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103
2.25 Section 11.11 of the Credit Agreement is hereby amended by
striking the second sentence appearing therein and inserting therefor the
following:
"Notices hereunder to the Company shall be addressed to:
0000 Xxxx Xxxxx, Xxxxx 0-000
Xxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
BACE Industries, L.L.C.
0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to:
Xxxx XxxXxxxxx
BACE Industries LLC
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
With a copy to (in case of notices of default):
Xxxx X. Xxxxxxxx
Xxxxxxx and Xxxxxx, LLC
000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
2.26 Schedule 8.14 to the Credit Agreement by adding the following
to such Schedule in the appropriate columns thereof:
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104
SECURED PARTY COLLATERAL
General Electric Capital Corporation Specific equipment purchased through
("GECC") the use of GECC financing
Colorado Business Leasing, Inc. ("CBL") Specific equipment purchased through
the use of CBL financing
Issuers of Subordinated Debt contemplated All assets of the Company (junior to the Banks
by Section 8.13(e) and the equipment lenders)
2.27 Section 8.20 of the Credit Agreement is hereby amended in its
entirety and as so amended is restated to read as follows:
"Section 8.20. Subordinated Debt. (a) The Company
will not, and will not permit any Subsidiary to, amend or
modify the terms and conditions applicable to any Subordinated
Debt, except that the Company may agree to a decrease in the
interest rate or premium applicable thereto or to a deferral
of repayment of any of principal of or interest or premium on
any Subordinated Debt beyond the due date applicable thereto
as of the date such indebtedness is initially approved by the
Required Lenders. The Company will not, and will not permit
any Subsidiary to, make any payment of principal, interest or
premium, if any, on or in respect of any Subordinated Debt or
otherwise acquire, prepay or retire any such Subordinated Debt
prior to the maturities thereof or prior to any other times
required for payment thereof as are in force and effect as of
the date such indebtedness is initially approved by the
Required Lenders.
(b) Notwithstanding anything contained herein to
the contrary, the Company may: (i) issue the Investor
Subordinated Debt; (ii) pay interest as the same becomes due
and payable on the Investor Subordinated Debt in the form and
only in the form of Series C Preferred Stock of the Company;
(iii) permit the conversion of the Investor Subordinated Debt
into Series C Preferred Stock of the Company on the basis of
one (1) share of Series C Preferred Stock of the Company for
each $1,000 of the then outstanding principal amount of the
Investor Subordinated Debt and (iv) in the event and only in
the event that the Company consummates its proposed initial
public offering of equity securities and the cash proceeds
received by the Company from such initial public offering are
an amount greater
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105
than or equal to $20,000,000 (net of (x) the aggregate amount
expended by the Company and its Subsidiaries for the
redemption or other repurchase of their capital stock and (y)
reasonable fees, commissions and underwriting discounts
directly incurred and payable by the Company or any Subsidiary
as a result of such initial public offering), use a portion of
the cash proceeds thereof to repay the then outstanding
principal amount of the Investor Subordinated Debt."
3. NEW SUBORDINATED DEBT.
3.1 The Company has informed the Lenders pursuant to that certain
term sheet dated as of July 31, 1997 (the "term sheet") that the Company is
contemplating the issuance of Subordinated Debt following the effective date of
this Amendment in an aggregate principal amount not to exceed $3,000,000 (the
"Investor Subordinated Debt"). The Company has requested that the Lenders waive
compliance with certain Sections of the Credit Agreement in order to permit the
Company to issue the Investor Subordinated Debt. Section 6.12 of the Credit
Agreement requires the Company to represent that none of the contracts or
agreements between the Company and any of its Affiliates contain terms and
conditions which are less favorable to the Company than would be usual and
customary in similar contracts or agreements between non- affiliated Persons.
The Company has requested that the Lenders waive compliance with Section 6.12
of the Credit Agreement to the extent that the Investor Subordinated Debt
represents a contract or agreement which is prohibited thereby. In addition,
Section 8.23 of the Credit Agreement prohibits the Company from entering into
any contract, agreement or business arrangement with any Affiliate on terms or
conditions which are less favorable to the Company than would be usual and
customary in similar contracts, agreements or business arrangements between
non-affiliated Persons. The Company has requested that the Lenders waive
compliance with Section 8.23 to the extent that the issuance of the Investor
Subordinated Debt would constitute a contract, agreement or business
arrangement with an Affiliate which is prohibited thereby. Accordingly,
provided the Investor Subordinated Debt is issued substantially upon the terms
set forth in the term sheet, the Lenders hereby waive compliance with Sections
6.12 and 8.23 of the Credit Agreement to the extent and only to the extent that
the issuance of Investor Subordinated Debt would otherwise be prohibited
thereby. Except as indicated herein, the Company must comply with all of the
terms and conditions of the Credit Agreement as currently in effect as amended
by this amendment.
4. REPLACEMENT OF NOTES.
4.1 New Revolving Credit Notes. In replacement for the outstanding
Revolving Credit Note dated October 28, 1996 payable to the order of Xxxxxx
Trust and Savings Bank ("Xxxxxx") in the aggregate face principal amount of
$2,142,857.14 (the "Existing Revolving Credit Note") now outstanding for
Revolving Loans made by Xxxxxx to the Company pursuant to the Credit Agreement
and the other changes made hereby, the Company shall execute and deliver to
Xxxxxx a new revolving credit note in the amount of Xxxxxx' Revolving Credit
Commitment and otherwise in the form (with
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106
appropriate insertions) annexed hereto as Exhibit A (the "New Revolving Credit
Note") which shall substitute for the Existing Revolving Credit Note issued to
Xxxxxx and shall evidence all Revolving Loans now or hereafter outstanding from
Xxxxxx under the Revolving Credit. All references in the Credit Agreement or in
any other instrument or document referring to the Existing Revolving Credit
Note shall be deemed references to the New Revolving Credit Note.
4.2 New Term Credit Notes. In replacement for the Term Credit
Note dated October 28, 1996 payable to the order of Xxxxxx in the original
principal amount of $15,000,000 (the "Existing Term Credit Note") now
outstanding for Term Loans by Xxxxxx to the Company pursuant to the Credit
Agreement and the other changes made hereby, the Company shall execute and
deliver to Xxxxxx a new term credit note in the amount of Xxxxxx' Term Credit
Commitment in the form (with appropriate insertions) annexed hereto as Exhibit
B (the "New Term Credit Note") which shall substitute for the Existing Term
Credit Note issued to Xxxxxx and shall evidence all Term Loans now or hereafter
outstanding from Xxxxxx under the Term Credit. All references in the Credit
Agreement or in any other instrument or document referring to the Existing Term
Credit Notes shall be deemed references to the New Term Credit Notes.
5. INITIAL PUBLIC OFFERING - WAIVERS.
The Company has informed the Lenders that it is currently preparing to
make an initial public offering of its equity securities (the "IPO"). The
Company has requested that the Lenders waive compliance with certain Sections
of the Credit Agreement in order to permit the Company to consummate the IPO.
The Lenders have informed the Company that the Company plans to convert, upon
the consummation of the IPO, the then issued and outstanding classes of its
preferred stock into common capital stock of the Company without any
consideration from the Company or any Subsidiary other than the Company's
issuance to its preferred stockholders of the common capital stock into which
their preferred stock shall be converted. Section 8.19 of the Credit Agreement
prohibits among other things the direct or indirect purchase, redemption, other
acquisition or retirement by the Company of any of its capital stock. The
Company has requested that the Lenders waive compliance with Section 8.19 of
the Credit Agreement to the extent and only to the extent that the provisions
thereof would otherwise prohibit such conversion of its issued and outstanding
classes of preferred stock into common capital stock of the Company.
Accordingly, the Lenders hereby waive compliance with Section 8.19 of the
Credit Agreement to the extent and only to the extent required to permit the
Company's conversion of its issued and outstanding classes of preferred stock
into common capital stock of the Company. Except as indicated herein, the
Company must comply with all of the terms and conditions of the Credit
Agreement as currently in effect as amended by this Amendment.
6. BACE MANAGEMENT AGREEMENT.
The Company has informed the Lenders that it has modified the terms of
the BACE Management Agreement relating to among other things the compensation
payable to BACE and/or an Affiliate of BACE pursuant to the First Amendment to
Consulting Agreement dated as of
- 00 -
000
Xxxxxx 0, 0000 (xxx "Management Amendment"). Section 8.27 of the Credit
Agreement prohibits the amendment or modification by the Company or any
Subsidiary of any provision of the BACE Management Agreement relating to the
compensation payable to BACE and any of its Affiliates. The Company has
requested that the Lenders waive compliance with Section 8.27 of the Credit
Agreement to the extent and only to the extent that the provisions thereof
would otherwise prohibit the Company's execution and delivery of the Management
Amendment. Accordingly, the Lenders hereby waive compliance with Section 8.27
of the Credit Agreement to the extent and only to the extent required to permit
the Company's execution and delivery of the Management Amendment. Except as
indicated herein, the Company must comply with all of the terms and conditions
of the Credit Agreement as currently in effect as amended by this Amendment.
7. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:
7.1 The Company, Newmanco, Inc., a New Mexico corporation
("Newmanco"), Xxxxx Rental Service, a Michigan corporation ("Xxxxx") the Agent
and the Lenders shall have executed and delivered this Amendment.
7.2 The Company shall have executed Notes in favor of each Lender
in the forms attached hereto as Exhibits A and B, with each Note to a Lender to
be dated as of the date of its issuance and in a face amount equal to the
relevant Commitment of such Lender after giving effect to this Amendment.
7.3 No Default or Event of Default shall have occurred and be
continuing as of the date this Amendment would otherwise take effect.
7.4 Legal matters incident to the execution and delivery of this
Amendment shall be satisfactory to the Lenders and their counsel; and the
Lenders shall have received the favorable written opinion of counsel for the
Company in form and substance satisfactory to the Lenders and their counsel.
7.5 The Company shall have delivered to the Agent a copy of the
Company's Articles of Incorporation, as currently in effect, certified by the
Secretary or Assistant Secretary of the Company.
7.6 The Agent shall have received for the account of the Lenders the
closing fees required to be paid by the Company under Section 3.1(d) of the
Credit Agreement as amended hereby.
Upon the effectiveness of this Amendment, each Lender shall promptly
return to the Company the Notes issued to that Lender which are being replaced
by the Notes contemplated by this Amendment.
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8. REPRESENTATIONS.
In order to induce the Lenders to execute and deliver this Amendment,
the Company hereby represents to the Lenders that as of the date hereof, the
representations and warranties set forth in Section 6 of the Credit Agreement
are and shall be and remain true and correct (except that for purposes of this
paragraph, (i) the representations contained in Section 6.3 shall be deemed to
include this Amendment as and when it refers to Loan Documents and (ii) the
representations contained in Section 6.5 shall be deemed to refer to the most
recent financial statements of the Company delivered to the Lenders) and the
Company is in full compliance with all of the terms and conditions of the
Credit Agreement and no Default or Event of Default has occurred and is
continuing under the Credit Agreement or shall result after giving effect to
this Amendment.
9. MISCELLANEOUS.
9.1 Each of the Company, Newmanco and Xxxxx acknowledges and
agrees that all of the Collateral Documents to which it is a party remain in
full force and effect for the benefit and security of, among other things, the
Revolving Credit Loans and Term Loans as modified hereby. Each of the Company,
Newmanco and Xxxxx further acknowledges and agrees that all references in such
Collateral Documents to the Revolving Credit Loans and Term Loans shall be
deemed a reference to the Revolving Credit Loans and Term Loans as so modified.
Each of the Company, Newmanco and Xxxxx further agrees to execute and deliver
any and all instruments or documents as may be required by the Agent or
Required Lenders to confirm any of the foregoing.
9.2 Except as specifically amended herein or waived hereby, the
Credit Agreement shall continue in full force and effect in accordance with its
original terms. Reference to this specific Amendment need not be made in the
Credit Agreement, the Notes, or any other instrument or document executed in
connection therewith, or in any certificate, letter or communication issued or
made pursuant to or with respect to the Credit Agreement, any reference in any
of such items to the Credit Agreement being sufficient to refer to the Credit
Agreement as amended hereby.
9.3 This Amendment may be executed in any number of counterparts,
and by the different parties on different counterpart signature pages, all of
which taken together shall constitute one and the same agreement. Any of the
parties hereto may execute this Amendment by signing any such counterpart and
each of such counterparts shall for all purposes be deemed to be an original.
This Amendment shall be governed by the internal laws of the State of Illinois.
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9.4 The Company agrees to pay all reasonable out-of-pocket costs
and expenses incurred by the Lenders in connection with the preparation,
execution and delivery of this Amendment and the documents and transactions
contemplated hereby, including the reasonable fees and expenses of counsel for
the Lenders with respect to the foregoing.
Dated as of August 25, 1997.
RENTX INDUSTRIES, INC.
By /s/ Xxxxxx X. Xxxxxx
----------------------------------
Its Executive Vice President
----------------------------------
NEWMANCO, INC.
By /s/ Xxxxxx X. Xxxxxx
----------------------------------
Its Executive Vice President
----------------------------------
XXXXX RENTAL SERVICE COMPANIES, INC.
By /s/ Xxxxxx X. Xxxxxx
----------------------------------
Its Executive Vice President
----------------------------------
Accepted and agreed to in Chicago, Illinois as of the date and year
last above written.
XXXXXX TRUST AND SAVINGS BANK
By /s/ ILLEGIBLE
----------------------------------
Its Vice President
LASALLE NATIONAL BANK
By /s/ ILLEGIBLE
----------------------------------
Its Vice President
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BANK ONE, ILLINOIS, N.A. (formerly
known as Bank One, Chicago, N.A.)
By /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Its Regional Vice President
----------------------------------
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EXHIBIT A
RENTX INDUSTRIES, INC.
REVOLVING CREDIT NOTE
Chicago, Illinois
$2,763,265.29 August _____, 1997
On the Revolving Credit Termination Date, for value received, the
undersigned, RENTX INDUSTRIES, INC., a Delaware corporation (the "Company"),
hereby promises to pay to the order of Xxxxxx Trust and Savings Bank (the
"Lender"), at the principal office of Xxxxxx Trust and Savings Bank in Chicago,
Illinois, the principal sum of (i) Two Million Seven Hundred Sixty Three
Thousand Two Hundred Sixty Five and 29/100 Dollars ($2,763,265.29), or (ii)
such lesser amount as may at the time of the maturity hereof, whether by
acceleration or otherwise, be the aggregate unpaid principal amount of all
Revolving Credit Loans owing from the Company to the Lender under the Revolving
Credit provided for in the Credit Agreement hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate
Portion" and "LIBOR Portions" as such terms are defined in that certain Credit
Agreement dated as of May 15, 1996, between the Company, Xxxxxx Trust and
Savings Bank, individually and as Agent thereunder, and the other Lenders which
are now or may from time to time hereafter become parties thereto (said Credit
Agreement, as the same may be amended, modified or restated from time to time,
being referred to herein as the "Credit Agreement") made and to be made to the
Company by the Lender under the Revolving Credit provided for under the Credit
Agreement, and the Company hereby promises to pay interest at the office
described above on each loan evidenced hereby at the rates and at the times and
in the manner specified therefor in the Credit Agreement.
Each loan made under the Revolving Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part of the
Domestic Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion,
the interest rate and Interest Period applicable thereto shall be endorsed by
the holder hereof on a schedule to this Note or recorded on the books and
records of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees that
in any action or proceeding instituted to collect or enforce collection of this
Note, the entries so endorsed on a schedule to this Note or recorded on the
books and records of the holder hereof shall, absent manifest error, be prima
facie evidence of the unpaid principal balance of this Note, the status of each
such loan from time to time as part of the Domestic Rate Portion or a LIBOR
Portion, and, in the case of any LIBOR Portion, the interest rate and Interest
Period applicable thereto.
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This Note is issued by the Company under the terms and provisions of
the Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary
prepayments may be made hereon, and certain prepayments are required to be made
hereon, all in the events, on the terms and with the effects provided in the
Credit Agreement. All capitalized terms used herein without definition shall
have the same meanings herein as such terms are defined in the Credit
Agreement.
This Note is issued in substitution for and in replacement of that
certain Revolving Credit Note of the Company dated October 28, 1996 payable to
the order of the Lender in the face principal amount of $2,142,857.14.
The Company hereby promises to pay all reasonable costs and expenses
(including attorneys' fees) suffered or incurred by the holder hereof in
collecting this Note or enforcing any rights in any collateral therefor. The
Company hereby waives presentment for payment and demand. THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
RENTX INDUSTRIES, INC.
By
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
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EXHIBIT B
RENTX INDUSTRIES, INC.
TERM NOTE
Chicago, Illinois
$19,342,857 August___, 1997
On the Term Credit Termination Date, for value received, the
undersigned, RENTX INDUSTRIES, INC., a Delaware corporation (the "Company"),
hereby promises to pay to the order of Xxxxxx Trust and Savings Bank (the
"Lender"), at the principal office of Xxxxxx Trust and Savings Bank in Chicago,
Illinois, the principal sum of (i) Nineteen Million Three Hundred Forty-two
Thousand Eight Hundred Fifty-Seven and no/100 Dollars ($19,342,857), or (ii)
such lesser amount as may at the time of the maturity hereof, whether by
acceleration or otherwise, be the aggregate unpaid principal amount of all Term
Loans owing from the Company to the Lender under the Term Credit provided for
in the Credit Agreement hereinafter mentioned.
This Note evidences loans constituting part of a "Domestic Rate
Portion" and "LIBOR Portions" as such terms are defined in that certain Credit
Agreement dated as of May 15, 1996, between the Company, Xxxxxx Trust and
Savings Bank, individually and as Agent thereunder, and the other Lenders which
are now or may from time to time hereafter become parties thereto (said Credit
Agreement, as the same may be amended, modified or restated from time to time,
being referred to herein as the "Credit Agreement") made and to be made to the
Company by the Lender under the Term Credit provided for under the Credit
Agreement, and the Company hereby promises to pay interest at the office
described above on each loan evidenced hereby at the rates and at the times and
in the manner specified therefor in the Credit Agreement.
Each loan made under the Term Credit provided for in the Credit
Agreement by the Lender to the Company against this Note, any repayment of
principal hereon, the status of each such loan from time to time as part of the
Domestic Rate Portion or a LIBOR Portion and, in the case of any LIBOR Portion,
the interest rate and Interest Period applicable thereto shall be endorsed by
the holder hereof on a schedule to this Note or recorded on the books and
records of the holder hereof (provided that such entries shall be endorsed on a
schedule to this Note prior to any negotiation hereof). The Company agrees
that in any action or proceeding instituted to collect or enforce collection of
this Note, the entries so endorsed on a schedule to this Note or recorded on
the books and records of the holder hereof shall, absent manifest error, be
prima facie evidence of the unpaid principal balance of this Note, the status
of each such loan from time to time as part of the Domestic Rate Portion or a
LIBOR Portion, and, in the case of any LIBOR Portion, the interest rate and
Interest Period applicable thereto.
This Note is issued by the Company under the terms and provisions of
the Credit Agreement and is secured by, among other things, the Collateral
Documents, and this Note and the holder hereof are entitled to all of the
benefits and security provided for thereby or referred to therein, to which
reference is hereby made for a statement thereof. This Note may be declared to
be, or be and become, due prior to its expressed maturity, voluntary
prepayments may be made hereon, and certain
114
prepayments are required to be made hereon, all in the events, on the terms and
with the effects provided in the Credit Agreement. All capitalized terms used
herein without definition shall have the same meanings herein as such terms are
defined in the Credit Agreement.
This Note is issued in substitution for and in replacement of that
certain Revolving Credit Note of the Company dated October 28, 1996 payable to
the order of the Lender in the face principal amount of $15,000,000.
The Company hereby promises to pay all reasonable costs and expenses
(including attorneys' fees) suffered or incurred by the holder hereof in
collecting this Note or enforcing any rights in any collateral therefor. The
Company hereby waives presentment for payment and demand. THIS NOTE SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE INTERNAL LAWS OF THE STATE
OF ILLINOIS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
RENTX INDUSTRIES, INC.
By
------------------------------------
Name:
----------------------------------
Title:
--------------------------------
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