-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rth7WctTX1ssA/tQvylNzmjoEZm14uaT+Dnfdper5AJZm3RiMIOfMRDptd02WcbB 4nRCjECyJv/6ZlLy18EyXQ== 0000950130-01-501665.txt : 20010516 0000950130-01-501665.hdr.sgml : 20010516 ACCESSION NUMBER: 0000950130-01-501665 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED RENTALS INC /DE CENTRAL INDEX KEY: 0001067701 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 061522496 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14387 FILM NUMBER: 1635962 BUSINESS ADDRESS: STREET 1: FOUR GREENWICH OFFICE PARK CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2036223131 MAIL ADDRESS: STREET 1: FOUR GREENWICH OFFICE PARK CITY: GREENWICH STATE: CT ZIP: 06830 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED RENTALS NORTH AMERICA INC CENTRAL INDEX KEY: 0001047166 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 061493538 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-13663 FILM NUMBER: 1635963 BUSINESS ADDRESS: STREET 1: FIVE GREENWICH OFFICE PARK CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2036223131 MAIL ADDRESS: STREET 1: FOUR GREENWICH OFFICE PARK CITY: GREENWICH STATE: CT ZIP: 06830 FORMER COMPANY: FORMER CONFORMED NAME: UNITED RENTALS INC DATE OF NAME CHANGE: 19971020 10-Q 1 d10q.txt QUARTERLY REPORT - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1-14387 United Rentals, Inc. Commission File No. 1-13663 United Rentals (North America), Inc. (Exact names of registrants as specified in their charters) Delaware 06-1522496 Delaware 06-1493538 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification Nos.) Five Greenwich Office Park, Greenwich, Connecticut 06830 (Address of principal executive offices) (Zip Code)
(203) 622-3131 (Registrants' telephone number, including area code) Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. X Yes No As of April 27, 2001, there were 70,089,240 shares of the United Rentals, Inc. common stock, $.01 par value, outstanding. There is no market for the common stock of United Rentals (North America), Inc., all outstanding shares of which are owned by United Rentals, Inc. This combined Form 10-Q is separately filed by (i) United Rentals, Inc. and (ii) United Rentals (North America), Inc. (which is a wholly owned subsidiary of United Rentals, Inc.). United Rentals (North America), Inc. meets the conditions set forth in general instruction H(1) (a) and (b) of Form 10-Q and is therefore filing this form with the reduced disclosure format permitted by such instruction. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- UNITED RENTALS, INC. UNITED RENTALS (NORTH AMERICA), INC. FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001 INDEX
Page ---- PART I FINANCIAL INFORMATION Item 1 Unaudited Consolidated Financial Statements United Rentals, Inc. Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000 (unaudited)................................... 4 United Rentals, Inc. Consolidated Statements of Operations for the Three Months Ended March 31, 2001 and 2000 (unaudited)...... 5 United Rentals, Inc. Consolidated Statement of Stockholders' Equity for the Three Months Ended March 31, 2001 (unaudited).... 6 United Rentals, Inc. Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2001 and 2000 (unaudited)...... 7 United Rentals (North America), Inc. Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000 (unaudited)............................... 8 United Rentals (North America), Inc. Consolidated Statements of Operations for the Three Months Ended March 31, 2001 and 2000 (unaudited).......... 9 United Rentals (North America), Inc. Consolidated Statement of Stockholder's Equity for the Three Months Ended March 31, 2001 (unaudited)..................................................... 10 United Rentals (North America), Inc. Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2001 and 2000 (unaudited).......... 11 Notes to Unaudited Consolidated Financial Statements............. 12 Management's Discussion and Analysis of Financial Condition and Item 2 Results of Operations........................................... 20 Item 3 Quantitative and Qualitative Disclosures about Market Risk....... 29 PART II OTHER INFORMATION Item 1 Legal Proceedings................................................ 30 Item 2 Changes in Securities and Use of Proceeds........................ 30 Item 6 Exhibits and Reports on Form 8-K................................. 31 Signatures....................................................... 32
Certain of the statements contained in this Report are forward looking in nature. Such statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," "on- track," "plan," or "anticipates" or the negative thereof or comparable terminology, or by discussions of strategy. You are cautioned that our business and operations are subject to a variety of risks and uncertainties and, consequently, our actual results may materially differ from those projected by any forward-looking statements. Certain of these factors are discussed in Item 2 of Part I of this Report under the caption "--Factors that May Influence Future Results and Accuracy of Forward-Looking Statements." We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made. UNITED RENTALS United Rentals is the largest equipment rental company in North America with more than 750 locations in 47 states, seven Canadian provinces and Mexico. We offer for rent over 600 different types of equipment to customers that include construction and industrial companies, manufacturers, utilities, municipalities, homeowners and others. In 2000, we served more than 1.2 million customers and completed over 8.4 million rental transactions. We have the largest fleet of rental equipment in the world, with over 500,000 units having an original purchase price of approximately $3.5 billion. Our fleet includes: . General construction and industrial equipment, such as backhoes, skid- steer loaders, forklifts, earth moving equipment, material handling equipment, compressors, pumps and generators; . Aerial work platforms, such as scissor lifts and boom lifts; . Traffic control equipment, such as barricades, cones, warning lights, message boards and pavement marking systems; . Trench safety equipment for below ground work, such as trench shields, aluminum hydraulic shoring systems, slide rails, crossing plates, construction lasers and line testing equipment; . Special event equipment, such as large tents, light towers and power units used for sporting, corporate and other events; and . General tools and light equipment, such as power washers, water pumps, heaters and hand tools. In addition to renting equipment, we sell used rental equipment, act as a dealer for new equipment and sell related merchandise, parts and service. Competitive Advantages We believe that we benefit from the following competitive advantages: Large and Diverse Rental Fleet. Our rental fleet is the largest and most comprehensive in the industry, which allows us to: . attract customers by providing "one-stop" shopping; . serve a diverse customer base and reduce our dependence on any particular customer or group of customers; and . serve customers that require substantial quantities or wide varieties of equipment. Significant Purchasing Power. We purchase large amounts of equipment, merchandise and other items, which enables us to negotiate favorable pricing, warranty and other terms with our vendors. Our purchasing power is further increased by our ongoing efforts to consolidate our vendor base. For example, we reduced the 1 number of our primary equipment suppliers from 111 to 28 in 2000. This reduction allowed us to lower our equipment purchase costs by approximately $150 million in 2000 and should enable us to save additional amounts in 2001. We expect to realize additional savings by consolidating our merchandise suppliers and negotiating more favorable warranty terms with key vendors. Operating Efficiencies. We generally group our branches into clusters of 10 to 30 locations that are in the same geographic area. Our information technology systems allow each branch to access all available equipment within a cluster. We believe that our cluster strategy produces significant operating efficiencies by enabling us to: (1) market equipment through all branches within a cluster, (2) cross-market equipment specialties of different branches within each cluster, and (3) reduce costs by consolidating functions that are common to our 755 branches, such as payroll, accounts payable and credit and collection, into 26 credit offices and three service centers. In the first quarter of 2001, approximately 9.8% of our rental revenue was attributable to equipment sharing among branches. Geographic and Customer Diversity. We have more than 750 branches in 47 states, seven Canadian provinces and Mexico and served more than 1.2 million customers in 2000. Our customers are diverse, ranging from Fortune 500 companies to small companies and homeowners, and in 2000 our top ten customers accounted for approximately 2% of our revenues. We believe that our geographic and customer diversity provide us with many advantages including: (1) enabling us to better serve National Account customers with multiple locations, (2) helping us achieve favorable resale prices by allowing us to access used equipment resale markets across the country, (3) reducing our dependence on any particular customer and (4) reducing the impact that fluctuations in regional economic conditions have on our overall financial performance. Strong and Motivated Branch Management. Each of our branches has a full-time branch manager who is supervised by one of our 64 district managers and nine regional vice presidents. We believe that our managers are among the most knowledgeable and experienced in the industry, and we empower them--within budgetary guidelines--to make day-to-day decisions concerning staffing, pricing, equipment purchasing and other branch matters. Management closely tracks branch, district and regional performance with extensive systems and controls, including performance benchmarks and detailed monthly operating reviews. We promote equipment sharing among branches by linking the compensation of branch managers and other personnel to their branch's financial performance and return on assets. Information Technology Systems. Our information technology systems facilitate our ability to make rapid and informed decisions, respond quickly to changing market conditions, and share equipment among branches. These systems allow: (1) management to obtain a wide range of operating and financial data, (2) branch personnel to access and manage branch level data, such as customer requirements, equipment availability and maintenance histories, and (3) customers to access their accounts online. These systems promote equipment sharing among branches by enabling branch personnel to locate needed equipment within a geographic region, determine its closest location and arrange for its delivery to a customer's work site. We have an in-house team of approximately 100 information technology specialists that supports our systems and extends them to new locations. National Account Program. Our National Account sales force is dedicated to establishing and expanding relationships with larger companies, particularly those with a national or multi-regional presence. We offer our National Account customers the benefits of a consistent level of service across North America and a single point of contact for all their equipment needs. Our National Account team currently includes 39 professionals serving over 1,400 National Account customers, including more than 200 new accounts added in the first quarter of 2001. We estimate that our revenues from National Account customers will increase to approximately $350.0 million in 2001 from $245.0 million in 2000. Risk Management and Safety Programs. We place great emphasis on risk reduction and safety and believe that we have one of the most comprehensive risk management and safety programs in the industry. Our risk management department is staffed by 43 experienced professionals and is responsible for implementing our 2 safety programs and procedures, developing our employee and customer training programs, and managing any claims against us. Industry Background The U.S. equipment rental industry has grown from approximately $6.5 billion in annual rental revenues in 1990 to over $25 billion in 2000, representing a compound annual growth rate of approximately 14.5%. This information is based on data provided by Manfredi & Associates, Inc. a leading industry consultant. We believe that the principal driver of growth in the equipment rental industry, in addition to general economic expansion, has been the increasing recognition by equipment users of the many advantages that equipment rental may offer compared with ownership. They recognize that by renting they can: . avoid the large capital investment required for equipment purchases; . access a broad selection of equipment and select the equipment best suited for each particular job; . reduce storage and maintenance costs; and . access the latest technology without investing in new equipment. While the construction industry has to date been the principal user of rental equipment, industrial companies, utilities and others are increasingly using rental equipment for plant maintenance, plant turnarounds and other functions requiring the periodic use of equipment. The market for rental equipment is also benefiting from increased government funding for infrastructure projects, such as funding under the U.S. Transportation Equity Act for the 21st Century ("TEA-21") and the Aviation Investment and Reform Act for the 21st Century ("AIR-21"). TEA-21 earmarks $175 billion for highway construction and $42 billion for transit spending over the 1998-2003 fiscal period, a 40% increase over the prior six-year period. AIR-21 provides for $40 billion in construction spending over three years to support the FAA's airport improvement programs. 3 UNITED RENTALS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, December 31, 2001 2000 ---------------- ------------------ (In thousands, except share data) ASSETS Cash and cash equivalents................. $ 26,202 $ 34,384 Accounts receivable, net of allowance for doubtful accounts of $53,444 in 2001 and $55,624 in 2000.......................... 420,579 469,594 Inventory................................. 127,829 133,380 Prepaid expenses and other assets......... 167,807 104,493 Rental equipment, net..................... 1,719,676 1,732,835 Property and equipment, net............... 428,125 422,239 Intangible assets, net of accumulated amortization of $123,385 in 2001 and $108,066 in 2000......................... 2,221,894 2,227,008 ---------------- ---------------- $ 5,112,112 $ 5,123,933 ================ ================ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Accounts payable........................ $ 205,864 $ 260,155 Debt.................................... 2,751,190 2,675,367 Deferred taxes.......................... 214,784 206,243 Accrued expenses and other liabilities.. 125,850 136,225 ---------------- ---------------- Total liabilities..................... 3,297,688 3,277,990 Commitments and contingencies Company-obligated mandatorily redeemable convertible preferred securities of a subsidiary trust....................... 300,000 300,000 Stockholders' equity: Preferred stock--$.01 par value, 5,000,000 shares authorized:........... Series A perpetual convertible preferred stock--$300,000 liquidation preference, 300,000 shares issued and outstanding........................... 3 3 Series B perpetual convertible preferred stock--$150,000 liquidation preference, 150,000 shares issued and outstanding........................... 2 2 Common stock--$.01 par value, 500,000,000 shares authorized, 69,813,652 shares issued and outstanding in 2001 and 71,065,707 in 2000................................... 698 711 Additional paid-in capital.............. 1,173,419 1,196,324 Retained earnings....................... 359,262 355,850 Accumulated other comprehensive loss.... (18,960) (6,947) ---------------- ---------------- Total stockholders' equity............ 1,514,424 1,545,943 ---------------- ---------------- $ 5,112,112 $ 5,123,933 ================ ================
The accompanying notes are an integral part of these consolidated financial statements. 4 UNITED RENTALS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, -------------------- 2001 2000 --------- --------- (In thousands, except per share data) Revenues: Equipment rentals...................................... $ 461,382 $ 400,098 Sales of rental equipment.............................. 39,122 70,332 Sales of equipment and merchandise and other revenues.. 118,600 108,532 --------- --------- Total revenues.......................................... 619,104 578,962 Cost of revenues: Cost of equipment rentals, excluding depreciation...... 230,033 174,300 Depreciation of rental equipment....................... 76,801 73,503 Cost of rental equipment sales......................... 23,076 41,086 Cost of equipment and merchandise sales and other operating costs....................................... 86,627 84,089 --------- --------- Total cost of revenues.................................. 416,537 372,978 --------- --------- Gross profit............................................ 202,567 205,984 Selling, general and administrative expenses............ 108,893 101,850 Non-rental depreciation and amortization................ 26,107 20,018 --------- --------- Operating income........................................ 67,567 84,116 Interest expense........................................ 57,530 49,683 Preferred dividends of a subsidiary trust............... 4,875 4,875 Other (income) expense, net............................. (670) (204) --------- --------- Income before provision for income taxes................ 5,832 29,762 Provision for income taxes.............................. 2,420 12,351 --------- --------- Net income.............................................. $ 3,412 $ 17,411 ========= ========= Basic earnings per share................................ $ 0.05 $ 0.24 ========= ========= Diluted earnings per share.............................. $ 0.04 $ 0.19 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 5 UNITED RENTALS, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
Series A Series B Perpetual Convertible Perpetual Convertible Preferred Stock Preferred Stock Common Stock ----------------------- --------------------- ------------------ Additional Number of Number of Number of Paid-in Retained Comprehensive Shares Amount Shares Amount Shares Amount Capital Earnings Loss ------------ --------- ------------ --------- ----------- ------ ---------- -------- ------------- (In thousands, except share data) Balance, December 31, 2000........ 300,000 $3 150,000 $ 2 71,065,707 $711 $1,196,324 $355,850 Comprehensive income: Net income...... 3,412 $ 3,412 Other comprehensive loss: Foreign currency translation adjustments.... (12,013) -------- Comprehensive loss............ $ (8,601) ======== Issuance of common stock.... 2,770 50 Exercise of common stock options... 15,775 208 Shares repurchased and retired......... (1,270,600) (13) (23,163) ------------ -------- ------------ -------- ----------- ---- ---------- -------- Balance, March 31, 2001........ 300,000 $ 3 150,000 $ 2 69,813,652 $698 $1,173,419 $359,262 ============ ======== ============ ======== =========== ==== ========== ======== Accumulated Other Comprehensive Loss ------------- Balance, December 31, 2000........ $ (6,947) Comprehensive income: Net income...... Other comprehensive loss: Foreign currency translation adjustments.... (12,013) Comprehensive loss............ Issuance of common stock.... Exercise of common stock options... Shares repurchased and retired......... ------------- Balance, March 31, 2001........ $(18,960) =============
The accompanying notes are an integral part of these consolidated financial statements. 6 UNITED RENTALS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, -------------------- 2001 2000 --------- --------- (In thousands) Cash Flows From Operating Activities: Net income.............................................. $ 3,412 $ 17,411 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.......................... 102,908 93,521 Gain on sales of rental equipment...................... (16,046) (29,246) Deferred taxes......................................... 2,105 3,088 Changes in operating assets and liabilities: Accounts receivable.................................... 49,467 50,331 Inventory.............................................. 6,096 (10,787) Prepaid expenses and other assets...................... (38,752) (16,942) Accounts payable....................................... (54,583) 59,315 Accrued expenses and other liabilities................. 1,460 (73,125) --------- --------- Net cash provided by operating activities.......... 56,067 93,566 Cash Flows From Investing Activities: Purchases of rental equipment........................... (98,347) (193,020) Purchases of property and equipment..................... (16,722) (30,848) Proceeds from sales of rental equipment................. 39,122 70,332 In-process acquisition costs............................ (719) (1,926) Payments of contingent purchase price................... (6,403) Purchases of other companies............................ (27,695) (128,651) --------- --------- Net cash used in investing activities.............. (104,361) (290,516) Cash Flows From Financing Activities: Proceeds from debt...................................... 95,155 231,278 Payments of debt........................................ (19,645) (34,476) Proceeds from sale-leaseback............................ 12,000 Payments of financing costs............................. (381) (86) Proceeds from the exercise of common stock options...... 172 95 Shares repurchased and retired.......................... (23,176) --------- --------- Net cash provided by financing activities.......... 52,125 208,811 Effect of foreign exchange rates........................ (12,013) (770) --------- --------- Net increase (decrease) in cash and cash equivalents.... (8,182) 11,091 Cash and cash equivalents at beginning of period........ 34,384 23,811 --------- --------- Cash and cash equivalents at end of period.............. $ 26,202 $ 34,902 ========= ========= Supplemental disclosure of cash flow information: Cash paid for interest.................................. $ 62,604 $ 55,154 Cash paid for income taxes, net of refunds.............. $ 765 $ 35,900 Supplemental disclosure of non-cash investing and financing activities: The Company acquired the net assets and assumed certain liabilities of other companies as follows: Assets, net of cash acquired........................... $ 5,457 $ 192,580 Liabilities assumed.................................... (1,036) (63,929) Less: Amounts paid through issuance of debt................ (600) --------- --------- 3,821 128,651 Due to seller payments................................. 23,874 --------- --------- Net cash paid...................................... $ 27,695 $ 128,651 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 7 UNITED RENTALS (NORTH AMERICA), INC. CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, 2001 December 31, 2000 ---------------- ------------------ (In thousands, except share data) ASSETS Cash and cash equivalents................. $ 26,202 $ 34,384 Accounts receivable, net of allowance for doubtful accounts of $53,444 in 2001 and $55,624 in 2000.......................... 420,579 469,594 Inventory................................. 127,829 133,380 Prepaid expenses and other assets......... 167,807 104,493 Rental equipment, net..................... 1,719,676 1,732,835 Property and equipment, net............... 393,513 387,432 Intangible assets, net of accumulated am- ortization of $123,385 in 2001 and $108,066 in 2000......................... 2,221,894 2,227,008 ---------------- ---------------- $ 5,077,500 $ 5,089,126 ================ ================ LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities: Accounts payable........................ $ 205,864 $ 260,155 Debt.................................... 2,751,190 2,675,367 Deferred taxes.......................... 214,784 206,243 Accrued expenses and other liabilities.. 109,894 119,172 ---------------- ---------------- Total liabilities..................... 3,281,732 3,260,937 Commitments and contingencies Stockholder's equity: Common stock--$0.01 par value, 3,000 shares authorized, 1,000 shares issued and outstanding........................ Additional paid-in capital.............. 1,507,833 1,507,661 Retained earnings....................... 306,895 327,475 Accumulated other comprehensive loss.... (18,960) (6,947) ---------------- ---------------- Total stockholder's equity............ 1,795,768 1,828,189 ---------------- ---------------- $ 5,077,500 $ 5,089,126 ================ ================
The accompanying notes are an integral part of these consolidated financial statements. 8 UNITED RENTALS (NORTH AMERICA), INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, -------------------- 2001 2000 --------- --------- (In thousands) Revenues: Equipment rentals...................................... $461,382 $ 400,098 Sales of rental equipment.............................. 39,122 70,332 Sales of equipment and merchandise and other revenues.. 118,600 108,532 --------- --------- Total revenues.......................................... 619,104 578,962 Cost of revenues: Cost of equipment rentals, excluding depreciation...... 230,033 174,300 Depreciation of rental equipment....................... 76,801 73,503 Cost of rental equipment sales......................... 23,076 41,086 Cost of equipment and merchandise sales and other operating costs....................................... 86,627 84,089 --------- --------- Total cost of revenues.................................. 416,537 372,978 --------- --------- Gross profit............................................ 202,567 205,984 Selling, general and administrative expenses............ 108,893 101,850 Non-rental depreciation and amortization................ 24,043 18,317 --------- --------- Operating income........................................ 69,631 85,817 Interest expense........................................ 57,530 49,683 Other (income) expense, net............................. (670) (204) --------- --------- Income before provision for income taxes ............... 12,771 36,338 Provision for income taxes.............................. 5,300 15,129 --------- --------- Net income ............................................. $ 7,471 $ 21,209 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 9 UNITED RENTALS (NORTH AMERICA), INC. CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY (Unaudited)
Common Stock Accumulated ---------------- Additional Other Number Paid-In Retained Comprehensive Comprehensive of Shares Amount Capital Earnings Loss Loss --------- ------ ---------- -------- ------------- ------------- (In thousands, except share data) Balance, December 31, 2000................... 1,000 $1,507,661 $327,475 $(6,947) Comprehensive income: Net income............. 7,471 $ 7,471 Other comprehensive loss: Foreign currency translation adjustments.......... (12,013) (12,013) -------- Comprehensive loss...... $ (4,542) ======== Contributed capital from parent................. 172 Dividend distributions to parent.............. (28,051) ----- ---------- -------- -------- Balance, March 31, 2001................... 1,000 $1,507,833 $306,895 $(18,960) ===== ========== ======== ========
The accompanying notes are an integral part of these consolidated financial statements. 10 UNITED RENTALS (NORTH AMERICA), INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, ------------------- 2001 2000 -------- --------- (In thousands) Cash Flows From Operating Activities: Net income........................................... $ 7,471 $ 21,209 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization....................... 100,844 91,820 Gain on sales of rental equipment................... (16,046) (29,246) Deferred taxes...................................... 2,105 3,088 Changes in operating assets and liabilities: Accounts receivable................................. 49,467 50,331 Inventory........................................... 6,096 (10,787) Prepaid expenses and other assets................... (39,323) (17,892) Accounts payable.................................... (54,583) 24,002 Accrued expenses and other liabilities.............. 2,471 (42,472) -------- --------- Net cash provided by operating activities......... 58,502 90,053 Cash Flows From Investing Activities: Purchases of rental equipment........................ (98,347) (193,020) Purchases of property and equipment.................. (15,001) (24,386) Proceeds from sales of rental equipment.............. 39,122 70,332 Payments of contingent purchase price................ (6,403) Purchases of other companies......................... (27,695) (128,651) -------- --------- Net cash used in investing activities............. (101,921) (282,128) Cash Flows From Financing Activities: Proceeds from debt................................... 95,155 231,278 Payments of debt..................................... (19,645) (34,476) Proceeds from sale-leaseback......................... 12,000 Payments of financing costs.......................... (381) (86) Capital contributions by parent...................... 172 95 Dividend distributions to parent..................... (28,051) (4,875) -------- --------- Net cash provided by financing activities......... 47,250 203,936 Effect of foreign exchange rates..................... (12,013) (770) -------- --------- Net increase (decrease) in cash and cash equivalents......................................... (8,182) 11,091 Cash and cash equivalents at beginning of period..... 34,384 23,811 -------- --------- Cash and cash equivalents at end of period........... $ 26,202 $ 34,902 ======== ========= Supplemental disclosure of cash flow information: Cash paid for interest............................... $ 57,729 $ 50,279 Cash paid for income taxes, net of refunds........... $ 765 $ 35,900 Supplemental disclosure of non-cash investing and financing activities: The Company acquired the net assets and assumed certain liabilities of other companies as follows: Assets, net of cash acquired........................ $ 5,457 $ 192,580 Liabilities assumed................................. (1,036) (63,929) Less: Amounts paid through issuance of debt............. (600) -------- --------- 3,821 128,651 Due to seller payments.............................. 23,874 -------- --------- --- Net cash paid................................... $ 27,695 $ 128,651 ======== =========
The accompanying notes are an integral part of these consolidated financial statements. 11 UNITED RENTALS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation General United Rentals, Inc., is principally a holding company ("Holdings" or the "Company") and conducts its operations primarily through its wholly owned subsidiary United Rentals (North America), Inc. ("URI") and subsidiaries of URI. Separate footnote information is not presented for the financial statements of URI and subsidiaries as that information is substantially equivalent to that presented below. Earnings per share data is not provided for the operating results of URI and its subsidiaries as they are wholly owned subsidiaries of Holdings. The Consolidated Financial Statements of the Company included herein are unaudited and, in the opinion of management, such financial statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the results of the interim periods presented. Interim financial statements do not require all disclosures normally presented in year-end financial statements, and, accordingly, certain disclosures have been omitted. Results of operations for the three month period ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. The Consolidated Financial Statements included herein should be read in conjunction with the Company's Consolidated Financial Statements and related Notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. Impact of Recently Issued Accounting Standards In June 1999, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 137, "Accounting for Derivative Instruments and Hedging Activities--Deferral of the Effective Date of FASB Statement No. 133". This standard delays the effective date of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", for one year, to fiscal years beginning after June 15, 2000. SFAS No. 133 establishes a new model for accounting for derivatives and hedging activities. In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities". This standard amends SFAS No. 133 and addresses a limited number of issues causing implementation difficulties. The Company adopted SFAS No. 133 on January 1, 2001 and it did not have a material effect on the Company's consolidated financial position or results of operations. In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities--a replacement of FASB Statement No. 125". This standard revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures. This standard is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001 and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The adoption of SFAS No. 140 is not expected to have a material effect on the Company's consolidated financial position or results of operations. Reclassifications Certain prior year balances have been reclassified to conform to the 2001 presentation. 2. Acquisitions During the three months ended March 31, 2001 and the year ended December 31, 2000, the Company completed two acquisitions and 53 acquisitions, respectively, that were accounted for as purchases. The results of operations of the businesses acquired in these acquisitions have been included in the Company's results of operations from their respective acquisition dates. 12 UNITED RENTALS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) The purchase prices for such acquisitions have been allocated to the assets acquired and liabilities assumed based on their respective fair values at their respective acquisition dates. However, the Company has not completed its valuation of all of its purchases and, accordingly, the purchase price allocations are subject to change when additional information concerning asset and liability valuations are completed. The following table summarizes, on an unaudited pro forma basis, the results of operations of the Company for the three months ended March 31, 2000 as though each acquisition which was consummated during the period January 1, 2000 to March 31, 2001 as mentioned above and in Note 3 to the Notes to Consolidated Financial Statements included in the Company's 2000 Annual Report on Form 10-K was made on January 1, 2000 (in thousands, except per share data): Revenues......................................................... $640,403 Net income....................................................... 18,228 Basic earnings per share......................................... $ 0.25 Diluted earnings per share....................................... $ 0.19
Since the acquisitions made during the three months ended March 31, 2001 did not have a material impact on the Company's pro forma results of operations, the pro forma results of operations for the first quarter of 2001 are not shown. The unaudited pro forma results are based upon certain assumptions and estimates, which are subject to change. These results are not necessarily indicative of the actual results of operations that might have occurred, nor are they necessarily indicative of expected results in the future. 3. Earnings Per Share The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):
Three Months Ended March 31, --------------- 2001 2000 ------- ------- Numerator: Net income.................................................... $ 3,412 $17,411 Denominator: Denominator for basic earnings per share-- weighted-average shares...................................... 70,731 72,059 Effect of dilutive securities: Employee stock options...................................... 1,315 1,234 Warrants.................................................... 2,563 2,558 Series A perpetual convertible preferred stock.............. 12,000 12,000 Series B perpetual convertible preferred stock.............. 5,000 5,000 ------- ------- Denominator for diluted earnings per share-- adjusted weighted-average shares............................. 91,609 92,851 ======= ======= Basic earnings per share........................................ $ 0.05 $ 0.24 ======= ======= Diluted earnings per share...................................... $ 0.04 $ 0.19 ======= =======
13 UNITED RENTALS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) 4. Condensed Consolidating Financial Information of Guarantor Subsidiaries Certain indebtedness of URI is guaranteed by URI's United States subsidiaries (the "guarantor subsidiaries") but is not guaranteed by URI's foreign subsidiaries (the "non-guarantor subsidiaries"). The guarantor subsidiaries are all wholly owned and the guarantees are made on a joint and several basis and are full and unconditional (subject to subordination provisions and subject to a standard limitation which provides that the maximum amount guaranteed by each guarantor will not exceed the maximum amount that can be guaranteed without making the guarantee void under fraudulent conveyance laws). Pursuant to a legal reorganization of URI, certain guarantor subsidiaries and subsidiaries of URI were combined for the purpose of simplifying the Company's legal entity structure. As a result of this legal reorganization, prior period amounts have been reclassified to conform to the current year presentation. Separate consolidated financial statements of the guarantor subsidiaries have not been presented because management believes such information would not be material to investors. However, condensed consolidating financial information as of March 31, 2001 and December 31, 2000 and for the three months ended March 31, 2001 and 2000, are presented. The condensed consolidating financial information of URI and its subsidiaries are as follows: CONDENSED CONSOLIDATING BALANCE SHEET
March 31, 2001 --------------------------------------------------------------- Non- Guarantor Guarantor Consolidated URI Subsidiaries Subsidiaries Eliminations Total ---------- ------------ ------------ ------------ ------------ (In thousands) ASSETS Cash and cash equiva- lents.................. $ 23,519 $ 2,683 $ 26,202 Accounts receivable, net.................... $ 201,538 121,075 97,966 420,579 Intercompany receivable (payable).............. 267,929 (9,603) (258,326) Inventory............... 55,796 66,878 5,155 127,829 Prepaid expenses and other assets........... 50,848 115,725 1,234 167,807 Rental equipment, net... 856,703 741,287 121,686 1,719,676 Property and equipment, net.................... 141,834 235,758 15,921 393,513 Investment in subsidiar- ies.................... 2,280,195 $(2,280,195) Intangible assets, net.. 950,681 1,144,042 127,171 2,221,894 ---------- ---------- --------- ----------- ---------- $4,805,524 $2,438,681 $ 113,490 $(2,280,195) $5,077,500 ========== ========== ========= =========== ========== LIABILITIES AND STOCK- HOLDER'S EQUITY Liabilities: Accounts payable....... $ 36,566 $ 160,345 $ 8,953 $ 205,864 Debt................... 2,726,313 2,921 21,956 2,751,190 Deferred income tax- es.................... 214,734 50 214,784 Accrued expenses and other liabilities..... 32,606 63,647 13,641 109,894 ---------- ---------- --------- ----------- ---------- Total liabilities.... 3,010,219 226,963 44,550 3,281,732 Commitments and contin- gencies Stockholder's equity: Common stock........... Additional paid-in capital............... 1,488,410 1,830,667 65,662 $(1,876,906) 1,507,833 Retained earnings...... 306,895 381,051 22,238 (403,289) 306,895 Accumulated other com- prehensive income..... (18,960) (18,960) ---------- ---------- --------- ----------- ---------- Total stockholder's equity.............. 1,795,305 2,211,718 68,940 2,280,195 1,795,768 ---------- ---------- --------- ----------- ---------- $4,805,524 $2,438,681 $ 113,490 $ 2,280,195 $5,077,500 ========== ========== ========= =========== ==========
14 UNITED RENTALS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2000 --------------------------------------------------------------- Non- Guarantor Guarantor Consolidated URI Subsidiaries Subsidiaries Eliminations Total ---------- ------------ ------------ ------------ ------------ (In thousands) Assets Cash and cash equiva- lents.................. $ 29,733 $ 4,651 $ 34,384 Accounts receivable, net.................... $ 216,444 143,295 109,855 469,594 Intercompany receivable (payable).............. 319,423 (55,187) (264,236) Inventory............... 54,022 73,979 5,379 133,380 Prepaid expenses and other assets........... 28,263 75,633 597 104,493 Rental equipment, net... 837,972 766,219 128,644 1,732,835 Property and equipment, net.................... 139,871 231,195 16,366 387,432 Investment in subsidiar- ies.................... 2,257,692 $(2,257,692) Intangible assets, net.. 960,444 1,132,438 134,126 2,227,008 ---------- ---------- --------- ----------- ---------- $4,814,131 $2,397,305 $ 135,382 $(2,257,692) $5,089,126 ========== ========== ========= =========== ========== Liabilities and Stock- holder's Equity Liabilities: Accounts payable....... $ 78,623 $ 165,677 $ 15,855 $ 260,155 Debt................... 2,647,144 3,484 24,739 2,675,367 Deferred income tax- es.................... 186,091 20,702 (550) 206,243 Accrued expenses and other liabilities..... 86,560 18,862 13,750 119,172 ---------- ---------- --------- ----------- ---------- Total liabilities.... 2,998,418 208,725 53,794 3,260,937 Commitments and contin- gencies Stockholder's equity: Common stock........... Additional paid-in capital................ 1,488,238 1,830,500 65,657 $(1,876,734) 1,507,661 Retained earnings...... 327,475 358,080 22,878 (380,958) 327,475 Accumulated other com- prehensive loss........ (6,947) (6,947) ---------- ---------- --------- ----------- ---------- Total stockholder's equity.............. 1,815,713 2,188,580 81,588 (2,257,692) 1,828,189 ---------- ---------- --------- ----------- ---------- $4,814,131 $2,397,305 $ 135,382 $(2,257,692) $5,089,126 ========== ========== ========= =========== ==========
15 UNITED RENTALS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2001 ------------------------------------------------------------- Non- Guarantor Guarantor Consolidated URI Subsidiaries Subsidiaries Eliminations Total -------- ------------ ------------ ------------ ------------ (In thousands) Revenues: Equipment rentals..... $207,473 $233,354 $20,555 $461,382 Sales of rental equip- ment................. 28,195 8,059 2,868 39,122 Sales of equipment and merchandise and other revenues............. 56,541 54,650 7,409 118,600 -------- -------- ------- -------- -------- Total revenues.......... 292,209 296,063 30,832 619,104 Cost of revenues: Cost of equipment rentals, excluding depreciation......... 98,811 119,675 11,547 230,033 Depreciation of rental equipment............ 37,411 34,296 5,094 76,801 Cost of rental equip- ment sales........... 16,584 4,902 1,590 23,076 Cost of equipment and merchandise sales and other operating costs................ 42,672 38,508 5,447 86,627 -------- -------- ------- -------- -------- Total cost of revenues.. 195,478 197,381 23,678 416,537 -------- -------- ------- -------- -------- Gross profit............ 96,731 98,682 7,154 202,567 Selling, general and ad- ministrative expenses.. 48,249 54,608 6,036 108,893 Non-rental depreciation and amortization....... 10,837 11,756 1,450 24,043 -------- -------- ------- -------- -------- Operating income........ 37,645 32,318 (332) 69,631 Interest expense........ 56,847 436 247 57,530 Other (income) expense, net.................... 6,200 (7,385) 515 (670) -------- -------- ------- -------- -------- Income (loss) before provision for income taxes.................. (25,402) 39,267 (1,094) 12,771 Provision (benefit) for income taxes........... (10,542) 16,296 (454) 5,300 -------- -------- ------- -------- -------- Income (loss) before eq- uity in net earnings of subsidiaries........ (14,860) 22,971 (640) $(22,331) (14,860) Equity in net earnings of subsidiaries........ 22,331 22,331 -------- -------- ------- -------- -------- Net income (loss)....... $ 7,471 $ 22,971 $ (640) $(22,331) $ 7,471 ======== ======== ======= ======== ========
16 UNITED RENTALS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 2000 ------------------------------------------------------------- Non- Guarantor Guarantor Consolidated URI Subsidiaries Subsidiaries Eliminations Total --- ------------ ------------ ------------ ------------ (In thousands) Revenues: Equipment rentals..... $172,673 $205,962 $21,463 $400,098 Sales of rental equip- ment................. 29,511 34,345 6,476 70,332 Sales of equipment and merchandise and other revenues............. 57,426 43,681 7,425 108,532 -------- -------- ------- -------- -------- Total revenues.......... 259,610 283,988 35,364 578,962 Cost of revenues: Cost of equipment rentals, excluding depreciation......... 73,121 89,950 11,229 174,300 Depreciation of rental equipment............ 35,385 33,575 4,543 73,503 Cost of rental equip- ment sales........... 18,652 18,130 4,304 41,086 Cost of equipment and merchandise sales and other operating costs................ 45,876 31,994 6,219 84,089 -------- -------- ------- -------- -------- Total cost of revenues.. 173,034 173,649 26,295 372,978 -------- -------- ------- -------- -------- Gross profit............ 86,576 110,339 9,069 205,984 Selling, general and ad- ministrative expenses.. 41,502 55,021 5,327 101,850 Non-rental depreciation and amortization....... 9,020 8,024 1,273 18,317 -------- -------- ------- -------- -------- Operating income........ 36,054 47,294 2,469 85,817 Interest expense........ 48,822 41 820 49,683 Other (income) expense, net.................... 1,774 (1,725) (253) (204) -------- -------- ------- -------- -------- Income (loss) before provision for income taxes.................. (14,542) 48,978 1,902 36,338 Provision (benefit) for income taxes........... (6,035) 20,374 790 15,129 -------- -------- ------- -------- -------- Income (loss) before equity in net earnings of subsidiaries........ (8,507) 28,604 1,112 $(29,716) (8,507) Equity in net earnings of subsidiaries........ 29,716 29,716 -------- -------- ------- -------- -------- Net income.............. $ 21,209 $ 28,604 $ 1,112 $(29,716) $ 21,209 ======== ======== ======= ======== ========
17 UNITED RENTALS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) CONDENSED CONSOLIDATING CASH FLOW INFORMATION
For the Three Months Ended March 31, 2001 --------------------------------------------------------------- Guarantor Non-guarantor URI Subsidiaries Subsidiaries Eliminations Consolidated -------- ------------- ------------- ------------ ------------ (In thousands) Net cash provided by operating activities... $ 21,233 $ 20,403 $ 16,866 $ 58,502 Cash flows from investing activities: Purchases of rental equipment............. (66,761) (26,650) (4,936) (98,347) Purchases of property and equipment......... (6,188) (7,482) (1,331) (15,001) Proceeds from sales of rental equipment...... 28,195 8,059 2,868 39,122 Purchases of other companies............. (27,056) (639) (27,695) -------- -------- -------- ------ --------- Net cash used in investing activities.......... (71,810) (26,073) (4,038) (101,921) Cash flows from financing activities: Proceeds from debt..... 95,144 11 95,155 Payments of debt....... (16,307) (555) (2,783) (19,645) Payments of financing costs................. (381) (381) Capital contributions by parent............. 172 172 Dividend distributions to parent............. (28,051) (28,051) -------- -------- -------- ------ --------- Net cash provided by (used in) financing activities.......... 50,577 (544) (2,783) 47,250 Effect of foreign exchange rates........ (12,013) (12,013) -------- -------- -------- ------ --------- Net decrease in cash and cash equivalents........... (6,214) (1,968) (8,182) Cash and cash equivalents at beginning of period... 29,733 4,651 34,384 -------- -------- -------- ------ --------- Cash and cash equivalents at end of period................ $ $ 23,519 $ 2,683 $ 26,202 ======== ======== ======== ====== ========= Supplemental disclosure of cash flow information: Cash paid for interest............ $ 53,026 $ 4,133 $ 570 $ 57,729 Cash paid for income taxes, net of refunds............. $ 538 $ 227 $ 765 Supplemental disclosure of non-cash investing and financing activities: The Company acquired the net assets and assumed certain liabilities of other companies as follows: Assets, net of cash acquired.............. $ 4,624 $ 833 $ 5,457 Liabilities assumed.... (842) (194) (1,036) Less: Amounts paid through issuance of debt.... (600) (600) -------- -------- -------- ------ --------- 3,182 639 3,821 Due to seller payments.............. 23,874 23,874 -------- -------- -------- ------ --------- Net cash paid........ $ 27,056 $ 639 $ 27,695 ======== ======== ======== ====== =========
18 UNITED RENTALS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(Continued) CONDENSED CONSOLIDATING CASH FLOW INFORMATION
For the Three Months Ended March 31, 2000 ---------------------------------------------------------------- Guarantor Non-guarantor URI Subsidiaries Subsidiaries Eliminations Consolidated --------- ------------- ------------- ------------ ------------ (In thousands) Net cash provided by operating activities... $ 71,328 $ 16,502 $ 2,223 $ 90,053 Cash flows from investing activities: Purchases of rental equipment............. (147,683) (38,799) (6,538) (193,020) Purchases of property and equipment......... (17,842) (5,582) (962) (24,386) Proceeds from sales of rental equipment...... 29,511 34,345 6,476 70,332 Payments of contingent purchase price........ (803) (5,600) (6,403) Purchases of other companies............. (128,651) (128,651) --------- -------- ------- --- --------- --- Net cash used in investing activities.......... (265,468) (15,636) (1,024) (282,128) Cash flows from financing activities: Proceeds from debt..... 211,625 19,653 231,278 Payments of debt....... (28,308) (4,145) (2,023) (34,476) Proceeds from sale- leaseback............. 12,000 12,000 Payments of financing costs................. (86) (86) Capital contributions by parent............. 95 95 Dividend distributions to parent............. (4,875) (4,875) --------- -------- ------- --- --------- Net cash provided by (used in) financing activities.......... 190,451 15,508 (2,023) 203,936 Effect of foreign exchange rates........ (770) (770) --------- -------- ------- --- --------- Net increase (decrease) in cash and cash equivalents...... (3,689) 16,374 (1,594) 11,091 Cash and cash equivalents at beginning of period... 3,689 16,414 3,708 23,811 --------- -------- ------- --- --------- Cash and cash equivalents at end of period................ $ $ 32,788 $ 2,114 $ 34,902 ========= ======== ======= === ========= Supplemental disclosure of cash flow information: Cash paid for interest............ $ 49,479 $ 194 $ 606 $ 50,279 Cash paid for income taxes............... $ 29,702 $ 6,198 $ 35,900 Supplemental disclosure of non-cash investing and financing activities: The Company acquired the net assets and assumed certain liabilities of other companies as follows: Assets, net of cash acquired.............. $ 192,580 $ 192,580 Liabilities assumed.... (63,929) (63,929) --------- -------- ------- --- --------- Net cash paid...... $ 128,651 $ 128,651 ========= ======== ======= === =========
6. Subsequent Event In April 2001, URI issued $450.0 million aggregate principal amount of 10 3/4% senior notes. Concurrent with the issuance of the senior notes, URI entered into a new senior secured credit facility. The new credit facility is comprised of a $750.0 million term loan and a $750.0 million revolving credit facility. The proceeds from the new senior notes and new senior secured credit facility were used to refinance outstanding secured indebtedness of approximately $1,664.5 million and obligations under a synthetic lease of $31.2 million. For additional information concerning these transactions, see "--Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations--Information Concerning Recent Financing Transactions". As a result of the refinancing, the Company will record in the second quarter of 2001 a pretax extraordinary charge of approximately $17.0 million, primarily related to the write-off of financing fees. 19 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion reviews our operations for the three months ended March 31, 2001 and 2000 and should be read in conjunction with the Unaudited Consolidated Financial Statements and related notes included herein and the Consolidated Financial Statements and related notes included in our 2000 Annual Report on Form 10-K. General We primarily derive revenues from the following sources: (i) equipment rental (including additional fees that may be charged for equipment delivery, fuel, repair of rental equipment, and damage waivers), (ii) the sale of used rental equipment, (iii) the sale of new equipment, and (iv) the sale of related merchandise and parts and other revenue. Cost of operations consists primarily of depreciation costs associated with rental equipment, the cost of repairing and maintaining rental equipment, the cost of rental equipment and equipment and other merchandise sold, personnel costs, occupancy costs and supplies. We record rental equipment expenditures at cost and depreciate equipment using the straight-line method over the estimated useful life (which ranges from 2 to 10 years), after giving effect to an estimated salvage value of 0% to 10% of cost. Selling, general and administrative expenses primarily include sales commissions, advertising and marketing expenses, management salaries, and clerical and administrative overhead. Non-rental depreciation and amortization includes (i) depreciation expense associated with equipment that is not offered for rent (such as vehicles, computers and office equipment) and amortization expense associated with leasehold improvements, (ii) the amortization of deferred financing costs and (iii) the amortization of intangible assets. Our intangible assets include non-compete agreements and goodwill, which represents the excess of the purchase price of acquired companies over the estimated fair market value of the net assets acquired. Accounting For Acquisitions We completed several acquisitions in 2000 and 2001. See note 2 to the Unaudited Consolidated Financial Statements included herein. We accounted for these acquisitions as "purchases," which means that the results of operations of the businesses acquired are included in our financial statements only from their respective dates of acquisition. In view of the fact that our operating results for 2001 and 2000 were impacted by these acquisitions, we believe that our results of operations for these periods are not directly comparable. 20 Results of Operations Three Months Ended March 31, 2001 and 2000 Revenues. Total revenues for the three months ended March 31, 2001 were $619.1 million, representing an increase of 6.9% over total revenues of $579.0 million for the three months ended March 31, 2000. Our revenues during these periods were attributable to the following sources. . Revenues from Equipment Rentals. These revenues were $461.4 million in the first quarter of 2001, representing an increase of 15.3% from $400.1 million in the first quarter of 2000. These revenues accounted for 74.5% of our total revenues in the first quarter of 2001 compared with 69.1% of our total revenues in the first quarter of 2000. The 15.3% increase in these revenues in the first quarter of 2001 reflected (i) increased revenues at locations open more than one year (which accounted for approximately 8.2 percentage points) and (ii) new rental locations acquired through acquisitions and the opening of start-up locations, partially offset by locations sold or closed (which accounted for approximately 7.1 percentage points). . Revenues from the Sales of Rental Equipment. These revenues were $39.1 million in the first quarter of 2001, representing a decrease of 44.4% from $70.3 million in the first quarter of 2000. These revenues accounted for 6.3% of our total revenues in the first quarter of 2001 compared with 12.1% of our total revenues in the first quarter of 2000. We have, in response to softening economic conditions, been focusing on measures to reduce our cash outlays. These measures include reducing our 2001 budget for new equipment purchases and slowing the rate at which we sell our used rental equipment. The 44.4% reduction in revenues from the sales of rental equipment during the first quarter of 2001 reflects these actions. For additional information, see "-- Liquidity and Capital Resources--Certain Measures to Reduce Cash Requirements." . Revenues from the Sales of Equipment and Merchandise and Other Revenues. These revenues were $118.6 million in the first quarter of 2001, representing an increase of 9.3% from $108.5 million in the first quarter of 2000. These revenues accounted for 19.2% of our total revenues in the first quarter of 2001 compared with 18.7% of our total revenues in the first quarter of 2000. The 9.3% increase in sales of equipment and merchandise and other revenues was attributable to the increase in the volume of transactions. Gross Profit. Gross profit decreased to $202.6 million in the three months ended March 31, 2001, from $206.0 million in the three months ended March 31, 2000. This decrease primarily reflected the following: (i) the sales of used rental equipment, which generally produces higher gross profit margins than our other sources of revenues, accounted for a smaller percentage of our total revenues as discussed above, and (ii) our business of renting traffic control equipment, which generally operates at a loss during the first quarter due to seasonal factors, increased in size, making our overall results during the first quarter more subject to this seasonality. Our gross profit margin by source of revenues in the three months ended March 31, 2001 and 2000 was: (i) equipment rental (33.1% in the three months ended March 31, 2001 and 38.1% in the three months ended March 31, 2000), (ii) sales of rental equipment (41.0% in the three months ended March 31, 2001 and 41.6% in the three months ended March 31, 2000) and (iii) sales of equipment and merchandise and other revenues (28.6% in the three months ended March 31, 2001 and 22.5% in the three months ended March 31, 2000). The decrease in the gross profit margin from rental revenues in the three months ended March 31, 2001 was primarily attributable to the impact of our traffic control business as described above. The increase in the gross profit margin from sales of equipment and merchandise and other revenue in the three months ended March 31, 2001, primarily reflected the following: (i) lower costs resulting from our ongoing efforts to consolidate our suppliers and further capitalize on our purchasing power and (ii) a shift in mix which resulted in more of our sales being attributable to higher margin areas such as providing services and selling parts. 21 Selling, General and Administrative Expenses. Selling, general and administrative expenses ("SG&A") were $108.9 million, or 17.6% of total revenues, during the three months ended March 31, 2001 and $101.9 million, or 17.6% of total revenues, during the three months ended March 31, 2000. Non-rental Depreciation and Amortization. Non-rental depreciation and amortization was $26.1 million, or 4.2% of total revenues, in the three months ended March 31, 2001 and $20.0 million, or 3.5% of total revenues, in the three months ended March 31, 2000. The increase in the dollar amount of non- rental depreciation and amortization in the first three months of 2001 primarily reflected the amortization of goodwill attributable to acquisitions completed subsequent to the first quarter of 2000. Interest Expense. Interest expense increased to $57.5 million in the three months ended March 31, 2001 from $49.7 million in the three months ended March 31, 2000. This increase primarily reflected an increase in the Company's indebtedness, principally to fund acquisitions. Preferred Dividends of a Subsidiary Trust. During the three months ended March 31, 2001 and 2000, preferred dividends of a subsidiary trust were $4.9 million. Other (Income) Expense. Other income was $0.7 million in the three months ended March 31, 2001 compared with $0.2 million in the three months ended March 31, 2000. Income Taxes. Income taxes were $2.4 million, or an effective rate of 41.5%, in the three months ended March 31, 2001 compared to $12.4 million, or an effective rate of 41.5%, in the three months ended March 31, 2000. Information Concerning Recent Financing Transactions General In April 2001, we refinanced $1,664.5 million of our outstanding secured indebtedness. In order to effect this refinancing, we: . issued $450.0 million of 10 3/4% Senior Notes Due 2008; . obtained a new senior secured credit facility comprised of a $750 million term loan and a $750 million revolving credit facility; . made an initial draw under the new revolving credit facility in the amount of $525.0 million; and . used the proceeds from the notes, the new term loan and the initial draw under the new revolving credit facility to (i) permanently repay the outstanding balance under our old revolving credit facility ($476.0 million); (ii) repay outstanding term loans ($1,188.5 million) and (iii) repay an outstanding synthetic lease ($31.2 million). Additional Information Concerning the 10 3/4% Senior Notes On April 20, 2001, United Rentals (North America), Inc. ("URI"), a wholly owned subsidiary of United Rentals, Inc. ("Holdings"), sold $450 million aggregate principal amount of 10 3/4% Senior Notes Due 2008. The net proceeds from the sale of the notes were approximately $439.9 million (after deducting the initial purchasers' discount and estimated offering expenses). The notes mature on April 15, 2008. The notes are unsecured and are guaranteed by Holdings and by URI's domestic subsidiaries. URI may, at its option, redeem the notes on or after April 15, 2005, at specified redemption prices which range from 105.375% in 2005 to 100.0% in 2007 and thereafter. In addition, on or prior to April 15, 2004, URI may, at its option, use the proceeds of a public equity offering to redeem up to 35% of the outstanding notes, at a redemption price of 110.75%. The 22 indenture governing the notes contains certain restrictive covenants, including limitations on (i) additional indebtedness, (ii) restricted payments, (iii) liens, (iv) dividends and other payments, (v) preferred stock of certain subsidiaries, (vi) transactions with affiliates, (vii) the disposition of proceeds of asset sales and (viii) our ability to consolidate, merge or sell all or substantially all of our assets. Additional Information Concerning the New Credit Facility On April 20, 2001, we entered into a new senior secured credit facility. The new facility is comprised of a term loan and a revolving credit facility and replaces the term loans and revolving credit facility that we previously had. Set forth below is additional information concerning the new credit facility. General Terms of the New Revolving Credit Facility. The revolving credit facility enables URI to borrow up to $750 million on a revolving basis and enables one of our Canadian subsidiaries to borrow up to $40 million (provided that the aggregate borrowings of URI and the Canadian subsidiary may not exceed $750 million). Up to $100 million of the revolving credit facility is available in the form of letters of credit. The revolving credit facility will mature and terminate on October 20, 2006. Borrowings under the revolving credit facility will until October 20, 2001, accrue interest, at our option, at either (A) the ABR Rate (which is equal to the greater of (i) the Federal Funds Rate plus 0.5% or (ii) the Chase Manhattan Bank's prime rate) plus a margin of 1.00% or (B) an adjusted LIBOR rate plus a margin of 2.0%. From and after October 20, 2001, the above interest rate margins will be adjusted quarterly based on our financial leverage ratio, up to maximum margins of 1.75% and 2.75%, for revolving loans based on the ABR rate and the adjusted LIBOR rate, respectively, and down to minimum margins of 0.75% and 1.75%, for revolving loans based on the ABR rate and the adjusted LIBOR rate, respectively. Borrowings by the Canadian subsidiary under the revolving credit facility will until October 20, 2001, accrue interest, at such subsidiary's option, at either (X) the Prime rate (which is equal to the Chase Manhattan Bank of Canada's prime rate) plus a margin of 1.00% or (Y) the B/A rate (which is equal to the Chase Manhattan Bank of Canada's B/A rate) plus a margin of 2.0%. From and after October 20, 2001, the above interest rate margins will be adjusted quarterly based on our financial leverage ratio, up to maximum margins of 1.75% and 2.75%, for revolving loans based on the Prime rate and the B/A rate, respectively, and down to minimum margins of 0.75% and 1.75%, for revolving loans based on the Prime rate and the B/A rate, respectively. If at any time an event of default exists, the interest rate applicable to each loan will increase by 2% per annum. We are also required to pay the lenders a commitment fee equal to 0.5% per annum in respect of undrawn commitments under the revolving credit facility. General Terms of the New Term Loan. On April 20, 2001, URI obtained a $750 million term loan. Amounts repaid in respect of the term loan may not be reborrowed. URI must repay the principal of the term loan in installments, over six and one-half years, as follows: (i) on June 30, 2001 and on the last day of each calendar quarter thereafter up to and including September 30, 2006, URI must repay $1.9 million and (ii) on the last day of each calendar quarter thereafter up to and including September 30, 2007, URI must repay $177.2 million. Borrowings under the term loan accrue interest, at our option, at either (a) the ABR rate (which is equal to the greater of (i) the Federal Funds Rate plus 0.5% or (ii) the Chase Manhattan Bank's prime rate) plus a margin of 2.0%, or (b) an adjusted LIBOR rate plus a margin of 3.0%. Covenants. The agreements governing our new senior secured credit facility contains certain covenants that require us to, among other things, satisfy certain financial tests relating to: (a) the ratio of senior debt to cash flow, (b) minimum interest coverage ratio, (c) the ratio of funded debt to cash flow, and (d) the ratio of senior debt to tangible assets. These agreements also contain various other covenants that restrict our ability to, 23 among other things, (i) incur additional indebtedness, (ii) permit liens to attach to our assets, (iii) pay dividends or make other restricted payments on our common stock and certain other securities and (iv) make acquisitions unless certain financial conditions are satisfied. Security and Guarantees. URI's obligations under the new senior secured facility are, subject to limited exceptions, (i) guaranteed by Holdings and URI's United States subsidiaries and (ii) secured by substantially all of URI's assets, the stock of URI and the stock of Holding's other United States subsidiaries and a portion of the stock of Holding's Canadian subsidiaries. The obligations of the Canadian subsidiary that may borrow under the revolving credit facility are guaranteed by our other Canadian subsidiaries and secured by substantially all of the assets of this Canadian subsidiary and the stock of its subsidiaries. Liquidity and Capital Resources Sources and Uses of Cash During the first three months of 2001, we (i) generated cash from operations of approximately $56.1 million, (ii) generated cash from the sale of rental equipment of approximately $39.1 million and (iii) obtained net proceeds from financing activities of approximately $52.1 million. We used cash during this period principally to (i) pay consideration for acquisitions and settle certain outstanding liabilities due to former owners of businesses that we acquired (approximately $27.7 million), (ii) purchase rental equipment (approximately $98.3 million), (iii) purchase other property and equipment (approximately $16.7 million) and (iv) purchase and retire shares of our outstanding common stock (approximately $23.2 million). Certain Balance Sheet Changes The decrease in accounts receivable at March 31, 2001 compared to December 31, 2000 was primarily due to collection of accounts receivable generated in the seasonally stronger prior fiscal quarters. The increase in prepaid expenses and other assets at March 31, 2001 compared to December 31, 2000 was primarily attributable to payment of certain prepaid expenses during the first quarter. The decrease in rental equipment at March 31, 2001 compared to December 31, 2000 was primarily attributable to the depreciation of the assets and to the disposal of rental equipment, partially offset by purchases of rental equipment, during the first quarter. The decrease in accounts payable at March 31, 2001 compared to December 31, 2000 was attributable to the payment of accounts payable. The increase in debt at March 31, 2001 compared to December 31, 2000 was primarily attributable to borrowings for acquisition related payments and equipment purchases. The decrease in accrued expenses and other liabilities at March 31, 2001 compared to December 31, 2000 was primarily attributable to the payment of certain accrued bonus compensation. The decrease in additional paid-in capital at March 31, 2001 compared to December 31, 2000, primarily reflected the purchase and retirement of shares of our outstanding common stock. Cash Requirements Related to Operations Our principal existing sources of cash are borrowings available under our revolving credit facility ($201.6 million available as of May 8, 2001) and cash generated from operations. We expect that our principal needs for cash relating to our existing operations over the next 12 months will be to fund (i) operating activities and working capital, (ii) the purchase of rental equipment and inventory items offered for sale, (iii) debt service and (iv) costs relating to the matters described below under "--Certain Projected Charges--Branch Consolidation". We plan to fund such cash requirements relating to our existing operations from our existing sources of cash described above. In addition, we plan to seek additional financing through the securitization of certain of our accounts receivable. We estimate that equipment expenditures for the year 2001 will be approximately $400 million for our existing operations. These expenditures are comprised of approximately (i) $150 million of expenditures in order to replace rental equipment sold, (ii) $200 million of discretionary expenditures to increase the size of our rental 24 fleet and (iii) $50 million of expenditures for the purchase of non-rental equipment. We expect that we will fund such expenditures from proceeds from the sale of used equipment, cash generated from operations and, if required, borrowings available under our revolving credit facility. While emphasizing internal growth, we may also continue to expand through a disciplined acquisition program. We expect to pay for future acquisitions using cash, capital stock, notes and/or assumption of indebtedness. To the extent that our existing sources of cash described above are not sufficient to fund such future acquisitions, we will require additional financing and, consequently, our indebtedness may increase as we implement our growth strategy. There can be no assurance, however, that any additional financing will be available or, if available, will be on terms that are satisfactory to us. The recent refinancing of $1.664.5 million of our indebtedness (described under "--Information Concerning Recent Financing Transactions") extended the maturities of a significant amount of our indebtedness. Based on the scheduled maturities of our current indebtedness, we are required to make principal payments of approximately $19.3 million over the next 12 months. We may also, at our option, make additional principal payments. Certain Measures to Reduce Cash Requirements We have, in response to softening economic conditions, been focusing on measures to cut costs and reduce cash outlays. Some of our principal initiatives are discussed below. Reduce Equipment Purchases. We plan to significantly reduce our equipment purchases in 2001. This is reflected in our 2001 budget which, as described above, allocates $400 million for equipment expenditures, representing a significant decrease from the $962 million that we expended in 2000. We also plan to reduce the rate at which we sell our used equipment in 2001. The magnitude of the reduction will depend on a number of future developments, including the economic outlook, conditions in the used equipment market, and our equipment utilization rate. Based on current conditions, we estimate that our revenues from the sale of used equipment will be 50-75% lower in 2001 than it was in 2000. We estimate that the weighted average age of our rental fleet, which currently is approximately 28 months, will increase to approximately 32 months as a result of the planned reduction in the rate at which we purchase new equipment and sell used equipment. We believe that, because of the young age of our fleet, our business will not be adversely affected by this increase in average age. Close or Consolidate a Limited Number of Under-Performing Branches. Among our more than 750 branch locations, we have identified a limited number that are under-performing based on our benchmarks. We expect that over the next several months we will close, or consolidate with other locations, 25 to 30 under-performing branches. Continue to Consolidate Suppliers. We reduced the number of our primary equipment suppliers from 111 to 28 in 2000. This allowed us to lower our purchase costs by approximately $150 million in 2000 and should enable us to save additional amounts in 2001. We are currently in the process of similarly consolidating our merchandise suppliers. Other Cost-Cutting Measures. We are seeking to reduce costs in a number of other ways, including reducing administrative expenses, consolidating credit and collection centers, and streamlining advertising. Certain Projected Charges Branch Consolidation We estimate that we will incur a pre-tax charge in 2001 in the range of $20 million to $40 million in connection with our plan to close or consolidate 25 to 30 under-performing branches as described above. This charge will primarily relate to severance for employees and vacating facilities. 25 Debt Refinancing We refinanced $1,664.5 million of indebtedness during the second quarter of 2001 (as described under "--Information Concerning Recent Financing Transactions"). We will record a pre-tax extraordinary charge of approximately $17 million during the second quarter of 2001, primarily relating to the write-off of financing fees. Relationship Between Holdings and URI United Rentals, Inc. ("Holdings") is principally a holding company and primarily conducts its operations through its wholly owned subsidiary United Rentals (North America), Inc. ("URI") and subsidiaries of URI. Holdings provides certain services to URI in connection with its operations. These services principally include: (i) senior management services, (ii) finance related services and support, (iii) information technology systems and support and (iv) acquisition related services. In addition, Holdings leases certain equipment and real property that are made available for use by URI and its subsidiaries. URI has made, and expects to continue to make, certain payments to Holdings in respect of the services provided by Holdings to URI. The expenses relating to URI's payments to Holdings are reflected on URI's financial statements as selling, general and administrative expenses. In addition, although not legally obligated to do so, URI has in the past, and expects that it will in the future, make distributions to Holdings to, among other things, enable Holdings to pay dividends on certain preferred securities (the "Trust Preferred Securities") that were issued by a subsidiary trust of Holdings in August 1998. The Trust Preferred Securities are the obligation of a subsidiary trust of Holdings and are not the obligation of URI. As a result, the dividends payable on these securities are reflected as an expense on the consolidated financial statements of Holdings, but are not reflected as an expense on the consolidated financial statements of URI. This is the principal reason why the net income reported on the consolidated financial statements of URI is higher than the net income reported on the consolidated financial statements of Holdings. Seasonality Our business is seasonal with demand for our rental equipment tending to be lower in the winter months. The seasonality of our business has been heightened by our acquisition of businesses that specialize in renting traffic control equipment. These businesses tend to generate most of their revenues and profits in the second and third quarters of the year, slow down during the fourth quarter and operate at a loss during the first quarter. Inflation Although we cannot accurately anticipate the effect of inflation on our operations, we believe that inflation has not had, and is not likely in the foreseeable future to have, a material impact on our results of operations. Recently Issued Accounting Standards In June 1999, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 137, "Accounting for Derivative Instruments and Hedging Activities-- Deferral of the Effective Date of FASB Statement No. 133". This standard delays the effective date of SFAS No. 133, "Accounting for Derivative Instrument and Hedging Activities", for one year, to fiscal years beginning after June 15, 2000. SFAS No. 133 establishes a new model for accounting for derivatives and hedging activities. In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging Activities". This standard amends SFAS No. 133 and addresses a limited number of issues causing implementation difficulties. We adopted SFAS No. 133 on January 1, 2001 and it did not have a material effect on our consolidated financial position or results of operations. 26 In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities--a replacement of FASB Statement No. 125". This standard revises the standards for accounting for securitizations and other transfers of financial assets and collateral and requires certain disclosures. This standard is effective for transfers and servicing of financial assets and extinguishments of liabilities occurring after March 31, 2001 and for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000. The adoption of SFAS No. 140 is not expected to have a material effect on our consolidated financial position or results of operations. Factors that May Influence Future Results and Accuracy of Forward-Looking Statements Sensitivity to Changes in Construction and Industrial Activities Our equipment is principally used in connection with construction and industrial activities. Consequently, a downturn in construction or industrial activity may lead to a decrease in the demand for our equipment, or depress rental rates and the sales prices for the equipment we sell. We have identified below certain of the factors which may cause such a downturn, either temporarily or long-term: . the recent slow-down of the economy worsens or continues over the long- term; . an increase in interest rates; or . adverse weather conditions which may temporarily affect a particular region. In addition, demand for our traffic control equipment may not reach projected levels in the event that funding for highway and other construction projects under government programs, such as the Transportation Equity Act for the 21st Century ("TEA-21") or the Aviation Investment and Reform Act for the 21st Century ("AIR-21"), does not reach expected levels. Fluctuations of Operating Results We expect that our revenues and operating results may fluctuate from quarter to quarter or over the longer term due to a number of factors, including: . seasonal rental patterns of our customers--with rental activity tending to be lower in the winter; . our recent acquisition of businesses that specialize in renting traffic control equipment, which tend to operate at a loss during the first quarter; . the timing of expenditures for new equipment and the disposition of used equipment; . changes in demand for our equipment or the prices therefor due to changes in economic conditions, competition or other factors; . changes in the interest rates applicable to our floating rate debt; . if we determine that a potential acquisition will not be consummated, the need to charge against earnings any expenditures relating to such transaction (such as financing commitment fees, merger and acquisition advisory fees and professional fees) previously capitalized; and . the possible need, from time to time, to take other write-offs or special charges due to a variety of occurrences, such as store consolidations or closings or the refinancing of existing indebtedness. Dependence on Additional Capital We may require additional capital for, among other purposes, purchasing rental equipment, completing acquisitions, establishing new rental locations, and refinancing existing indebtedness. If the cash that we generate 27 from our business, together with cash that we may borrow under our credit facility, is not sufficient to fund our capital requirements, we will require additional debt and/or equity financing. We cannot, however, be certain that any additional financing will be available or, if available, will be available on terms that are satisfactory to us. If we are unable to obtain sufficient additional capital in the future, our business could be adversely affected. Certain Risks Relating to Acquisitions The making of acquisitions entails certain risks, including: . unrecorded liabilities of acquired companies that we fail to discover during our due diligence investigations; . difficulty in assimilating the operations and personnel of the acquired company with our existing operations; . loss of key employees of the acquired company; and . difficulty maintaining uniform standards, controls, procedures and policies. Dependence on Management We are highly dependent upon our senior management team. Consequently, our business could be adversely affected in the event that we lose the services of any member of senior management. We do not maintain "key man" life insurance with respect to members of senior management. Competition The equipment rental industry is highly fragmented and competitive. Our competitors primarily include small, independent businesses with one or two rental locations; regional competitors which operate in one or more states; public companies or divisions of public companies; and equipment vendors and dealers who both sell and rent equipment directly to customers. We may in the future encounter increased competition from our existing competitors or from new companies. In addition, certain equipment manufacturers may commence or increase their existing efforts relating to renting and selling equipment directly to our customers or potential customers. Liability and Insurance We are exposed to various possible claims relating to our business. These possible claims include those relating to (1) personal injury or death caused by equipment rented or sold by us, (2) motor vehicle accidents involving our delivery and service personnel and (3) employment related claims. We carry a broad range of insurance for the protection of our assets and operations. However, such insurance may not fully protect us for a number of reasons, including: . our coverage is subject to a deductible of $1 million and limited to a maximum of $98 million per occurrence; . we do not maintain coverage for environmental liability (other than legally required fuel storage tank coverage), since we believe that the cost for such coverage is high relative to the benefit that it provides; and . certain types of claims, such as claims for punitive damages or for damages arising from intentional misconduct, which are often alleged in third party lawsuits, might not be covered by our insurance. We cannot be certain that insurance will continue to be available to us on economically reasonable terms, if at all. 28 Environmental and Safety Regulations Our operations are subject to numerous laws governing environmental protection and occupational health and safety matters. These laws regulate such issues as wastewater, stormwater, solid and hazardous wastes and materials, and air quality. Under these laws, we may be liable for, among other things, (1) the costs of investigating and remediating contamination at our sites as well as sites to which we sent hazardous wastes for disposal or treatment regardless of fault and (2) fines and penalties for non-compliance. Our operations generally do not raise significant environmental risks, but we use hazardous materials to clean and maintain equipment, and dispose of solid and hazardous waste and wastewater from equipment washing, and store and dispense petroleum products from underground and above-ground storage tanks located at certain of our locations. Based on the conditions currently known to us, we do not believe that any pending or likely remediation and compliance costs will have a material adverse effect on our business. We cannot be certain, however, as to the potential financial impact on our business if new adverse environmental conditions are discovered or environmental and safety requirements become more stringent. If we are required to incur environmental compliance or remediation costs that are not currently anticipated by us, our business could be adversely affected depending on the magnitude of the cost. Risks Related to International Operations Our operations outside the United States are subject to the risks normally associated with international operations. These include the need to convert currencies, which could result in a gain or loss depending on fluctuations in exchange rates, and the need to comply with foreign laws. Dependence on Information Technology Systems Our ability to monitor and control our operations depends to a large extent on the proper functioning of our information technology systems. Any disruption in these systems or the failure of these systems to operate as expected could, depending on the magnitude and duration of the problem, adversely affect our business. Labor Matters Certain of our employees are represented by unions and covered by collective bargaining agreements. If we should experience a prolonged labor dispute involving a significant number of our employees, our business could be adversely affected. Restrictive Covenants We are subject to various restrictive financial and operating covenants under the agreements governing our indebtedness. These covenants limit or prohibit, among other things, our ability to incur indebtedness, make prepayments of certain indebtedness, make investments, create liens, make acquisitions, sell assets and engage in mergers and acquisitions. These covenants could adversely affect our business by significantly limiting our operating and financial flexibility. Item 3. Quantitative and Qualitative Disclosures about Market Risk Market risks relating to changes in interest rates and foreign currency exchanges rates were reported in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2000. There has been no material change in these market risks since the end of the fiscal year 2000. 29 PART II OTHER INFORMATION Item 1. Legal Proceedings We and our subsidiaries are parties to various litigation matters, in most cases involving ordinary and routine claims incidental to our business. Our ultimate legal and financial liability with respect to such pending litigation cannot be estimated with certainty but we believe, based on our examination of such matters, that such ultimate liability will not have a material effect on our business or financial condition. Item 2. Changes in Securities and Use of Proceeds Sale of Unregistered Securities Set forth below is certain information concerning sales of unregistered securities by us during the first quarter of 2001. The issuances by us of the securities sold in the transactions referenced below were not registered under the Securities Act of 1933, pursuant to the exemption contemplated by Section 4(2) thereof for transactions not involving a public offering. 1. In January 2001, we issued 2,770 shares of common stock to an executive officer pursuant to an employment agreement. 30 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits:
Exhibit Number Description of Exhibit ------- ---------------------- 3(a) Amended and Restated Certificate of Incorporation of United Rentals, Inc., in effect as of the date hereof (incorporated by reference to exhibit 3.1 of United Rentals, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). 3(b) Certificate of Amendment to the United Rentals, Inc. Certificate of Incorporation dated September 29, 1998 (incorporated by reference to Exhibit 4.2 to the United Rentals, Inc. Registration Statement on Form S-3, No. 333-70151). 3(c) By-laws of United Rentals, Inc., in effect as of the date hereof (incorporated by reference to exhibit 3.2 of United Rentals, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 1998). 3(d) Form of Certificate of Designation for Series A Perpetual Convertible Preferred Stock (incorporated by reference to Exhibit 4(k) to the United Rentals, Inc. Registration Statement on Form S-3, No. 333-64463) together with a certificate of amendment thereto (incorporated by reference to exhibit A of United Rentals, Inc. Proxy Statement on Schedule 14A dated July 22, 1999). 3(e) Form of Certificate of Designation for Series B Perpetual Convertible Preferred Stock (incorporated by reference to exhibit B of United Rentals, Inc. Proxy Statement on Schedule 14A dated July 22, 1999). 3(f) Amended and Restated Certificate of Incorporation of United Rentals (North America), Inc., in effect as of the date hereof (incorporated by reference to Exhibit 3.3 of the United Rentals (North America), Inc. Report on Form 10-Q for the quarter ended June 30, 1998). 3(g) By-laws of United Rentals (North America), Inc., in effect as of the date hereof (incorporated by reference to Exhibit 3.4 of the United Rentals (North America), Inc. Report on Form 10-Q for the quarter ended June 30, 1998). 10(a)* Amended and Restated Credit Agreement dated as of April 20, 2001 between United Rentals, Inc., United Rentals (North America), Inc., various financial institutions, and The Chase Manhattan Bank, as U.S. Administrative Agent. 10(b)* Indenture dated as of April 20, 2001 among United Rentals (North America), Inc., the Guarantors named therein and The Bank of New York, as Trustee. 10(c)* Purchase Agreement dated April 12, 2001 relating to the initial sale by United Rentals (North America), Inc. of $450 million aggregate principal amount of 10 3/4% Senior Notes due 2008. 10(d)* Registration Rights Agreement dated as of April 20, 2001 among United Rentals (North America), Inc., the Guarantors named therein and the Initial Purchasers named therein, relating to $450 million aggregate principal amount of 10 3/4% Senior Notes due 2008.
- -------- *Filed herewith. (b)Reports on Form 8-K: 1. Form 8-K dated January 2, 2001 (earliest event reported December 29, 2000); Item 5 was reported. 2. Form 8-K dated February 28, 2001 (earliest event reported February 28, 2001); Item 5 was reported. 31 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. United Rentals, Inc. Dated: May 14, 2001 /s/ Michael J. Nolan By: _________________________________ Michael J. Nolan Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer) United Rentals (North America), Inc. Dated: May 14, 2001 /s/ Michael J. Nolan By: _________________________________ Michael J. Nolan Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer) 32 EX-10.(A) 2 dex10a.txt AMENDED AND RESTATED CREDIT AGREEMENT 4/20/2001 EXHIBIT 10.A AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 20, 2001 among UNITED RENTALS, INC., UNITED RENTALS (NORTH AMERICA), INC., as U.S. Borrower, UNITED RENTALS OF CANADA, INC., as Canadian Borrower, The Lenders Party Hereto, THE CHASE MANHATTAN BANK, as U.S. Administrative Agent, and THE CHASE MANHATTAN BANK OF CANADA, as Canadian Administrative Agent, ___________________________ JPMORGAN, A DIVISION OF CHASE SECURITIES INC. and BANC OF AMERICA SECURITIES LLC, as Joint Arrangers and BANK OF AMERICA, N.A., as Syndication Agent and CREDIT SUISSE FIRST BOSTON and CITICORP NORTH AMERICA, INC. and FLEET NATIONAL BANK, as Documentation Agents TABLE OF CONTENTS
Page ---- ARTICLE I Definitions ----------- SECTION 1.01. Defined Terms............................................... 1 SECTION 1.02. Classification of Loans and Borrowings...................... 44 SECTION 1.03. Terms Generally............................................. 44 SECTION 1.04. Accounting Terms; GAAP...................................... 44 ARTICLE II The Credits ----------- SECTION 2.01. Commitments................................................. 45 SECTION 2.02. Loans and Borrowings........................................ 47 SECTION 2.03. Requests for Borrowings..................................... 49 SECTION 2.04. Swingline Loans............................................. 51 SECTION 2.05. Letters of Credit........................................... 52 SECTION 2.06. Funding of Borrowings....................................... 59 SECTION 2.07. Interest Elections.......................................... 60 SECTION 2.08. Termination and Reduction of Commitments.................... 62 SECTION 2.09. Repayment of Loans; Evidence of Debt........................ 63 SECTION 2.10. Amortization of Term Loans.................................. 65 SECTION 2.11. Prepayment of Loans......................................... 66 SECTION 2.12. Fees........................................................ 68 SECTION 2.13. Interest.................................................... 70 SECTION 2.14. Alternate Rate of Interest.................................. 72 SECTION 2.15. Increased Costs............................................. 73 SECTION 2.16. Break Funding Payments...................................... 75 SECTION 2.17. Taxes....................................................... 76 SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs.. 78 SECTION 2.19. Mitigation Obligations; Replacement of Lenders.............. 81 SECTION 2.20. Incremental Facility........................................ 82 SECTION 2.21. Bankers' Acceptances........................................ 84 SECTION 2.22. Spot Exchange Rate Calculations............................. 87 SECTION 2.23. Reallocation................................................ 87
ii ARTICLE III Representations and Warranties ------------------------------ SECTION 3.01. Organization; Powers........................................ 92 SECTION 3.02. Authorization; Enforceability............................... 92 SECTION 3.03. Governmental Approvals; No Conflicts........................ 92 SECTION 3.04. Financial Condition; No Material Adverse Change............. 93 SECTION 3.05. Properties.................................................. 93 SECTION 3.06. Litigation and Environmental Matters........................ 94 SECTION 3.07. Compliance with Laws and Agreements......................... 94 SECTION 3.08. Investment and Holding Company Status....................... 95 SECTION 3.09. Taxes....................................................... 95 SECTION 3.10. ERISA....................................................... 95 SECTION 3.11. Disclosure.................................................. 95 SECTION 3.12. Subsidiaries................................................ 96 SECTION 3.13. Insurance................................................... 96 SECTION 3.14. Labor Matters............................................... 96 SECTION 3.15. Solvency.................................................... 97 SECTION 3.16. Senior Debt................................................. 97 SECTION 3.17. Security Interests.......................................... 97 ARTICLE IV Conditions ---------- SECTION 4.01. Effective Date.............................................. 99 SECTION 4.02. Each Credit Event........................................... 103 ARTICLE V Affirmative Covenants --------------------- SECTION 5.01. Financial Statements and Other Information.................. 104 SECTION 5.02. Notices of Material Events.................................. 106 SECTION 5.03. Information Regarding Collateral............................ 106 SECTION 5.04. Existence; Conduct of Business.............................. 107 SECTION 5.05. Payment of Obligations...................................... 107 SECTION 5.06. Maintenance of Properties................................... 108 SECTION 5.07. Insurance................................................... 108 SECTION 5.08. Casualty and Condemnation................................... 108 SECTION 5.09. Books and Records; Inspection and Audit Rights.............. 109 SECTION 5.10. Compliance with Laws........................................ 109 SECTION 5.11. Use of Proceeds and Letters of Credit....................... 109 SECTION 5.12. Additional Subsidiaries..................................... 110 SECTION 5.13. Further Assurances.......................................... 110
iii SECTION 5.14. Interest Rate Protection.................................... 110 ARTICLE VI Negative Covenants ------------------ SECTION 6.01. Financial Covenants......................................... 111 SECTION 6.02. Limitations on Debt......................................... 111 SECTION 6.03. Liens....................................................... 114 SECTION 6.04. Restricted Payments......................................... 116 SECTION 6.05. Mergers, Consolidations, Amalgamations, Sales............... 117 SECTION 6.06. Modification of Certain Documents........................... 119 SECTION 6.07. Transactions with Affiliates................................ 119 SECTION 6.08. Inconsistent Agreements..................................... 120 SECTION 6.09. Business Activities......................................... 120 SECTION 6.10. Advances and Other Investments.............................. 120 SECTION 6.11. Location of Assets.......................................... 122 SECTION 6.12. QuIPS Documents............................................. 122 SECTION 6.13. Securitization Obligations.................................. 122 ARTICLE VII Events of Default ----------------- ARTICLE VIII The Administrative Agents and the Collateral Agents --------------------------------------------------- ARTICLE IX Miscellaneous ------------- SECTION 9.01. Notices..................................................... 132 SECTION 9.02. Waivers; Amendments......................................... 133 SECTION 9.03. Expenses; Indemnity; Damage Waiver.......................... 136 SECTION 9.04. Successors and Assigns...................................... 138 SECTION 9.05. Survival.................................................... 143 SECTION 9.06. Counterparts; Integration; Effectiveness.................... 143 SECTION 9.07. Severability................................................ 144 SECTION 9.08. Right of Setoff............................................. 144 SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.. 144 SECTION 9.10. WAIVER OF JURY TRIAL........................................ 145
iv SECTION 9.11. Headings.................................................... 146 SECTION 9.12. Confidentiality............................................. 146 SECTION 9.13. Interest Rate Limitation.................................... 147 SECTION 9.14. Designated Senior Indebtedness.............................. 147 SECTION 9.15. Judgment Currency........................................... 147 SECTION 9.16. Limitation on Liability..................................... 148 ARTICLE X Collection Allocation Mechanism ------------------------------- SECTION 10.01. Implementation of CAM...................................... 149 SECTION 10.02. Letters of Credit.......................................... 150 SECTION 10.03. Conversion................................................. 152 ARTICLE XI Guaranty by the U.S. Borrower ----------------------------- SECTION 11.01. Guaranty................................................... 152 SECTION 11.02. Guaranty Unconditional..................................... 153 SECTION 11.03. Discharge only upon Payment in Full: Reinstatement in Certain Circumstances.................... 154 SECTION 11.04. Waiver by the U.S. Borrower................................ 154 SECTION 11.05. Subrogation................................................ 154 SECTION 11.06. Stay of Acceleration....................................... 154
SCHEDULES: - --------- Schedule 2.01 -- Commitments Schedule 2.05 -- Existing Letters of Credit Schedule 3.05 -- Real Property Schedule 3.06 -- Disclosed Matters Schedule 3.12 -- Subsidiaries Schedule 3.13 -- Insurance Schedule 3.14 -- Labor Matters Schedule 6.02(g) -- Existing Debt Schedule 6.03 -- Existing Liens EXHIBITS: - -------- Exhibit A -- Form of Assignment and Acceptance Exhibit B -- Form of U.S. Guaranty Exhibit C -- Form of U.S. Pledge Agreement Exhibit D -- Form of U.S. Security Agreement Exhibit E -- Form of Canadian Subsidiary Guarantee Agreement v Exhibit F -- Form of Canadian Security Agreement Exhibit G -- Form of Canadian Pledge Agreement Exhibit H-1 -- Form of Opinion of Weil, Gotshal & Manges LLP Exhibit H-2 -- Form of Opinion of Oscar D. Folger, Esq. Exhibit H-3 -- Form of Opinion of Macleod Dixon Exhibit I -- Form of Perfection Certificate Exhibit J -- Form of Subordination Language Exhibit K -- Form of B/A Equivalent Note AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 20, 2001, among UNITED RENTALS, INC., UNITED RENTALS (NORTH AMERICA), INC., UNITED RENTALS OF CANADA, INC., the LENDERS party hereto, THE CHASE MANHATTAN BANK, as U.S. Administrative Agent, and THE CHASE MANHATTAN BANK OF CANADA, a Canadian chartered bank, as Canadian Administrative Agent, The parties hereto desire to consolidate, amend and restate the Existing Credit Agreements (as defined herein) pursuant to and in accordance with this Agreement. Accordingly, the parties hereto agree as follows: ARTICLE I Definitions ----------- SECTION 1.01. Defined Terms. As used in this Agreement, the -------------- following terms have the meanings specified below: "ABR", when used in reference to any Loan or Borrowing, refers to --- whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate. "Acceptance Fee" means a fee payable in Canadian Dollars by the -------------- Canadian Borrower to a C $ Revolving Lender with respect to the acceptance of a B/A or the purchase of a B/A Equivalent Note, calculated on the face amount of the B/A or the B/A Equivalent Note at the rate per annum equal to the B/A Spread on the basis of the number of days in the applicable Contract Period and a year of 365 days (or 366 days in a leap year) (it being agreed that the B/A Spread in respect of a B/A Equivalent Note is equivalent to the B/A Spread otherwise applicable to the B/A Borrowing which has been replaced by the purchase of such B/A Equivalent Note pursuant to Section 2.21(g)). "Acquisition Subsidiary" means a Subsidiary organized solely for the ---------------------- purpose of acquiring the Equity Interests or assets of a Person as permitted by Section 6.05. "Additional Lender" has the meaning assigned to such term in Section ----------------- 2.20. 2 "Additional Revolving Availability Period" means the period from and ---------------------------------------- including July 1, 2001, to but excluding the earlier of (a) the Revolving Maturity Date and (b) the date of termination of the Additional Revolving Commitments and the C $ Revolving Commitments. "Additional Revolving Borrowing" means a Borrowing comprised of ------------------------------ Additional Revolving Loans. "Additional Revolving Commitment" means, with respect to any Lender, ------------------------------- the commitment, if any, of such Lender to make Additional Revolving Loans during the Additional Revolving Availability Period, expressed as an amount representing the maximum potential aggregate principal amount of such Lender's Additional Revolving Loans hereunder, as such commitment may be (a) temporarily or permanently reduced from time to time pursuant to Sections 2.08 and 2.23 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 2.19 or 9.04. The initial aggregate amount of the Additional Revolving Lenders' Additional Revolving Commitments is $0. "Additional Revolving Exposure" means, with respect to any Additional ----------------------------- Revolving Lender at any time, the sum of the aggregate principal amount at such time of all outstanding Additional Revolving Loans of such Lender. "Additional Revolving Lender" means each C $ Revolving Lender, lending --------------------------- through a U.S. office (or, if any C $ Revolving Lender is not a Canadian Schedule I chartered bank, the Affiliate designated by such C $ Revolving Lender that is a U.S. chartered bank or other financial institution (each, a "Designated U.S. Affiliate")) with an Additional Revolving Commitment or, if the ------------------------- Additional Revolving Commitment shall equal zero, a Lender (individually or together with its Designated U.S. Affiliate) that may be required, pursuant to Section 2.23, to make Additional Revolving Loans. "Additional Revolving Loan" means any loan made by an Additional ------------------------- Revolving Lender pursuant to its Additional Revolving Commitment. "Adjusted IBO Rate" means, with respect to any Eurodollar Borrowing ----------------- for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the IBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate. 3 "Administrative Agents" means the U.S. Administrative Agent and the --------------------- Canadian Administrative Agent. "Administrative Questionnaire" means an Administrative Questionnaire ---------------------------- in a form supplied by the U.S. Administrative Agent or Canadian Administrative Agent, as applicable. "Affiliate" means, with respect to a specified Person, another Person --------- that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "Agents" means the Administrative Agents and the Collateral Agents. ------ "Alternate Base Rate" means, for any day, a rate per annum equal to ------------------- the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "Applicable Percentage" means, with respect to any (a) U.S. $ --------------------- Revolving Lender, the percentage of the Total U.S. $ Revolving Commitment represented by such Lender's U.S. $ Revolving Commitment, (b) C $ Revolving Lender, the percentage of the Total C $ Revolving Commitment represented by such Lender's C $ Revolving Commitment and (c) Additional Revolving Lender, the percentage of the Total Additional Revolving Commitment represented by such Lender's Additional Revolving Commitment. In the event any Revolving Commitments or Additional Revolving Commitments shall have expired or been terminated, the Applicable Percentages shall be determined on the basis of the relevant Revolving Commitments or Additional Revolving Commitments most recently in effect, but giving effect to any assignments pursuant to Section 9.04. "Applicable Rate" means, (a) for any day with respect to any Term Loan --------------- that is an ABR Loan, 2.00%, or a Eurodollar Loan, 3.00%, (b) for any day with respect to any ABR Loan or Eurodollar Loan that is a U.S. $ Revolving Loan or Additional Revolving Loan, as the case may be, the applicable rate per annum set forth below under the caption "ABR Spread" or "Eurodollar Spread", as the case may be, based upon the Funded Debt to Cash Flow Ratio as of the most recent determination date and (c) for any day with respect to any Canadian Prime Rate Loan or B/A Borrowing, as the 4 case may be, the applicable rate per annum set forth below under the caption "Canadian Prime Rate--C $ Revolving Loan" or "B/A Spread--C $ Revolving Loan", as the case may be, based upon the Funded Debt to Cash Flow Ratio as of the most recent determination date; provided that until the date that is six months after -------- the Effective Date the "Applicable Rate" shall not be less than (i) with respect to any U.S. $ Revolving Loan or Additional Revolving Loan that is an ABR Loan, 1.00%, or a Eurodollar Loan, 2.00%, and (ii) with respect to any C $ Revolving Loan that is a Canadian Prime Rate Loan, 1.00%, or a B/A Loan, 2.00%: ======================================================================== U.S. $ Revolving Loans/Additional C $ Revolving Loans Revolving Loans --------------- --------------- Funded Debt to Euro- ABR B/A Canadian - -------------- ----- --- --- -------- Cash Flow dollar Spread Spread Prime - --------- ------ ------ ------ ----- Ratio: Spread Rate - ------ ------ ---- - ------------------------------------------------------------------------ Category 1 - ---------- Greater than 2.75% 1.75% 2.75% 1.75% or equal to 4.00 to 1.00 - ------------------------------------------------------------------------ Category 2 - ---------- Less than 4.00 2.50% 1.50% 2.50% 1.50% to 1.00 but greater than or equal to 3.50 to 1.00 - ------------------------------------------------------------------------ Category 3 - ---------- Less than 3.50 2.25% 1.25% 2.25% 1.25% to 1.00 but greater than or equal to 3.00 to 1.00 - ------------------------------------------------------------------------ Category 4 - ---------- Less than 3.00 2.00% 1.00% 2.00% 1.00% to 1.00 but greater than or equal to 2.50 to 1.00 - ------------------------------------------------------------------------ Category 5 - ---------- Less than 2.50 1.75% 0.75% 1.75% 0.75% to 1.00 ======================================================================== For purposes of the foregoing, (a) the Funded Debt to Cash Flow Ratio shall be determined as of the last day of each Fiscal Quarter based upon Holdings's consolidated financial statements delivered pursuant to Section 5.01(a) 5 or (b) and (b) each change in the Applicable Rate resulting from a change in the Funded Debt to Cash Flow Ratio shall be effective during the period commencing on and including the date that is three days after the date of delivery to the Administrative Agent of such consolidated financial statements indicating such change and ending on the date immediately preceding the effective date of the next such change; provided that the Funded Debt to Cash Flow Ratio shall be -------- deemed to be in Category 1 (A) at any time that an Event of Default has occurred and is continuing or (B) at the option of the Administrative Agent or at the request of the Required Lenders if Holdings fails to deliver the consolidated financial statements required to be delivered by it pursuant to Section 5.01(a) or (b), during the period from the expiration of the time for delivery thereof until such consolidated financial statements are delivered. "Assigned Debt" means the principal amount of any Debt outstanding ------------- under any Existing Credit Agreement on the Effective Date immediately prior to consummation of the transactions contemplated hereby, to the extent that (i) such Debt is held at such time by a lender under such Existing Credit Agreement that is not a party to this Agreement as a Lender and (ii) such Debt is requested to be assigned to the Lenders hereunder on the Effective Date pursuant to the Assignment Agreement. "Assigned Dollar Value" means in respect of any C $ Revolving --------------------- Borrowing, the Dollar Equivalent of the amount set forth in the initial Borrowing Request with respect thereto or, in the case of a B/A Borrowing, the Dollar Equivalent of the face amount of the Bankers' Acceptances or B/A Equivalent Notes relating thereto. Thereafter, Assigned Dollar Value shall mean, in respect of any C $ Revolving Borrowing, the Dollar Equivalent of the principal amount of the Loans relating to such Borrowing (or the face amounts of the Bankers' Acceptances or B/A Equivalent Notes relating thereto) as determined on the most recent Reset Date based on the Spot Exchange Rate. "Assignment Agreement" means an agreement entered into by one or more -------------------- holders of Assigned Debt with the U.S. Administrative Agent, Holdings and the U.S. Borrower, pursuant to which such holder or holders of Assigned Debt shall have agreed to assign the principal amount of such Assigned Debt to the Lenders on the Effective Date in consideration of the payment to such holder or holders (a) by the Term Lenders, of an amount equal to the principal amount of the Assigned Debt so assigned to them, and (b) by the U.S. Borrower, of all other amounts accrued and owing to 6 such holder or holders under the Existing Credit Agreements as of the Effective Date. "Assignment and Acceptance" means an assignment and acceptance entered ------------------------- into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the U.S. Administrative Agent (and, in the case of an assignment of C $ Revolving Commitments, C $ Revolving Loans, Additional Revolving Commitments or Additional Revolving Loans, accepted by the Canadian Administrative Agent), substantially in the form of Exhibit A or any other form approved by the applicable Administrative Agent. "B/A Borrowing" means a Borrowing by the Canadian Borrower comprised ------------- of a Bankers' Acceptance or, as applicable, a B/A Equivalent Note. "B/A Equivalent Note" has the meaning set forth in Section 2.21(g). ------------------- "B/A Spread" means, for any day, with respect to any B/A Borrowing, ---------- the Applicable Rate that would apply to such Borrowing on such day. "Bankers' Acceptance" and "B/A" means either a depository bill within ------------------- --- the meaning of the Depository Bills and Notes Act or a bill of exchange within the meaning of the Bills of Exchange Act denominated in Canadian Dollars, drawn by the Canadian Borrower and accepted by a C $ Revolving Lender in accordance with this Agreement; provided that with respect to a C $ Revolving Lender that -------- has notified the Canadian Administrative Agent that it is not willing or is otherwise unable to accept such bills of exchange, it shall mean a B/A Equivalent Note. "Board" means the Board of Governors of the Federal Reserve System of ----- the United States of America. "Borrowers" means the U.S. Borrower and the Canadian Borrower. --------- "Borrowing" means (a) Loans of the same Class and Type, made, --------- converted or continued on the same date and, in the case of Eurodollar Loans or B/A Rate Loans, as to which a single Interest Period or Contract Period, as applicable, is in effect, or (b) a Swingline Loan. "Borrowing Request" means a request by either of the Borrowers for a ----------------- Borrowing in accordance with Section 2.03. 7 "Business Day" means any day that is not a Saturday, Sunday or other ------------ day on which commercial banks in New York City are authorized or required by law to remain closed; provided that, (a) when used in connection with a Eurodollar -------- Loan, "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the Eurodollar lending offices where the U.S. Administrative Agent's foreign currency and exchange operations and Eurodollar funding operations are customarily conducted in the international interbank market and (b) when used in connection with a C $ Revolving Loan, the term "Business Day" shall also exclude any day on which banks are required or permitted to be closed in the city of Toronto. "C $ Revolving Availability Period" means the period from and --------------------------------- including the Effective Date to but excluding the earlier of (a) the Revolving Maturity Date and (b) the date of termination of the C $ Revolving Commitments. "C $ Revolving Borrowing" means a Borrowing by the Canadian Borrower ----------------------- comprised of C $ Revolving Loans. "C $ Revolving Commitment" means, with respect to any C $ Revolving ------------------------ Lender at any time, the commitment, if any, of such Lender to make C $ Revolving Loans and accept Bankers' Acceptances during the C $ Revolving Availability Period, expressed as an amount representing the maximum potential aggregate amount of such Lender's C $ Revolving Exposure hereunder, as such commitment may be (a) temporarily or permanently reduced or increased from time to time pursuant to Section 2.24 or Sections 2.08 and 2.23 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 2.19 or 9.04. The initial amount of each C $ Revolving Lender's C $ Revolving Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its C $ Revolving Commitment, as applicable. "C $ Revolving Exposure" means, with respect to any Lender at any ---------------------- time, the sum of the Assigned Dollar Value at such time of all outstanding C $ Revolving Loans of such Lender. "C $ Revolving Lender" means a Lender, which on the date such Person -------------------- becomes a Lender shall be a Canadian chartered bank or other Canadian financial institution, with a C $ Revolving Commitment or, if the C $ Revolving Commitment shall equal zero, a Lender that may be required, pursuant to Section 2.23, to make C $ Revolving Loans. 8 "C $ Revolving Loan" means any loan made by a Lender, and any Bankers' ------------------ Acceptance accepted by a Lender, pursuant to its C $ Revolving Commitment. "Calculation Date" means (a) the last Business Days of each March, ---------------- June, September and December and (b) in respect of C $ Revolving Loans at any time when the aggregate C $ Revolving Exposure exceeds 85% of the Total C $ Revolving Commitments, any other date the Canadian Administrative Agent may determine (upon at least three Business Days' prior notice to the U.S. Borrower) in its discretion to be a Calculation Date (but not more than one date during any calendar week). "CAM" means the mechanism for the allocation and exchange of interests --- in the Credit Facilities and collections thereunder established under Article X. "CAM Exchange" means the exchange of the Lenders' interests provided ------------ for in Section 10.01. "CAM Exchange Date" means the first date after the Effective Date on ----------------- which there shall occur (a) any event described in paragraph (i) or (j) of Article VII with respect to Holdings or either Borrower or (b) an acceleration of the maturity of Loans pursuant to Article VII. "CAM Percentage" means, as to each Lender, a fraction, expressed as a -------------- decimal, of which (a) the numerator shall be the sum of (i) the aggregate Designated Obligations owed to such Lender, (ii) the LC Exposure, if any, of such Lender and (iii) the Swingline Exposure, if any, of such Lender, in each case immediately prior to the CAM Exchange Date, and (b) the denominator shall be the sum of (i) the aggregate Designated Obligations owed to all the Lenders and (ii) the aggregate LC Exposure of all the Lenders, in each case immediately prior to such CAM Exchange Date; provided that, for purposes of clause (a) -------- above, the Designated Obligations owed to the Swingline Lender will be deemed not to include any Swingline Loans except to the extent provided in clause (a)(iii) above. For purposes of computing each Lender's CAM Percentage, all Designated Obligations that are denominated in Canadian Dollars shall be translated into Dollars at the Spot Exchange Rate in effect on the CAM Exchange Date. "Canadian Administrative Agent" means The Chase Manhattan Bank of ----------------------------- Canada, in its capacity as administrative agent for the C $ Revolving Lenders hereunder, and any successor appointed in accordance with Article VIII. 9 "Canadian Borrower" means United Rentals of Canada, Inc., a ----------------- corporation organized and existing under the laws of Canada. "Canadian Collateral Agent" means the "Canadian Collateral Agent", as ------------------------- defined in the Canadian Security Agreement and the Canadian Subsidiary Guarantee Agreement, and any successor appointed in accordance with Article VIII. "Canadian Commitment Fee" has the meaning set forth in Section ----------------------- 2.12(a). "Canadian Dollars" or "C $" means lawful money of Canada. ------------------------- "Canadian Pledge Agreement" means the Amended and Restated Canadian ------------------------- Pledge Agreement, substantially in the form of Exhibit G, among the Canadian Subsidiary Loan Parties and the Canadian Collateral Agent for the benefit of the Canadian Secured Parties. "Canadian Prime Rate" means, on any day, the annual rate of interest ------------------- (rounded upwards, if necessary, to the nearest 1/16 of 1%) equal to the greater of: (a) the annual rate of interest determined by the Canadian Administrative Agent from time to time as its prime rate in effect at its principal office in Toronto on such day for determining interest rates on Canadian Dollar denominated commercial loans in Canada; and (b) the annual rate of interest equal to the sum of (i) the CDOR Rate in effect on such day and (ii) 1%. "Canadian Prime Rate Borrowing" means a Borrowing by the Canadian ----------------------------- Borrower comprised of Canadian Prime Rate Loans. "Canadian Prime Rate Loan" means a Loan denominated in Canadian ------------------------ Dollars that bears interest at a rate based upon the Canadian Prime Rate. "Canadian Secured Parties" has the meaning assigned to such term in ------------------------ the Canadian Security Agreement. "Canadian Security Agreement" means the Amended and Restated Security --------------------------- Agreement, substantially in the Form of Exhibit F, among the Canadian Borrower, the Canadian 10 Subsidiary Loan Parties and the Canadian Collateral Agent for the benefit of the Canadian Secured Parties. "Canadian Security Documents" means the Canadian Security Agreement, --------------------------- the Canadian Pledge Agreement and such other agreements as may from time to time be executed by the Canadian Borrower or a Canadian Subsidiary pursuant to Sections 5.12 and 5.13. "Canadian Subsidiary" means any Subsidiary that is organized under the ------------------- federal or provincial laws of Canada. "Canadian Subsidiary Guarantee Agreement" means the Amended and --------------------------------------- Restated Subsidiary Guarantee Agreement, substantially in the form of Exhibit E, made by the Canadian Subsidiary Loan Parties in favor of the Canadian Collateral Agent for the benefit of the Canadian Secured Parties. "Canadian Subsidiary Loan Party" means each Subsidiary Loan Party ------------------------------ (including the Canadian Borrower) that is a Canadian Subsidiary other than a Subsidiary which has been wound up and has no assets (so long as such Subsidiary continues to have no assets). "Capital Lease" means, with respect to any Person, any lease of (or ------------- other agreement conveying the right to use) any real or personal property by such Person that, in conformity with GAAP, is required to be accounted for as a capital lease on a balance sheet of such Person. "Capital Lease Obligations" of any Person means the obligations of ------------------------- such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP. "Cash Equivalent Investment" means, at any time, (a) any evidence of -------------------------- Debt, maturing not more than one year after such time, issued or guaranteed by the United States Government or any agency thereof, (b) commercial paper, maturing not more than one year from the date of issue, or corporate demand notes, in each case (unless issued by a Lender or its holding company (any such Person a "Permitted Bank")) rated at least A-1 by S&P or P-1 by Moody's, (c) any -------------- certificate of deposit (or time deposits represented by such certificates of deposit) or bankers acceptance, maturing not more than one year after such time, or overnight Federal 11 Funds transactions that are issued or sold by any Permitted Bank or a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, (d) any repurchase agreement entered into with any Permitted Bank (or other commercial banking institution of the stature referred to in clause (c)) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c) and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such Permitted Bank (or other commercial banking institution) thereunder and (e) investments in short-term asset management accounts offered by any Permitted Bank which are invested in debt of any state or municipality of the United States or of the District of Columbia and which are rated under one of the two highest ratings then obtainable from S&P's or Moody's or investments of the types described in clauses (a) through (d) above. "Cash Flow" means, as of the last day of any Fiscal Quarter, --------- Consolidated Net Income for the Computation Period ending on such day plus, to the extent deducted in determining such Consolidated Net Income, Interest Expense (and, to the extent not included in Interest Expense, all interest and rental payments and purchase price obligations under Synthetic Leases), income tax expense, depreciation and amortization for such period, all calculated on a pro forma basis in accordance with Article 11 of Regulation S-X of the Securities and Exchange Commission to reflect any business combination or disposition that has been consummated subsequent to the commencement of such Computation Period. "CDOR Rate" means, on any date, the annual rate of interest that is --------- the rate based on an average rate applicable to C $ bankers' acceptances for a term of 30 days appearing on the "Reuters Screen CDOR Page" (as defined in the International Swaps and Derivatives Association, Inc. definitions, as modified and amended from time to time) at approximately 10:00 a.m. (Toronto time), on such date, or if such date is not a Business Day, then on the immediately preceding Business Day; provided that if such rate does not appear on the -------- Reuters Screen CDOR Page as contemplated, then the CDOR Rate on any date shall be calculated as the rate for the term referred to above applicable to C $ bankers' acceptances quoted by the Canadian Administrative Agent as of 10:00 a.m. (Toronto time) on such date or, if such date is not a Business Day, then on the immediately preceding Business Day. 12 "Change in Control" means (a) any Person or group of Persons (within ----------------- the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, but excluding Permitted Holders) shall acquire beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of 35% or more of the ordinary voting power represented by the outstanding Equity Interests of Holdings having ordinary voting power; (b) during any 24-month period, individuals who at the beginning of such period constituted Holdings's Board of Directors (together with any new directors whose election by Holdings's Board of Directors or whose nomination for election by Holdings's shareholders was approved by a vote of at least two-thirds of the directors who either were directors at beginning of such period or whose election or nomination was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Holdings; (c) any "Change of Control" or similar event, however denominated, shall occur under, and as defined in, any Subordinated Note Indenture, the Senior Note Documents or any document evidencing or governing any other Subordinated Debt; or (d) the U.S. Borrower shall cease to be a direct, wholly owned Subsidiary of Holdings or the Canadian Borrower shall cease to be a direct or indirect, wholly owned Subsidiary of the U.S. Borrower. "Change in Law" means (a) the adoption of any law, rule or regulation ------------- after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.15(b), by any lending office of such Lender or by such Lender's or the Issuing Bank's holding company, if any, with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. "Class", when used in reference to any Loan or Borrowing, refers to ----- whether such Loan, or the Loans comprising such Borrowing, are U.S. $ Revolving Loans, C $ Revolving Loans, Additional Revolving Loans, Term Loans, Incremental Term Loans or Swingline Loans and, when used in reference to any Commitment, refers to whether such Commitment is a U.S. $ Revolving Commitment, C $ Revolving Commitment, Additional Revolving Commitment or Term Loan Commitment. "Code" means the Internal Revenue Code of 1986, as amended from time ---- to time. 13 "Collateral" means any and all "Collateral", as defined in any ---------- applicable Security Document. "Collateral Agents" means the U.S. Collateral Agent and the Canadian ----------------- Collateral Agent, and any successor appointed in accordance with Article VIII. "Collateral and Guarantee Requirement" means the requirement that: ------------------------------------ (a) the U.S. Collateral Agent shall have received from each U.S. Loan Party either (i) a counterpart of each of the U.S. Guaranty, the U.S. Pledge Agreement and the U.S. Security Agreement, in each case duly executed and delivered on behalf of such U.S. Loan Party, or (ii) in the case of any Person that becomes a U.S. Loan Party after the Effective Date, a supplement to each of the foregoing agreements, in each case in the form specified therein, duly executed and delivered on behalf of such U.S. Loan Party; (b) the Canadian Collateral Agent shall have received from each Canadian Subsidiary Loan Party either (i) a counterpart of each of the Canadian Subsidiary Guarantee Agreement, the Canadian Pledge Agreement and the Canadian Security Agreement, in each case duly executed and delivered on behalf of such Canadian Subsidiary Loan Party, or (ii) in the case of any Person that becomes a Canadian Subsidiary Loan Party after the Effective Date, a counterpart of each of the agreements referred to in clause (i), duly executed and delivered on behalf of such Canadian Loan Party; (c) all outstanding Equity Interests of each Subsidiary (other than an Excluded Subsidiary) owned by or on behalf of any Loan Party shall have been pledged pursuant to the applicable Canadian Security Document, if such Loan Party is a Canadian Loan Party, or applicable U.S. Security Document, if such Loan Party is a U.S. Loan Party (except that the Loan Parties shall not be required to pledge more than 65% of the outstanding voting Equity Interests of any Foreign Subsidiary (which, for purposes of this paragraph (c), shall include, as to the U.S. Loan Parties, any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America, or any state thereof, or the District of Columbia) pursuant to the applicable Security Document to the extent that the pledge of any greater percentage could result in adverse tax consequences to Holdings or any 14 Subsidiary) and the Collateral Agent shall have received certificates or other instruments representing all such Equity Interests, together with stock powers or other instruments of transfer with respect thereto endorsed in blank; provided that it is understood and agreed that, for purposes of -------- this paragraph, any Equity Interests directly owned by a Subsidiary shall be deemed not to be owned by Holdings or any other Subsidiary of which such first Subsidiary is a subsidiary; (d) all Debt of Holdings and each Subsidiary that is owing to any Loan Party and is evidenced by a promissory note shall have been pledged pursuant to the applicable Security Document and the applicable Collateral Agent shall have received all such promissory notes, together with instruments of transfer with respect thereto endorsed in blank; (e) all documents and instruments, including Uniform Commercial Code financing statements, required by law or reasonably requested by the applicable Collateral Agent or the applicable Administrative Agent to be filed, registered or recorded to (i) create the Liens intended to be created by the applicable Security Agreement and the applicable Pledge Agreement and (ii) perfect such Liens to the extent required by, and with the priority required by, the applicable Security Agreement and the applicable Pledge Agreement, shall have been filed, registered or recorded or delivered to the applicable Collateral Agent for filing, registration or recording; and (f) each Loan Party shall have obtained all consents and approvals required to be obtained by it in connection with the execution and delivery of all Security Documents to which it is a party, the performance of its obligations thereunder and the granting by it of the Liens thereunder. "Commitment" means a U.S. $ Revolving Commitment, C $ Revolving ---------- Commitment, Additional Revolving Commitment or Term Loan Commitment, or any combination thereof (as the context requires). "Computation Period" means each period of four Fiscal Quarters ending ------------------ on the last day of a Fiscal Quarter on or after the Effective Date. "Consolidated Net Income" means, with respect to Holdings and its ----------------------- Subsidiaries for any period, the net income 15 (or loss) of Holdings and its Subsidiaries for such period, excluding (a) any --------- extraordinary gains during such period and (b) if such period includes the Fiscal Quarter ending June 30, 2001, (i) up to $27,000,000 of financing fees incurred and written-off in such Fiscal Quarter as a result of the Transactions and (ii) up to $40,000,000 of charges taken in such Fiscal Quarter related to store closings and work force reductions. "Contingent Payment" means any payment that has been (or is required ------------------ to be) made under any of the following circumstances: (a) such payment is required to be made by Holdings or any Subsidiary in connection with the purchase of any asset or business, where the obligation of Holdings or the applicable Subsidiary to make such payment (or the amount thereof) is contingent upon the financial or other performance of such asset or business on an ongoing basis (e.g., based on ---- revenues or similar measures of performance); (b) such payment is required to be made by Holdings or any Subsidiary in connection with the achievement of any particular business goal (excluding employee compensation and bonuses in the ordinary course of business); (c) such payment is required to be made by Holdings or any Subsidiary under circumstances similar to those described in clause (a) or (b) or provides substantially the same economic incentive as would a payment described in clause (a) or (b); or (d) such payment is required to be made by Holdings or any Subsidiary in connection with the purchase of any real estate, where the obligation to make such payment is contingent on any event or condition (other than customary closing conditions for a purchase of real estate). "Contract Period" means the term of a B/A or B/A Equivalent Note --------------- selected by the Canadian Borrower in accordance with Section 2.21, commencing on the date of such Borrowing or any rollover date, as applicable, of such B/A or B/A Equivalent Note (which shall be a Business Day) and expiring on a Business Day that shall be either 30 days, 60 days, 90 days or (subject to availability from all the C $ Revolving Lenders) 180 days thereafter, as the Canadian Borrower may elect; provided that no Contract Period shall extend beyond the -------- Revolving Maturity Date. Notwithstanding 16 the foregoing, whenever the last day of any Contract Period would otherwise occur on a day that is not a Business Day, the last day of such Contract Period shall occur on the next succeeding Business Day and such extension of time shall in such case be included in computing the Acceptance Fee in respect of the relevant B/A unless such next succeeding Business Day would fall in the next calendar month, in which case such Contract Period shall end on the next preceding Business Day. "Control" means the possession, directly or indirectly, of the power ------- to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto. ----------- ---------- "Controlled Group" means all members of a controlled group of ---------------- corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with Holdings, are treated as a single employer under Section 414 of the Code or Section 4001 of ERISA. "Credit Facility" means a category of Commitments and extensions of --------------- credit thereunder. For purposes hereof, each of the following comprises a separate Credit Facility: (a) the U.S. $ Revolving Commitments, the U.S. $ Revolving Loans, the Swingline Exposure and the LC Exposure; (b) the C $ Revolving Commitments and the C $ Revolving Loans; (c) the Additional Revolving Commitments and the Additional Revolving Loans; (d) the Term Loans; and (e) the Incremental Term Loans. "Debt" of any Person means, without duplication, (a) all obligations ---- of such Person for borrowed money, whether or not evidenced by bonds, debentures, notes or similar instruments, (b) all Capital Lease Obligations of such Person as lessee under Capital Leases, (c) all obligations of such Person to pay the deferred purchase price of property or services (including Contingent Payments and Holdbacks but excluding trade accounts payable in the ordinary course of business), (d) all Debt secured by a Lien on the property of such Person, whether or not such Debt shall have been assumed by such Person (it being understood that if such Person has not assumed or otherwise become personally liable for any such Debt, the amount of the Debt of such Person in connection therewith shall be limited to the lesser of the face amount of such Debt or the fair market value of all property of such Person securing such Debt), (e) all obligations, contingent or otherwise, with 17 respect to the face amount of all letters of credit (whether or not drawn) and banker's acceptances issued for the account or upon the application of such Person, (f) all Hedging Obligations of such Person, (g) all Suretyship Liabilities of such Person and (h) all Synthetic Lease Obligations of such Person. "Default" means any event or condition which constitutes an Event of ------- Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. "Denomination Date" means, in relation to any Canadian Dollar ----------------- Borrowing, the date that is three Business Days before the date such Borrowing is made. "Designated Obligations" means all Obligations of the Loan Parties in ---------------------- respect of (a) principal of and interest on the Loans (including B/As, B/A Equivalent Notes and Acceptance Fees with respect thereto) and (b) fees, whether or not the same shall at the time of any determination be due and payable under the terms of the Loan Documents. "Designated U.S. Affiliate" has the meaning set forth in the ------------------------- definition of the term "Additional Revolving Lender". "Disclosed Matters" means the actions, suits and proceedings and the ----------------- environmental matters disclosed in Schedule 3.06. "Discount Proceeds" means, for any B/A (or, as applicable, any B/A ----------------- Equivalent Note), an amount (rounded to the nearest whole cent, and with one- half of one cent being rounded upwards) calculated on the applicable date of the Borrowing of which such B/A or B/A Equivalent Note is a part or any rollover date for such Borrowing by multiplying: (a) the face amount of the B/A (or, as applicable, the B/A Equivalent Note); by (b) the quotient of one divided by the sum of one plus the product of: (i) the Discount Rate (expressed as a decimal) applicable to such B/A (or as applicable, such B/A Equivalent Note), and (ii) a fraction, the numerator of which is the Contract Period of the B/A (or, as 18 applicable, the B/A Equivalent Note) and the denominator of which is the number of days in the applicable calendar year, with such quotient being rounded up or down to the fifth decimal place, and .000005 being rounded up. "Discount Rate" means: ------------- (a) with respect to any C $ Revolving Lender that is a Schedule I chartered bank under the Bank Act (Canada), as applicable to a B/A (or, as applicable, a B/A Equivalent Note) being purchased by such Lender on any day, the average (as determined by the Canadian Administrative Agent) of the respective percentage discount rates (expressed to two decimal places and rounded upward, if necessary, to the nearest 0.01%) quoted by the Schedule I Reference Banks as the percentage discount rate at which the Schedule I Reference Banks would, in accordance with their normal practices, at or about 10:00 a.m., Toronto time, on such date, be prepared to purchase bankers' acceptances accepted by the Schedule I Reference Banks having a face amount and term comparable to the face amount and term of such B/A or B/A Equivalent Note; and (b) with respect to any C $ Revolving Lender that is not a Schedule I chartered bank under the Bank Act (Canada), as applicable to a B/A (or, as applicable, a B/A Equivalent Note) being purchased by such Lender on any day, the average (as determined by the Canadian Administrative Agent) of the respective percentage discount rates (expressed to two decimal places and rounded upward, if necessary, to the nearest 0.01%) quoted by the Schedule II and/or Schedule III Reference Banks as the percentage discount rates at which the Schedule II and/or Schedule III Reference Banks would, in accordance with their normal practices, at or about 10:00 a.m., Toronto time, on such date, be prepared to purchase bankers' acceptances accepted by the Schedule II and/or Schedule III Reference Banks having a face amount and term comparable to the face amount and term of such B/A; provided, -------- however, that no Discount Rate calculated pursuant to this clause (b) shall ------- exceed the Discount Rate calculated pursuant to clause (a) above in respect of the same issue of Bankers' Acceptances plus 7 basis points (0.07%) per annum. "Disqualified Equity Interests" means any class or series of Equity ----------------------------- Interests that, either by its terms, by the 19 terms of any security into which it is convertible or exchangeable or by contract or otherwise, is or upon the happening of an event or passage of time would be, required to be redeemed prior to the Term Loan Maturity Date or is redeemable at the option of the holder thereof at any time prior to the Term Loan Maturity Date, or is convertible into or exchangeable for debt securities at any time prior to the Term Loan Maturity Date, or any class or series of Equity Interests that is otherwise redeemable on terms more favorable to the holder thereof than the redemption terms relating to Holdings's Series A Perpetual Convertible Preferred Stock, issued on January 7, 1999, or Series B Perpetual Convertible Preferred Stock, issued on September 30, 1999; provided, -------- however, that Equity Interests will not constitute Disqualified Equity Interests - ------- solely because the holders thereof have the right to require the issuer thereof to repurchase or redeem such Equity Interests upon the occurrence of a Change in Control; provided further that any Equity Interests that are redeemable on terms -------- ------- no more favorable to the holder thereof than the redemption terms relating to Holdings's Series A Perpetual Convertible Preferred Stock, issued on January 7, 1999, or Series B Perpetual Convertible Preferred Stock, issued on September 30, 1999, shall not constitute "Disqualified Equity Interests". "Dollar Equivalent" means, with respect to any amount of Canadian ----------------- Dollars on any date, the amount of Dollars that may be purchased with such amount of Canadian Dollars at the Spot Exchange Rate on such date. "Dollars" or "$" refers to lawful money of the United States of ------- - America. "Effective Date" means the date on which the conditions specified in -------------- Section 4.01 are satisfied (or waived in accordance with Section 9.02). "Environmental Laws" means all applicable laws, rules, regulations, ------------------ codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by or with any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, presence, release or threatened release of any Hazardous Materials or to health and safety matters, as those matters relate to environmental protection. "Environmental Liability" means any liability, contingent or otherwise ----------------------- (including any liability for 20 damages, costs of environmental remediation, fines, penalties or indemnities), of Holdings or any Subsidiary resulting from or based upon (a) violation of any Environmental Law, (b) the generation, presence, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. "Equipment Securitization Transaction" means any sale, assignment, ------------------------------------ pledge or other transfer (or series of related sales, assignments, pledges or other transfers) (a) by Holdings or any Subsidiary of rental fleet equipment or related assets to facilitate any financing transaction entered into by an ES Special Purpose Vehicle that is permitted hereunder, (b) by any ES Special Purpose Vehicle of leases or rental agreements between Holdings and/or any Subsidiary, as lessee, on the one hand, and such ES Special Purpose Vehicle, as lessor, on the other hand, relating to such equipment or related assets and lease receivables arising under such leases and rental agreements and (c) by Holdings or any Subsidiary of any interest in any of the foregoing, together in each case with (i) any and all proceeds thereof (including all collections relating thereto, all payments and other rights under insurance policies or warranties relating thereto, all disposition proceeds received upon a sale thereof, and all rights under manufacturers' repurchase programs or guaranteed depreciation programs relating thereto), (ii) any collection or deposit account relating thereto and (iii) any collateral, guaranties, credit enhancement or other property or claims supporting or securing payment on, or otherwise relating to, any such leases, rental agreements or lease receivables. "Equity Interests" means shares of capital stock, partnership ---------------- interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person. "ERISA" means the Employee Retirement Income Security Act of 1974, as ----- amended from time to time. "ERISA Affiliate" means any trade or business (whether or not --------------- incorporated) that, together with Holdings, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of 21 ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. "ERISA Event" means (a) any "reportable event", as defined in Section ----------- 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by Holdings or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by Holdings or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by Holdings or any of its ERISA Affiliates of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by Holdings or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from Holdings or any ERISA Affiliate, of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. "ES Special Purpose Vehicle" means a trust, bankruptcy remote entity -------------------------- or other special purpose entity which is a Subsidiary (or, if not a Subsidiary, the common equity of which is wholly owned, directly or indirectly, by Holdings) and which is formed for the purpose of, and engages in no material business other than, acting as a lessor, issuer or depositor in an Equipment Securitization Transaction (and, in connection therewith, owning the equipment, leases, rental agreements, lease receivables, rights to payment and other interests, rights and assets described in the definition of Equipment Securitization Transaction, and pledging or transferring any of the foregoing or interests therein). "Eurodollar", when used in reference to any Loan or Borrowing, refers ---------- to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted IBO Rate. "Event of Default" has the meaning assigned to such term in Article ---------------- VII. 22 "Excess Synthetic Lease Collateral" means specified assets with a fair --------------------------------- market value not exceeding 35% of the Synthetic Lease Obligations secured thereby. "Excluded Subsidiaries" means (a) any Special Purpose Vehicle (if and --------------------- so long as, and to the extent that, satisfaction of the Collateral and Guarantee Requirement by such Special Purpose Vehicle would violate the terms of the Securitization Transaction(s) entered into by such Special Purpose Vehicle), (b) any Acquisition Subsidiary (unless and until such Acquisition Subsidiary acquires any Equity Interests or assets), (c) the QuIPS Trust and (d) any Subsidiary if (i) any Equity Interests in such Subsidiary (other than directors' qualifying shares or similar Equity Interests) are owned by any Person or Persons other than Holdings or a Subsidiary (except any Excluded Subsidiary), (ii) the consent of such Person or Persons is required in order for the Collateral and Guarantee Requirement to be satisfied with respect to such Subsidiary, (iii) such consent has not been obtained and (iv) such Subsidiary has not incurred any Suretyship Liability in respect of, or Lien on any of its assets securing, any other Debt of any Loan Party. "Excluded Taxes" means, with respect to the Agents, any Lender, the -------------- Issuing Bank or any other recipient (including a Participant) of any payment to be made by or on account of any obligation of either Borrower hereunder or under any other Loan Document, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) above and (c) in the case of a Foreign Lender (or a Participant that would be a Foreign Lender if it were a Lender) or any other recipient of any payment to be made by or on account of any obligation of either Borrower hereunder or under any other Loan Document (other than an assignee pursuant to a request by such Borrower under Section 2.19(b)), any withholding tax that (i) is in effect and would apply to amounts payable to such Foreign Lender (or a Participant that would be a Foreign Lender if it were a Lender) or any other recipient of any payment to be made by or on account of any obligation of either Borrower hereunder or under any other Loan Document at the time such Foreign Lender (or a Participant that would be a Foreign Lender if it were a Lender) or any other recipient of any payment to be made by or on account of any obligation of 23 such Borrower hereunder or under any other Loan Document becomes a party (or becomes entitled to any payment with respect) to this Agreement or any other Loan Document (or designates a new lending office), except to the extent that (A) such Foreign Lender (or a Participant that would be a Foreign Lender if it were a Lender) or any other recipient of any payment to be made by or on account of any obligation of either Borrower hereunder or under any other Loan Document (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from such Borrower with respect to any withholding tax pursuant to Section 2.17(a), (B) such withholding Tax is attributable to the designation of a Subsidiary after the date upon which such Foreign Lender (or a Participant that would be a Foreign Lender if it were a Lender) or any other recipient of any payment to be made by or on account of any obligation of either Borrower hereunder or under any other Loan Document becomes a party to this Agreement or (C) such withholding tax is imposed on payments made (x) to a Foreign Lender (or a Participant that would be a Foreign Lender if it were a Lender) or any other recipient of any payment to be made by or on account of any obligations of either Borrower hereunder or under any other Loan Document following a CAM Exchange or (ii) is attributable to the failure of such Foreign Lender (or a Participant that would be a Foreign Lender if it were a Lender) or any other recipient of any payment to be made by or on account of any obligation of either Borrower hereunder or under any other Loan Document to comply with Section 2.17(e). "Excluded Transfers" has the meaning assigned to such term in Section ------------------ 6.05(d). "Existing Credit Agreements" means the Existing Revolving Credit -------------------------- Agreement and the Existing Term Loan Credit Agreements. "Existing Letter of Credit" means each letter of credit previously ------------------------- issued for the account of, or guaranteed by, Holdings or any Subsidiary that (a) is outstanding on the Effective Date and (b) is listed on Schedule 2.05. "Existing Revolving Credit Agreement" means the Credit Agreement dated ----------------------------------- as of September 29, 1998, among the U.S. Borrower, Holdings, the Canadian Borrower, various financial institutions, Bank of America Canada, as Canadian administrative agent, and Bank of America, N.A., as administrative agent, as amended or restated from time to time (including any amendment or restatement increasing the amount available thereunder). 24 "Existing Synthetic Leases" means (a) the $98,500,000 of Synthetic ------------------------- Lease Obligations of the U.S. Borrower outstanding on the date hereof under the Master Lease Agreement dated as of December 17, 1999, as amended, between UR (NA) 1999 Trust and the U.S. Borrower and (b) the $246,500,000 of Synthetic Lease Obligations of the U.S. Borrower outstanding on the date hereof under the Master Lease Agreement dated as of June 30, 2000, as amended, between UR (NA) 2000 Trust and the U.S. Borrower. "Existing Term Loan B Credit Agreement" means the Amended and Restated ------------------------------------- Term Loan Agreement dated as of May 12, 2000, among Holdings, the U.S. Borrower, various financial institutions and Bank of America, N.A., as agent, which amends and restates the Term Loan Agreement dated as of July 10, 1998. "Existing Term Loan C Credit Agreement" means the Amended and Restated ------------------------------------- Term Loan Agreement dated as of May 12, 2000, among Holdings, the U.S. Borrower, various financial institutions and Bank of America, N.A., as agent, which amends and restates the Term Loan Agreement dated as of July 15, 1999. "Existing Term Loan Credit Agreements" means, collectively, the ------------------------------------ Existing Term Loan B Credit Agreement, the Existing Term Loan C Credit Agreement and the Existing Term Loan D Credit Agreement. "Existing Term Loan D Credit Agreement" means the Term Loan Agreement ------------------------------------- dated as of June 9, 2000, among Holdings, the U.S. Borrower and Bank of America, N.A., as agent. "Existing Term Loans" has the meaning assigned to such term in Section ------------------- 2.01(b). "Federal Funds Effective Rate" means, for any day, the weighted ---------------------------- average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the U.S. Administrative Agent from three Federal funds brokers of recognized standing selected by it. 25 "Financial Officer" means the chief financial officer, principal ----------------- accounting officer, treasurer or controller of Holdings. "Fiscal Quarter" means a fiscal quarter of a Fiscal Year. -------------- "Fiscal Year" means the fiscal year of Holdings and its Subsidiaries, ----------- which period shall be the 12-month period ending on December 31 of each year. References to a Fiscal Year with a number corresponding to any calendar year (e.g., "Fiscal Year 2001") refer to the Fiscal Year ending on December 31 of ---- such calendar year. "Floor Plan Financing Arrangement" means any arrangement whereby -------------------------------- Holdings or a Subsidiary grants a Lien to an equipment manufacturer (or an affiliate thereof which is in the financing business) on all equipment purchased from such manufacturer and the proceeds thereof, including equipment which was not financed by such manufacturer (or an affiliate thereof). "Foreign Lender" means any Lender that is organized under the laws of -------------- a jurisdiction other than that in which the applicable Borrower is located. For purposes of this definition, the United States of America, each state thereof and the District of Columbia shall be deemed to constitute a single jurisdiction and Canada and each province and territory thereof shall be deemed to constitute a single other jurisdiction. "Foreign Subsidiary" means any Subsidiary that is organized under the ------------------ laws of a jurisdiction other than, and which is conducting the majority of its business outside of, (i) the United States of America or any state thereof or the District of Columbia and (ii) Canada or any province or territory thereof. "Funded Debt" means (a) all Debt of Holdings and its Subsidiaries and ----------- (b) to the extent not included in the definition of Debt, without duplication, all outstanding Securitization Obligations, but excluding (i) contingent obligations in respect of undrawn letters of credit and Suretyship Liabilities (except to the extent constituting contingent obligations or Suretyship Liabilities in respect of Funded Debt of a Person other than Holdings or any Subsidiary), (ii) Hedging Obligations, (iii) Debt of Holdings to Subsidiaries and Debt of Subsidiaries to Holdings or to other Subsidiaries and (iv) Debt (including guaranties thereof) in respect of the QuIPS Debentures and the QuIPS Preferred Securities. 26 "Funded Debt to Cash Flow Ratio" means, as of the last day of any ------------------------------ Fiscal Quarter, the ratio of (i) Funded Debt as of such day to (ii) Cash Flow as of such day. "GAAP" means generally accepted accounting principles in the United ---- States of America. "Governmental Authority" means the government of the United States of ---------------------- America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Guarantee Agreements" means the U.S. Guaranty and the Canadian -------------------- Subsidiary Guarantee Agreement. "Hazardous Materials" means all explosive or radioactive substances ------------------- or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. "Hedging Agreement" means any interest rate protection agreement, ----------------- foreign currency exchange agreement, equity swap agreement, commodity price protection agreement or other interest or currency exchange rate, equity price or commodity price hedging arrangement. "Hedging Obligations" means, with respect to any Person, all ------------------- liabilities of such Person under any Hedging Agreement. "Holdback" means an unsecured, non-interest-bearing obligation of -------- Holdings or any Subsidiary to pay a portion of the purchase price for any purchase or other acquisition permitted hereunder which matures within nine months of the date of such purchase or other acquisition. "Holdings" means United Rentals, Inc., a Delaware corporation. -------- "IBO Rate" means, with respect to any Eurodollar Borrowing for any -------- Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next higher 1/100th of 1%) equal to the interest rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered in immediately available funds 27 to the U.S. Administrative Agent at the Eurodollar lending offices where its foreign currency and exchange operations and Eurodollar funding operations are customarily conducted in the international interbank market at approximately 10:00 a.m., New York City time, two Business Days prior to the commencement of such Interest Period. In the event that such rate is not available at such time for any reason, then the "IBO Rate" with respect to such Eurodollar Borrowing -------- for such Interest Period shall be the rate at which Dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the Eurodollar lending offices where the U.S. Administrative Agent's foreign currency and exchange operations and Eurodollar funding operations are customarily conducted in the international interbank market at approximately 11:00 a.m., New York City time, two Business Days prior to the commencement of such Interest Period. "Incremental Term Lender" means a Lender with an outstanding ----------------------- Incremental Term Loan. "Incremental Term Loans" has the meaning assigned to such term in ---------------------- Section 2.20. "Incremental Facility Amendment" has the meaning assigned to such term ------------------------------ in Section 2.20. "Indemnified Taxes" means Taxes other than Excluded Taxes. ----------------- "Information Memorandum" means the Confidential Information Memorandum ---------------------- dated March 2001, relating to Holdings, the U.S. Borrower and the Transactions. "Interest Coverage Ratio" means, for any Computation Period, the ratio ----------------------- of (a) Consolidated Net Income before deducting Interest Expense, income tax expense, amortization (but not depreciation) and Rentals for such Computation Period to (b) Interest Expense plus (without duplication) Rentals (excluding ---- Rentals relating to the principal component under Synthetic Leases) for such Computation Period. "Interest Election Request" means a request by the U.S. Borrower or ------------------------- the Canadian Borrower, as applicable, to convert or continue a U.S. $ Revolving Borrowing, C $ Revolving Borrowing, Additional Revolving Borrowing or Term Borrowing in accordance with Section 2.07. "Interest Expense" means for any period the sum, without duplication, ---------------- of (a) the consolidated interest 28 expense of Holdings and its Subsidiaries for such period (including, without duplication, interest paid on the QuIPS Debentures, distributions on (but not redemptions of) the QuIPS Preferred Securities, imputed interest on Capital Leases and Synthetic Leases and any interest which is capitalized but excluding amortization of deferred financing costs) and (b) consolidated yield or discount accrued during such period on the aggregate investment or claim held by purchasers, assignees or other transferees of, or of interests in, accounts receivable, lease receivables and other rights to payment of Holdings and its Subsidiaries in connection with any Securitization Transaction (regardless of the accounting treatment of such Securitization Transaction). "Interest Payment Date" means (a) with respect to any ABR Loan, --------------------- Canadian Prime Rate Loan or Swingline Loan, the last day of each March, June, September and December and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period. "Interest Period" means, with respect to any Eurodollar Borrowing, the --------------- period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, with the consent of each Lender participating in such Borrowing, nine or twelve months) thereafter or the day one or two weeks thereafter, as the U.S. Borrower may elect; provided that (a) if any Interest Period would end on a day -------- other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (b) any Interest Period (other than a one or two-week Interest Period) that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. 29 "Investment" means, relative to any Person, (a) any loan or advance ---------- made by such Person to any other Person (excluding any commission, travel or similar advances made to directors, officers and employees of Holdings or any Subsidiary), (b) any Suretyship Liability of such Person, (c) any ownership or similar interest held by such Person in any other Person and (d) deposits and the like relating to prospective acquisitions of businesses (excluding deposits placed in escrow pursuant to bona fide arrangements that provide for the return of such deposits to Holdings or the applicable Subsidiary in the event that the related transaction is not consummated for any reason by a date certain). "Issuing Bank" means The Chase Manhattan Bank, in its capacity as the ------------ issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.05(i) and solely in respect of any Existing Letter of Credit, the issuer of such Existing Letter of Credit. The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term "Issuing Bank" shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. "Judgment Currency" has the meaning set forth in Section 9.15. ----------------- "Judgment Currency Conversion Date" has the meaning set forth in --------------------------------- Section 9.15. "LC Disbursement" means a payment made by the Issuing Bank pursuant to --------------- a Letter of Credit. "LC Exposure" means, at any time, the sum of (a) the aggregate undrawn ----------- amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the U.S. Borrower at such time. The LC Exposure of any U.S. $ Revolving Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time. "LC Reserve Account" has the meaning set forth in Section 10.02(a). ------------------ "Lender Affiliate" means (a) with respect to any Lender, (i) an ---------------- Affiliate of such Lender or (ii) any entity (whether a corporation, partnership, trust or otherwise) that is engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or 30 managed by a Lender or an Affiliate of such Lender, and (b) with respect to any Lender that is a fund that invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and that is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. "Lenders" means the Persons listed on Schedule 2.01 and any other ------- Person that shall have become a party hereto pursuant to an Assignment and Acceptance or an Incremental Facility Amendment or pursuant to Section 2.24, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance. Unless the context otherwise requires, the term "Lenders" includes the Swingline Lender. "Letter of Credit" means any letter of credit issued pursuant to this ---------------- Agreement and each Existing Letter of Credit. "Lien" means, with respect to any Person, any interest granted by such ---- Person in any real or personal property, asset or other right owned or being purchased or acquired by such Person which secures payment or performance of any obligation and shall include any mortgage, lien, encumbrance, charge, hypothecation or other security interest of any kind, whether arising by contract, as a matter of law, by judicial process or otherwise. "Loan Documents" means this Agreement, the Guarantee Agreements, the -------------- Incremental Facility Amendment and the Security Documents. "Loan Parties" means Holdings, the Borrowers and the Subsidiary Loan ------------ Parties. "Loan" means any loan made by any Lender to either Borrower pursuant ---- to this Agreement, which shall include any B/A or B/A Equivalent Note accepted by any C $ Revolving Lender pursuant to this Agreement. "Majority Lenders" means, with respect to any Credit Facility on any ---------------- date, Lenders having Loans (excluding Swingline Loans) and unused Commitments (excluding commitments to issue Letters of Credit or make Swingline Loans) representing more than 50% of the sum of all Loans (excluding Swingline Loans) and unused Commitments (excluding commitments to issue Letters of Credit or make Swingline Loans) under such Credit Facility on such date. For purposes of determining the Majority Lenders, any amounts denominated in Canadian Dollars shall be translated 31 into Dollars at the Spot Exchange Rates in effect on the Effective Date. "Margin Stock" means any "margin stock" as defined in Regulation U of ------------ the Board. "Material Adverse Effect" means (a) a material adverse change in, or a ----------------------- material adverse effect upon, the financial condition, operations, assets, business, properties or prospects of Holdings and the Subsidiaries, taken as a whole, or (b) a material adverse effect upon any substantial portion of the Collateral or upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document. "Material Debt" means Debt (other than the Loans and Letters of ------------- Credit) of any one or more of Holdings and the Subsidiaries in an aggregate principal amount exceeding $15,000,000 (or its equivalent in any other currency). For purposes of determining Material Debt, the "principal amount" of any Hedging Obligation of Holdings or any Subsidiary at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that Holdings or such Subsidiary would be required to pay if the related Hedging Agreement were terminated at such time. "Moody's" means Moody's Investors Service, Inc. ------- "Multiemployer Plan" means a multiemployer plan as defined in Section ------------------ 4001(a)(3) of ERISA. "Net Proceeds" means, with respect to any event (a) the cash proceeds ------------ received in respect of such event including (i) any cash received in respect of any non-cash proceeds, but only as and when received, (ii) in the case of a casualty, insurance proceeds, and (iii) in the case of a condemnation or similar event, condemnation awards and similar payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid by Holdings and the Subsidiaries to third parties (other than Affiliates) in connection with such event, (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), the amount of all payments required to be made by Holdings and the Subsidiaries as a result of such event to repay Debt (other than Loans) secured by such asset or otherwise subject to mandatory prepayment as a result of such event, and (iii) the amount of all taxes paid (or reasonably estimated to be payable) by Holdings and the Subsidiaries, and the amount of any reserves established by Holdings and the 32 Subsidiaries to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by the chief financial officer of Holdings). "Net Worth" means, at any time, the sum of (a) Holdings's consolidated --------- stockholders' equity (including preferred stock accounts but determined by excluding the effects of the write-offs and charges referred to in clause (b) of the definition of Consolidated Net Income) at such time plus (b) to the extent, if any, not included in such stockholders' equity, the outstanding amount of the QuIPS Preferred Securities at such time. "Obligation Currency" has the meaning set forth in Section 9.15. ------------------- "Obligations" means any and all "Liabilities", as defined in any ----------- applicable Security Document or the Guarantee Agreements. "Other Taxes" means any and all present or future recording, stamp, ----------- documentary, excise, transfer, sales, property or similar taxes, charges or levies, other than Excluded Taxes, arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document. "Participant" has the meaning set forth in Section 9.04(e). ----------- "PBGC" means the Pension Benefit Guaranty Corporation referred to and ---- defined in ERISA and any successor entity performing similar functions. "Perfection Certificate" means a certificate in the form of Exhibit I ---------------------- or any other form approved by the U.S. Collateral Agent. "Permitted Holders" means (a) the executive managers of the U.S. ----------------- Borrower as of the Effective Date and their respective estates, their respective spouses and former spouses, their lineal descendants, the legal representatives of any of the foregoing, the trustees of any bona fide trusts of which any of the foregoing are the sole beneficiaries, and any Person of which any of the foregoing "beneficially owns" (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) at least 51% of each class of Equity Interests of such Person; and (b) Richard D. 33 Colburn and any of his estate, his spouse or any former spouse, his lineal descendants, the legal representatives of any of the foregoing, the trustees of any bona fide trusts of which any of the foregoing and/or one or more charitable organizations (as defined below) are the sole beneficiaries, any Person of which any of the foregoing "beneficially owns" (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934) at least 51 % of each class of the Equity Interests of such Person and any charitable organization to which any of the foregoing transfers 20% or more of the outstanding shares of common stock of Holdings. For purposes of the foregoing, a "charitable organization" is an organization to which a contribution is deductible for income tax purposes under the Code. "Person" means any natural person, corporation, limited liability ------ company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. "Plan" means any employee pension benefit plan (other than a ---- Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which Holdings or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Pledge Agreements" means the U.S. Pledge Agreement and the Canadian ----------------- Pledge Agreement. "Prime Rate" means the rate of interest per annum publicly announced ---------- from time to time by The Chase Manhattan Bank as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. "QuIPS Debentures" means the 6-1/2% convertible subordinated ---------------- debentures issued by Holdings to the QuIPS Trust pursuant to the QuIPS Indenture. "QuIPS Guarantees" means (i) the Guarantee Agreement dated as of ---------------- August 5, 1998, issued by Holdings (then known as United Rentals Holdings, Inc.) relating to the common securities of the QuIPS Trust and (ii) the Guarantee Agreement dated as of August 5, 1998, between Holdings (then known as United Rentals Holdings, Inc.) and The Bank of New York, as Trustee, relating to the QuIPS Preferred Securities. 34 "QuIPS Indenture" means the Indenture dated as of August 5, 1998, --------------- between Holdings (then known as United Rentals Holdings, Inc.) and The Bank of New York, as Trustee. "QuIPS Preferred Securities" means the 6-1/2% convertible quarterly -------------------------- income preferred securities issued by the QuIPS Trust pursuant to the QuIPS Purchase Agreement. "QuIPS Purchase Agreement" means the Purchase Agreement dated as of ------------------------ July 30, 1998, among the QUIPS Trust, Holdings (then known as United Rentals Holdings, Inc.), the U.S. Borrower (then known as United Rentals, Inc.) and the purchasers named therein. "QuIPS Trust" means United Rentals Trust I, a special purpose Delaware ----------- business trust established pursuant to the Amended and Restated Trust Agreement dated as of August 5, 1998, among Holdings (then known as United Rentals Holdings, Inc.), The Bank of New York, as Property Trustee, The Bank of New York (Delaware), as Delaware Trustee, and the administrative trustees named therein. "Reallocation Notice" has the meaning set forth in Section 2.23. ------------------- "Receivables Securitization Transaction" means any sale, assignment or -------------------------------------- other transfer (or series of related sales, assignments or other transfers) by Holdings or any Subsidiary of accounts receivable, lease receivables or other payment obligations owing to Holdings or such Subsidiary or any interest in any of the foregoing, together in each case with any collections and other proceeds thereof, any collection or deposit account related thereto, and any collateral, guaranties or other property or claims supporting or securing payment by the obligor thereon of, or otherwise related to, or subject to leases giving rise to, any such receivables. "Register" has the meaning set forth in Section 9.04. -------- "Related Parties" means, with respect to any specified Person, such --------------- Person's Affiliates and the respective directors, officers, employees, agents and advisors of such Person and such Person's Affiliates. "Rentals" means the aggregate fixed amounts payable by Holdings or any ------- Subsidiary under any lease of (or other agreement conveying the right to use) any real or personal property by Holdings or any Subsidiary, as lessee, 35 other than (i) any Capital Lease or (ii) any lease with a remaining term of six months or less which is not renewable solely at the option of the lessee. "Required Lenders" means, at any time, Lenders having Revolving ---------------- Exposures, Term Loans, Incremental Term Loans and unused Commitments representing more than 50% of the sum of the total Revolving Exposures, outstanding Term Loans, Incremental Term Loans and unused Commitments at such time. For purposes of determining the Required Lenders, any amounts denominated in Canadian Dollars shall be translated into Dollars at the Spot Exchange Rate in effect on the Effective Date. "Reset Date" has the meaning set forth in Section 2.22(a)(ii). ---------- "Revolving Commitments" means the U.S. $ Revolving Commitments and the --------------------- C $ Revolving Commitments. "Revolving Exposures" means the U.S. $ Revolving Exposures, the ------------------- Additional Revolving Exposures and the C $ Revolving Exposures. "Revolving Lenders" means the U.S. $ Revolving Lenders and the C $ ----------------- Revolving Lenders. "Revolving Loans" means the U.S. $ Revolving Loans and C $ Revolving --------------- Loans. "Revolving Maturity Date" means October 20, 2006. ----------------------- "RS Special Purpose Vehicle" means a trust, bankruptcy remote entity -------------------------- or other special purpose entity which is a Subsidiary (or, if not a Subsidiary, the common equity of which is wholly owned, directly or indirectly, by Holdings) and which is formed for the purpose of, and engages in no material business other than, acting as an issuer or a depositor in a Receivables Securitization Transaction (and, in connection therewith, owning accounts receivable, lease receivables, other rights to payment, leases and related assets and pledging or transferring any of the foregoing or interests therein). "S&P" means Standard & Poor's, a division of The McGraw-Hill --- Companies. "Schedule I Reference Banks" means such Schedule I chartered banks -------------------------- under the Bank Act (Canada) as are mutually agreed upon by the Canadian Administrative Agent and the Canadian Borrower. 36 "Schedule II and/or Schedule III Reference Banks" means such Schedule ----------------------------------------------- II and/or Schedule III banks under the Bank Act (Canada) as are mutually agreed upon by the Canadian Administrative Agent and the Canadian Borrower. "Secured Parties" has the meaning assigned to such term in the U.S. --------------- Security Agreement. "Securitization Obligations" means, with respect to any Securitization -------------------------- Transaction, the aggregate investment or claim held at any time by all purchasers, assignees or transferees of (or of interests in) or holders of obligations that are supported or secured by (i) in the case of an Equipment Securitization Transaction, equipment or related assets (and leases, rental agreements, lease receivables, rights to payment and other interests, rights and assets described in the definition of Equipment Securitization Transaction) in connection with such Equipment Securitization Transaction, and (ii) in the case of a Receivables Securitization Transaction, accounts receivable, lease receivables and other rights to payment in connection with such Receivables Securitization Transaction. "Securitization Transaction" means an Equipment Securitization -------------------------- Transaction or a Receivables Securitization Transaction. "Security Agreements" means the U.S. Security Agreement and the ------------------- Canadian Security Agreement. "Security Documents" means the Security Agreements, the Pledge ------------------ Agreements and each other security agreement or other instrument or document executed and delivered pursuant to Section 5.12 or 5.13 to secure any of the Obligations. "Seller Subordinated Debt" means unsecured Debt of either Borrower ------------------------ that: (a) is subordinated, substantially upon the terms set forth in Exhibit J or other terms that are more favorable to the Lenders, in right of payment to the payment in full in cash of the Loans and all other amounts owed under the Loan Documents (whether or not matured or due and payable); and (b) represents all or part of the purchase price payable by either Borrower in connection with a transaction described in Section 6.05(c). 37 "Senior Debt" means all Funded Debt of Holdings and its Subsidiaries ----------- other than Subordinated Debt. "Senior Debt to Cash Flow Ratio" means, as of the last day of any ------------------------------ Fiscal Quarter, the ratio of (i) Senior Debt as of such day to (ii) Cash Flow as of such day. "Senior Note Documents" means the Senior Notes Indenture and all other --------------------- instruments, agreements and other documents evidencing or governing the Senior Notes or providing for any Suretyship Liability or other right in respect thereof. "Senior Notes" means the senior unsecured notes to be issued by the ------------ U.S. Borrower on or prior to the Effective Date in an aggregate principal amount not less than $300,000,000 and the Debt represented thereby and by the guarantees thereof. "Senior Notes Indenture" means the indenture under which the Senior ---------------------- Notes are issued. "Special Purpose Vehicle" means an ES Special Purpose Vehicle or an RS ----------------------- Special Purpose Vehicle. "Spot Exchange Rate" means, on any day, with respect to Canadian ------------------ Dollars, the spot rate at which Dollars are offered on such day by the Canadian Administrative Agent in Toronto for Canadian Dollars at approximately 11:00 a.m. (Toronto time). For purposes of determining the Spot Exchange Rate in connection with a Canadian Dollar Borrowing, such Spot Exchange Rate shall be determined as of the Denomination Date for such Borrowing. "Statutory Reserve Rate" means a fraction (expressed as a decimal), ---------------------- the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the U.S. Administrative Agent is subject for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be 38 adjusted automatically on and as of the effective date of any change in any reserve percentage. "Subordinated Debt" means (a) the $200,000,000 of 9.50% unsecured ----------------- senior subordinated notes due 2008 issued by the U.S. Borrower (then known as United Rentals, Inc.) on May 22, 1998, and the unsecured subordinated guarantees thereof provided for in the applicable Subordinated Note Indenture, (b) the $205,000,000 of 8.80% unsecured senior subordinated notes due 2008 issued by the U.S. Borrower on August 12, 1998, and the unsecured subordinated guarantees thereof provided for in the applicable Subordinated Note Indenture, (c) the $300,000,000 of 9.25% unsecured senior subordinated notes due 2009 issued by the U.S. Borrower on December 15, 1998, and the unsecured subordinated guarantees thereof provided for in the applicable Subordinated Note Indenture, (d) the $250,000,000 of 9.0% unsecured senior subordinated notes due 2009 issued by the U.S. Borrower on March 23, 1999, and the unsecured subordinated guarantees thereof provided for in the applicable Subordinated Note Indenture, (e) Seller Subordinated Debt and (f) any other unsecured Debt of either Borrower and unsecured guarantees thereof by Holdings and/or any Subsidiary of the U.S. Borrower which (i) is owed to Persons other than officers, employees, directors or Affiliates of either Borrower, (ii) has no amortization prior to the date that is six months after the Term Loan Maturity Date and (iii) has subordination terms (including subordination terms with respect to guarantees), covenants, events of default and redemption provisions which are not less favorable to the Lenders than those set forth in the Subordinated Note Indentures or are otherwise approved by the Required Lenders, such approval not to be unreasonably withheld. "Subordinated Note Indentures" means each of (a) the Indenture dated ---------------------------- as of May 22, 1998, among the U.S. Borrower (then known as United Rentals, Inc.), various Subsidiaries of the U.S. Borrower and State Street Bank and Trust Company, as Trustee, pursuant to which the U.S. Borrower issued $200,000,000 of Subordinated Debt, (b) the Indenture dated as August 12, 1998, among the U.S. Borrower, various Subsidiaries of the U.S. Borrower and State Street Bank and Trust Company, as Trustee, pursuant to which the U.S. Borrower issued $205,000,000 of Subordinated Debt, (c) the Indenture dated as of December 15, 1998, among the U.S. Borrower, various Subsidiaries of the U.S. Borrower and State Street Bank and Trust Company, as Trustee, pursuant to which the U.S. Borrower issued $300,000,000 of Subordinated Debt and (d) the Indenture dated as of March 23, 1999, among the U.S. Borrower, various Subsidiaries of the U.S. Borrower and The Bank of New York, 39 as Trustee, pursuant to which the U.S. Borrower issued $250,000,000 of Subordinated Debt. "subsidiary" means, with respect to any Person (the "parent") at any ---------- ------ date, any corporation, limited liability company, unlimited liability company, partnership, association or other entity the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, unlimited liability company, partnership, association or other entity of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. "Subsidiary" means any subsidiary of Holdings (including the ---------- Borrowers). "Subsidiary Loan Party" means any Subsidiary (including the Borrowers) --------------------- other than a Foreign Subsidiary or an Excluded Subsidiary. "Suretyship Liability" means, with respect to any Person, any -------------------- liability of such Person with respect to any agreement, undertaking or arrangement by which such Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to or otherwise to invest in a debtor, or otherwise to assure a creditor against loss) any Debt (or, other than for purposes of the definition of Debt, any other obligation or other liability) of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. The amount of any Person's obligation in respect of any Suretyship Liability shall (subject to any limitation set forth therein) be deemed to be the principal amount of the debt, obligation or other liability supported thereby. "Swingline Exposure" means, at any time, the aggregate principal ------------------ amount of all Swingline Loans outstanding at such time. The Swingline Exposure of any Lender at any time shall be its Applicable Percentage of the total Swingline Exposure at such time. 40 "Swingline Lender" means The Chase Manhattan Bank, in its capacity as ---------------- lender of Swingline Loans hereunder. "Swingline Loan" means a Loan made pursuant to Section 2.04. -------------- "Synthetic Lease" means a lease transaction under which the parties --------------- intend that (i) the lease will be treated as an "operating lease" by the lessee pursuant to Statement of Financial Accounting Standards No. 13, as amended, and (ii) the lessee will be entitled to various tax and other benefits ordinarily available to owners (as opposed to lessees) of like property. "Synthetic Lease Obligations" means, with respect to any Person, the --------------------------- sum of (a) all remaining rental obligations of such Person as lessee under Synthetic Leases which are attributable to principal and, without duplication, (b) all rental and purchase price payment obligations of such Person under Synthetic Leases assuming such Person exercises the option to purchase the leased property at the end of the lease term. "Tangible Assets" means at any time all assets of Holdings and its --------------- Subsidiaries excluding all Intangible Assets. For purposes of the foregoing, --------- "Intangible Assets" means goodwill, patents, trade names, trademarks, ----------------- copyrights, franchises, experimental expense, organization expense and any other assets that are properly classified as intangible assets in accordance with GAAP. "Taxes" means any and all present or future taxes, levies, imposts, ----- duties, deductions, charges or withholdings imposed by any Governmental Authority. "Term Loan" means a Loan made (and Existing Term Loans and Assigned --------- Debt purchased by the Lenders) pursuant to clause (a) of Section 2.01. "Term Loan Commitment" means, with respect to each Lender, the -------------------- commitment, if any, of such Lender to make a Term Loan hereunder (or to purchase Existing Term Loans and Assigned Debt that become Term Loans hereunder) on the Effective Date, expressed as an amount representing the maximum principal amount of the Term Loan to be made by such Lender hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender's Term Loan Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant 41 to which such Lender shall have assumed its Term Loan Commitment, as applicable. The initial aggregate amount of the Lenders' Term Loan Commitments is $750,000,000. "Term Loan Lender" means a Lender with a Term Loan Commitment or an ---------------- outstanding Term Loan. "Term Loan Maturity Date" means August 31, 2007. ----------------------- "Total Additional Revolving Commitment" means, at any time, the ------------------------------------- aggregate amount of the Additional Revolving Commitments, as in effect at such time, but not to exceed $75,000,000. The Total Additional Revolving Commitment on the Effective Date is $0. "Total C $ Revolving Commitment" means, at any time, the aggregate ------------------------------ amount of the C $ Revolving Commitments, as in effect at such time, but not to exceed $75,000,000. The Total C $ Revolving Commitment on the Effective Date is U.S. $40,000,000. "Total U.S. $ Revolving Commitment" means, at any time, the aggregate --------------------------------- amount of the U.S. $ Revolving Commitments, as in effect at such time. The Total U.S. $ Revolving Commitment on the Effective Date is $710,000,000. "Transactions" means (a) the repayment by the U.S. Borrower and its ------------ Subsidiaries of all amounts outstanding under the Existing Credit Agreements (other than the principal amount of any loans outstanding thereunder on the Effective Date that are held by, or assigned to, the Lenders hereunder and are to remain outstanding hereunder as provided in Section 2.01(b) and the Existing Letters of Credit deemed issued hereunder as provided in Section 2.05(a)) and the amendment and restatement of the Existing Credit Agreements as provided in this Agreement; (b) the execution, delivery and performance by each Loan Party of the Loan Documents to which it is to be a party (including the granting of Liens pursuant to the Security Documents), the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder; and (c) the execution, delivery and performance by the U.S. Borrower of the Senior Note Documents to which it is to be a party, the issuance of the Senior Notes and the use of the proceeds thereof. "Type", when used in respect of any Loan or Borrowing, shall refer to ---- the Rate by reference to which interest on such Loan or on the Loans comprising such Borrowing is determined. For purposes hereof, the term 42 "Rate" shall include the Adjusted IBO Rate, the Alternate Base Rate, the ---- Canadian Prime Rate and the Discount Rate applicable to B/As or B/A Equivalent Notes. "U.S. $ Commitment Fee" has the meaning set forth in Section 2.12(a). --------------------- "U.S. $ Revolving Availability Period" means the period from and ------------------------------------ including the Effective Date to but excluding the earlier of (a) the Revolving Maturity Date and (b) the date of termination of the U.S. $ Revolving Commitments. "U.S. $ Revolving Borrowing" means a Borrowing comprised of U.S. $ -------------------------- Revolving Loans. "U.S. $ Revolving Commitment" means, with respect to any Lender, the --------------------------- commitment, if any, of such Lender to make U.S. $ Revolving Loans during the U.S. $ Revolving Availability Period and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum potential aggregate amount of such Lender's U.S. $ Revolving Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 or 2.24 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 2.19 or 9.04. The initial amount of each U.S. $ Revolving Lender's U.S. $ Revolving Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its U.S. $ Revolving Commitment, as applicable. "U.S. $ Revolving Exposure" means, with respect to any U.S. $ ------------------------- Revolving Lender at any time, the sum of (a) the aggregate principal amount at such time of all outstanding U.S. $ Revolving Loans of such Lender, plus (b) the aggregate amount at such time of such Lender's LC Exposure, plus (c) the aggregate amount at such time of such Lender's Swingline Exposure. "U.S. $ Revolving Lender" means a Lender with a U.S. $ Revolving ----------------------- Commitment. "U.S. $ Revolving Loan" means any loan made by a U.S. $ Revolving --------------------- Lender pursuant to its U.S. $ Revolving Commitment. "U.S. Administrative Agent" means The Chase Manhattan Bank, in its ------------------------- capacity as administrative agent for 43 the Lenders hereunder, and any successor appointed in accordance with Article VIII. "U.S. Borrower" means United Rentals (North America), Inc., a Delaware ------------- corporation. "U.S. Collateral Agent" means Bank of America, N.A., in its capacity --------------------- as collateral agent for the Secured Parties under the U.S. Security Documents and the U.S. Guaranty, and any successor appointed in accordance with Article VIII. "U.S. Guaranty" means the Third Restated U.S. Guaranty, substantially ------------- in the form of Exhibit B, made by Holdings and the U.S. Subsidiary Loan Parties (other than the U.S. Borrower) in favor of the U.S. Collateral Agent for the benefit of the Secured Parties. "U.S. Loan Parties" means Holdings, the U.S. Borrower and any ----------------- Subsidiary party to the U.S. Guaranty. "U.S. Pledge Agreement" means the Consolidated Restated U.S. Pledge --------------------- Agreement, substantially in the form of Exhibit C, among Holdings, the U.S. Borrower, the U.S. Subsidiary Loan Parties and the U.S. Collateral Agent for the benefit of the Secured Parties. "U.S. Security Agreement" means the Third Restated U.S. Security ----------------------- Agreement, substantially in the form of Exhibit D, among Holdings, the U.S. Borrower, the U.S. Subsidiary Loan Parties and the U.S. Collateral Agent for the benefit of the Secured Parties. "U.S. Security Documents" means the U.S. Security Agreement, the U.S. ----------------------- Pledge Agreement and each other security agreement or other instrument or document executed and delivered by any U.S. Loan Party pursuant to Section 5.12 and 5.13 to secure any of the Obligations. "U.S. Subsidiary Loan Party" means each Subsidiary Loan Party that is -------------------------- not a Canadian Subsidiary Loan Party. "Vendor Financing Arrangement" means any financing arrangement ---------------------------- provided by a Person (other than Holdings or any Affiliate thereof) to any purchaser of equipment sold by Holdings or any Subsidiary in the ordinary course of business, the terms of which provide for recourse against Holdings and/or the applicable Subsidiary in the event of default by the purchaser. 44 "Welfare Plan" means a "welfare plan", as such term is defined in ------------ Section 3(1) of ERISA. "Withdrawal Liability" means liability to a Multiemployer Plan as a -------------------- result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. SECTION 1.02. Classification of Loans and Borrowings. For purposes --------------------------------------- of this Agreement, Loans may be classified and referred to by Class (e.g., a ---- "Term Loan"), by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a ---- ---- "Eurodollar Term Loan"). Borrowings also may be classified and referred to by Class (e.g., a "Term Borrowing"), by Type (e.g., a "Eurodollar Borrowing") or by ---- ---- Class and Type (e.g., a "Eurodollar Term Borrowing"). ---- SECTION 1.03. Terms Generally. The definitions of terms herein shall ---------------- apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly ----------------------- provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided -------- that, if Holdings notifies the U.S. Administrative Agent that Holdings requests an amendment to any provision 45 hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the U.S. Administrative Agent notifies Holdings that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. ARTICLE II The Credits ----------- SECTION 2.01. Commitments. (a) Subject to the terms and conditions ------------ set forth herein, (i) each Term Loan Lender agrees to make a Term Loan to the U.S. Borrower (or to purchase Existing Term Loans or Assigned Debt (or, to the extent agreed to by the U.S. Borrower and the Agents in accordance with Section 2.01(b), to retain Existing Term Loans) that shall thereupon be deemed to constitute Term Loans) on the Effective Date in a principal amount equal to its Term Loan Commitment, (ii) each U.S. $ Revolving Lender agrees to make U.S. $ Revolving Loans to the U.S. Borrower from time to time during the U.S. $ Revolving Availability Period, in Dollars, in an aggregate principal amount that will not result in such Lender's U.S. $ Revolving Exposure exceeding such Lender's U.S. $ Revolving Commitment, (iii) each C $ Revolving Lender agrees to make C $ Revolving Loans, including by means of a B/A or B/A Equivalent Note, to the Canadian Borrower from time to time during the C $ Revolving Availability Period, in Canadian Dollars, in an aggregate principal amount that will not result in such Lender's C $ Revolving Exposure exceeding such Lender's C $ Revolving Commitment and (iv) each Additional Revolving Lender agrees to make Additional Revolving Loans to the U.S. Borrower from time to time during the Additional Revolving Availability Period, in Dollars, in an aggregate principal amount that will not result in the aggregate principal amount of such Lender's Additional Revolving Loans exceeding such Lender's Additional Revolving Commitment. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans and Additional Revolving Loans; provided that the aggregate principal amount of -------- U.S. $ Revolving Loans, Additional Revolving Loans and C $ Revolving Loans made on the Effective Date shall not exceed the positive 46 difference between (a) the aggregate payments to be made pursuant to clauses (i) and (ii) of Section 5.11(a) and (b) the sum of the net proceeds on the Effective Date of the issuance of the Senior Notes and the aggregate principal amount of the Term Loans. Amounts repaid in respect of Term Loans may not be reborrowed. (b) It is the purpose and intent of this Agreement that, after giving effect to the amendment and restatement of the Existing Credit Agreements and the fundings hereunder on the Effective Date, each Term Lender will hold outstanding Term Loans in an aggregate principal amount equal to its Term Loan Commitment set forth opposite its name on Schedule 2.01, each U.S. $ Revolving Lender will have a U.S. $ Revolving Commitment as set forth opposite its name on Schedule 2.01, each C $ Revolving Lender will have a C $ Revolving Commitment as set forth opposite its name on Schedule 2.01 and each Additional Revolving Lender will have an Additional Revolving Commitment as set forth opposite its name on Schedule 2.01 (and any extensions of credit hereunder will be made ratably in accordance with the applicable Commitments). In order to give effect to the foregoing, on and as of the Effective Date (i) each Lender that holds any "Loans" then outstanding under and as defined in the Existing Term Loan Credit Agreements ("Existing Term Loans") shall be deemed to have assigned (and hereby ------------------- assigns, effective on the Effective Date) the outstanding principal of its Existing Term Loans (or, in the case of any such Lender agreed to by the Agents and the U.S. Borrower, a portion, which may be none, of the outstanding principal of such Lender's Existing Term Loans agreed to by the Agents and the U.S. Borrower) to the Term Lenders hereunder, (ii) each Term Lender shall fund to the U.S. Administrative Agent, in accordance with this Agreement, the full amount of its Term Loan Commitment (less the aggregate principal amount of such Lender's Existing Term Loans (if any) that is not assigned by such Lender pursuant to clause (i) above), with such funding being treated as the purchase of Existing Term Loans under clause (i) above, the purchase of Assigned Debt and/or the advance of additional Term Loans, as appropriate, (iii) Existing Term Loans and Assigned Debt purchased as provided above and additional Term Loans made hereunder shall be allocated among the Term Lenders to achieve the result specified in the first sentence of this paragraph, (iv) the U.S. Administrative Agent will apply the proceeds of the fundings described in clause (ii) above, first, to pay the purchase price of the Existing Term Loans and Assigned Debt (in an amount equal to 100% of the principal amount thereof) and, second, as specified by the U.S. Borrower in accordance with the applicable provisions of this Agreement, (v) the U.S. Borrower will pay all 47 accrued interest and other amounts owing in respect of the Existing Term Loans and Assigned Debt (other than outstanding principal so assigned and purchased or outstanding principal not so assigned and purchased by virtue of the operation of the final parenthetical to clause (i) above, with such assignments, in the case of assignments of Debt under the Existing Credit Agreements, being treated as prepayments for purposes of (A) Section 8.4 of the Existing Revolving Credit Agreement and the Existing Term Loan D Credit Agreement and (B) paragraph D of Article VIII of the Existing Term Loan B Credit Agreement and the Existing Term Loan C Credit Agreement), (vi) the Borrowers will pay all other amounts then outstanding or accrued and owing under the Existing Credit Agreements (including outstanding "Loans" (as defined in the Existing Revolving Credit Agreement) under the Existing Revolving Credit Agreement but excluding reimbursement obligations relating to Existing Letters of Credit to the extent such Existing Letters of Credit have not yet been drawn), but without prejudice to each Borrower's right to borrow Revolving Loans, Additional Revolving Loans and Swingline Loans hereunder in accordance with this Agreement, (vii) all "Percentages", as defined in the Existing Credit Agreements, shall be reallocated as Commitments as provided in Schedule 2.01 and, to the extent inconsistent with such Schedule, shall be terminated, (viii) the "Interest Period", as defined in the Existing Credit Agreements, of all Existing Term Loans and Assigned Debt shall terminate and the initial Interest Period of the Term Loans hereunder resulting from the purchase of such Existing Term Loans and Assigned Debt shall be determined based upon the U.S. Borrower's initial notice under Section 2.03 and (ix) the Existing Credit Agreements shall be amended and restated in their entirety into a single replacement agreement in the form of this Agreement. On the Effective Date, the Existing Credit Agreements shall be deemed amended and restated in their entirety as set forth herein and all Existing Term Loans and Assigned Debt shall continue to remain outstanding as Term Loans hereunder, without extinguishing such Debt. The amendment and restatement of the Existing Credit Agreements shall not affect the Borrowers' liability in respect of their respective obligations accrued thereunder. However, unless and until the Effective Date occurs as provided herein, the Existing Credit Agreements shall remain in effect and shall not be affected by this Agreement. SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than a --------------------- Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their 48 respective Commitments of the applicable Class. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are -------- several and no Lender shall be responsible for any other Lender's failure to make Loans as required. (b) Subject to Section 2.14, each (i) U.S. Revolving Borrowing, Additional Revolving Borrowing and Term Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the U.S. Borrower may request in accordance herewith and (ii) each C $ Revolving Borrowing shall be comprised entirely of B/A Borrowings or Canadian Prime Rate Borrowings as the Canadian Borrower may request in accordance herewith. Each Swingline Loan shall be an ABR Loan. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any -------- exercise of such option shall not affect the obligation of the U.S. Borrower to repay such Loan in accordance with the terms of this Agreement. (c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $5,000,000. At the time that (i) each ABR Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $5,000,000 and (ii) each Canadian Prime Rate Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of C $500,000 and not less than C $5,000,000; provided that an ABR U.S. $ Revolving Borrowing, an ABR Additional -------- Revolving Borrowing or a Canadian Prime Rate Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total U.S. $ Revolving Commitments, Additional Revolving Commitments or C $ Revolving Commitments, as applicable, or (in the case of an ABR U.S. $ Revolving Borrowing) that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e). The Loans comprising any B/A Borrowing shall, subject to Section 2.21, be in an aggregate principal amount that is an integral multiple of C $100,000 and not less than C $1,000,000. The Loans comprising each Canadian Dollar Borrowing shall be made in the amount specified in the applicable Borrowing Request for such Borrowing. Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $100,000. Borrowings of more than one Type and Class may be outstanding at the same time; provided that there shall not at any time be more than a total of -------- eight Eurodollar 49 Borrowings or eight B/A Borrowings of any Class outstanding. (d) Notwithstanding any other provision of this Agreement, the Borrowers shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period or Contract Period (in the case of a B/A Borrowing) requested with respect thereto would end after the Revolving Maturity Date or Term Loan Maturity Date, as applicable. (e) (i) The U.S. Administrative Agent shall notify the U.S. Borrower and the U.S. $ Revolving Lenders of the amount of the aggregate U.S. $ Revolving Exposure, (ii) the Canadian Administrative Agent shall notify the Canadian Borrower and the C $ Revolving Lenders of the amount of the aggregate C $ Revolving Exposure and (iii) the U.S. Administrative Agent shall notify the U.S. Borrower and the Additional Revolving Lenders of the amount of the aggregate Additional Revolving Loans, in each case promptly following the last day of each March, June, September and December. SECTION 2.03. Requests for Borrowings. To request a U.S. $ Revolving ------------------------ Borrowing, Additional Revolving Borrowing or Term Borrowing, the U.S. Borrower shall notify the U.S. Administrative Agent, and to request a C $ Revolving Borrowing, the Canadian Borrower shall notify the Canadian Administrative Agent, of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, two Business Days before the date of the proposed Borrowing, (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of the proposed Borrowing, (c) in the case of a B/A Borrowing, not later than 10:00 a.m., Toronto time, three Business Days before the date of such proposed Borrowing and (d) in the case of a Canadian Prime Rate Borrowing, not later than 11:00 a.m., Toronto time, one Business Day before the date of such proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the U.S. Administrative Agent or the Canadian Administrative Agent, as applicable, of a written Borrowing Request in a form approved by the applicable Administrative Agent and signed by the applicable Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02: (i) the Borrower requesting such Borrowing; 50 (ii) whether the requested Borrowing is to be a U.S. $ Revolving Borrowing, Additional Revolving Borrowing, C $ Revolving Borrowing or Term Borrowing; (iii) the aggregate amount of such Borrowing (which shall be expressed in Dollars, except when such Borrowing is a Canadian Dollar Borrowing) or, in the case of a B/A Borrowing, the face amount of the Bankers' Acceptance being requested; (iv) the date of such Borrowing, which shall be a Business Day; (v) whether such Borrowing is to be an ABR Borrowing, a Eurodollar Borrowing, a B/A Borrowing or a Canadian Prime Rate Borrowing; (vi) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; (vii) if such Borrowing is to be a B/A Borrowing, the Contract Period and maturity date thereof, which shall be a period contemplated by the definition of the term "Contract Period"; (viii) the location and number of the applicable Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06; and (ix) the currency of such Borrowing (which (A) shall be Dollars, in the case of any Term Borrowing, U.S. $ Revolving Borrowing or Additional Revolving Borrowing and (B) shall be Canadian Dollars, in the case of any C $ Revolving Borrowing). If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing if a U.S. $ Revolving Borrowing, Additional Revolving Borrowing or Term Borrowing and a Canadian Prime Rate Borrowing if a C $ Revolving Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the U.S. Borrower shall be deemed to have selected an Interest Period of one month's duration. If no Contract Period is specified with respect to any requested B/A Borrowing, then the Canadian Borrower shall be deemed to have selected a Contract Period of 30 days' duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the applicable Administrative 51 Agent shall advise each applicable Lender participating in the Borrowing of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing and, in the case of a C $ Revolving Borrowing, of the Canadian Dollar amount of such Borrowing and the Spot Exchange Rate utilized to determine such amount. The U.S. Borrower shall include in its initial notice under this Section all information with respect to amounts to be funded to purchase Existing Term Loans and Assigned Debt, as provided in Section 2.01. SECTION 2.04. Swingline Loans. (a) Subject to the terms and ---------------- conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to the U.S. Borrower from time to time during the U.S. $ Revolving Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $25,000,000 or (ii) the sum of the aggregate U.S. $ Revolving Exposures exceeding the Total U.S. $ Revolving Commitment; provided that the -------- Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, the U.S. Borrower may borrow, prepay and reborrow Swingline Loans. (b) To request a Swingline Loan, the U.S. Borrower shall notify the U.S. Administrative Agent of such request by telephone (confirmed by telecopy), not later than 2:00 p.m., New York City time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The U.S. Administrative Agent will promptly advise the Swingline Lender of any such notice received from the U.S. Borrower. The Swingline Lender shall make each Swingline Loan available to the U.S. Borrower by means of a credit to the general deposit account of the U.S. Borrower with the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e), by remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan. (c) The Swingline Lender may by written notice given to the U.S. Administrative Agent not later than 12:00 noon, New York City time, on any Business Day require the U.S. $ Revolving Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans 52 outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which such U.S. $ Revolving Lenders will participate. Promptly upon receipt of such notice, the U.S. Administrative Agent will give notice thereof to each U.S. $ Revolving Lender, specifying in such notice such U.S. $ Revolving Lender's Applicable Percentage of such Swingline Loan or Loans. Each U.S. $ Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the U.S. Administrative Agent, for the account of the Swingline Lender, such U.S. $ Revolving Lender's Applicable Percentage of such Swingline Loan or Loans. Each U.S. $ Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. Each U.S. $ Revolving Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment ------- -------- obligations of the U.S. $ Revolving Lenders), and the U.S. Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the U.S. $ Revolving Lenders. The U.S. Administrative Agent shall notify the U.S. Borrower of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the U.S. Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from the U.S. Borrower (or other party on behalf of the U.S. Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the U.S. Administrative Agent; any such amounts received by the U.S. Administrative Agent shall be promptly remitted by the U.S. Administrative Agent to the U.S. $ Revolving Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the U.S. Borrower of any default in the payment thereof. SECTION 2.05. Letters of Credit. (a) General. Upon the Effective ------------------ -------- Date, the Existing Letters of Credit will automatically, without any action on the part of any Person, be deemed to be Letters of Credit issued hereunder for the account of the U.S. Borrower for all purposes of this 53 Agreement and the other Loan Documents. In addition, subject to the terms and conditions set forth herein, the U.S. Borrower may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable to the U.S. Administrative Agent and the Issuing Bank, at any time and from time to time during the U.S. $ Revolving Availability Period and prior to the date that is five Business Days prior to the Revolving Maturity Date. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the U.S. Borrower to, or entered into by the U.S. Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. All Letters of Credit shall be denominated in Dollars. (b) Notice of Issuance, Amendment, Renewal, Extension; Certain ---------------------------------------------------------- Conditions. To request the issuance of a Letter of Credit (or the amendment, - ----------- renewal or extension of an outstanding Letter of Credit), the U.S. Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the U.S. Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the U.S. Borrower also shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the U.S. Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $100,000,000 and (ii) the aggregate U.S. $ Revolving Exposures shall not exceed the aggregate U.S. $ Revolving Commitments. (c) Expiration Date. Each Letter of Credit shall expire at or prior ---------------- to the close of business on the earlier of (i) the date one year after the date of the issuance of 54 such Letter of Credit (or, in the case of any Existing Letter of Credit having a later expiration date, such expiration date) or, in the case of any renewal or extension thereof, one year after such renewal or extension, and (ii) the date that is five Business Days prior to the Revolving Maturity Date. (d) Participations. By the issuance of a Letter of Credit (or an --------------- amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the U.S. $ Revolving Lenders, the Issuing Bank hereby grants to each U.S. $ Revolving Lender, and each U.S. $ Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit (including each Existing Letter of Credit) equal to such U.S. $ Revolving Lender's Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each U.S. $ Revolving Lender hereby absolutely and unconditionally agrees to pay to the U.S. Administrative Agent, for the account of the Issuing Bank, such U.S. $ Revolving Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the U.S. Borrower on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the U.S. Borrower for any reason. Each U.S. $ Revolving Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the U.S. $ Revolving Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (e) Reimbursement. If the Issuing Bank shall make any LC -------------- Disbursement in respect of a Letter of Credit, the U.S. Borrower shall reimburse such LC Disbursement by paying to the U.S. Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such LC Disbursement is made, if the U.S. Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the U.S. Borrower prior to such time on such date, then not later than 12:00 noon, New York City time, on (i) the Business Day that the U.S. Borrower receives such notice, if such notice is received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day 55 immediately following the day that the U.S. Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided -------- that, if such LC Disbursement is not less than $1,000,000, the U.S. Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.04 that such payment be financed with an ABR U.S. $ Revolving Borrowing or Swingline Loan in an equivalent amount and, to the extent so financed, the U.S. Borrower's obligation to make such payment shall be discharged and replaced by the resulting ABR U.S. $ Revolving Borrowing or Swingline Loan. If the U.S. Borrower fails to make such payment when due, the U.S. Administrative Agent shall notify each U.S. $ Revolving Lender of the applicable LC Disbursement, the payment then due from the U.S. Borrower in respect thereof and such U.S. $ Revolving Lender's Applicable Percentage thereof. Promptly following receipt of such notice, each U.S. $ Revolving Lender shall pay to the U.S. Administrative Agent its Applicable Percentage of the payment then due from the U.S. Borrower, in the same manner as provided in Section 2.06 with respect to Loans made by such U.S. $ Revolving Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the ------- -------- U.S. $ Revolving Lenders), and the U.S. Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the U.S. $ Revolving Lenders. Promptly following receipt by the U.S. Administrative Agent of any payment from the U.S. Borrower pursuant to this paragraph, the U.S. Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that U.S. $ Revolving Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such U.S. $ Lenders and the Issuing Bank as their interests may appear. Any payment made by a U.S. $ Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR U.S. $ Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the U.S. Borrower of its obligation to reimburse such LC Disbursement. (f) Obligations Absolute. The U.S. Borrower's obligation to -------------------- reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid 56 in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of setoff against, the U.S. Borrower's obligations hereunder. Neither the U.S. Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the -------- Issuing Bank from liability to the U.S. Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the U.S. Borrower to the extent permitted by applicable law) suffered by the U.S. Borrower that are caused by the Issuing Bank's failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or wilful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit. (g) Disbursement Procedures. The Issuing Bank shall, promptly ----------------------- following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify 57 the U.S. Administrative Agent and the U.S. Borrower by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or -------- delay in giving such notice shall not relieve the U.S. Borrower of its obligation to reimburse the Issuing Bank and the U.S. $ Revolving Lenders with respect to any such LC Disbursement. (h) Interim Interest. If the Issuing Bank shall make any LC ---------------- Disbursement, then, unless the U.S. Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the U.S. Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR U.S. $ Revolving Loans; provided that, if the U.S. Borrower fails to reimburse such LC -------- Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(e) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any U.S. $ Revolving Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such U.S. $ Revolving Lender to the extent of such payment. (i) Replacement of the Issuing Bank. The Issuing Bank may be ------------------------------- replaced at any time by written agreement among the U.S. Borrower, the U.S. Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The U.S. Administrative Agent shall notify the U.S. $ Revolving Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the U.S. Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. 58 (j) Cash Collateralization. If any Event of Default shall occur and ---------------------- be continuing, on the Business Day that the U.S. Borrower receives notice from the U.S. Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, U.S. $ Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the U.S. Borrower shall deposit in an account with the U.S. Administrative Agent, in the name of the U.S. Administrative Agent and for the benefit of the U.S. $ Revolving Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash -------- collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the U.S. Borrower described in clause (i) or (j) of Article VII. Each such deposit pursuant to this paragraph or Section 2.11(b) shall be held by the U.S. Administrative Agent as collateral for the payment and performance of the obligations of the U.S. Borrower under this Agreement. The U.S. Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the U.S. Administrative Agent and at the U.S. Borrower's risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the U.S. Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the U.S. Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of U.S. $ Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure), be applied to satisfy other obligations of the U.S. Borrower under this Agreement. If the U.S. Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to the U.S. Borrower within three Business Days after all Events of Default have been cured or waived. If the U.S. Borrower is required to provide an amount of cash collateral hereunder pursuant to Section 2.11(b), such amount (to the extent not applied as aforesaid) shall be returned to the U.S. Borrower as and to the extent that, after giving effect to such return, the U.S. Borrower would 59 remain in compliance with Section 2.11(b) and no Default shall have occurred and be continuing. SECTION 2.06. Funding of Borrowings. (a) Each Term Loan Lender, --------------------- U.S. $ Revolving Lender and Additional Revolving Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, New York City time, to the account of the U.S. Administrative Agent most recently designated by the U.S. Administrative Agent for such purpose by notice to the Term Loan Lenders, the U.S. $ Revolving Lenders and the Additional Revolving Lenders, as applicable; provided that Swingline Loans shall be made as provided in Section 2.04. The - -------- U.S. Administrative Agent will make such Term Loans, U.S. $ Revolving Loans and Additional Revolving Loans available to the U.S. Borrower by promptly crediting the amounts so received, in like funds, to an account of the U.S. Borrower maintained with the U.S. Administrative Agent in New York City and designated by the U.S. Borrower in the applicable Borrowing Request; provided that ABR U.S. $ -------- Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be remitted by the U.S. Administrative Agent to the Issuing Bank. Each C $ Revolving Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 12:00 noon, Toronto time, to the account of the Canadian Administrative Agent most recently designated by the Canadian Administrative Agent for such purposes by notice to the C $ Revolving Lenders. The Canadian Administrative Agent will make such Loans available to the Canadian Borrower by promptly crediting the amounts so received, in like funds, to an account of the Canadian Borrower designated in the applicable Borrowing Request (or, in the case of a Loan made in the form of a B/A Borrowing, in accordance with Section 2.21). (b) Unless the applicable Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to such Administrative Agent such Lender's share of such Borrowing, such Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount in the required currency. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to such Administrative Agent, then the applicable Lender and the applicable Borrower severally agree to pay to such Administrative Agent forthwith on demand such 60 corresponding amount with interest thereon, for each day from and including the date such amount is made available to the applicable Borrower to but excluding the date of payment to such U.S. Administrative Agent, at (i) (A) in the case of any such Term Loan Lender, U.S. $ Revolving Lender, Additional Revolving Lender or Swingline Lender, the greater of the Federal Funds Effective Rate and a rate determined by the U.S. Administrative Agent in accordance with banking industry rules on interbank compensation or (B) in the case of any such C $ Revolving Lender, at a rate determined by the Canadian Administrative Agent to represent its cost of overnight or short-term funds (which determination shall be conclusive absent manifest error) or (ii) (A) in the case of the U.S. Borrower, the interest rate applicable to ABR Loans of the applicable Class or (B) in the case of the Canadian Borrower, the interest rate applicable to Canadian Prime Rate Loans. If such Lender pays such amount to the applicable Administrative Agent, then such amount shall constitute such Lender's Loan included in such Borrowing. SECTION 2.07. Interest Elections. (a) Each U.S. $ Revolving ------------------ Borrowing, C $ Revolving Borrowing, Additional Revolving Borrowing and Term Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request and, in the case of a B/A Borrowing, shall have a Contract Period and maturity date as specified in such Borrowing Request. Thereafter, the applicable Borrower may from time to time elect to convert or continue the Type of, or the duration of the Interest Period (or issue replacement B/As for a further Contract Period) applicable to, the Loans included in any Borrowing, all as provided in this Section. The applicable Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. This Section shall not apply to Swingline Borrowings, which may not be converted or continued. (b) To make an election pursuant to this Section, the applicable Borrower shall notify the applicable Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if such Borrower were requesting a U.S. $ Revolving Borrowing, C $ Revolving Borrowing or Additional Revolving Borrowing, as applicable, of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest 61 Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the applicable Administrative Agent of a written Interest Election Request in a form approved by the applicable Administrative Agent and signed by the applicable Borrower. (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02 and paragraph (f) of this Section: (i) the Borrower making such Interest Election Request; (ii) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iv) and (v) below shall be specified for each resulting Borrowing); (iii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; (iv) whether the resulting Borrowing is to be an ABR Borrowing, a Eurodollar Borrowing, a Canadian Prime Rate Borrowing or a B/A Borrowing; (v) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period"; and (vi) if the resulting Borrowing is a B/A Borrowing, the Contract Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Contract Period". If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the U.S. Borrower shall be deemed to have selected an Interest Period of one month's duration. If any such Interest Election Request requests a B/A Borrowing but does not specify a maturity date or Contract Period, then the Canadian Borrower shall be deemed to have selected a maturity date that is 30 days following the date of such B/A Borrowing. 62 (d) Promptly following receipt of an Interest Election Request, the applicable Administrative Agent shall advise each applicable Lender of the details thereof and of such Lender's portion of each resulting Borrowing. (e) If the U.S. Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. If the Canadian Borrower fails to deliver a timely Interest Election Request with respect to a B/A Borrowing prior to the maturity date applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Contract Period such Borrowing shall be converted to a Canadian Prime Rate Borrowing. (f) Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the U.S. Administrative Agent, at the request of the Required Lenders, so notifies the Borrowers, then, so long as an Event of Default is continuing (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing or a B/A Borrowing, (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto and (iii) each outstanding B/A Borrowing shall be converted or continued as a Canadian Prime Rate Loan on its maturity date and any additional C $ Revolving Loans shall be made as Canadian Prime Rate Loans. (g) A Borrowing of any Class may not be converted to or continued as a Eurodollar Borrowing if after giving effect thereto (i) the Interest Period therefor would commence before and end after a date on which any principal of the Loans of such Class is scheduled to be repaid and (ii) the sum of the aggregate principal amount of outstanding Eurodollar Borrowings of such Class with Interest Periods ending on or prior to such scheduled repayment date plus the aggregate principal amount of outstanding ABR Borrowings of such Class would be less than the aggregate principal amount of Loans of such Class required to be repaid on such scheduled repayment date. SECTION 2.08. Termination and Reduction of Commitments. (a) Unless ---------------------------------------- previously terminated, (i) the Term Loan Commitments shall terminate at 5:00 p.m., New York City time, on the Effective Date and (ii) the Revolving Commitments and the Additional Revolving Commitments shall terminate on the Revolving Maturity Date. 63 (b) The U.S. Borrower or the Canadian Borrower, as applicable, may at any time terminate, or from time to time reduce, the Commitments of any Class; provided that (i) each reduction of the Commitments of any Class shall be in an - -------- amount that is an integral multiple of $500,000 and not less than $5,000,000, (ii) the Total U.S. $ Revolving Commitment shall not be reduced to an amount that is less than the aggregate U.S. $ Revolving Exposure of the U.S. $ Revolving Lenders at the time, (iii) the Total C $ Revolving Commitment shall not be reduced to an amount that is less than the aggregate C $ Revolving Exposure of the C $ Revolving Lenders at the time and (iv) the Total Additional Revolving Commitment shall not be reduced to an amount that is less than the aggregate principal amount of Additional Revolving Loans outstanding at such time. (c) The Revolving Commitments and Additional Revolving Commitments shall be reduced as and to the extent required by Section 2.11(c). (d) The applicable Borrower shall notify the applicable Administrative Agent of any election to terminate or reduce the Commitments of any Class under paragraph (b) of this Section, or any required reduction of the Revolving Commitments under Section 2.11(c), at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any such notice, the applicable Administrative Agent shall advise the relevant Lenders of the contents thereof. Each notice delivered by either of the Borrowers pursuant to this Section shall be irrevocable; provided that a notice of termination with -------- respect to any Revolving Commitment or Additional Revolving Commitment delivered by the applicable Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by such Borrower (by notice to the applicable Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments of any Class pursuant to this Section shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class. SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The U.S. ------------------------------------ Borrower hereby unconditionally promises to pay to the U.S. Administrative Agent (i) for the account of each U.S. $ Revolving Lender the then unpaid principal amount of each U.S. $ Revolving Loan of such Lender on the earlier of the date of termination of the 64 U.S. $ Revolving Commitments and the Revolving Maturity Date, (ii) for the account of each Additional Revolving Lender the then unpaid principal amount of each Additional Revolving Loan of such Lender on the earlier of the date of termination of the Additional Revolving Commitments and the Revolving Maturity Date, (iii) for the account of each Term Loan Lender the then unpaid principal amount of each Term Loan of such Lender as provided in Section 2.10 and (iv) for the account of the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earliest of (A) the date of termination of the U.S. $ Revolving Commitments, (B) the Revolving Maturity Date, and (C) the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least two Business Days after such Swingline Loan is made; provided that (x) on each date that a U.S. $ Revolving Borrowing is made and (y) - -------- if requested by the Swingline Lender, on the last day of March, June, September and December of each year, the U.S. Borrower shall repay all Swingline Loans then outstanding. The Canadian Borrower hereby unconditionally promises to pay to the Canadian Administrative Agent for the account of each C $ Revolving Lender the then unpaid principal amount of each C $ Revolving Loan of such Lender on the earlier of the date of termination of the C $ Revolving Commitments and the Revolving Maturity Date. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Debt of the applicable Borrower to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (c) The applicable Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made and the Credit Facility under which each Loan is made hereunder, (ii) the Class and Type thereof and the Interest Period (if a Eurodollar Borrowing) or maturity date and Contract Period (if a B/A Borrowing) applicable thereto, (iii) with respect to each C $ Revolving Loan, (A) the Denomination Date for such Loan, (B) the Assigned Dollar Value for such Loan and (C) the Spot Exchange Rate used to calculate such Assigned Dollar Value, (iv) the amount of any principal or interest due and payable or to become due and payable from the applicable Borrower to each Lender hereunder and (v) the amount of any sum received by such Administrative Agent hereunder for the account of the Lenders from the applicable Borrower and each Lender's share thereof. 65 (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be prima facie evidence of the existence and ----- ----- amounts of the obligations recorded therein; provided that the failure of any -------- Lender or the Administrative Agents to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrowers to repay the Loans in accordance with the terms of this Agreement. (e) Any Lender may request that Loans of any Class made by it be evidenced by a promissory note. In such event, the applicable Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the applicable Administrative Agent. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). SECTION 2.10. Amortization of Term Loans. (a) Subject to -------------------------- adjustment pursuant to paragraph (c) of this Section, the U.S. Borrower shall repay Term Borrowings on each March 31, June 30, September 30 and December 31 of each year, commencing with June 30, 2001, and ending with the Term Loan Maturity Date, in an aggregate principal amount equal to (i) $1,875,000 on each such date prior to December 31, 2006, and (ii) $177,187,500 on each of December 31, 2006, March 31, 2007, June 30, 2007, and the Term Loan Maturity Date. (b) To the extent not previously paid, all Term Loans shall be due and payable on the Term Loan Maturity Date. (c) Any prepayment of a Term Borrowing shall be applied to reduce the subsequent scheduled repayments of the Term Borrowings to be made pursuant to this Section ratably; provided that the U.S. Borrower may elect, by notice to -------- the U.S. Administrative Agent on or prior to the date of any such prepayment that is an optional prepayment pursuant to Section 2.11(a), that such prepayment be applied to reduce such subsequent scheduled payments in the order of maturity. (d) Prior to any repayment of any Term Borrowings hereunder, the U.S. Borrower shall select the Borrowing or Borrowings to be repaid and shall notify the U.S. Administrative Agent by telephone (confirmed by telecopy) of 66 such selection not later than 11:00 a.m., New York City time, three Business Days before the scheduled date of such repayment. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing. Repayments of Term Borrowings shall be accompanied by accrued interest on the amount repaid. SECTION 2.11. Prepayment of Loans. (a) Each Borrower shall have the ------------------- right at any time and from time to time to prepay any Borrowing in whole or in part, subject to the requirements of this Section. (b) In the event and on each occasion that the sum of the U.S. $ Revolving Exposures exceeds the Total U.S. $ Revolving Commitment, the U.S. Borrower shall prepay Revolving Borrowings or Swingline Borrowings (or, if no such Borrowings are outstanding, deposit cash collateral in an account with the U.S. Administrative Agent pursuant to Section 2.05(j)) in an aggregate amount equal to such excess. In the event and on each occasion that the aggregate principal amount of the outstanding Additional Revolving Loans exceeds the Total Additional Revolving Commitment, the U.S. Borrower shall prepay Additional Revolving Loans in an aggregate amount equal to such excess. In the event and on each occasion that the sum of the C $ Revolving Exposures exceeds the Total C $ Revolving Commitment, the Canadian Borrower shall prepay C $ Revolving Loans in an aggregate Dollar Equivalent amount equal to such excess. (c) If Holding or any Subsidiary shall sell, transfer or otherwise dispose of any assets and, as a result thereof, the U.S. Borrower (or any other Loan Party) would be required to make, or offer to make, any redemption or prepayment of any Subordinated Debt, QuIPS Debentures or Senior Notes, then the applicable Borrower shall prepay Loans as and to the extent necessary to eliminate or avoid any such requirement to make, or offer to make, any such redemption or prepayment; provided that the foregoing shall not be construed to -------- require any prepayment of the Loans if the requirement to make, or offer to make, such redemption or prepayment is eliminated or avoided by reason of other actions taken in compliance with the Loan Documents. Any prepayment required to be made pursuant to this paragraph (c) shall be made in respect of Term Loans, until all Term Loans have been prepaid, and then in respect of U.S. $ Revolving Loans and Additional Revolving Loans. The U.S. $ Revolving Commitments and, after all the U.S. $ Revolving Commitments have been terminated, the Additional Revolving Commitments shall be reduced in accordance with Section 2.08 to the extent that any Revolving Loans or 67 Additional Revolving Loans are required to be prepaid pursuant to the preceding sentence (regardless of whether such Revolving Loans or Additional Revolving Loans are so prepaid or are outstanding). (d) Prior to any optional or mandatory prepayment of Borrowings hereunder, the applicable Borrower shall, subject to the requirements of Section 2.11(c), select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (e) of this Section 2.11. (e) The applicable Borrower shall notify the applicable Administrative Agent (and, in the case of prepayment of Swingline Loans, the Swingline Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, two Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date of prepayment, (iii) in the case of prepayment of a Canadian Prime Rate Borrowing, not later than 11:00 a.m., Toronto time, three Business Days before the date of prepayment, or (iv) in the case of prepayment of Swingline Loans, not later than 2:00 p.m., New York City time, on the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that, -------- if a notice of optional prepayment is given in connection with a conditional notice of termination of the U.S. $ Revolving Commitments, C $ Revolving Commitments or Additional Revolving Commitments as contemplated by Section 2.08, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.08. Promptly following receipt of any such notice (other than a notice relating solely to Swingline Loans), the applicable Administrative Agent shall advise the relevant Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.13. 68 (f) If, on any Reset Date, the aggregate C $ Revolving Exposure (expressed in Dollars) exceeds an amount equal to 105% of the Total C $ Revolving Commitment, then (A) the Canadian Administrative Agent shall give notice thereof to the C $ Revolving Lenders and the Borrowers and (B) the U.S. Borrower shall cause the Canadian Borrower to, on the next succeeding Business Day, apply an amount equal to such excess to repay or prepay outstanding C $ Revolving Borrowings (or cash collateralize Bankers' Acceptances in accordance with paragraph (g) below). (g) All repayments or prepayments of C $ Revolving Borrowings under this Section 2.11 shall be applied first, to repay or prepay outstanding C $ Revolving Loans that are Canadian Prime Rate Loans, and second, to cash collateralize outstanding Bankers' Acceptances and B/A Equivalent Notes, on terms and subject to documentation satisfactory to the Canadian Administrative Agent as security for the Canadian Borrower's obligations under such Bankers' Acceptances and B/A Equivalent Notes until the maturity and repayment of such Bankers' Acceptances and B/A Equivalent Notes. Notwithstanding anything herein to the contrary, no Bankers' Acceptance or B/A Equivalent Note may be prepaid prior to the maturity date thereof, except as provided in Article VII. SECTION 2.12. Fees. (a) The U.S. Borrower agrees to pay to the U.S. ----- Administrative Agent for the account of each U.S. $ Revolving Lender and Additional Revolving Lender a commitment fee (a "U.S. $ Commitment Fee"), which --------------------- shall accrue at the rate of 0.50% per annum on the average daily unused amount of the U.S. $ Revolving Commitment and Additional Revolving Commitment of such Lender during the period from and including the Effective Date (or, in the case of the Additional Revolving Commitment, the first day that a reallocation of Commitments pursuant to Section 2.23 shall become effective) to but excluding the date on which such U.S. $ Revolving Commitment or Additional Revolving Commitment terminates and (b) the Canadian Borrower agrees to pay to the Canadian Administrative Agent for the account of each C $ Revolving Lender a commitment fee (the "Canadian Commitment Fee" and, together with the U.S. $ ----------------------- Commitment Fee, the "Commitment Fees"), which shall accrue at the rate of 0.50% --------------- per annum on the average daily unused amount of the C $ Revolving Commitment of such Lender during the period from and including the Effective Date to but excluding the date on which such C $ Revolving Commitment terminates. Accrued Commitment Fees shall be payable in arrears on the last Business Day of March, June, September and December of each year and on the date on which the U.S. $ Revolving 69 Commitments, the C $ Revolving Commitments or Additional Revolving Commitments, as applicable, terminate, commencing on the first such date to occur after the date hereof. All Commitment Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing the Commitment Fees, (i) a U.S. $ Revolving Commitment of a U.S. $ Revolving Lender shall be deemed to be used to the extent of the outstanding U.S. $ Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purpose), and (ii) a C $ Revolving Commitment of a C $ Revolving Lender shall be deemed to be used to the extent of the Dollar Equivalent of the outstanding C $ Revolving Loans of such Lender (or, in the case of outstanding C $ Revolving Loans that are in the form of B/As, the Dollar Equivalent of the face amount of such B/As). (b) The U.S. Borrower agrees to pay (i) to the U.S. Administrative Agent for the account of each U.S. $ Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate as interest on Eurodollar Revolving Loans on the average daily amount of such Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender's U.S. $ Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of 0.250% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the U.S. $ Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank's standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable in arrears on the third Business Day following such last day, commencing on the first such date to occur after the Effective Date; provided -------- that all such fees shall be payable on the date on which the U.S. $ Revolving Commitments terminate and any such fees accruing after the date on which the U.S. $ Revolving Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable 70 within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (c) The U.S. Borrower agrees to pay to the U.S. Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between Holdings and the U.S. Administrative Agent (and/or its Affiliates). (d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the applicable Administrative Agent (or to the Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Lenders entitled thereto. All fees payable to the U.S. Administrative Agent, the Issuing Bank, the Swingline Lender, the Term Lenders, the U.S. $ Revolving Lenders and the Additional Revolving Lenders shall be payable in Dollars, and all fees payable to the Canadian Administrative Agent and the C $ Revolving Lenders shall be payable in Canadian Dollars. Fees paid shall not be refundable under any circumstances. SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing -------- (excluding each Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate. Each Swingline Loan shall bear interest at an annual rate separately agreed upon by the U.S. Borrower and the Swingline Lender. (b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted IBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate. (c) The Loans comprising any Canadian Prime Rate Borrowing shall bear interest at the Canadian Prime Rate plus the Applicable Rate. (d) Each B/A Borrowing shall be subject to an Acceptance Fee calculated and payable at a rate per annum equal to the applicable B/A Spread from time to time in effect and payable as set forth in Section 2.21. (e) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by the Borrowers hereunder is not paid when due, whether at stated maturity, upon acceleration or 71 otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2.00% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2.00% plus the rate applicable to ABR U.S. $ Revolving Loans as provided in paragraph (a) of this Section. (f) Accrued interest on each Loan (other than pursuant to a B/A Borrowing) shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of U.S. $ Revolving Loans, C $ Revolving Loans and Additional Revolving Loans, upon termination of the U.S. $ Revolving Commitments, the C $ Revolving Commitments or the Additional Revolving Commitments, as the case may be; provided that (i) interest accrued pursuant to -------- paragraph (e) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR U.S. $ Revolving Loan or Additional Revolving Loan, as the case may be, prior to the end of the U.S. $ Revolving Availability Period or the Additional Revolving Loan Availability Period, as the case may be), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion. (g) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to (i) the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate and (ii) the Canadian Prime Rate and the B/A Spread shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Canadian Prime Rate for each day, or Adjusted IBO Rate for each Interest Period or Discount Rate for each Contract Period, shall be determined by the U.S. Administrative Agent or the Canadian Administrative Agent (in the case of Canadian Dollar Borrowings), and such determination shall be conclusive absent manifest error. The applicable Administrative Agent shall give the applicable Borrower prompt notice of each such determination. (h) For the purposes of the Interest Act (Canada) and disclosure thereunder, whenever interest or a fee to be 72 paid hereunder or in connection herewith is to be calculated on the basis of a year of 360 days or any other period of time that is less than a calendar year, the yearly rate of interest or fee to which the rate determined pursuant to such calculation is equivalent is the rate so determined (expressed as a percentage) multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by either 360 or such other period of time, as the case may be. The rates of interest under this Agreement are nominal rates, and not effective rates or yields. The principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement. SECTION 2.14. Alternate Rate of Interest. If prior to the -------------------------- commencement of any Interest Period for a Eurodollar Borrowing or the Contract Period for a B/A Borrowing: (a) the U.S. Administrative Agent (in the case of a Term Loan, U.S. $ Revolving Loan or Additional Revolving Loan) or the Canadian Administrative Agent (in the case of a C $ Revolving Loan) determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted IBO Rate for such Interest Period or Discount Rate for such Contract Period, as applicable; or (b) the applicable Administrate Agent is advised by a majority in interest of the Lenders participating in such Borrowing that deposits in the principal amounts of the Loans comprising such Borrowing and in the currency in which such Loans are to be denominated are not generally available in the international interbank market or there is not an adequate Canadian market for bankers' acceptances, as applicable, or that the rates at which such deposits are being offered or B/As are purchased will not adequately and fairly reflect the cost to the Majority Lenders in respect of the affected Credit Facility of making or maintaining its Eurodollar Loan during such Interest Period or its B/A Borrowing or B/A Equivalent Note during such Contract Period, as applicable, such Administrative Agent shall, as soon as practicable thereafter, give written or telecopy notice of such determination to the applicable Borrower and the applicable Lenders. In the event of any such determination, until the applicable Administrative Agent shall have advised the applicable Borrower and the applicable Lenders that the circumstances giving rise to such notice no longer exist, any request by the applicable Borrower for a Eurodollar Borrowing or a B/A Borrowing, as applicable, pursuant to Section 2.03 or 2.07 shall be deemed 73 to be a request for an ABR Borrowing (if a Eurodollar Borrowing has been requested) or a Canadian Prime Rate Loan (if a B/A Borrowing has been requested). Each determination by the Administrative Agents hereunder shall be conclusive absent manifest error. In making any determination under this Section 2.14, the Administrative Agents and each Lender will use good faith efforts to treat the Borrowers in substantially the same manner as the Administrative Agent or such Lender, as the case may be, treats other similarly situated borrowers under similar circumstances. SECTION 2.15. Increased Costs. (a) If any Change in Law shall: --------------- (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted IBO Rate) or the Issuing Bank; or (ii) impose on any Lender or the Issuing Bank or the London interbank market or any other relevant market any other condition affecting this Agreement or Eurodollar Loans or any C $ Revolving Loans made by such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan or any C $ Revolving Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then the U.S. Borrower will pay (or cause the Canadian Borrower to pay in respect of the C $ Revolving Loans) to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered. (b) If any Lender or the Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the Issuing Bank's capital or on the capital of such Lender's or the Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made by, or 74 participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's holding company with respect to capital adequacy), then from time to time the U.S. Borrower will pay (or cause the Canadian Borrower to pay in respect of the C $ Revolving Loans) to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company for any such reduction suffered. (c) A certificate of a Lender or the Issuing Bank setting forth (and showing in reasonable detail the calculation of) the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the U.S. Borrower and shall be conclusive absent manifest error. The U.S. Borrower shall pay (or cause the Canadian Borrower to pay in respect of the C $ Revolving Loans) such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof. (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's or the Issuing Bank's right to demand such compensation; provided -------- that neither the U.S. Borrower nor the Canadian Borrower shall be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 270 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the U.S. Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Bank's intention to claim compensation therefor; provided, further, that if the Change in Law giving rise to such increased costs - -------- ------- or reductions is retroactive, then the 270-day period referred to above shall be extended to include the period of retroactive effect thereof. (e) In requesting any compensation pursuant to this Section, each Lender and the Issuing Bank will use good faith efforts to treat the Borrowers in substantially the same manner as such Lender or the Issuing Bank, as the case 75 may be, treats other similarly situated borrowers under similar circumstances. SECTION 2.16. Break Funding Payments. In the event of (a) the ---------------------- payment of any principal of any Eurodollar Loan or Bankers' Acceptance other than on the last day of an Interest Period or Contract Period applicable thereto (including as a result of an Event of Default), (b) the conversion of, or the exchange pursuant to Article X of, any Eurodollar Loan or Bankers' Acceptance other than on the last day of the Interest Period or Contract Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan or Term Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(e) and is revoked in accordance therewith) or (d) the assignment of any Eurodollar Loan or Bankers' Acceptance other than on the last day of the Interest Period or Contract Period applicable thereto as a result of a request by the applicable Borrower pursuant to Section 2.19, then, in any such event, the applicable Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan or Bankers' Acceptance, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted IBO Rate or the Discount Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period or Contract Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period or Contract Period for such Loan), over (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate that such Lender would bid were it to bid at the commencement of such period, for deposits or bankers' acceptances of a comparable amount and period and in the same currency from other banks in the eurodollar market or the Canadian market, as applicable. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the applicable Borrower and shall be conclusive absent manifest error. The applicable Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. Nothing in this Section 2.16 shall be construed to permit a voluntary prepayment of a B/A Borrowing other than on the last day of a Contract Period. 76 SECTION 2.17. Taxes. (a) Any and all payments by or on account of ----- any obligation of either Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if either Borrower shall be required to deduct any -------- Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the applicable Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the applicable Borrower shall make such deductions and (iii) the applicable Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the applicable Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) The applicable Borrower shall indemnify each Agent, each Lender and the Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by such Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of the applicable Borrower hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the applicable Borrower by a Lender or the Issuing Bank, or by the applicable Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by either Borrower to a Governmental Authority, such Borrower shall deliver to the U.S. Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the U.S. Administrative Agent. 77 (e) Any Foreign Lender (or Participant that would be a Foreign Lender if it were a Lender) or any other recipient of any payment to be made by or on account of any obligation of either Borrower hereunder or under any other Loan Document that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which a Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments by or on account of any obligation of the applicable Borrower hereunder or under any other Loan Document shall deliver to the applicable Borrower (with a copy to the applicable Administrative Agent), at the time or times prescribed by applicable law, Internal Revenue Service Form W-8BEN or W-8ECI, as applicable (or any successor form), or such properly completed and executed documentation prescribed by applicable law or reasonably requested by applicable Borrower as will permit such payments to be made without withholding or at a reduced rate. (f) If any Lender, Participant, the Issuing Bank or any Agent or any other recipient of any payment to be made by or on account of any obligation of the U.S. Borrower or the Canadian Borrower hereunder or under any other Loan Document shall become aware that it is entitled to receive a refund, reduction or credit in respect of amounts paid by the U.S. Borrower or the Canadian Borrower pursuant to this Section 2.17, which refund, reduction or credit in the good faith judgment of such Lender, Participant, Issuing Bank or any Agent or any other recipient of any payment to be made by or on account of any obligation of the U.S. Borrower or the Canadian Borrower hereunder or under any other Loan Document is allocable to such payment, it shall promptly notify such Borrower of the availability of such refund, reduction or credit and shall, within 30 days after the receipt of a request by such Borrower, apply for such refund, reduction or credit. If any Lender, Participant, the Issuing Bank or any Agent or any other recipient of any payment to be made by or on account of any obligation of the U.S. Borrower or the Canadian Borrower hereunder or under any other Loan Document receives a refund, reduction or credit in respect of any amounts paid by either Borrower pursuant to this Section 2.17, which refund, reduction or credit in the good faith judgment of such Lender, Participant, Issuing Bank or any Agent or any other recipient of any payment to be made by or on account of any obligation of the U.S. Borrower or the Canadian Borrower hereunder or under any other Loan Document is allocable to such payment, it shall promptly notify such Borrower of such refund, reduction or credit and shall, within 15 days after receipt, repay such refund or the amount of such reduction or credit to such Borrower net of all out-of-pocket expenses 78 of such Lender, Participant, Issuing Bank or any Agent or any other recipient of any payment to be made by or on account of any obligation of the U.S. Borrower hereunder or the Canadian Borrower hereunder or under any other Loan Document; provided, however, that such Borrower, upon the request of such Lender, - -------- ------- Participant, Issuing Bank or any Agent or any other recipient of any payment to be made by or on account of any obligation of the U.S. Borrower or the Canadian Borrower hereunder or under any other Loan Document, agrees to repay the amount paid over to such Borrower to such Lender, Participant, Issuing Bank or any Agent or any other recipient of any payment to be made by or on account of any obligation of the U.S. Borrower or the Canadian Borrower or under any other Loan Document in the event such Lender, Participant, Issuing Bank or any Agent or any other recipient of any payment to be made by or on account of any obligation of the U.S. Borrower or the Canadian Borrower hereunder or under any other Loan Document is required to repay such refund, reduction or credit, which repayment shall in no event be made fewer than five days prior to the date on which such Lender, Participant, Issuing Bank or any Agent or any other recipient of any payment to be made by or on account of any obligation of the U.S. Borrower or the Canadian Borrower hereunder or under any other Loan Document is required to repay such refund, reduction or credit. SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of -------------------------------------------------- Setoffs. (a) Each Borrower shall make each payment required to be made by it - -------- hereunder or under any other Loan Document (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available funds, without setoff or counterclaim. Any amounts received after such time on any date may, in the discretion of the U.S. Administrative Agent or the Canadian Administrative Agent, as applicable, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All payments to the U.S. Administrative Agent 79 shall be made to it at its offices at 270 Park Avenue, New York, New York, except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. All payments to the Canadian Administrative Agent shall be made to it at c/o Royal Bank of Canada, Correspondent Banking Division, Financial Institution Account Services, 180 Wellington Street, 6th Floor, Toronto, Ontario M5J2J5 except that payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The applicable Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. (b) If at any time insufficient funds are received by and available to (i) the U.S. Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due with respect to the U.S. $ Revolving Commitments and the U.S. $ Revolving Loans hereunder, such funds shall be applied (A) first, towards payment of interest and fees then due hereunder with respect thereto, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (B) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties, (ii) the Canadian Administrative Agent to pay fully all amounts of principal, interest and fees then due with respect to the C $ Revolving Commitments and the C $ Revolving Loans hereunder, such funds shall be applied (A) first, towards payment of interest and fees then due hereunder with respect thereto, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (B) second, towards payment of principal then due with respect to the C $ Revolving Commitments and C $ Revolving Loans hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties and (iii) the U.S. Administrative Agent to pay fully all amounts of principal, interest and fees then due with respect to the Additional Revolving Commitments and Additional Revolving Loans hereunder, such funds shall be applied (A) first, towards payment of interest and fees then due hereunder with respect thereto, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties and (B) second, towards payment of principal then 80 due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal then due to such parties. (c) If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its U.S. $ Revolving Loans, C $ Revolving Loans, Additional Revolving Loans, Term Loans or participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its U.S. $ Revolving Loans, C $ Revolving Loans, Additional Revolving Loans, Term Loans, participations in LC Disbursements and participations in Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans, C $ Revolving Loans, Additional Revolving Loans, Term Loans, participations in LC Disbursements and participations in Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective U.S. $ Revolving Loans, C $ Revolving Loans, Additional Revolving Loans, Term Loans, participations in LC Disbursements and participations in Swingline Loans; provided that (i) if any -------- such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by either Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Borrowers or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Borrower in the amount of such participation. (d) Unless the applicable Administrative Agent shall have received notice from the applicable Borrower 81 prior to the date on which any payment is due to such Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the applicable Borrower will not make such payment, the applicable Administrative Agent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the relevant Lenders or the Issuing Bank, as applicable, the amount due. In such event, if the applicable Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as applicable, severally agrees to repay to the applicable Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the applicable Administrative Agent, (i) in the case of payments to the U.S. Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the U.S. Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of payments to the Canadian Administrative Agent, the greater of a rate determined by the Canadian Administrative Agent to represent its cost of overnight or short-term funds and a rate in accordance with applicable banking industry rules on interbank compensation. (e) If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.18(d) or 9.03(c), then the applicable Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by such Administrative Agent for the account of such Lender to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid. SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) ----------------------------------------------- If any Lender requests compensation under Section 2.15, or if either Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Each Borrower 82 hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. (b) If (i) any Lender requests compensation under Section 2.15, (ii) either Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17 or (iii) any Lender defaults in its obligation to fund Loans hereunder, then the applicable Borrower may, at its sole expense and effort, upon notice to such Lender and the applicable Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (A) the applicable Borrower shall have received the -------- prior written consent of the applicable Administrative Agent (and, if a U.S. $ Revolving Commitment is being assigned, the Issuing Bank and Swingline Lender), which consent, in each case, shall not unreasonably be withheld, (B) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the applicable Borrower (in the case of all other amounts), and (C) in the case of any such assignment resulting from a claim for compensation under Section 2.15 or payments required to be made pursuant to Section 2.17, such assignment will result in a material reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the applicable Borrower to require such assignment and delegation cease to apply. SECTION 2.20. Incremental Facility. At any time prior to the sixth --------------------- anniversary of the Effective Date, the U.S. Borrower may, by notice to the U.S. Administrative Agent (which shall promptly deliver a copy to each of the Lenders), request the addition of a new tranche of term loans (the "Incremental ----------- Term Loans"); provided that both at the time of any such request and upon the - ---------- -------- effectiveness of the Incremental Facility Amendment referred to below, no Default shall exist and at the time that any such Incremental Term Loans are made (and after giving effect thereto) no Default shall exist and Holdings and the Borrowers shall be in compliance with Section 6.01, 83 determined on a pro forma basis as if such Incremental Term Loans had been incurred at the beginning of the most recent period for testing compliance therewith. The Incremental Term Loans (i) shall be in an aggregate principal amount not exceeding (in the aggregate) $250,000,000, (ii) shall rank pari passu ---- ----- in right of payment and of security with the Revolving Loans and the Term Loans, (iii) shall not mature earlier than the Term Loan Maturity Date (but may, subject to clause (iv) below, have amortization and commitment reductions prior to such date), (iv) shall not have a weighted average life that is shorter than that of the Term Loans, (v) shall not accrue interest at a rate or rates in excess of the interest rates applicable to the Term Loans and (vi) shall otherwise be treated no more favorably than the Term Loans (in each case, including with respect to mandatory and voluntary prepayments); provided that -------- the terms and conditions applicable to the Incremental Term Loans may provide for additional or different financial or other covenants applicable only during periods after the Term Loan Maturity Date. Such notice shall set forth the requested amount of Incremental Term Loans. In the event that existing Lenders provide commitments in an aggregate amount less than the total amount of the Incremental Term Loans requested by the U.S. Borrower (but the U.S. Borrower shall not have any obligation to request any Lender to provide any amount of the Incremental Term Loans), the U.S. Borrower may arrange for one or more banks or other financial institutions (any such bank or other financial institution being called an "Additional Lender") to extend commitments to provide Incremental Term ----------------- Loans in an aggregate amount equal to the unsubscribed amount. Commitments in respect of Incremental Term Loans shall become Commitments under this Agreement pursuant to an amendment (an "Incremental Facility Amendment") to this Agreement ------------------------------ and, as appropriate, the other Loan Documents, executed by Holdings, the U.S. Borrower, each Lender agreeing to provide such Commitment, if any, each Additional Lender, if any, and the U.S. Administrative Agent. The Incremental Facility Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the opinion of the U.S. Administrative Agent, to effect the provisions of this Section. The effectiveness of any Incremental Facility Amendment shall be subject to the satisfaction on the date thereof of each of the conditions set forth in Section 4.02 (it being understood that all references to "the date of such Borrowing" in such Section 4.02 shall be deemed to refer to the effective date of such Incremental Facility Amendment). No Lender shall be obligated to provide any Incremental Term Loans unless it so agrees. 84 SECTION 2.21. Bankers' Acceptances. (a) Subject to the terms and --------------------- conditions of this Agreement, the Canadian Borrower may request a C $ Revolving Borrowing by presenting drafts for acceptance and purchase as B/As by the C $ Revolving Lenders. (b) To facilitate B/A Borrowings, the Canadian Borrower hereby appoints each C $ Revolving Lender as its attorney to sign and endorse on its behalf, in handwriting or by facsimile or mechanical signature as and when deemed necessary by such Lender, blank forms of B/As in the form requested by such Lender. In this respect, it is each C $ Revolving Lender's responsibility to maintain an adequate supply of blank forms of B/As for acceptance under this Agreement. The Canadian Borrower recognizes and agrees that all B/As signed and/or endorsed on its behalf by a C $ Revolving Lender shall bind the Canadian Borrower as fully and effectually as if signed in the handwriting of and duly issued by the proper signing officers of the Canadian Borrower. Each C $ Revolving Lender is hereby authorized to issue such B/As endorsed in blank in such face amounts as may be determined by such Lender; provided that the -------- aggregate amount thereof is equal to the aggregate amount of B/As required to be accepted and purchased by such Lender. No C $ Revolving Lender shall be liable for any damage, loss or other claim arising by reason of any loss or improper use of any such instrument except the gross negligence or wilful misconduct of such Lender or its officers, employees, agents or representatives. Each C $ Revolving Lender shall maintain a record with respect to B/As (i) received by it in blank hereunder, (ii) voided by it for any reason, (iii) accepted and purchased by it hereunder and (iv) canceled at their respective maturities. Each C $ Revolving Lender further agrees to retain such records in the manner and for the statutory periods provided in the various provincial or federal statutes and regulations that apply to such Lender. Each C $ Revolving Lender agrees to provide a copy of such records to the Canadian Borrower at the Canadian Borrower's expense upon request. On request by or on behalf of the Canadian Borrower, a C $ Revolving Lender shall cancel all forms of B/A that have been pre-signed or pre-endorsed on behalf of the Canadian Borrower and that are held by such Lender and are not required to be issued in accordance with the Canadian Borrower's irrevocable notice. (c) Drafts of the Canadian Borrower to be accepted as B/As hereunder shall be signed as set forth in this Section 2.21. Notwithstanding that any person whose signature appears on any B/A may no longer be an authorized signatory for any C $ Revolving Lender or the Canadian 85 Borrower at the date of issuance of a B/A, such signature shall nevertheless be valid and sufficient for all purposes as if such authority had remained in force at the time of such issuance and any such B/A so signed shall be binding on the Canadian Borrower. (d) Promptly following receipt of a Borrowing Request or notice of rollover pursuant to Section 2.03 by way of B/As, the Canadian Administrative Agent shall so advise the C $ Revolving Lenders and shall advise each C $ Revolving Lender of the aggregate face amount of the B/As to be accepted by it and the applicable Contract Period (which shall be identical for all C $ Revolving Lenders). The aggregate face amount of the B/As to be accepted by a C $ Revolving Lender shall be a whole multiple of C $100,000, and such face amount shall be in the C $ Revolving Lenders' pro rata portions of such C $ Revolving Borrowing; provided that the Canadian Administrative Agent may in its sole -------- discretion increase or reduce any C $ Revolving Lender's portion of such B/A Borrowing to the nearest C $100,000. (e) Upon acceptance of a B/A by a C $ Revolving Lender, such Lender shall purchase, or arrange the purchase of, each B/A from the Canadian Borrower at the Discount Rate for such Lender applicable to such B/A accepted by it and provide to the Canadian Administrative Agent the Discount Proceeds for the account of the Canadian Borrower. The Canadian Borrower will, upon acceptance of a B/A by a C $ Revolving Lender, be obligated to pay to the Canadian Administrative Agent on behalf of the C $ Revolving Lender that accepted the B/A an Acceptance Fee in respect of such B/A. The Acceptance Fee payable by the Canadian Borrower to a C $ Revolving Lender under this Section 2.21(e) in respect of each B/A accepted by such Lender shall be set off against the Discount Proceeds payable by such Lender under this Section 2.21(e). (f) Each C $ Revolving Lender may at any time and from time to time hold, sell, rediscount or otherwise dispose of any or all B/As accepted and purchased by it. (g) If a C $ Revolving Lender notifies the Canadian Administrative Agent in writing that it is unable or unwilling to accept Bankers' Acceptances, such Lender will, instead of accepting and purchasing Bankers' Acceptances, purchase from the Canadian Borrower a note that does not bear interest during the Contract Period (a "B/A Equivalent Note"), in the form of Exhibit K, issued ------------------- by the Canadian Borrower in the amount and for the same term as the draft that such Lender would otherwise have been required to accept and purchase hereunder, at a purchase price 86 calculated on the same basis as Bankers' Acceptances are discounted pursuant to this Agreement. Each such Lender will provide to the Canadian Administrative Agent the proceeds of such purchase for the account of the Canadian Borrower. The Canadian Borrower will, upon purchase of a B/A Equivalent Note, pay to the Canadian Administrative Agent on behalf of the C $ Revolving Lender that purchased from the Canadian Borrower the B/A Equivalent Note an Acceptance Fee in respect of such B/A Equivalent Note. The Acceptance Fee payable by the Canadian Borrower to a C $ Revolving Lender under this Section 2.21(g) in respect of each B/A Equivalent Note purchased by such Lender shall be set off against the Discount Proceeds payable by such Lender under this Section 2.21(g). (h) With respect to each B/A Borrowing, at or before 10:00 a.m., Toronto time, two Business Days before the maturity date of such B/As, the Canadian Borrower shall notify the Canadian Administrative Agent at the Canadian Administrative Agent's address set forth in Section 9.01 by irrevocable telephone notice, followed by a notice of rollover on the same day, if the Canadian Borrower intends to issue B/As on such maturity date to provide for the payment of such maturing B/As. If the Canadian Borrower fails to notify the Canadian Administrative Agent of its intention to issue B/As on such maturity date, the Canadian Borrower shall provide payment to the Canadian Administrative Agent on behalf of the C $ Revolving Lenders of an amount equal to the aggregate face amount of such B/As on the maturity date of such B/As. If the Canadian Borrower fails to make such payment, such maturing B/As shall, subject to satisfaction of the conditions set forth in Section 4.02, be deemed to have been converted on their maturity date into a Canadian Prime Rate Loan in an amount equal to the face amount of such B/A as provided in Section 2.07 and the Canadian Borrower shall on demand pay any losses, costs or penalties that may have been incurred by the Canadian Administrative Agent or any C $ Revolving Lender due to the failure of the Canadian Borrower to make such payment. (i) The Canadian Borrower waives presentment for payment and any other defense, in respect of a B/A accepted and purchased by it pursuant to this Agreement, that might exist solely by reason of such B/A being held, at the maturity thereof, by such Lender in its own right and the Canadian Borrower agrees not to claim any days of grace if such Lender as holder sues the Canadian Borrower on the B/A for payment of the amount payable by the Canadian Borrower thereunder. On the specified maturity date of a B/A, or such earlier date as may be required or permitted pursuant 87 to the provisions of this Agreement, the Canadian Borrower shall pay, through the Canadian Administrative Agent, the C $ Revolving Lender that has accepted and purchased such B/A the full face amount of such B/A and after such payment, the Canadian Borrower shall have no further liability in respect of such B/A and such Lender shall be entitled to all benefits of, and be responsible for all payments due to third parties under, such B/A. (j) If a C $ Revolving Lender grants a participation in a portion of its rights under this Agreement to a participant under Section 9.04(f), then in respect of any B/A Borrowing, a portion thereof may, at the option of such Lender, be by way of Bankers' Acceptance accepted by such participant. In such event, the Canadian Borrower shall upon request of the Canadian Administrative Agent or the C $ Revolving Lender granting the participation execute and deliver a form of Bankers' Acceptance undertaking in favor of such participant for delivery to such participant. SECTION 2.22. Spot Exchange Rate Calculations. (a)(i) Not later than -------------------------------- 2:00 p.m., Toronto time, on each Calculation Date, the Canadian Administrative Agent shall (A) determine the Spot Exchange Rate as of such Calculation Date with respect to Canadian Dollars if at such time C $ Revolving Loans are then outstanding and (B) give notice thereof to the Canadian Borrower and the C $ Revolving Lenders. (ii) The Spot Exchange Rates determined pursuant to this Section 2.22(a) shall become effective on the second Business Day immediately following the relevant Calculation Date (a "Reset Date") and shall remain effective until ---------- the next succeeding Reset Date. (b) Not later than 2:00 p.m., Toronto time, on the Business Day immediately following the delivery of any notice pursuant to Section 2.08(d) or 2.11(f) in connection with the repayment of C $ Revolving Loans, the Canadian Administrative Agent shall (i) determine as of such date the Assigned Dollar Value, based on the Spot Exchange Rate then in effect, of each C $ Revolving Loan then outstanding (after giving effect to any C $ Revolving Loan repaid in connection therewith) and (ii) notify the Canadian Borrower and the C $ Revolving Lenders of the results of such determination. SECTION 2.23. Reallocation. (a) Subject to Section 2.23(b), the ------------- Borrowers may, from time to time (but no more than once in any calendar quarter), from and after July 1, 2001, until the earlier of (i) the Revolving 88 Maturity Date and (ii) the termination of the C $ Revolving Commitments and the Additional Revolving Commitments, upon giving an irrevocable joint written notice (each, a "Reallocation Notice") to the Canadian Administrative Agent and ------------------- the U.S. Administrative Agent at least ten Business Days prior to the beginning of the next Fiscal Quarter (including, with respect to any reallocation to be effective as of July 1, 2001, the Fiscal Quarter ended June 30, 2001), temporarily reduce (but not below zero), in whole or in part, the C $ Revolving Commitments or the Additional Revolving Commitments, as applicable. Each reduction in the C $ Revolving Commitments shall result in an automatic corresponding increase in the Additional Revolving Commitments, and each reduction in the Additional Revolving Commitments shall result in an automatic and corresponding increase in the C $ Revolving Commitments. Any amount of C $ Revolving Commitments reallocated under this Section 2.23(a) to Additional Revolving Commitments will not be available to the Canadian Borrower, and any amount of Additional Revolving Commitments reallocated under this Section 2.23(a) to C $ Revolving Commitments will not be available to the U.S. Borrower, in each case unless and until such amounts are reallocated back to the C $ Revolving Commitments or the Additional Revolving Commitments, as applicable, in accordance with the terms and subject to the conditions of this Section 2.23. (b) The Borrowers shall be permitted to reallocate the C $ Revolving Commitments and the Additional Revolving Commitments in accordance with this Section 2.23 subject to the conditions that (i) any such reallocation shall only be made on, and be effective as of, the first day of a Fiscal Quarter, (ii) each partial reallocation shall be in an integral multiple of $1,000,000 (or, if less, the remaining amount of the applicable Commitments being reduced), (iii) the Total C $ Revolving Commitment shall not be reduced to an amount that is less than the aggregate C $ Revolving Exposures of the C $ Revolving Lenders at such time, (iv) the Total Additional Revolving Commitment shall not be reduced to an amount that is less than the aggregate principal amount of Additional Revolving Loans outstanding at such time and (v) on the date of any reduction of the Additional Revolving Commitments (and a corresponding increase in the C $ Revolving Commitments), (A) the representations and warranties set forth in each Loan Document shall be true and correct in all material respects with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, and (B) immediately after giving effect to such reduction and corresponding 89 increase no Default or Event of Default shall have occurred and be continuing. (c) Each Reallocation Notice shall specify the amount (expressed in Dollars) of any (i) reduction in the C $ Revolving Commitments and the corresponding increase in the Additional Revolving Commitments or (ii) reduction in the Additional Revolving Commitments and the corresponding increase in the C $ Revolving Commitments. Each reduction in the C $ Revolving Commitments and each increase in the C $ Revolving Commitments (if the C $ Revolving Commitments at such time are greater than zero) shall be made ratably among the C $ Revolving Lenders based on their respective C $ Revolving Commitments. Each increase in the C $ Revolving Commitments (if the C $ Revolving Commitments at such time are equal to zero) shall be made ratably among the C $ Revolving Lenders based on their respective Additional Revolving Commitments; provided -------- that, for this purpose, the Additional Revolving Commitment of any C $ Revolving Lender that makes Additional Revolving Loans through its Designated U.S. Affiliate shall be deemed to be equal to the Additional Revolving Commitment of such Designated U.S. Affiliate. Each reduction in the Additional Revolving Commitments and each increase in the Additional Revolving Commitments (if the Additional Revolving Commitments at such time are greater than zero) shall be made ratably among the Additional Revolving Lenders based on their respective Additional Revolving Commitments. Each increase in the Additional Revolving Commitments (if the Additional Revolving Commitments at such time are equal to zero) shall be made ratably among the Additional Revolving Lenders based on their respective C $ Revolving Commitments; provided that, for this purpose, the -------- C $ Revolving Commitment of any Additional Revolving Lender that is a Designated U.S. Affiliate shall be deemed to be equal to the C $ Revolving Commitment of its Affiliate that is a C $ Revolving Lender. Promptly after receiving a Reallocation Notice, the Canadian Administrative Agent or the U.S. Administrative Agent, as applicable, shall notify each C $ Revolving Lender and Additional Revolving Lender, as applicable, of the amount of its C $ Revolving Commitment or Additional Revolving Commitment, as applicable, to be reallocated pursuant to this Section 2.23 and the date of such reallocation. (d) Notwithstanding anything to the contrary contained in this Agreement, (i) the Additional Revolving Commitments shall be available to the U.S. Borrower in addition to the U.S. $ Revolving Commitments, (ii) Swingline Loans and Letters of Credit are not available under the Additional Revolving Commitments and (iii) the Additional Revolving Lenders shall be entitled to the same rights and 90 subject to the same obligations with respect to the Additional Revolving Commitments as are the U.S. $ Revolving Lenders with respect to the U.S. $ Revolving Commitments. Section 2.24. Increases in C $ Revolving Commitments. (a) -------------------------------------- Notwithstanding anything to the contrary in this Agreement, the Canadian Borrower may, from time to time (but no more than once in any Fiscal Quarter), from and after July 1, 2001, until the Revolving Maturity Date, upon giving an irrevocable written notice (each, a "C $ Commitment Increase Notice") to the ------------------------------ Canadian Administrative Agent and the U.S. Administrative Agent at least ten Business Days prior to the beginning of the next Fiscal Quarter (including, with respect to any increase to be effective as of July 1, 2001, the Fiscal Quarter ended June 30, 2001), obtain an increase in the C $ Revolving Commitments in accordance with paragraphs (b) through (f) below, subject to the conditions that (i) any such increase shall be in an integral multiple of $1,000,000, (ii) on the date of each such increase, (A) the representations and warranties set forth in each Loan Document shall be true and correct in all material respects with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, and (B) immediately after giving effect to each such increase no Default or Event of Default shall have occurred and be continuing and (iii) after giving effect to each such increase, the Total Additional Revolving Commitment plus the Total C $ Revolving Commitment shall not exceed $75,000,000. (b) Each increase in the C $ Revolving Commitments pursuant to this Section 2.24 shall be effected by the execution and delivery by the Borrowers and by a Lender or other Person satisfactory to the Administrative Agents (in either case, that satisfies the definition of C $ Revolving Lender) of a supplement to this Agreement, in form and substance satisfactory to the Administrative Agents, pursuant to which such Lender or other Person agrees (i) to provide a C $ Revolving Commitment or, if such Lender is at the time already a C $ Revolving Lender, to increase its C $ Revolving Commitment and (ii) if such Person is not at the time already a Lender, to become a party to this Agreement as a Lender and to have all the obligations of a Lender hereunder with respect to its C $ Revolving Commitment. Any supplement so executed and delivered in accordance with this Section 2.24 shall be effective to increase the C $ Revolving Commitments as provided therein (and correspondingly decrease the U.S. $ Revolving Commitments as provided herein) without the consent of any other Lenders. 91 (c) Each increase in the C $ Revolving Commitments pursuant to this Section 2.24 shall result in an automatic corresponding decrease in the U.S. $ Revolving Commitments, which corresponding decrease shall (i) if neither (A) the Person providing such increase in the C $ Revolving Commitments nor (B) an Affiliate of such Person designated by such Person and agreed to by the Borrowers and the Administrative Agents is already a U.S. $ Revolving Lender at the time, be made ratably among the U.S. $ Revolving Lenders based on their respective U.S. $ Revolving Commitments or (ii) if either (A) the Person providing such increase in the C $ Revolving Commitments or (B) an Affiliate of such Person designated by such Person and agreed to by the Borrowers and the Administrative Agents is already a U.S. $ Revolving Lender at the time, be allocated first to reduce such Person's (or, with the consent of the Borrowers and the Administrative Agents, such Affiliate's) U.S. $ Revolving Commitment and, after such Person's or Affiliate's U.S. $ Revolving Commitment has been reduced to zero, be made ratably among the remaining U.S. $ Revolving Lenders based on their respective remaining U.S. $ Revolving Commitments. (d) Any increase in the C $ Revolving Commitments pursuant to this Section 2.24 (and any corresponding reduction in the U.S. $ Revolving Commitments referred to in paragraph (c) above) shall only be made on, and be effective as of, the first day of a Fiscal Quarter. (e) If, immediately prior to the effectiveness of any increase in the C $ Revolving Commitments pursuant to this Section 2.24, (i) there are any Loans outstanding under the C $ Revolving Commitments, then all such Loans shall be repaid immediately prior to or concurrently with the effectiveness of such increase or (ii) there are any Loans outstanding under the U.S. $ Revolving Commitments and clause (ii) of paragraph (c) of this Section 2.24 is applicable to such increase, then all such Loans shall be repaid immediately prior to or concurrently with the effectiveness of such increase. (f) Each C $ Commitment Increase Notice shall specify the amount (expressed in Dollars) of any increase in the C $ Revolving Commitments and the corresponding decrease in the U.S. $ Revolving Commitments. 92 ARTICLE III Representations and Warranties ------------------------------ Each of Holdings and the Borrowers represents and warrants to the Lenders that: SECTION 3.01. Organization; Powers. Each of Holdings and the --------------------- Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted and, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required. SECTION 3.02. Authorization; Enforceability. The Transactions to be ------------------------------ entered into by each Loan Party are within such Loan Party's powers and have been duly authorized by all necessary corporate and, if required, stockholder action. This Agreement has been duly executed and delivered by each of Holdings and the Borrowers and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of Holdings, the Borrowers or such Loan Party (as the case may be), enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law. SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions ------------------------------------- (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except filings necessary to perfect Liens created under the Loan Documents, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of Holdings or any Subsidiary or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon Holdings or any Subsidiary or its assets that is material to Holdings and its Subsidiaries, taken as a whole, or give rise to a right thereunder to require any payment to be made by Holdings or any Subsidiary and (d) will not result in the creation or imposition of any 93 Lien on any asset of Holdings or any Subsidiary, except Liens created under the Loan Documents. SECTION 3.04. Financial Condition; No Material Adverse Change. (a) ------------------------------------------------ Holdings has heretofore furnished to the Lenders the consolidated balance sheet and statements of income, stockholders' equity and cash flows of Holdings and its Subsidiaries as of and for the Fiscal Year ended December 31, 2000, reported on by Ernst & Young LLP, independent public accountants. Such financial statements present fairly, in all material respects, the financial position and results of operations and cash flows of Holdings and the Subsidiaries as of such date and for such period in accordance with GAAP. (b) Holdings has heretofore furnished to the Lenders Holdings's pro forma consolidated balance sheet as of December 31, 2000, prepared giving effect to the Transactions as if the Transactions had occurred on such date. Such pro forma consolidated balance sheet (i) has been prepared in good faith based on the same assumptions used to prepare the pro forma financial statements included in the Information Memorandum (which assumptions are believed by Holdings and the U.S. Borrower as of the Effective Date to be reasonable), (ii) is based on the best information available to Holdings and the U.S. Borrower as of the Effective Date after due inquiry, (iii) accurately reflects all adjustments necessary to give effect to the Transactions and (iv) presents fairly, in all material respects, the pro forma financial position of Holdings and its consolidated Subsidiaries as of December 31, 2000, as if the Transactions had occurred on such date. (c) Except as disclosed in the financial statements referred to above or the notes thereto or in the Information Memorandum and except for the Disclosed Matters, after giving effect to the Transactions, none of Holdings or the Subsidiaries has, as of the Effective Date, any material contingent liabilities, unusual long-term commitments or unrealized losses. (d) Since December 31, 2000, there has been no material adverse change in the financial condition, operations, assets, business, properties or prospects of Holdings and the Subsidiaries, taken as a whole. SECTION 3.05. Properties. (a) Each of Holdings and the Subsidiaries ----------- has good title to, or valid leasehold interests in, all its real and personal property material to its business, except for minor defects in title that do not interfere with its ability to conduct its business as 94 currently conducted or to utilize such properties for their intended purposes. (b) Each of Holdings and the Subsidiaries owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual property material to its business, and the use thereof by Holdings and the Subsidiaries does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. (c) Schedule 3.05 sets forth the address of each real property that is owned or leased by Holdings or any Subsidiary as of the Effective Date. SECTION 3.06. Litigation and Environmental Matters. (a) There are no ------------------------------------- actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of Holdings or the U.S. Borrower, threatened against or affecting Holdings or any Subsidiary (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely deter mined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve any of the Loan Documents or the Transactions. (b) Except for the Disclosed Matters and except with respect to any other matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, neither Holdings nor any Subsidiary (i) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has become subject to any Environmental Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv) knows of any basis for any Environmental Liability. (c) Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect. SECTION 3.07. Compliance with Laws and Agreements. Each of Holdings ------------------------------------ and the Subsidiaries is in compliance with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding 95 upon it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No Default has occurred and is continuing. SECTION 3.08. Investment and Holding Company Status. Neither -------------------------------------- Holdings nor any Subsidiary is (a) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (b) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. SECTION 3.09. Taxes. Each of Holdings and the Subsidiaries has ------ timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) any Taxes that are being contested in good faith by appropriate proceedings and for which Holdings or such Subsidiary, as applicable, has set aside on its books adequate reserves or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably ------ expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not in the aggregate, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan by an amount which could reasonably be expected to result in a Material Adverse Effect, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not in the aggregate, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of all such underfunded Plans by an amount which could reasonably be expected to result in a Material Adverse Effect. SECTION 3.11. Disclosure. Holdings and the Borrowers have disclosed ----------- to the Lenders all agreements, instruments and corporate or other restrictions to which Holdings or any Subsidiary is subject, and all other matters known to any of them, that, individually or in the aggregate, could reasonably be expected to result in a 96 Material Adverse Effect. Neither the Information Memorandum nor any of the other reports, financial statements, certificates or other information furnished by or on behalf of any Loan Party to any Agent or any Lender in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or thereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being recognized by the Agents and the Lenders that any projections and forecasts provided by Holdings or any Subsidiary are based on good faith estimates and assumptions believed by Holdings or such Subsidiary to be reasonable as of the date of the applicable projections or assumptions and that actual results during the period or periods covered by any such projections and forecasts may differ from projected or forecasted results and no representation whatsoever is made with respect to reports or projections that are included or referred to in or attached to the Information Memorandum and identified therein as having been provided by Persons other than Holdings or one of its Affiliates). SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth the name and ------------- jurisdiction of organization of, and the ownership interest of Holdings in, each Subsidiary and identifies each Subsidiary that is a Subsidiary Loan Party, in each case as of the Effective Date. The Canadian Borrower is a wholly owned subsidiary of the U.S. Borrower. SECTION 3.13. Insurance. Schedule 3.13 sets forth a description of ---------- all insurance maintained by or on behalf of Holdings and the Subsidiaries as of the Effective Date. As of the Effective Date, all premiums in respect of such insurance have been paid. SECTION 3.14. Labor Matters. Except as set forth in Schedule 3.14, -------------- as of the Effective Date, there are no strikes, lockouts or slowdowns against Holdings or any Subsidiary pending or, to the knowledge of Holdings or the Borrower, threatened. The hours worked by and payments made to employees of Holdings and the Subsidiaries have been in compliance with the Fair Labor Standards Act or any other applicable federal, state, local or foreign law dealing with such matters except where the failure to comply could not reasonably be expected to result in a Material Adverse Effect. All payments due from Holdings or any Subsidiary, or for which any claim may be made against Holdings or any Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have been paid or 97 accrued as a liability on the books of Holdings or such Subsidiary except to the extent that a failure to comply could not reasonably be expected to result in a Material Adverse Effect. Except as set forth in Schedule 3.14, the consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which Holdings or any Subsidiary is bound. SECTION 3.15. Solvency. Immediately after the consummation of the --------- Transactions to occur on the Effective Date and immediately following the making of each Loan made on the Effective Date and after giving effect to the application of the proceeds of such Loans (and taking into account all rights of contribution arising by operation of law or otherwise to which any Loan Party may be entitled and other credit support available to any Subsidiary from Holdings or any of the other Subsidiaries), (a) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and liabilities, subordinated, contingent or otherwise, (b) the present fair saleable value of the property of each Loan Party will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured, (c) each Loan Party will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, and (d) each Loan Party will not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted following the Effective Date. SECTION 3.16. Senior Debt. The Obligations constitute "Senior ------------ Indebtedness" under and as defined in each Subordinated Note Indenture and the documents evidencing or governing all Subordinated Debt referred to in clauses (e) and (f) of the definition of "Subordinated Debt". SECTION 3.17. Security Interests. (a) When executed and delivered, ------------------- the Pledge Agreements (and/or, as applicable, in the case of the Canadian Borrower or the Canadian Subsidiary Loan Parties, the making of requisite filings or registrations) will be effective to create in favor of the applicable Collateral Agent, for the ratable benefit of the applicable Secured Parties or Canadian Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the applicable Pledge Agreement) and, when the portion of the Collateral constituting certificated securities (as defined in the 98 Uniform Commercial Code or such other local law as may apply) is delivered to the applicable Collateral Agent (and/or, as applicable, in the case of the Canadian Borrower or the Canadian Subsidiary Loan Parties, the requisite filings or registrations are made), the Pledge Agreements shall constitute a fully perfected first priority Lien on, and security interest in, all right, title and interest of the pledgor thereunder in such Collateral, in each case prior and superior in right to any other Person. (b) The Security Agreements are effective to create in favor of the applicable Collateral Agent, for the ratable benefit of the applicable Secured Parties or Canadian Secured Parties, a legal, valid and enforceable security interest in the Collateral (as defined in the applicable Security Agreement) and, when financing statements or such other filings required by local law in appropriate form are filed in the appropriate filing offices (which, for the U.S. Subsidiary Loan Parties as of the Effective Date, are the offices specified on Schedule 6 to the Perfection Certificate), the Security Agreements shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in such Collateral to the extent perfection can be obtained by filing, recording or registering a security agreement, financing statement or analogous document in the United States or Canada (other than under vehicle certificate of title statutes), in each case prior and superior in right to any other Person other than with respect to the rights of Persons pursuant to Liens expressly permitted by Section 6.03. (c) When the U.S. Security Agreement is filed in the United States Patent and Trademark Office and the United States Copyright Office, the security interest created thereunder shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the Intellectual Property (as defined in the U.S. Security Agreement) in which a security interest may be perfected by filing, recording or registering a security agreement, financing statement or analogous document in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, in each case prior and superior in right to any other Person, other than with respect to the rights of Persons pursuant to Liens expressly permitted by Section 6.03 (it being understood that subsequent recordings in the United States Patent and Trademark Office and the United States Copyright Office may be necessary to perfect a Lien on registered trademarks, trademark applications and copyrights acquired by the Loan Parties after the date hereof). 99 ARTICLE IV Conditions ---------- SECTION 4.01. Effective Date. The consolidation, amendment and --------------- restatement of the Existing Credit Agreements as provided herein and the obligations of the Lenders to make Loans (including the obligations of the Term Lenders to purchase Existing Term Loans and Assigned Debt) and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 9.02): (a) The U.S. Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the U.S. Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement. (b) The U.S. Administrative Agent shall have received a favorable written opinion (addressed to the Agents and the Lenders and dated the Effective Date) of each of (i) Weil, Gotshal & Manges LLP, counsel for the Loan Parties, substantially in the form of Exhibit H-1, (ii) Oscar D. Folger, Esq., counsel for the Loan Parties, substantially in the form of Exhibit H-2, and (iii) Macleod Dixon, counsel for the Canadian Subsidiary Loan Parties, substantially in the form of Exhibit H-3 and, in the case of each such opinion required by this paragraph, covering such other matters relating to the Loan Parties, the Loan Documents or the Transactions as the Agents or the Required Lenders shall reasonably request. Each of Holdings and the Borrowers hereby request such counsel to deliver such opinions. (c) The U.S. Administrative Agent shall have received such documents and certificates as the U.S. Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of Holdings, the Borrowers and such other Loan Parties as to which documents and certificates are reasonably requested by the U.S. Administrative Agent or its counsel, the authorization of the Transactions and any other legal matters relating to the Loan Parties, the Loan Documents or the Transactions, all in 100 form and substance satisfactory to the U.S. Administrative Agent and its counsel. (d) The U.S. Administrative Agent shall have received a certificate, in a form reasonably acceptable to the U.S. Administrative Agent, dated the Effective Date and signed by the Chief Executive Officer, the President, a Vice President or a Financial Officer of Holdings and the U.S. Borrower, confirming compliance with the conditions set forth in paragraphs (a) and (b) of Section 4.02. (e) The Agents shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses (including fees, charges and disbursements of counsel) required to be reimbursed or paid by any Loan Party hereunder or under any other Loan Document. (f) The Collateral and Guarantee Requirement shall have been satisfied and the Agents shall have received a completed Perfection Certificate dated the Effective Date and signed by an officer of Holdings and the U.S. Borrower, together with all attachments contemplated thereby, including (i) the results of a search of the Uniform Commercial Code (or equivalent) filings made with respect to the Loan Parties in the jurisdictions agreed upon by the Agents and the U.S. Borrower, (ii) copies of the financing statements (or similar documents) disclosed by such search, (iii) evidence reasonably satisfactory to the Agents that the Liens indicated by such financing statements (or similar documents) are permitted by Section 6.02 or have been released (other than with respect to such Liens that are in the process of being released, as separately agreed upon between Holdings and the applicable Administrative Agent), (iv) to the extent requested by the Agents, copies of all documents required to effect security under the Bank Act (Canada), (v) to the extent requested by the Agents, a copy of the hypothec on movables entered into by the Canadian Borrower with respect to security granted in the province of Quebec, (vi) to the extent requested by the Agents, acknowledgments from each person named as a secured party in any financing statement or other security registration in respect of the Canadian Borrower or any Canadian Subsidiary (A) disclosing the scope of the security interest perfected by such financing statement or other registration; (B) establishing that such security interest is permitted 101 by Section 6.02; and (C) providing that such secured party cannot rely upon such financing statement or other registration to perfect a security interest other than as permitted by Section 6.02 and (vii) to the extent requested by the Agents, acknowledgments from GE Capital Canada Leasing Services Inc., ABN Amro Leasing (a division of ABN Amro Bank Canada) and Corporation Alter Moneta/Alter Moneta Corporation in favor of the Canadian Collateral Agent that they continue to be bound by the existing intercreditor agreements entered into by them with Bank of America (Canada) notwithstanding the amendment and restatement of the credit agreement and the security agreement. (g) The U.S. Administrative Agent shall have received evidence that the insurance required by Section 5.07 and the Security Documents is in effect. (h) The Agents shall be reasonably satisfied as to the amount and nature of any environmental and employee health and safety exposures to which Holdings and the Subsidiaries may be subject after giving effect to the Transactions and the other transactions contemplated hereby, and with the plans of Holdings or such Subsidiaries with respect thereto. (i) All amounts accrued and owing under the Existing Credit Agreements shall be paid (other than Existing Term Loans, Assigned Debt and reimbursement obligations in respect of Existing Letters of Credit to the extent such Existing Letters of Credit have not yet been drawn) prior to or concurrently with the initial Borrowing hereunder on the Effective Date, and the U.S. Administrative Agent shall have received satisfactory evidence of the foregoing. (j) The Lenders shall be satisfied that the aggregate amount of fees and expenses incurred by Holdings and the Subsidiaries in connection with the Loan Documents shall not exceed $15,000,000. (k) The U.S. Borrower shall have received gross cash proceeds of not less than $300,000,000 (before deducting the initial purchasers' discount) from the issuance of the Senior Notes in a public offering or in a private placement to one or more holders satisfactory to the U.S. Administrative Agent. The terms and conditions of the Senior Notes and the provisions of the Senior Note Documents shall be satisfactory in all respects to the Lenders. The U.S. Administrative Agent shall have received copies of the Senior Note 102 Documents, certified by the chief financial officer of the U.S. Borrower as complete and correct. (l) All material consents and approvals required to be obtained from any Governmental Authority or other Person in connection with the Transactions and the other transactions contemplated hereby shall have been obtained, and all applicable waiting periods and appeal periods shall have expired, in each case without the imposition of any burdensome conditions on the Transactions or the other transactions contemplated hereby and there shall be no governmental or judicial action, actual or threatened, that could reasonably be expected to restrain, prevent or impose burdensome conditions on the Transactions or the other transactions contemplated hereby. (m) The U.S. Administrative Agent shall have received a pro forma consolidated balance sheet of Holdings as of a recent date, giving effect to the Transactions. (n) After giving effect to the Transactions and the other transactions contemplated hereby, neither Holdings nor any Subsidiary shall have outstanding any shares of preferred stock or any Debt, other than (i) Debt incurred under the Loan Documents, (ii) the Senior Notes, (iii) Debt pursuant to a Securitization Transaction permitted hereunder, (iv) the Existing Synthetic Leases, (v) the Subordinated Debt, (vi) QuIPS Debentures, (vii) QuIPS Preferred Securities, (viii) Holdings's Series A Perpetual Convertible Preferred Stock, issued on January 7, 1999, (ix) Holdings's Series B Perpetual Convertible Preferred Stock, issued on September 30, 1999, and (x) other Debt and preferred stock existing on the date hereof and set forth in Schedule 6.02. The terms and conditions of all Debt set forth in Schedule 6.02 shall be satisfactory in all respects to the Lenders. (o) The U.S. Administrative Agent shall have received a solvency certificate from the chief financial officer of Holdings, in form and substance satisfactory to the U.S. Administrative Agent, together with such other evidence reasonably requested by the Lenders, confirming the solvency of Holdings and the Subsidiaries on a consolidated basis after giving effect to the Transactions and the other transactions contemplated hereby. 103 The U.S. Administrative Agent shall notify the Borrowers, the Canadian Administrative Agent, the Collateral Agents and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, consolidation, amendment and restatement of the Existing Credit Agreements as provided herein and the obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) at or prior to 5:00 p.m., New York City time, on April 30, 2001 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time). SECTION 4.02. Each Credit Event. The obligation of each Lender to ------------------ make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to receipt of the request therefor in accordance herewith and to the satisfaction of the following conditions: (a) The representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable (other than representations and warranties that relate to a specific earlier date, so long as such representations and warranties were true and correct in all material respects as of such earlier date). (b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing. Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by Holdings and the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section. 104 ARTICLE V Affirmative Covenants --------------------- Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, each of Holdings and the Borrowers covenants and agrees with the Lenders and the Issuing Bank that: SECTION 5.01. Financial Statements and Other Information. The U.S. ------------------------------------------- Borrower will furnish to the U.S. Administrative Agent (for delivery to the Lenders): (a) within 90 days after the end of each Fiscal Year of Holdings, its audited consolidated balance sheet and related statements of operations, stockholders' equity and cash flows (and its unaudited consolidating balance sheet and related statements of operations) as of the end of and for such year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all reported on (in the case of such audited consolidated statements) by Ernst & Young LLP or other independent public accountants of recognized national standing (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit), together with a certificate from the chief financial officer of Holdings to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of Holdings and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied; (b) within 45 days after the end of each of the first three Fiscal Quarters of each Fiscal Year of Holdings, its consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such Fiscal Quarter and the then elapsed portion of the Fiscal Year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous Fiscal Year, all certified by a Financial Officer as presenting fairly in all material respects the financial condition and results of operations of Holdings and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently 105 applied, subject to normal year-end audit adjustments and the absence of footnotes; (c) concurrently with any delivery of financial statements under clause (a) or (b) above, (i) a certificate of a Financial Officer (A) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (B) setting forth reasonably detailed calculations demonstrating compliance with Section 6.01 and (C) stating whether any change in GAAP or in the application thereof that has a material effect on the financial statements referred to in clause (a) or (b) above has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate and (ii) an updated organizational chart listing all Subsidiaries and the locations of their businesses; (d) concurrently with any delivery of financial statements under clause (a) above, a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines); (e) as soon as practicable and in any event within 60 days after the commencement of each Fiscal Year, financial projections for Holdings and the Subsidiaries for such Fiscal Year prepared in a manner consistent with those projections delivered by the U.S. Borrower to the Lenders prior to the Effective Date or otherwise in a manner satisfactory to the U.S. Administrative Agent; (f) promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials (other than on Form S-8) filed by Holdings or any Subsidiary with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed by Holdings to its shareholders generally, as the case may be; provided that the filing of such reports, proxy statements and -------- other materials with the Securities and Exchange Commission 106 through EDGAR shall be deemed to satisfy the requirements of this paragraph (f); and (g) promptly following any request therefor, such other information regarding the operations, business affairs, financial condition and prospects of Holdings or any Subsidiary, or compliance with the terms of any Loan Document, as any Agent or any Lender (through an Agent) may reasonably request. SECTION 5.02. Notices of Material Events. Holdings and the U.S. --------------------------- Borrower will furnish to the Agents (for delivery to the Lenders) prompt written notice of the following upon becoming aware thereof: (a) the occurrence of any Default; (b) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting Holdings, the Borrowers or any Affiliate thereof that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; (c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect; and (d) any other development that results in, or any other developments (other than a change in general market or industry conditions) that could reasonably be expected to result in, a Material Adverse Effect. Each notice delivered under this Section 5.02 shall be accompanied by a statement of a Financial Officer or other executive officer of Holdings or the U.S. Borrower setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto. SECTION 5.03. Information Regarding Collateral. (a) Holdings and the --------------------------------- U.S. Borrower will furnish to the U.S. Administrative Agent prompt written notice of any change (i) in any Loan Party's corporate name or in any trade name used to identify it in the conduct of its business or in the ownership of its properties, (ii) in the location of any Loan Party's chief executive office, its principal place of business, any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the 107 establishment of any such new office or facility), (iii) in any Loan Party's identity or corporate structure or (iv) in any Loan Party's Federal Taxpayer Identification Number. Holdings and the Borrowers agree not to effect or permit any change referred to in the preceding sentence unless all filings under the Uniform Commercial Code or otherwise that are required in order for the U.S. Collateral Agent or the Canadian Collateral Agent, as applicable, to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral for the benefit of the Secured Parties have been (or, within the period required by the Uniform Commercial Code or other applicable law, are subsequently) made. Holdings and the Borrowers also agree promptly to notify the U.S. Administrative Agent if any material portion of the Collateral is damaged or destroyed. (b) Each year, at the time of delivery of annual financial statements with respect to the preceding Fiscal Year pursuant to clause (a) of Section 5.01, the U.S. Borrower shall deliver to the U.S. Administrative Agent a certificate signed by an officer of the U.S. Borrower setting forth the information required pursuant to the Perfection Certificate or confirming that there has been no change in such information since the date of the Perfection Certificate delivered on the Effective Date or the date of the most recent certificate delivered pursuant to this Section. SECTION 5.04. Existence; Conduct of Business. Holdings will, and will ------------------------------- cause each Subsidiary to, do or cause to be done all things necessary to preserve, renew or replace and keep in full force and effect its legal existence and the rights, licenses, permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the conduct of the business of Holdings and the Subsidiaries, taken as a whole; provided that the foregoing shall not -------- prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.05. SECTION 5.05. Payment of Obligations. Holdings will, and will cause ----------------------- each Subsidiary to, pay its Debt and other obligations, including liabilities in respect of Taxes, before the same shall become delinquent or in default, except where (a)(i) the validity or amount thereof is being contested in good faith by appropriate proceedings, (ii) Holdings or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP, (iii) such contest effectively suspends collection of the contested obligation and the enforcement of any Lien securing such obligation and (iv) the failure to make 108 payment pending such contest could not reasonably be expected to result in a Material Adverse Effect or (b) the aggregate uninsured and unpaid amount is less than $5,000,000 and does not include Taxes and the failure to make payment could not reasonably be expected to result in a Material Adverse Effect. SECTION 5.06. Maintenance of Properties. Holdings will, and will, -------------------------- subject to Section 6.05, cause each Subsidiary to, keep and maintain all property material to the conduct of the business of Holdings and its Subsidiaries, taken as a whole, in good working order and condition, ordinary wear and tear excepted. SECTION 5.07. Insurance. Holdings will, and will cause each ---------- Subsidiary to, maintain, with financially sound and reputable insurance companies (a) insurance in such amounts (with no greater risk retention) and against such risks as are customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations and (b) all insurance required to be maintained pursuant to the Security Documents. Each Borrower will furnish to the Lenders, upon reasonable request by the applicable Administrative Agent, the requested information in reasonable detail as to the insurance so maintained. Each Borrower shall deliver to the applicable Administrative Agent, prior to the cancelation, modification or nonrenewal of any material such policy of insurance, a copy of a renewal or replacement policy (or other evidence of renewal of a policy previously delivered to the applicable Administrative Agent) together with evidence satisfactory to the applicable Administrative Agent of payment of the premium therefor. All insurance policies or certificates (or certified copies thereof) with respect to such insurance shall be endorsed to the applicable Administrative Agent's reasonable satisfaction for the benefit of the Lenders (including by naming the applicable Administrative Agent or Collateral Agent, as appropriate, as loss payee or additional insured, as appropriate). SECTION 5.08. Casualty and Condemnation. The Borrowers (a) will -------------------------- furnish to the Agents and the Lenders prompt written notice of any casualty or other insured damage to any material portion of any Collateral or the commencement of any action or proceeding for the taking of any material portion of any Collateral under power of eminent domain or by condemnation or similar proceeding and (b) will ensure that the Net Proceeds of any such event with respect to any Collateral (whether in the form of insurance proceeds, condemnation awards or otherwise) are collected 109 and applied in accordance with the applicable provisions of this Agreement and the Security Documents. SECTION 5.09. Books and Records; Inspection and Audit Rights. ----------------------------------------------- Holdings will, and will cause each Subsidiary to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. Holdings will, and will cause each Subsidiary to, permit any representatives designated by the Agents or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested. SECTION 5.10. Compliance with Laws. Holdings will, and will cause --------------------- each Subsidiary to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. SECTION 5.11. Use of Proceeds and Letters of Credit. (a) On the -------------------------------------- Effective Date, the proceeds of the Term Loans, together with (a) the Net Proceeds of the issuance of the Senior Notes and (b) proceeds of the U.S. $ Revolving Loans made on the Effective Date, will be used solely for (i) the repayment (or, in the case of Existing Term Loans and Assigned Debt, the purchase, as provided in Section 2.01(b)) of all amounts accrued and owing under the Existing Credit Agreements and all amounts owing on the Effective Date under a Synthetic Lease transaction with Deutsche Bank and (ii) the payment of the fees and expenses incurred in connection with the Loan Documents in an aggregate amount not to exceed $15,000,000. (b) The proceeds of U.S. $ Revolving Loans (to the extent not used pursuant to paragraph (a) above) and Additional Revolving Loans and Swingline Loans will be used by the U.S. Borrower, and the proceeds of the C $ Revolving Loans will be used by the Canadian Borrower, for general corporate purposes, including repayment of indebtedness, acquisitions, investments, loans, purchases of Equity Interests and other payments permitted under this Agreement. (c) Letters of credit will be used by the U.S. Borrower for general corporate purposes. 110 (d) No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X. SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary ------------------------ is formed or acquired (or any Excluded Subsidiary ceases to be an Excluded Subsidiary or any Canadian Subsidiary becomes a Canadian Subsidiary Loan Party) after the Effective Date, Holdings will promptly (a) notify the applicable Administrative Agent thereof and (b) cause the Collateral and Guarantee Requirement to be satisfied with respect to such Subsidiary (if it is a Subsidiary Loan Party) and with respect to any Equity Interest in or Debt of such Subsidiary owned by or on behalf of any Loan Party. SECTION 5.13. Further Assurances. (a) Holdings will, and will cause ------------------- each Subsidiary Loan Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings and other documents), that may be required under any applicable law, or that the applicable Collateral Agent or the Required Lenders may reasonably request, to cause the Collateral and Guarantee Requirement to be and remain satisfied, all at the expense of the Loan Parties. Holdings will, and will cause each Subsidiary Loan Party to, take all actions reasonably requested by the Agents in order to terminate any Liens referred to in the last parenthetical of Section 4.01(f)(iii). (b) If any material assets (other than real property) are acquired by any Subsidiary Loan Party after the Effective Date (other than assets constituting Collateral under either Security Agreement that become subject to the Lien of such Security Agreement upon acquisition thereof), Holdings will notify the applicable Agents thereof, and, if requested by such Agents or the Required Lenders, Holdings will, unless otherwise not required to hereunder or under any Security Document, cause such assets to be subjected to a Lien securing the relevant Obligations and will take, and cause such Subsidiary Loan Party to take, such actions as shall be necessary or reasonably requested by such Agents to grant and perfect such Liens, including actions described in paragraph (a) of this Section 5.13, all at the expense of the Loan Parties. SECTION 5.14. Interest Rate Protection. As promptly as practicable, ------------------------- and in any event within 180 days after the Effective Date, the Borrowers will enter into, and 111 thereafter for a period of not less than two and one-half years will maintain in effect, one or more interest rate protection agreements as and to the extent necessary to achieve interest rate hedging reasonably satisfactory to the Administrative Agent and on such terms and with such parties as shall be reasonably satisfactory to the Administrative Agent. ARTICLE VI Negative Covenants ------------------ Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, each of Holdings and the Borrowers covenants and agrees with the Lenders and the Issuing Bank that: SECTION 6.01. Financial Covenants. -------------------- (a) Minimum Interest Coverage Ratio. Holdings will not permit the -------------------------------- Interest Coverage Ratio for any Computation Period to be less than 1.75 to 1.0. (b) Funded Debt to Cash Flow Ratio. Holdings will not permit the ------------------------------- Funded Debt to Cash Flow Ratio as of the last day of any Fiscal Quarter to exceed 4.25 to 1.0. (c) Senior Debt to Tangible Assets. Holdings will not permit the ------------------------------- ratio of (i) Senior Debt (excluding Securitization Obligations) to (ii) Tangible Assets (excluding, to the extent included in Tangible Assets, (A) all assets which are owned by a Special Purpose Vehicle or subject to a Lien in connection with a Securitization Transaction and (B) Excess Synthetic Lease Collateral (other than Excess Synthetic Lease Collateral securing the Existing Synthetic Leases)) to exceed 1.0 to 1.0 at any time. (d) Senior Debt to Cash Flow Ratio. Holdings will not permit the ------------------------------- Senior Debt to Cash Flow Ratio as of the last day of any Fiscal Quarter to exceed 2.75 to 1.0. SECTION 6.02. Limitations on Debt. Holdings will not, and will not -------------------- permit any Subsidiary to, create, incur, 112 assume or suffer to exist any Debt, except (without duplication): (a) Debt hereunder (including Incremental Term Loans incurred in compliance with Section 2.20) and under the other Loan Documents; (b) unsecured Debt of Holdings or any Subsidiary (excluding Contingent Payments and Seller Subordinated Debt); provided that (i) no Subsidiary of -------- the U.S. Borrower shall incur any such Debt if, after giving effect thereto, the aggregate amount of all then-outstanding Debt of the Subsidiaries of the U.S. Borrower permitted solely by this clause (b) would exceed 25% of Net Worth, (ii) Holdings or such Subsidiary shall not incur any such Debt if Holdings is not in compliance with all covenants set forth in this Article VI (including compliance with Section 6.01, determined on a pro forma basis as if any such incurrence of Debt had occurred at the beginning of the most recent period for testing compliance therewith) and (iii) the aggregate principal amount of Debt permitted solely by this clause (b) plus the aggregate principal amount of Incremental Term Loans then outstanding shall not at any time exceed $500,000,000; (c) Debt of Holdings or any Subsidiary in respect of Capital Leases or arising in connection with the acquisition of equipment (including Debt assumed in connection with an asset purchase permitted by Section 6.05, or incurred pursuant to a Capital Lease or in connection with the acquisition of equipment by a Person before it became a Subsidiary in connection with a stock purchase permitted by Section 6.05, in each case so long as such Debt is not incurred in contemplation of such purchase), and refinancings of any such Debt so long as the terms applicable to such refinanced Debt are not materially less favorable to Holdings or the applicable Subsidiary than the terms in effect immediately prior to such refinancing; provided that the -------- aggregate amount of all such Debt at any time outstanding shall not exceed $150,000,000 (or its equivalent in any other currency); provided, further, -------- ------- that the aggregate amount of all such Debt arising in connection with Floor Plan Financing Arrangements shall not exceed $30,000,000; (d) Debt of Subsidiaries owed to Holdings or any Subsidiary; provided -------- that the aggregate amount of all such Debt of Subsidiaries that are not U.S. Loan 113 Parties owed to U.S. Loan Parties shall not cause a violation of clause (z) of the proviso to Section 6.10; (e) unsecured Debt of any Special Purpose Vehicle to Holdings, the U.S. Borrower or any Subsidiary Loan Party; (f) Subordinated Debt; provided that (i) the aggregate principal -------- amount of all Seller Subordinated Debt at any time outstanding shall not exceed $50,000,000 (or its equivalent in any other currency) and (ii) the Borrowers shall not issue or incur any Debt described in clause (f) of the definition of Subordinated Debt (x) at any time that a Default exists or would result therefrom and (y) unless the U.S. Borrower has delivered to the U.S. Administrative Agent (which shall promptly deliver a copy thereof to each Lender) a certificate in reasonable detail demonstrating that, after giving effect to such issuance or incurrence, Holdings will be in pro forma compliance with all financial covenants set forth in this Article VI; (g) other Debt, not of a type described in clause (c), outstanding on the Effective Date and listed in Schedule 6.02(g), and extensions, renewals and replacements thereof that do not increase the outstanding principal amount thereof; (h) Contingent Payments; provided that Holdings shall not, and shall -------- not permit any Subsidiary to, incur any obligation to make Contingent Payments the maximum possible amount of which exceeds $50,000,000 (or its equivalent in any other currency) in the aggregate for all Contingent Payments at any time outstanding; (i) the QuIPS Debentures, the QuIPS Preferred Securities and the QuIPS Guarantees; (j) Synthetic Lease Obligations; provided that the aggregate amount of -------- all Synthetic Lease Obligations shall not at any time exceed $500,000,000; (k) Suretyship Liabilities incurred by Holdings with respect to the obligations of any Subsidiary; (l) unsecured recourse obligations of Holdings or any Subsidiary in respect of Vendor Financing Arrangements; 114 (m) Hedging Obligations incurred for purposes of protection from price, interest rate or currency fluctuations posed by bona fide debt, contract or purchase order obligations or from changes in the price of Holdings's stock; (n) Debt in connection with Securitization Transactions permitted pursuant to Section 6.13; (o) the Senior Notes; provided that no Subsidiary will guarantee the -------- U.S. Borrower's obligations in respect of the Senior Notes if such Subsidiary is not a guarantor under the U.S. Subsidiary Guarantee Agreement; and (p) Debt of any Foreign Subsidiary or any Subsidiary referred to in clause (d) of the definition of Excluded Subsidiaries; provided that the -------- aggregate principal amount of all such Debt at any time outstanding permitted by this clause (p) shall not exceed $20,000,000 (or its equivalent in any other currency). For purposes of clause (h) above, a Contingent Payment shall be deemed to be "outstanding" from the time that Holdings or any Subsidiary enters into the agreement containing the obligation to make such Contingent Payment until such time as either such Contingent Payment has been made in full or it has become certain that such Contingent Payment will never have to be made. SECTION 6.03. Liens. Holdings will not, and will not permit any ------ Subsidiary to, create or permit to exist any Lien on any of its real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter acquired), except: (a) Liens for taxes or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which it maintains adequate reserves; (b) Liens arising in the ordinary course of business (such as (i) Liens of carriers, warehousemen, mechanics and materialmen and other similar Liens imposed by law and (ii) Liens incurred in connection with worker's compensation, unemployment compensation and other types of social security (excluding Liens arising under ERISA) or in connection with surety bonds, bids, performance bonds and similar obligations) 115 for sums not overdue or being contested in good faith by appropriate proceedings and not involving any deposits or advances or borrowed money or the deferred purchase price of property or services, and, in each case, for which it maintains adequate reserves; (c) Liens identified in Schedule 6.03; (d) Liens securing Debt permitted by clause (c) of Section 6.02 (and attaching only to the property (i) being leased (in the case of Capital Leases), (ii) purchased from the relevant manufacturer (in the case of Floor Plan Financing Arrangements) or (iii) the purchase price for which was or is being financed by such Debt (in the case of other Debt) and, in each case, the proceeds (including insurance proceeds) of any disposition or loss of such property); (e) attachments, appeal bonds, judgments and other similar Liens, for sums not exceeding $15,000,000 (or its equivalent in any other currency), arising in connection with court proceedings, provided the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are being actively contested in good faith and by appropriate proceedings; (f) easements, rights of way, restrictions, minor defects or irregularities in title and other similar Liens not interfering in any material respect with the ordinary conduct of the business of Holdings or any Subsidiary; (g) Liens in favor of the Collateral Agents arising under the Loan Documents; (h) Liens arising in connection with Securitization Transactions permitted under this Agreement; (i) Liens securing Synthetic Lease Obligations; provided that such -------- Liens attach only to (i) the assets that are subject to the related Synthetic Lease and (ii) Excess Synthetic Lease Collateral; and (j) Liens securing Debt permitted by paragraph (p) of Section 6.02; provided that such Liens attach only to the assets of Subsidiaries -------- permitted to incur Debt under paragraph (p) of Section 6.02. 116 SECTION 6.04. Restricted Payments. Holdings will not, and will not -------------------- permit any Subsidiary to, (a) declare or pay any dividends on any of its Equity Interests (other than dividends payable solely by issuance of its Equity Interests), (b) purchase or redeem any such Equity Interests or any warrants, units, options or other rights in respect of such Equity Interests (other than for consideration consisting of Equity Interests having terms not less favorable to the Lenders than the terms of the Equity Interests so purchased or redeemed), (c) make any other distribution to shareholders, (d) prepay, purchase, defease or redeem any Subordinated Debt or Senior Notes, (e) make any payment of principal of or interest on, or acquire, redeem or otherwise retire, or make any other distribution in respect of, any of the QuIPS Debentures or the QuIPS Preferred Securities or (f) set aside funds for any of the foregoing; provided -------- that (i) any Subsidiary may declare and pay dividends to Holdings or to any direct or indirect wholly owned Subsidiary; (ii) the U.S. Borrower may declare and pay dividends to Holdings; (iii) any Excluded Subsidiary may declare and pay dividends ratably with respect to its Equity Interests; (iv) the QuIPS Trust may make a distribution of Holdings's common stock pursuant to the terms of the QuIPS Preferred Securities or the QuIPS Debentures; (v) so long as no Default exists or would result therefrom, Holdings may make payments on the QuIPS Debentures and permit the QuIPS Trust to make corresponding distributions on the QuIPS Preferred Securities in accordance with the terms of the QuIPS Indenture; (vi) Holdings and any Subsidiary may prepay, purchase, defease or redeem, as applicable, any such Equity Interests, Subordinated Debt or Senior Notes so long as (x) no Default exists or would result therefrom and (y) the amount of all such prepayments, purchases, defeasance and redemptions (excluding purchases permitted by clause (vii) below) does not, together with the aggregate amount of Investments made pursuant to Section 6.10(m) since the Effective Date, exceed $250,000,000 in the aggregate since the Effective Date; and (vii) so long as (x) no Default exists or would result therefrom and (y) the aggregate amount of all purchases of Equity Interests, warrants or units made by Holdings (or, prior to August 5, 1998, the U.S. Borrower) since October 1, 1997 (excluding purchases permitted by clause (vi) above) does not exceed $12,000,000, Holdings may purchase its common stock or warrants, or units issued in respect thereof, from time to time on terms consistent with those set forth under the heading "Certain Agreements Relating to the Outstanding Securities" in the U.S. Borrower's Private Placement Memorandum dated September 12, 1997. Nothing in this Section 6.04 shall prohibit Holdings from permitting 117 the cashless exercise of any options or warrants for stock of Holdings. SECTION 6.05. Mergers, Consolidations, Amalgamations, Sales. ---------------------------------------------- Holdings will not, and will not permit any Subsidiary to, be a party to any merger, consolidation or amalgamation, or purchase or otherwise acquire all or substantially all of the assets or any Equity Interests of any class of, or any partnership or joint venture interest in, any other Person, or, except in the ordinary course of its business (including sales or exchanges of equipment consistent with industry practice), sell, transfer, convey or lease all or any substantial part of its assets, or sell or assign with or without recourse any receivables, except for: (a) any such merger or consolidation, amalgamation, sale, transfer, conveyance, lease or assignment of or by any direct or indirect wholly owned Subsidiary into Holdings or the U.S. Borrower or into, with or to any other direct or indirect wholly owned Subsidiary; provided that (i) no -------- Subsidiary (other than a Special Purpose Vehicle) may merge, consolidate or amalgamate with and into a Special Purpose Vehicle such that the Special Purpose Vehicle is the surviving entity and (ii) all sales and other dispositions by any Subsidiary (other than a Special Purpose Vehicle) to a Special Purpose Vehicle shall be subject to the limitations set forth in clauses (d) and (e) below); (b) any such purchase or other acquisition by Holdings or any direct or indirect wholly owned Subsidiary of the assets or Equity Interests of any direct or indirect wholly owned Subsidiary; provided that (i) purchases -------- or acquisitions by a Special Purpose Vehicle from any Subsidiary (other than a Special Purpose Vehicle) shall be subject to the limitations set forth in clauses (d) and (e) below and (ii) no Special Purpose Vehicle may purchase the Equity Interests of any Subsidiary other than another Special Purpose Vehicle; (c) any such purchase or other acquisition (including pursuant to a merger or an asset exchange of like-kind property) by Holdings or any direct or indirect wholly owned Subsidiary of the assets or the Equity Interests of any other Person (if, in the case of Equity Interests, after giving effect to such purchase or other acquisition, Holdings and such Subsidiaries own 100% of the Equity Interests of such Person (other than directors' qualifying shares or 118 similar Equity Interests)) where (1) such assets (in the case of an asset purchase) are for use, or such Person (in the case of a purchase of Equity Interests) is engaged, solely in the equipment rental and related businesses, (2) immediately before and after giving effect to such purchase or acquisition, no Default shall have occurred and be continuing, (3) such proposed purchase or other acquisition, giving pro forma effect to the same (as well as any related incurrence of Debt), does not cause the Funded Debt to Cash Flow Ratio to exceed 3.75 to 1.0 and (4) the board of directors of such Person has not announced that it will oppose such acquisition and has not commenced any litigation which alleges that such acquisition violates or will violate any requirement of law or any contractual obligation of such Person; (d) the sale, assignment or other transfer of (i) accounts receivable, lease receivables or other rights to payment pursuant to Receivables Securitization Transactions in an aggregate amount not to exceed $500,000,000 at any time outstanding (determined by reference to the amount of such receivables and other rights to payment that are outstanding at any time) or (ii) equipment and related assets (including leases, rental agreements, lease receivables, rights to payment and similar interests, and other rights and assets described in the definition of Equipment Securitization Transaction) pursuant to Equipment Securitization Transactions; provided that (A) at the time of and after giving effect to -------- any such sale, assignment or other transfer pursuant to clause (i) or (ii) above (other than any such sale, assignment or other transfer ("Excluded -------- Transfers") (1) made solely to effect a replacement or substitution of --------- assets of equivalent value under an Equipment Securitization or (2) made at any time if, immediately after giving effect thereto, the aggregate Securitization Obligations outstanding under the applicable Securitization Transaction would not exceed the largest aggregate amount of Securitization Obligations outstanding under such Securitization Transaction at any one time since the later of the Effective Date and the date of the then- most recent reduction (if any) in the maximum Securitization Obligations that may be incurred under such Securitization Transaction) Holdings and the Borrowers shall be in compliance with the Loan Documents (including compliance with Section 6.01, determined on a pro forma basis as if such sale, assignment or transfer had occurred at the beginning of the most 119 recent period for testing compliance therewith) and (B) at the time of each such sale, assignment or other transfer pursuant to clause (ii) above (other than any Excluded Transfer) and after giving effect thereto, Holdings and the Subsidiaries would be permitted to incur at least $500,000,000 of additional Senior Debt (other than Securitization Obligations) pursuant to Section 6.01(c) (without in any way limiting the obligations of Holdings and the Borrowers to comply with the other Sections of this Agreement); (e) sales and dispositions of assets (including all the stock then held by Holdings and the Subsidiaries of Subsidiaries, sales pursuant to sale and leaseback transactions and asset exchanges of like-kind property), in addition to sales and other dispositions in the ordinary course of business or permitted by clause (d), so long as the net book value of (i) all assets disposed of by Holdings and any Subsidiary (other than any ES Special Purpose Vehicle) in like-kind exchanges in any Fiscal Year does not exceed 5% of the net book value of the consolidated assets of Holdings and its Subsidiaries (excluding ES Special Purpose Vehicles) as of the last day of the preceding Fiscal Year and (ii) all other assets sold or otherwise disposed of by Holdings and any Subsidiary (other than any ES Special Purpose Vehicle) in any Fiscal Year does not exceed 5% of the net book value of the consolidated assets of Holdings and its Subsidiaries (excluding ES Special Purpose Vehicles) as of the last day of the preceding Fiscal Year; and (f) any such purchase or other acquisition permitted by Section 6.10(m). SECTION 6.06. Modification of Certain Documents. Holdings will not ---------------------------------- permit the Certificate or Articles of Incorporation, By-Laws or other organizational documents of Holdings or any Subsidiary, or any Senior Note Document, any Subordinated Note Indenture or any other document evidencing or setting forth the terms applicable to any Subordinated Debt, to be amended or modified in any way which might reasonably be expected to materially adversely affect the interests of the Lenders. The Borrower will not designate any Debt (including the Senior Notes) as "Designated Senior Indebtedness" for purposes of, and as defined in, any Subordinated Note Indenture, except pursuant to Section 9.14. SECTION 6.07. Transactions with Affiliates. Holdings will not, and ----------------------------- will not permit any Subsidiary to, 120 enter into, or cause, suffer or permit to exist any transaction, arrangement or contract with any of its other Affiliates (other than Holdings and the Subsidiaries) which is on terms which are less favorable than are obtainable from any Person which is not one of its Affiliates; provided that (a) Holdings -------- may enter into transactions with Acquisition Subsidiaries or the QuIPS Trust, and (b) Holdings or any Subsidiary may enter into (i) employment contracts, consulting arrangements, indemnification and reimbursement arrangements, incentive and other compensation arrangements (including benefit plans) and similar arrangements entered into with employees, officers and directors of Holdings or any of the Subsidiaries, in each case in the ordinary course of business, (ii) transactions with any Special Purpose Vehicle in connection with any Securitization Transaction, to the extent permitted by the terms of this Agreement and (iii) transactions permitted under clauses (i) through (v) and (vii) of the first proviso to Section 6.04 and under 6.10(g). SECTION 6.08. Inconsistent Agreements. Holdings will not, and will ------------------------ not permit any Subsidiary to, enter into any agreement containing any provision which (a) would be violated or breached by the performance by Holdings or any Subsidiary of any of its obligations hereunder or under any other Loan Document or (b) would prohibit Holdings or any Subsidiary (other than any Excluded Subsidiary (other than an Acquisition Subsidiary)) from granting to the Collateral Agent, for the benefit of the Lenders, a Lien on any of its assets. SECTION 6.09. Business Activities. Holdings will not, and will not -------------------- permit any Subsidiary (other than the QuIPS Trust and any Special Purpose Vehicle) to, engage in any line of business other than the equipment rental business and businesses reasonably related thereto. SECTION 6.10. Advances and Other Investments. Holdings will not, and ------------------------------- will not permit any Subsidiary to, make, incur, assume or suffer to exist any Investment in any other Person, except (without duplication) the following: (a) Investments existing on the Effective Date in Equity Interests of wholly owned Subsidiaries identified in Schedule 3.12; (b) Investments in Equity Interests acquired after the Effective Date in transactions permitted as acquisitions of Equity Interests or assets pursuant to Section 6.05; 121 (c) in the ordinary course of business, contributions by Holdings to the capital of any of its Subsidiaries, or by any such Subsidiary to the capital of any of its Subsidiaries; (d) in the ordinary course of business, Investments by the U.S. Borrower in Holdings or in any Subsidiary or by any Subsidiary in Holdings, the U.S. Borrower or any other Subsidiary, by way of intercompany loans, advances or guaranties, all to the extent permitted by Section 6.02; (e) Suretyship Liabilities permitted by Section 6.02; (f) good faith deposits made in connection with prospective acquisitions of Equity Interests or assets permitted by Section 6.05; (g) loans (and Suretyship Liabilities in respect of loans) to officers and employees not exceeding (i) $1,000,000 in the aggregate to any single individual or (ii) $10,000,000 in the aggregate for all such individuals at any one time outstanding; (h) Investments by Holdings or the U.S. Borrower in Subsidiaries (other than Special Purpose Vehicles); (i) Investments by Holdings in the QuIPS Trust existing on the Effective Date; (j) Cash Equivalent Investments; (k) Investments by Holdings or any Subsidiary in any Special Purpose Vehicle; provided that the aggregate amount of all such Investments made in -------- cash shall not exceed $50,000,000; (l) purchases or redemptions by Holdings and wholly owned Subsidiaries (other than Excluded Subsidiaries) of minority Equity Interests in Excluded Subsidiaries that are effected pursuant to clause (vi) of the first proviso to Section 6.04; (m) Investments in Equity Interests of non-wholly owned Subsidiaries; provided that the amount of such Investments, together with the aggregate -------- amount of any prepayments, purchases, defeasances or redemptions made pursuant to clause (vi) of the first proviso to Section 6.04, does not exceed $250,000,000 in the aggregate since the Effective Date; 122 (n) Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with, customers and suppliers, in each case in the ordinary course of business; and (o) Investments to the extent made with Equity Interests (other than Disqualified Equity Interests) of Holdings; provided that after giving -------- effect to any such Investment, Holdings and the Subsidiaries are in compliance with all covenants set forth in this Article VI (including compliance with Section 6.01 determined on a pro forma basis as if such Investment had occurred at the beginning of the most recent period for testing compliance therewith); provided that (x) any Investment which when made complies with the requirements - -------- of the definition of the term "Cash Equivalent Investment" may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements; and (y) no Investment otherwise permitted by clause (b), (e), (f), (g) or (k) shall be permitted to be made if, immediately before or after giving effect thereto, any Default shall have occurred and be continuing; and (z) the aggregate amount of Investments by U.S. Loan Parties in Subsidiaries (other than Special Purpose Vehicles) that are not U.S. Loan Parties shall not at any time exceed 20% of the consolidated assets of Holdings and its Subsidiaries. SECTION 6.11. Location of Assets. Holdings will not permit at any ------------------- time more than 20% of the consolidated assets of Holdings and its Subsidiaries to be owned by Subsidiaries (other than Special Purpose Vehicles) that are not U.S. Loan Parties. SECTION 6.12. QuIPS Documents. Holdings will not permit any ---------------- amendment to or modification of the QuIPS Debentures, the QuIPS Preferred Securities, either QuIPS Guarantee or the QuIPS Indenture which, in any such case, is adverse to the interests of the Lenders. SECTION 6.13. Securitization Obligations. Holdings will not permit --------------------------- any Securitization Obligation to be incurred or any sale, assignment or other transfer of assets to be made pursuant to any Securitization Transaction if (and to the extent that) at the time thereof and after giving effect thereto (a) in the case of a Receivables Securitization Transaction, the aggregate amount of accounts receivable, lease receivables and other rights to payment subject to all Receivables Securitization Transactions would 123 exceed $500,000,000 (determined by reference to the outstanding amount thereof at the time); (b) in the case of an Equipment Securitization Transaction (unless the incurrence of such Securitization Obligation or the making of such sale, assignment or other transfer relates solely to (or constitutes only) an Excluded Transfer), Holdings and the Subsidiaries would not be permitted to incur at least $500,000,000 of additional Senior Debt (other than Securitization Obligations) pursuant to Section 6.01(c) (without in any way limiting the obligation of Holdings and the Borrowers to comply with the other Sections of this Agreement); or (c) after giving effect to any such Securitization Transaction, Holdings and the Subsidiaries would not be in compliance with all covenants set forth in this Article VI (including compliance with Section 6.01 (unless the incurrence of such Securitization Obligation or the making of such sale, assignment or other transfer relates solely to (or constitutes only) an Excluded Transfer), determined on a pro forma basis as if such Securitization Transaction had occurred at the beginning of the most recent period for testing compliance therewith). ARTICLE VII Events of Default ----------------- If any of the following events ("Events of Default") shall occur: ----------------- (a) either Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise; (b) either Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in clause (a) of this Article VII) payable under this Agreement or any other Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of five days; (c) any representation or warranty made or deemed made by or on behalf of Holdings or any Subsidiary in or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, or in any report, certificate, financial statement or other document furnished pursuant to or in 124 connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made; (d) Holdings or either Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02, 5.04 (with respect to the existence of Holdings or either Borrower) or 5.11 or in Article VI; (e) any Loan Party shall fail to observe or perform any covenant, condition or agreement contained in any Loan Document (other than those specified in clause (a), (b) or (d) of this Article VII), and such failure shall continue unremedied for a period of 30 days after notice thereof from the applicable Administrative Agent to Holdings (which notice will be given at the request of any Lender); (f) Holdings or any Subsidiary (other than a Special Purpose Vehicle) shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Debt (excluding Holdbacks), when and as the same shall become due and payable (subject to the expiration of any applicable grace period); or any failure of payment of the type referred to above shall occur under the terms of any Holdback owed by Holdings or any Subsidiary (other than a Special Purpose Vehicle) that in the aggregate (for all Holdbacks so affected) constitute Material Debt; provided that no amount payable in respect of any Holdback shall be -------- deemed to be in default to the extent that the obligation to pay such amount is being contested by Holdings or the applicable Subsidiary in good faith and by appropriate proceedings and appropriate reserves have been set aside in respect of such amount; (g) any event or condition occurs that results in any Material Debt (excluding Holdbacks and other than the Material Debt of a Special Purpose Vehicle) becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Debt (excluding Holdbacks and other than the Material Debt of a Special Purpose Vehicle) or any trustee or agent on its or their behalf to cause any Material Debt (excluding Holdbacks and other than the Material Debt of a Special Purpose Vehicle) to become due, or to require the prepayment, 125 repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided that this clause (g) shall not apply to secured Debt -------- that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Debt; or any event or condition of the type referred to above shall occur under the terms of any Holdback owed by Holdings or any Subsidiary (other than a Special Purpose Vehicle) that in the aggregate (for all Holdbacks so affected) constitute Material Debt; provided that no amount payable in respect of any Holdback shall be deemed -------- to be in default to the extent that the obligation to pay such amount is being contested by Holdings or the applicable Subsidiary in good faith and by appropriate proceedings and appropriate reserves have been set aside in respect of such amount; or Holdings or any Subsidiary (other than a Special Purpose Vehicle) shall be required to purchase, or any Person shall be entitled (with or without the giving of notice, the lapse of time or both) to require Holdings or any such Subsidiary to purchase, any assets for a purchase price exceeding $15,000,000 previously sold by Holdings or any Subsidiary pursuant to a Securitization Transaction; (h) default in the payment when due, or in the performance or observance of, any material obligation of, or condition agreed to by, Holdings or any Subsidiary (other than a Special Purpose Vehicle) with respect to any material purchase or lease of goods or services where such default, singly or in the aggregate with other such defaults might reasonably be expected to have a Material Adverse Effect (except only to the extent that the existence of any such default is being contested by Holdings or such Subsidiary in good faith and by appropriate proceedings and appropriate reserves have been made in respect of such default); (i) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of Holdings or any Subsidiary (other than a Special Purpose Vehicle) or its debts, or of a substantial part of its assets, under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Holdings or any Subsidiary (other than a Special Purpose Vehicle) or for a substantial part of its assets, and, in any such case, such proceeding or 126 petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered; (j) Holdings or any Subsidiary (other than a Special Purpose Vehicle) shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (i) of this Article, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for Holdings or any Subsidiary (other than a Special Purpose Vehicle) or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing; (k) Holdings or any Subsidiary (other than a Special Purpose Vehicle) shall become unable, admit in writing its inability or fail generally to pay its debts as they become due; (l) one or more final judgments for the payment of money in an aggregate amount in excess of $15,000,000 (or its equivalent in any other currency) shall be rendered against Holdings, any of its Subsidiaries (other than a Special Purpose Vehicle) or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of Holdings or any Subsidiary (other than a Special Purpose Vehicle) to enforce any such judgment; (m) an ERISA Event shall have occurred that, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in a Material Adverse Effect; (n) any Security Document or Guarantee Agreement, or any material provision of any Security Document or Guarantee Agreement, shall cease to be in full force or effect (other than pursuant to the terms hereof or 127 thereof or as a result of acts or omissions of the Agents or any Lender) or any Loan Party shall deny or disaffirm in writing such Loan Party's Obligations under any Security Document or Guarantee Agreement; (o) any Lien purported to be created under any of the Security Documents shall cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien on any Collateral, with the priority required by the applicable Security Document and within the time period specified in the applicable Security Document, except (i) as a result of the sale or other disposition of the applicable Collateral in a transaction permitted under the applicable Loan Documents or (ii) as a result of the applicable Collateral Agent's failure to maintain possession of any stock certificates, promissory notes, certificates of title or other instruments delivered to it under any Loan Document; (p) a Change in Control shall occur; or (q) any event or condition described in clause (f), (g), (h), (i), (j), (k) or (l) occurs with respect to any Subsidiary that is a Special Purpose Vehicle that would constitute an Event of Default under such clause if Special Purpose Vehicles were not excluded therefrom, unless (i) such Special Purpose Vehicle is an "Unrestricted Subsidiary" as defined in the Subordinated Note Indentures and the U.S. Borrower is in compliance with the last paragraph of Section 10.18(a) of the Subordinated Note Indentures (other than any non-compliance solely as a result of the existence of this clause (q)) and (ii) neither Holdings nor any other Subsidiary (other than a Special Purpose Vehicle) is liable for any Material Debt of such Special Purpose Vehicle; then, and in every such event (other than an event with respect to either Borrower described in clause (i) or (j) of this Article VII), and at any time thereafter during the continuance of such event, the U.S. Administrative Agent may, and at the request of the Required Lenders shall, by notice to the U.S. Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Loans (including the face amount of B/As and B/A Equivalent Notes) then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), 128 and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder, shall become due and payable immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers; and in case of any event with respect to either Borrower described in clause (i) or (j) of this Article VII, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and other obligations of the Borrowers accrued hereunder, shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrowers. ARTICLE VIII The Administrative Agents and the Collateral Agents --------------------------------------------------- Each of the Lenders and the Issuing Bank hereby irrevocably appoints each Agent as its agent and authorizes each Agent to take such actions on its behalf and to exercise such powers as are delegated to such Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. The Canadian Collateral Agent hereby agrees to act as the fonde de pouvoir (i.e., holder of the power of attorney) of the Canadian Secured ---- Parties to the extent necessary or desirable for the purposes of creating, maintaining or enforcing any security interest created or established or to be created or established under any of the Canadian Security Documents including entering into the Canadian Security Documents and exercising all or any of the rights, powers, trusts or duties conferred upon the Canadian Collateral Agent therein or conferred upon the Canadian Collateral Agent hereunder with respect to such security interest, and each Canadian Secured Party by executing this Credit Agreement accepts the Canadian Collateral Agent as the fonde de pouvoir of such Canadian Secured Party for such purposes. Each bank serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with Holdings, the Borrowers or any Subsidiary or other Affiliate thereof as if it were not an Agent hereunder. 129 The Agents shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Agents shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Agents shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Agents are required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) and (c) except as expressly set forth in the Loan Documents, the Agents shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to Holdings, either Borrower or any of the Subsidiaries that is communicated to or obtained by such Agent or any of its Affiliates in any capacity. No Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or wilful misconduct. No Agent shall be deemed to have knowledge of any Default unless and until written notice thereof is given to such Agent by Holdings, either Borrower or a Lender, and no Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to such Agent. Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. Each Agent may consult with legal counsel (who may be counsel for either Borrower), independent accountants and 130 other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Either Collateral Agent may (and shall at the request of any Loan Party), without the approval of any other Secured Party, (a) release any Collateral under any Security Document which is permitted to be sold or disposed of or otherwise released pursuant to this Agreement and execute and deliver such releases as may be necessary to terminate of record such Collateral Agent's security interest in such Collateral, (b) release any Loan Party from its obligations under the applicable Guarantee Agreement if such Loan Party ceases to be a Subsidiary pursuant to a transaction which is permitted under this Agreement and (c) subordinate the interest of such Collateral Agent in any Collateral to the holder of any Lien on such Collateral which is permitted by clause (d), (h) or (i) of Section 6.03. In determining whether any such release or subordination is permitted under this Agreement, each Collateral Agent (i) may rely, as to factual matters, on a certificate from either Borrower and (ii) may (but shall not be obligated to) seek (and, if obtained, rely upon) instructions from the Required Lenders. In addition, the Collateral Agents may release all Collateral upon receipt of written notice from the Administrative Agents that all obligations of the Loan Parties hereunder and under the other Loan Documents have been paid in full (other than contingent obligations (A) in respect of Letters of Credit which have been cash collateralized or otherwise provided for to the satisfaction of the Issuing Bank and (B) arising under provisions of this Agreement which by their terms survive termination hereof) and all Commitments have been terminated. Each Agent may perform any of and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by such Agent. Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub- agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as an Agent. Any Agent may resign at any time upon 30 days' notice to the Lenders, the Issuing Bank and the Borrowers. Upon any such resignation, the Required Lenders shall, with (so long as no Default exists) the consent of the U.S. 131 Borrower (which consent shall not be unreasonably withheld or delayed), have the right to appoint a successor; provided that, in the case of the resignation of -------- the Canadian Administrative Agent or the Canadian Collateral Agent, Lenders holding a majority of the C $ Revolving Loans shall, with (so long as no Default exists) the consent of the Canadian Borrower (which consent shall not be unreasonably withheld or delayed), have such right. If no successor shall have been so appointed by the Required Lenders (or the C $ Revolving Lenders, in the case of the Canadian Administrative Agent or the Canadian Collateral Agent) and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank having a combined capital and surplus of at least $500,000,000 (or in the case of a successor to the Canadian Administrative Agent or the Canadian Collateral Agent, a Canadian bank with an office in Toronto having a combined capital and surplus of at least $500,000,000). Upon the acceptance of its appointment as an Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. The fees payable by the applicable Borrower to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between the applicable Borrower and such successor. After the applicable Agent's resignation hereunder, the provisions of this Article VIII and Section 9.03 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as an Agent. If no successor Agent has accepted appointment as the applicable Agent by the date which is 30 days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon become effective and the Lenders (or, in the case of the Canadian Administrative Agent and the Canadian Collateral Agent, the C $ Revolving Lenders) shall perform all of the duties of such Agent hereunder until such time, if any, as the Required Lenders appoint a successor Agent as provided for above. Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without 132 reliance upon any Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder. ARTICLE IX Miscellaneous ------------- SECTION 9.01. Notices. Except in the case of notices and other -------- communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: (a) if to Holdings, the U.S. Borrower or the Canadian Borrower, to it at c/o United Rentals, Inc., Five Greenwich Office Park, Greenwich, CT 06830, Attention of Chief Financial Officer (Telecopy No. (203) 622-6080); (b) if to the U.S. Administrative Agent, to The Chase Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Roy Castromonte (Telecopy No. (212) 552- 5662), with a copy to The Chase Manhattan Bank, 270 Park Avenue, 47th Floor, New York, New York 10017, Attention of Randolph E. Cates (Telecopy No. (212) 270-6041); (c) if to either Collateral Agent, to Bank of America, N.A., Agency Management, 231 South LaSalle Street, Chicago, Illinois 60697, Attention of Kristine D. Hyde (Telecopy No. (312) 974-9102); (d) if to the Canadian Administrative Agent, to The Chase Manhattan Bank of Canada, 1 First Canadian Place, 100 King Street West, Suite 6900, Toronto Ontario, Canada M5X 1A4, and with respect to any funding and/or repayment-related notice, Attention of Funding Officer (Telecopy No. (416) 216-4162), and with respect to any other notice, Attention of Vice President, Portfolio Management (Telecopy No. (416) 216-4161); 133 (e) if to the Issuing Bank, to The Chase Manhattan Bank, 55 Water Street, 17th Floor, Room 1708, New York, New York 10041, Attention of Standby LC Department (Telecopy No. (212) 718-242-6501); (f) if to the Swingline Lender, to The Chase Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Maggie Swales (Telecopy No. (212) 552-5662); and (g) if to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire. Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt. SECTION 9.02. Waivers; Amendments. (a) No failure or delay by any -------------------- Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of any Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether any Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time. (b) Except as provided in Section 2.20 with respect to an Incremental Facility Amendment or Section 2.24 with respect to an increase in the C $ Revolving Commitments, neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, 134 amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by Holdings, the Borrowers and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the applicable Agent, and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; provided that no such agreement shall (i) -------- increase the Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender affected thereby, (iii) postpone the scheduled date of payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.18(b) or (c) or 2.11(e) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (v) change any of the provisions of this Section 9.02(b) or the definition of "Required Lenders", "Majority Lenders" or any other provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be), (vi) release any Loan Party from its guarantee under the applicable Guarantee Agreement (except as expressly provided therein) or release the U.S. Borrower from its Guaranty set forth in Article XI, or limit such Loan Party's or the U.S. Borrower's liability in respect of such Guarantee Agreement or Guaranty, as the case may be, without the written consent of each Lender, (vii) release all or substantially all of the Collateral from the Liens of the Security Documents (except as expressly provided therein), without the written consent of each Lender, (viii) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of any Class differently than those holding Loans of any other Class, without the written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each affected Class, or (ix) change Section 2.10(c), or change Section 2.11(c) in a manner that would alter the order of the application of the payments contemplated by the second sentence thereof, without the written consent of Lenders holding a majority in interest of Term Loans; provided, further, that (A) no such agreement -------- ------- 135 shall amend, modify or otherwise affect the rights or duties of the Administrative Agents, the Issuing Bank or the Swingline Lender without the prior written consent of the applicable Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be, and (B) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of the U.S. $ Revolving Lenders (but not the Term Loan Lenders, the Incremental Term Lenders, the C $ Revolving Lenders and the Additional Revolving Lenders), the C $ Revolving Lenders and Additional Revolving Lenders (including any change in the identity of the Canadian Borrower)(but not the U.S. $ Revolving Lenders, the Term Loan Lenders and the Incremental Term Lenders), the Term Loan Lenders (but not the Revolving Lenders, the Additional Revolving Lenders, the C $ Revolving Lenders or the Incremental Term Lenders) or the Incremental Term Lenders (but not the Revolving Lenders, the Additional Revolving Lenders, the C $ Revolving Lenders or the Term Loan Lenders) may be effected by an agreement or agreements in writing entered into by Holdings, the Borrowers and the requisite percentage in interest of the affected Class of Lenders. Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by Holdings, the Borrowers, the Required Lenders and each Agent (and, if their rights or obligations are affected thereby, the Issuing Bank and the Swingline Lender) if (i) by the terms of such agreement the Commitment of each Lender not consenting to the amendment provided for therein shall terminate (but such Lender shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03) upon the effectiveness of such amendment and (ii) at the time such amendment becomes effective, each Lender not consenting thereto receives payment in full of the principal of and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its account under this Agreement and is released from its obligations hereunder. In connection with any proposed amendment, modification, waiver or termination (a "Proposed Change") requiring --------------- the consent of all affected Lenders, if the consent of the Required Lenders to such Proposed Change is obtained, but the consent to such Proposed Change of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in this Section 9.02(b) being referred to as a "Non-Consenting Lender"), then, so long as the Lender that is acting as the --------------------- U.S. Administrative Agent is not a Non-Consenting Lender, at the Borrower's request, the U.S. Administrative Agent or another assignee that is acceptable to the U.S. Administrative Agent shall have the right with the U.S. Administrative Agent's consent and in the U.S. Administrative Agent's sole discretion (but shall have no 136 obligation) to purchase from such Non-Consenting Lender, and such Non-Consenting Lender agrees that it shall, upon the U.S. Administrative Agent's request, sell and assign to the Lender that is acting as the Administrative Agent or such other assignee, all of the Commitments, Term Loans and Revolving Exposures of such Non-Consenting Lender for an amount equal to the principal balance of all Term Loans and Revolving Loans (and funded participations in Swingline Loans and unreimbursed LC Disbursements) held by the Non-Consenting Lender and all accrued interest and fees with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment and Acceptance in accordance with Section 9.04(b). SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrowers ----------------------------------- shall pay (i) all reasonable out-of-pocket expenses incurred by each Agent and its Affiliates, including the reasonable fees, charges and disbursements of one counsel in each relevant jurisdiction (unless the U.S. Borrower consents to more than one counsel) for each of (A) the Administrative Agents and (B) the Collateral Agents, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of the Loan Documents or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all out-of-pocket expenses incurred by any Agent, the Issuing Bank or any Lender, including the reasonable fees, charges and disbursements of counsel for each Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section 9.03, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit. (b) The Borrowers shall indemnify the Agents, the Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an "Indemnitee") against, and hold each Indemnitee harmless ---------- from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of any Loan Document or any other agreement or 137 instrument contemplated hereby, the performance by the parties to the Loan Documents of their respective obligations thereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or release of Hazardous Materials on or from any property currently or formerly owned or operated by Holdings or any Subsidiary, or any Environmental Liability related in any way to Holdings or any Subsidiary, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such -------- indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such Indemnitee. (c) To the extent that either Borrower fails to pay any amount required to be paid by it to any Agent, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section 9.03, each Lender severally agrees to pay to such Agent, the Issuing Bank or the Swingline Lender, as the case may be, such Lender's pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, - -------- liability or related expense, as the case may be, was incurred by or asserted against such Agent, the Issuing Bank or the Swingline Lender in its capacity as such. For purposes hereof, a Lender's "pro rata share" shall be determined based upon its share of the sum of the total Revolving Exposures, outstanding Term Loans and unused Commitments at the time. (d) To the extent permitted by applicable law, neither Holdings nor the Borrowers shall assert, and each hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof. 138 (e) All amounts due under this Section shall be payable promptly after written demand therefor. (f) Notwithstanding the foregoing, the Canadian Borrower shall not have any liability pursuant to this Section 9.03 other than to the Canadian Administrative Agent, the Canadian Collateral Agent and the C $ Revolving Lenders (and assignees thereof pursuant to Section 9.04 or 10.01) SECTION 9.04. Successors and Assigns. (a) The provisions of this ----------------------- Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that neither Holdings nor the Borrowers may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by Holdings or either Borrower without such consent shall be null and void)(except as contemplated by the second parenthetical in clause (B) of the second proviso to Section 9.02(b)). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Related Parties of each Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) -------- except in the case of an assignment to a Lender or a Lender Affiliate of any Lender, each of the U.S. Borrower and, if applicable, the Canadian Borrower, and either the U.S. Administrative Agent or the Canadian Administrative Agent (and, in the case of an assignment of all or a portion of a U.S. $ Revolving Commitment or any Lender's obligations in respect of its LC Exposure or Swingline Exposure, the Issuing Bank and the Swingline Lender) must give their prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed), (ii) except in the case of an assignment to a Lender or a Lender Affiliate of any Lender or an assignment of the entire remaining amount of the assigning Lender's Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the 139 Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than (A) $1,000,000, in the case of an assignment of Term Loans or Term Loan Commitments, or (B) $5,000,000, in the case of an assignment of Revolving Loans or Revolving Commitments, in each case unless each of the U.S. Borrower and the U.S. Administrative Agent, or the Canadian Borrower and the Canadian Administrative Agent, as applicable, otherwise consent, (iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement, except that, subject to clause (vi), this clause (iii) shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender's rights and obligations in respect of one Class of Commitments or Loans, (iv) the parties to each assignment shall execute and deliver to the applicable Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500, (v) the assignee, if it shall not be a Lender, shall deliver to the applicable Administrative Agent an Administrative Questionnaire and (vi) each assignment by a C $ Revolving Lender (or, in the case of a C $ Revolving Lender that is not a Canadian Schedule I chartered bank, its Designated U.S. Affiliate) shall be (A) to an assignee that is able to comply with the reallocation mechanism set forth in Section 2.23 after giving effect to such assignment, (B) to an assignee that agrees to make (individually or together with a U.S. Affiliate) C $ Revolving Loans and Additional Revolving Loans as required pursuant to Section 2.23 (and, if such assignee is not a Canadian Schedule I chartered bank, such assignee must designate in the applicable Assignment and Acceptance a U.S. Affiliate for purposes of making Additional Revolving Loans) and (C) comprised of all or a pro rata portion of such Lender's C $ Revolving Commitments and Additional Revolving Commitments; provided, further, that any consent of the Borrowers otherwise -------- ------- required under this paragraph shall not be required if an Event of Default under Article VII has occurred and is continuing. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to 140 be a party hereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section. (c) Each of the U.S. Administrative Agent and the Canadian Administrative Agent, acting for this purpose as an agent of the applicable Borrower, shall maintain at its address referred to in Section 9.01 a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (each, a "Register"). The -------- entries in a Register shall be conclusive, and Holdings, the Borrowers, the Administrative Agents, the Issuing Bank and the Lenders may treat each Person whose name is recorded in a Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. Each Register shall be available for inspection by the Borrowers, the Collateral Agents, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section 9.04 and any written consent to such assignment required by paragraph (b) of this Section 9.04, the applicable Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. (e) Any Lender may, without notice to or the consent of any party, sell participations to one or more banks or other entities (a "Participant") in ----------- all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain - -------- unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations 141 and (iii) Holdings, the Borrowers, the Administrative Agents, the Issuing Bank, the Swingline Lender and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that -------- such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (f) of this Section, the Borrowers agree that each Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(c) as though it were a Lender. (f) A Participant shall not be entitled to receive any greater payment under Section 2.15 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the applicable Borrower's prior written consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.17 unless the applicable Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of such Borrower, to comply with Section 2.17(e) and Section 2.17(f) as though it were a Lender. (g) In the event that S&P or Moody's shall, after the date that any Lender becomes a Revolving Lender, downgrade the long-term certificate of deposit ratings of such Revolving Lender, and the resulting ratings shall be BBB+ or lower, in the case of S&P, or Baa1 or lower, in the case of Moody's, then the Issuing Bank shall have the right, but not the obligation, at its own expense, upon notice to such Lender and the U.S. Administrative Agent, to replace (or to request the U.S. Borrower to use its reasonable efforts to replace) such Lender with an assignee (in accordance with and subject to the restrictions contained in paragraph (b) above), and such Lender hereby agrees to transfer and assign without representation, warranty or 142 recourse (in accordance with and subject to the restrictions contained in paragraph (b) above) all its interests, rights and obligations in respect of its Revolving Commitment to such assignee; provided, however, that (i) no such -------- ------- assignment shall conflict with any law, rule and regulation or order of any Governmental Authority and (ii) the Issuing Bank or such assignee, as the case may be, shall pay to such Lender in immediately available funds on the date of such assignment the principal of and interest accrued to the date of payment on the Revolving Loans made by such Lender hereunder and all other amounts accrued for such Lender's account or owed to it hereunder (in its capacity as a Revolving Lender). (h) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of -------- a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. (i) Notwithstanding anything to the contrary contained in this Section 9.04, any Lender (a "Granting Lender") may grant to a special purpose --------------- funding vehicle (an "SPV"), identified as such in writing from time to time by --- the Granting Lender to each Agent and the Borrowers, the option to provide to the Borrowers all or any part of any Loan that such Granting Lender would otherwise be obligated to make to the Borrowers pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPV to - -------- make any Loan and (ii) if an SPV elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof. The making of a Loan by an SPV hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if, such Loan were made by such Granting Lender. Each party hereto hereby agrees that no SPV shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Lender). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior Debt of any SPV, it will not institute against, or join any other person in instituting against, such SPV any 143 bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States of America or any State thereof. In addition, notwithstanding anything to the contrary in this Section 9.04, any SPV may (i) with notice to, but without the prior written consent of, the Borrowers or any Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Lender or to any financial institutions (consented to by the Borrowers and each Agent) providing liquidity and/or credit support to or for the account of such SPV to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPV. As this Section 9.04(h) applies to any particular SPV, this Section may not be amended without the written consent of such SPV. SECTION 9.05. Survival. All covenants, agreements, representations --------- and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that any Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof. SECTION 9.06. Counterparts; Integration; Effectiveness. This ----------------------------------------- Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents 144 and any separate letter agreements with respect to fees payable to any Agents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agents and when the U.S. Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 9.07. Severability. Any provision of this Agreement held to ------------- be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 9.08. Right of Setoff. If an Event of Default shall have ---------------- occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the applicable Borrower against any of and all the obligations of such Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. Notwithstanding anything to the contrary contained in any of the Loan Documents, no proceeds of the exercise of any such lien, setoff or similar right against the Canadian Borrower or its subsidiaries shall be applied to the payment of any amounts other than amounts owing by the Canadian Borrower hereunder in respect of C $ Revolving Borrowings. 145 SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of -------------------------------------------------- Process. (a) This Agreement shall be construed in accordance with and governed - -------- by the law of the State of New York. (b) Each of Holdings and the Borrowers hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Agents, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against Holdings, the Borrowers or their properties in the courts of any jurisdiction. (c) Each of Holdings and the Borrowers hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section 9.09. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, --------------------- TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF 146 OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 9.11. Headings. Article and Section headings and the Table --------- of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. SECTION 9.12. Confidentiality. Each of the Agents, the Issuing Bank ---------------- and the Lenders agrees to maintain the confidentiality of the Information (as defined below) and use the information only in connection with the administration of this Agreement and the other Loan Documents or in connection with any other extension of credit or proposed extension of credit to Holdings or a Subsidiary by the Agents, the Issuing Bank or the Lenders, as applicable, except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors in connection with the administration of this Agreement and the other Loan Documents, and to any direct or indirect contractual counterparty in swap agreements or to such contractual counterparty's professional advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority or by the National Association of Insurance Commissioners, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 9.12, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (g) with the consent of Holdings, (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the 147 Agents, the Issuing Bank or any Lender on a nonconfidential basis from a source other than Holdings or the Borrowers or (i) on a confidential basis, to any rating agency for purposes of obtaining a rating of a Lender or its obligations. For the purposes of this Section, "Information" means all information received ----------- from Holdings or the Borrowers relating to Holdings or either Borrower or its business, other than any such information that is available to the Agents, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by Holdings or the Borrowers; provided that, in the case of information received -------- from Holdings or the Borrowers after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section 9.12 shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. SECTION 9.13. Interest Rate Limitation. Notwithstanding anything ------------------------- herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively, the "Charges"), shall exceed ------- the maximum lawful rate (the "Maximum Rate") which may be contracted for, ------------ charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate (or, in the case of amounts owed to C $ Revolving Lenders, the Canadian Prime Rate) to the date of repayment, shall have been received by such Lender. SECTION 9.14. Designated Senior Indebtedness. The U.S. Borrower ------------------------------ hereby designates the Loans and all other Obligations of the U.S. Borrower hereunder and under the other Loan Documents as "Designated Senior Indebtedness" for purposes of, and as defined in, each Subordinated Note Indenture. 148 SECTION 9.15. Judgment Currency. (a) The Borrowers' obligations ------------------ hereunder and under the other Loan Documents to make payments in Dollars or in Canadian Dollars (the "Obligation Currency") shall not be discharged or ------------------- satisfied by any tender or recovery pursuant to any judgment expressed in or converted into any currency other than the Obligation Currency, except to the extent that such tender or recovery results in the effective receipt by the Administrative Agents, the Collateral Agents or a Lender of the full amount of the Obligation Currency expressed to be payable to such Administrative Agent, Collateral Agent or Lender under this Agreement or the other Loan Documents. If, for the purpose of obtaining or enforcing judgment against either of the Borrowers or any other Loan Party in any court or in any jurisdiction, it becomes necessary to convert into or from any currency other than the Obligation Currency (such other currency being hereinafter referred to as the "Judgment -------- Currency") an amount due in the Obligation Currency, the conversion shall be - -------- made, at the Dollar Equivalent of such amount, in the case of any Canadian Dollars, and, in the case of other currencies, the rate of exchange (as quoted by the U.S. Administrative Agent or, if the U.S. Administrative Agent does not quote a rate of exchange on such currency, by a known dealer in such currency designated by the U.S. Administrative Agent) determined, in each case, as of the date immediately preceding the day on which the judgment is given (such Business Day being hereinafter referred to as the "Judgment Currency Conversion Date"). --------------------------------- (b) If there is a change in the rate of exchange prevailing between the Judgment Currency Conversion Date and the date of actual payment of the amount due, the Borrowers covenant and agree to pay, or cause to be paid, such additional amounts, if any (but in any event not a lesser amount), as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation Currency which could have been purchased with the amount of Judgment Currency stipulated in the judgment or judicial award at the rate of exchange prevailing on the Judgment Currency Conversion Date. (c) For purposes of determining the Dollar Equivalent or rate of exchange for this Section, such amounts shall include any premium and costs payable in connection with the purchase of the Obligation Currency. SECTION 9.16. Limitation on Liability. Notwithstanding anything to ------------------------ the contrary in this Agreement, the Canadian Borrower shall not have any liability to any 149 party with respect to any representation or warranty made pursuant hereto or the breach of any covenant set forth herein other than to the Canadian Administrative Agent, the Canadian Collateral Agent and the C $ Revolving Lenders (and assignees thereof pursuant to Section 9.04 or Section 10.01). ARTICLE X Collection Allocation Mechanism ------------------------------- SECTION 10.01. Implementation of CAM. (a) On the CAM Exchange Date, ---------------------- (i) the Commitments shall automatically and without further act be terminated as provided in Article VII, (ii) each U.S. $ Revolving Lender shall immediately be deemed to have acquired (and shall promptly make payment therefor to the U.S. Administrative Agent in accordance with Section 2.04(c)) participations in the Swingline Loans in an amount equal to such U.S. $ Revolving Lender's Applicable Percentage of each Swingline Loan outstanding on such date and (iii) the Lenders shall automatically and without further act (and without regard to the provisions of Section 9.04) be deemed to have exchanged interests in the Credit Facilities such that in lieu of the interest of each Lender in each Credit Facility in which it shall participate as of such date (including such Lender's interest in the Designated Obligations of each Loan Party in respect of each such Credit Facility), such Lender shall hold an interest in every one of the Credit Facilities (including the Designated Obligations (including Swingline Exposure) of each Loan Party in respect of each such Credit Facility and each LC Reserve Account established pursuant to Section 10.02 below), whether or not such Lender shall previously have participated therein, equal to such Lender's CAM Percentage thereof. Each Lender and each Loan Party hereby consents and agrees to the CAM Exchange, and each Lender agrees that the CAM Exchange shall be binding upon its successors and assigns and any Person that acquires a participation in its interests in any Credit Facility. Each Loan Party agrees from time to time to execute and deliver to the U.S. Administrative Agent all such notes and other instruments and documents as the U.S. Administrative Agent shall reasonably request to evidence and confirm the respective interests of the Lenders after giving effect to the CAM Exchange, and each Lender agrees to surrender any notes originally received by it in connection with its Loans hereunder to the U.S. Administrative Agent against delivery of new notes evidencing its interests in the Credit Facilities; provided, however, that the -------- ------- failure of any Loan Party to execute or deliver or of any Lender to accept any 150 such note, instrument or document shall not affect the validity or effectiveness of the CAM Exchange. (b) As a result of the CAM Exchange, upon and after the CAM Exchange Date, each payment received by the Administrative Agents or the Collateral Agents pursuant to any Loan Document in respect of the Designated Obligations, and each distribution made by the Collateral Agents pursuant to any Security Documents in respect of the Designated Obligations, shall be distributed to the Lenders pro rata in accordance with their respective CAM Percentages. Any direct payment received by a Lender upon or after the CAM Exchange Date, including by way of setoff, in respect of a Designated Obligation shall be paid over to the U.S. Administrative Agent or the Canadian Administrative Agent, as applicable, for distribution to the Lenders in accordance herewith. SECTION 10.02. Letters of Credit. (a) In the event that on the CAM ------------------ Exchange Date any Letter of Credit shall be outstanding and undrawn in whole or in part, or any amount drawn under a Letter of Credit shall not have been reimbursed either by the U.S. Borrower, or with the proceeds of a U.S. $ Revolving Borrowing, each U.S. $ Revolving Lender shall promptly pay over to the U.S. Administrative Agent, in immediately available funds, an amount equal to such U.S. $ Revolving Lender's Applicable Percentage (as notified to such Lender by the U.S. Administrative Agent) of such Letter of Credit undrawn face amount or (to the extent it has not already done so) such Letter of Credit unreimbursed drawing, together with interest thereon from the CAM Exchange Date to the date on which such amount shall be paid to the U.S. Administrative Agent at the rate that would be applicable at the time to an ABR U.S. $ Revolving Loan in a principal amount equal to such amount, as the case may be. The U.S. Administrative Agent shall establish a separate account or accounts for each Lender (each, an "LC Reserve Account") for the amounts received with respect to ------------------ each such Letter of Credit pursuant to the preceding sentence. The U.S. Administrative Agent shall deposit in each Lender's LC Reserve Account such Lender's CAM Percentage of the amounts received from the U.S. $ Revolving Lenders as provided above. The U.S. Administrative Agent shall have sole dominion and control over each LC Reserve Account, and the amounts deposited in each LC Reserve Account shall be held in such LC Reserve Account until withdrawn as provided in paragraph (b), (c), (d) or (e) below. The U.S. Administrative Agent shall maintain records enabling it to determine the amounts paid over to it and deposited in the LC Reserve Accounts in respect of 151 each Letter of Credit and the amounts on deposit in respect of each Letter of Credit attributable to each Lender's CAM Percentage. The amounts held in each Lender's LC Reserve Account shall be held as a reserve against the LC Exposure, shall be the property of such Lender, shall not constitute Loans to or give rise to any claim of or against any Loan Party and shall not give rise to any obligation on the part of any Borrower to pay interest to such Lender, it being agreed that the reimbursement obligations in respect of Letters of Credit shall arise only at such times as drawings are made thereunder, as provided in Section 2.05. (b) In the event that after the CAM Exchange Date any drawing shall be made in respect of a Letter of Credit, the U.S. Administrative Agent shall, at the request of the Issuing Bank, withdraw from the LC Reserve Account of each Lender any amounts, up to the amount of such Lender's CAM Percentage of such drawing, deposited in respect of such Letter of Credit and remaining on deposit and deliver such amounts to the Issuing Bank, as applicable, in satisfaction of the reimbursement obligations of the U.S. $ Revolving Lenders under Section 2.05(e) (but not of the U.S. Borrower under Section 2.05(f)). In the event any U.S. $ Revolving Lender shall default on its obligation to pay over any amount to the U.S. Administrative Agent in respect of any Letter of Credit as provided in this Section 10.02, the applicable Issuing Bank shall, in the event of a drawing thereunder, have a claim against such U.S. $ Revolving Lender to the same extent as if such Lender had defaulted on its obligations under Section 2.05(e), but shall have no claim against any other Lender in respect of such defaulted amount, notwithstanding the exchange of interests in the U.S. Borrower's reimbursement obligations pursuant to Section 10.01. Each other Lender shall have a claim against such defaulting U.S. $ Revolving Lender for any damages sustained by it as a result of such default, including, in the event such Letter of Credit shall expire undrawn, its CAM Percentage of the defaulted amount. (c) In the event that after the CAM Exchange Date any Letter of Credit shall expire undrawn, the U.S. Administrative Agent shall withdraw from the LC Reserve Account of each Lender the amount remaining on deposit therein in respect of such Letter of Credit and distribute such amount to such Lender. (d) With the prior written approval of the U.S. Administrative Agent and the applicable Issuing Bank (not to be unreasonably withheld), any Lender may withdraw the amount held in its LC Reserve Account in respect of the undrawn amount of any Letter of Credit. Any Lender making such a withdrawal shall be unconditionally obligated, in the 152 event there shall subsequently be a drawing under such Letter of Credit, to pay over to the U.S. Administrative Agent, for the account of the Issuing Bank, on demand, its CAM Percentage of such drawing. (e) Pending the withdrawal by any Lender of any amounts from its LC Reserve Account as contemplated by the above paragraphs, the U.S. Administrative Agent will, at the direction of such Lender and subject to such rules as the U.S. Administrative Agent may prescribe for the avoidance of inconvenience, invest such amounts in Cash Equivalent Investments. Each Lender that has not withdrawn its CAM Percentage of amounts in its LC Reserve Account as provided in paragraph (d) above shall have the right, at intervals reasonably specified by the U.S. Administrative Agent, to withdraw the earnings on investments so made by the U.S. Administrative Agent with amounts in its LC Reserve Account and to retain such earnings for its own account. SECTION 10.03. Conversion. In the event the CAM Exchange Date shall ----------- occur, Obligations owed by the Loan Parties denominated in Canadian Dollars shall, automatically and with no further act required, be converted to obligations of the same Loan Parties denominated in Dollars. Such conversion shall be effected based upon the Spot Exchange Rate in effect with respect to Canadian Dollars on the CAM Exchange Date. On and after any such conversion, all amounts accruing and owed to any Lender in respect of its Obligations shall accrue and be payable in Dollars at the rates otherwise applicable hereunder (and, in the case of interest on Loans, at the default rate applicable to ABR Loans hereunder). Notwithstanding the foregoing provisions of this Section 10.03, any Lender may, by notice to the U.S. Borrower and the U.S. Administrative Agent prior to the CAM Exchange Date, elect not to have the provisions of this Section 10.03 apply with respect to all Obligations owed to such Lender immediately following the CAM Exchange Date, and, if such notice is given, all Obligations owed to such Lender immediately following the CAM Exchange Date shall remain designated in Canadian Dollars. ARTICLE XI Guaranty by the U.S. Borrower ----------------------------- SECTION 11.01. Guaranty. The U.S. Borrower hereby absolutely, --------- unconditionally and irrevocably guarantees the full and punctual payment (whether at stated maturity, upon acceleration or otherwise) of the principal of and interest on each Loan made to and each promissory 153 note issued by the Canadian Borrower, and the full and punctual payment of all other amounts payable by the Canadian Borrower under this Agreement. Upon failure by the Canadian Borrower to pay punctually any such amount, the U.S. Borrower shall forthwith on demand pay the amount not so paid at the place, in the currency and in the manner specified in this Agreement. In addition (and without limiting the foregoing), upon any Loan to the Canadian Borrower being declared or otherwise becoming immediately due and payable pursuant to Article VII, the U.S. Borrower shall forthwith on demand pay all amounts payable in respect of such Loan at the place, in the currency and in the manner specified in this Agreement. SECTION 11.02. Guaranty Unconditional. The obligations of the U.S. ----------------------- Borrower under this Section shall be absolute, unconditional and irrevocable and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: (a) any extension, renewal, settlement, compromise, waiver or release in respect of any obligation of the Canadian Borrower under this Agreement or any promissory note issued hereunder, by operation of law or otherwise; (b) any modification or amendment of or supplement to this Agreement or any promissory note issued hereunder; (c) any release, impairment, non-perfection or invalidity of any other guaranty or of any direct or indirect security for any obligation of the Canadian Borrower under this Agreement or any promissory note issued hereunder; (d) any change in the corporate existence, structure or ownership of the Canadian Borrower or any insolvency, bankruptcy, reorganization or other similar proceeding affecting the Canadian Borrower or the Canadian Borrower's assets or any resulting release or discharge of any obligation of the Canadian Borrower contained in this Agreement or any promissory note issued hereunder; (e) the existence of any claim, set-off or other right which the U.S. Borrower may have at any time against the Canadian Borrower, any Agent, any Lender or any other Person, whether in connection herewith or any unrelated transaction; provided that nothing herein -------- 154 shall prevent the assertion of any such claim by separate suit or compulsory counterclaim; (f) any invalidity or unenforceability relating to or against the Canadian Borrower for any reason of this Agreement or any promissory note issued hereunder, or any provision of applicable law or regulation purporting to prohibit the payment by the Canadian Borrower of the principal of or interest on any Loan or promissory note issued hereunder or any other amount payable by the Canadian Borrower under this Agreement; or (g) any other act or omission to act or delay of any kind by the Canadian Borrower, any Agent, any Lender or any other Person or any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of the Canadian Borrower's obligations hereunder. SECTION 11.03. Discharge only upon Payment in Full: Reinstatement in ----------------------------------------------------- Certain Circumstances. The U.S. Borrower's obligations as guarantor hereunder - ---------------------- shall remain in full force and effect until the Commitments shall have terminated and all obligations of the Canadian Borrower under this Agreement and each promissory note issued hereunder shall have been paid in full. If at any time any payment of principal, interest or any other amount payable by the Canadian Borrower under this Agreement or any promissory note issued hereunder is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or reorganization of the Canadian Borrower or otherwise, the Canadian Borrower's obligations hereunder with respect to such payment shall be reinstated as though such payment had been due but not made at such time. SECTION 11.04. Waiver by the U.S. Borrower. The U.S. Borrower ---------------------------- irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Canadian Borrower or any other Person. SECTION 11.05. Subrogation. Notwithstanding any payment made by or ------------ for the account of the Canadian Borrower pursuant to this Section, the U.S. Borrower shall not be subrogated to any right of any Agent or any Lender until such time as the Agents and the Lenders shall have received final payment in cash of the full amount of all obligations of the Canadian Borrower hereunder. 155 SECTION 11.06. Stay of Acceleration. If acceleration of the time for --------------------- payment of any amount payable by the Canadian Borrower under this Agreement or any promissory note issued hereunder is stayed upon the insolvency, bankruptcy or reorganization of the Canadian Borrower, all such amounts otherwise subject to acceleration under the terms of this Agreement shall nonetheless be payable by the U.S. Borrower hereunder forthwith on demand by the U.S. Administrative Agent made at the request of the Required Lenders. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. UNITED RENTALS, INC., by _________________________ Name: Title: UNITED RENTALS (NORTH AMERICA), INC., by _________________________ Name: Title: UNITED RENTALS OF CANADA, INC., by _________________________ Name: Title: THE CHASE MANHATTAN BANK, individually and as U.S. Administrative Agent, by _________________________ Name: Title: BANK OF AMERICA, N.A., individually and as U.S. Collateral Agent, by _________________________ Name: Title: THE CHASE MANHATTAN BANK OF CANADA, individually and as Canadian Administrative Agent, by _________________________ Name: Title: BANK OF AMERICA CANADA, individually and as Canadian Collateral Agent, by _________________________ Name: Title: CREDIT SUISSE FIRST BOSTON, individually and as Documentation Agent, by _________________________ Name: Title: by _________________________ Name: Title: FLEET NATIONAL BANK, individually and as Documentation Agent, by _________________________ Name: Title: CITICORP NORTH AMERICA, INC., individually and as Documentation Agent, by _________________________ Name: Title: Name of Institution: ______________________________ by ______________________________ Name: Title: EXHIBIT A FORM OF ASSIGNMENT AND ACCEPTANCE Reference is made to Amended and Restated Credit Agreement dated as of April 20, 2001 (as amended and in effect from time to time, the "Credit Agreement"), among United Rentals, Inc. ("Holdings"), United Rentals ---------------- -------- (North America), Inc. (the "U.S. Borrower"), United Rentals of Canada, Inc., the ------------ Lenders party thereto, The Chase Manhattan Bank, as U.S. administrative agent (the "U.S. Administrative Agent") and The Chase Manhattan Bank of Canada, a -------------------------- Canadian chartered bank, as Canadian Administrative Agent (the "Canadian -------- Administrative Agent"). Each term used but not defined herein has the meaning - -------------------- assigned to such term in the Credit Agreement. 1. The Assignor hereby sells and assigns, without recourse, to the Assignee, and the Assignee hereby purchases and assumes, without recourse, from the Assignor, effective as of the Effective Date set forth on the reverse hereof, the interests set forth on the reverse hereof (the "Assigned Interest") ----------------- in the Assignor's rights and obligations under the Credit Agreement, including, without limitation, the percentages and amounts set forth on the reverse hereof of (a) the Commitments of the Assignor on the Effective Date, (b) the Loans owing to the Assignor that are outstanding on the Effective Date and (c) participations in Letters of Credit acquired from the Issuing Bank that are outstanding on the Effective Date. Each of the Assignor and the Assignee hereby makes and agrees to be bound by all the representations, warranties and agreements set forth in Section 9.04(b) of the Credit Agreement, a copy of which has been received by each such party. The Assignor represents and warrants that the Assignor has legal and beneficial ownership of the Assigned Interest assigned by it hereunder and that such Assigned Interest has not been sold or transferred and is not subject to any participating interest, lien or encumbrance (except for participating interests, liens or encumbrances that will terminate upon the assignment provided for herein). From and after the Effective Date, (a) the Assignee shall be a party to and be bound by the provisions of the Credit Agreement and, to the extent of the interests assigned by this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the Loan Documents and (b) the Assignor shall, to the extent of the interests assigned by this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement (and in the event that this Assignment and Acceptance covers all or the remaining portion of the Assignor's rights and obligations under the Credit Agreement, the Assignor shall cease to be a party thereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03 thereof, as well as to any fees accrued for its account and not yet paid). 2. This Assignment and Acceptance is being delivered to the U.S. Administrative Agent and, if this Assignment and Acceptance is in respect of C $ Revolving Credit Commitments or C $ Revolving Credit Loans, the Canadian Administrative Agent, together with (a) if the Assignee is organized under the laws of a jurisdiction outside the United States, the applicable forms specified in Section 2.17(e) of the Credit Agreement, duly completed and executed by such Assignee and (b) if the Assignee is not already a Lender under the Credit Agreement, an Administrative Questionnaire. 3. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York. Date of Assignment: Legal Name of Assignor: Legal Name of Assignee: Assignee's Address for Notices: Effective Date of Assignment: 2
Percentage Assigned of facility and Commitment thereunder (set forth, to at least eight decimals, as a percentage of the facility and the Principal Amount aggregate Commitments of Commitment Assigned all Lenders thereunder) - --------------------------- ------------------- ------------------------------------- Term Loans- % Term Loan Commitments- % Revolving Loans: U.S. $ Revolving Loans- % Additional Revolving Loans- % C $ Revolving Loans- % Revolving Commitments: U.S. $ Revolving - % Commitments Additional Revolving % Commitments- C $ Revolving Commitments- % [L/C Disbursements- % Letters of Credit- % Letter of Credit Commitments- % Participations in Swingline % Loans-]
3 The terms set forth above are hereby agreed to: As Assignee, - ------------------------------------ By: -------------------------------- Name: ------------------------------ Title: ----------------------------- As Assignor, - ------------------------------------- By: -------------------------------- Name: ------------------------------ Title: ----------------------------- 4 [Consented to by: UNITED RENTALS, INC., By: ----------------------------- Name: --------------------------- Title: -------------------------- UNITED RENTALS (NORTH AMERICA), INC., By: ----------------------------- Name: --------------------------- Title: -------------------------- [UNITED RENTALS OF CANADA, INC., By: ----------------------------- Name: --------------------------- Title: ]1/ -------------------------- THE CHASE MANHATTAN BANK, as U.S. Administrative Agent, By: ----------------------------- Name: --------------------------- Title: -------------------------- [THE CHASE MANHATTAN BANK OF CANADA, as Canadian Administrative Agent, By: ----------------------------- Name: --------------------------- Title: ]1/]2/ -------------------------- - ----------------------- 1/To be completed only if C $ Revolving Loans or C $ Revolving Commitments are being assigned. 2/To be completed only if consents are required under Section 9.04(b) of the Credit Agreement. EXHIBIT B THIRD RESTATED U.S. GUARANTY THIS THIRD RESTATED U.S. GUARANTY dated as of April __, 2001 is executed in favor of BANK OF AMERICA, N.A.("Bank of America"), individually and as U.S. --------------- Collateral Agent (as defined below), and the other Secured Parties (as defined below). W I T N E S S E T H: - - - - - - - - - - WHEREAS, United Rentals (North America), Inc. (the "Borrower"), United -------- Rentals, Inc. ("Holdings"), United Rentals of Canada, Inc., various financial --------- institutions (the "Lenders"), The Chase Manhattan Bank, as U.S. Administrative ------- Agent, and The Chase Manhattan Bank of Canada, as Canadian Administrative Agent, have entered into an Amended and Restated Credit Agreement dated as of April __, 2001 (as amended, restated or otherwise modified from time to time, the "Credit ------ Agreement"); - --------- WHEREAS, pursuant to the Credit Agreement, Bank of America has been appointed as U.S. Collateral Agent (in such capacity, together with any successor in such capacity, the "U.S. Collateral Agent") to act on behalf of the --------------------- Secured Parties with respect to this Guaranty and certain Security Documents (as defined in the Credit Agreement); WHEREAS, each of the initial signatories hereto has previously guaranteed all obligations of the Borrower under the Existing Credit Agreements (as defined in the Credit Agreement) pursuant to a Second Restated U.S. Guaranty dated as of September 29, 1998 or, in the case of Holdings, pursuant to the Restated Parent Guaranty dated as of September 29, 1998 (collectively, the "Existing -------- Guaranties"); - ---------- WHEREAS, each of the original signatories hereto has agreed with the U.S. Collateral Agent that the Existing Guaranties shall be amended and restated pursuant to this Guaranty; and WHEREAS, each of the undersigned will benefit from the making of loans and the issuance of letters of credit pursuant to the Credit Agreement and is willing to guaranty the Liabilities (as defined below) as hereinafter set forth; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the undersigned hereto agrees as follows: 1. Definitions. (a) Capitalized terms used but not defined herein have the ----------- respective meanings assigned to such terms in the Credit Agreement. (b) As used herein, the term "Secured Party" means the U.S. Collateral ------------- Agent, each other Agent, each Affiliate of an Agent providing treasury, depositary or cash management services, each Lender, each Indemnitee (as defined in Section 9.03(b) of the Credit Agreement) and each Affiliate of a Lender which is a party to a Hedging Agreement with the Borrower. 2. Guaranty. Each of the undersigned hereby jointly and severally -------- unconditionally, as primary obligor and not merely as surety, guarantees the full and prompt payment when due, whether by acceleration or otherwise, and at all times thereafter, of (i) all obligations of the Borrower under or in connection with the Credit Agreement (including Article XI thereof) or any other Loan Document, (ii) all Hedging Obligations of the Borrower to any Secured Party and (iii) all obligations of the Borrower to any Agent or Affiliate of an Agent in respect of overdrafts and related liabilities or arising from treasury, depositary or cash management services (including in connection with any automated clearing house transfer of funds), in each case howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, plus all costs and expenses paid or incurred by the U.S. Collateral Agent or any other Secured Party in enforcing this Guaranty against such undersigned (all such obligations, costs and expenses being herein collectively called the "Liabilities"); provided, however, that the ----------- -------- ------- liability of each of the undersigned hereunder shall be limited to the maximum amount of the Liabilities which such undersigned may guaranty without violating any fraudulent conveyance or fraudulent transfer law. Each of the undersigned agrees that upon the occurrence of any Event of Default under clause (i) or (j) of Article VII of the Credit Agreement, and if such event shall occur at a time when any of the Liabilities may not then be due and payable, such undersigned will pay to the U.S. Collateral Agent for the account of the Secured Parties forthwith the full amount which would be payable hereunder by such undersigned if all Liabilities were then due and payable. To secure all obligations of each of the undersigned hereunder, the U.S. Collateral Agent and each other Secured Party shall have a lien on and security interest in (and may, without demand or notice of any kind, at any time and from time to time when any amount shall be due and payable by such undersigned hereunder, appropriate and apply toward the payment of such amount, in such order of application as the U.S. Collateral Agent or the other Secured Parties may elect, in accordance with the Credit Agreement) any and all balances, credits, deposits, accounts or moneys of or in the name of such undersigned now or hereafter with the U.S. Collateral Agent or such other Secured Party and any and all property of every kind or description of or 2 in the name of such undersigned now or hereafter, for any reason or purpose whatsoever, in the possession or control of, or in transit to, the U.S. Collateral Agent or such other Secured Party or any agent or bailee for the U.S. Collateral Agent or such other Secured Party. This Guaranty shall in all respects be a continuing, irrevocable, absolute and unconditional guaranty of payment and performance and not only collectibility, and shall remain in full force and effect (notwithstanding, without limitation, the dissolution of any of the undersigned, that at any time or from time to time no Liabilities are outstanding or any other circumstance) until all Commitments have terminated and all Liabilities have been paid in full (subject to reinstatement as provided in the immediately following paragraph). The undersigned further agree that if at any time all or any part of any payment theretofore applied by the U.S. Collateral Agent or any other Secured Party to any of the Liabilities is or must be rescinded or returned by the U.S. Collateral Agent or such other Secured Party for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of the Borrower or any of the undersigned), such Liabilities shall, for the purposes of this Guaranty, to the extent that such payment is or must be rescinded or returned, be deemed to have continued in existence, notwithstanding such application by the U.S. Collateral Agent or such other Secured Party, and (notwithstanding anything herein to the contrary) this Guaranty shall continue to be effective or be reinstated, as the case may be, as to such Liabilities, all as though such application by the U.S. Collateral Agent or such other Secured Party had not been made. The U.S. Collateral Agent or any other Secured Party may, from time to time, at its sole discretion and without notice to the undersigned (or any of them), take any or all of the following actions: (a) retain or obtain a security interest in any property to secure any of the Liabilities or any obligation hereunder, (b) retain or obtain the primary or secondary obligation of any obligor or obligors, in addition to the undersigned, with respect to any of the Liabilities, (c) extend or renew any of the Liabilities for one or more periods (whether or not longer than the original period), alter or exchange any of the Liabilities, or release or compromise any obligation of any of the undersigned hereunder or any obligation of any nature of any other obligor with respect to any of the Liabilities, (d) release its security interest in, or surrender, release or permit any substitution or exchange for, all or any part of any property securing any of the Liabilities or any obligation hereunder, or extend or renew for one or more periods (whether or not longer than the original period) or release, compromise, alter or 3 exchange any obligations of any nature of any obligor with respect to any such property, and (e) resort to the undersigned (or any of them) for payment of any of the Liabilities when due, whether or not the U.S. Collateral Agent or such other Secured Party shall have resorted to any property securing any of the Liabilities or any obligation hereunder or shall have proceeded against any other of the undersigned or any other obligor primarily or secondarily obligated with respect to any of the Liabilities. Any amounts received by the U.S. Collateral Agent or any other Secured Party from whatever source on account of the Liabilities may be applied by it toward the payment of the Liabilities in accordance with the Credit Agreement; and, notwithstanding any payments made by or for the account of any of the undersigned pursuant to this Guaranty, the undersigned shall not be subrogated to any rights of the U.S. Collateral Agent or any other Secured Party until such time as this Guaranty shall have been discontinued as to all of the undersigned and the U.S. Collateral Agent and the other Secured Parties shall have received payment of the full amount of all Liabilities of the undersigned hereunder. The undersigned hereby expressly waive: (a) notice of the acceptance by the U.S. Collateral Agent or any other Secured Party of this Guaranty, (b) notice of the existence or creation or non-payment of all or any of the Liabilities, (c) presentment, demand, notice of dishonor, protest, and all other notices whatsoever, and (d) all diligence in collection or protection of or realization upon any Liabilities or any security for or guaranty of any Liabilities. Each of the undersigned further agrees to pay all expenses (including reasonable attorneys' fees and legal expenses) paid or incurred by the U.S. Collateral Agent or any other Secured Party in endeavoring to collect the Liabilities of such undersigned, or any part thereof, and in enforcing this Guaranty against such undersigned. The creation or existence from time to time of additional Liabilities to the U.S. Collateral Agent or the other Secured Parties or any of them is hereby authorized, without notice to the undersigned (or any of them), and shall in no way affect or impair the rights of the U.S. Collateral Agent or the other Secured Parties or the obligations of the undersigned under this Guaranty. The U.S. Collateral Agent and any other Secured Party may from time to time, without notice to the undersigned (or any of them), assign or transfer any or all of the Liabilities or any interest therein; and, notwithstanding any such assignment or 4 transfer or any subsequent assignment or transfer thereof, such Liabilities shall be and remain Liabilities for the purposes of this Guaranty, and each and every immediate and successive assignee or transferee of any of the Liabilities or of any interest therein shall, to the extent of the interest of such assignee or transferee in the Liabilities, be entitled to the benefits of this Guaranty to the same extent as if such assignee or transferee were a Secured Party. No delay on the part of the U.S. Collateral Agent or any other Secured Party in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the U.S. Collateral Agent or any other Secured Party of any right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy; nor shall any modification or waiver of any provision of this Guaranty be binding upon the U.S. Collateral Agent or any other Secured Party except as expressly set forth in a writing duly signed and delivered on behalf of the U.S. Collateral Agent (or, if at any time there is no U.S. Collateral Agent, the Required Lenders). No action of the U.S. Collateral Agent or any other Secured Party permitted hereunder shall in any way affect or impair the rights of the U.S. Collateral Agent or any other Secured Party or the obligations of the undersigned under this Guaranty. For purposes of this Guaranty, Liabilities shall include all obligations of the Borrower to the U.S. Collateral Agent or any other Secured Party arising under or in connection with any Loan Document, notwithstanding any right or power of the Borrower or anyone else to assert any claim or defense as to the invalidity or unenforceability of any obligation, and no such claim or defense shall affect or impair the obligations of the undersigned hereunder. Pursuant to the Credit Agreement, (a) this Guaranty has been delivered to the U.S. Collateral Agent and (b) the U.S. Collateral Agent has been authorized to enforce this Guaranty on behalf of itself and each of the other Secured Parties. All payments by the undersigned pursuant to this Guaranty shall be made to the U.S. Collateral Agent for application as set forth in the Credit Agreement or, if there is no U.S. Collateral Agent, to the Secured Parties for their ratable benefit. This Guaranty shall be binding upon the undersigned and the successors and assigns of the undersigned; and to the extent that the Borrower or any of the undersigned is a partnership, corporation, limited liability company or other entity, all references herein to the Borrower and to the undersigned, respectively, shall be deemed to include any successor or successors, whether immediate or remote, to such partnership, corporation, limited liability company or other entity. The term "undersigned" as used herein shall mean all parties executing 5 this Guaranty and each of them, and all such parties shall be jointly and severally obligated hereunder. This Guaranty shall be construed in accordance with and governed by the law of the State of New York. Wherever possible each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Guaranty. This Guaranty may be executed in any number of counterparts and by the different parties hereto on separate counterparts, and each such counterpart shall be deemed to be an original but all such counterparts shall together constitute one and the same Guaranty. At any time after the date of this Guaranty, one or more additional persons or entities may become parties hereto by executing and delivering to the U.S. Collateral Agent a counterpart of this Guaranty. Immediately upon such execution and delivery (and without any further action), each such additional person or entity will become a party to, and will be bound by all of the terms of, this Guaranty. This Guaranty is secured pursuant to a Third Restated U.S. Security Agreement dated as of even date herewith (as amended or otherwise modified from time to time) and may be secured by one or more other agreements (including, without limitation, one or more pledge agreements, mortgages, deeds of trust or other similar documents). This Guaranty amends and restates in its entirety the Existing Guaranty which, after the effectiveness hereof, shall no longer be effective (except for any provisions thereof which by their terms survive, or may be reinstated, after terminations thereof). ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT -------- ------- ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE U.S. COLLATERAL AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH OF THE UNDERSIGNED HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH OF THE UNDERSIGNED FURTHER 6 IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO FIVE GREENWICH OFFICE PARK, GREENWICH, CONNECTICUT 06830 (OR SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED IN WRITING TO THE U.S. COLLATERAL AGENT AS ITS ADDRESS FOR NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH OF THE UNDERSIGNED HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY OF THE UNDERSIGNED HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH UNDERSIGNED HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY AND THE OTHER LOAN DOCUMENTS. EACH OF THE UNDERSIGNED, AND (BY ACCEPTING THE BENEFITS HEREOF) EACH OF THE U.S. COLLATERAL AGENT AND EACH OTHER SECURED PARTY, HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS GUARANTY OR ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. 7 IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered as of the day and year first above written. UNITED RENTALS, INC. By: ---------------------------- Title: ------------------------ Signature Page: Third Restated U.S. Guaranty ADVANCE BARRICADES AND SIGNING, INC. ALL CITIES TRAILER EXCHANGE, INC. ARROW EQUIPMENT COMPANY A.S.C. PAVEMENT MARKINGS, INC. BNR EQUIPMENT, INC. BAKERSFIELD COMPACTION EQUIPMENT COAST LINE MARKING, INC. DEALER SERVICES COMPANY EQUIPMENT LEASING SERVICES, INC. FLASHER CO. OF KANSAS, INC. FLASHER COMPANY OF OKLAHOMA, INC. FRONTENAC EQUIPMENT, INC. HIGHWAY RENTALS, INC. HIGHWAY SUPPLY COMPANY HIGHWAY SAFETY SERVICE COMPANY JADCO SIGNING, INC. LECTRIC SAFETY LIGHTS CO. LIDDELL MANAGEMENT CO., INC. PAIGE BARRICADES, INC. PAUL E. CARLSON, INC. RENTALS UNLIMITED, INCORPORATED ROCKY MOUNTAIN SAFETY SERVICE, INC. RUSS ENTERPRISES, INC. SHORING AND SUPPLY COMPANY, INC. STATE BARRICADING, INC. SAFE-T-FLARE SERVICES, INC. THOESEN EQUIPMENT, INC. TRAFFIC MARKINGS SOUTH, INC. TRAFFIC SAFETY SERVICES, INC. TRI-MAC, CORPORATION UNITED RENTALS GULF, INC. UNITED RENTALS HIGHWAY TECHNOLOGIES, INC. UNITED RENTALS HIGHWAY TECHNOLOGIES GULF, INC. UNITED RENTALS NORTHWEST, INC. UNITED RENTALS SOUTHEAST, INC. WANAMAKER RENTS, INCORPORATED WARNING LITES OF INDIANA, INC. WARNING LITES OF IOWA, INC. WARNING LITES OF MINNESOTA, INC. By: ---------------------------- Title: ------------------------- Signature Page: Third Restated U.S. Guaranty WARNING SAFETY LIGHTS, INC. WARNING SAFETY LIGHTS OF GEORGIA, INC. WEST-CO RENTAL & SALES WLI INDUSTRIES, INC. WORK SIGNS, INC. WORK ZONE, INC. WORK ZONE SAFETY, INC. WOUDENBERG ENTERPRISES, INC. WYNNE SYSTEMS, INC. By: ---------------------------- Title: ------------------------- UNITED EQUIPMENT RENTALS GULF, L.P. By: United Rentals (North America), Inc. Its: General Partner By: ---------------------------- Title: ------------------------- UNITED RENTALS HIGHWAY TECHNOLOGIES, L.P. By: United Rentals (North America), Inc. Its: General Partner By: ---------------------------- Title: ------------------------- UNITED RENTALS SOUTHEAST, L.P. By: United Rentals (North America), Inc. Its: General Partner By: ---------------------------- Title: ------------------------- Signature Page: Third Restated U.S. Guaranty ADDITIONAL SIGNATURE PAGE to the Third Restated U.S. Guaranty dated as of April __, 2001 issued by United Rentals, Inc. and various subsidiaries of United Rentals (North America), Inc. The undersigned is executing a counterpart hereof for purposes of becoming a party hereto: [ ] By: ---------------------------- Name: -------------------------- Title: ------------------------- Signature Page: Third Restated U.S. Guaranty EXHIBIT C CONSOLIDATED RESTATED U.S. PLEDGE AGREEMENT THIS CONSOLIDATED RESTATED U.S. PLEDGE AGREEMENT (this "Agreement") dated --------- as of April __, 2001 is among UNITED RENTALS, INC. ("Holdings"), UNITED RENTALS -------- (NORTH AMERICA), INC., (the "Borrower"), each subsidiary of the Borrower listed -------- on the signature pages hereto (collectively, including Holdings and the Borrower, the "Pledgors" and each individually a "Pledgor"), and BANK OF -------- ------- AMERICA, N.A. ("Bank of America"), as U.S. Collateral Agent (as defined below) --------------- for the Secured Parties (as defined below). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrower, Holdings, United Rentals of Canada, Inc., various financial institutions (the "Lenders"), The Chase Manhattan Bank, as U.S. ------- Administrative Agent, and The Chase Manhattan Bank of Canada, as Canadian Administrative Agent, have entered into an Amended and Restated Credit Agreement dated as of April ___, 2001 (as amended, restated or otherwise modified from time to time, the "Credit Agreement"); ---------------- WHEREAS, pursuant to the Credit Agreement, Bank of America has been appointed as U.S. Collateral Agent (in such capacity, together with any successor in such capacity, the "U.S. Collateral Agent") to act on behalf of the --------------------- Secured Parties with respect to the U.S. Guaranty (as defined in the Credit Agreement) and certain other Security Documents (as defined in the Credit Agreement); WHEREAS, each of the initial signatories hereto has previously provided security for the obligations of the Borrower under the Existing Credit Agreements (as defined in the Credit Agreement) pursuant to (i) in the case of the Borrower, a Second Restated Pledge Agreement dated as of September 29, 1998, (ii) in the case of Holdings, a Restated Parent Pledge Agreement dated as of September 29, 1998, and (iii) in the case of the other initial signatories hereto, various Subsidiary Pledge Agreements (all of the foregoing, collectively, the "Existing Pledge Agreements"); and -------------------------- WHEREAS, each of the original signatories hereto has agreed with the U.S. Collateral Agent that the Existing Pledge Agreements shall be amended and restated pursuant to this Agreement; NOW, THEREFORE, for and in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Definitions. When used herein, (a) capitalized terms used but not ----------- defined herein have the respective meanings assigned to such terms in the Credit Agreement and (b) the following terms have the following meanings (such meanings to be applicable to both the singular and plural forms of such terms): Agreement - see the introductory paragraph. --------- Bank of America - see the introductory paragraph. --------------- Borrower - see the introductory paragraph. -------- Collateral - see Section 2. ---------- Credit Agreement - see the recitals. ---------------- Default means the occurrence of any of the following events: (i) any ------- Default with respect to the Borrower under clause (i) or (j) of Article VII of the Credit Agreement, (ii) any Event of Default or (iii) any warranty of any Pledgor herein is untrue or misleading in any material respect and, as a result thereof, the U.S. Collateral Agent's security interest for the benefit of the Secured Parties in any material portion of the Collateral is not perfected or the U.S. Collateral Agent's rights and remedies with respect to any material portion of the Collateral is materially impaired or otherwise materially adversely affected. Existing Pledge Agreements - see the recitals. -------------------------- Holdings - see the introductory paragraph. -------- Foreign Issuer means each Issuer designated as a "Foreign Issuer" on -------------- Schedule I hereto and any other Issuer which is organized under the laws of any jurisdiction other than, and conducts substantially all of its business outside of, any state or territory of the United States. Issuer means the issuer of any of the shares of stock or other ------ securities representing all or any of the Collateral. Lenders - see the recitals. ------- Liabilities means (a) with respect to the Borrower, (i) all ----------- obligations of the Borrower, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing or due or to become due, which arise out of or in connection with the Credit Agreement or any other Loan Document (including, without limitation, with respect to Letters of Credit), as the same may be amended, modified, extended or renewed from time to time, (ii) all Hedging Obligations of the Borrower to 2 any Secured Party and (iii) all obligations of the Borrower to any Agent or Affiliate of an Agent in respect of overdrafts and related liabilities or arising from treasury, depositary or cash management services (including in connection with any automated clearing house transfer of funds); and (b) with respect to each other Pledgor, all obligations of such Pledgor under the U.S. Guaranty or any other Loan Document. Pledgor - see the introductory paragraph. ------- Secured Party means the U.S. Collateral Agent, each other Agent, each ------------- Affiliate of an Agent providing treasury, depositary or cash management services, each Lender, each Indemnitee (as defined in Section 9.03(b) of the Credit Agreement) and each Affiliate of a Lender which is a party to a Hedging Agreement with the Borrower. U.S. Collateral Agent - see the recitals. --------------------- 2. Pledge. As security for the payment of all Liabilities, each Pledgor ------ hereby pledges to the U.S. Collateral Agent for the benefit of the Secured Parties, and grants to the U.S. Collateral Agent for the benefit of the Secured Parties a continuing security interest in, all of the following: A. All of the shares of stock and other securities set forth under such Pledgor's name on Schedule I hereto, all of the certificates and/or ---------- instruments representing such shares of stock and other securities, and all cash, securities, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares or other securities; B. All additional shares of stock of any of the Issuers listed in Schedule I hereto at any time and from time to time acquired by such ---------- Pledgor in any manner, all of the certificates representing such additional shares, and all cash, securities, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares; C. All other property hereafter delivered by such Pledgor to the U.S. Collateral Agent in substitution for or in addition to any of the foregoing, all certificates and instruments representing or evidencing such property, and all cash, securities, interest, dividends, rights and other property at any time and from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all thereof; and D. All products and proceeds of all of the foregoing. All of the foregoing are herein collectively called the "Collateral". Notwithstanding the foregoing, the Collateral shall not include, and no Pledgor shall be required to pledge hereunder, more than 3 65% of the stock of any class of any Foreign Issuer to the extent that the pledge of any greater percentage could result in adverse tax consequences to Holdings or any Subsidiary. Each Pledgor agrees to deliver to the U.S. Collateral Agent, promptly upon receipt and in due form for transfer (i.e., endorsed in blank or accompanied by undated stock or bond powers executed in blank), any Collateral (other than dividends which such Pledgor is entitled to receive and retain pursuant to Section 5 hereof) which may at any time or from time to time be in or come into - --------- the possession or control of such Pledgor, and prior to the delivery thereof to the U.S. Collateral Agent, such Collateral shall be held by such Pledgor separate and apart from its other property and in express trust for the U.S. Collateral Agent for the benefit of the Secured Parties. 3. Warranties; Further Assurances. Each Pledgor warrants to the U.S. ------------------------------ Collateral Agent for the benefit of each Secured Party that: (a) such Pledgor is (or at the time of any future delivery, pledge, assignment or transfer thereof will be) the legal and equitable owner of such Pledgor's Collateral free and clear of all liens, security interests and encumbrances of every description whatsoever other than the security interest created hereunder; (b) the pledge and delivery of such Pledgor's Collateral pursuant to this Agreement will create a valid perfected security interest in such Pledgor's Collateral in favor of the U.S. Collateral Agent for the benefit of the Secured Parties; (c) all shares of stock referred to in Schedule I hereto are duly authorized, validly issued, ---------- fully paid and non-assessable; (d) as to each Issuer whose name appears in Schedule I hereto, such Pledgor's Collateral represents on the date hereof not - ---------- less than the applicable percentage (as shown in Schedule I hereto) of the total ---------- shares of capital stock issued and outstanding of such Issuer; and (e) the information contained on Schedule I hereto with respect to such Pledgor is true ---------- and accurate in all respects. So long as any of the Liabilities shall be outstanding or any commitment shall exist on the part of any Secured Party with respect to the creation of any Liabilities, each Pledgor (i) shall not, except as permitted by the Credit Agreement or with the express prior written consent of the U.S. Collateral Agent, sell, assign, exchange, pledge, encumber or otherwise transfer, or grant any option, warrant or other right to purchase, the stock of any Issuer which is pledged hereunder, or otherwise diminish or impair any of its rights in, to or under any of such Pledgor's Collateral; (ii) shall execute such Uniform Commercial Code financing statements and other documents (and pay the costs of filing and recording or re-filing and re-recording the same in all public offices reasonably deemed necessary or appropriate by the U.S. Collateral Agent) and do such other acts and things, all as the U.S. Collateral Agent may from time to time reasonably request, to establish and maintain a valid, perfected security interest in such Pledgor's Collateral (free of all other liens, claims and rights of third parties whatsoever) to secure the performance and payment of the Liabilities; (iii) will execute and deliver to the U.S. Collateral Agent such stock powers and similar documents relating to such Pledgor's Collateral, satisfactory in form and substance to the U.S. Collateral Agent, as the U.S. Collateral Agent may reasonably request; and (iv) will furnish the U.S. Collateral Agent or any Secured Party such information concerning such Pledgor's Collateral as the U.S. Collateral Agent or such Secured Party may from time to time reasonably request, and will permit the U.S. Collateral Agent or any other Secured Party or any designee of the U.S. 4 Collateral Agent or any other Secured Party, from time to time at reasonable times and on reasonable notice (or at any time without notice during the existence of a Default), to inspect, audit and make copies of and extracts from all records and all other papers in the possession of such Pledgor which pertain to such Pledgor's Collateral, and will, upon request of the U.S. Collateral Agent at any time when a Default has occurred and is continuing, deliver to the U.S. Collateral Agent all of such records and papers. 4. Holding in Name of U.S. Collateral Agent, etc. The U.S. Collateral --------------------------------------------- Agent may from time to time after the occurrence and during the continuance of a Default, without notice to any Pledgor, take all or any of the following actions: (a) transfer all or any part of the Collateral into the name of the U.S. Collateral Agent or any nominee or sub-agent for the U.S. Collateral Agent, with or without disclosing that such Collateral is subject to the lien and security interest hereunder, (b) appoint one or more sub-agents or nominees for the purpose of retaining physical possession of the Collateral, (c) notify the parties obligated on any of the Collateral to make payment to the U.S. Collateral Agent of any amount due or to become due thereunder, (d) endorse any checks, drafts or other writings in the name of the applicable Pledgor to allow collection of the Collateral, (e) enforce collection of any of the Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto, and (f) take control of any proceeds of the Collateral. 5. Voting Rights, Dividends, etc. (a) Notwithstanding certain provisions ----------------------------- of Section 4 hereof, so long as the U.S. Collateral Agent has not given the notice referred to in paragraph (b) below: A. The Pledgors shall be entitled to exercise any and all voting or consensual rights and powers and stock purchase or subscription rights relating or pertaining to the Collateral or any part thereof for any purpose; provided, however, that each Pledgor agrees that it will not -------- ------- exercise any such right or power in any manner which would have a material adverse effect on the value of the Collateral. B. The Pledgors shall be entitled to receive and retain any and all lawful dividends payable in respect of the Collateral which are paid in cash by any Issuer if such dividends are permitted by the Credit Agreement, but all dividends and distributions in respect of the Collateral or any part thereof made in shares of stock or securities or other property or representing any return of capital, whether resulting from a subdivision, combination or reclassification of Collateral or any part thereof or received in exchange for Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which any Issuer may be a party or otherwise or as a result of any exercise of any stock purchase or subscription right, shall be and become part of the Collateral hereunder and, if received by any Pledgor, shall be forthwith delivered to the U.S. Collateral Agent in due form for transfer (i.e., endorsed in blank or accompanied by 5 undated stock or bond powers executed in blank) to be held for the purposes of this Agreement. C. The U.S. Collateral Agent shall execute and deliver, or cause to be executed and delivered, to the Pledgors all proxies, powers of attorney, dividend orders and other instruments as any Pledgor may request for the purpose of enabling such Pledgor to exercise the rights and powers which it is entitled to exercise pursuant to clause (A) above and to receive the ---------- dividends which it is authorized to retain pursuant to clause (B) above. ---------- (b) Upon notice from the U.S. Collateral Agent during the existence of a Default, and so long as the same shall be continuing, all rights and powers which the Pledgors are entitled to exercise pursuant to Section 5(a)(A) hereof, --------------- and all rights of the Pledgors to receive and retain dividends pursuant to Section 5(a)(B) hereof, shall forthwith cease, and all such rights and powers - --------------- shall thereupon become vested in the U.S. Collateral Agent which shall have, during the continuance of such Default, the sole and exclusive authority to exercise such rights and powers and to receive such dividends. Any and all money and other property paid over to or received by the U.S. Collateral Agent pursuant to this paragraph (b) shall be retained by the U.S. Collateral Agent as ------------- additional Collateral hereunder and applied in accordance with the provisions hereof. 6. Remedies. Whenever a Default shall exist, the U.S. Collateral Agent may -------- exercise from time to time any rights and remedies available to it under the Uniform Commercial Code as in effect in New York or otherwise available to it. Without limiting the foregoing, whenever a Default shall exist the U.S. Collateral Agent (a) may, to the fullest extent permitted by applicable law, without notice, advertisement, hearing or process of law of any kind, (i) sell any or all of the Collateral, free of all rights and claims of any Pledgor therein and thereto, at any public or private sale or brokers' board and (ii) bid for and purchase any or all of the Collateral at any such public sale and (b) shall have the right, for and in the name, place and stead of the applicable Pledgor, to execute endorsements, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Collateral. Each Pledgor hereby expressly waives, to the fullest extent permitted by applicable law, any and all notices, advertisements, hearings or process of law in connection with the exercise by the U.S. Collateral Agent of any of its rights and remedies during the continuance of a Default. Any notification of intended disposition of any of the Collateral shall be deemed reasonably and properly given if given at least ten (10) days before such disposition. Any proceeds of any of the Collateral may be applied by the U.S. Collateral Agent to the payment of expenses in connection with the Collateral, including, without limitation, reasonable attorneys' fees and legal expenses, and any balance of such proceeds may be applied by the U.S. Collateral Agent toward the ratable payment of the Liabilities (and, after payment in full of all Liabilities, any excess shall be delivered to the applicable Pledgor or as a court of competent jurisdiction shall direct). The U.S. Collateral Agent is hereby authorized to comply with any limitation or restriction in connection with any sale of Collateral as it may be advised by counsel is necessary in order to (a) avoid any violation of applicable law (including, without limitation, compliance with such 6 procedures as may restrict the number of prospective bidders and purchasers and/or further restrict such prospective bidders or purchasers to persons or entities who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral) or (b) obtain any required approval of the sale or of the purchase by any governmental regulatory authority or official, and each Pledgor agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner and that the U.S. Collateral Agent shall not be liable or accountable to any Pledgor for any discount allowed by reason of the fact that such Collateral is sold in compliance with any such limitation or restriction. 7. General. The U.S. Collateral Agent shall be deemed to have exercised ------- reasonable care in the custody and preservation of the Collateral if it takes such action for that purpose as the applicable Pledgor shall request in writing, but failure of the U.S. Collateral Agent to comply with any such request shall not of itself be deemed a failure to exercise reasonable care, and no failure of the U.S. Collateral Agent to preserve or protect any rights with respect to the Collateral against prior parties, or to do any act with respect to preservation of the Collateral not so requested by the such Pledgor, shall be deemed a failure to exercise reasonable care in the custody or preservation of any Collateral. No delay on the part of the U.S. Collateral Agent in exercising any right, power or remedy shall operate as a waiver thereof, and no single or partial exercise of any such right, power or remedy shall preclude any other or further exercise thereof, or the exercise of any other right, power or remedy. No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement shall be effective unless the same shall be in writing and signed and delivered by the U.S. Collateral Agent, and then such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. All obligations of the Pledgors and all rights, powers and remedies of the U.S. Collateral Agent and the other Secured Parties expressed herein are in addition to all other rights, powers and remedies possessed by them, including, without limitation, those provided by applicable law or in any other written instrument or agreement relating to any of the Liabilities or any security therefor. This Agreement shall be construed in accordance with and governed by the laws of the State of New York. Wherever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. This Agreement shall be binding upon the Pledgors and the U.S. Collateral Agent and their respective successors and assigns, and shall inure to the benefit of the Pledgors and the U.S. Collateral Agent and the successors and assigns of the U.S. Collateral Agent. 7 This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, and each such counterpart shall be deemed an original but all such counterparts shall together constitute but one and the same Agreement. This Agreement amends and restates in its entirety the Existing Pledge Agreements which, after the effectiveness hereof, shall no longer be effective (except for any provisions thereof which by their terms survive, or may be reinstated, after terminations thereof). ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT ANY SUIT -------- SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE U.S. COLLATERAL AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS OF SUCH PLEDGOR SPECIFIED IN, OR PURSUANT TO, THE LOAN DOCUMENTS, AS APPLICABLE, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT A PLEDGOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH PLEDGOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER FINANCING AGREEMENTS. EACH PLEDGOR, THE U.S. COLLATERAL AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH OTHER SECURED PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER FINANCING AGREEMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT 8 OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. 9 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as of the day and year first written above. UNITED RENTALS (NORTH AMERICA), INC. Address: Five Greenwich Office Park By: Greenwich, CT 06830 --------------------------- Attention: Chief Financial Title: Officer ------------------------ Facsimile: 203-622-6080 UNITED RENTALS, INC. Address: Five Greenwich Office Park By: Greenwich, CT 06830 --------------------------- Attention: Chief Financial Title: Officer ------------------------ Facsimile: 203-622-6080 UNITED RENTALS GULF, INC. Address: Five Greenwich Office Park By: Greenwich, CT 06830 --------------------------- Attention: Chief Financial Title: Officer ------------------------ Facsimile: 203-622-6080 WLI INDUSTRIES, INC. Address: Five Greenwich Office Park By: Greenwich, CT 06830 --------------------------- Attention: Chief Financial Title: ------------------------ Signature Page: Consolidated Restated U.S. Pledge Agreement Officer Facsimile: 203-622-6080 WOUDENBERG ENTERPRISES, INC. Address: Five Greenwich Office Park By: Greenwich, CT 06830 --------------------------- Attention: Chief Financial Title: Officer ------------------------ Facsimile: 203-622-6080 BANK OF AMERICA, N.A., as U.S. Collateral Agent By: --------------------------- Title: ------------------------ Address: 231 South LaSalle Street Chicago, Illinois 60697 Attention: Service Industries Group Facsimile: (312) 828-1974 12804202 97403190 Signature Page: Consolidated Restated U.S. Pledge Agreement ADDITIONAL SIGNATURE PAGE to the Consolidated Restated U.S. Pledge Agreement dated as of April __, 2001 among United Rentals (North America), Inc. (the "Borrower"), United Rentals, Inc. and various subsidiaries of the Borrower. The undersigned is executing a counterpart hereof for purposes of becoming a party hereto (and attached hereto is a supplement to Schedule I to such Pledge Agreement setting forth information regarding certain shares of stock and other securities pledged by the undersigned in connection with such Pledge Agreement): [ ] By: ------------------------------------------------- Name: ----------------------------------------------- Title: ---------------------------------------------- Signature Page: Consolidated Restated U.S. Pledge Agreement Schedule 1 ---------- EXHIBIT D THIRD RESTATED U.S. SECURITY AGREEMENT THIS THIRD RESTATED U.S. SECURITY AGREEMENT (this "Agreement") dated as of --------- April __, 2001 is among UNITED RENTALS (NORTH AMERICA), INC. (the "Borrower"), -------- UNITED RENTALS, INC. ("Holdings"), each subsidiary of the Borrower listed on the -------- signature pages hereof, each other person or entity which from time to time becomes a party hereto (collectively, including the Borrower and Holdings, the "Debtors" and individually each a "Debtor") and BANK OF AMERICA, N.A. ("Bank of ------- ------ --------------- America"), in its capacity as U.S. Collateral Agent (as defined below) for the other Secured Parties (as defined below). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Borrower, Holdings, United Rentals of Canada, Inc., various financial institutions (the "Lenders"), The Chase Manhattan Bank, as U.S. ------- Administrative Agent, and The Chase Manhattan Bank of Canada, as Canadian Administrative Agent, have entered into an Amended and Restated Credit Agreement dated as of April __, 2001 (as amended, restated or otherwise modified from time to time, the "Credit Agreement"); ---------------- WHEREAS, pursuant to the Credit Agreement, Bank of America has been appointed as U.S. Collateral Agent (in such capacity, together with any successor in such capacity, the "U.S. Collateral Agent") to act on behalf of the --------------------- Secured Parties with respect to this Agreement and certain other Security Documents(as defined in the Credit Agreement); WHEREAS, each of the initial signatories hereto has previously provided security for the obligations of the Borrower under the Existing Credit Agreements (as defined in the Credit Agreement) pursuant to a Second Restated U.S. Security Agreement dated as of September 29, 1998 (the "Existing Security ----------------- Agreement"); and - --------- WHEREAS, each of the original signatories hereto has agreed with the U.S. Collateral Agent that the Existing Security Agreement shall be amended and restated pursuant to this Agreement; NOW, THEREFORE, for and in consideration of the premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Definitions. When used herein, (a) the terms Certificated Security, ----------- --------------------- Commodity Account, Commodity Contract, Chattel Paper, Deposit Account, ----------------- ------------------ ------------- --------------- Document, -------- Equipment, Fixture, Goods, Inventory, Investment Property, Instrument, --------- ------- ----- --------- ------------------- ---------- Security, Security Entitlement, Securities Account and Uncertificated -------- -------------------- ------------------ -------------- Security shall have the respective meanings assigned to such terms in the -------- Uniform Commercial Code (as defined below), (b) capitalized terms used but not defined herein have the meanings assigned to such terms in the Credit Agreement and (c) the following terms have the following meanings (such definitions to be applicable to both the singular and plural forms of such terms): Account Debtor means, with respect to any Debtor, any party who is -------------- obligated on or under any Account Receivable, Contract Right or General Intangible of such Debtor. Account Receivable means, with respect to any Debtor, any right of such ------------------ Debtor to payment for goods sold or leased or for services rendered. Agreement - see the introductory paragraph. --------- Assignee Deposit Account - see Section 4. ------------------------ --------- Bank of America - see the introductory paragraph. --------------- Borrower - see the introductory paragraph. -------- Collateral means, with respect to any Debtor, all property and rights of ---------- such Debtor in which a security interest is granted hereunder. Computer Hardware and Software means, with respect to any Debtor, (i) all ------------------------------ computer and other electronic data processing hardware, whether now or hereafter owned, licensed or leased by such Debtor, including, without limitation, all integrated computer systems, central processing units, memory units, display terminals, printers, features, computer elements, card readers, tape drives, hard and soft disk drives, cables, electrical supply hardware, generators, power equalizers, accessories and peripheral devices and other related computer hardware; (ii) all software programs, whether now or hereafter owned, licensed or leased by such Debtor, designed for use on the computers and electronic data processing hardware described in clause (i) above, including, without ---------- limitation, all operating system software, utilities and application programs in whatsoever form (source code and object code in magnetic tape, disk or hard copy format or any other listings whatsoever); (iii) all firmware associated therewith, whether now or hereafter owned, licensed or leased by such Debtor; and (iv) all documentation for such hardware, software and firmware described in the preceding clauses (i), (ii) and (iii), whether now or hereafter owned, ----------- ---- ----- 2 licensed or leased by such Debtor, including, without limitation, flow charts, logic diagrams, manuals, specifications, training materials, charts and pseudo codes. Contract Right means, with respect to any Debtor, any right of such Debtor -------------- to payment under a contract for the sale or lease of goods or the rendering of services, which right is at the time not yet earned by performance. Credit Agreement - see the recitals. ---------------- Debtor - see the introductory paragraph. ------ Default means the occurrence of any of the following events: (i) any ------- Default with respect to the Borrower under clause (i) or (j) of Article VII of the Credit Agreement, (ii) any Event of Default or (iii) any warranty of any Debtor herein is untrue or misleading in any material respect and, as a result thereof, the U.S. Collateral Agent's security interest for the benefit of the Secured Parties in any material portion of the Collateral (of all Debtors taken as a whole) is not perfected or the U.S. Collateral Agent's rights and remedies with respect to any material portion of the Collateral of all Debtors (taken as a whole) is materially impaired or otherwise materially adversely affected. Existing Security Agreement - see the recitals. --------------------------- General Intangibles means, with respect to any Debtor, all of such Debtor's ------------------- "general intangibles" as defined in the Uniform Commercial Code and, in any event, includes (without limitation) all of such Debtor's trademarks, trade names, patents, copyrights, trade secrets, customer lists, inventions, designs, software programs, mask works, goodwill, registrations, licenses, franchises, tax refund claims, guarantee claims, security interests and rights to indemnification. Holdings - see the introductory paragraph. -------- Intellectual Property means all past, present and future: trade secrets and --------------------- other proprietary information; trademarks, service marks, business names, designs, logos, indicia, and/or other source and/or business identifiers and the goodwill of the business relating thereto and all registrations or applications for registrations which have heretofore been or may hereafter be issued thereon throughout the world; copyrights (including, without limitation, copyrights for computer programs) and copyright registrations or applications for registrations which have heretofore been or may hereafter be issued throughout the world and all tangible property embodying the copyrights; unpatented inventions (whether or not patentable); patent applications and patents; industrial designs, 3 industrial design applications and registered industrial designs; license agreements related to any of the foregoing set forth in this definition and income therefrom; books, records, writings, computer tapes or disks, flow diagrams, specification sheets, source codes, object codes and other physical manifestations, embodiments or incorporations of any of the foregoing set forth in this definition; the right to sue for all past, present and future infringements of any of the foregoing set forth in this definition; and all common law and other rights throughout the world in and to all of the foregoing set forth in this definition. Lenders - see the recitals. ------- Liabilities means (a) with respect to the Borrower, (i) all obligations of ----------- the Borrower, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, which arise out of or in connection with the Credit Agreement or any other Loan Document (including, without limitation, with respect to Letters of Credit), as the same may be amended, modified, extended or renewed from time to time, (ii) all Hedging Obligations of the Borrower to any Secured Party and (iii) all obligations of the Borrower to any Agent or Affiliate of an Agent in respect of overdraft and related liabilities or arising from treasury, depositary or cash management services (including in connection with any automated clearing house transfer of funds); and (b) with respect to each other Debtor, all obligations of such Debtor under the U.S. Guaranty or any other Loan Document. Non-Tangible Collateral means, with respect to any Debtor, collectively, ----------------------- such Debtor's Accounts Receivable, Contract Rights and General Intangibles. Permitted Liens - see Section 3. --------------- --------- Secured Party means the U.S. Collateral Agent, each other Agent, each ------------- Affiliate of an Agent providing treasury, depositary or cash management services, each Lender, each Indemnitee (as defined in Section 9.03(b) of the Credit Agreement) and each Affiliate of a Lender which is a party to a Hedging Agreement with the Borrower. Uniform Commercial Code means the Uniform Commercial Code as in effect in ----------------------- the State of New York on the date of this Agreement; provided that, as used in -------- Section 8 hereof, "Uniform Commercial Code" shall mean the Uniform Commercial - --------- Code as in effect from time to time in the applicable jurisdiction. U.S. Collateral Agent - see the recitals. --------------------- 4 2. Grant of Security Interest. As security for the payment of all Liabilities, -------------------------- each Debtor hereby assigns to the U.S. Collateral Agent for the benefit of the Secured Parties, and grants to the U.S. Collateral Agent for the benefit of the Secured Parties a continuing security interest in, the following, whether now or hereafter existing or acquired: All of such Debtor's: (i) Accounts Receivable; (ii) Certificated Securities; (iii) Chattel Paper; (iv) Computer Hardware and Software and all rights with respect thereto, including, without limitation, any and all licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications, and any substitutions, replacements, additions or model conversions of any of the foregoing; (v) Contract Rights; (vi) Deposit Accounts; (vii) Documents; (viii) General Intangibles; (ix) Goods (including, without limitation, all its Equipment, Fixtures and Inventory), together with all accessions, additions, attachments, improvements, substitutions and replacements thereto and therefor; (x) Instruments; (xi) Intellectual Property; (xii) money (of every jurisdiction whatsoever); (xiii) Commodity Accounts, Commodity Contracts, Investment Property, Security Entitlements and Security Accounts; (xiv) Uncertificated Securities; 5 (xv) to the extent not included in the foregoing, maps, surveys and similar items used or useful in such Debtor's business; and (xvi) to the extent not included in the foregoing, other personal property of any kind or description; together with all books, records, writings, data bases, information and other property relating to, used or useful in connection with, evidencing, embodying, incorporating or referring to any of the foregoing, and all proceeds, products, offspring, rents, issues, profits and returns of and from any of the foregoing; provided that to the extent that the provisions of any lease or license - -------- expressly prohibit (which prohibition is enforceable under applicable law) the grant of a security interest therein, such Debtor's rights in such lease or license shall be excluded from the foregoing grant for so long as such prohibition continues, it being understood that upon request of the U.S. -- ----- ---------- Collateral Agent, such Debtor will in good faith use reasonable efforts to obtain consent for the creation of a security interest in favor of the U.S. Collateral Agent in such Debtor's rights under such lease or license. 3. Warranties. Each Debtor warrants that: (i) no financing ---------- statement (other than any which may have been filed on behalf of the U.S. Collateral Agent for the benefit of the Secured Parties) covering any of the Collateral is on file in any public office, other than financing statements perfecting liens and claims expressly permitted by the Credit Agreement ("Permitted Liens") and financing statements filed by lessors under operating --------------- leases; (ii) such Debtor is and will be the lawful owner of all Collateral, free of all liens and claims whatsoever, other than the security interest hereunder and Permitted Liens, with full power and authority to execute and deliver this Agreement and perform such Debtor's obligations hereunder, and to subject the Collateral to the security interest hereunder; (iii) all information with respect to Collateral and Account Debtors set forth in any schedule, certificate or other writing at any time heretofore or hereafter furnished by such Debtor to the U.S. Collateral Agent or any other Secured Party and all other written information heretofore or hereafter furnished by such Debtor to the U.S. Collateral Agent or any other Secured Party in connection with the Credit Agreement is and will be true and correct in all material respects as of the date furnished; (iv) such Debtor's true legal name as registered in the jurisdiction in which such debtor is organized or incorporated, state of organization or incorporation, organization number as designated by the state of its incorporation or organization, chief executive office and principal place of business are as set forth on Schedule I hereto (and such Debtor has not ---------- maintained its chief executive office 6 and principal place of business at any other location at any time after November 1, 2000); (v) each other location where such Debtor maintains a place of business or locates Goods (other than Goods which are leased to customers or in transit to or from customer locations) is set forth on Schedule II hereto; (vi) ----------- except as previously disclosed to the Collateral Agent, such Debtor is not now known and during the five years preceding the date hereof has not previously been known by any trade name; (vii) except as previously disclosed to the Collateral Agent, during the five years preceding the date hereof such Debtor has not been known by any legal name different from the one set forth on the signature page of this Agreement nor has such Debtor been the subject of any merger or other corporate reorganization; and (viii) Schedule III hereto ------------ contains a complete listing of all of such Debtor's Intellectual Property which has been registered under any registration statute. 4. Collections, etc. Until such time during the existence of a ---------------- Default as the U.S. Collateral Agent shall notify such Debtor of the revocation of such power and authority, each Debtor (a) may, in the ordinary course of its business, at its own expense, sell, lease or furnish under contracts of service any of the Inventory normally held by such Debtor for such purpose, use and consume, in the ordinary course of its business, any raw materials, work in process or materials normally held by such Debtor for such purpose, and use, in the ordinary course of its business (but subject to the terms of the Credit Agreement), the cash proceeds of Collateral and other money which constitutes Collateral, (b) will, at its own expense, use commercially reasonable efforts to collect, as and when due, all amounts due under any of the Non-Tangible Collateral, including the taking of such action with respect to such collection as the U.S. Collateral Agent may reasonably request or, in the absence of such request, as such Debtor may deem advisable, and (c) may grant, in the ordinary course of business, to any party obligated on any of the Non-Tangible Collateral, any rebate, refund or allowance to which such party may be lawfully entitled, and may accept, in connection therewith, the return of Goods, the sale or lease of which shall have given rise to such Non-Tangible Collateral. The U.S. Collateral Agent, however, may, at any time that a Default exists, whether before or after any revocation of such power and authority or the maturity of any of the Liabilities, notify any parties obligated on any of the Non-Tangible Collateral to make payment to the U.S. Collateral Agent of any amounts due or to become due thereunder and enforce collection of any of the Non-Tangible Collateral by suit or otherwise and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby. Upon request of the U.S. Collateral Agent during the existence of a Default, each Debtor 7 will, at its own expense, notify any parties obligated on any of the Non-Tangible Collateral to make payment to the U.S. Collateral Agent of any amounts due or to become due thereunder. Upon request by the U.S. Collateral Agent during the existence of a Default, each Debtor will forthwith, upon receipt, transmit and deliver to the U.S. Collateral Agent, in the form received, all cash, checks, drafts and other instruments or writings for the payment of money (properly endorsed, where required, so that such items may be collected by the U.S. Collateral Agent) which may be received by such Debtor at any time in full or partial payment or otherwise as proceeds of any of the Collateral. Except as the U.S. Collateral Agent may otherwise consent in writing, any such items which may be so received by any Debtor during the existence of a Default will not be commingled with any other of its funds or property, but will be held separate and apart from its own funds or property and upon express trust for the U.S. Collateral Agent for the benefit of the Secured Parties until delivery is made to the U.S. Collateral Agent. Each Debtor will comply with the terms and conditions of any consent given by the U.S. Collateral Agent pursuant to the foregoing sentence. During the existence of a Default, all items or amounts which are delivered by any Debtor to the U.S. Collateral Agent on account of partial or full payment or otherwise as proceeds of any of the Collateral shall be deposited to the credit of a deposit account of such Debtor under which the U.S. Collateral Agent is the depositary bank (each an "Assignee Deposit Account"), as security for payment of the Liabilities. No Debtor shall have any right to withdraw any funds deposited in the applicable Assignee Deposit Account. The U.S. Collateral Agent may, from time to time, in its discretion, and shall upon request of the applicable Debtor made not more than once in any week, apply all or any of the then balance, representing collected funds, in the Assignee Deposit Account, toward payment of the Liabilities, whether or not then due, in such order of application as the U.S. Collateral Agent may determine, and the U.S. Collateral Agent may, from time to time, in its discretion, release all or any of such balance to the applicable Debtor. If and to the extent that a perfected security interest hereunder in any Collateral shall cease to be perfected for any reason whatsoever (including, without limitation, release of all or any balance in any Assignee Deposit Account or use or disposition by any Debtor of any proceeds of Collateral), then such Collateral (referred to in this paragraph as "released Collateral") shall be deemed thereby released from the security interest hereunder in exchange, as of the time of such release, for any other Collateral of equivalent value in which a perfected security interest hereunder is being obtained contemporaneously 8 or has been most recently obtained, but only to the extent such other Collateral does not represent either (a) Collateral in exchange for which any previously released Collateral shall have been deemed released, or (b) Collateral of equivalent value to any loan or advance (otherwise than by renewal or extension) from the U.S. Collateral Agent to the Borrower in which Collateral a perfected security interest hereunder shall have been obtained contemporaneously with or most recently prior to such loan or advance. During the existence of a Default, the U.S. Collateral Agent is authorized to endorse, in the name of the applicable Debtor, any item, howsoever received by the U.S. Collateral Agent, representing any payment on or other proceeds of any of the Collateral. 5. Certificates, Schedules and Reports. Each Debtor will from time to ----------------------------------- time deliver to the U.S. Collateral Agent such schedules, certificates and reports respecting all or any of the Collateral at the time subject to the security interest hereunder, and the items or amounts received by such Debtor in full or partial payment of any of the Collateral, as the U.S. Collateral Agent may reasonably request. Any such schedule, certificate or report shall be executed by a duly authorized officer of such Debtor and shall be in such form and detail as the U.S. Collateral Agent may specify. Each Debtor shall immediately notify the U.S. Collateral Agent of the occurrence of any event causing any loss of its Inventory or other Goods which is material to Holdings and its Subsidiaries taken as a whole, and such notice shall specify the amount of such loss. 6. Agreements of the Debtors. Each Debtor (a) will, upon request of ------------------------- the U.S. Collateral Agent, execute such financing statements and other documents (and pay the cost of filing or recording the same in all public offices reasonably deemed appropriate by the U.S. Collateral Agent) and do such other acts and things (including, without limitation, delivery to the U.S. Collateral Agent of any Instruments or Certificated Securities which constitute Collateral), all as the U.S. Collateral Agent may from time to time reasonably request, to establish and maintain a valid security interest in the Collateral (free of all other liens, claims and rights of third parties whatsoever, other than Permitted Liens) to secure the payment of the Liabilities; (b) hereby authorizes the U.S. Collateral Agent to file such financing statements and other documents without its signature (to the extent allowed by applicable law); (c) will keep all its Inventory (other than Inventory which is leased to customers or in transit to or from customer locations), Equipment and other Goods at, and will not maintain any place of business at any location other than, its address(es) shown on Schedules I and II hereto or at such other addresses of ----------- -- which such Debtor shall have 9 given the U.S. Collateral Agent not less than 10 days' prior written notice; (d) shall not change its state of organization or incorporation or its name, identity or corporate structure such that any financing statement filed to perfect the U.S. Collateral Agent's interests under this Agreement would become seriously misleading, unless the Debtor shall have given the U.S. Collateral Agent not less than 10 days' prior notice of such change (provided that this Section 6(d) shall not be deemed to authorize any change or transaction prohibited under the Credit Agreement); (e) will keep its records concerning the Non-Tangible Collateral in such a manner as will enable the U.S. Collateral Agent or its designees to determine at any time the status of the Non-Tangible Collateral; (f) will furnish the U.S. Collateral Agent such information concerning such Debtor, the Collateral and the Account Debtors as the U.S. Collateral Agent may from time to time reasonably request; (g) will permit the U.S. Collateral Agent and its designees, from time to time, on reasonable notice and at reasonable times and intervals during normal business hours (or at any time without notice during the existence of a Default) to inspect such Debtor's Inventory and other Goods, and to inspect, audit and make copies of and extracts from all records and all other papers in the possession of such Debtor pertaining to the Collateral and the Account Debtors, and will, upon request of the U.S. Collateral Agent during the existence of a Default, deliver to the U.S. Collateral Agent all of such records and papers; (h) will, upon request of the U.S. Collateral Agent, stamp on its records concerning the Collateral and add on all Chattel Paper constituting a portion of the Collateral, a notation, in form satisfactory to the U.S. Collateral Agent, of the security interest of the U.S. Collateral Agent hereunder; (i) except for the sale or lease of Inventory in the ordinary course of its business and sales of Equipment which is no longer useful in its business or which is being replaced by similar Equipment or as otherwise permitted by the Credit Agreement, will not create or permit to exist any lien on or security interest in any Collateral other than Permitted Liens and liens and security interests in favor of the U.S. Collateral Agent for the benefit of the Secured Parties; (j) will at all times keep all its Inventory and other Goods insured under policies maintained with reputable, financially sound insurance companies against loss, damage, theft and other risks to such extent as is customarily maintained by companies similarly situated, and cause all such policies to provide that loss thereunder shall be payable to the U.S. Collateral Agent as its interest may appear (it being understood that (A) so long as no Default shall be existing, the U.S. Collateral Agent shall deliver any proceeds of such insurance which may be received by it to such Debtor and (B) whenever a Default shall be existing, the U.S. Collateral Agent may apply any proceeds of such insurance which may be received by it toward the ratable payment of the Liabilities, whether or not due), and such policies or certificates thereof shall, if the U.S. Collateral Agent so requests, be deposited with or furnished to the U.S. Collateral Agent; (k) will, upon request of the U.S. Collateral Agent, (i) cause to be noted on the applicable certificate, in the event any of its Equipment is covered by a certificate of title, the security interest of the U.S. Collateral Agent in the Equipment covered thereby and (ii) deliver all such certificates to the U.S. Collateral Agent or its designees; (l) will take all steps reasonably necessary to protect, preserve and maintain all of its rights in the Collateral; (m) will keep all of the tangible Collateral and Deposit Accounts in the continental United States or, in the case of any Debtor, any province in Canada of which such Debtor has given the U.S. Collateral Agent not less than 10 days prior written notice; and (n) will reimburse the U.S. Collateral Agent for all expenses, including reasonable attorneys' fees and legal expenses, incurred by the U.S. Collateral Agent in seeking to collect or enforce any rights in respect of such Debtor's Collateral. Any expenses incurred in protecting, preserving and maintaining any Collateral shall be borne by the applicable Debtor. Whenever a Default shall be existing, the U.S. Collateral Agent shall have the right to bring suit to enforce any or all of the Intellectual Property or licenses thereunder, in which event the applicable Debtor shall at the request of the U.S. Collateral Agent do any and all lawful acts and execute any and all proper documents required by the U.S. Collateral Agent in aid of such enforcement and such Debtor shall promptly, upon demand, reimburse and indemnify the U.S. Collateral Agent for all reasonable costs and expenses incurred by the U.S. Collateral Agent in the exercise of its rights under this Section 6, except to the extent any of the --------- foregoing result from the gross negligence or willful misconduct of the U.S. Collateral Agent. Notwithstanding the foregoing, the U.S. Collateral Agent shall have no obligations or liabilities regarding the Collateral or any thereof by reason of, or arising out of, this Agreement. 7. Default. Whenever a Default shall be existing, the U.S. Collateral ------- Agent may exercise from time to time any and all rights and remedies available to it under the UCC or any other applicable law, in addition to those described in this section below. (a) Each Debtor agrees, in case of Default, (i) to assemble, at its expense, all its Inventory and other Goods (other than Fixtures) at a convenient place or places acceptable to the U.S. Collateral Agent, and (ii) at the U.S. Collateral Agent's request, to execute all such documents and do all such other things which may be necessary or desirable in order to enable the U.S. Collateral Agent or its nominee to be registered 11 as owner of the Intellectual Property with any competent registration authority. (b) Notice of the intended disposition of any of the Collateral may be given by first-class mail, hand-delivery (through a delivery service or otherwise), facsimile or E-mail, and shall be deemed to have been "sent" upon deposit in the U.S. Mails with adequate postage properly affixed, upon delivery to an express delivery service or upon the electronic submission through telephonic or Internet services, as applicable. Each Debtor hereby agrees and acknowledges that (i) with respect to Collateral that is: (A) perishable or threatens to decline speedily in value or (B) is of a type customarily sold on a recognized market (including but not limited to, Investment Property), no notice of disposition need be given; and (ii) with respect to Collateral not described in clause (i) of this Section 7(b), notification sent after default and ten days before any proposed disposition provides notice within a reasonable time before disposition. (c) Each Debtor hereby agrees and acknowledges that a commercially reasonable disposition of Inventory, Equipment, Computer Hardware and Software or Intellectual Property may be by lease or license of, in addition to the sale of, such Collateral. Each Debtor further agrees and acknowledges that a disposition (i) made in the usual manner on any recognized market, (ii) a disposition at the price current in any recognized market at the time of disposition or (iii) a disposition in conformity with reasonable commercial practices among dealers in the type of property subject to the disposition shall, in each case, be deemed commercially reasonable. (d) Any cash proceeds of any disposition by the U.S. Collateral Agent of any of the Collateral shall be applied by the U.S. Collateral Agent to payment of expenses in connection with the Collateral, including reasonable attorneys' fees and legal expenses, and thereafter to the ratable payment of the Liabilities, and thereafter any surplus will be paid to the applicable Debtor. The U.S. Collateral Agent need not apply or pay over for application noncash proceeds of collection and enforcement unless (i) the failure to do so would be commercially unreasonable and (ii) the affected Debtor has provided the U.S. Collateral Agent with a written demand to apply or pay over such noncash proceeds on such basis. 8. General. The U.S. Collateral Agent shall be deemed to have exercised ------- reasonable care in the custody and preservation of any of the Collateral in its possession if it takes such action 12 for that purpose as any applicable Debtor requests in writing, but failure of the U.S. Collateral Agent to comply with any such request shall not of itself be deemed a failure to exercise reasonable care, and no failure of the U.S. Collateral Agent to preserve or protect any rights with respect to such Collateral against prior parties, or to do any act with respect to the preservation of such Collateral not so requested by any Debtor, shall be deemed a failure to exercise reasonable care in the custody or preservation of such Collateral. All notices and requests hereunder shall be in writing (including facsimile transmission) and shall be sent to the applicable party at its address shown on Schedule I hereto or at such other address as such party may, by written notice - ---------- received by the U.S. Collateral Agent, have designated as its address for such purpose. Notices sent by facsimile transmission shall be deemed to have been given when sent; notices sent by mail shall be deemed to have been given three Business Days after the date when sent by registered or certified mail, postage prepaid; and notices sent by hand delivery or overnight courier shall be deemed to have been given when received. Each of the Debtors agrees to pay all expenses (including reasonable attorney's fees and legal expenses) paid or incurred by the U.S. Collateral Agent or any other Secured Party in endeavoring to collect the Liabilities of such Debtor, or any part thereof, and in enforcing this Agreement against such Debtor, and such obligations will themselves be Liabilities. No delay on the part of the U.S. Collateral Agent in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the U.S. Collateral Agent of any right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy. This Security Agreement shall remain in full force and effect until all Liabilities have been paid in full and all Commitments have terminated. If at any time all or any part of any payment theretofore applied by the U.S. Collateral Agent or any other Secured Party to any of the Liabilities is or must be rescinded or returned by the U.S. Collateral Agent or such other Secured Party for any reason whatsoever (including, without limitation, the insolvency, bankruptcy or reorganization of any Debtor), such Liabilities shall, for the purposes of this Agreement, to the extent that such payment is or must be rescinded or returned, be deemed to have continued in existence, notwithstanding such application by the U.S. Collateral Agent or such other Secured Party, and this Agreement shall continue to be effective or be reinstated, as the case may be, as to such Liabilities, all as though such application by the U.S. Collateral Agent or such other Secured Party had not been made. 13 This Agreement shall be construed in accordance with and governed by the laws of the State of New York(except to the extent that perfection, the effect of perfection or nonperfection, or the priority of the security interest granted hereunder may be determined in accordance with the Uniform Commercial Code of a different jurisdiction in accordance with New York law). Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. The rights and privileges of the U.S. Collateral Agent hereunder shall inure to the benefit of its successors and assigns. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. At any time after the date of this Agreement, one or more additional persons or entities may become parties hereto by executing and delivering to the U.S. Collateral Agent a counterpart of this Agreement (including supplements to the Schedules hereto). Immediately upon such execution and delivery (and without any further action), each such additional person or entity will become a party to, and will be bound by all the terms of, this Agreement. This Agreement amends and restates in its entirety the Existing Security Agreement which, after the effectiveness hereof, shall no longer be effective (except for any provisions thereof which by their terms survive, or may be reinstated, after terminations thereof). ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT -------- ------- ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE U.S. COLLATERAL AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH DEBTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, TO THE ADDRESS SET 14 FORTH ON SCHEDULE I HERETO (OR SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED IN ---------- WRITING TO THE U.S. COLLATERAL AGENT AS ITS ADDRESS FOR NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH DEBTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY DEBTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH DEBTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. EACH OF EACH DEBTOR, THE U.S. COLLATERAL AGENT AND (BY ACCEPTING THE BENEFITS HEREOF) EACH OTHER SECURED PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. 15 IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year first above written. UNITED RENTALS (NORTH AMERICA), INC. By: --------------------------- Title: ------------------------ UNITED RENTALS, INC. By: --------------------------- Title: ------------------------ BANK OF AMERICA, N.A., as U.S. Collateral Agent for the Secured Parties By: --------------------------- Title: ------------------------ 12804199 97403190 Signature Page: Third Restated U.S. Security Agreement ADVANCE BARRICADES AND SIGNING, INC. ALL CITIES TRAILER EXCHANGE, INC. ARROW EQUIPMENT COMPANY A.S.C. PAVEMENT MARKINGS, INC. BAKERSFIELD COMPACTION EQUIPMENT BNR EQUIPMENT, INC. COAST LINE MARKING, INC. DEALER SERVICES COMPANY EQUIPMENT LEASING SERVICES, INC. FLASHER CO. OF KANSAS, INC. FLASHER COMPANY OF OKLAHOMA, INC. FRONTENAC EQUIPMENT, INC. HIGHWAY RENTALS, INC. HIGHWAY SUPPLY COMPANY HIGHWAY SAFETY SERVICE COMPANY JADCO SIGNING, INC. LECTRIC SAFETY LIGHTS CO. LIDDELL MANAGEMENT CO., INC. PAIGE BARRICADES, INC. PAUL E. CARLSON, INC. RENTALS UNLIMITED, INCORPORATED ROCKY MOUNTAIN SAFETY SERVICE, INC. RUSS ENTERPRISES, INC. SHORING AND SUPPLY COMPANY, INC. STATE BARRICADING, INC. SAFE-T-FLARE SERVICES, INC. THOESEN EQUIPMENT, INC. TRAFFIC MARKINGS SOUTH, INC. TRAFFIC SAFETY SERVICES, INC. TRI-MAC, CORPORATION UNITED RENTALS GULF, INC. UNITED RENTALS HIGHWAY TECHNOLOGIES, INC. UNITED RENTALS HIGHWAY TECHNOLOGIES GULF, INC. By: ------------------------------ Title: --------------------------- UNITED RENTALS NORTHWEST, INC. UNITED RENTALS SOUTHEAST, INC. WANAMAKER RENTS, INCORPORATED 12804199 97403190 Signature Page: Third Restated U.S. Security Agreement WARNING LITES OF INDIANA, INC. WARNING LITES OF IOWA, INC. WARNING LITES OF MINNESOTA, INC. WARNING SAFETY LIGHTS, INC. WARNING SAFETY LIGHTS OF GEORGIA, INC. WEST-CO RENTAL & SALES WLI INDUSTRIES, INC. WORK SIGNS, INC. WORK ZONE, INC. WORK ZONE SAFETY, INC. WOUDENBERG ENTERPRISES, INC. WYNNE SYSTEMS, INC. By: ------------------------------ Title: --------------------------- UNITED EQUIPMENT RENTALS GULF, L.P. By: United Rentals (North America), Inc. Its: General Partner By: ------------------------------ Title: --------------------------- UNITED RENTALS HIGHWAY TECHNOLOGIES, L.P. By: United Rentals (North America), Inc. Its: General Partner By: ------------------------------ Title: --------------------------- UNITED RENTALS SOUTHEAST, L.P. By: United Rentals (North America), Inc. Its: General Partner By: ------------------------------ Title: --------------------------- 12804199 97403190 Signature Page: Third Restated U.S. Security Agreement ADDITIONAL SIGNATURE PAGE to the Third Restated U.S. Security Agreement dated as of April __, 2001 among United Rentals (North America), Inc. (the "Borrower"), United Rentals, Inc., Bank of America, N.A., as U.S. Collateral Agent, and various U.S. Subsidiaries of the Borrower. The undersigned is executing a counterpart hereof for purposes of becoming a party hereto (and attached hereto is a supplement to Schedules I, II and III of such Security Agreement setting forth the information required thereby with respect to the undersigned for purposes of such Security Agreement): [ ] By:________________________________ Name:______________________________ Title:_____________________________ 12804199 97403190 Signature Page: Third Restated U.S. Security Agreement SCHEDULE I TO SECURITY AGREEMENT CHIEF EXECUTIVE OFFICES ----------------------- SCHEDULE II TO SECURITY AGREEMENT ADDRESSES OF OTHER LOCATIONS ---------------------------- SCHEDULE III TO SECURITY AGREEMENT LIST OF INTELLECTUAL PROPERTY ----------------------------- EXHIBIT "E" FORM OF CANADIAN GUARANTEE Guarantee dated as of [X], made by [Name of Guarantor] (the "Guarantor") to and in favour of the Canadian Collateral Agent (as defined herein) and the other Canadian Secured Parties (as defined herein). WHEREAS: A. The Chase Manhattan Bank of Canada, as Canadian administrative agent, and such other financial institutions (collectively, the "Lenders") as may from time to time be parties to the Credit Agreement (as hereinafter defined) have made certain credit facilities available to United Rentals of Canada, Inc. (the "Borrower") upon the terms and conditions contained in an amended and restated credit agreement dated as of April ____, 2001, among United Rentals (North America), Inc., United Rentals, Inc., the Borrower, The Chase Manhattan Bank as U.S. administrative agent and the Lenders (as amended, modified, extended, renewed, replaced, restated, supplemented or refinanced from time to time and including any agreement extending the maturity of, or refinancing or restructuring (including the inclusion of additional borrowers thereunder or any increase in the amount borrowed) all or any portion of, the indebtedness under such agreement or any successor agreements, whether or not with the same agents, co-agents or lenders, the "Credit Agreement"); B. One of the conditions of the Lenders agreeing to make credit facilities available to United Rentals (North America), Inc. and the Borrower under the Credit Agreement was that the Guarantor execute and deliver this guarantee, to and in favour of Bank of America Canada, as Canadian collateral agent (in such capacity, the "Canadian Collateral Agent") and the C $ Revolving Lenders (as defined in the Credit Agreement) (collectively, the "Canadian Secured Parties"), guaranteeing the payment and performance of all present and future debts, liabilities and obligations, direct or indirect, absolute or contingent, of the Borrower to the Canadian Collateral Agent and the other Canadian Secured Parties arising under, in connection with or pursuant to the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement); and C. The Guarantor is a subsidiary (as construed in accordance with the Business Corporations Act ([Name of Jurisdiction])) of the Borrower and the Guarantor has determined that it is in the best interests of the Guarantor to enter into this guarantee; NOW THEREFORE in consideration of the foregoing, the sum of $10.00 now paid by the Canadian Collateral Agent and the other Canadian Secured Parties to - 2 - the Guarantor and such other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Guarantor agrees as follows: ARTICLE 1 GUARANTEE Section 1.1 Guarantee. The Guarantor absolutely, irrevocably and unconditionally guarantees the due and punctual payment to the Canadian Secured Parties, whether at stated maturity, by acceleration or otherwise, of all present and future debts, liabilities and obligations, direct or indirect, absolute or contingent, of the Borrower to the Canadian Secured Parties or any of them arising pursuant to, or in respect of, the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement) or any other document executed and delivered by the Borrower in connection with the Credit Agreement and all Hedging Obligations (as defined in the Credit Agreement) of the Borrower to the Canadian Secured Parties (all such obligations, the "Guaranteed Obligations") and promises to pay, on demand, any and all out-of-pocket expenses (including reasonable counsel fees and disbursements) incurred by or on behalf of the Canadian Secured Parties in enforcing any of their respective rights under this guarantee. Section 1.2 Absolute Liability. The Guarantor guarantees that the Guaranteed Obligations will be paid to the Canadian Collateral Agent and the other Canadian Secured Parties strictly in accordance with their terms and conditions, that the Guarantor shall be liable as principal debtor and not solely as surety with respect to the payment of the Guaranteed Obligations and that the liability of the Guarantor under this guarantee shall be absolute, irrevocable and unconditional irrespective of: (a) the lack of validity or enforceability of any terms of any of the Loan Documents; (b) any contest by the Borrower, United Rentals (North America), Inc. or any other Person as to the amount of the Guaranteed Obligations, the validity or enforceability of any terms of the Loan Documents or the priority of any security granted to the Canadian Collateral Agent or the other Canadian Secured Parties; (c) any defence, counter-claim or right of set-off available to the Borrower; (d) any extension of the time or times for payment of the Guaranteed Obligations or any other indulgences which the Canadian Secured Parties may grant to the Borrower, United Rentals (North America), - 3 - Inc. or any other Person or any amendment to, or alteration or renewal of, any of the Loan Documents or the Guaranteed Obligations; (e) any dealings with the security which the Canadian Secured Parties hold or may hold pursuant to the terms and conditions of the Loan Documents, including the taking, giving up or exchange of securities, their variation or realization, the accepting of compositions and the granting of releases and discharges, and any release of any other guarantor of the Guaranteed Obligations; (f) the assignment of all or any part of the benefits of this guarantee; (g) any invalidity, non-perfection or unenforceability of any security held by the Canadian Secured Parties or any irregularity or defect in the manner or procedure by which the Canadian Collateral Agent and the other Canadian Secured Parties realize on such security; and (h) any other circumstances which might otherwise constitute a defence available to, or a discharge of, the Guarantor, the Borrower, United Rentals (North America), Inc. or any other Person in respect of the Guaranteed Obligations or this guarantee. ARTICLE 2 ENFORCEMENT Section 2.1 Remedies. The Canadian Secured Parties shall not be bound to exhaust their recourse against the Borrower, United Rentals (North America), Inc. or any other Person or realize on any security they may hold in respect of the Guaranteed Obligations before being entitled to payment under this guarantee and the Guarantor renounces all benefits of discussion and division. Section 2.2 Impairment of Security. Any loss of, or loss of value of, any security granted to any of the Canadian Secured Parties by the Borrower, United Rentals (North America), Inc. or any other Person shall not discharge pro tanto or limit or lessen the liability of the Guarantor under this guarantee. Section 2.3 Amount of Guaranteed Obligations. Any account settled or stated by or between the Canadian Collateral Agent and the Borrower, or if any such account has not been settled or stated immediately before demand for payment under this guarantee, any account stated by the Canadian Collateral Agent shall, in the absence of manifest mathematical error, be - 4 - accepted by the Guarantor as conclusive evidence of the amount of the Guaranteed Obligations which is due by the Borrower to the Canadian Secured Parties or remains unpaid by the Borrower to the Canadian Secured Parties. Section 2.4 Payment on Demand. The obligation of the Guarantor to pay the amount of the Guaranteed Obligations and all other amounts payable by it to the Canadian Secured Parties under this guarantee shall arise, and the Guarantor shall make such payments, immediately after demand for same is made in writing to it. The liability of the Guarantor shall bear interest from the date of such demand at the rate or rates of interest then applicable to the Guaranteed Obligations under and calculated in the manner provided in the Loan Documents (including any adjustment to give effect to the provisions of the Interest Act (Canada)). Section 2.5 Assignment and Postponement. (1) All obligations, liabilities and indebtedness of the Borrower, United Rentals, Inc. and each of their respective Subsidiaries to the Guarantor of any nature whatsoever and all security therefor (the "Intercorporate Indebtedness") are assigned and transferred to the Canadian Collateral Agent for the benefit of the Canadian Collateral Agent and the other Canadian Secured Parties as continuing and collateral security for the Guarantor's obligations under this guarantee. Subject to Section 2.5(2) and Section 2.5(3), until notice by the Canadian Collateral Agent to the Guarantor that the Guaranteed Obligations have become due and payable, the Guarantor may receive payments in respect of the Intercorporate Indebtedness in accordance with their terms. The Guarantor shall not, except with the written consent of the Canadian Collateral Agent and the other Canadian Secured Parties, assign all or any part of the Intercorporate Indebtedness to any Person other than the Canadian Collateral Agent or the other Canadian Secured Parties. (2) Upon the occurrence and during the continuance of an Event of Default under and as defined in the Credit Agreement, all Intercorporate Indebtedness shall be held in trust for the Canadian Secured Parties and shall be collected, enforced or proved subject to, and for the purpose of, this guarantee and any payments received by the Guarantor in respect of the Intercorporate Indebtedness shall be segregated from other funds and property held by the Guarantor and immediately paid to the Canadian Collateral Agent on account of the Guaranteed Obligations. (3) Upon the occurrence and during the continuance of an Event of Default under and as defined in the Credit Agreement, the Canadian Secured Parties shall be entitled to receive payment of the Guaranteed Obligations in full before the Guarantor receives any payment on account of the Intercorporate - 5 - Indebtedness. In such case, the Intercorporate Indebtedness shall not be released or withdrawn by the Guarantor unless the Canadian Collateral Agent's written consent to the release or withdrawal is first obtained. The Guarantor shall not permit the prescription of the Intercorporate Indebtedness by any statute of limitations or ask for or obtain any security or negotiable paper for, or other evidence of, the Intercorporate Indebtedness except for the purpose of delivering the same to the Canadian Collateral Agent. Section 2.6 Suspension of Guarantor Rights. The Guarantor irrevocably waives any rights which it may at any time have by reason of the performance of any of its obligations under this guarantee (i) to be indemnified by the Borrower, (ii) to claim contribution from any other guarantor of the debts, liabilities or obligations of the Borrower, or (iii) subject to Section 2.8, to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Canadian Secured Parties under any of the Loan Documents. Section 2.7 No Prejudice to Canadian Secured Parties or Canadian Collateral Agent. The Canadian Secured Parties shall not be prejudiced in any way in the right to enforce any provision of this guarantee by any act or failure to act on the part of the Borrower, United Rentals (North America), Inc., United Rentals, Inc., the Canadian Collateral Agent or the other Canadian Secured Parties. The Canadian Collateral Agent and the other Canadian Secured Parties may, at any time and from time to time, in such manner as any of them may determine is expedient, without any consent of, or notice to, the Guarantor and without impairing or releasing the obligations of the Guarantor (i) change the manner, place, time or terms of payment of, or renew or alter, the Guaranteed Obligations, (ii) renew, increase or otherwise vary any credit or credit facilities to, or the terms or conditions of any transaction with, the Borrower, United Rentals (North America), Inc. or any other Person, (iii) release, compound or vary the liability of the Borrower, United Rentals (North America), Inc. or any other Person liable in any manner under or in respect of the Guaranteed Obligations, (iv) exercise or enforce or refrain from exercising or enforcing any right or security against the Borrower, United Rentals (North America), Inc., the Guarantor or any other Person, and (v) apply any sums from time to time received to the Guaranteed Obligations. In their dealings with the Borrower and United Rentals (North America), Inc., the Canadian Collateral Agent and the other Canadian Secured Parties need not enquire into the authority or power of any Person purporting to act for or on behalf of the Borrower or United Rentals (North America), Inc. - 6 - Section 2.8 No Subrogation. The Guarantor irrevocably waives any claim, remedy or other right which it may now have or hereafter acquire against the Borrower that arises from the existence, payment, performance or enforcement of the Guarantor's obligations under this guarantee, including any right of subrogation, reimbursement, exoneration or indemnification or any right to participate in any claim or remedy of the Canadian Secured Parties against the Borrower or any collateral which the Canadian Secured Parties now have or hereafter acquire, whether or not such claim, remedy or other right is reduced to judgment or is liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured, and whether or not such claim, remedy or other right arises in equity or under contract, statute or common law. The Guarantor further agrees that the Borrower shall be an intended third party beneficiary of the Guarantor's waiver contained in this Section 2.8. If any amount is paid to the Guarantor in violation of this section and, at such time, the Canadian Secured Parties' claims against the Borrower in respect of the Guaranteed Obligations shall not have been paid in full, any amount paid to the Guarantor shall be deemed to have been paid to the Guarantor for the benefit of, and held in trust for, the Canadian Secured Parties, and shall immediately be paid to the Canadian Collateral Agent to be credited and applied upon such Guaranteed Obligations. The Guarantor acknowledges that it will receive direct and indirect benefits from the transactions contemplated by this guarantee and that the waiver in this Section 2.8 is knowingly made in contemplation of such benefits. Section 2.9 No Set-off. To the fullest extent permitted by law, the Guarantor shall make all payments under this guarantee without regard to any defence, counter-claim or right of set-off available to it. Section 2.10 Successors of the Borrower. Any change or changes in the name of, or reorganization (whether by way of reconstruction, consolidation, amalgamation, merger, transfer, sale, lease or otherwise) of, the Borrower or its business shall not affect or in any way limit or lessen the liability of the Guarantor under this guarantee or under any of the Guarantor Security Agreements (as defined below). This guarantee and the Guarantor Security Agreements shall extend to any person, firm or corporation acquiring or from time to time carrying on the business of the Borrower. Section 2.11 Continuing Guarantee. This guarantee is a continuing guarantee. It extends to all present and future Guaranteed Obligations, applies to and secures the ultimate balance of the Guaranteed Obligations due or remaining due to the Canadian Collateral Agent and the other Canadian Secured Parties and shall be binding as a continuing obligation - 7 - of the Guarantor until the Canadian Collateral Agent and the other Canadian Secured Parties release the Guarantor. This guarantee shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations is rescinded or must otherwise be returned by the Canadian Secured Parties upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though the payment had not been made. Section 2.12 Supplemental Security. This guarantee is in addition and without prejudice to and supplemental to all other guarantees and securities held or which may hereafter be held by the Canadian Secured Parties. Section 2.13 Security for Guarantee. The Guarantor acknowledges that this guarantee is intended to secure payment of the Guaranteed Obligations and that the payment of the Guaranteed Obligations and the other obligations of the Guarantor under this guarantee are secured pursuant to the terms and provisions of those agreements described in Schedule "A" (collectively, the "Guarantor Security Agreements"). Section 2.14 Right of Set-off. Upon the occurrence and during the continuance of any Event of Default under and as defined in the Credit Agreement, the Canadian Collateral Agent and each of the other Canadian Secured Parties are authorized by the Guarantor at any time and from time to time and may, to the fullest extent permitted by law, set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by the Canadian Collateral Agent or the other Canadian Secured Parties to or for the credit or the account of the Guarantor against any and all of the obligations of the Guarantor now or hereafter existing irrespective of whether or not (i) the Canadian Secured Parties have made any demand under this guarantee, or (ii) any of the obligations comprising the Guaranteed Obligations are contingent or unmatured. The rights of the Canadian Collateral Agent and the other Canadian Secured Parties under this Section 2.14 are in addition and without prejudice to and supplemental to other rights and remedies which the Canadian Collateral Agent and the other Canadian Secured Parties may have. Section 2.15 Interest Act (Canada). The Guarantor acknowledges that certain of the rates of interest applicable to the Guaranteed Obligations may be computed on the basis of a year of 360 days or 365 days, as the case may be and paid for the actual number of days elapsed. For purposes of the Interest Act (Canada), whenever any interest is calculated using a rate based on a year of 360 days or 365 days, as the case may be, such rate - 8 - determined pursuant to such calculation, when expressed as an annual rate is equivalent to (i) the applicable rate based on a year of 360 days or 365 days, as the case may be, (ii) multiplied by the actual number of days in the calendar year in which the period for such interest is payable (or compounded) ends, and (iii) divided by 360 or 365, as the case may be. Section 2.16 Taxes and Other Taxes. (1) All payments to the Canadian Collateral Agent or the other Canadian Secured Parties by the Guarantor under this guarantee or under any of the Guarantor Security Agreements shall be made free and clear of and without deduction or withholding for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by any Lender's net income or receipts (all non-excluded items being called "Taxes"). If any withholding or deduction from any payment to be made by the Guarantor hereunder (including any additional amount or amounts to be paid under this Section 2.16) is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Guarantor will: (a) pay directly to the relevant authority the full amount required to be so withheld or deducted; (b) promptly forward to the Canadian Collateral Agent an official receipt or other documentation satisfactory to the Canadian Collateral Agent evidencing such payment to such authority; and (c) pay to the Canadian Collateral Agent for the account of the Canadian Secured Parties such additional amount or amounts as is necessary to ensure that the net amount actually received by each Canadian Secured Parties will equal the full amount such Canadian Secured Parties would have received had no such withholding or deduction been required. Moreover, if any Taxes are directly asserted against the Canadian Collateral Agent or any other Canadian Secured Party with respect to any payment received by the Canadian Collateral Agent or such other Canadian Secured Party hereunder, the Canadian Collateral Agent or such other Canadian Secured Party may pay such Taxes and the Guarantor will promptly pay such additional amounts (including any penalty, interest and expense) as is necessary in order that the net amount received by such Person after the payment of such Taxes (including any Taxes on such additional amount) - 9 - shall equal the amount such Person would have received had such Taxes not been asserted. (2) If the Guarantor fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Canadian Collateral Agent, for the account of the applicable Canadian Secured Parties, the required receipts or other required documentary evidence, the Guarantor shall indemnify such Canadian Secured Parties for any incremental Taxes, interest or penalties that may become payable by any such Canadian Secured Party as a result of any such failure. For purposes of this Section 2.16, a distribution hereunder by the Canadian Collateral Agent or any Canadian Secured Party to or for the account of any Canadian Secured Party shall be deemed a payment by the Guarantor. (3) The provisions of this Section 2.16 shall survive the termination of this guarantee. Section 2.17 Judgment Currency. (1) If for the purposes of obtaining judgment in any court it is necessary to convert all or any part of the Guaranteed Obligations or any other amount due to a Canadian Secured Party in respect of the Guarantor's obligations under this guarantee in any currency (the "Original Currency") into another currency (the "Other Currency"), the Guarantor, to the fullest extent that it may effectively do so, agrees that the rate of exchange used shall be that at which, in accordance with normal banking procedures, such Canadian Secured Party, as the case may be, could purchase the Original Currency with the Other Currency on the Business Day preceding that on which final judgment is paid or satisfied. (2) The obligations of the Guarantor in respect of any sum due in the Original Currency from it to any Canadian Secured Party shall, notwithstanding any judgment in any Other Currency, be discharged only to the extent that on the Business Day following receipt by such Canadian Secured Party of any sum adjudged to be so due in such Other Currency such Canadian Secured Party may, in accordance with its normal banking procedures, purchase the Original Currency with such Other Currency. If the amount of the Original Currency so purchased is less than the sum originally due to such Canadian Secured Party in the Original Currency, the Guarantor agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Canadian Secured Party against such loss, and if the amount of the Original Currency so purchased exceeds the sum originally due to such Canadian Secured Party in the Original Currency, such Canadian Secured Party agrees to remit such excess to the Guarantor. - 10 - ARTICLE 3 GENERAL Section 3.1 Notices, etc. Any notice, direction or other communication to be given under this guarantee shall, except as otherwise permitted, be in writing and given by delivering it or sending it by telecopy or other similar form of recorded communication addressed: (a) if to the Guarantor, to it at: c/o United Rentals, Inc. Four Greenwich Office Park Greenwich, Connecticut 06830 USA Attention: Chief Financial Officer Telephone: (203) 622-3131 Telecopier: (203) 622-6080 (b) if to the Canadian Collateral Agent or the other Canadian Secured Parties, to the Canadian Collateral Agent at: 200 Front Street West Suite 2500 Toronto, Ontario M5V 3L2 Attention: Medina Sales de Andrade Telephone: (416) 349-4100 Telecopier: (416) 349-4283 Any such communication shall be deemed to have been validly and effectively given (i) if personally delivered, on the date of such delivery if such date is a Business Day and such delivery was made prior to 4:00 p.m. (Toronto time), otherwise on the next Business Day, and (ii) if transmitted by facsimile or similar means of recorded communication, on the Business Day following the date of transmission. Any party may change its address for service from time to time by notice given in accordance with the foregoing and any subsequent notice shall be sent to the party at its changed address. - 11 - Section 3.2 Defined Terms. Capitalized terms used in this guarantee and not otherwise defined have the meanings specified in the Credit Agreement. Section 3.3 Gender and Number. Any reference in this guarantee to gender shall include all genders and words importing the singular number only shall include the plural and vice versa. Section 3.4 Headings, etc. The division of this guarantee into Articles and Sections and the insertion of headings are for convenient reference only and are not to affect the interpretation of this guarantee. Section 3.5 Currency. All references in this guarantee to dollars, unless otherwise specifically indicated, are expressed in Canadian currency. Section 3.6 Successors and Assigns. This guarantee shall be binding upon the Guarantor, its successors and assigns, and shall enure to the benefit of the Canadian Secured Parties and their respective successors and assigns. All rights of the Canadian Collateral Agent and the other Canadian Secured Parties shall be assignable and in any action brought by an assignee to enforce any such right, the Guarantor shall not assert against the assignee any claim or defence which the Guarantor now has or hereafter may have against the Canadian Collateral Agent or any of the other Canadian Secured Parties. Section 3.7 Severability. If any provision of this guarantee is deemed by any court of competent jurisdiction to be invalid or void, the remaining provisions shall remain in full force and effect. Section 3.8 Governing Law. This guarantee shall be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. - 12 - IN WITNESS WHEREOF the Guarantor has caused this Guarantee to be executed by its duly authorized officer as of the date first above written. GUARANTOR By: -------------------------- Authorized Signing Officer SCHEDULE "A" GUARANTOR SECURITY 1. Security agreement dated as of the date hereof made by the Guarantor to and in favour of the Canadian Collateral Agent EXHIBIT "F" FORM OF CANADIAN SECURITY AGREEMENT Security agreement dated as of [x] made by [Canadian Subsidiary] (the "Obligor") to and in favour of the Canadian Collateral Agent (as defined herein). WHEREAS: A. The Chase Manhattan Bank of Canada and such other financial institutions (collectively, the "Lenders") as may from time to time be parties to the Credit Agreement (as hereinafter defined) have made certain credit facilities available to United Rentals of Canada, Inc. (the "Borrower") upon the terms and conditions contained in an amended and restated credit agreement dated as of April ____, 2001, among United Rentals (North America), Inc., the Borrower , The Chase Manhattan Bank of Canada, as Canadian administrative agent (in such capacity, the "Canadian Administrative Agent"), the Chase Manhattan Bank, as U.S. administrative agent and the Lenders (as amended, modified, extended, renewed, replaced, restated, supplemented or refinanced from time to time and including any agreement extending the maturity of, or refinancing or restructuring (including the inclusion of additional borrowers thereunder or any increase in the amount borrowed) all or any portion of, the indebtedness under such agreement or any successor agreements, whether or not with the same agents, co-agents or lenders, the "Credit Agreement"); B. Pursuant to the Credit Agreement, Bank of America Canada has been appointed as Canadian Collateral Agent (in such capacity, together with any successor in such capacity, the "Canadian Collateral Agent") to act on behalf of the Canadian Secured Parties (as defined herein) with respect to this agreement and certain other Canadian Security Documents (as defined in the Credit Agreement); C. The Obligor, pursuant to a guarantee dated as of the date hereof (the "Guarantee") in favour of the Canadian Collateral Agent and the other Canadian Securities Parties (as defined herein), guaranteed the payment and performance of all present and future debts, liabilities and obligations, direct and indirect, absolute or contingent, of the Borrower to the Canadian Collateral Agent and the other Canadian Secured Parties (as defined herein) arising under, in connection with or pursuant to the Credit Agreement and the other Loan Documents (as defined in the Credit Agreement) or any other document executed and delivered by the Borrower in connection with the Credit Agreement and all Hedging Obligations (as defined in the Credit Agreement) of the Borrower; and D. The Obligor has agreed to execute and deliver this security agreement to and in favour of the Canadian Collateral Agent as security for the payment and - 2 - performance of all debts, liabilities and obligations including all charges and fees of the Canadian Collateral Agent and the other Canadian Secured Parties (as defined herein) due from the Obligor to the Canadian Collateral Agent and the other Canadian Secured Parties (as defined herein) pursuant to or in connection with the Guarantee or the other Loan Documents (as defined in the Credit Agreement) to which it is a party. NOW THEREFORE in consideration of the foregoing, the sum of $10.00 now paid by the Canadian Collateral Agent and the other Canadian Secured Parties (as defined herein) to the Obligor and such other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the Obligor, the Obligor agrees as follows: ARTICLE 1 SECURITY Section 1.1 Terms Incorporated by Reference. Terms defined in the Personal Property Security Act (Ontario) (as amended from time to time, the "PPSA") and used in this security agreement shall have the same meanings. Section 1.2 Grant of Security. Subject to Section 1.5, the Obligor grants to the Canadian Collateral Agent, for its own benefit as a C $ Revolving Lender (as defined in the Credit Agreement) and as agent and in trust for the rateable benefit of itself and the other Canadian Secured Parties (as defined herein), a security interest in all the Obligor's right, title and interest in and to the personal property and undertaking of the Obligor now owned or hereafter acquired (collectively, the "Collateral") including, without limitation, any and all of the Obligor's: (a) inventory including goods held for sale, lease or resale, goods furnished or to be furnished to third parties under contracts of lease, consignment or service, goods which are raw materials or work in process, goods used in or procured for packing and materials used or consumed in the business of the Obligor; (b) equipment, machinery, furniture, fixtures, plants, vehicles and other goods of every kind and description and all licences and other rights and all records, files, charts, plans, drawings, specifications, manuals and documents relating thereto; - 3 - (c) accounts due or accruing due and all agreements, books, accounts, invoices, letters, documents and papers recording, evidencing or relating thereto; (d) money, documents of title, chattel paper, instruments and securities; (e) intangibles including all security interests, goodwill, choses in action and other contractual benefits and all trade marks, trade mark registrations and pending trade mark applications, patents and pending patent applications and copyrights and other intellectual property (collectively, the "Intellectual Property"); (f) substitutions and replacements of and increases, additions and, where applicable, accessions to the property described in Sections 1.2(a)-(e) inclusive; and (g) proceeds in any form derived directly or indirectly from any dealing with all or any part of the property described in Sections 1.2(a)-(f) inclusive or the proceeds of such proceeds. Section 1.3 Obligations Secured. (1) The security interest granted hereby (the "Security Interest") secures the payment and performance of all debts, liabilities and obligations including all charges and fees of the Canadian Collateral Agent and the C $ Revolving Lenders (as defined in the Credit Agreement) (including any assignees or participants thereof) (collectively, the "Canadian Secured Parties") due from the Obligor to the Canadian Secured Parties pursuant to or in connection with the Guarantee and each of the other Loan Documents (as defined in the Credit Agreement) to which it is a party or any other document executed and delivered by the Obligor in connection with the Credit Agreement (collectively, and together with the expenses, costs and charges set out in Section 1.3(2), the "Obligations"). (2) All expenses, costs and charges incurred by or on behalf of the Canadian Collateral Agent and the other Canadian Secured Parties in connection with this security agreement, the Security Interest or the Collateral, including all legal fees, court costs, receiver's or agent's remuneration and other expenses of taking possession of, repairing, protecting, insuring, preparing for disposition, realizing, collecting, selling, transferring, delivering or obtaining payment for the Collateral, and of taking, defending or participating in any action or proceeding in connection with any of the foregoing matters or otherwise in connection with the Canadian Collateral Agent's or any other Canadian Secured Party's interest in any Collateral, whether or not directly relating to the enforcement of this security agreement or any other Loan - 4 - Document (as defined in the Credit Agreement), shall be added to and form a part of the Obligations. Section 1.4 Attachment. (1) The Obligor acknowledges that (i) value has been given, (ii) it has rights in the Collateral (other than after-acquired Collateral), (iii) it has not agreed to postpone the time of attachment of the Security Interest, and (iv) it has received a duplicate original copy of this security agreement. (2) If the Obligor acquires Collateral consisting of chattel paper, instruments, securities or negotiable documents of title (collectively, "Negotiable Collateral"), the Obligor will, immediately upon receipt, deliver to the Canadian Collateral Agent the Negotiable Collateral, other than Negotiable Collateral that is chattel paper or instruments and has been acquired by the Obligor in the ordinary course of business, and shall, at the request of the Canadian Collateral Agent (i) cause the transfer of the Negotiable Collateral to the Canadian Collateral Agent to be registered wherever, in the opinion of the Canadian Collateral Agent, such registration may be required or advisable, (ii) duly endorse the same for transfer in blank or as the Canadian Collateral Agent may direct, and (iii) immediately deliver to the Canadian Collateral Agent any and all consents or other documents which may be necessary to effect the transfer of the Negotiable Collateral to the Canadian Collateral Agent or any third party. (3) The Obligor will promptly inform the Canadian Collateral Agent in writing of the acquisition by the Obligor of any personal property which is not adequately described in this security agreement, and the Obligor will execute and deliver, at its own expense, from time to time, amendments to this security agreement or additional security agreements as may be required by the Canadian Collateral Agent. Section 1.5 Scope of Security Interest. (1) To the extent that the creation of the Security Interest would constitute a breach or permit the acceleration or termination of any agreement, right, licence or permit of the Obligor (each, a "Restricted Asset"), the Security Interest created hereunder will constitute a trust created in favour of the Canadian Secured Parties pursuant to which the Obligor shall hold as trustee its interest in all proceeds arising under or in connection with the Restricted Asset in trust for the Canadian Collateral Agent on the following basis: (i) until the Security Interest has become enforceable, the Obligor shall be entitled to receive all such proceeds; and - 5 - (ii) whenever the Security Interest has become enforceable, all rights of the Obligor to receive such proceeds shall cease, the Obligor shall at the request of the Canadian Collateral Agent take all such actions to collect and enforce payment and other rights arising under the Restricted Asset in accordance with the instructions of the Canadian Collateral Agent and all such proceeds arising under or in connection with the Restricted Asset shall be immediately paid over to the Canadian Collateral Agent for the benefit of the Canadian Secured Parties. The Obligor shall not exercise any rights of set-off with respect to amounts payable under or in connection with any Restricted Asset and shall use its best efforts to ensure that no other party to the Restricted Asset shall exercise any rights of set-off against any amounts payable thereunder. The Obligor shall use its best efforts to obtain the consent of each other party to the Restricted Asset to the creation of a security interest in the Restricted Asset in favour of the Canadian Collateral Agent in accordance with this security agreement and shall use its best efforts to ensure that all agreements entered into on and after the date hereof expressly permit the creation of a security interest in the Restricted Asset in favour of the Canadian Collateral Agent in accordance with the terms of this security agreement. (2) Until the Security Interest shall have become enforceable, the grant of the Security Interest in the Intellectual Property shall not affect in any way the Obligor's rights to commercially exploit the Intellectual Property, defend it, enforce the Obligor's rights in it or with respect to it against third parties in any court or claim and be entitled to receive any damages with respect to any infringement of it. (3) The Security Interest shall not extend to consumer goods. (4) The Security Interest shall not extend or apply to the last day of the term of any lease or sublease or any agreement for a lease or sublease, now held or hereafter acquired by the Obligor in respect of real property, but the Obligor shall stand possessed of any such last day upon trust to assign and dispose of it as the Canadian Collateral Agent may direct. Section 1.6 Grant of Licence to Use Intellectual Property. For purposes of enabling the Canadian Collateral Agent to exercise its rights and remedies pursuant to Article 2, at such time as the Canadian Collateral Agent shall be lawfully entitled to exercise its rights and remedies and for no other purpose, the Obligor grants to the Canadian Collateral Agent an irrevocable, nonexclusive licence (exercisable without payment of royalty or other compensation to the Obligor) to use, assign or sublicense any of the Intellectual Property wherever - 6 - the same may be located, including in such licence access to (i) all media in which any of the licensed items may be recorded or stored, and (ii) all computer programs used for compilation or print-out. Section 1.7 Care and Custody of Collateral. (1) The Canadian Collateral Agent and the other Canadian Secured Parties shall have no obligation to keep Collateral in their possession identifiable. (2) The Canadian Collateral Agent may, after the Security Interest shall have become enforceable, (i) notify any person obligated on an account or on chattel paper or any obligor on an instrument to make payments to the Canadian Collateral Agent whether or not the Obligor was previously making collections on such accounts, chattel paper or instruments, and (ii) assume control of any proceeds arising from the Collateral. ARTICLE 2 ENFORCEMENT Section 2.1 Enforcement. The Security Interest shall be and become enforceable against the Obligor upon the occurrence and during the continuance of an Event of Default (under and as defined in the Credit Agreement). Section 2.2 Remedies. Whenever the Security Interest has become enforceable, the Canadian Collateral Agent may realize upon the Collateral and enforce the rights of the Canadian Collateral Agent and the other Canadian Secured Parties by: (a) entry onto any premises where Collateral consisting of tangible personal property may be located; (b) entry into possession of the Collateral by any method permitted by law; (c) sale or lease of all or any part of the Collateral; (d) collection of any proceeds arising in respect of the Collateral; (e) collection, realization or sale of, or other dealing with, the accounts; (f) appointment by instrument in writing of a receiver (which term as used in this security agreement includes a receiver and manager) or agent of all or any part of the Collateral and removal or replacement from time to time of any receiver or agent; - 7 - (g) institution of proceedings in any court of competent jurisdiction for the appointment of a receiver of all or any part of the Collateral; (h) institution of proceedings in any court of competent jurisdiction for sale or foreclosure of all or any part of the Collateral; (i) filing of proofs of claim and other documents to establish claims to the Collateral in any proceeding relating to the Obligor; and (j) any other remedy or proceeding authorized or permitted under the PPSA or otherwise by law or equity. Such remedies may be exercised from time to time separately or in combination and are in addition to, and not in substitution for, any other rights of the Canadian Collateral Agent and the other Canadian Secured Parties however created. The Canadian Collateral Agent shall not be bound to exercise any right or remedy, and the exercise of rights and remedies shall be without prejudice to the rights of the Canadian Collateral Agent and the other Canadian Secured Parties in respect of the Obligations including the right to claim for any deficiency. Section 2.3 Additional Rights. In addition to the remedies set forth in Section 2.2, the Canadian Collateral Agent may, whenever the Security Interest has become enforceable: (a) require the Obligor, at the Obligor's expense, to assemble the Collateral at a place or places designated by notice in writing and the Obligor agrees to so assemble the Collateral; (b) require the Obligor, by notice in writing, to disclose to the Canadian Collateral Agent the location or locations of the Collateral and the Obligor agrees to make such disclosure when so required; (c) repair, process, modify, complete or otherwise deal with the Collateral and prepare for the disposition of the Collateral, whether on the premises of the Obligor or otherwise; (d) carry on all or any part of the business of the Obligor and, to the exclusion of all others including the Obligor, enter upon, occupy and use all or any of the premises, buildings, and other property of or used by the Obligor for such time as the Canadian Collateral Agent sees fit, free of charge, and the Canadian Collateral Agent and the other Canadian Secured Parties shall not be liable to the Obligor for any act, omission or negligence in so doing or for any rent, charges, - 8 - depreciation or damages incurred in connection with or resulting from such action; (e) borrow for the purpose of carrying on the business of the Obligor or for the maintenance, preservation or protection of the Collateral and grant a security interest in the Collateral, whether or not in priority to the Security Interest, to secure repayment; and (f) commence, continue or defend any judicial or administrative proceedings for the purpose of protecting, seizing, collecting, realizing on or obtaining possession or payment of the Collateral, and give good and valid receipts and discharges in respect of the Collateral and compromise or give time for the payment or performance of all or any part of the accounts or any other obligation of any third party to the Obligor. Section 2.4 Receiver's Powers. (1) Any receiver appointed by the Canadian Collateral Agent shall be vested with the rights and remedies which could have been exercised by the Canadian Collateral Agent in respect of the Obligor or the Collateral and such other powers and discretions as are granted in the instrument of appointment and any supplemental instruments. The identity of the receiver, its replacement and its remuneration shall be within the sole and unfettered discretion of the Canadian Collateral Agent. (2) Any receiver appointed by the Canadian Collateral Agent shall act as agent for the Canadian Collateral Agent for the purposes of taking possession of the Collateral, but otherwise and for all other purposes (except as provided below), as agent for the Obligor. The receiver may sell, lease, or otherwise dispose of Collateral as agent for the Obligor or as agent for the Canadian Collateral Agent as the Canadian Collateral Agent may determine in its discretion. The Obligor agrees to ratify and confirm all actions of the receiver acting as agent for the Obligor, and to release and indemnify the receiver in respect of all such actions. (3) The Canadian Collateral Agent, in appointing or refraining from appointing any receiver, shall not incur liability to the receiver, the Obligor or otherwise and shall not be responsible for any misconduct or negligence of such receiver. Section 2.5 Appointment of Attorney. The Obligor irrevocably appoints the Canadian Collateral Agent (and any of its officers) as attorney of the Obligor (with full power of substitution) to do, make and execute, in the name of and on behalf of the Obligor, all such further acts, - 9 - documents, matters and things which the Canadian Collateral Agent may deem necessary or advisable to accomplish the purposes of this security agreement including the execution, endorsement and delivery of documents and any notices, receipts, assignments or verifications of the accounts. All acts of the attorney are ratified and approved, and the attorney shall not be liable for any act, failure to act or any other matter or thing, except for its own gross negligence or wilful misconduct. Section 2.6 Dealing with the Collateral. (1) The Canadian Collateral Agent and the other Canadian Secured Parties shall not be obliged to exhaust their recourse against the Obligor or any other person or against any other security they may hold in respect of the Obligations before realizing upon or otherwise dealing with the Collateral in such manner as the Canadian Collateral Agent may consider desirable. (2) The Canadian Collateral Agent and the other Canadian Secured Parties may grant extensions or other indulgences, take and give up securities, accept compositions, grant releases and discharges and otherwise deal with the Obligor and with other persons, sureties or securities as they may see fit without prejudice to the Obligations, the liability of the Obligor or the rights of the Canadian Collateral Agent and the other Canadian Secured Parties in respect of the Collateral. (3) Except as otherwise provided by law or this security agreement, the Canadian Collateral Agent and the other Canadian Secured Parties shall not be (i) liable or accountable for any failure to collect, realize on or obtain payment in respect of the Collateral, (ii) bound to institute proceedings for the purpose of collecting, enforcing, realizing on or obtaining payment of the Collateral or for the purpose of preserving any rights of any persons in respect of the Collateral, (iii) responsible for any loss occasioned by any sale or other dealing with the Collateral or by the retention of or failure to sell or otherwise deal with the Collateral, or (iv) bound to protect the Collateral from depreciating in value or becoming worthless. Section 2.7 Standards of Sale. Without prejudice to the ability of the Canadian Collateral Agent to dispose of the Collateral in any manner which is commercially reasonable, the Obligor acknowledges that: (a) Collateral may be disposed of in whole or in part; (b) Collateral may be disposed of by public auction, public tender or private contract, with or without advertising and without any other formality; - 10 - (c) any assignee of such Collateral may be the Canadian Collateral Agent, another Canadian Secured Party or a customer of any such person; (d) any sale conducted by the Canadian Collateral Agent shall be at such time and place, on such notice and in accordance with such procedures as the Canadian Collateral Agent, in its sole discretion, may deem advantageous; (e) Collateral may be disposed of in any manner and on any terms necessary to avoid violation of applicable law (including, without limitation, compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that the prospective bidders and purchasers have certain qualifications, and restrict the prospective bidders and purchasers to persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of the Collateral) or in order to obtain any required approval of the disposition (or of the resulting purchase) by any governmental or regulatory authority or official; (f) a disposition of Collateral may be on such terms and conditions as to credit or otherwise as the Canadian Collateral Agent, in its sole discretion, may deem advantageous; and (g) the Canadian Collateral Agent may establish an upset or reserve bid or price in respect of Collateral. Section 2.8 Dealings by Third Parties. (1) No person dealing with the Canadian Collateral Agent, any of the other Canadian Secured Parties or an agent or receiver shall be required to determine (i) whether the Security Interest has become enforceable, (ii) whether the powers which such person is purporting to exercise have become exercisable, (iii) whether any money remains due to the Canadian Collateral Agent or the other Canadian Secured Parties by the Obligor, (iv) the necessity or expediency of the stipulations and conditions subject to which any sale or lease is made, (v) the propriety or regularity of any sale or other dealing by the Canadian Collateral Agent or any other Canadian Secured Parties with the Collateral, or (vi) how any money paid to the Canadian Collateral Agent or other Canadian Secured Parties has been applied. (2) Any purchaser of all or any part of the Collateral from the Canadian Collateral Agent or any receiver or agent shall hold the Collateral absolutely, free from any claim or right of whatever kind, including any equity of - 11 - redemption, of the Obligor, which it specifically waives (to the fullest extent permitted by law) as against any such purchaser together with all rights of redemption, stay or appraisal which the Obligor has or may have under any rule of law or statute now existing or hereafter adopted. ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS Section 3.1 Representations and Warranties. The Obligor hereby represents and warrants to and in favour of the Canadian Collateral Agent and the other Canadian Secured Parties acknowledging and confirming that the Canadian Collateral Agent and each other Canadian Secured Parties is relying thereon without independent inquiry in connection with the acceptance of this security agreement as security for the Obligations, that: (a) no financing statement or other document creating a security interest (other than (i) any which may have been filed on behalf of the Canadian Collateral Agent, (ii) financing statements registered under the PPSA or any other applicable personal property security legislation which are expressly permitted by the Credit Agreement) covering any of the Collateral is on file in any public office; (b) the Obligor is and will be the lawful owner of all Collateral, free of all liens and claims whatsoever, other than the security interest hereunder and liens and claims expressly permitted by the Credit Agreement (the "Permitted Liens"), with full power and authority to execute this security agreement and perform the Obligor's obligations hereunder, and to subject the Collateral to the security interest hereunder; (c) all information with respect to Collateral and account debtors of the Obligor set forth in any schedule, certificate or other writing at any time heretofore or hereafter furnished by the Obligor to the Canadian Collateral Agent or any other Canadian Secured Parties and all other written information heretofore or hereafter furnished by the Obligor to the Canadian Collateral Agent or any other Canadian Secured Parties in connection with the Credit Agreement or the other Loan Documents (as defined in the Credit Agreement) will be true and correct in all material respects as of the date furnished; (d) the Obligor's chief executive office and principal place of business are as set forth on Schedule "A" hereto (and the Obligor has not maintained its chief executive office and principal place of business at any other location at any time); - 12 - (e) each other location where the Obligor maintains a place of business is set forth on Schedule "B" hereto; (f) except as disclosed on Schedule "C" hereto, the Obligor is not now known and during the five years preceding the date hereof has not previously been known by any trade name; (g) except as disclosed on Schedule "C" hereto, during the five years preceding the date hereof the Obligor has not been known by any legal name different from the one set forth on the signature page of this security agreement nor has the Obligor been the subject of any merger or other corporate reorganization; (h) Schedule "D" hereto contains a complete listing of all of the Obligor's registrations or pending applications in respect of Intellectual Property; (i) the Obligor is a corporation duly organized, validly existing and in good standing under the laws of [name of jurisdiction]; (j) the execution and delivery of this security agreement and the performance by the Obligor of its obligations hereunder are within the Obligor's corporate powers, have been duly authorized by all necessary corporate action, have received all necessary governmental approval (if any shall be required), and do not and will not contravene or conflict with any provision of law or of the certificate and articles of incorporation or by-laws of the Obligor or of any material agreement, indenture, instrument or other document, or any material judgment, order or decree, which is binding upon the Obligor; (k) the Obligor is not prohibited, restricted or limited under the terms of any agreement, lease or indenture with any of its customers from assigning or granting a security interest in such agreement, lease or indenture or any account receivable thereunder and the Obligor shall ensure that no agreement, lease or indenture now or hereafter entered into with a customer contains any such prohibition, restriction or limitation; (l) this security agreement is a legal, valid and binding obligation of the Obligor, enforceable in accordance with its terms, except that the enforceability of this security agreement may be limited by bankruptcy, winding-up, moratorium, insolvency, reorganization, arrangement, fraudulent preference and conveyance, assignment and preference and other similar laws of general application now or - 13 - hereafter in effect relating to creditors' rights generally and by general principles of equity and the obligation to act and exercise discretion in a reasonable manner, and by the fact that the availability of any specific remedy is in the discretion of the court (regardless of whether enforcement is sought in a proceeding in equity or at law); and (m) the Obligor is in compliance with the requirements of all applicable laws, rules, regulations and orders of every governmental authority, the non-compliance with which would materially adversely affect the business, properties, assets, operations or condition (financial or otherwise) of the Obligor and its Subsidiaries (as such term is defined in the Credit Agreement) taken as a whole or the value of the Collateral or the worth of the Collateral as collateral security. Section 3.2 Covenants. The Obligor covenants and agrees that until the Security Interest has been discharged in accordance with Section 4.2 hereof, the Obligor will: (a) from time to time deliver to the Canadian Collateral Agent such schedules, certificates and reports respecting all or any of the Collateral at the time subject to the Security Interest hereunder, and the items or amounts received by the Obligor in full or partial payment of any of the Collateral, as the Canadian Collateral Agent may reasonably request. Any such schedule, certificate or report shall be executed by a duly authorized officer of the Obligor and shall be in such form and detail as the Canadian Collateral Agent may specify. The Obligor shall immediately notify the Canadian Collateral Agent of the occurrence of any event causing any loss or depreciation in the value of its inventory or other goods which is material to the Obligor and its Subsidiaries (as such term is defined in the Credit Agreement) taken as a whole, and such notice shall specify the amount of such loss or depreciation; (b) upon request of the Canadian Collateral Agent, execute such financing statements and other documents (and pay the cost of filing or recording the same in all public offices reasonably deemed appropriate by the Canadian Collateral Agent) and do such other acts and things (including, without limitation, delivery to the Canadian Collateral Agent of any instruments or securities which constitute Collateral), all as the Canadian Collateral Agent may from time to time reasonably request, to establish and maintain a valid security interest in the Collateral (free of all other liens, claims and rights of third parties whatsoever, other than Permitted Liens) to secure the payment of the Obligations; - 14 - (c) keep all its inventory at, and will not maintain any place of business at any location other than, its addresses shown on Schedules I and II hereto or at such other addresses of which the Obligor shall have given the Canadian Collateral Agent not less than 10 days' prior written notice; (d) keep its records concerning the Collateral in a location listed in Schedule "B" in the province where the applicable Collateral is located, and keep its records concerning the intangible Collateral in such a manner as will enable the Canadian Collateral Agent or its designees to determine at any time the status of the intangible Collateral; (e) furnish the Canadian Collateral Agent such information concerning the Obligor, the Collateral and the account debtors of the Obligor as the Canadian Collateral Agent may from time to time reasonably request; (f) permit the Canadian Collateral Agent and its designees, from time to time, on reasonable notice and at reasonable times and intervals during normal business hours (or at any time without notice whenever the Security Interest has become enforceable) to inspect the Obligor's inventory and other goods, and to inspect, audit and make copies of and extracts from all records and all other papers in the possession of the Obligor pertaining to the Collateral and the account debtors of the Obligor, and will, upon request of the Canadian Collateral Agent whenever the Security Interest has become enforceable, deliver to the Canadian Collateral Agent all of such records and papers; (g) upon request of the Canadian Collateral Agent, stamp on its records concerning the Collateral and add on all chattel paper constituting a portion of the Collateral, a notation, in form satisfactory to the Canadian Collateral Agent, of the security interest of the Canadian Collateral Agent hereunder; (h) except for the sale or lease of inventory in the ordinary course of its business and sales of equipment which is no longer useful in its business or which is being replaced by similar equipment or as otherwise permitted by the Credit Agreement, not sell, lease, assign or create or permit to exist any lien on or security interest in any Collateral other than Permitted Liens and liens and security interests in favour of the Canadian Collateral Agent for the benefit of the Canadian Collateral Agent and the other Canadian Secured Parties; - 15 - (i) at all times keep all its inventory and other goods insured under policies maintained with reputable, financially sound insurance companies against loss, damage, theft and other risks to such extent as is customarily maintained by companies similarly situated, and cause all such policies to provide that loss thereunder shall be payable to the Canadian Collateral Agent as its interest may appear (it being understood that (A) so long as the Security Interest has not become enforceable, the Canadian Collateral Agent shall deliver any proceeds of such insurance which may be received by it to the Obligor and (B) whenever the Security Interest has become enforceable, the Canadian Collateral Agent may apply any proceeds of such insurance which may be received by it toward payment of the Obligations, whether or not due, in such order of application as the Canadian Collateral Agent may determine) and such policies or certificates thereof shall, if the Canadian Collateral Agent, so requests, be deposited with or furnished to the Canadian Collateral Agent; (j) take such actions as are reasonably necessary to keep its inventory in good repair and condition, ordinary wear and tear excepted; (k) take such actions as are reasonably necessary to keep its equipment (other than obsolete equipment) in good repair and condition and in good working or running order, ordinary wear and tear excepted; (l) promptly pay when due all license fees, registration fees, taxes, assessments and other charges which may be levied upon or assessed against the ownership, operation, possession, maintenance or use of its equipment and other goods (as applicable); provided, however, that the Obligor shall not be required to pay any such fee, tax, assessment or other charge if the validity thereof is being contested by the Obligor in good faith by appropriate proceedings, so long as forfeiture of any substantial part of its equipment or other goods will not result from the failure of the Obligor to pay any such fee, tax, assessment or other charge during the period of such contest; (m) upon request of the Canadian Collateral Agent, (i) cause to be noted on the applicable certificate, in the event any of its equipment is covered by a certificate of title, the security interest of the Canadian Collateral Agent for the benefit of the Canadian Collateral Agent and the other Canadian Secured Parties in the equipment covered thereby and (ii) deliver all such certificates to the Canadian Collateral Agent or its designees; - 16 - (n) take all steps reasonably necessary to protect, preserve and maintain all of its rights in the Collateral; and (o) ensure that all of the Collateral remains at all times within one of the jurisdictions specified in Schedule "B" except equipment with an aggregate value of not more than $200,000 that is: (i) equipment leased in the ordinary course of business to a customer where the aggregate value of all equipment leased to such customer does not exceed $150,000 or (ii) equipment leased in the ordinary course of business to a customer that has been removed by such customer from one of the jurisdictions specified in Schedule "B" in breach of the lease contract between the customer and the Obligor. ARTICLE 4 GENERAL Section 4.1 Notices. Any notices, directions or other communications provided for in this security agreement shall be in writing and given in accordance with the provisions of the Guarantee. Section 4.2 Discharge. The Security Interest shall be discharged upon, but only upon, (i) full payment and performance of the Obligations, and (ii) the Canadian Collateral Agent and the other Canadian Secured Parties having no obligations under the Loan Documents. Upon discharge of the Security Interest and at the request and expense of the Obligor, the Canadian Collateral Agent shall execute and deliver to the Obligor such releases and discharges as the Obligor may reasonably require. Section 4.3 No Merger. This security agreement shall not operate by way of merger of any of the Obligations and no judgment recovered by the Canadian Collateral Agent or any of the other Canadian Secured Parties shall operate by way of merger of, or in any way affect, the Security Interest, which is in addition to, and not in substitution for, any other security now or hereafter held by the Canadian Collateral Agent and the other Canadian Secured Parties in respect of the Obligations. Section 4.4 Further Assurances. The Obligor shall from time to time, whether before or after the Security Interest shall have become enforceable, do all acts and things and execute and deliver all transfers, assignments and instruments as the Canadian Collateral Agent may reasonably require for (i) protecting the Collateral, (ii) perfecting the Security - 17 - Interest, and (iii) exercising all powers, authorities and discretions conferred upon the Canadian Collateral Agent. The Obligor shall, from time to time after the Security Interest has become enforceable, do all acts and things and execute and deliver all transfers, assignments and instruments as the Canadian Collateral Agent may require for facilitating the sale or other disposition of the Collateral in connection with its realization. Section 4.5 Supplemental Security. This security agreement is in addition and without prejudice to and supplemental to all other security now held or which may hereafter be held by the Canadian Collateral Agent or the other Canadian Secured Parties. Section 4.6 Successors and Assigns. This security agreement shall be binding upon the Obligor, its successors and assigns, and shall enure to the benefit of the Canadian Collateral Agent and its successors and assigns. All rights of the Canadian Collateral Agent shall be assignable and in any action brought by an assignee to enforce any such right, the Obligor shall not assert against the assignee any claim or defence which the Obligor now has or hereafter may have against the Canadian Collateral Agent or any of the other Canadian Secured Parties. Section 4.7 Gender and Number. Any reference in this security agreement to gender shall include all genders and words importing the singular number only shall include the plural and vice versa. Section 4.8 Headings, etc. The division of this security agreement into Articles and Sections and the insertion of headings are for convenient reference only and are not to affect its interpretation. Section 4.9 No Liability. Neither the Canadian Collateral Agent nor any other Canadian Secured Party shall have any obligation or liability regarding the Collateral or any portion thereof by reason of, or arising out of, this security agreement. Section 4.10 Amendments. No amendment to, or waiver of, any provision of this security agreement shall be effective unless in writing and signed by the Canadian Collateral Agent (and, in the case of an amendment, signed by the Obligor). - 18 - Section 4.11 Severability. If any provision of this security agreement is deemed by any court of competent jurisdiction to be invalid or void, the remaining provisions shall remain in full force and effect. Section 4.12 Governing Law. This security agreement shall be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. - 19 - IN WITNESS WHEREOF the Obligor has caused this security agreement to be executed by its duly authorized officer as of the date first above written. [CANADIAN SUBSIDIARY] By: -------------------------- Authorized Signing Officer SCHEDULE "A" CHIEF EXECUTIVE OFFICE AND PRINCIPAL PLACE OF BUSINESS SCHEDULE "B" PLACES OF BUSINESS SCHEDULE "C" TRADENAMES AND LEGAL NAMES SCHEDULE "D" INTELLECTUAL PROPERTY EXHIBIT "G" FORM OF CANADIAN SECURITIES PLEDGE AGREEMENT Securities pledge agreement dated as of [<063>] made by [Name of Pledgor] (the "Pledgor"), to and in favour of the Canadian Collateral Agent (as hereinafter defined). WHEREAS: A. The Chase Manhattan Bank of Canada and such other financial institutions (collectively, the "Lenders") as may from time to time be parties to the Credit Agreement (as hereinafter defined) have made certain credit facilities available to United Rentals of Canada Inc. (the "Borrower") upon the terms and conditions contained in an amended and restated credit agreement dated as of April ____, 2001, among United Rentals (North America), Inc., United Rentals, Inc., the Borrower, The Chase Manhattan Bank of Canada, as Canadian administrative agent (in such capacity, the "Canadian Administrative Agent"), The Chase Manhattan Bank, as U.S. administrative agent, and the Lenders (as amended, modified, extended, renewed, replaced, restated, supplemented or refinanced from time to time and including any agreement extending the maturity of, or refinancing or restructuring (including the inclusion of additional borrowers thereunder or any increase in the amount borrowed) all or any portion of, the indebtedness under such agreement or any successor agreements, whether or not with the same agents, co-agents or lenders, the "Credit Agreement"); B. Pursuant to the Credit Agreement, Bank of America Canada has been appointed as Canadian Collateral Agent (in such capacity, together with any successors in such capacity, the "Canadian Collateral Agent") to act on behalf of the Canadian Secured Parties (as defined herein) with respect to this agreement and certain other Canadian Security Documents (as defined in the Credit Agreement); C. The Pledgor has, pursuant to a guarantee dated as of the date hereof (the "Guarantee") in favour of the Canadian Collateral Agent and the other Canadian Secured Parties (as defined herein), guaranteed the payment and performance of all present and future debts, liabilities and obligations, direct or indirect, absolute or contingent, direct or indirect, absolute or contingent, of the Borrower to the Canadian Collateral Agent and the other Canadian Secured Parties arising under, in connection with or pursuant to the Credit Agreement and each of the other Loan Documents (as defined in the Credit Agreement) to which it is a party or any other document executed and delivered by the Borrower in connection with the Credit Agreement; and - 2 - D. The Pledgor has agreed to execute and deliver this securities pledge agreement to and in favour of the Canadian Collateral Agent and the other Canadian Secured Parties (as defined herein) as security for the payment and performance of all debts, liabilities and obligations including all charges and fees of the Canadian Collateral Agent and the other Canadian Secured Parties (as defined herein) due from the Pledgor to the Canadian Collateral Agent and the other Canadian Secured Parties (as defined herein) pursuant to or in connection with the Guarantee and each of the other Loan Documents (as defined in the Credit Agreement) to which it is a party. NOW THEREFORE in consideration of the foregoing, the sum of $10.00 now paid by the Canadian Collateral Agent and the other Canadian Secured Parties (as defined herein) to the Pledgor and other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the Pledgor, the Pledgor agrees as follows: ARTICLE 1 SECURITY Section 1.1 Terms Incorporated by Reference. Terms defined in the Personal Property Security Act (Ontario) (as amended from time to time, the "PPSA") and used in this securities pledge agreement shall have the same meaning in this securities pledge agreement. Section 1.2 Grant of Security. (1) The Pledgor assigns, mortgages, charges, hypothecates and pledges to the Canadian Collateral Agent, for its own benefit as a C $ Revolving Lender (as defined in the Credit Agreement) and as agent and in trust for the rateable benefit of itself and the other Canadian Secured Parties (as defined herein) and grants to the Canadian Collateral Agent, for its own benefit as a C $ Revolving Lender (as defined in the Credit Agreement) and as agent and in trust for the rateable benefit of itself and the other Canadian Secured Parties (as defined herein), a security interest in, all securities now owned or hereafter acquired by the Pledgor and deposits (and, in the case of any securities hereafter acquired by the Pledgor, agrees to deposit immediately upon acquiring such securities) with the Canadian Collateral Agent any and all security certificates evidencing such securities accompanied in each case by a duly executed stock power of attorney (collectively, together with the dividends, moneys, rights and claims hereinafter referred to and the securities referred to in Section 1.2(2), the "Securities"), any cash dividends or other moneys now or hereafter received or declared in respect of the Securities and all other rights and claims of the Pledgor in respect of the Securities. - 3 - (2) The Securities shall include any substitutions, additions or proceeds arising out of any consolidation, subdivision, reclassification, stock dividend or similar increase or decrease in, or alteration to, the capital of each issuer of the Securities (each, an "Issuer"). Section 1.3 Obligations Secured. (1) The assignments, mortgages, charges, hypothecations, pledges and security interests granted hereby (the "Security Interest") secure the payment and performance of all debts, liabilities and obligations including all charges and fees of the Canadian Collateral Agent and the C $ Revolving Lenders (as defined in the Credit Agreement) (including any assignees or participants thereof) (collectively, the "Canadian Secured Parties") due from the Pledgor to the Canadian Collateral Agent and the other Canadian Secured Parties pursuant to or in connection with the Guarantee and each of the other Loan Documents (as defined in the Credit Agreement) to which it is a party (collectively, and together with the expenses, costs and charges set out in Section 1.3(2), the "Obligations"). (2) All expenses, costs and charges incurred by or on behalf of the Canadian Collateral Agent and the other Canadian Secured Parties in connection with this securities pledge agreement, the Security Interest or the Securities including all reasonable legal fees, court costs, receiver's or agent's remuneration and other expenses of taking possession of, repairing, protecting, insuring, preparing for disposition, realizing, collecting, selling, transferring, delivering or obtaining payment for the Securities, and of taking, defending or participating in any action or proceeding in connection with any of the foregoing matters or otherwise in connection with the Canadian Collateral Agent and the other Canadian Secured Parties' interest in any Securities, whether or not directly relating to the enforcement of this securities pledge agreement or any other Loan Document (as defined in the Credit Agreement), shall be added to and form a part of the Obligations. Section 1.4 Attachment. (1) The Pledgor acknowledges that (i) value has been given, (ii) it has rights in the Securities, (iii) it has not agreed to postpone the time of attachment of the Security Interest, and (iv) it has received a duplicate original copy of this securities pledge agreement. (2) If the Securities are now or at any time hereafter become evidenced, in whole or in part, by uncertificated securities registered or recorded in records maintained by or on behalf of any Issuer in the name of a clearing agency, the Pledgor shall, at the request of the Canadian Collateral Agent, cause the Security Interest to be entered in the records of such clearing agency. - 4 - (3) At the election of the Canadian Collateral Agent and immediately upon written notice being provided by the Canadian Collateral Agent to the Pledgor, the Pledgor shall cause the Securities to be transferred into and registered in the name of the Canadian Collateral Agent or as it may direct and the Pledgor covenants that, at the time of any such transfer, it will provide all required consents and approvals. Section 1.5 Care and Custody of Securities. The Canadian Collateral Agent need not see to the collection of dividends on, or exercise any option or right in connection with, the Securities and need not protect or preserve them from depreciating in value or becoming worthless and is released from all responsibility for any loss of value. The Canadian Collateral Agent shall be bound to exercise in the physical keeping of the Securities only the same degree of care as it would exercise with respect to its own securities kept at the same place. Section 1.6 Negative Covenant of the Pledgor. The Pledgor shall not, without the prior written consent of the Canadian Collateral Agent, sell, exchange, release or abandon or otherwise dispose of, absolutely or by way of security, any of its right, title or interest in and to the Securities. Section 1.7 Representation. The Pledgor represents and warrants that (i) it is the registered, legal and beneficial owner of the Securities, (ii) the Securities are free and clear of all liens, mortgages, charges and security interests whatsoever other than those created in favour of the Canadian Collateral Agent, (iii) the Securities have been validly issued and are fully paid and non-assessable, (iv) the Securities represent 100% of the issued and outstanding shares in the capital of each Issuer, and (v) the Securities described in Schedule "A" are all securities owned by the Pledgor as of the date hereof. Section 1.8 Rights of the Pledgor. (1) Until the Security Interest has become enforceable, the Pledgor shall be entitled to vote the Securities and to receive all cash dividends. Whenever the Security Interest has become enforceable, all rights of the Pledgor to vote or to receive dividends shall cease and all such rights shall become vested solely and absolutely in the Canadian Collateral Agent. (2) Any dividends received by the Pledgor contrary to Section 1.8(1) or any other moneys or property which may be received by the Pledgor at any time for, or in respect of, the Securities shall be received as trustee for the Canadian - 5 - Collateral Agent and the other Canadian Secured Parties and shall be immediately paid and transferred over to the Canadian Collateral Agent. ARTICLE 2 ENFORCEMENT Section 2.1 Enforcement. The Security Interest shall be and become enforceable against the Pledgor upon the occurrence and during the continuance of an Event of Default (under and as defined in the Credit Agreement). Section 2.2 Remedies. Whenever the Security Interest has become enforceable, the Canadian Collateral Agent may, at any time in its sole discretion, (i) realize upon or otherwise dispose of or contract to dispose of the Securities by sale, transfer or delivery, or (ii) exercise and enforce all rights and remedies of a holder of the Securities as if the Canadian Collateral Agent were their absolute owner (including, if necessary, causing the Securities to be registered in the name of the Canadian Collateral Agent or its nominee if not already done pursuant to Section 1.4(3)), all without demand of performance or other demand, advertisement or notice of any kind to or upon the Pledgor (except as may be required by law). Any remedy may be exercised separately or in combination and shall be in addition to, and not in substitution for, any other rights the Canadian Collateral Agent and the other Canadian Secured Parties may have, however created. The Canadian Collateral Agent shall not be bound to exercise any right or remedy, and the exercise of rights and remedies shall be without prejudice to the rights of the Canadian Collateral Agent and the other Canadian Secured Parties in respect of the Obligations including the right to claim for any deficiency. Section 2.3 Appointment of Attorney. The Pledgor irrevocably appoints the Canadian Collateral Agent (and any of its officers) as attorney of the Pledgor (with full power of substitution) to do, make and execute in the name of and on behalf of the Pledgor all such further acts, documents, matters and things which the Canadian Collateral Agent may deem necessary or advisable to accomplish the purposes of this securities pledge agreement including the execution, endorsement and delivery and transfer of the Securities to the Canadian Collateral Agent or its nominees or transferees. Except as herein provided, the Canadian Collateral Agent or its nominees and transferees are empowered to exercise all rights and powers and to perform all acts of ownership with respect to the Securities to the same extent as the Pledgor might do. The powers of attorney herein granted is an addition to, and not in substitution for any stock power of attorney delivered by the Pledgor and such power of attorney may - 6 - be relied upon by the Canadian Collateral Agent severally or in combination. All acts of any such attorney are ratified and approved, and the attorney shall not be liable for any act, failure to act or any other matter or thing in connection therewith, except for its own gross negligence or wilful misconduct. Section 2.4 Dealing with the Securities. (1) The Canadian Collateral Agent and the other Canadian Secured Parties shall not be obliged to exhaust their recourse against the Pledgor or any other person or against any other security they may hold in respect of the Obligations before realizing upon or otherwise dealing with the Securities in such manner as the Canadian Collateral Agent may consider desirable. (2) The Canadian Collateral Agent and the other Canadian Secured Parties may grant extensions or other indulgences, take and give up securities, accept compositions, grant releases and discharges and otherwise deal with the Pledgor and with other persons, sureties or securities as they may see fit without prejudice to the Obligations, the liability of the Pledgor or the rights of the Canadian Collateral Agent and the other Canadian Secured Parties in respect of the Securities. (3) Except as otherwise provided by law or this securities pledge agreement, the Canadian Collateral Agent and the other Canadian Secured Parties shall not be (i) liable or accountable for any failure to collect, realize or obtain payment in respect of the Securities, (ii) bound to institute proceedings for the purpose of collecting, enforcing, realizing or obtaining payment of the Securities or for the purpose of preserving any rights of any persons, (iii) responsible for any loss occasioned by any sale or other dealing with the Securities or by the retention of or failure to sell or otherwise deal with the Securities, or (iv) bound to protect the Securities from depreciating in value or becoming worthless. Section 2.5 Standards of Sale. Without prejudice to the ability of the Canadian Collateral Agent to dispose of the Securities in any manner which is commercially reasonable, the Pledgor acknowledges that: (a) Securities may be disposed of in whole or in part; (b) Securities may be disposed of by public auction, public tender or private contract, with or without advertising and without any other formality; (c) any assignee of such Securities may be the Canadian Collateral Agent, another Canadian Secured Party or a customer of any such person; - 7 - (d) any sale conducted by the Canadian Collateral Agent shall be at such time and place, on such notice and in accordance with such procedures as the Canadian Collateral Agent, in its sole discretion, may deem advantageous; (e) Securities may be disposed of in any manner and on any terms necessary to avoid violation of applicable law (including, without limitation, compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that the prospective bidders and purchasers have certain qualifications, and restrict the prospective bidders and purchasers to persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of the Securities) or in order to obtain any required approval of the disposition (or of the resulting purchase) by any governmental or regulatory authority or official; (f) a disposition of Securities may be on such terms and conditions as to credit or otherwise as the Canadian Collateral Agent, in its sole discretion, may deem advantageous; and (g) the Canadian Collateral Agent may establish an upset or reserve bid or price in respect of the Securities. Section 2.6 Dealings by Third Parties. (1) No person dealing with the Canadian Collateral Agent, any of the other Canadian Secured Parties or an agent or receiver shall be required to determine (i) whether the Security Interest has become enforceable, (ii) whether the powers which such person is purporting to exercise have become exercisable, (iii) whether any money remains due to the Canadian Collateral Agent or the other Canadian Secured Parties by the Pledgor, (iv) the necessity or expediency of the stipulations and conditions subject to which any sale or lease shall be made, (v) the propriety or regularity of any sale or other dealing by the Canadian Collateral Agent or any other Canadian Secured Parties with the Securities, or (vi) how any money paid to the Canadian Collateral Agent or the other Canadian Secured Parties has been applied. (2) Any purchaser of Securities from the Canadian Collateral Agent or the other Canadian Secured Parties shall hold the Securities absolutely, free from any claim or right of whatever kind, including any equity of redemption, of the Pledgor, which it specifically waives (to the fullest extent permitted by law) as against any such purchaser together with all rights of redemption, stay or - 8 - appraisal which the Pledgor has or may have under any rule of law or statute now existing or hereafter adopted. ARTICLE 3 GENERAL Section 3.1 Notices. Any notices, directions and other communications provided for in this securities pledge agreement shall be in writing and given in accordance with the provisions of the Guarantee. Section 3.2 Discharge. The Security Interest shall be discharged upon, but only upon, (i) full payment and performance of the Obligations, and (ii) the Canadian Collateral Agent and the other Canadian Secured Parties having no obligation under the Loan Documents (as defined in the Credit Agreement). Upon discharge of the Security Interest and at the request and expense of the Pledgor, the Canadian Collateral Agent shall execute and deliver to the Pledgor such releases and discharges as the Pledgor may reasonably require. Section 3.3 No Merger. This securities pledge agreement shall not operate by way of merger of any of the Obligations and no judgment recovered by the Canadian Collateral Agent or any of the other Canadian Secured Parties shall operate by way of merger of, or in any way affect, the Security Interest, which is in addition to, and not in substitution for, any other security held by the Canadian Collateral Agent and the other Canadian Secured Parties in respect of the Obligations. Section 3.4 Further Assurances. The Pledgor shall from time to time, whether before or after the Security Interest shall have become enforceable, do all such acts and things and execute and deliver all such transfers, assignments and instruments as the Canadian Collateral Agent may reasonably require for (i) protecting the Securities, (ii) perfecting the Security Interest, and (iii) exercising all powers, authorities and discretions hereby conferred upon the Canadian Collateral Agent. The Pledgor shall, from time to time after the Security Interest has become enforceable, do all such acts and things and execute and deliver all such transfers, assignments and instruments as the Canadian Collateral Agent may require for facilitating the sale or other disposition of the Securities in connection with their realization. - 9 - Section 3.5 Supplemental Security. This securities pledge agreement is in addition and without prejudice to and supplemental to all other security now held or which may hereafter be held by the Canadian Collateral Agent and the other Canadian Secured Parties. Section 3.6 Successors and Assigns. This securities pledge agreement shall be binding upon the Pledgor, its successors and assigns, and shall enure to the benefit of the Canadian Collateral Agent and its successors and assigns. All rights of the Canadian Collateral Agent shall be assignable and in any action brought by an assignee to enforce any such right, the Pledgor shall not assert against the assignee any claim or defence which the Pledgor now has or hereafter may have against the Canadian Collateral Agent or any of the other Canadian Secured Parties. Section 3.7 Gender and Number. Any reference in this securities pledge agreement to gender shall include all genders and words importing the singular number only shall include the plural and vice versa. Section 3.8 Headings, etc. The division of this securities pledge agreement into Articles and Sections and the insertion of headings are for convenient reference only and are not to affect its interpretation. Section 3.9 No Liability. Neither the Canadian Collateral Agent nor any other Canadian Secured Party shall have any obligation or liability regarding the Securities or any portion thereof by reason of, or arising out of, this securities pledge agreement. Section 3.10 Section 3.9. Amendments. No amendment to, or waiver of, any provision of this securities pledge agreement shall be effective unless in writing and signed by the Canadian Collateral Agent (and, in the case of an amendment, signed by the Pledgor). Section 3.11 Severability. If any provision of this securities pledge agreement shall be deemed by any court of competent jurisdiction to be invalid or void, the remaining provisions shall remain in full force and effect. - 10 - Section 3.12 Governing Law. This securities pledge agreement shall be governed by and interpreted and enforced in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. - 11 - IN WITNESS WHEREOF the Pledgor has caused this securities pledge agreement to be executed by its duly authorized officer as of the date first above written. [CANADIAN PLEDGOR] Per: __________________________ Authorized Signing Officer SCHEDULE "A" SECURITIES Issuer Class of Securities Number of Certificate Securities Number - -------------------------------------------------------------------------------- EXHIBIT I PERFECTION CERTIFICATE Reference is made to the Credit Agreement dated as of April ___ , 2001 (the "Credit Agreement") among United Rentals (North America), Inc. (the "Borrower"), United Rentals, Inc. ("Holdings"), the lenders party thereto and The Chase Manhattan Bank, as Administrative Agent. Capitalized terms used but not defined herein have the meanings assigned in the Credit Agreement or the Security Agreement referred to therein, as applicable. The undersigned, a Financial Officer and a Legal Officer, respectively, of the Borrower, hereby certify to the Collateral Agent and each other Secured Party as follows: 1. Names and FEIN numbers. The exact name of each Grantor, as such name appears ---------------------- in its respective certificate of incorporation or partnership agreement, and such Grantor's Federal Taxpayer Identification Number, are as set forth on Schedule 1. - ---------- 2. Current Locations. (a) The chief executive office of each Grantor is located ----------------- at Five Greenwich Office Park, Greenwich, CT 06830. (b) Set forth opposite the name of each Grantor on Schedule 2 are all the ---------- places of business of such Grantor not identified in paragraph (a) above: ------------- 3. Unusual Transactions. All Accounts Receivable have been originated by the -------------------- Grantors and all Inventory has been acquired by the Grantors in the ordinary course of business. 4. File Search Reports. File search reports have been obtained from each Uniform ------------------- Commercial Code filing office identified with respect to such Grantor in Section 2 hereof (except for those locations listed on Schedule 3), and such - --------- ---------- search reports reflect no liens against any of the Collateral other than those permitted under the Credit Agreement and those listed on Schedule 4. ---------- 5. UCC Filings. Duly signed financing statements on Form UCC- 1 in substantially ----------- the form of Schedule 5 hereto have been filed or prepared for filing in the ---------- Uniform Commercial Code filing office in each jurisdiction identified with respect to such Grantor in Section 2. --------- 6. Schedule of Filings. Attached hereto as Schedule 6 is a schedule setting ------------------- ---------- forth, with respect to the filings described in Section 5 above, each filing and --------- the filing office in which such filing has been or is to be made. 7. Stock Ownership and other Equity Interests. Attached hereto as Schedule 7 is ------------------------------------------ ---------- a true and correct list of all the issued and outstanding stock, partnership interests, limited liability company membership interests or other equity interests of Holdings and each Subsidiary and the record and beneficial owners of such stock, partnership interests, membership interests or other equity interests. Also set forth on Schedule 7 is each equity investment of Holdings, ---------- the Borrower or any Subsidiary that represents 50% or less of the equity of the entity in which such investment was made. 8. Debt Instruments. Attached hereto as Schedule 8 is a true and correct list of ---------------- ---------- all promissory notes and other evidence of indebtedness held by Holdings, the Borrower and each Subsidiary that are required to be pledged under the Pledge Agreement, including all intercompany notes between Holdings and each Subsidiary of Holdings and each Subsidiary of Holdings and each other such Subsidiary. 9. Advances. Attached hereto as Schedule 9 is (a) a true and correct list of all -------- ---------- advances made by Holdings to any Subsidiary of Holdings or made by any Subsidiary of Holdings to Holdings or to any other Subsidiary of Holdings (other than those identified on Schedule 8), which advances will be on and after the ---------- date hereof evidenced by one or more intercompany notes pledged to the Collateral Agent under the Pledge Agreement and (b) a true and correct list of all unpaid intercompany transfers of goods sold and delivered by or to Holdings or any Subsidiary of Holdings. 10. Intellectual Property. Attached hereto as Schedule 11(A) in proper form for --------------------- filing with the United States Patent and Trademark Office is a schedule setting forth all of each Grantor's Patents, Patent Licenses, Trademarks and Trademark Licenses, including the name of the registered owner, the registration number and the expiration date of each Patent, Patent License, Trademark and Trademark License owned by any Grantor. Attached hereto as Schedule 11(B) in proper form for filing with the United States Copyright Office is a schedule setting forth all of each Grantor's Copyrights and Copyright Licenses, including the name of the registered owner, the registration number and the expiration date of each Copyright or Copyright License owned by any Grantor. 2 IN WITNESS WHEREOF, the undersigned have duly executed this certificate on this [ ] day of April 2001. UNITED RENTALS (NORTH AMERICA), INC. By: Name: ------------------ Title: By: ------------------------ Name: Title: [PERFECTION CERTIFICATE] EXHIBIT J --------- SUBORDINATION PROVISIONS APPLICABLE TO SELLER SUBORDINATED DEBT 1. The indebtedness evidenced by the subordinated notes* shall at all times be wholly subordinate and junior in right or payment to any and all Superior Indebtedness (as defined below) in the manner and with the force and effect hereafter set forth: a. In the event of any liquidation, dissolution or winding up of the Borrowers, or of any execution sale, receivership, insolvency, bankruptcy, reorganization or other similar proceeding relative to the Borrowers or its property, all principal, interest, fees, reimbursement obligations and other amounts owing on all Superior Indebtedness shall first be paid in full before any payment is made upon the indebtedness evidenced by the subordinated notes; and in any such event any payment or distribution of any kind or character, whether in cash, property or securities (other than in securities or other evidences of indebtedness, the payment of which is subordinated to the same extent as the indebtedness evidenced hereby to the payment of all Superior Indebtedness which may at the time be outstanding) which shall be made upon or in respect of the subordinated notes shall be paid over to the holders of such Superior Indebtedness, pro rata, for application in payment thereof until such Superior Indebtedness shall have been paid or satisfied in full. b. (a) During the continuance of any default in any agreement pursuant to which any Superior Indebtedness is issued which arises from the failure to pay when due (whether by acceleration or otherwise) any principal of, premium, if any, interest on, fees or other amounts in respect of such Superior Indebtedness (a "Superior Payment Default"), no payment of ------------------------ principal, premium or interest shall be made on the subordinated notes if either (i) notice in writing of such default has been given to the Borrowers by any holder or holders of any Superior Indebtedness or (ii) judicial proceedings shall be pending in respect of such default. (b) During the continuance of any event of default or unmatured event of default in any agreement pursuant to which any Superior Indebtedness is issued other than a Superior Payment Default (a "Superior Non-Payment -------------------- Default") as to which the Borrowers have received notice in writing from ------- any holder or holders of Superior Indebtedness, no payment of principal, premium or interest shall be made on the subordinated notes for a period (each, a "Payment Blockage Period") commencing on the date of receipt by ----------------------- the Borrowers of such notice and terminating on the earliest to occur of the following dates: (i) the date of acceleration of the Superior Indebtedness, (ii) 180 days after the Borrowers' - -------- * Or debentures or other designation as may be appropriate. receipt of such written notice, (iii) the date such Superior Non-Payment Default shall have been cured or waived, or shall have ceased to exist, (iv) the date the Superior Indebtedness shall have been discharged or paid in full in cash, or (v) the date such Payment Blockage Period shall have been terminated by written notice to the Borrowers from the holder or holders of Superior Indebtedness initiating such Payment Blockage Period, after which, in the case of clauses (ii), (iii), (iv) and (v), the ------------ ----- ---- --- Borrowers shall resume making payments in respect of the subordinated notes, unless clause (a) above is then applicable. ---------- c. If the subordinated notes are declared or become due and payable prior to stated maturity because of the occurrence of any default thereunder or under the agreement or instrument under which they are issued or otherwise than at the option of the Borrowers, under circumstances when clause (a) ---------- above shall not be applicable, the holders of the subordinated notes shall not be entitled to payments until sixty (60) days after such event and then only if such payment is permitted under clauses (a) and (b) above. ----------- --- 2. The holder of each subordinated note undertakes and agrees for the benefit of each holder of Superior Indebtedness to execute, verify, deliver and file any proof of claim, consent, assignment or other instrument which any holder of Superior Indebtedness may at any time require in order to prove and realize upon any right or claim pertaining to the subordinated notes and to effectuate the full benefit of the subordination contained herein; and upon failure of the holder of any subordinated note so to do any such holder of Superior Indebtedness shall be deemed to be irrevocably appointed the agent and attorney- in-fact of the holder of such note to execute, verify, deliver and file any such proof of claim, consent, assignment or other instrument. 3. No right of any holder of any Superior Indebtedness to enforce subordination as herein provided shall at any time or in any way be affected or impaired by any failure to act on the part of the Borrowers or any holder of Superior Indebtedness, or by any non-compliance by the Borrowers with any term, provision or covenant of the subordinated notes or the agreement under which they are issued, regardless of any knowledge thereof that any such holder of Superior Indebtedness may have or be otherwise charged with. 4. The Borrowers agree, for the benefit of the holders of Superior Indebtedness, that in the event that any subordinated note is declared due and payable before its expressed maturity because of the occurrence of a default thereunder or under the agreement under which it was issued, the Borrowers will give prompt notice in writing of such happening to the holders of Superior Indebtedness. 5. "Superior Indebtedness" means (a) all obligations of the Borrowers under or --------------------- in connection with the Amended and Restated Credit Agreement, dated as of April 20, 2001, among United Rentals, Inc., United Rentals (North America), Inc., the Canadian borrower party thereto, various financial institutions, and The Chase Manhattan Bank, as 2 agent (as amended, restated, amended and restated, otherwise modified or refinanced from time to time, the "Credit Agreement"), whether for principal, ---------------- interest (including any interest that would accrue but for the filing of a petition initiating any bankruptcy, insolvency or like proceeding, whether or not such interest is an allowed claim enforceable against the debtor), fees, expenses or otherwise and (b) all obligations of the Borrowers under or in connection with any interest rate swap agreement or similar hedging arrangement (as amended or otherwise modified from time to time) with any financial institution which is a party to the Credit Agreement or any affiliate of such financial institution. 3 EXHIBIT K FORM OF B/A EQUIVALENT NOTE C $[ ] [Date] The undersigned refers to the Amended and Restated Credit Agreement dated as of April 20, 2001, among United Rentals, Inc., United Rentals (North America), Inc., United Rentals of Canada, Inc., the Lenders party thereto, The Chase Manhattan Bank, as U.S. Administrative Agent and The Chase Manhattan Bank of Canada, a Canadian chartered bank, as Canadian Administrative Agent (as supplemented, amended or restated from time to time, the "Credit Agreement"). ---------------- All capitalized terms set forth herein will have the respective meanings specified in the Credit Agreement. For value received, the undersigned promises to pay to the holder hereof, on [Date] or on such earlier date as such amount may become due pursuant to the provisions of the Credit Agreement, the sum of C $_______, without interest, or, in the event such amount is not paid when due, with interest. The undersigned hereby waives presentment, protest and notice of every kind and waives any defense based upon indulgences which may be granted by the holder of this note to the undersigned and waives any days of grace. Payment of this note shall be made in Canadian Dollars immediately available funds. This note evidences debt incurred under, is secured as provided in, and is subject to the terms and provisions of, the Credit Agreement. This note shall be governed by the laws of the State of New York. DATED this [ ] day of [ ], 2001 ------------------------- By: ---------------------- Name: Title: By: ---------------------- Name: Title: EX-10.(B) 3 dex10b.txt INDENTURE DATED APRIL 20, 2001 EXHIBIT 10(b) ================================================================================ UNITED RENTALS (NORTH AMERICA), INC. as the Company and UNITED RENTALS, INC. and THE SUBSIDIARIES NAMED HEREIN as Guarantors to THE BANK OF NEW YORK as Trustee ______________ Indenture Dated as of April 20, 2001 ______________ $450,000,000 10 3/4% Senior Notes Due 2008, Series A $450,000,000 10 3/4% Senior Notes Due 2008, Series B ================================================================================ CROSS REFERENCE TABLE/1/ ========================
Trust Indenture Act Indenture Selection Section - --------- ------- 310(a)(1)........................................................ 6.09 310(a)(2)........................................................ 6.09 310(a)(3)........................................................ N.A./2/ 310(a)(4)........................................................ N.A. 310(a)(5)........................................................ N.A. 310(b)........................................................... 6.08; 6.10 310(c)........................................................... N.A. 311(a)........................................................... 6.13 311(b)........................................................... 6.13 311(c)........................................................... N.A. 312(a)........................................................... 7.01; 7.02 312(b)........................................................... 7.02 312(c)........................................................... 7.02 313(a)........................................................... 7.03 313(b)........................................................... 7.03 313(c)........................................................... 1.06 313(d)........................................................... 7.03 314(a)........................................................... 7.04 314(b)........................................................... N.A. 314(c)(1)........................................................ 1.02 314(c)(2)........................................................ 1.02 314(c)(3)........................................................ N.A. 314(d)........................................................... N.A. 314(e)........................................................... 1.02 314(f)........................................................... N.A. 315(a)........................................................... 6.01 315(b)........................................................... 6.02 315(c)........................................................... 6.01 315(d)........................................................... 6.01 315(e)........................................................... 5.14 316(a)(1)(A)..................................................... 5.12 316(a)(1)(B)..................................................... 5.13 316(a)(2)........................................................ N.A. 316(a)(last sentence)............................................ 1.01/3/ 316(b)........................................................... 5.07; 5.08 316(c)........................................................... 1.04 317(a)(1)........................................................ 5.03 317(a)(2)........................................................ 5.04 317(b)........................................................... 10.03 318(a)........................................................... 1.07
_____________________ /1/ Note: This Cross Reference Table shall not, for any purpose, be deemed part of this Indenture. /2/ Not Applicable. /3/ Definition of "Outstanding." TABLE OF CONTENTS ARTICLE I Definitions and Other Provisions of General Application SECTION 1.01. Definitions................................................. 1 SECTION 1.02. Compliance Certificates and Opinions........................ 27 SECTION 1.03. Form of Documents Delivered to Trustee...................... 27 SECTION 1.04. Acts of Holders; Record Dates............................... 28 SECTION 1.05. Notices to Trustee, the Company or a Guarantor.............. 30 SECTION 1.06. Notice to Holders; Waiver................................... 30 SECTION 1.07. Conflict with Trust Indenture Act........................... 31 SECTION 1.08. Effect of Headings and Table of Contents.................... 31 SECTION 1.09. Successors and Assigns...................................... 31 SECTION 1.10. Separability Clause......................................... 31 SECTION 1.11. Benefits of Indenture....................................... 31 SECTION 1.12. Governing Law............................................... 31 SECTION 1.13. Legal Holidays.............................................. 31 ARTICLE II Security Forms SECTION 2.01. Forms Generally............................................. 32 ARTICLE III The Securities SECTION 3.01. Title and Terms............................................. 32 SECTION 3.02. Denominations............................................... 33 SECTION 3.03. Execution, Authentication, Delivery and Dating.............. 33 SECTION 3.04. Temporary Securities........................................ 34 SECTION 3.05. Registration, Registration of Transfer and Exchange......... 34 SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities............ 35 SECTION 3.07. Payment of Interest; Rights Preserved....................... 36 SECTION 3.08. Persons Deemed Owners....................................... 37 SECTION 3.09. Cancellation................................................ 37 SECTION 3.10. Computation of Interest..................................... 37 SECTION 3.11. CUSIP and CINS Numbers...................................... 37 SECTION 3.12. Deposits of Monies.......................................... 38 SECTION 3.13. Book-Entry Provisions for Global Securities................. 38 SECTION 3.14. Special Transfer Provisions................................. 38 SECTION 3.15. Issuance of Additional Securities........................... 40
i ARTICLE IV Satisfaction and Discharge SECTION 4.01. Satisfaction and Discharge of Indenture................................... 40 SECTION 4.02. Application of Trust Money................................................ 41 ARTICLE V Remedies SECTION 5.01. Events of Default......................................................... 42 SECTION 5.02. Acceleration of Maturity; Rescission and Annulment........................ 43 SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by Trustee........... 44 SECTION 5.04. Trustee May File Proofs of Claim.......................................... 45 SECTION 5.05. Trustee May Enforce Claims Without Possession of Securities............... 45 SECTION 5.06. Application of Money Collected............................................ 46 SECTION 5.07. Limitation on Suits....................................................... 46 SECTION 5.08. Unconditional Right of Holders to Receive Principal, Premium and Interest..................................................... 47 SECTION 5.09. Restoration of Rights and Remedies........................................ 47 SECTION 5.10. Rights and Remedies Cumulative............................................ 47 SECTION 5.11. Delay or Omission Not Waiver.............................................. 47 SECTION 5.12. Control by Holders........................................................ 47 SECTION 5.13. Waiver of Past Defaults................................................... 48 SECTION 5.14. Undertaking for Costs..................................................... 48 SECTION 5.15. Waiver of Stay or Extension Laws.......................................... 48 ARTICLE VI The Trustee SECTION 6.01. Certain Duties and Responsibilities....................................... 49 SECTION 6.02. Notice of Defaults........................................................ 49 SECTION 6.03. Certain Rights of Trustee................................................. 50 SECTION 6.04. Not Responsible for Recitals or Issuance of Securities.................... 51 SECTION 6.05. May Hold Securities....................................................... 51 SECTION 6.06. Money Held in Trust....................................................... 51 SECTION 6.07. Compensation and Reimbursement............................................ 51 SECTION 6.08. Conflicting Interests..................................................... 52 SECTION 6.09. Corporate Trustee Required; Eligibility................................... 52 SECTION 6.10. Resignation and Removal; Appointment of Successor......................... 52 SECTION 6.11. Acceptance of Appointment by Successor.................................... 54 SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business............... 54 SECTION 6.13. Preferential Collection of Claims Against the Company or a Guarantor................................................................ 54 SECTION 6.14. Appointment of Authenticating Agent....................................... 54
ii ARTICLE VII Holders' Lists and Reports by Trustee and Company SECTION 7.01. Company to Furnish Trustee Names and Addresses of Holders................ 56 SECTION 7.02. Preservation of Information; Communications to Holders................... 56 SECTION 7.03. Reports by Trustee....................................................... 56 SECTION 7.04. Reports by Company....................................................... 57 ARTICLE VIII Consolidation, Merger, Conveyance, Transfer or Lease SECTION 8.01. Company May Consolidate, Etc. Only on Certain Terms...................... 57 SECTION 8.02. Successor Substituted.................................................... 58 ARTICLE IX Amendments; Waivers; Supplemental Indentures SECTION 9.01. Amendments, Waivers and Supplemental Indentures Without Consent of Holders...................................................... 59 SECTION 9.02. Modifications, Amendments and Supplemental Indentures with Consent of Holders...................................................... 59 SECTION 9.03. Execution of Supplemental Indentures..................................... 61 SECTION 9.04. Effect of Supplemental Indentures........................................ 61 SECTION 9.05. Conformity with Trust Indenture Act...................................... 61 SECTION 9.06. Reference in Securities to Supplemental Indentures....................... 61 SECTION 9.07. Waiver of Certain Covenants.............................................. 61 SECTION 9.08. No Liability for Certain Persons......................................... 61 ARTICLE X Covenants SECTION 10.01. Payment of Principal, Premium and Interest.............................. 62 SECTION 10.02. Maintenance of Office or Agency......................................... 62 SECTION 10.03. Money for Security Payments to be Held in Trust......................... 62 SECTION 10.04. Existence; Activities................................................... 63 SECTION 10.05. Maintenance of Properties............................................... 63 SECTION 10.06. Payment of Taxes and Other Claims....................................... 64 SECTION 10.07. Maintenance of Insurance................................................ 64 SECTION 10.08. Limitation on Indebtedness.............................................. 64 SECTION 10.09. Limitation on Restricted Payments....................................... 65 SECTION 10.10. Limitation on Preferred Stock of Restricted Subsidiaries................ 68 SECTION 10.11. Limitation on Transactions with Affiliates.............................. 68 SECTION 10.12. Limitation on Liens..................................................... 69 SECTION 10.13. Change of Control....................................................... 69 SECTION 10.14. Disposition of Proceeds of Asset Sales.................................. 70 SECTION 10.15. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries...................................... 72
iii SECTION 10.16. Limitation on Sale/Leaseback Transactions......................... 73 SECTION 10.17. Additional Subsidiary Guarantees.................................. 73 SECTION 10.18. Limitations on Designation of Unrestricted Subsidiaries........... 74 SECTION 10.19. Provision of Financial Information................................ 75 SECTION 10.20. Statement by Officers as to Default; Compliance Certificates...... 75 ARTICLE XI Redemption of Securities SECTION 11.01. Right of Redemption............................................... 75 SECTION 11.02. Applicability of Article.......................................... 76 SECTION 11.03. Election to Redeem; Notice to Trustee............................. 76 SECTION 11.04. Selection by Trustee of Securities to Be Redeemed................. 76 SECTION 11.05. Notice of Redemption.............................................. 76 SECTION 11.06. Deposit of Redemption Price....................................... 77 SECTION 11.07. Securities Payable on Redemption Date............................. 77 SECTION 11.08. Securities Redeemed in Part....................................... 77 ARTICLE XII Defeasance and Covenant Defeasance SECTION 12.01. Company's Option to Effect Defeasance or Covenant Defeasance...... 78 SECTION 12.02. Defeasance and Discharge.......................................... 78 SECTION 12.03. Covenant Defeasance............................................... 78 SECTION 12.04. Conditions to Defeasance or Covenant Defeasance................... 79 SECTION 12.05. Deposited Money and U.S. Government Obligations to Be Held in Trust; Miscellaneous Provisions............................... 81 SECTION 12.06. Reinstatement..................................................... 81 ARTICLE XIII Guaranty SECTION 13.01. Guaranty.......................................................... 81 SECTION 13.02. Limitation on Liability........................................... 83 SECTION 13.03. Execution and Delivery of Guarantees.............................. 84 SECTION 13.04. Guarantors May Consolidate, Etc., on Certain Terms................ 84 SECTION 13.05. Release of Guarantors............................................. 84 SECTION 13.06. Successors and Assigns............................................ 85 SECTION 13.07. No Waiver, etc.................................................... 85 SECTION 13.08. Modification, etc................................................. 85 Schedule A The Guarantors Schedule B The Initial Purchasers Exhibit A-1 Form of Series A Security Exhibit A-2 Form of Series B Security Exhibit B Global Securities Legend Exhibit C Form of Notation on Security Relating to Guaranty
iv INDENTURE, dated as of April 20, 2001, among UNITED RENTALS (NORTH AMERICA), INC., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company"), having its principal office at Five Greenwich Office Park, Greenwich, Connecticut 06830, UNITED RENTALS, INC., a corporation duly organized and existing under the laws of the State of Delaware (herein called "Holdings"), the Subsidiaries of the Company named in Schedule A (together with any additional Domestic Subsidiaries of the Company that execute Guaranty Agreements in accordance with Section 10.17 of this Indenture, herein called the "Subsidiary Guarantors" and, together with Holdings, the "Guarantors") and THE BANK OF NEW YORK, a New York banking corporation, having its principal corporate trust office at 101 Barclay Street, New York, New York 10286, as trustee (herein called the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the creation of an issue of 10 3/4% Senior Notes Due 2008 of substantially the tenor and amount hereinafter set forth, and to provide therefor the Company has duly authorized the execution and delivery of this Indenture. Each Guarantor desires to make the Guaranty provided herein and has duly authorized the execution and delivery of this Indenture. All things necessary to make the Securities, when executed by the Company, authenticated and delivered hereunder and duly issued by the Company, and each Guaranty, when executed and delivered hereunder by each Guarantor, the valid obligations of the Company and each Guarantor, and to make this Indenture a valid agreement of the Company and each Guarantor, in accordance with their and its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders (as defined herein) thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Initial Securities and the Exchange Securities, as follows: ARTICLE I Definitions and Other Provisions of General Application SECTION 1.01. Definitions. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: 2 (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (3) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP (whether or not such is indicated herein); (4) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or Section, as the case may be, of this Indenture; (5) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (6) each reference herein to a rule or form of the Commission shall mean such rule or form and any rule or form successor thereto, in each case as amended from time to time; (7) "or" is not exclusive; (8) "including" means including without limitation; (9) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured Indebtedness; (10) the principal amount of any non-interest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP; (11) the principal amount of any Preferred Stock shall be (i) the maximum liquidation value of such Preferred Stock or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock, whichever is greater; and (12) all references to the date the Securities were originally issued shall refer to the Issue Date, except as otherwise specified. Whenever this Indenture requires that a particular ratio or amount be calculated with respect to a specified period after giving effect to certain transactions or events on a pro forma basis, such calculation shall be made as if the transactions or events occurred on the first day of such period, unless otherwise specified. "8.80% Notes" means the $205 million aggregate principal amount of 8.80% Senior Subordinated Notes due 2008 issued by the Company under the indenture, dated as of August 12, 1998, among the Company, as issuer, its United States subsidiaries, as guarantors, and State Street Bank and Trust Company, as trustee. 3 "9% Notes" means the $250 million aggregate principal amount of 9% Senior Subordinated Notes due 2009 issued by the Company under the indenture dated as of March 23, 1999, among the Company, as issuer, its United States subsidiaries, as guarantors, and The Bank of New York, as trustee. "9 1/4% Notes" means the $300 million aggregate principal amount of 9 1/4% Senior Subordinated Notes due 2009 issued by the Company under the indenture, dated as of December 15, 1998, among the Company, as issuer, its United States subsidiaries, as guarantors, and State Street Bank and Trust Company, as trustee. "9 1/2% Notes" means the $200 million aggregate principal amount of 9 1/2% Senior Subordinated Notes due 2008 issued by the Company under the indenture, dated as of May 22, 1998, among the Company, as issuer, its United States subsidiaries, as guarantors, and State Street Bank and Trust Company, as trustee. "Acquired Indebtedness" means Indebtedness of a Person (a) assumed in connection with an Asset Acquisition from such Person or (b) existing at the time such Person becomes a Subsidiary of any other Person and not incurred in connection with, or in contemplation of, such Asset Acquisition or such Person becoming a Subsidiary. "Act," when used with respect to any Holder, has the meaning specified in Section 1.04. "Additional Securities" means, subject to the Company's compliance with Section 10.08, 10 3/4% Senior Notes Due 2008 issued from time to time after the Issue Date under the terms of this Indenture (other than pursuant to Section 3.04, 3.05, 3.06 or 11.08 of this Indenture and other than Exchange Securities issued pursuant to an exchange offer for other Securities outstanding under this Indenture). "Affiliate" means, with respect to any specified Person, (i) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person, (ii) any other Person that owns, directly or indirectly, 10% or more of such specified Person's Capital Stock, (iii) any officer or director of (A) any such specified Person, (B) any Subsidiary of such specified Person or (C) any Person described in clauses (i) or (ii) above. "Asset Acquisition" means (a) an Investment by the Company or any Restricted Subsidiary of the Company in any other Person pursuant to which such Person shall become a Restricted Subsidiary of the Company or any Restricted Subsidiary of the Company, or shall be merged with or into the Company or any Restricted Subsidiary of the Company, or (b) the acquisition by the Company or any Restricted Subsidiary of the Company of the assets of any Person which constitute all or substantially all of the assets of such Person, any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business. "Asset Sale" means any sale, issuance, conveyance, transfer, lease or other disposition by the Company or any Restricted Subsidiary of the Company to any Person other than the Company or a Restricted Subsidiary of the Company, of (a) any Capital Stock of any Restricted Subsidiary of the Company; (b) all or substantially all of the properties and assets of any division or line of business of the Company or any Restricted Subsidiary of the Company; or (c) any other properties or assets of the Company or any 4 Restricted Subsidiary of the Company, other than in the case of clause (a), (b) or (c) above, (i) sales of obsolete, damaged or used equipment or other equipment or inventory sales in the ordinary course of business, (ii) sales of assets in one or a series of related transactions for an aggregate consideration of less than $1,000,000 and (iii) for purposes of Section 10.14 only, (x) a disposition that constitutes a Restricted Payment permitted by Section 10.09 or a Permitted Investment, (y) a disposition of all or substantially all the assets of the Company in accordance with the provisions of Article VIII and (z) any sale, issuance, conveyance, transfer, lease or other disposition of properties or assets in connection with a Securitization Transaction. "Asset Sale Offer" has the meaning specified in Section 10.14. "Asset Sale Offer Price" has the meaning specified in Section 10.14. "Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Securities, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended); provided, however, that if such Sale/Leaseback Transaction results in a Capitalized Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of "Capitalized Lease Obligation." "Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 6.14 hereof to act on behalf of the Trustee to authenticate Securities. "Average Life to Stated Maturity" means, with respect to any Indebtedness, as at any date of determination, the quotient obtained by dividing (i) the sum of the products of (a) the number of years from such date to the date or dates of each successive scheduled principal payment (including, without limitation, any sinking fund requirements) of such Indebtedness and (b) the amount of each such principal payment by (ii) the sum of all such principal payments. "Board of Directors" means the board of directors of a company or its equivalent, including managers of a limited liability company, general partners of a partnership or trustees of a business trust, or any duly authorized committee thereof. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of a company to have been duly adopted by the Board of Directors of such company and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the Borough of Manhattan, The City of New York, are authorized or obligated by law or executive order to close. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations, rights in or other equivalents (however designated) of such Person's capital stock or equity participations, and any rights (other than debt securities convertible into capital stock), warrants or options exchangeable for or convertible into such capital stock and, including, without limitation, with respect to partnerships, limited 5 liability companies or business trusts, ownership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, such partnerships, limited liability companies or business trusts. "Capitalized Lease Obligation" means any obligation under a lease of (or other agreement conveying the right to use) any property (whether real, personal or mixed) that is required to be classified and accounted for as a capital lease obligation under GAAP, and, for the purpose of this Indenture, the amount of such obligation at any date shall be the capitalized amount thereof at such date, determined in accordance with GAAP. "Cash Equivalents" means, at any time, (a) any evidence of Indebtedness, maturing not more than one year after such time, issued or guaranteed by the United States Government or any agency thereof, (b) commercial paper, maturing not more than one year from the date of issue, or corporate demand notes, in each case rated at least A-1 by S&P or P-1 by Moody's, (c) any certificate of deposit (or time deposits represented by such certificates of deposit) or bankers' acceptance, maturing not more than one year after such time, or overnight Federal Funds transactions that are issued or sold by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000, (d) any repurchase agreement entered into with any commercial banking institution of the stature referred to in clause (c) which (i) is secured by a fully perfected security interest in any obligation of the type described in any of clauses (a) through (c) and (ii) has a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation of such commercial banking institution thereunder, and (e) investments in short term asset management accounts managed by any bank party to the Credit Agreement which are invested in indebtedness of any state or municipality of the United States or of the District of Columbia and which are rated under one of the two highest ratings then obtainable from S&P or by Moody's or investments of the types described in clauses (a) through (d) above, and (f) investments in funds investing primarily in investments of the types described in clauses (a) through (e) above. "Change of Control" means the occurrence of any of the following events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), excluding Permitted Holders, is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total Voting Stock of the Company or Holdings; provided, however, that a "Change of Control" shall not be deemed to have occurred under this subclause (a) unless the Permitted Holders do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of the Company or Holdings; (b) the Company or Holdings consolidates with, or merges with or into, another Person or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets to any Person, or any Person consolidates with, or merges with or into, the Company (or Holdings), in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company or Holdings is converted into or exchanged for cash, securities or other property, other than any such transaction where (i) the outstanding Voting Stock of the Company or Holdings is converted into or exchanged for Voting Stock (other than 6 Redeemable Capital Stock) of the surviving or transferee corporation and (ii) immediately after such transaction no "person" or "group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act), excluding Permitted Holders, is the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total Voting Stock of the surviving or transferee corporation; (c) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Company or Holdings (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company or Holdings was approved by a vote of 66-2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company or Holdings then in office; or (d) the Company is liquidated or dissolved or adopts a plan of liquidation. "Change of Control Date" has the meaning specified in Section 10.13. "Change of Control Offer" has the meaning specified in Section 10.13. "Change of Control Purchase Date" has the meaning specified in Section 10.13. "Change of Control Purchase Price" has the meaning specified in Section 10.13. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations thereunder. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Stock" means the common stock, par value $.01 per share, of Holdings. "Company" means the Person named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture and thereafter "Company" shall mean such successor Person. "Company Order" or "Company Request" means a written order or request signed in the name of the Company by its Chairman of the Board, its Chief Executive Officer, its Chief Financial Officer, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee or Paying Agent, as applicable. 7 "Consolidated Cash Flow Available for Fixed Charges" means, with respect to any Person for any period, (i) the sum of, without duplication, the amounts for such period, taken as a single accounting period, of (a) Consolidated Net Income, (b) Consolidated Non-cash Charges, (c) Consolidated Interest Expense, (d) Consolidated Income Tax Expense (other than income tax expense (either positive or negative) attributable to extraordinary gains or losses), (e) one-third of Consolidated Rental Payments, and (f) if any Asset Sale or Asset Acquisition shall have occurred since the first day of any four quarter period for which "Consolidated Cash Flow Available for Fixed Charges" is being calculated (including to the date of calculation) (A) the cost of any compensation, remuneration or other benefit paid or provided to any employee, consultant, Affiliate or equity owner of the entity involved in any such Asset Acquisition to the extent such costs are eliminated or reduced (or public announcement has been made of the intent to eliminate or reduce such costs) prior to the date of such calculation and not replaced and (B) the amount of any reduction in general, administrative or overhead costs of the entity involved in any such Asset Acquisition or Asset Sale, to the extent such amounts under clauses (A) and (B) would be permitted to be eliminated in a pro forma income statement prepared in accordance with Rule 11-02 of Regulation S-X, less (ii)(x) non-cash items increasing Consolidated Net Income and (y) all cash payments during such period relating to non-cash charges that were added back in determining Consolidated Cash Flow Available for Fixed Charges in the most recent Four Quarter Period (as defined in the definition of "Consolidated Fixed Charge Coverage Ratio"). "Consolidated Fixed Charge Coverage Ratio" means, with respect to any Person, the ratio of the aggregate amount of Consolidated Cash Flow Available for Fixed Charges of such Person for the four full fiscal quarters, treated as one period, for which financial information in respect thereof is available immediately preceding the date of the transaction (the "Transaction Date") giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (such four full fiscal quarter period being referred to herein as the "Four Quarter Period") to the aggregate amount of Consolidated Fixed Charges of such Person for the Four Quarter Period. In calculating "Consolidated Fixed Charges" for purposes of determining the denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (i) interest on outstanding Indebtedness determined on a fluctuating basis as of the Transaction Date and which will continue to be so determined thereafter shall be deemed to have accrued at a fixed rate per annum equal to the rate of interest on such Indebtedness in effect on the Transaction Date; and (ii) if interest on any Indebtedness actually incurred on the Transaction Date may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rates, then the interest rate in effect on the Transaction Date will be deemed to have been in effect during the Four Quarter Period. If such Person or any of its Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a third Person, this definition shall give effect to the incurrence of such guaranteed Indebtedness as if such Person or such Subsidiary had directly incurred or otherwise assumed such guaranteed Indebtedness. "Consolidated Fixed Charges" means, with respect to any Person for any period, the sum of, without duplication, the amounts for such period of (i) Consolidated Interest Expense, (ii) the aggregate amount of dividends and other distributions paid or accrued during such period in respect of Redeemable Capital Stock of such Person and its Restricted Subsidiaries on a consolidated basis and (iii) one-third of Consolidated Rental Payments. 8 "Consolidated Income Tax Expense" means, with respect to any Person for any period, the provision for federal, state, local and foreign income taxes of such Person and its Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" means, with respect to any Person for any period, without duplication, the sum of (i) the interest expense of such Person and its Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP, including, without limitation, (a) any amortization of debt discount, (b) the net cost under Interest Rate Protection Obligations (including any amortization of discounts), (c) the interest portion of any deferred payment obligation, (d) all commissions, discounts and other fees and charges owed with respect to letters of credit, bankers' acceptance financing or similar facilities and (e) all accrued interest and (ii) the interest component of Capitalized Lease Obligations paid, accrued and/or scheduled to be paid or accrued by such Person and its Restricted Subsidiaries during such period as determined on a consolidated basis in accordance with GAAP. "Consolidated Net Income" means, with respect to any Person, for any period, the consolidated net income (or loss) of such Person and its Restricted Subsidiaries for such period as determined in accordance with GAAP, adjusted, to the extent included in calculating such net income, by excluding, without duplication, (i) all extraordinary gains or losses (net of fees and expenses relating to the transaction giving rise thereto), (ii) the portion of net income of such Person and its Restricted Subsidiaries allocable to minority interests in unconsolidated Persons or to Investments in Unrestricted Subsidiaries to the extent that cash dividends or distributions have not actually been received by such Person or one of its Restricted Subsidiaries, (iii) net income (or loss) of any Person combined with such Person or one of its Restricted Subsidiaries on a "pooling of interests" basis attributable to any period prior to the date of combination, (iv) gains or losses in respect of any Asset Sales by such Person or one of its Restricted Subsidiaries (net of fees and expenses relating to the transaction giving rise thereto), on an after-tax basis, (v) the net income of any Restricted Subsidiary of such Person to the extent that the declaration of dividends or similar distributions by that Restricted Subsidiary of that income is not at the time permitted, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulations applicable to that Restricted Subsidiary or its stockholders and (vi) any gain or loss realized as a result of the cumulative effect of a change in accounting principles. "Consolidated Non-cash Charges" means, with respect to any Person for any period, the aggregate depreciation, amortization (including amortization of goodwill and other intangibles) and other non-cash expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person and its Restricted Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP (excluding any such charges constituting an extraordinary item or loss). "Consolidated Rental Payments" of any Person means, for any period, the aggregate rental obligations of such Person and its Restricted Subsidiaries (not including taxes, insurance, maintenance and similar expenses that the lessee is obligated to pay under the terms of the relevant leases), determined on a consolidated basis in accordance with GAAP, payable in respect of such period (net of income from subleases thereof not including taxes, insurance, maintenance and similar expenses that the sublessee is 9 obligated to pay under the terms of such sublease), whether or not such obligations are reflected as liabilities or commitments on a consolidated balance sheet of such Person and its Restricted Subsidiaries or in the notes thereto, excluding, however, in any event, (i) that portion of Consolidated Interest Expense of such Person representing payments by such Person or any of its Restricted Subsidiaries in respect of Capitalized Lease Obligations (net of payments to such Person or any of its Restricted Subsidiaries under subleases qualifying as capitalized lease subleases to the extent that such payments would be deducted in determining Consolidated Interest Expense) and (ii) the aggregate amount of amortization of obligations of such Person and its Restricted Subsidiaries in respect of such Capitalized Lease Obligations for such period (net of payments to such Person or any of its Restricted Subsidiaries and subleases qualifying as capitalized lease subleases to the extent that such payments could be deducted in determining such amortization amount). "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Corporate Trust Office" means the office of the Trustee at which at any particular time its principal corporate trust business shall be administered, which address as of the date of this Indenture is located at 101 Barclay Street, Floor 21 West, New York, New York 10286, Attention: Corporate Finance Group or such other address as the Trustee may designate from time to time by notice to the Holders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as a successor Trustee may designate from time to time by notice to the Holders and the Company). "corporation" means (except in the definition of "Subsidiary") a corporation, association, company, joint stock company or business trust. "Covenant Defeasance" has the meaning specified in Section 12.03. "Credit Agreement" means the Amended and Restated Credit Agreement dated as of April 20, 2001, by and among Holdings, the Company, a Canadian subsidiary of the Company, the lenders referred to therein, The Chase Manhattan Bank, as Administrative Agent, The Chase Manhattan Bank of Canada, as Canadian Administrative Agent, and Bank of America, N.A., as Syndication Agent, together with the related documents thereto (including the term loans and revolving loans thereunder, any guarantees and any security documents), as amended, extended, renewed, restated, supplemented or otherwise modified (in whole or in part, and without limitation as to amount, terms, conditions, covenants and other provisions) from time to time, and any agreement (and related documents) governing Indebtedness incurred to refinance or replace, in whole or in part, the borrowings and commitments at any time outstanding or permitted to be outstanding under such Credit Agreement or a successor Credit Agreement, whether by the same or any other lender or group of lenders and whether to the same borrower or different borrowers. "Default" means any event that is, or after notice or passage of time, or both, would be, an Event of Default. 10 "Defaulted Interest" has the meaning specified in Section 3.07. "Defeasance" has the meaning specified in Section 12.02. "Depositary" means The Depository Trust Company, or its successor. "Disinterested Member of the Board of Directors of the Company" means, with respect to any transaction or series of transactions, a member of the Board of Directors of the Company other than a member who has any material direct or indirect financial interest in or with respect to such transaction or series of transactions or who is an Affiliate, officer, director or an employee of any Person (other than the Company or Holdings) who has any direct or indirect financial interest in or with respect to such transaction or series of transactions. "Domestic Subsidiary" means any Restricted Subsidiary that is created or organized under the laws of the United States or any State, district or territory thereof. "Equipment Securitization Transaction" means any sale, assignment, pledge or other transfer (a) by the Company or any Subsidiary of the Company of rental fleet equipment, (b) by any ES Special Purpose Vehicle of leases or rental agreements between the Company and/or any Subsidiary of the Company, as lessee, on the one hand, and such ES Special Purpose Vehicle, as lessor, on the other hand, relating to such rental fleet equipment and lease receivables arising under such leases and rental agreements and (c) by the Company or any Subsidiary of the Company of any interest in any of the foregoing, together in each case with (i) any and all proceeds thereof (including all collections relating thereto, all payments and other rights under insurance policies or warranties relating thereto, all disposition proceeds received upon a sale thereof, and all rights under manufacturers' repurchase programs or guaranteed depreciation programs relating thereto), (ii) any collection or deposit account relating thereto and (iii) any collateral, guarantees, credit enhancement or other property or claims supporting or securing payment on, or otherwise relating to, any such leases, rental agreements or lease receivables. "ES Special Purpose Vehicle" means a trust, bankruptcy remote entity or other special purpose entity which is a Subsidiary of the Company (or, if not a Subsidiary of the Company, the common equity of which is wholly owned, directly or indirectly, by the Company) and which is formed for the purpose of, and engages in no material business other than, acting as a lessor, issuer or depositor in an Equipment Securitization Transaction (and, in connection therewith, owning the rental fleet equipment, leases, rental agreements, lease receivables, rights to payment and other interests, rights and assets described in the definition of Equipment Securitization Transaction, and pledging or transferring any of the foregoing or interests therein). "Event of Default" has the meaning specified in Section 5.01. "Excess Proceeds" has the meaning specified in Section 10.14. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Securities" has the meaning specified in the form of the Security in Exhibit A-1. 11 "Expiration Date" shall have the meaning set forth in the definition of "Offer to Purchase." "Fair Market Value" means, with respect to any asset, the price which could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of which is under pressure or compulsion to complete the transaction. Fair Market Value shall be determined by the Board of Directors of the Company in good faith. "Federal Bankruptcy Code" means Title 11, U.S. Code. "Foreign Subsidiary" means any Restricted Subsidiary not created or organized under the laws of the United States or any State, district or territory thereof and that conducts substantially all its operations outside of the United States. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States of America, which are applicable at the date of the Indenture. "Global Securities" means one or more permanent global Securities in registered form representing the aggregate principal amount of Securities issued under this Indenture and not otherwise represented in certificated form. "guarantee" means, as applied to any obligation, (i) a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner, of any part or all of such obligation and (ii) an agreement, direct or indirect, contingent or otherwise, the practical effect of which is to assure in any way the payment or performance (or payment of damages in the event of nonperformance) of all or any part of such obligation, including, without limiting the foregoing, the payment of amounts available to be drawn down under letters of credit of another Person. The term "guarantee" used as a verb has a corresponding meaning. The term "guarantor" shall mean any Person providing a guarantee of any obligation. "Guaranty" means each guarantee of the Securities contained in Article XIII given by each Guarantor. "Guaranty Agreement" means a supplemental indenture, in a form satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor guarantees the Company's obligations with respect to the Securities on the terms provided for in this Indenture. "Guaranty Obligations" means, with respect to each Guarantor, the obligations of such Guarantor under Article XIII. "Holder" means a Person in whose name a Security is registered in the Security Register. 12 "Holdings" means the Person named as "Holdings" in the first paragraph of this instrument. "Indebtedness" means, with respect to any Person, without duplication, (a) all liabilities of such Person for borrowed money or for the deferred purchase price of property or services, excluding any trade payables and other accrued current liabilities incurred in the ordinary course of business, but including, without limitation, all obligations, contingent or otherwise, of such Person in connection with any letters of credit, banker's acceptance or other similar credit transaction, (b) all obligations of such Person evidenced by bonds, notes, debentures or other similar instruments, (c) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even if the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), but excluding trade accounts payable arising in the ordinary course of business, (d) all Capitalized Lease Obligations of such Person and all Attributable Debt in respect of Sale/Leaseback Transactions entered into by such Person, (e) all Indebtedness referred to in the preceding clauses of other Persons and all dividends of other Persons, the payment of which is secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon property (including, without limitation, accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness (the amount of such obligation being deemed to be the lesser of the value of such property or asset or the amount of the obligation so secured), (f) all guarantees of Indebtedness referred to in this definition by such Person, (g) all Redeemable Capital Stock of such Person valued at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued dividends, (h) all obligations under or in respect of Interest Rate Protection Obligations of such Person, and (i) any amendment, supplement, modification, deferral, renewal, extension, refinancing or refunding of any liability of the types referred to in clauses (a) through (h) above; provided, however, that Indebtedness shall not include (i) any holdback or escrow of the purchase price of property, services, businesses or assets or (ii) any contingent payment obligations incurred in connection with the acquisition of assets or business, which are contingent on the performance of the assets or businesses so acquired. For purposes hereof, the "maximum fixed repurchase price" of any Redeemable Capital Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant hereto, and if such price is based upon, or measured by, the fair market value of such Redeemable Capital Stock, such fair market value shall be approved in good faith by the Board of Directors of the issuer of such Redeemable Capital Stock. In the case of Indebtedness of other Persons, the payment of which is secured by a Lien on property owned by a Person as referred to in clause (e) above, the amount of the Indebtedness of such Person attributable to such Lien at any date shall be the lesser of the Fair Market Value at such date of any asset subject to such Lien and the amount of the Indebtedness secured. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. 13 "Initial Purchasers" means (i) with respect to the Initial Securities issued on the Issue Date, the parties named in Schedule B hereto and (ii) with respect to each issuance of Additional Securities, the Persons purchasing such Additional Securities under the related purchase agreement. "Initial Securities" means (i) the 10 3/4% Senior Notes Due 2008, Series A, of the Company and (ii) Additional Securities, if any, issued in a transaction exempt from the registration requirements of the Securities Act. "Interest Payment Date" means the Stated Maturity of an installment of interest on the Securities. "Interest Rate Protection Agreement" means, with respect to any Person, any arrangement with any other Person whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a floating or a fixed rate of interest on a stated notional amount in exchange for periodic payments made by such Person calculated by applying a fixed or a floating rate of interest on the same notional amount and shall include, without limitation, interest rate swaps, caps, floors, collars and similar agreements. "Interest Rate Protection Obligations" means the obligations of any Person pursuant to any Interest Rate Protection Agreements. "Investment" means, with respect to any Person, any direct or indirect loan or other extension of credit (including, without limitation, a guarantee) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition by such Person of any Capital Stock, bonds, notes, debentures or other securities or evidences of Indebtedness issued by, any other Person. "Issue Date" means April 20, 2001. "Lien" means any mortgage, charge, pledge, lien (statutory or other), security interest, hypothecation, assignment for security, claim, or preference or priority or other encumbrance upon or with respect to any property of any kind. A Person shall be deemed to own subject to a Lien any property which such Person has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement. "Maturity Date" means April 15, 2008. "Moody's" means Moody's Investors Service, Inc. and its successors. "Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (except to the extent that such obligations are financed or sold with recourse to the Company or any Restricted Subsidiary of the Company) net of (i) brokerage commissions and other fees and expenses (including, without limitation, fees and expenses of legal counsel and investment bankers, recording fees, transfer fees and appraisers' fees) related to such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale, 14 (iii) amounts required to be paid to any Person (other than the Company or any Restricted Subsidiary of the Company) owning a beneficial interest in the assets subject to the Asset Sale, (iv) payments made to retire Indebtedness where payment of such Indebtedness is secured by the assets or properties the subject of such Asset Sale, and (v) appropriate amounts to be provided by the Company or any Restricted Subsidiary of the Company, as the case may be, as a reserve required in accordance with GAAP against any liabilities associated with such Asset Sale and retained by the Company or any Restricted Subsidiary of the Company, as the case may be, after such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as reflected in an Officer's Certificate delivered to the Trustee. "Non-U.S. Person" means a Person that is not a U.S. Person as such term is defined in Regulation S. "Notice of Default" means a written notice of the kind specified in Section 5.02. "Offer" means a Change of Control Offer or an Asset Sale Offer. "Offer to Purchase" means an Offer sent by or on behalf of the Company by first-class mail, postage prepaid, to each Holder of Securities at its address appearing in the register for the Securities on the date of the Offer offering to purchase up to the principal amount of Securities specified in such Offer at the purchase price specified in such Offer (as determined pursuant to this Indenture). Unless otherwise provided in Section 10.13 or 10.14 or otherwise required by applicable law, the Offer shall specify an expiration date (the "Expiration Date") of the Offer to Purchase, which shall be not less than 20 Business Days nor more than 60 days after the date of such Offer (or such later date as may be necessary for the Company to comply with the Exchange Act), and a settlement date (the "Purchase Date") for purchase of Securities to occur no later than five Business Days after the Expiration Date. The Company shall notify the Trustee at least 15 Business Days (or such shorter period as is acceptable to the Trustee) prior to the mailing of the Offer of the Company's obligation to make an Offer to Purchase, and the Offer shall be mailed by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company. The Offer shall contain all the information required by applicable law to be included therein. The Offer shall contain all instructions and materials necessary to enable such Holders to tender Securities pursuant to the Offer to Purchase. The Offer shall also state: (1) the Section of this Indenture pursuant to which the Offer to Purchase is being made; (2) the Expiration Date and the Purchase Date; (3) the purchase price to be paid by the Company for each $1,000 aggregate principal amount of Securities accepted for payment (as specified pursuant to this Indenture) (the "Purchase Price"); and the amount of accrued and unpaid interest to be paid; 15 (4) that the Holder may tender all or any portion of the Securities registered in the name of such Holder and that any portion of a Security tendered must be tendered in an integral multiple of $1,000 principal amount; (5) the place or places where Securities are to be surrendered for tender pursuant to the Offer to Purchase; (6) that interest on any Security not tendered or tendered but not purchased by the Company pursuant to the Offer to Purchase will continue to accrue; (7) that on the Purchase Date the Purchase Price will become due and payable upon each Security being accepted for payment pursuant to the Offer to Purchase and that interest thereon shall cease to accrue on and after the Purchase Date; (8) that each Holder electing to tender all or any portion of a Security pursuant to the Offer to Purchase will be required to surrender such Security at the place or places specified in the Offer prior to the close of business on the Expiration Date (such Security being, if the Company or the Trustee so requires, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by the Holder thereof or his attorney duly authorized in writing); (9) that Holders will be entitled to withdraw all or any portion of Securities tendered if the Company (or its Paying Agent) receives, not later than the close of business on the fifth Business Day next preceding the Expiration Date, a facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security the Holder tendered, the certificate number of the Security the Holder tendered and a statement that such Holder is withdrawing all or a portion of his tender; (10) that (a) if Securities purchasable at an aggregate Purchase Price less than or equal to the Purchase Amount are duly tendered and not withdrawn pursuant to the Offer to Purchase, the Company shall purchase all such Securities and (b) if Securities purchasable at an aggregate Purchase Price in excess of the Purchase Amount are tendered and not withdrawn pursuant to the Offer to Purchase, the Company shall purchase Securities on a pro rata basis based on the Purchase Price therefor or such other method as the Trustee shall deem fair and appropriate (subject in each case to applicable rules of the Depositary and any securities exchange upon which the Securities may then be listed), with such adjustments as may be deemed appropriate so that only Securities in denominations of $1,000 principal face amount or integral multiples thereof shall be purchased; notwithstanding the foregoing, if the Company is required to commence an Asset Sale Offer at any time when securities of the Company ranking pari passu in right of payment with the Securities are outstanding and the terms of such securities provide that a similar offer must be made with respect to such other securities, then the Asset Sale Offer for the Securities shall be made concurrently with such other offers and securities of each issue will be accepted on a pro rata basis in proportion to the aggregate principal amount of securities of each issue which the holders thereof elect to have purchased; and 16 (11) that in the case of a Holder whose Security is purchased only in part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in an aggregate principal amount equal to and in exchange for the unpurchased portion of the Security so tendered. An Offer to Purchase shall be governed by and effected in accordance with the provisions of this Indenture pertaining to the type of Offer to which it relates. "Offering Circular" means the Offering Circular dated April 12, 2001 pursuant to which the Securities were offered, and any supplement thereto. "Officer's Certificate" means a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President or a Vice President, the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company, and delivered to the Trustee. One of the officers signing an Officer's Certificate given pursuant to Section 10.20 shall be the principal executive, financial or accounting officer of the Company. "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Company, and who shall be reasonably acceptable to the Trustee. "Outstanding," when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except: (i) Securities theretofore cancelled by the Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided, however, that, if such securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; (iii) Securities which have been paid pursuant to Section 3.06 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; and (iv) Securities as to which Defeasance has been effected pursuant to Section 12.02; provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given, made or taken any request, demand, authorization, direction, notice, consent, waiver or other action hereunder as of any date, 17 Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding (it being understood that Securities to be acquired by the Company pursuant to an Offer or other offer to purchase shall not be deemed to be owned by the Company until legal title to such Securities passes to the Company), except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent, waiver or other action, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor. "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Securities on behalf of the Company. "Permitted Holder" means (i) Holdings and (ii) Bradley S. Jacobs, John N. Milne, Michael J. Nolan and their respective Affiliates, and trusts established for the benefit of a Permitted Holder or members of his immediate family. "Permitted Indebtedness" means, without duplication: (a) Indebtedness of the Company and the Guarantors related to the Securities and the Guarantees, respectively (other than any Additional Securities); (b) Indebtedness of the Company and Restricted Subsidiaries under the Credit Agreement; provided, however, that, immediately after giving effect to any such incurrence, the aggregate principal amount of all Indebtedness incurred under this clause (b) and then outstanding does not exceed the greater of (A) $1,500,000,000 and (B) 100% of Tangible Assets, less, in either case, any amounts permanently repaid or commitments permanently reduced in accordance with Section 10.14; (c) Indebtedness of the Company or any Restricted Subsidiary outstanding on the Issue Date, including the 9 1/2% Notes, the 8.80% Notes, the 9 1/4% Notes, the 9% Notes and the respective guarantees thereof; (d) Indebtedness of the Company or any Restricted Subsidiary of the Company incurred in respect of performance bonds, bankers' acceptances and letters of credit in the ordinary course of business, including Indebtedness evidenced by letters of credit issued in the ordinary course of business consistent with past practice to support the insurance or self- insurance obligations of the Company or any of its Restricted Subsidiaries (including to secure workers' compensation and other similar insurance coverages), in the aggregate amount not to exceed$10,000,000 at any time; but excluding letters of credit issued in respect of or to secure money borrowed; (e) (i) Interest Rate Protection Obligations of the Company covering Indebtedness of the Company and (ii) Interest Rate Protection Obligations of any Restricted Subsidiary covering Permitted Indebtedness of such Restricted 18 Subsidiary; provided, however, that, in the case of either clause (i) or (ii), (x) any Indebtedness to which any such Interest Rate Protection Obligations correspond bears interest at fluctuating interest rates and is otherwise permitted to be incurred under Section 10.08 and (y) the notional principal amount of any such Interest Rate Protection Obligations that exceeds the principal amount of the Indebtedness to which such Interest Rate Protection Obligations relate shall not constitute Permitted Indebtedness; (f) Indebtedness of a Restricted Subsidiary owed to and held by the Company or another Restricted Subsidiary, except that (i) any transfer of such Indebtedness by the Company or a Restricted Subsidiary (other than to the Company or another Restricted Subsidiary) and (ii) the sale, transfer or other disposition by the Company or any Restricted Subsidiary of the Company of Capital Stock of a Restricted Subsidiary (other than to the Company or a Restricted Subsidiary) which is owed Indebtedness of another Restricted Subsidiary shall, in each case, be an incurrence of Indebtedness by such Restricted Subsidiary subject to the other provisions hereof; (g) Indebtedness of the Company owed to and held by a Restricted Subsidiary which is unsecured and subordinated in right of payment to the payment and performance of the obligations of the Company under this Indenture and the Securities, except that (i) any transfer of such Indebtedness by the Restricted Subsidiary (other than to another Restricted Subsidiary) and (ii) the sale, transfer or other disposition by the Company or any Restricted Subsidiary of the Company (other than to the Company or a Restricted Subsidiary) of Capital Stock of a Restricted Subsidiary which is owed Indebtedness of the Company shall, in each case, be an incurrence of Indebtedness by the Company, subject to the other provisions hereof; (h) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of incurrence; (i) Indebtedness of the Company or any Restricted Subsidiary under equipment purchase or lines of credit or for Capitalized Lease Obligations not to exceed $100,000,000 in aggregate principal amount outstanding at any time; (j) (i) Indebtedness of the Company the proceeds of which are used solely to refinance (whether by amendment, renewal, extension or refunding) Indebtedness of the Company or any of its Restricted Subsidiaries and (ii) Indebtedness of any Restricted Subsidiary of the Company the proceeds of which are used solely to refinance (whether by amendment, renewal, extension or refunding) Indebtedness of such Restricted Subsidiary, provided, however, that (x) the principal amount of Indebtedness incurred pursuant to this clause (j) (or, if such Indebtedness provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the maturity thereof, the original issue price of such Indebtedness) shall not exceed the sum of the principal amount of Indebtedness so refinanced, plus the amount of any premium required to be paid in connection with such refinancing pursuant to the terms of 19 such Indebtedness or the amount of any premium reasonably determined by the Company as necessary to accomplish such refinancing by means of a tender offer or privately negotiated purchase, plus the amount of expenses in connection therewith, and (y) in the case of Indebtedness incurred by the Company pursuant to this clause (j) to refinance Subordinated Indebtedness, such Indebtedness (A) has no scheduled principal payment prior to the 91st day after the Maturity Date, (B) has an Average Life to Stated Maturity greater than the remaining Average Life to Stated Maturity of the Securities and (C) is subordinated to the Securities in the same manner and to the same extent that the Subordinated Indebtedness being refinanced is subordinated to the Securities; (k) Indebtedness of a Foreign Subsidiary incurred to finance the working capital of such Foreign Subsidiary; (l) Indebtedness arising from agreements of the Company or any Restricted Subsidiary providing for indemnification, adjustment or holdback of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; (m) Indebtedness of a Special Purpose Vehicle that is not recourse to the Company or any of its Restricted Subsidiaries (other than with respect to Standard Securitization Undertakings) in connection with a Securitization Transaction; provided, however, that in the event such Special Purpose Vehicle ceases to qualify as a Special Purpose Vehicle or such Indebtedness ceases to be non-recourse to the Company or any of its Restricted Subsidiaries, such Indebtedness will be deemed, in each case, to be incurred at such time; provided further, however, that Indebtedness incurred under this paragraph (m) with respect to Equipment Securitization Transactions shall not exceed 15% of Tangible Assets after giving effect to such Equipment Securitization Transaction; (n) guarantees by the Company or a Restricted Subsidiary of Indebtedness that was permitted to be incurred under this Indenture; and (o) Indebtedness of the Company or any Restricted Subsidiary, in addition to that described in clauses (a) through (n) of this definition, in an aggregate principal amount outstanding at any time not to exceed $50,000,000. "Permitted Investments" means any of the following: (i) Investments in the Company or in a Restricted Subsidiary; (ii) Investments in another Person, if as a result of such Investment (A) such other Person becomes a Restricted Subsidiary or (B) such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all of its assets to, the Company or a Restricted Subsidiary; (iii) Investments representing Capital Stock or obligations issued to the Company or a Restricted Subsidiary in settlement of claims against any other Person by reason of a composition or readjustment of debt or a reorganization of any debtor of the Company or such Restricted Subsidiary; (iv) Investments in Interest Rate Protection Agreements on commercially reasonable terms entered into by the Company or any of its Subsidiaries in the ordinary course of business in connection with the operations of the business of the 20 Company or its Restricted Subsidiaries to hedge against fluctuations in interest rates on its outstanding Indebtedness; (v) Investments in the Securities; (vi) Investments in Cash Equivalents; (vii) Investments acquired by the Company or any Restricted Subsidiary in connection with an Asset Sale permitted under Section 10.14 to the extent such Investments are non-cash proceeds as permitted under Section 10.14; (viii) advances to employees or officers of the Company in the ordinary course of business and additional loans to employees or officers, in an aggregate amount at any time outstanding not to exceed $10,000,000; (ix) any Investment to the extent that the consideration therefor is Capital Stock (other than Redeemable Capital Stock) of the Company; (x) guarantees (including guarantees of the Securities) of Indebtedness permitted to be incurred under Section 10.08; (xi) any acquisition of assets solely in exchange for the issuance of Capital Stock (other than Redeemable Capital Stock) of Holdings or the Company; and (xii) other Investments not to exceed $20,000,000 at any time outstanding. "Permitted Liens" means the following types of Liens: (a) any Lien existing as of the Issue Date; (b) Liens securing Indebtedness permitted under the provisions described in clauses (b) and (k) under the definition of "Permitted Indebtedness"; (c) any Lien securing Acquired Indebtedness created prior to (and not created in connection with, or in contemplation of) the incurrence of such Indebtedness by the Company or any Restricted Subsidiary, if such Lien does not attach to any property or assets of the Company or any Restricted Subsidiary other than the property or assets subject to the Lien prior to such incurrence; (d) Liens in favor of the Company or a Restricted Subsidiary; (e) Liens on and pledges of the assets or Capital Stock of any Unrestricted Subsidiary securing any Indebtedness of such Unrestricted Subsidiary; (f) Liens for taxes, assessments or governmental charges or claims either (i) not delinquent or (ii) thereafter payable without penalty or contested in good faith by appropriate proceedings and as to which the Company or its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP; (g) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers, materialmen, repairmen and other Liens imposed by law incurred in the ordinary course of business for sums not yet delinquent or being contested in good faith, if such reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made in respect thereof; (h) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, performance and return-of-money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money); 21 (i) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; (j) easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries; (k) any interest or title of a lessor under any Capitalized Lease Obligation or operating lease; (l) Liens securing Indebtedness incurred to finance the construction, purchase or lease of, or repairs, improvements or additions to, property, plant or equipment of the Company or any Restricted Subsidiary; provided, however, that the Lien may not extend to any other property owned by the Company or any Restricted Subsidiary at the time the Lien is incurred (other than assets and property affixed or appurtenant thereto), and the Indebtedness (other than any interest thereon) secured by the Lien may not be incurred more than 180 days after the later of the acquisition, completion of construction, repair, improvement, addition or commencement of full operation of the property subject to the Lien; (m) Liens securing reimbursement obligations with respect to commercial letters of credit which encumber documents and other property relating to such letters of credit and products and proceeds thereof; (n) Liens securing refinancing Indebtedness permitted under clause (j) of the definition of "Permitted Indebtedness", provided such Liens do not exceed the Liens replaced in connection with such refinanced Indebtedness; (o) Liens encumbering deposits made to secure obligations arising from statutory, regulatory, contractual, or warranty requirements of the Company or any of its Restricted Subsidiaries, including rights of offset and set-off; (p) Liens securing Interest Rate Protection Obligations which Interest Rate Protection Obligations relate to Indebtedness that is secured by Liens otherwise permitted under this Indenture; (q) customary Liens on assets of a Special Purpose Vehicle arising in connection with a Securitization Transaction; (r) Liens created in favor of the Trustee pursuant to Section 6.07 hereof; and (s) Liens incurred by the Company or any Restricted Subsidiary with respect to obligations that do not exceed $25,000,000 at any time outstanding. 22 "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Preferred Stock," as applied to any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person. "Private Placement Legend" shall mean the legend initially set forth on the Securities in the form set forth on Exhibit A-1. "Public Equity Offering" means an underwritten public offering of Common Stock pursuant to a registration statement filed with the Commission in accordance with the Securities Act. "Purchase Amount" means, with respect to an Offer to Purchase, the maximum aggregate amount payable by the Company for Securities under the terms of such Offer to Purchase, if such Offer to Purchase were accepted in respect of all Securities. "Purchase Date" shall have the meaning set forth in the definition of "Offer to Purchase." "Qualified Equity Interest" in a Person means any interest in Capital Stock of such Person, other than Redeemable Capital Stock. "Qualified Institutional Buyer" or "QIB" has the meaning specified in Rule 144A under the Securities Act. "Receivables Securitization Transaction" means any sale, assignment or other transfer by the Company or any Subsidiary of the Company of accounts receivable, lease receivables or other payment obligations owing to the Company or such Subsidiary of the Company or any interest in any of the foregoing, together in each case with any collections and other proceeds thereof, any collection or deposit account related thereto, and any collateral, guarantees or other property or claims supporting or securing payment by the obligor thereon of, or otherwise related to, or subject to leases giving rise to, any such receivables. "Record Expiration Date" has the meaning specified in Section 1.04. "Redeemable Capital Stock" means any class or series of Capital Stock that, either by its terms, by the terms of any security into which it is convertible or exchangeable or by contract or otherwise, is or upon the happening of an event or passage of time would be, required to be redeemed prior to the Maturity Date or is redeemable at the option of the holder thereof at any time prior to the Maturity Date, or is convertible into or exchangeable for debt securities at any time prior to the Maturity Date; provided, however, that Capital Stock will not constitute Redeemable Capital Stock solely because the holders thereof have the right to require the Company to repurchase or redeem such Capital Stock upon the occurrence of a Change of Control or an Asset Sale. 23 "Redemption Date," when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price," when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Registrable Securities" has the meaning set forth in the Registration Rights Agreement. "Registration Rights Agreement" means (i) with respect to the Initial Securities issued on the Issue Date, the Registration Rights Agreement dated as of April 20, 2001, by and among the Company, the Guarantors and the Initial Purchasers, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and (ii) with respect to each issuance of Additional Securities issued in a transaction exempt from the registration requirements of the Securities Act, the registration rights agreement, if any, among the Company and the Persons purchasing such Additional Securities under the related purchase agreement. "Regular Record Date" for the interest payable on any Interest Payment Date means the April 1 or October 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "Regulation S" means Regulation S under the Securities Act. "Replacement Assets" has the meaning specified in Section 10.14. "Required Filing Dates" has the meaning specified in Section 10.19. "Responsible Officer," when used with respect to the Trustee, means any officer within the Corporate Trust Office, including, any vice president, any assistant vice president, any assistant secretary, any assistant treasurer, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Payments" has the meaning specified in Section 10.09. "Restricted Security" means a Security that constitutes a "restricted security" within the meaning of Rule 144(a)(3) under the Securities Act; provided, however, that the Trustee shall be entitled to request and conclusively rely on an opinion of counsel with respect to whether any Security constitutes a Restricted Security. "Restricted Subsidiary" means any Subsidiary of the Company that is not an Unrestricted Subsidiary or a Special Purpose Vehicle. "Revocation" has the meaning set forth in Section 10.18. "RS Special Purpose Vehicle" means a trust, bankruptcy remote entity or other special purpose entity which is a Subsidiary of the Company (or, if not a Subsidiary of the Company, the common equity of which is wholly owned, directly or indirectly, by 24 the Company) and which is formed for the purpose of, and engages in no material business other than, acting as an issuer or a depositor in a Receivables Securitization Transaction (and, in connection therewith, owning accounts receivable, lease receivables, other rights to payment, leases and related assets and pledging or transferring any of the foregoing or interests therein). "Rule 144A" means Rule 144A under the Securities Act. "S&P" means Standard & Poor's Ratings Group, and its successors. "Sale/Leaseback Transaction" means an arrangement relating to property owned by the Company or a Restricted Subsidiary on the Issue Date or thereafter acquired by the Company or a Restricted Subsidiary whereby the Company or a Restricted Subsidiary transfers such property to a person and the Company or a Restricted Subsidiary leases it from such person. "Securities" means the securities issued under this Indenture. "Securities Act" means the Securities Act of 1933 and any statute successor thereto, in each case as amended from time to time. "Securitization Transaction" means an Equipment Securitization Transaction or a Receivables Securitization Transaction. "Security Register" and "Security Registrar" have the respective meanings specified in Section 3.05. "Senior Indebtedness" means with respect to any Person: (1) Indebtedness of such Person, whether outstanding on the Issue Date or thereafter created, incurred or assumed; and (2) accrued and unpaid interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to such Person whether or not post-filing interest is allowed in such proceeding) in respect of (A) indebtedness of such person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable, unless, in the case of clauses (1) and (2), in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is expressly provided that such obligations are subordinate in right of payment to the Securities or the Guaranty of such Person, as the case may be. Without limiting the generality of the foregoing, "Senior Indebtedness" shall include the principal of, premium, if any, and interest on all obligations of every nature of any Person from time to time owed to the lenders under the Credit Agreement, including, without limitation, principal of and interest on, any loans and letter of credit disbursements outstanding, and all fees, indemnities and expenses payable, under the Credit Agreement. 25 Notwithstanding the foregoing, "Senior Indebtedness" shall not include: (a) any Indebtedness of such Person (and any accrued and unpaid interest in respect thereof) that is subordinate or junior in any respect to any other Indebtedness or other obligation of such Person; (b) Indebtedness which, when incurred and without respect to any election under Section 1111(b) of Title 11, United States Code, is without recourse to such Person; (c) Indebtedness which is represented by Redeemable Capital Stock; (d) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities); (e) Indebtedness of or amounts owed by such Person for compensation to employees or for services rendered to such Person; (f) any liability for federal, state, local or other taxes owed or owing by such Person; (g) Indebtedness of such Person to a Subsidiary or any other Affiliate or any of such Affiliate's Subsidiaries; and (h) that portion of any Indebtedness which is incurred in violation of this Indenture. "Senior Subordinated Indebtedness" means the 9 1/2% Notes, 8.80% Notes, 9 1/4% Notes and 9% Notes, guarantees thereof and any other Indebtedness of the Company that specifically provides that such Indebtedness is to rank junior to the Securities in right of payment and is not subordinated by its terms in right of payment to any Indebtedness or other obligation of the Company which is not Senior Indebtedness of the Company. "Significant Subsidiary" of any Person means, as of any date of determination, a Restricted Subsidiary of such Person which would be a significant subsidiary of such Person as of such date as determined in accordance with the definition in Rule 1-02(w) of Article I of Regulation S-X promulgated by the Commission and as in effect on the date of this Indenture. "Special Purpose Vehicle" means an ES Special Purpose Vehicle or an RS Special Purpose Vehicle. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.07. "Standard Securitization Undertakings" means representations, warranties, covenants and indemnities entered into by the Company or any of its Restricted Subsidiaries that are reasonably customary in a Securitization Transaction. 26 "Stated Maturity" means, when used with respect to any Security or any installment of interest thereon, the date specified in such Security as the fixed date on which the principal of such Security or such installment of interest is due and payable, and when used with respect to any other Indebtedness, means the date specified in the instrument governing such Indebtedness as the fixed date on which the principal of such Indebtedness, or any installment of interest thereon, is due and payable. "Subordinated Indebtedness" means, with respect to a Person, Indebtedness of such Person (whether incurred on the Issue Date or thereafter incurred) which is subordinate or junior in right of payment to the Securities or a Guarantee of such Person, as the case may be, pursuant to a written agreement to that effect. "Subsidiary" means, with respect to any Person, (i) a corporation a majority of whose Voting Stock is at the time, directly or indirectly, owned by such Person, by one or more Subsidiaries of such Person or by such Person and one or more Subsidiaries thereof and (ii) any other Person (other than a corporation), including, without limitation, a partnership, limited liability company, business trust or joint venture, in which such Person, one or more Subsidiaries thereof or such Person and one or more Subsidiaries thereof, directly or indirectly, at the date of determination thereof, has at least majority ownership interest entitled to vote in the election of directors, managers or trustees thereof (or other Person performing similar functions). For purposes of this definition, any directors' qualifying shares or investments by foreign nationals mandated by applicable law shall be disregarded in determining the ownership of a Subsidiary. "Subsidiary Guaranty" means a Guaranty by a Subsidiary Guarantor of the Company's obligations with respect to the Securities. "Tangible Assets" means all assets of the Company and its Restricted Subsidiaries, excluding all Intangible Assets and any assets subject to a Securitization Transaction. For purposes of the foregoing, "Intangible Assets" means goodwill, patents, trade names, trade marks, copyrights, franchises, experimental expense, organization expenses and any other assets properly classified as intangible assets in accordance with GAAP. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trustee" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Unrestricted Subsidiary" means each Subsidiary of the Company designated as such pursuant to and in compliance with Section 10.18 and each Subsidiary of such Unrestricted Subsidiary. "U.S. Government Obligation" has the meaning specified in Section 12.04. 27 "Vice President," when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." "Voting Stock" means any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors, managers or trustees of any Person (irrespective of whether or not, at the time, stock of any other class or classes shall have, or might have, voting power by reason of the happening of any contingency). "Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of the Company of which 100% of the outstanding Capital Stock is owned by the Company or another Wholly Owned Restricted Subsidiary of the Company. For purposes of this definition, any directors' qualifying shares or investments by foreign nationals mandated by applicable law shall be disregarded in determining the ownership of a Subsidiary. SECTION 1.02. Compliance Certificates and Opinions. Upon any application or request by the Company or a Guarantor to the Trustee to take any action under any provision of this Indenture, the Company or the Guarantor shall furnish to the Trustee such certificates and opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officer's Certificate, if to be given by an officer of the Company or a Guarantor, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirement set forth in this Indenture. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (i) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (iii) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 1.03. Form of Documents Delivered to Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some 28 matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company or a Guarantor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate or opinion of counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company or a Guarantor stating that the information with respect to such factual matters is in the possession of the Company or such Guarantor, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. SECTION 1.04. Acts of Holders; Record Dates. Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company or a Guarantor, as applicable. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.01) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. The ownership of Securities shall be proved exclusively by the Security Register for all purposes. Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered 29 to be done by the Trustee, the Company or a Guarantor in reliance thereon, whether or not notation of such action is made upon such Security. The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given or taken by Holders of Securities, provided, however, that the Company may not set a record date for, and the provisions of this paragraph shall not apply with respect to, the giving or making of any notice, declaration, request or direction referred to in the next paragraph. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided, however, that no such action shall be effective hereunder unless taken on or prior to the applicable Record Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be cancelled and of no effect), nor shall anything in this paragraph be construed to render ineffective any action taken pursuant to or in accordance with any other provision of this Indenture by Holders of the requisite principal amount of Outstanding Securities on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Record Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in Section 1.06. The Trustee may but need not set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration referred to in Section 5.02, (iii) any request to institute proceedings referred to in Section 5.07(ii) or (iv) any direction referred to in Section 5.12. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided, however, that no such action shall be effective hereunder unless taken on or prior to the applicable Record Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action (whereupon the record date previously set shall automatically and without any action by any Person be cancelled and of no effect), nor shall anything in this paragraph be construed to render ineffective any action taken pursuant to or in accordance with any other provision of this Indenture by Holders of the requisite principal amount of Outstanding Securities on the date such action is taken. Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company's expense, shall cause notice of such record date, the matter(s) to be submitted for potential action by Holders and the applicable Record Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in Section 1.06. With respect to any record date set pursuant to this Section, the party hereto that sets such record date may designate any day as the "Record Expiration Date" and from time to time may change the Record Expiration Date to any earlier or later day, 30 provided, however, that no such change shall be effective unless notice of the proposed new Record Expiration Date is given to the other party hereto in writing, and to each Holder of Securities in the manner set forth in Section 1.06, on or before the existing Record Expiration Date. If a Record Expiration Date is not designated with respect to any record date set pursuant to this Section, the party hereto that set such record date shall be deemed to have initially designated the 180th day after such record date as the Record Expiration Date with respect thereto, subject to its right to change the Record Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Record Expiration Date shall be later than the 180th day after the applicable record date. Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. SECTION 1.05. Notices to Trustee, the Company or a Guarantor. Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (i) the Trustee by any Holder or by the Company or a Guarantor shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing and mailed, first-class postage prepaid, to or with the Trustee at its Corporate Trust Office, Attention: Corporate Trust Trustee Administration, (ii) the Company or a Guarantor by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to the Company or such Guarantor addressed to it at the address of the Company's principal office specified in the first paragraph of this instrument, or at any other address previously furnished in writing to the Trustee by the Company. SECTION 1.06. Notice to Holders; Waiver. Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at his address as it appears in the Security Register, not later than the latest date (if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail or receive such notice, nor any defect in any such notice, to any particular Holder shall affect the sufficiency or validity of such notice. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. 31 SECTION 1.07. Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under the Trust Indenture Act to be part of and govern this Indenture, such provision of the Trust Indenture Act shall control. If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, such provision shall be deemed to be so modified or excluded, as the case may be. SECTION 1.08. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 1.09. Successors and Assigns. Without limiting Articles VIII and XIII hereof, all covenants and agreements in this Indenture by each of the Company or the Guarantors shall bind their respective successors and assigns, whether so expressed or not. SECTION 1.10. Separability Clause. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 1.11. Benefits of Indenture. Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders of Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 1.12. Governing Law. This Indenture and the Securities shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof. SECTION 1.13. Legal Holidays. In any case where any Interest Payment Date, Redemption Date, Purchase Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Securities) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect (including with respect to the accrual of interest) as if made on the Interest Payment Date, Redemption Date or Purchase Date, or at the Stated Maturity. 32 ARTICLE II Security Forms SECTION 2.01. Forms Generally. The Securities and the Trustee's certificates of authentication shall be in substantially the forms set forth or referenced in Exhibit A-1 and Exhibit A-2 annexed hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or the Depositary or as may, consistently herewith, be determined by the officers executing such Securities, as evidenced by their execution thereof. ARTICLE III The Securities SECTION 3.01. Title and Terms. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture on the Issue Date is limited to $450,000,000 principal amount of Initial Securities and up to $450,000,000 principal amount of Exchange Securities exchanged therefor in accordance with the Registration Rights Agreement. Additional Securities may be issued, authenticated and delivered pursuant to Section 3.15, and Securities may be authenticated and delivered upon registration or transfer of, or in exchange for, or in lieu of, other Securities pursuant to Sections 3.04, 3.05, 3.06, 9.06 or 11.08 or in connection with an Offer pursuant to Sections 10.13 or 10.14. The Securities shall be known and designated as the "10 3/4% Senior Notes Due 2008" of the Company. Their Stated Maturity for payment of principal shall be April 15, 2008. Interest on the Securities shall accrue at the rate of 10.75% per annum and shall be payable semiannually on each April 15 and October 15, commencing October 15, 2001, to the Holders of record of Securities at the close of business on April 1 and October 1, respectively, immediately preceding such Interest Payment Date. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Issue Date of such Securities; provided, however, that interest on Additional Securities will accrue from their date of issuance. Interest on the Securities will be computed on the basis of a 360-day year comprised of twelve 30-day months. The principal of (and premium, if any) and interest on the Securities shall be payable at the Corporate Trust Office of the Trustee in the Borough of Manhattan, The City of New York, or such other office maintained by the Trustee for such purpose and at any other office or agency maintained by the Company for such purpose; provided, however, that, at the option of the Company, payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. The Securities shall be redeemable as provided in Article XI and the Securities. 33 The Securities shall be subject to Defeasance and/or Covenant Defeasance as provided in Article XII. SECTION 3.02. Denominations. The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 principal amount and any integral multiple thereof. SECTION 3.03. Execution, Authentication, Delivery and Dating. Initial Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A-1 hereto. Exchange Securities and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A-2 hereto. The terms and provisions contained in the Securities annexed hereto as Exhibits A-1 and A-2 shall constitute, and are hereby expressly made, a part of this Indenture and, to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. Initial Securities offered and sold in reliance on Rule 144A and on Regulation S shall be issued initially in the form of one or more Global Securities, substantially in the form set forth in Exhibit A-1, deposited with the Trustee, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. All Global Securities shall bear the legend set forth in Exhibit B. The aggregate principal amount of the Global Securities may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary, as hereinafter provided. All Securities shall remain in the form of a Global Security, except as provided herein. The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents, or its Chief Financial Officer. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, which shall specify the amount of the Securities to be authenticated and the date on which the original issue of Securities is to be authenticated and, in the case of an issuance of Additional Securities pursuant to Section 3.15 after the Issue Date, shall certify that such issuance is in compliance with Section 10.08; and the Trustee in accordance with such Company Order shall authenticate and deliver such Securities as in this Indenture provided and not otherwise. 34 Each Security shall be dated the date of its authentication. No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Authentication by counterpart shall satisfy the requirements of this Section 3.03 and the requirements of the Securities. SECTION 3.04. Temporary Securities. Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities. If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at any office or agency of the Company designated pursuant to Section 10.02, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of authorized denominations and of a like tenor. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities. SECTION 3.05. Registration, Registration of Transfer and Exchange. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office and in any other office or agency designated pursuant to Section 10.02 being herein sometimes collectively referred to as the "Security Register") in which, subject to such reasonable regulations as the Company may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities. The Trustee is hereby appointed the initial "Security Registrar" for the purpose of registering Securities and transfers of Securities as herein provided. Subject to Sections 3.13 and 3.14 of this Indenture, upon surrender for registration of transfer of any Security at an office or agency of the Company designated pursuant to Section 10.02 for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one more or more new Securities of any authorized denominations and of a like aggregate principal amount and tenor. At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations and of a like aggregate principal amount and tenor, upon surrender of the Securities to be exchanged at such office or agency. 35 Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the Holder making the exchange is entitled to receive. All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange. Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by the Holder thereof or his attorney duly authorized in writing. No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 3.04, 9.06 or 11.08 or in accordance with any Change of Control Offer pursuant to Section 10.13 or any Asset Sale Offer pursuant to Section 10.14, and in any such case not involving any transfer. The Company shall not be required (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Securities selected for redemption under Section 11.05 and ending at the close of business on the day of such mailing, (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part or (iii) to register the transfer of any Securities other than Securities having a principal amount of $1,000 or integral multiples thereof. SECTION 3.06. Mutilated, Destroyed, Lost and Stolen Securities. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them and any agent of each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute, and upon its request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security. 36 Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 3.07. Payment of Interest; Rights Preserved. Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more predecessor securities) is registered at the close of business on the Regular Record Date for such interest payment. Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (1) or (2) below: (1) the Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner: the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 15 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be given to each Holder in the manner specified in Section 1.06, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective predecessor Securities) 37 are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (2). (2) the Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause (2), such manner of payment shall be deemed practicable by the Trustee. Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security. SECTION 3.08. Persons Deemed Owners. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 3.07) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 3.09. Cancellation. All Securities surrendered for payment, redemption, registration of transfer or exchange or tendered and accepted pursuant to any Change of Control Offer pursuant to Section 10.13 or any Asset Sale Offer pursuant to Section 10.14 shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly cancelled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities cancelled as provided in this Section, except as expressly permitted by this Indenture. All cancelled Securities held by the Trustee shall be disposed of by the Trustee in its customary manner. SECTION 3.10. Computation of Interest. Interest on the Securities shall be computed on the basis of a 360-day year comprised of twelve 30-day months. SECTION 3.11. CUSIP and CINS Numbers. The Company in issuing the Securities may use "CUSIP" and "CINS" numbers (if then generally in use), and, if so, the Trustee shall use the CUSIP or CINS numbers in notices of redemption or repurchase as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption or repurchase and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption or repurchase shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee of any change in the CUSIP or CINS numbers. 38 SECTION 3.12. Deposits of Monies. Except to the extent payment of interest is made by the Company's check pursuant to Section 3.01, prior to 11:00 a.m., New York City time, on each Redemption Date, Stated Maturity, and Purchase Date, the Company shall deposit with the Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such Redemption Date, Stated Maturity and Purchase Date, as the case may be, in a timely manner which permits the Paying Agent to remit payment to the Holders on such Interest Payment Date, Redemption Date, Stated Maturity, and Purchase Date, as the case may be. SECTION 3.13. Book-Entry Provisions for Global Securities. (a) The Global Securities initially shall (i) be registered in the name of the Depositary or the nominee of such Depositary, (ii) be delivered to the Trustee as custodian for such Depositary and (iii) bear legends as set forth in Exhibit B hereto. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary, or the Trustee as its custodian, or under any Global Security, and the Depositary shall be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of the Global Securities for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security. (b) Interests of beneficial owners in a Global Security may be transferred in accordance with the applicable rules and procedures of the Depositary and the provisions of Section 3.14. Transfer of Global Securities shall be limited to transfers in whole, but not in part, to the Depositary, its successors or their respective nominees. Interests of beneficial owners in the Global Securities may not be transferred or exchanged for physical securities, except that physical securities shall be transferred to all beneficial owners in exchange for their beneficial interests in Global Securities if (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for any Global Security, or that it will cease to be a "Clearing Agency" under the Exchange Act, and in either case a successor Depositary is not appointed by the Company within 90 days of such notice, (ii) the Company, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of Certificated Securities under this Indenture or (iii) an Event of Default entitling the Holders to accelerate the maturity of the Securities has occurred and is continuing and the Security Registrar has received a written request from the Depositary to issue physical securities. (c) The Holder of any Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. SECTION 3.14. Special Transfer Provisions. (a) The Security Registrar shall register the transfer of any beneficial interest in an Initial Security to any Non-U.S. Person, whether or not such Security bears the Private Placement Legend, and such transfer may be made, if the proposed transferor has certified in writing to the Security 39 Registrar that such transfer was made in Reliance on Regulation S (such certification to be in the form set forth on the reverse of the Security). (b) The Security Registrar shall register the transfer of any beneficial interest in an Initial Security to a QIB (excluding Non-U.S. Persons), whether or not such Security bears the Private Placement Legend, and such transfer may be made, if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Security stating, or has otherwise advised the Company and the Security Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Security stating, or has otherwise advised the Company and the Security Registrar in writing, that it is purchasing the Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A. (c) Private Placement Legend. Upon the registration of transfer, exchange or replacement of Securities not bearing the Private Placement Legend, the Security Registrar shall deliver Securities that do not bear the Private Placement Legend. Upon the registration of transfer, exchange or replacement of Securities bearing the Private Placement Legend, the Security Registrar shall deliver only Securities that bear the Private Placement Legend unless (i) the circumstances contemplated by paragraph (a) or (b) of this Section 3.14 exists, (ii) there is delivered to the Security Registrar an opinion of counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act or (iii) such Security has been sold pursuant to an effective registration statement under the Securities Act. (d) Other Transfers. If a Holder proposes to transfer a Security constituting a Restricted Security pursuant to any exemption from the registration requirements of the Securities Act other than as provided for by Section 3.14(a) and 3.14(b), the Security Registrar shall only register such transfer or exchange if such transferor delivers an opinion of counsel satisfactory to the Company and the Security Registrar that such transfer is in compliance with the Securities Act and the terms of this Indenture. (e) General. By its acceptance of any Security bearing the Private Placement Legend and by its ownership of a beneficial interest therein, each Holder of such a Security and each owner of a beneficial interest therein acknowledges the restrictions on transfer of such Security and of beneficial interests therein set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Security and beneficial interests therein only as provided in this Indenture. 40 The Security Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 3.13 or this Section 3.14. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable prior written notice to the Security Registrar. SECTION 3.15. Issuance of Additional Securities. The Company shall be entitled, subject to its compliance with Section 10.08, to issue Additional Securities under this Indenture which shall have identical terms as the Initial Securities issued on the Issue Date, other than with respect to the date of issuance and issue price. The Initial Securities issued on the Issue Date, any Additional Securities and all Exchange Securities issued in exchange therefor shall be treated as a single class for all purposes under this Indenture. With respect to any Additional Securities, the Company shall set forth in a resolution of its Board of Directors and an Officers' Certificate, a copy of each which shall be delivered to the Trustee, the following information: (1) the aggregate principal amount of such Additional Securities to be authenticated and delivered pursuant to this Indenture; (2) the issue price, the issue date and the CUSIP number of such Additional Securities; provided, however, that no Additional Securities may be issued at a price that would cause such Additional Securities to have "original issue discount" within the meaning of Section 1273 of the Code; and (3) whether such Additional Securities shall be subject to restrictions on transfer and issued in the form of Initial Securities as set forth in Exhibit A-1 or Exchange Securities as set forth in Exhibit A-2. ARTICLE IV Satisfaction and Discharge SECTION 4.01. Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or repaid as provided in Section 3.06 and (ii) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.03) have been delivered to the Trustee for cancellation; or 41 (B) all such Securities not theretofore delivered to the Trustee for cancellation (other than Securities which have been destroyed, lost or stolen and which have been replaced or repaid as provided in Section 3.06), (i) have become due and payable, or (ii) will become due and payable at their Stated Maturity within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company, and the Company, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust for the purpose an amount sufficient to pay and discharge the entire Indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest on the Securities to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be, together with irrevocable instructions from the Company directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company or the Guarantors; and (3) the Company has delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture pursuant to this Article IV, the obligations of the Company to the Trustee under Section 6.07, the obligations of the Company to any Authenticating Agent under Section 6.14 and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the obligations of the Trustee under Section 4.02 and the last paragraph of Section 10.03 shall survive. SECTION 4.02. Application of Trust Money. Subject to the provisions of the last paragraph of Section 10.03, all money deposited with the Trustee pursuant to Section 4.01 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee. 42 ARTICLE V Remedies SECTION 5.01. Events of Default. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of the principal of or premium, if any, when due and payable, on any of the Securities (at Stated Maturity, upon optional redemption, required purchase or otherwise); or (2) default in the payment of an installment of interest on any of the Securities, when due and payable, for 30 days; or (3) default in the performance, or breach, of any covenant or agreement of the Company under this Indenture (other than a default in the performance or breach of a covenant or agreement which is specifically dealt with in clauses (1), (2) or (4)) and such default or breach shall continue for a period of 30 days after written notice has been given, by certified mail, (x) to the Company by the Trustee or (y) to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of the Outstanding Securities; or (4) (a) there shall be a default in the performance or breach of the provisions of Section 8.01 with respect to the Company; (b) the Company shall have failed to make or consummate an Asset Sale Offer in accordance with the provisions of Section 10.14; or (c) the Company shall have failed to make or consummate a Change of Control Offer in accordance with the provisions of Section 10.13; or (5) default or defaults under one or more agreements, instruments, mortgages, bonds, debentures or other evidences of Indebtedness under which the Company or any Restricted Subsidiary of the Company then has outstanding Indebtedness in excess of $15,000,000, individually or in the aggregate, and either (a) such Indebtedness is already due and payable in full or (b) such default or defaults have resulted in the acceleration of the maturity of such Indebtedness; or (6) one or more judgments, orders or decrees of any court or regulatory or administrative agency of competent jurisdiction for the payment of money in excess of $15,000,000, either individually or in the aggregate, shall be entered against the Company or any Restricted Subsidiary of the Company or any of their respective properties and shall not be discharged and there shall have been a period of 60 days after the date on which any period for appeal has expired and during which a stay of enforcement of such judgment, order or decree, shall not be in effect; or (7) the entry of a decree or order by a court having jurisdiction in the premises (A) for relief in respect of the Company or any Significant Subsidiary in an involuntary case or proceeding under the Federal Bankruptcy Code or any 43 other federal, state or foreign bankruptcy, insolvency, reorganization or similar law or (B) adjudging the Company or any Significant Subsidiary bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or any Significant Subsidiary under the Federal Bankruptcy Code or any other similar federal, state or foreign law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Company or any Significant Subsidiary or of any substantial part of any of their properties, or ordering the winding up or liquidation of any of their affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days; or (8) the institution by the Company or any Significant Subsidiary of a voluntary case or proceeding under the Federal Bankruptcy Code or any other similar federal, state or foreign law or any other case or proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company or any Significant Subsidiary to the entry of a decree or order for relief in respect of the Company or any Significant Subsidiary in any involuntary case or proceeding under the Federal Bankruptcy Code or any other similar federal, state or foreign law or to the institution of bankruptcy or insolvency proceedings against the Company or any Significant Subsidiary, or the filing by the Company or any Significant Subsidiary of a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy Code or any other similar federal, state or foreign law, or the consent by it to the filing of any such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or sequestrator (or other similar official) of any of the Company or any Significant Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due or the taking of corporate action by the Company or any Significant Subsidiary in furtherance of any such action; or (9) any of the Guarantees ceases to be in full force and effect or any of the Guarantees is declared to be null and void and unenforceable or any of the Guarantees is found to be invalid or any of the Guarantors denies its liability under its Guaranty (other than by reason of release of a Guarantor in accordance with the terms of this Indenture). SECTION 5.02. Acceleration of Maturity; Rescission and Annulment. If an Event of Default (other than those covered by clause (7) or (8) of Section 5.01 with respect to the Company) shall occur and be continuing, the Trustee, by notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Securities then Outstanding, by notice to the Trustee and the Company, may declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all of the Outstanding Securities due and payable immediately. If an Event of Default specified in clause (7) or (8) of Section 5.01 with respect to the Company or a Significant Subsidiary occurs and is continuing, then the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Outstanding Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder of Securities. 44 After a declaration of acceleration under the Indenture, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Company and the Trustee, may rescind such declaration if (1) the Company or any Guarantor has paid or deposited with the Trustee a sum sufficient to pay (A) all sums paid or advanced by the Trustee under this Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, (B) all overdue interest on all Securities, (C) the principal of and premium, if any, on any Securities which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Securities, and (D) to the extent that payment of such interest is lawful, interest upon overdue interest and overdue principal at the rate set forth in the Securities which has become due otherwise than by such declaration of acceleration; (2) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and (3) all Events of Default, other than the non-payment of principal of, premium, if any, and interest on the Securities that have become due solely by such declaration of acceleration, have been cured or waived. No such rescission shall affect any subsequent default or impair any right consequent thereto. SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by Trustee. The Company and each Guarantor covenants that if (i) default is made in the payment of any interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days, or (ii) default is made in the payment of the principal of (or premium, if any, on) any Security on the due date for payment thereof, including, with respect to any Security required to have been purchased pursuant to a Change of Control Offer or an Asset Sale Offer made by the Company, at the Purchase Date thereof, the Company or such Guarantor will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal (and premium, if any) and interest, and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal (and premium, if any) and on any overdue interest, at the rate provided by the Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the 45 reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. In addition to the rights and powers set forth in Section 317(a) of the Trust Indenture Act, the Trustee shall be entitled to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of the Holders of the Securities allowed in any judicial proceeding relative to the Company, any Guarantor or any other obligor upon the Securities, its creditors, or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the Holders to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for compensation and expenses, including counsel fees incurred by it up to the date of such distribution. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 5.04. Trustee May File Proofs of Claim. In case of any judicial proceeding relative to the Company, a Guarantor (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.07. No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors' or other similar committee. SECTION 5.05. Trustee May Enforce Claims Without Possession of Securities. All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable 46 compensation, expenses, distributions and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered. SECTION 5.06. Application of Money Collected. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: FIRST: To the payment of all amounts due the Trustee under Section 6.07; SECOND: To the payment of the amounts then due and unpaid for principal of (and premium, if any) and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal (and premium, if any) and interest, respectively; THIRD: To the payment of any and all other amounts due under the Indenture, the Securities or the Guarantees; and FOURTH: To the Company (or such other Person as a court of competent jurisdiction may direct). SECTION 5.07. Limitation on Suits. Subject to Section 5.08, no Holder of any Security shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (i) such Holder has previously given written notice to the Trustee of a continuing Event of Default; (ii) the Holders of not less than 25% in principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder; (iii) such Holder or Holders have offered to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; (iv) the Trustee for 45 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and (v) no direction inconsistent with such written request has been given to the Trustee during such 45-day period by the Holders of a majority in principal amount of the Outstanding Securities; it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference 47 over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders. SECTION 5.08. Unconditional Right of Holders to Receive Principal, Premium and Interest. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any) and (subject to Section 3.07) interest on such Security on the respective Stated Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date or in the case of a Change of Control Offer or an Asset Sale Offer made by the Company and required to be accepted as to such Security, on the relevant Purchase Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. SECTION 5.09. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, each Guarantor, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted, subject to the determination in such proceeding. SECTION 5.10. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 3.06, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 5.11. Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 5.12. Control by Holders. The Holders of a majority in principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that; (i) such direction shall not be in conflict with any rule of law or with this Indenture, and (ii) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. 48 SECTION 5.13. Waiver of Past Defaults. The Holders of not less than a majority in principal amount of the Outstanding Securities may on behalf of the Holders of all the Securities waive any past default hereunder and its consequences, except a default (i) in the payment of the principal of (or premium, if any) or interest on any Security (including any Security which is required to have been purchased pursuant to a Change of Control Offer or an Asset Sale Offer which has been made by the Company), or (ii) in respect of a covenant or provision hereof which under Article IX cannot be modified or amended without the consent of the Holder of each Outstanding Security affected. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. SECTION 5.14. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of such suit (including reasonable counsel fees and expenses), and may assess costs against any such party litigant, in the manner and to the extent provided in the Trust Indenture Act; provided, that neither this Section nor the Trust Indenture Act shall be deemed to authorize any court to require such an undertaking or to make such an assessment in any suit instituted by the Company or a Guarantor, in any suit instituted by the Trustee, in any suit instituted by any Holder or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities, or in any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Security on or after the Stated Maturity expressed in such Security (or, in the case of redemption, on or after the Redemption Date or, in the case of a Change of Control Offer or an Asset Sale Offer, made by the Company and required to be accepted as to such Security, on the applicable Purchase Date, as the case may be). SECTION 5.15. Waiver of Stay or Extension Laws. The Company and each Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company and each Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. 49 ARTICLE VI The Trustee SECTION 6.01. Certain Duties and Responsibilities. (a) Except during the continuance of an Event of Default, (i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by the provisions hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture but need not verify the contents thereof. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent misconduct, except that no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers under this Indenture, unless the Trustee has received security and indemnity satisfactory to it against any loss, liability or expense. The Trustee shall not be liable for any error of judgment unless it is proved that the Trustee was negligent in the performance of its duties hereunder. (d) Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.01. SECTION 6.02. Notice of Defaults. Within 90 days after the occurrence of any Default known to the Trustee, the Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Security Register, notice of such Default hereunder known to the Trustee, unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment of the principal of, premium, if any, or interest on any Security, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders. 50 SECTION 6.03. Certain Rights of Trustee. Subject to the provisions of Section 6.01: (a) the Trustee may conclusively rely as to the truth of the statements and correctness of the opinions expressed therein and shall be fully protected in acting or refraining from acting upon any resolution, Officer's Certificate, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors of the Company may be sufficiently evidenced by a Board Resolution of the Company; (c) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer's Certificate; (d) the Trustee may consult with counsel of its selection and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled (subject to reasonable confidentiality arrangements as may be proposed by the Company or any Guarantor) to make reasonable examination (upon prior notice and during regular business hours) of the books, records and premises of the Company or a Guarantor, personally or by agent or attorney; (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or custodians or nominees and the Trustee shall not be responsible for the supervision of, or any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; 51 (h) the Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; (i) in the event that the Trustee is also acting as Authenticating Agent, Paying Agent or Security Registrar hereunder, the rights and protections afforded to the Trustee pursuant to this Article VI shall also be afforded to such Authenticating Agent, Paying Agent and Security Registrar; and (j) the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture. SECTION 6.04. Not Responsible for Recitals or Issuance of Securities. The recitals contained herein and in the Securities, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee or any Authenticating Agent assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 6.05. May Hold Securities. The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company or any Guarantor, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 6.08 and 6.13, may otherwise deal with the Company or a Guarantor with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent. SECTION 6.06. Money Held in Trust. Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. SECTION 6.07. Compensation and Reimbursement. The Company agrees (1) to pay to the Trustee from time to time such compensation as the Company and the Trustee shall from time to time agree in writing for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, to promptly reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and (3) to indemnify the Trustee, its directors, officers, agents and employees for, and to hold them harmless against, any and all loss, damage, claim, liability or expense incurred without negligence or bad faith on its part, including taxes (other than taxes based upon, measured by or determined by the revenue or income of the Trustee), arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim (whether asserted by the Company, a Holder or any 52 other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall have a lien prior to the Securities as to all property and funds held by it hereunder for any amount owing to it pursuant to this Section 6.07, except with respect to funds held in trust for the benefit of the Holders of particular Securities. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.01(7) or Section 5.01(8), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law. The provisions of this Section shall survive any termination of this Indenture. SECTION 6.08. Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. SECTION 6.09. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has, or is a wholly-owned subsidiary of a bank holding company that has, a combined capital and surplus of at least $50,000,000 and a Corporate Trust Office in the Borough of Manhattan, The City of New York. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of a Federal or State supervising or examining authority, then for the purposes of this Section and to the extent permitted by the Trust Indenture Act, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 6.10. Resignation and Removal; Appointment of Successor. (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.11. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee in accordance with the applicable requirements of Section 6.11 shall not have been delivered to the Company and the resigning Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Securities, delivered to the Trustee and to the Company. If an instrument of acceptance by a successor Trustee in accordance 53 with the applicable requirements of Section 6.11 shall not have been delivered to the Company and the Trustee being removed within 30 days after the giving of such notice of removal, the Trustee being removed may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee. (d) If at any time: (i) the Trustee shall fail to comply with Section 6.08 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months, or (ii) the Trustee shall cease to be eligible under Section 6.09 and shall fail to resign after written request therefor by the Company, any Guarantor or by any such Holder, or (iii) the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, (A) the Company or any Guarantor, in each case by a Board Resolution, may remove the Trustee, or (B) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Securities delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 6.11, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in accordance with the applicable requirements of Section 6.11, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 1.06. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. (g) The resignation or removal of the Trustee pursuant to this Section 6.10 shall not affect the obligation of the Company to indemnify the Trustee pursuant to Section 6.07(3) in connection with the exercise or performance by the Trustee prior to its resignation or removal of any of its powers or duties hereunder. 54 (h) No Trustee under this Indenture shall be liable for any action or omission of any successor Trustee. SECTION 6.11. Acceptance of Appointment by Successor. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. SECTION 6.12. Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided, however, such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities. SECTION 6.13. Preferential Collection of Claims Against the Company or a Guarantor. If and when the Trustee shall be or become a creditor of the Company or a Guarantor (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the Trust Indenture Act regarding the collection of claims against the Company or such Guarantor (or any such other obligor). SECTION 6.14. Appointment of Authenticating Agent. The Trustee may appoint an Authenticating Agent or Agents which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer or partial redemption or partial purchase or pursuant to Section 3.06, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing 55 business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by federal or state authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall give notice of such appointment in the manner provided in Section 1.06, to all Holders as their names and addresses appear in the Security Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section. If an appointment is made pursuant to this Section, the Securities may have endorsed thereon, in addition to the Trustee's certificate of authentication, an alternative certificate of authentication in the following form: 56 This is one of the Securities described in the within-mentioned Indenture. Dated:_____________________ The Bank of New York, As Trustee by _______________________________ As Authenticating Agent by _______________________________ Authorized Signatory ARTICLE VII Holders' Lists and Reports by Trustee and Company SECTION 7.01. Company to Furnish Trustee Names and Addresses of Holders. The Company will furnish or cause to be furnished to the Trustee a list of the names and addresses of the Holders in such form as the Trustee may reasonably request in writing, within 30 days after the receipt by the Company of any such request, as of a date not more than 15 days prior to the time such list is furnished; excluding from any such list names and addresses received by the Trustee in its capacity as Security Registrar. SECTION 7.02. Preservation of Information; Communications to Holders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.01 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar, if so acting. (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and duties of the Trustee, shall be as provided by the Trust Indenture Act. (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company, any Guarantor nor the Trustee nor any agent of any of them shall be held accountable by reason of any disclosure of information as to the names and addresses of Holders made pursuant to the Trust Indenture Act. SECTION 7.03. Reports by Trustee. (a) Within 60 days after June 15 of each year commencing June 15, 2002, the Trustee shall transmit to Holders such reports 57 concerning the Trustee and its actions under this Indenture to the extent required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. (b) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Securities are listed, with the Commission and with the Company. The Company will promptly notify the Trustee when the Securities are listed on any stock exchange and of any delisting thereof. SECTION 7.04. Reports by Company. The Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to the Trust Indenture Act; provided that any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the Trustee within 15 days after the same is so required to be filed with the Commission. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer's Certificates). ARTICLE VIII Consolidation, Merger, Conveyance, Transfer or Lease SECTION 8.01. Company May Consolidate, Etc. Only on Certain Terms. (A) The Company will not, in any transaction or series of transactions, merge or consolidate with or into, or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets as an entirety to, any Person or Persons, and (B) the Company will not permit any of its Restricted Subsidiaries to enter into any such transaction or series of transactions if such transaction or series of transactions, in the aggregate, would result in a sale, assignment, conveyance, transfer, lease or other disposition of all or substantially all of the properties and assets of the Company or the Company and its Restricted Subsidiaries, taken as a whole, to any other Person or Persons, unless, in each of cases (A) and (B), at the time and after giving effect thereto: (1) either: (x) if the transaction or transactions is a merger or consolidation, the Company, or such Restricted Subsidiary, as the case may be, shall be the surviving Person of such merger or consolidation, or (y) the Person formed by such consolidation or into which the Company, or such Restricted Subsidiary, as the case may be, is merged or to which the properties and assets of the Company or such Restricted Subsidiary, as the case may be, substantially as an entirety, are transferred (any such surviving Person or transferee Person being the "Surviving 58 Entity") shall be a corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia and shall expressly assume by a supplemental indenture executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company or such Restricted Subsidiary, as the case may be, under the Securities, this Indenture and the Registration Rights Agreement and this Indenture, the Securities, the Guarantees and the Registration Rights Agreement shall remain in full force and effect; (2) immediately after giving effect to such transaction or series of transactions on a pro forma basis (including, without limitation, any Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction or series of transactions), no Default or Event of Default shall have occurred and be continuing; and (3) except in the case of any merger of the Company with any wholly- owned Subsidiary of the Company or any merger of a wholly owned Restricted Subsidiary of the Company with and into a Guarantor or merger of Guarantors (and in each case, with no other Persons), the Company or the Surviving Entity, as the case may be, after giving effect to such transaction or series of transactions on a pro forma basis (including, without limitation, any Indebtedness incurred or anticipated to be incurred in connection with or in respect of such transaction or series of transactions), could incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) under Section 10.08 (assuming a market rate of interest with respect to such additional Indebtedness). In connection with any consolidation, merger, transfer, lease, assignment or other disposition contemplated by the foregoing provisions of this Section 8.01, the Company shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officer's Certificate and an Opinion of Counsel, each stating that such consolidation, merger, transfer, lease, assignment, or other disposition and the supplemental indenture in respect thereof (required under clause (1)(y) of this Section 8.01) comply with the requirements of this Indenture. Each such Officer's Certificate shall set forth the manner of determination of the ability to incur Indebtedness in accordance with clause (3) of this Section 8.01. SECTION 8.02. Successor Substituted. Except as otherwise provided by Section 13.05, upon any consolidation or merger, or any sale, assignment, conveyance, transfer, lease or disposition of all or substantially all of the properties and assets of the Company in accordance with Section 8.01, the successor Person formed by such consolidation or into which the Company or a Restricted Subsidiary, as the case may be, is merged or the successor Person to which such sale, assignment, conveyance, transfer, lease or disposition is made shall succeed to, and be substituted for, and may exercise every right and power of the Company under the Securities, this Indenture and/or the Registration Rights Agreement, as applicable, with the same effect as if such successor had been named as the Company in the Securities, this Indenture and/or in the Registration Rights Agreement, as the case may be and, except in the case of a lease, the Company, or such Restricted Subsidiary, as the case may be, shall be released and discharged from its obligations thereunder. 59 For all purposes of this Indenture and the Securities (including the provisions of this Article VIII and Sections 10.08, 10.09 and 10.12), Subsidiaries of any Surviving Entity shall, upon consummation of such transaction or series of related transactions, become Restricted Subsidiaries unless and until designated Unrestricted Subsidiaries pursuant to and in accordance with Section 10.18 and all Indebtedness, and all Liens on property or assets, of the Company, and the Restricted Subsidiaries, as the case may be, in existence immediately prior to such transaction or series of related transactions will be deemed to have been incurred upon consummation of such transaction or series of related transactions. ARTICLE IX Amendments; Waivers; Supplemental Indentures SECTION 9.01. Amendments, Waivers and Supplemental Indentures Without Consent of Holders. Without the consent of any Holders, the Company and each Guarantor, when authorized by Board Resolutions, and the Trustee, at any time and from time to time, may together amend, waive or supplement this Indenture, for any of the following purposes: (i) to evidence the succession of another Person to the Company or a Guarantor and the assumption by any such successor of the covenants of the Company or such Guarantor herein and in the Securities or such Guarantor's Guaranty and to evidence the assumption of obligations under this Indenture and a Guaranty pursuant to Section 10.17; or (ii) to add to the covenants of the Company or a Guarantor for the benefit of the Holders, or to surrender any right or power herein conferred upon the Company or a Guarantor; or (iii) to secure the Securities pursuant to the requirements of Section 10.12 or otherwise; or (iv) to comply with any requirements of the Commission in order to effect or maintain the qualification of this Indenture under the Trust Indenture Act; or (v) to cure any ambiguity, to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, provided, however, that (a) such amendment, waiver or supplement does not adversely affect the rights of any Holder of Securities and (b) the Company shall have delivered to the Trustee an Opinion of Counsel stating that such action pursuant to clauses (i), (ii), (iii), (iv) or (v) above is permitted by this Indenture. The Trustee shall not be obligated to enter into any such amendment or supplemental indenture that adversely affects its own rights, duties or immunities under this Indenture or otherwise. SECTION 9.02. Modifications, Amendments and Supplemental Indentures with Consent of Holders. With the consent of the Holders of not less than a 60 majority in principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company and the Guarantors, when authorized by Board Resolutions, and the Trustee may together modify, amend or supplement this Indenture for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders under this Indenture; provided, however, that no such modification, amendment or supplemental indenture shall, without the consent of the Holder of each Outstanding Security affected thereby, (i) reduce the principal amount of, extend the Stated Maturity of or alter the redemption provisions of, the Securities, (ii) change the currency in which any Securities or any premium or the interest thereon is payable, (iii) reduce the percentage in principal amount of Outstanding Securities that must consent to an amendment, supplement or waiver or consent to take any action under this Indenture or the Securities or any Guaranty, (iv) impair the right to institute suit for the enforcement of any payment on or with respect to the Securities or any Guaranty, (v) waive a default in payment with respect to the Securities or any Guaranty, (vi) amend, change or modify the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control or make and consummate an Asset Sale Offer with respect to any Asset Sale or modify any of the provisions or definitions with respect thereto, (vii) reduce or change the rate or time for payment of interest on the Securities, or (viii) modify or change any provision of this Indenture affecting the ranking of the Securities or any Guaranty in a manner adverse to the Holders of the Securities. It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed amendment or supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. The Trustee shall join with the Company and each Guarantor in the execution of such amended or supplemental indenture unless such amended or supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion but shall not be obligated to enter into such amendment or supplemental indenture. In addition, no modification, amendment or supplement to the provisions of Article XIV which is adverse to the interests of the lenders under the Credit Facility or the Term Loan shall be made without the consent of the representatives of such lenders. 61 SECTION 9.03. Execution of Supplemental Indentures. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.01) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise; provided that the Trustee shall enter into and execute all other supplemental indentures which satisfy all applicable conditions under this Article IX. SECTION 9.04. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. SECTION 9.05. Conformity with Trust Indenture Act. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the Trust Indenture Act as then in effect. SECTION 9.06. Reference in Securities to Supplemental Indentures. Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture, provided that any failure by the Trustee to make such notation shall not affect the validity of the matter provided for in such supplemental indenture or any Security or Guaranty hereunder. If the Company shall so determine, new Securities or Guarantees so modified as to conform, in the opinion of the Trustee, the Guarantors and the Company, to any such supplemental indenture may be prepared and executed by the Company or Guarantor and authenticated and delivered by the Trustee in exchange for Outstanding Securities. SECTION 9.07. Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any covenant or condition set forth in Section 8.01, provided, however, pursuant to Section 9.01(ii) and set forth in Sections 10.04 to 10.12 and 10.15 to 10.18, inclusive, if before the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Securities shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in full force and effect; provided, however, with respect to an Offer as to which an Offer to Purchase has been mailed, no such waiver may be made or shall be effective against any Holder tendering Securities pursuant to such Offer, and the Company may not omit to comply with the terms of such Offer as to such Holder. SECTION 9.08. No Liability for Certain Persons. No director, officer, employee, or stockholder of Holdings or the Company, nor any director, officer or employee of any Guarantor, as such, shall have any liability for any obligations of the 62 Company or any Guarantor under the Securities, the Guarantees or this Indenture based on or by reason of such obligations or their creation. Each Holder by accepting a Security waives and releases all such liability. The foregoing waiver and release is an integral part of the consideration for the issuance of the Securities and the Guarantees. ARTICLE X Covenants SECTION 10.01. Payment of Principal, Premium and Interest. The Company shall duly and punctually pay the principal of (and premium, if any) and interest on the Securities in accordance with the terms of the Securities and this Indenture. SECTION 10.02. Maintenance of Office or Agency. The Company shall maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Company or any Guarantor in respect of the Securities, the Guarantees and this Indenture may be served. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at a Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands. In the event any such notice or demands are so made or served on the Trustee, the Trustee shall promptly forward copies thereof to the Company. The Company may also from time to time designate one or more other offices or agencies (in or outside the Borough of Manhattan, The City of New York) where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. SECTION 10.03. Money for Security Payments to be Held in Trust. If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (and premium, if any) or interest on any of the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. Whenever the Company shall have one or more Paying Agents, the Company will, prior to 11:00 a.m., New York City time, on each due date of the principal of (and premium, if any) or interest on any Securities, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such 63 sum to be held as provided by the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company shall cause each Paying Agent other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (i) comply with the provisions of the Trust Indenture Act applicable to it as Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent as such. The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by such Paying Agent; and, upon such payment by any Paying Agent (other than the Company) to the Trustee, such Paying Agent shall be released from all further liability with respect to such money. Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on any Security and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company. SECTION 10.04. Existence; Activities. Subject to Article VIII, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and material franchises; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors of the Company in good faith shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders. SECTION 10.05. Maintenance of Properties. The Company shall cause all material properties used in the conduct of its business or the business of any Restricted Subsidiary to be maintained and kept in good condition, repair and working order (regular wear and tear excepted), all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the 64 Company from disposing of any asset (subject to compliance with Section 10.14) or from discontinuing the operation or maintenance of any of such material properties if such discontinuance is, as determined by the Company in good faith, desirable in the conduct of its business or the business of any Restricted Subsidiary and not disadvantageous in any material respect to the Holders. SECTION 10.06. Payment of Taxes and Other Claims. The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all taxes, assessments and governmental charges levied or imposed upon the Company or any of its Restricted Subsidiaries or upon the income, profits or property of the Company or any of its Restricted Subsidiaries, and (2) all lawful material claims for labor, materials and supplies which, if unpaid, might by law become a lien upon property of the Company or any of its Restricted Subsidiaries; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 10.07. Maintenance of Insurance. The Company shall, and shall cause its Restricted Subsidiaries to, keep at all times all of their material properties which are of an insurable nature insured against loss or damage with insurers believed by the Company to be responsible to the extent that property of similar character is usually so insured by corporations similarly situated and owning like properties in accordance with good business practice. The Company shall, and shall cause its Restricted Subsidiaries to, use the proceeds from any such insurance policy to repair, replace or otherwise restore all material properties to which such proceeds relate, provided, however, that the Company shall not be required to repair, replace or otherwise restore any such material property if the Company in good faith determines that such inaction is desirable in the conduct of the business of the Company or any Restricted Subsidiary and not disadvantageous in any material respect to the Holders. SECTION 10.08. Limitation on Indebtedness. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or in any manner become directly or indirectly liable, contingently or otherwise (in each case, to "incur"), for the payment of any Indebtedness (including any Acquired Indebtedness) other than Permitted Indebtedness; provided, however, that (i) the Company and any Guarantor will be permitted to incur Indebtedness (including Acquired Indebtedness), and (ii) a Restricted Subsidiary will be permitted to incur Acquired Indebtedness, if in each case, after giving pro forma effect to (1) the incurrence of such Indebtedness and (if applicable) the application of the net proceeds therefrom, including to refinance other Indebtedness, as if such Indebtedness were incurred at the beginning of the four full fiscal quarters immediately preceding such incurrence, taken as one period; (2) the incurrence, repayment or retirement of any other Indebtedness by the Company and its Restricted Subsidiaries since the first day of such four-quarter period as if such Indebtedness was incurred, repaid or retired at the beginning of such four- quarter period (except that, in making such computation, the amount of Indebtedness under any revolving credit facility shall be computed based upon the average daily balance of such Indebtedness during such four-quarter period); and (3) any Asset Sale or Asset Acquisition occurring since the first day of such four-quarter period (including to the date of calculation) as if such acquisition or disposition occurred at the beginning of such four-quarter period, the Consolidated Fixed Charge Coverage Ratio of the Company is at least 2:1. 65 SECTION 10.09. Limitation on Restricted Payments. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (a) declare or pay any dividend or make any other distribution or payment on or in respect of Capital Stock of the Company or any of its Restricted Subsidiaries or make any payment to the direct or indirect holders (in their capacities as such) of Capital Stock of the Company or any of its Restricted Subsidiaries (other than dividends or distributions payable solely in Capital Stock of the Company (other than Redeemable Capital Stock) or in options, warrants or other rights to purchase Capital Stock of the Company (other than Redeemable Capital Stock)) (other than the declaration or payment of dividends or other distributions to the extent declared or paid to the Company or any Restricted Subsidiary); (b) purchase, redeem, defease or otherwise acquire or retire for value any Capital Stock of the Company or any of its Restricted Subsidiaries or any options, warrants, or other rights to purchase any such Capital Stock (other than any such securities owned by the Company or a Restricted Subsidiary); (c) make any principal payment on, or purchase, defease, repurchase, redeem or otherwise acquire or retire for value, prior to any scheduled maturity, scheduled repayment, scheduled sinking fund payment or other Stated Maturity, any Subordinated Indebtedness (other than any such Subordinated Indebtedness owned by the Company or a Restricted Subsidiary); or (d) make any Investment (other than any Permitted Investment) in any Person, (such payments or Investments described in the preceding clauses (a), (b), (c) and (d) are collectively referred to as "Restricted Payments"), unless, after giving effect to the proposed Restricted Payment (the amount of any such Restricted Payment, if other than cash, shall be the Fair Market Value of the asset(s) proposed to be transferred by the Company or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment), (A) no Default or Event of Default shall have occurred and be continuing, (B) immediately after giving effect to such Restricted Payment, the Company would be able to incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) (assuming a market rate of interest with respect to such additional Indebtedness) and (C) the aggregate amount of all Restricted Payments declared or made from and after May 22, 1998 would not exceed the sum of: (1) 50% of the aggregate Consolidated Net Income of the Company accrued on a cumulative basis during the period (treated as one accounting period) beginning on May 22, 1998 and ending on the last day of the fiscal quarter of the Company immediately preceding the date of such proposed Restricted Payment (or, if such aggregate cumulative Consolidated Net Income of the Company for such period shall be a deficit, minus 100% of such deficit); (2) the aggregate net cash proceeds received by the Company as capital contributions to the Company after May 22, 1998 and which constitute shareholders' equity of the Company in accordance with GAAP; 66 (3) the aggregate net cash proceeds received by the Company from the issuance or sale of Capital Stock (excluding Redeemable Capital Stock of the Company) of the Company to any Person (other than an issuance or sale to a Subsidiary of the Company and other than an issuance or sale to an employee stock ownership plan or to a trust established by the Company or any Subsidiary of the Company for the benefit of employees of the Company or any Subsidiary of the Company) after May 22, 1998; (4) the aggregate net cash proceeds received by the Company from any Person (other than a Subsidiary of the Company) upon the exercise of any options, warrants or rights to purchase shares of Capital Stock (other than Redeemable Capital Stock) of the Company after May 22, 1998; (5) the aggregate net cash proceeds received after May 22, 1998 by the Company from any Person (other than a Subsidiary of the Company) for debt securities that have been converted or exchanged into or for Capital Stock of the Company (other than Redeemable Capital Stock) (to the extent such debt securities were originally sold for cash) plus the aggregate amount of cash received by the Company (other than from a Subsidiary of the Company) in connection with such conversion or exchange; (6) in the case of the disposition or repayment of any Investment constituting a Restricted Payment after May 22, 1998, an amount equal to the lesser of the return of capital with respect to such Investment and the initial amount of such Investment, in either case, less the cost of the disposition of such Investment; and (7) so long as the Designation (as defined in Section 10.18) thereof was treated as a Restricted Payment made after May 22, 1998, with respect to any Unrestricted Subsidiary that has been redesignated as a Restricted Subsidiary after the Issue Date in accordance with Section 10.18 below, the Fair Market Value of the Company's interest in such Subsidiary, provided, however, that such amount shall not in any case exceed the Designation Amount (as defined in Section 10.18) with respect to such Restricted Subsidiary upon its Designation, minus the Designation Amount (measured as of the date of Designation) with respect to any Restricted Subsidiary of the Company which has been designated as an Unrestricted Subsidiary after May 22, 1998 in accordance with Section 10.18 below. For purposes of the preceding clause (C)(4), the value of the aggregate net proceeds received by the Company upon the issuance of Capital Stock upon the exercise of options, warrants or rights will be the net cash proceeds received upon the issuance of such options, warrants or rights plus the incremental amount received by the Company upon the exercise thereof. None of the foregoing provisions shall prohibit, so long, in the case of clauses (ii), (iii), (v), (vi), (vii), (viii), (ix) and (xi) below, as there is no Default or Event of Default continuing, (i) the payment of any dividend or distribution within 60 days after the date of its declaration, if at the date of declaration such payment would be permitted 67 by the first paragraph of this Section 10.09; (ii) the redemption, repurchase or other acquisition or retirement of any shares of any class of Capital Stock of the Company in exchange for, or out of the net cash proceeds of, a substantially concurrent issue and sale of other shares of Capital Stock of the Company (other than Redeemable Capital Stock of the Company) to any Person (other than to a Subsidiary of the Company); provided, however, that such net cash proceeds are excluded from clause (C) of the first paragraph of this Section 10.09; (iii) any redemption, repurchase or other acquisition or retirement of Subordinated Indebtedness by exchange for, or out of the net cash proceeds of, a substantially concurrent issue and sale of (1) Capital Stock (other than Redeemable Capital Stock of the Company) of the Company to any Person (other than to a Subsidiary of the Company); provided, however, that any such net cash proceeds are excluded from clause (C) of the first paragraph of this Section 10.09; or (2) Indebtedness of the Company so long as such Indebtedness is Subordinated Indebtedness which (x) has no scheduled principal payment prior to the 91st day after the Maturity Date, (y) has an Average Life to Stated Maturity greater than the remaining Average Life to Stated Maturity of the Securities and (z) is subordinated to the Securities in the same manner and to the same extent as the Subordinated Indebtedness so purchased, exchanged, redeemed, acquired or retired; (iv) Investments constituting Restricted Payments made as a result of the receipt of non-cash consideration from any Asset Sale or other sale of assets or property made pursuant to and in compliance with this Indenture; (v) payments to purchase Capital Stock of the Company or Holdings from officers of the Company or Holdings, pursuant to agreements in effect as of the Issue Date, in an amount not to exceed $15,000,000 in the aggregate; (vi) payments (other than those covered by clause (v)) to purchase Capital Stock of the Company or Holdings from management or employees of the Company or any of its Subsidiaries, or their authorized representatives, upon the death, disability or termination of employment of such employees, in aggregate amounts under this clause (vi) not to exceed $1,000,000 in any fiscal year of the Company,(vii) payments to Holdings in an amount sufficient to permit it to make scheduled payments of interest on its 6 1/2% Convertible Subordinated Debentures due August 1, 2028, issued to United Rentals Trust I, (viii) upon the occurrence of a Change of Control and within 60 days after the completion of the offer to repurchase the Securities pursuant to Section 10.13 (including the purchase of the Securities tendered), any purchase or redemption of Subordinated Indebtedness or any Capital Stock of Holdings, the Company or any Restricted Subsidiaries required pursuant to the terms thereof as a result of such Change of Control at a purchase or redemption price not to exceed 101% of the outstanding principal amount or liquidation amount thereof, plus accrued and unpaid interest or dividends (if any); provided, however, that at the time of such purchase or redemption no Default shall have occurred and be continuing (or would result therefrom); (ix) upon the occurrence of an Asset Sale and within 60 days after the completion of an Asset Sale Offer to repurchase the Securities pursuant to Section 10.14 (including the purchase of the Securities tendered), any purchase or redemption of Subordinated Indebtedness or any Capital Stock of Holdings, the Company or any Restricted Subsidiaries required pursuant to the terms thereof as a result of such Asset Sale at a purchase or redemption price not to exceed 100% of the outstanding principal amount or liquidation amount thereof, plus accrued and unpaid interest or dividends (if any); provided, however, that at the time of such purchase or redemption no Default shall have occurred and be continuing (or would result therefrom); (x) payments to Holdings in an amount sufficient to enable Holdings to pay (1) its taxes, legal, accounting, payroll, benefits and corporate overhead expenses (including Commission, stock exchange and transfer agency fees and expenses), and expenses of United Rentals Trust I payable by Holdings pursuant to the terms of the trust agreement governing such trust, (2) trade, 68 lease, payroll, benefits and other obligations in respect of goods to be delivered to, services (including management and consulting services) performed for and properties used by, the Company and its Restricted Subsidiaries, (3) the purchase price for Investments in other Persons, provided, however, that promptly following such Investment either (x) such other Person either becomes a Restricted Subsidiary or is merged or consolidated with, or transfers or conveys all or substantially all of its assets to, the Company or a Restricted Subsidiary, or (y) such Investment would otherwise be permitted under this Indenture if made by the Company and such Investment is contributed or transferred by Holdings to the Company or a Restricted Subsidiary and (4) reasonable and customary incidental expenses as determined in good faith by the Board of Directors of Holdings, (xi) cash payments in lieu of the issuance of fractional shares in connection with the exercise of any warrants, options or other securities convertible into or exchangeable for Capital Stock of Holdings, the Company or any of its Restricted Subsidiaries, (xii) the deemed repurchase of Capital Stock on the cashless exercise of stock options, (xiii) the payment of any dividend or distribution by a Restricted Subsidiary to the holders of its Capital Stock on a pro rata basis and (xiv) any Investment made in a Special Purpose Vehicle in connection with a Securitization Transaction, which Investment consists of the assets described in the definition of "Equipment Securitization Transaction" or "Receivables Securitization Transaction". Any payments made pursuant to clauses (i), (v), (vi), (vii), (viii) or (ix) of this paragraph shall be taken into account in calculating the amount of Restricted Payments made from and after May 22, 1998. SECTION 10.10. Limitation on Preferred Stock of Restricted Subsidiaries. The Company shall not permit any Restricted Subsidiary to issue any Preferred Stock other than Preferred Stock issued to the Company or a Wholly Owned Restricted Subsidiary. The Company shall not sell, transfer or otherwise dispose of Preferred Stock issued by a Restricted Subsidiary of the Company or permit a Restricted Subsidiary to sell, transfer or otherwise dispose of Preferred Stock issued by a Restricted Subsidiary, other than to the Company or a Wholly Owned Restricted Subsidiary. Notwithstanding the foregoing, nothing in this Section 10.10 shall prohibit Preferred Stock (other than Redeemable Capital Stock) issued by a Person prior to the time (A) such Person becomes a Restricted Subsidiary of the Company, (B) such Person merges with or into a Restricted Subsidiary of the Company or (C) a Restricted Subsidiary of the Company merges with or into such Person; provided, however, that such Preferred Stock was not issued or incurred by such Person in anticipation of a transaction contemplated by subclause (A), (B), or (C) above. SECTION 10.11. Limitation on Transactions with Affiliates. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into any transaction or series of related transactions (including, without limitation, the sale, transfer, disposition, purchase, exchange or lease of assets, property or services) with, or for the benefit of, any of its Affiliates (other than Restricted Subsidiaries), except (a) on terms that are no less favorable to the Company or such Subsidiary, as the case may be, than those which could have been obtained in a comparable transaction at such time from Persons who are not Affiliates of the Company, (b) with respect to a transaction or series of related transactions involving aggregate payments or value equal to or greater than $2,000,000 the Company shall have delivered an Officer's Certificate to the Trustee certifying that such transaction or transactions comply with the preceding clause (a), and (c) with respect to a transaction or series of related transactions involving aggregate payments or value equal to or greater than 69 $5,000,000, such transaction or transactions shall have been approved by a majority of the Disinterested Members of the Board of Directors of the Company. Notwithstanding the foregoing, the restrictions set forth in this Section 10.11 shall not apply to (i) transactions with or among the Company and the Restricted Subsidiaries of the Company, (ii) customary directors' fees, indemnification and similar arrangements, consulting fees, employee salaries, bonuses or employment agreements, compensation or employee benefit arrangements and incentive arrangements with any officer, director or employee of the Company or any Restricted Subsidiary entered into in the ordinary course of business, (iii) any dividends, payments or investments made in compliance with Section 10.09, (iv) loans and advances to officers, directors and employees of the Company or any Restricted Subsidiary for travel, entertainment, moving and other relocation expenses, in each case made in the ordinary course of business, (v) the incurrence of intercompany Indebtedness which constitutes Permitted Indebtedness, (vi) transactions pursuant to agreements in effect on the Issue Date, (vii) the purchase of equipment for its Fair Market Value from Terex Corporation or its Affiliates in the ordinary course of business of each of Terex Corporation and the Company, (viii) any sale, conveyance or other transfer of assets customarily transferred in a Securitization Transaction to a Special Purpose Vehicle, (ix) transactions with customers, clients, suppliers, joint venture partners, joint ventures, including their members or partners, or purchasers or sellers of goods or services, in each case in the ordinary course of business, including pursuant to joint venture agreements, and otherwise in compliance with the terms of this Indenture which are, in the aggregate (taking into account all the costs and benefits associated with such transactions), materially no less favorable to the Company or the applicable Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or that Restricted Subsidiary with an unrelated person or entity, in the good faith determination of the Company's Board of Directors or its senior management, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party, and (x) transactions described in, or permitted by, clauses (vii) and (x) of the final paragraph of Section 10.09. SECTION 10.12. Limitation on Liens. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, create, incur, assume or suffer to exist any Lien (the "Initial Lien") of any kind against or upon any of its property or assets, or any proceeds therefrom, unless the Securities are equally and ratably secured (except that Liens securing Subordinated Indebtedness shall be expressly subordinate to Liens securing the Securities to the same extent such Subordinated Indebtedness is subordinate to the Securities), except for Permitted Liens. Any Lien created for the benefit of the Holders of the Securities pursuant to the preceding sentence shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Initial Lien. SECTION 10.13. Change of Control. (a) On or before the 30th day after the date of the occurrence of a Change of Control (the "Change of Control Date"), the Company shall make an Offer to Purchase (a "Change of Control Offer") on a Business Day not more than 60 nor less than 30 days following the occurrence of the Change of Control, (the "Change of Control Purchase Date") all of the then Outstanding Securities tendered at a purchase price in cash (the "Change of Control Purchase Price") equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, thereon to 70 the Change of Control Purchase Date. The Company shall be required to purchase all Securities tendered into the Change of Control Offer and not withdrawn. (b) On the Change of Control Purchase Date, the Company shall (i) accept for payment Securities or portions thereof (not less than $1,000 principal amount and integral multiples thereof) tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent money, in immediately available funds, sufficient to pay the purchase price of all Securities or portions thereof so tendered and accepted and (iii) deliver to the Trustee the Securities so accepted together with an Officer's Certificate setting forth the Securities or portions thereof tendered to and accepted for payment by the Company. The Paying Agent shall promptly mail or deliver to the Holders of Securities so accepted payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and make available for delivery to such Holders a new Security of like tenor equal in principal amount to any unpurchased portion of the Security surrendered. Any Securities not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Change of Control Offer not later than the third Business Day following the Change of Control Purchase Date. (c) The Company shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements applicable to a Change of Control Offer made by the Company and purchases all Securities validly tendered and not withdrawn under such Change of Control Offer. (d) The Company shall comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the extent such laws or regulations are applicable, in the event that a Change of Control occurs and the Company is required to purchase Securities as described above. (e) Upon the occurrence of a Change of Control, the Company shall not repurchase any Subordinated Indebtedness of the Company pursuant to an offer to purchase or otherwise until (1) the requirements of this Section 10.13 have been satisfied or (2) the Company shall have obtained the requisite consent under this Indenture to permit the repurchase of such Subordinated Indebtedness. SECTION 10.14. Disposition of Proceeds of Asset Sales. The Company will not, and will not permit any of its Restricted Subsidiaries to, make any Asset Sale unless (a) the Company or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the shares or assets sold or otherwise disposed of and (b) at least 75% of such consideration consists of cash or Cash Equivalents or Replacement Assets; provided, however, that (i) the amount of any liabilities (as shown on the most recent balance sheet of the Company or such Restricted Subsidiary) of the Company or such Restricted Subsidiary that are assumed by the transferee of such assets and (ii) any securities, notes or other obligations received by the Company or such Restricted Subsidiary from such transferee that are converted within 30 days into cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received) shall be deemed to be cash for the purposes of this provision; provided further, that the 75% limitation referred to in clause (b) will not apply to any Asset Sale in which the cash or Cash Equivalent portion of the consideration received therefrom, determined in accordance with the foregoing provision, is equal to or 71 greater than what the after-tax proceeds would have been had such Asset Sale complied with the aforementioned 75% limitation. To the extent that the Net Cash Proceeds of any Asset Sale are not required to be applied to repay, and permanently reduce the commitments under, Senior Indebtedness of the Company or any Restricted Subsidiary, or are not so applied, the Company or such Restricted Subsidiary, as the case may be, may apply the Net Cash Proceeds from such Asset Sale, within 360 days of such Asset Sale, to an investment in properties and assets that replace the properties and assets that were the subject of such Asset Sale or in properties and assets that are used or useful in the business of the Company and its Restricted Subsidiaries conducted at such time or in businesses reasonably related thereto or in Capital Stock of a Person, the principal portion of whose assets consist of such property or assets ("Replacement Assets"). Any Net Cash Proceeds from any Asset Sale that are neither used to repay, and permanently reduce the commitments under, Senior Indebtedness of the Company, nor invested in Replacement Assets within such 360-day period constitute "Excess Proceeds" subject to disposition as provided below. When the aggregate amount of Excess Proceeds equals or exceeds $10,000,000, the Company shall make an offer to purchase (an "Asset Sale Offer"), from all holders of the Securities, an aggregate principal amount of Securities equal to such Excess Proceeds, at a price in cash equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest, if any, thereon to the Purchase Date (the "Asset Sale Offer Price"). To the extent that the aggregate principal amount of Securities tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Company may use such deficiency for general corporate purposes. The Securities shall be purchased by the Company, at the option of the Holder thereof, in whole or in part in integral multiples of $1,000, on a date that is not earlier than 30 days and not later than 60 days from the date the notice is given to Holders, or such later date as may be necessary for the Company to comply with the requirements under the Exchange Act. If Securities purchasable at an aggregate Purchase Price in excess of the Purchase Amount are tendered and not withdrawn pursuant to the Asset Sale Offer to Purchase, the Company shall purchase Securities on a pro rata basis, based on the Purchase Price therefor, or such other method as the Trustee shall deem fair and appropriate (subject in each case to applicable rules of the Depositary and any securities exchange upon which the Securities may then be listed), with such adjustments as may be deemed appropriate so that only Securities in denominations of $1,000 principal face amount or integral multiples thereof shall be purchased. Notwithstanding the foregoing, if the Company is required to commence an Asset Sale Offer at any time when securities of the Company ranking pari passu in right of payment with the Securities are outstanding and the terms of such securities provide that a similar offer must be made with respect to such other securities, then the Asset Sale Offer for the Securities shall be made concurrently with such other offers and securities of each issue will be accepted on a pro rata basis in proportion to the aggregate principal amount of securities of each issue which the holders thereof elect to have purchased. Any Asset Sale Offer will be made only to the extent permitted under, and subject to prior compliance with, the terms of agreements governing Senior Indebtedness. Upon completion of such Asset Sale Offer, the amount of Excess Proceeds shall be reset to zero. On the Purchase Date under this Section 10.14, the Company shall (i) accept for payment (subject to pro ration as described in the Offer to Purchase) 72 Securities or portions thereof tendered pursuant to the Asset Sale Offer, (ii) deposit with the Paying Agent money, in immediately available funds, sufficient to pay the purchase price of all Securities or portions thereof so tendered and accepted and (iii) deliver to the Trustee the Securities so accepted together with an Officer's Certificate setting forth the Securities or portions thereof tendered to and accepted for payment by the Company. The Paying Agent shall promptly mail or deliver to the Holders of Securities so accepted payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and make available for delivery to such Holders a new Security of like tenor equal in principal amount to any unpurchased portion of the Security surrendered. Any Securities not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company shall publicly announce the results of the Asset Sale Offer not later than the third business Day following the Asset Sale Offer Purchase Date. Whenever the aggregate amount of Excess Proceeds received by the Company and its Restricted Subsidiaries exceeds $10,000,000, such Excess Proceeds shall, prior to the purchase of Securities, be set aside by the Company or such Restricted Subsidiary, as the case may be, in a separate account pending (i) deposit with the Paying Agent of the amount required to purchase the Securities tendered in an Asset Sale Offer or (ii) delivery by the Company of the Asset Sale Offer Price to the Holders of the Securities validly tendered and not withdrawn pursuant to an Asset Sale Offer. Such Excess Proceeds may be invested in Cash Equivalents, as directed by the Company, having a maturity date which is not later than the earliest possible date for purchase of Securities pursuant to the Asset Sale Offer. The Company will be entitled to any interest or dividends accrued, earned or paid on such Cash Equivalents. The Company shall comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, to the extent such laws and regulations are applicable, in the event that an Asset Sale occurs and the Company is required to purchase Securities as described above. SECTION 10.15. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries. The Company shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary of the Company to (a) pay dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock or any other interest or participation in, or measured by, its profits, (b) pay any Indebtedness owed to the Company or any other Restricted Subsidiary of the Company, (c) make loans or advances to the Company or any other Restricted Subsidiary of the Company, (d) transfer any of its properties or assets to the Company or any other Restricted Subsidiary of the Company or (e) guarantee any Indebtedness of the Company or any other Restricted Subsidiary of the Company, except for such encumbrances or restrictions existing under or by reason of (i) applicable law or any applicable rule, regulation or order, (ii) customary non-assignment provisions of any contract or any lease governing a leasehold interest of the Company or any Restricted Subsidiary of the Company, (iii) customary restrictions on transfers of property subject to a Lien permitted under this Indenture, (iv) the Credit Agreement, as in effect on the Issue Date, (v) any agreement or other instrument of a Person acquired by the Company or any Restricted Subsidiary of the Company in existence at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets 73 of the Person, so acquired, (vi) an agreement entered into for the sale or disposition of Capital Stock or assets of a Restricted Subsidiary or an agreement entered into for the sale of specified assets (in either case, so long as such encumbrance or restriction, by its terms, terminates on the earlier of the termination of such agreement or the consummation of such agreement and so long as such restriction applies only to the Capital Stock or assets to be sold), (vii) any agreement in effect on the Issue Date, (viii) this Indenture and the Guarantees, (ix) the indentures governing the 9 1/2% Notes, the 8.80% Notes, the 9 1/4% Notes and the 9% Notes, (x) joint venture agreements and other similar agreements entered into in the ordinary course of business that prohibit actions of the type described in clauses (a), (c), (d) and (e) above, (xi) any agreement entered into with respect to a Special Purpose Vehicle in connection with a Securitization Transaction, containing customary restrictions required by the institutional sponsor or arranger of such Securitization Transaction in similar types of documents relating to the purchase of similar assets in connection with the financing thereof, (xii) restrictions relating to Foreign Subsidiaries contained in Indebtedness Incurred pursuant to clause (k) of the definition of "Permitted Indebtedness," and (xiii) any agreement that amends, extends, refinances, renews or replaces any agreement described in the foregoing clauses, provided, however, that the terms and conditions of any such agreement are not materially less favorable to the Holders of the Securities with respect to such dividend and payment restrictions than those under or pursuant to the agreement amended, extended, refinanced, renewed or replaced. SECTION 10.16. Limitation on Sale/Leaseback Transactions. (a) The Company shall not, and shall not permit any Restricted Subsidiary to, enter into any Sale/Leaseback Transaction with respect to any property unless: (1) the Company or such Restricted Subsidiary would be entitled to: (A) Incur Indebtedness in an amount equal to the Attributable Debt with respect to such Sale/Leaseback Transaction pursuant to Section 10.08; and (B) create a Lien on such property securing such Attributable Debt without equally and ratably securing the Securities pursuant to Section 10.12; (2) the net proceeds received by the Company or any Restricted Subsidiary in connection with such Sale/Leaseback Transaction are at least equal to the fair value (as determined by the Company's Board of Directors) of such property; and (3) the Company applies the proceeds of such transaction in compliance with Section 10.14. (b) Notwithstanding clauses (1)(B), (2) and (3) of this Section 10.16, the Company and the Restricted Subsidiaries may enter into Sale/Leaseback Transactions with respect to rental fleet equipment. SECTION 10.17. Additional Subsidiary Guarantees. The Company will cause each Domestic Subsidiary that guarantees any Indebtedness of the Company or any other Restricted Subsidiary to at the same time execute and deliver to the Trustee a Guaranty Agreement pursuant to which such Domestic Subsidiary will guarantee 74 payment of the Securities on the same terms and conditions as those set forth in this Indenture. This Section 10.17 shall not apply to any of the Company's Subsidiaries that have been properly designated as an Unrestricted Subsidiary or as a Special Purpose Vehicle. SECTION 10.18. Limitations on Designation of Unrestricted Subsidiaries. (a) The Company may designate after the Issue Date any Restricted Subsidiary as an "Unrestricted Subsidiary" under this Indenture (a "Designation") only if: (i) no Default shall have occurred and be continuing at the time of or after giving effect to such Designation; (ii) the Company would be permitted to make an Investment (other than a Permitted Investment, except a Permitted Investment covered by clause (xii) of the definition thereof) at the time of Designation (assuming the effectiveness of such Designation) pursuant to the first paragraph of Section 10.09 in an amount (the "Designation Amount") equal to the Fair Market Value of the Company's interest in such Subsidiary on such date calculated in accordance with GAAP; and (iii) the Company would be permitted under this Indenture to incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to Section 10.08 at the time of such Designation (assuming the effectiveness of such Designation). In the event of any such Designation, the Company shall be deemed to have made an Investment constituting a Restricted Payment pursuant to Section 10.09 for all purposes of this Indenture in the Designation Amount. The Company shall not, and shall not cause or permit any Restricted Subsidiary to, at any time (x) provide credit support for or subject any of its property or assets (other than the Capital Stock of any Unrestricted Subsidiary) to the satisfaction of, any Indebtedness of any Unrestricted Subsidiary (including any undertaking, agreement or instrument evidencing such Indebtedness), (y) be directly or indirectly liable for any Indebtedness of any Unrestricted Subsidiary or (z) be directly or indirectly liable for any Indebtedness which provides that the holder thereof may (upon notice, lapse of time or both) declare a default thereon or cause the payment thereof to be accelerated or payable prior to its final scheduled maturity upon the occurrence of a default with respect to any Indebtedness of any Unrestricted Subsidiary (including any right to take enforcement action against such Unrestricted Subsidiary), except any non-recourse guarantee given solely to support the pledge by the Company or any Restricted Subsidiary of the Capital Stock of an Unrestricted Subsidiary. All Subsidiaries of Unrestricted Subsidiaries shall automatically be deemed to be Unrestricted Subsidiaries. (b) The Company may revoke any Designation of a Subsidiary as an Unrestricted Subsidiary (a "Revocation") if: (i) no Default shall have occurred and be continuing at the time of and after giving effect to such Revocation, and (ii) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding immediately following such Revocation would, if incurred at such time by a 75 Restricted Subsidiary, have been permitted to be incurred for all purposes of this Indenture. (c) All Designations and Revocations must be evidenced by Board Resolutions of the Company delivered to the Trustee certifying compliance with the foregoing provisions. SECTION 10.19. Provision of Financial Information. For so long as the Securities are outstanding, whether or not the Company is subject to Section 13(a) or 15(d) of the Exchange Act, or any successor provision thereto, the Company shall file with the Commission (if permitted by Commission practice and applicable law and regulations) the annual reports, quarterly reports and other documents which the Company would have been required to file with the Commission pursuant to such Section 13(a) or 15(d) or any successor provision thereto if the Company were so subject, such documents to be filed with the Commission on or prior to the respective dates (the "Required Filing Dates") by which the Company would have been required so to file such documents if the Company were so subject. If, notwithstanding the preceding sentence, filing such documents by the Company with the Commission is not permitted by Commission practice or applicable law or regulations, the Company will transmit (or cause to be transmitted) by mail to the Trustee and all holders of the Securities, as their names and addresses appear in the Securities Register, copies of such documents within 15 days after the Required Filing Date. In addition, for so long as any Securities remain outstanding, the Company will furnish to the Holders of Securities and to securities analysts and prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act, and, to any beneficial holder of Securities, if not obtainable from the Commission, information of the type that would be filed with the Commission pursuant to the foregoing provisions upon the request of any such Holder. SECTION 10.20. Statement by Officers as to Default; Compliance Certificates. (a) The Company shall deliver to the Trustee, prior to March 31 in each year commencing with the year beginning on January 1, 2002, an Officer's Certificate, stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which he may have knowledge. (b) The Company shall deliver to the Trustee, as soon as possible and in any event within five days after the Company becomes aware of the occurrence of a Default or an Event of Default, an Officer's Certificate setting forth the details of such Default or Event of Default, and the action which the Company proposes to take with respect thereto. ARTICLE XI Redemption of Securities SECTION 11.01. Right of Redemption. The Securities may be redeemed at the election of the Company, in the amounts, at the times, at the Redemption Prices 76 (together with any applicable accrued and unpaid interest to the Redemption Date), and subject to the conditions specified in the form of Security and hereinafter set forth. SECTION 11.02. Applicability of Article. Redemption of Securities at the election of the Company, as permitted by this Indenture and the provisions of the Securities, shall be made in accordance with such provisions and this Article. SECTION 11.03. Election to Redeem; Notice to Trustee. The election of the Company to redeem any Securities pursuant to Section 11.01 shall be evidenced by a Board Resolution. In the event of any redemption at the election of the Company pursuant to Section 11.01, the Company shall notify the Trustee, in case of a redemption of less than all the Securities, at least 60 days, and in the case of a redemption of all the Securities, at least 40 days, prior to the Redemption Date fixed by the Company (in each case, unless a shorter notice shall be satisfactory to the Trustee) of such Redemption Date and of the principal amount of Securities to be redeemed. SECTION 11.04. Selection by Trustee of Securities to Be Redeemed. In the event that less than all of the Securities are to be redeemed at any time, selection of such Securities for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Securities are listed or, if the Securities are not then listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate (subject to the rules of the Depositary); provided, however, that Securities shall only be redeemable in amounts of $1,000 or an integral multiple of $1,000. The Trustee shall promptly notify the Company and each Security Registrar in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture and of the Securities, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed. SECTION 11.05. Notice of Redemption. Notice of redemption shall be given by first class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at his address appearing in the Security Register. All notices of redemption shall identify the Securities to be redeemed (including, if used, CUSIP or CINS numbers) and shall state: (i) the Redemption Date; (ii) the Redemption Price; (iii) if less than all the Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed; 77 (iv) that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and that interest thereon will cease to accrue on and after such Redemption Date; (v) the place or places where such Securities are to be surrendered for payment of the Redemption Price; and (vi) if the redemption is being made pursuant to the provisions of the Securities regarding a Public Equity Offering, a brief description of the transaction or transactions giving rise to such redemption, the nature and amount of Qualified Equity Interests sold in such transaction or transactions, the aggregate purchase price thereof and the net cash proceeds therefrom available for such redemption, the date or dates on which such transaction or transactions were completed and the percentage of the aggregate principal amount of Outstanding Securities being redeemed. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company and shall be irrevocable. SECTION 11.06. Deposit of Redemption Price. Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.03) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) any applicable accrued interest on, all the Securities which are to be redeemed on that date. SECTION 11.07. Securities Payable on Redemption Date. Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and any applicable accrued interest) such Securities shall not bear interest. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with any applicable accrued and unpaid interest to the Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more predecessor securities, registered as such at the close of business on the relevant record dates according to their terms and the provisions of Section 3.07. If any Security called for redemption in accordance with the election of the Company made pursuant to Section 11.01 shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate provided by the Security. SECTION 11.08. Securities Redeemed in Part. Any Security which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose pursuant to Section 10.02 (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or his 78 attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder, in aggregate principal amount at Stated Maturity equal to and in exchange for the unredeemed portion of the principal amount at Stated Maturity of the Security so surrendered. ARTICLE XII Defeasance and Covenant Defeasance SECTION 12.01. Company's Option to Effect Defeasance or Covenant Defeasance. The Company may elect, at its option at any time, to have Section 12.02 or Section 12.03 applied to the Outstanding Securities (as a whole and not in part) upon compliance with the conditions set forth below in this Article. Any such election shall be evidenced by a Board Resolution. SECTION 12.02. Defeasance and Discharge. Upon the Company's exercise of its option to have this Section applied to the Outstanding Securities (as a whole and not in part), the Company shall be deemed to have been discharged from its obligations with respect to such Securities as provided in this Section on and after the date the conditions set forth in Section 12.04 are satisfied (hereinafter called "Defeasance"). For this purpose, such Defeasance means that the Company shall be deemed to have paid and discharged the entire Indebtedness represented by such Securities and to have satisfied all its other obligations under such Securities and this Indenture insofar as such Securities are concerned (and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same), subject to the following which shall survive until otherwise terminated or discharged hereunder: (1) the rights of Holders of Outstanding Securities to receive, solely from the trust fund described in Section 12.04 and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Securities when payments are due, (2) the Company's obligations with respect to such Securities under Sections 3.04, 3.05, 3.06, 10.02 and 10.03, (3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and (4) this Article. Subject to compliance with this Article, the Company may exercise its option to have this Section applied to the Outstanding Securities (as a whole and not in part) notwithstanding the prior exercise of its option to have Section 12.03 applied to such Securities. SECTION 12.03. Covenant Defeasance. Upon the Company's exercise of its option to have this Section applied to the Outstanding Securities (as a whole and not in part), (i) the Company shall be released from its obligations under Section 8.01(3), Sections 10.05 through 10.19, inclusive, and any covenant provided pursuant to Section 9.01(ii) and the Guarantors shall be released from their obligations under Article XIII and the Guarantees, and (ii) the occurrence of any event specified in Sections 5.01(3) and 5.01(4) (with respect to Section 8.01(3) and any of Sections 10.05 through 10.19, inclusive, and any such covenants provided pursuant to Section 9.01(ii)), shall be deemed not to be or result in an Event of Default, in each case with respect to such Securities as provided in this Section on and after the date the conditions set forth in Section 12.04 are satisfied (hereinafter called "Covenant Defeasance"). For this purpose, such Covenant Defeasance means that, with respect to such Securities, the Company may 79 omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Section (to the extent so specified in the case of Section 5.01(3) or 5.01(4)), whether directly or indirectly, by reason of any reference elsewhere herein to any such Section or by reason of any reference in any such Section to any other provision herein or in any other document, but the remainder of this Indenture and such Securities shall be unaffected thereby. SECTION 12.04. Conditions to Defeasance or Covenant Defeasance. The following shall be the conditions to the application of Section 12.02 or Section 12.03 to the Outstanding Securities: (1) The Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee which satisfies the requirements contemplated by Section 6.09 and agrees to comply with the provisions of this Article applicable to it) as trust funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefits of the Holders of such Securities, (A) money in an amount, or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than one day before the due date of any payment, money in an amount, or (C) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or any such other qualifying trustee) to pay and discharge, the principal of, premium, if any, and any installment of interest on such Securities on the respective Stated Maturities or Redemption Date thereof, in accordance with the terms of this Indenture and such Securities. As used herein, "U.S. Government Obligation" means (x) any security which is (i) a direct obligation of the United States of America for the payment of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (y) any depositary receipt issued by a bank (as defined in Section 3(a) (2) of the Securities Act) as custodian with respect to any U.S. Government Obligation which is specified in clause (x) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any U.S. Government Obligation which is so specified and held, provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt. (2) In the event of an election to have Section 12.02 apply to the Outstanding Securities, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (B) since the date of this instrument, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such opinion shall confirm that, 80 the Holders of such Securities will not recognize gain or loss for federal income tax purposes as a result of the deposit, Defeasance and discharge to be effected with respect to such Securities and will be subject to Federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit, Defeasance and discharge were not to occur. (3) In the event of an election to have Section 12.03 apply to the Outstanding Securities, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders of such Securities will not recognize gain or loss for federal income tax purposes as a result of the deposit and Covenant Defeasance to be effected with respect to such Securities and will be subject to federal income tax on the same amount, in the same manner and at the same times as would be the case if such deposit and Covenant Defeasance were not to occur. (4) No Default or Event of Default with respect to the Outstanding Securities shall have occurred and be continuing at the time of such deposit (excluding a Default or Event of Default due to a breach of Section 10.08 or 10.12 which arises due to the borrowing of funds applied to such deposit). (5) Such Defeasance or Covenant Defeasance shall not cause the Trustee to have a conflicting interest with respect to any securities of the Company or any Guarantor. (6) Such Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under, any other material agreement or instrument to which the Company or any Subsidiary is a party or by which it is bound (excluding a Default or Event of Default due to a breach of Section 10.08 or 10.12 which arises due to the borrowing of funds applied to such deposit). (7) The Company shall have delivered to the Trustee an Opinion of Counsel (which opinion may be subject to customary assumptions and exceptions) to the effect that after the 91st day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally. (8) The Company shall have delivered to the Trustee an Officer's Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of the Securities over the other creditors of the Company or any Guarantor with the intent of defeating, hindering, delaying or defrauding creditors of the Company or any Guarantor or others. (9) No event or condition shall exist that would prevent the Company from making payments of the principal of, premium, if any, and interest on the Securities on the date of such deposit or at any time ending on the 91st day after the date of such deposit. (10) The Company shall have delivered to the Trustee an Officer's Certificate and an Opinion of Counsel, each stating that all conditions precedent under this Indenture to either Defeasance or Covenant Defeasance, as the case may be, have been complied with. 81 SECTION 12.05. Deposited Money and U.S. Government Obligations to Be Held in Trust; Miscellaneous Provisions. Subject to the provisions of the last paragraph of Section 10.03, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee or other qualifying trustee (solely for purposes of this Section and Section 12.06, the Trustee and any such other trustee are referred to collectively as the "Trustee") pursuant to Section 12.04 in respect of the Outstanding Securities shall be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any such Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Securities, of all sums due and to become due thereon in respect of principal and any premium and interest, but money so held in trust need not be segregated from other funds except to the extent required by law. The Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 12.04 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of Outstanding Securities. Anything in this Article to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 12.04 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect the Defeasance or Covenant Defeasance, as the case may be, with respect to the Outstanding Securities. SECTION 12.06. Reinstatement. If the Trustee or the Paying Agent is unable to apply any money in accordance with this Article with respect to any Securities by reason of any order or judgment of any court or governmental authority enjoining, restraining, or otherwise prohibiting such application, then the obligations under this Indenture, such Securities and the Guarantees from which the Company and the Guarantors have been discharged or released pursuant to Section 12.02 or 12.03 shall be revived and reinstated as though no deposit had occurred pursuant to this Article with respect to such Securities, until such time as the Trustee or Paying Agent is permitted to apply all money held in trust pursuant to Section 12.05 with respect to such Securities in accordance with this Article; provided, however, that if the Company makes any payment of principal of or any premium or interest on any such Security following such reinstatement of its obligations, the Company shall be subrogated to the rights (if any) of the Holders of such Securities to receive such payment from the money so held in trust. ARTICLE XIII Guaranty SECTION 13.01. Guaranty. Each Guarantor hereby unconditionally and irrevocably guarantees on a senior basis, jointly and severally, to each Holder and to the Trustee and its successors and assigns (a) the full and prompt payment (within applicable grace periods) of principal of and interest on the Securities when due, whether at 82 maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company under this Indenture and the Securities and (b) the full and prompt performance within applicable grace periods of all other obligations of the Company under this Indenture and the Securities (all the foregoing being hereinafter collectively called the "Guaranty Obligations"). Each Guarantor further agrees that the Guaranty Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor, and that such Guarantor will remain bound under this Article XIII notwithstanding any extension or renewal of any Guaranty Obligation. To the extent that any Subsidiary Guarantor shall be required to pay any amounts on account of the Securities pursuant to a Guaranty in excess of an amount calculated as the product of (i) the aggregate amount payable by the Subsidiary Guarantors on account of the Securities pursuant to their respective Guarantees times (ii) the proportion (expressed as a fraction) that such Subsidiary Guarantor's net assets (determined in accordance with GAAP) at the date enforcement of the Subsidiary Guarantees is sought bears to the aggregate net assets (determined in accordance with GAAP) of all Subsidiary Guarantors at such date, then such Subsidiary Guarantor shall be reimbursed by the other Subsidiary Guarantors for the amount of such excess, pro rata, based upon the respective net assets (determined in accordance with GAAP) of such other Subsidiary Guarantors at the date enforcement of the Subsidiary Guarantees is sought. This paragraph is intended only to define the relative rights of Subsidiary Guarantors as among themselves, and nothing set forth in this paragraph is intended to or shall impair the joint and several obligations of the Subsidiary Guarantors under their respective Subsidiary Guarantees. The Guarantors shall have the right to seek contribution from any non- paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under any Guaranty. Each Guarantor waives presentation to, demand of payment from and protest to the Company of any of the Guaranty Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Securities or the Guaranty Obligations. The obligations of each Guarantor hereunder shall not be affected by (a) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Company or any other Person under this Indenture, the Securities or any other agreement or otherwise; (b) any extension or renewal of any thereof; (c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Securities or any other agreement; (d) the release of any security held by any Holder or the Trustee for the Guaranty Obligations or any of them; (e) the failure of any Holder or Trustee to exercise any right or remedy against any other guarantor of the Guaranty Obligations; or (f) any change in the ownership of any Guarantor (subject to Section 13.05). Each Guarantor further agrees that its Guaranty herein constitutes a guaranty of payment, performance and compliance when due (and not a guaranty of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranty Obligations. To the fullest extent permitted by law, the obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, 83 and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranty Obligations or otherwise. Without limiting the generality of the foregoing, to the fullest extent permitted by law, the obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Securities or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, wilful or otherwise, in the performance of the Guaranty Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Guarantor or would otherwise operate as a discharge of each Guarantor as a matter of law or equity. Each Guarantor further agrees that its Guaranty herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Guaranty Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise. In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against each Guarantor by virtue hereof, upon the failure of the Company to pay the principal of or interest on any Guaranty Obligation when and as the same shall become due, whether at maturity, by acceleration, by redemption or otherwise (within applicable grace periods), or to perform or comply with any other Guaranty Obligation (within applicable grace periods), each Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid principal amount of such Guaranty Obligations, (ii) accrued and unpaid interest on such Guaranty Obligations (but only to the extent not prohibited by law) and (iii) all other monetary Guaranty Obligations of the Company to the Holders and the Trustee. Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any Guaranty Obligations Guaranteed hereby until payment in full of all Guaranty Obligations. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Guaranty Obligations Guaranteed hereby may be accelerated as provided in Article V for the purposes of its Guaranty herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranty Obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such Guaranty Obligations as provided in Article V, such Guaranty Obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purposes of this Section. Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys' fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section. SECTION 13.02. Limitation on Liability. Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the obligations guaranteed hereunder by each Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to 84 such Guarantor, voidable under applicable federal or state law relating to fraudulent conveyance or fraudulent transfer. SECTION 13.03. Execution and Delivery of Guarantees. The Guarantees to be endorsed on the Securities shall be in the form set forth in Exhibit C. Each of the Guarantors hereby agrees to execute its Guaranty in such form, to be endorsed on each Security authenticated and delivered by the Trustee. Each Guaranty shall be executed on behalf of each respective Guarantor by any one of such Guarantor's Chairman of the Board, Vice Chairman of the Board, President, Chief Financial Officer, or Vice Presidents. The signature of any or all of these officers on the Guaranty may be manual or facsimile. A Guaranty bearing the manual or facsimile signatures of individuals who were at any time the proper officers of a Guarantor shall bind such Guarantor, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of the Security on which such Guaranty is endorsed or did not hold such offices at the date of such Guaranty. Each Guaranty shall be registered, transferred, exchanged and cancelled, and shall be held in definitive or global form, in the same manner and together with, the Security to which it relates, in accordance with Article III. The delivery of any Security by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guaranty endorsed thereon on behalf of the Guarantors. Each of the Guarantors hereby jointly and severally agrees that its Guaranty set forth in Section 13.01 shall remain in full force and effect notwithstanding any failure to endorse a Guaranty on any Security. SECTION 13.04. Guarantors May Consolidate, Etc., on Certain Terms. Nothing contained in this Indenture or in any of the Securities or any Guaranty shall prevent any consolidation or merger of a Guarantor with or into the Company or a Guarantor or the merger of a wholly owned Restricted Subsidiary of the Company with and into a Guarantor or shall prevent any sale or conveyance of the assets of a Guarantor as an entirety or substantially as an entirety or the Capital Stock of a Guarantor to the Company or a Guarantor. SECTION 13.05. Release of Guarantors. The Guaranty of a Subsidiary Guarantor shall automatically be released from all obligations under its Guaranty endorsed on the Securities and under this Article XIII without need for any further act or the execution or delivery or any document: (i) upon the sale or other disposition (including by way of consolidation or merger) of such Subsidiary Guarantor other than to the Company or a Restricted Subsidiary of the Company and as permitted by this Indenture, including Section 10.14; (ii) upon the sale or disposition of all or substantially all of the assets of such Subsidiary Guarantor other than to the Company or a Restricted Subsidiary of the Company and as permitted by this Indenture, including Section 10.14; (iii) upon Defeasance or Covenant Defeasance in accordance with Article XII; or (iv) if the Company properly designates any Restricted Subsidiary that is a Subsidiary Guarantor as an Unrestricted Subsidiary. Upon delivery by the Company to the Trustee of an Officer's Certificate to the effect that such transaction was made in accordance with the provisions hereof, the Trustee shall execute any documents reasonably required in 85 order to evidence the release of such Guarantor from its obligations under its Guaranty endorsed on the Securities and under this Article XIII. SECTION 13.06. Successors and Assigns. This Article XIII shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Securities shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture. SECTION 13.07. No Waiver, etc. Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article XIII shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article XIII at law, in equity, by statute or otherwise. SECTION 13.08. Modification, etc. No modification, amendment or waiver of any provision of this Article, nor the consent to any departure by a Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on a Guarantor in any case shall entitle such Guarantor or any other guarantor to any other or further notice or demand in the same, similar or other circumstances. 86 This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written. UNITED RENTALS (NORTH AMERICA), INC. by __________________________________ Name: Title: THE BANK OF NEW YORK, AS TRUSTEE by __________________________________ Name: Title: THE GUARANTORS LISTED ON SCHEDULE A HERETO by __________________________________ Name: Title: Attest: Schedule A ---------- Name State of Incorporation - ---- ---------------------- Advance Barricades and Signing, Inc. Florida All Cities Trailer Exchange, Inc. California Arrow Equipment Company Illinois Bakersfield Compaction Equipment California BNR Equipment Inc. New York Coast Line Marking, Inc. Florida Dealers Service Corporation New Jersey Equipment Leasing Services, Inc. Massachusetts Flasher Co. of Kansas, Inc. Kansas Flasher Company of Oklahoma, Inc. Oklahoma Frontenac Equipment, Inc. Missouri Highway Supply Company, Inc. New Mexico Jadco Signing, Inc. Florida Liddell Management Co., Inc. Massachusetts Paul E. Carlson, Inc. d/b/a Carlson Equipment Company Minnesota Rentals Unlimited, Incorporated Rhode Island Rocky Mountain Safety Service, Inc. Wyoming Russ Enterprises, Inc. California Shoring & Supply Company, Inc. Kansas Thoesen Equipment Inc. Illinois Traffic Markings South, Inc. Georgia Traffic Safety Services, Inc. North Dakota Tri-Mac, Corporation, d/b/a Tri-Mack Barricade Indiana Company United Rentals Gulf, Inc. Delaware United Equipment Rentals Gulf, L.P. Texas A.S.C. Pavement Markings, Inc. Texas Highway Safety Service Company Texas Lectric Safety Lites Co. Texas Paige Barricades, Inc. Texas United Rentals Highway Technologies, Inc. Massachusetts United Rentals Highway Technologies Gulf, Inc. Delaware United Rentals Highway Technologies, L.P. Texas 2 Name State of Incorporation - ---- --------------------- United Rentals, Inc. Delaware United Rentals Northwest, Inc. Oregon United Rentals Southeast, Inc. Delaware United Rentals Southeast, L.P. Georgia Wanamaker Rents, Incorporated California Warning Safety Lights, Inc. Florida Warning Safety Lights of Georgia, Inc. Florida West-Co Rental & Sales Colorado WLI Industries, Inc. Illinois Safe-T-Flare Services, Inc. Missouri Warning Lites of Indiana, Inc. Indiana Warning Lites of Iowa, Inc. Iowa Work Zone, Inc. Louisiana Work Zone Safety, Inc. Colorado Woudenberg Enterprises, Inc. Arizona Highway Rentals, Inc. Nevada Wynne Systems, Inc. California Schedule B-The Initial Purchasers --------------------------------- Credit Suisse First Boston Corporation Goldman, Sachs & Co. Salomon Smith Barney Inc. Banc of America Securities LLC Chase Securities Inc. Deutsche Banc Alex. Brown Inc. Fleet Securities, Inc. Credit Lyonnais Securities (USA) Inc. First Union Securities, Inc. Scotia Capital (USA) Inc. Exhibit A-1 [FORM OF SECURITY] THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A PERSON WHO SUCH PURCHASER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION COMPLYING WITH RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF Regulation S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. THE COMPANY, THE TRUSTEE, THE TRANSFER AGENT AND THE REGISTRAR SHALL HAVE THE RIGHT PRIOR TO ANY SUCH OFFER, SALE, PLEDGE OR TRANSFER TO REQUIRE THAT A CERTIFICATION OR TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY BE COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. United Rentals(North America), Inc. 10 3/4% Senior Note Due 2008, Series A No. __________ $_________ CUSIP NO. United Rentals (North America),Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company," which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to _______________ or registered assigns, the principal sum of ____________ Dollars on April 15, 2008 and to pay interest thereon from April 20, 2001 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually in arrears on April 15 and October 15 in each year, commencing October 15, 2001 at the rate of 10.75% per annum, until the principal hereof is paid or duly provided for, provided, however, that any principal and premium, and any such installment of interest, which is overdue shall bear interest at the rate of 10.75% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or duly provided for. The interest so payable and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the April 1 and October 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more predecessor Securities) A-1-2 is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that, at the option of the Company, payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed and attested. Attest: United Rentals (North America), Inc. by __________________________________ _____________________________________ Title: Title: Trustee's Certificate of Authentication --------------------------------------- This is one of the Securities referred to in the within-mentioned Indenture. The Bank of New York, as Trustee Dated: by __________________________________________ Authorized Signatory A-1-3 Form of Reverse of Security --------------------------- This Security is one of a duly authorized issue of Securities of the Company designated as 10 3/4% Senior Notes Due 2008, Series A (herein called the "Initial Securities"), limited in aggregate principal amount on the Issue Date to $450,000,000 issued and to be issued under an Indenture, dated as of April 20, 2001 (herein called the "Indenture," which term shall have the meaning assigned to it in such instrument), among the Company, the guarantors named therein and The Bank of New York, as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. The Company shall be entitled, subject to its compliance with Section 10.08 of the Indenture, to issue Additional Securities pursuant to Section 3.15 of the Indenture. The Securities include the Initial Securities issued on the Issue Date, any Additional Securities and the Exchange Securities referred to below, issued in exchange for the Initial Securities pursuant to the Registration Rights Agreement. The Initial Securities issued on the Issue Date, any Additional Securities and the Exchange Securities are treated as a single class of securities under the Indenture. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. 7aaa - 77bbbb (the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Securities are subject to all such terms, and Holders of Securities are referred to the Indenture and the TIA for a statement of such terms. This Security is redeemable at the option of the Company, in whole or in part, at any time on or after April 15, 2005, at the Redemption Prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, thereon to the Redemption Date, if redeemed during the 12-month period beginning April 15 of the years indicated below: Redemption Year Price - ---- ----- 2005............................................................... 105.3750% 2006............................................................... 102.6875% 2007............................................................... 100.0000% In addition, at any time, or from time to time, on or prior to April 15, 2004, the Company may, at its option, use the net cash proceeds of one or more Public Equity Offerings to redeem up to an aggregate of 35% of the principal amount of the Securities (which includes Additional Securities, if any), at a redemption price equal to 110.75% of the principal amount thereof plus accrued and unpaid interest, if any, thereon to the Redemption Date; provided, however, that at least 65% of the aggregate principal amount of Securities (which includes Additional Securities, if any) remains outstanding immediately after the occurrence of such redemption. In order to effect the foregoing redemption with the proceeds of any Public Equity Offering, the Company shall send a A-1-4 redemption notice to the Trustee not later than 90 days after the consummation of any such Public Equity Offering. The Securities are not subject to any sinking fund. The Indenture provides that the Company is obligated (a) upon the occurrence of a Change in Control to make an offer to purchase all outstanding Securities at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the date of purchase and (b) to make an offer to purchase Securities with a portion of the net cash proceeds of certain sales or other dispositions of assets (not applied as specified in the Indenture within the periods set forth therein) at a purchase price equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase. In the event of redemption or purchase of this Security in part only pursuant to a Change of Control Offer or an Asset Sale Offer, a new Security or Securities for the unredeemed or unpurchased portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security or of certain restrictive covenants and Events of Default with respect to this Security, in each case upon compliance with certain conditions set forth in the Indenture. If an Event of Default shall occur and be continuing, there may be declared due and payable the principal of, premium, if any, and accrued and unpaid interest, if any, on all of the outstanding Securities, in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities, the Holders of not less than 25% in principal amount of the Securities at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity reasonably satisfactory to the Trustee and A-1-5 the Trustee shall not have received from the Holders of a majority in principal amount of Securities at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding for 45 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to certain suits described in the Indenture, including any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein (or, in the case of redemption, on or after the Redemption Date or, in the case of any purchase of this Security required to be made pursuant to a Change of Control Offer or an Asset Sale Offer, on or after the relevant Purchase Date). No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in the Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. This Security is issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Pursuant to the Registration Rights Agreement by and among the Company and the Initial Purchasers, the Company will be obligated to consummate an exchange offer pursuant to which the Holder of this Security shall have the right to exchange this Security (whether issued on the Issue Date or issued thereafter as an Additional Security) for 10 3/4% Senior Notes Due 2008, Series B, of the Company (herein called the "Exchange Securities"), which have been registered under the Securities Act, in like principal amount and having identical terms as the Initial Securities (other than as set forth in this paragraph). The Holders of Initial Securities shall be entitled to receive certain additional interest payments in the event such exchange offer is not consummated and upon certain other conditions, all pursuant to and in accordance with the terms of the A-1-6 Registration Rights Agreement. Such additional interest will constitute liquidated damages and will be the exclusive monetary remedy available to the Holder of this Security in respect of a Registration Default (as defined in the Registration Rights Agreement), but without prejudice to any non-monetary remedies otherwise available to such Holder, whether pursuant to the Registration Rights Agreement or otherwise. Interest on this Security shall be computed on the basis of a 360-day year comprised of twelve 30-day months. As provided in the Indenture and subject to certain limitations therein set forth, the obligations of the Company under the Indenture and this Security are Guaranteed pursuant to Guarantees endorsed hereon as provided in the Indenture. Each Holder, by holding this Security, agrees to all of the terms and provisions of said Guarantees. The Indenture provides that each Guarantor shall be released from its Guaranty upon compliance with certain conditions. All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Indenture and this Security shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof. A-1-7 ASSIGNMENT FORM If you, the Holder, want to assign this Security, fill in the form below and have your signature guaranteed: I (or we) assign and transfer this Security to ________________________________________________________________________________ (Insert assignee's social security or tax ID number) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for such agent. In connection with any transfer of this Security occurring prior to the date which is the earlier of (i) the date of the declaration by the Commission of the effectiveness of a registration settlement under the Securities Act of 1933, as amended (the "Securities Act"), covering resales of this Security (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) the date two years (or such shorter period of time as permitted by Rule 144(k) under the Securities Act or any successor provision thereunder) after the later of the original issuance date appearing on the face of this Security (or any predecessor thereto) or the last date on which the Company or any affiliate of the Company was the owner of this Security (or any predecessor thereto), the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with the transfer and that this Security is being transferred: [Check One] (1) [_] to the Company; or (2) [_] pursuant to an effective registration statement under the Securities Act of 1933; or (3) [_] inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or (4) [_] outside the United States in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933; or A-1-8 (5) [_] pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933. Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (4) or (5) is checked, the Trustee shall be entitled to require, prior to registering any such transfer of the Securities, such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, such as the exemption provided by Rule 144 under such Act. Date:_________ Your Signature:__________________________________________________ (Sign exactly as your name appears on the other side of this Security) by _______________________________________________ NOTICE: To be executed by an executive officer Signature Guarantee: ____________________________________ TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A (including the information specified in Rule 144A(d)(4)) or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated:________________ _______________________________________________________ NOTICE: To be executed by an executive officer A-1-9 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased in its entirety by the Company pursuant to Section 10.13 or 10.14 of the Indenture, check the applicable box: Section 10.13 [_] Section 10.14 [_] If you want to elect to have only a part of the principal amount of this Security purchased by the Company pursuant to Section 10.13 or 10.14 of the Indenture, state the portion of such amount: $_____________ Dated:______________ Your Signature:___________________________________________ (Sign exactly as name appears on the other side of this Security) Signature Guarantee: ____________________________________________________________ (Signature must be guaranteed by a financial institution that is a member of the Securities Transfer Agent Medallion Program ("STAMP"), the Stock Exchange Medallion Program ("SEMP"), the New York Stock Exchange, Inc. Medallion Signature Program ("MSP") or such other signature guarantee program as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange Act of 1934, as amended.) Exhibit A-2 United Rentals(North America), Inc. 10 3/4% Senior Note Due 2008, Series B No. __________ $ ________ CUSIP NO. United Rentals (North America), Inc., a corporation duly organized and existing under the laws of the State of Delaware (herein called the "Company," which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to _____________ or registered assigns, the principal sum of _____________ Dollars on April 15, 2008 and to pay interest thereon from April 20, 2001 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semiannually in arrears on April 15 and October 15 in each year, commencing October 15, 2001 at the rate of 10.75% per annum, until the principal hereof is paid or duly provided for, provided, however, that any principal and premium, and any such installment of interest, which is overdue shall bear interest at the rate of 10.75% per annum (to the extent that the payment of such interest shall be legally enforceable), from the dates such amounts are due until they are paid or duly provided for. The interest so payable and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the April 1 and October 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. Payment of the principal of (and premium, if any) and interest on this Security will be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that, at the option of the Company, payment of interest may be made by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register. Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. A-2-2 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed and attested. Attest: United Rentals (North America), Inc. by __________________________________ ______________________________________ Title: Title: Trustee's Certificate of Authentication --------------------------------------- This is one of the Securities referred to in the within-mentioned Indenture. The Bank of New York, as Trustee Dated: by ______________________________________ Authorized Signatory A-2-3 Form of Reverse of Security --------------------------- This Security is one of a duly authorized issue of Securities of the Company designated as 10 3/4% Senior Notes Due 2008, Series B (herein called the "Exchange Securities"), limited in aggregate principal amount on the Issue Date to $450,000,000 issued and to be issued under an Indenture, dated as of April 20, 2001 (herein called the "Indenture," which term shall have the meaning assigned to it in such instrument), among the Company, the guarantors named therein and The Bank of New York, as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered. The Company shall be entitled, subject to its compliance with Section 10.08 of the Indenture, to issue Additional Securities pursuant to Section 3.15 of the Indenture. The Securities include the Initial Securities issued on the Issue Date, any Additional Securities and the Exchange Securities, issued in exchange for the Initial Securities pursuant to the Registration Rights Agreement. The Initial Securities issued on the Issue Date, any Additional Securities and the Exchange Securities are treated as a single class of securities under the Indenture. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. 7aaa - 77bbbb (the "TIA")), as in effect on the date of the Indenture. Notwithstanding anything to the contrary herein, the Securities are subject to all such terms, and Holders of Securities are referred to the Indenture and the TIA for a statement of such terms. This Security is redeemable at the option of the Company, in whole or in part, at any time on or after April 15, 2005, at the Redemption Prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, thereon to the Redemption Date, if redeemed during the 12-month period beginning April 15 of the years indicated below: Year Redemption - ------ Price ----------- 2005........................................................ 105.3750% 2006........................................................ 102.6875% 2007........................................................ 100.0000% In addition, at any time, or from time to time, on or prior to April 15, 2004, the Company may, at its option, use the net cash proceeds of one or more Public Equity Offerings to redeem up to an aggregate of 35% of the principal amount of the Securities (which includes Additional Securities, if any), at a redemption price equal to 110.75% of the principal amount thereof plus accrued and unpaid interest, if any, thereon to the Redemption Date; provided, however, that at least 65% of the aggregate principal amount of Securities (which includes Additional Securities, if any) remains outstanding immediately after the occurrence of such redemption. In order to effect the foregoing redemption with the proceeds of any Public Equity Offering, the Company shall send the A-2-4 redemption notice not later than 90 days after the consummation of any such Public Equity Offering. The Securities are not subject to any sinking fund. The Indenture provides that the Company is obligated (a) upon the occurrence of a Change in Control to make an offer to purchase all outstanding Securities at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, thereon to the date of purchase and (b) to make an offer to purchase Securities with a portion of the net cash proceeds of certain sales or other dispositions of assets (not applied as specified in the Indenture within the periods set forth therein) at a purchase price equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase. In the event of redemption or purchase of this Security in part only pursuant to a Change of Control Offer or an Asset Sale Offer, a new Security or Securities for the unredeemed or unpurchased portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. The Indenture contains provisions for defeasance at any time of the entire indebtedness of this Security or of certain restrictive covenants and Events of Default with respect to this Security, in each case upon compliance with certain conditions set forth in the Indenture. If an Event of Default shall occur and be continuing, there may be declared due and payable the principal of, premium, if any, and accrued and unpaid interest, if any, on all of the outstanding Securities, in the manner and with the effect provided in the Indenture. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding. The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security. As provided in and subject to the provisions of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given the Trustee written notice of a continuing Event of Default with respect to the Securities, the Holders of not less than 25% in principal amount of the Securities at the time Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee indemnity reasonably satisfactory to the Trustee and A-2-5 the Trustee shall not have received from the Holders of a majority in principal amount of Securities at the time Outstanding a direction inconsistent with such request, and shall have failed to institute any such proceeding for 15 days after receipt of such notice, request and offer of indemnity. The foregoing shall not apply to certain suits described in the Indenture, including any suit instituted by the Holder of this Security for the enforcement of any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein (or, in the case of redemption, on or after the Redemption Date or, in the case of any purchase of this Security required to be made pursuant to a Change of Control Offer or an Asset Sale Offer, on or after the relevant Purchase Date). No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place and rate, and in the coin or currency, herein prescribed. As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in the Borough of Manhattan, The City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees. This Security is issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities of like tenor of a different authorized denomination, as requested by the Holder surrendering the same. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Prior to due presentment of this Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary. Interest on this Security shall be computed on the basis of a 360-day year comprised of twelve 30-day months. As provided in the Indenture and subject to certain limitations therein set forth, the obligations of the Company under the Indenture and this Security are Guaranteed pursuant to Guarantees endorsed hereon as provided in the Indenture. Each Holder, by holding this Security, agrees to all of the terms and provisions of said Guarantees. The Indenture provides that each Guarantor shall be released from its Guaranty upon compliance with certain conditions. A-2-6 All terms used in this Security which are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Indenture and this Security shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof. A-2-7 ASSIGNMENT FORM If you, the Holder, want to assign this Security, fill in the form below and have your signature guaranteed: I (or we) assign and transfer this Security to ________________________________________________________________________________ (Insert assignee's social security or tax ID number) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for such agent. Date: _____________ Your Signature: _______________________________________ (Sign exactly as your name appears on the other side of this Security) by _____________________________________ NOTICE: To be executed by an executive officer Signature Guarantee: ___________________ A-2-8 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased in its entirety by the Company pursuant to Section 10.13 or 10.14 of the Indenture, check the applicable box: Section 10.13 [ ] Section 10.14 [ ] If you want to elect to have only a part of the principal amount of this Security purchased by the Company pursuant to Section 10.13 or 10.14 of the Indenture, state the portion of such amount: $_____________ Date: ________________ Your Signature: _______________________________________ (Sign exactly as your name appears on the other side of this Security) Signature Guarantee: __________________________________ (Signature must be guaranteed by a financial institution that is a member of the Securities Transfer Agent Medallion Program ("STAMP"), the Stock Exchange Medallion Program ("SEMP"), the New York Stock Exchange, Inc. Medallion Signature Program ("MSP") or such other signature guarantee program as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, SEMP or MSP, all in accordance with the Securities Exchange Act of 1934, as amended.) Exhibit B FORM OF LEGEND FOR BOOK-ENTRY SECURITIES Any Global Security authenticated and delivered hereunder shall bear a legend (which would be in addition to any other legends required in the case of a Restricted Security) in substantially the following form: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. Exhibit C [FORM OF NOTATION ON SECURITY RELATING TO GUARANTY] GUARANTY ______________, a __________ corporation (the "Guarantor," which term includes any successor under the Indenture (the "Indenture") referred to in the Security upon which this notation is endorsed), hereby unconditionally and irrevocably guarantees on a senior basis, jointly and severally with each other Guarantor of the Securities, to each Holder and to the Trustee and its successors and assigns (a) the full and prompt payment (within applicable grace periods) of principal of and interest on the Securities when due, whether at maturity, by acceleration, by redemption or otherwise, and all other monetary obligations of the Company under the Indenture and the Securities and (b) the full and prompt performance within applicable grace periods of all other obligations of the Company under the Indenture and the Securities, subject to certain limitations set forth in the Indenture (all the foregoing being hereinafter collectively called the "Guaranty Obligations"). The Guarantor further agrees that the Guaranty Obligations may be extended or renewed, in whole or in part, without notice or further assent from such Guarantor, and that such Guarantor will remain bound under Article XIII of the Indenture notwithstanding any extension or renewal of any Guaranty Obligation. Capitalized terms used herein have the meanings assigned to them in the Indenture unless otherwise indicated. Subject to the terms of the Indenture, this Guaranty shall be binding upon the Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges herein conferred upon that party shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. This Guaranty shall not be valid or obligatory for any purpose until the certificate of authentication on the Security upon which this Guaranty is noted shall have been executed by the Trustee under the Indenture by the signature of one of its authorized signatories. Notwithstanding any other provision of the Indenture or this Guaranty, under the Indenture and this Guaranty the maximum aggregate amount of the obligations guaranteed by the Guarantor shall not exceed the maximum amount that can be guaranteed without rendering the Indenture or this Guaranty, as it relates to such Guarantor, voidable under applicable federal or state law relating to fraudulent conveyance or fraudulent transfer. This Guaranty shall be governed by the internal laws of the State of New York, without regard to conflict of laws provisions thereof. [Name of Guarantor] by ___________________________________ Name: Title: EX-10.(C) 4 dex10c.txt PURCHASE AGREEMENT DATED APRIL 12, 2001 EXHIBIT 10(c) EXECUTION COPY $450,000,000 UNITED RENTALS (NORTH AMERICA), INC. 10 3/4% Senior Notes Due April 15, 2008 PURCHASE AGREEMENT ------------------ April 12, 2001 Credit Suisse First Boston Corporation Goldman, Sachs & Co. Salomon Smith Barney Inc., As Representatives of the Several Purchasers, c/o Credit Suisse First Boston Corporation, Eleven Madison Avenue, New York, N.Y. 10010-3629 Dear Sirs: 1. Introductory. United Rentals (North America), Inc., a Delaware corporation (the "Company"), proposes, subject to the terms and conditions stated herein, to issue and sell to the several initial purchasers named in Schedule A hereto (the "Purchasers") U.S.$450,000,000 principal amount of its 10 3/4% Senior Notes Due April 15, 2008 ("Notes"). The Notes will be unconditionally guaranteed (each, a "Guaranty") on a senior unsecured basis by United Rentals, Inc., a Delaware corporation and parent of the Company ("Holdings"), and each of the Company's subsidiaries listed on Schedule B hereto (the "Subsidiary Guarantors" and, together with Holdings, the "Guarantors"). The Notes will also be guaranteed by each subsequently organized domestic subsidiary of the Company that becomes a guarantor pursuant to the Indenture (as hereinafter defined). The Notes will be issued under an indenture dated as of April 20, 2001 (the "Indenture"), among the Company, the Guarantors and The Bank of New York, as trustee (the "Trustee"). The Notes and the Guaranties are together referred to as the "Offered Securities". The United States Securities Act of 1933 is herein referred to as the "Securities Act". The following transactions (collectively, the "Transactions") will occur concurrently with the consummation of the offering of the Offered Securities (the "Offering"): (i) the Company will obtain $1.5 billion senior secured credit facilities (the "Senior Credit Facilities"), consisting of $750.0 million in term loans (all of which will be drawn on the Closing Date (as hereinafter defined)) and $750.0 million in revolving credit facilities (an estimated $652.3 million of which will be drawn on the Closing Date, subject to adjustment as provided in the Offering Document), under a credit agreement and related documentation among the Company, the lenders party thereto and The Chase Manhattan Bank, as administrative agent (the "Credit Agreement"), and (ii) the Company will use the proceeds of the Notes and of its borrowings under the Senior Credit Facilities on the Closing Date to (A) permanently repay the outstanding indebtedness under the Company's existing revolving credit facility, (B) repay the Company's outstanding term loans, (C) repay obligations under a synthetic lease and (D) pay transaction costs relating to the offering of the Notes and the Senior Credit Facilities. This Agreement, the Registration Rights Agreement (as hereinafter defined), the Indenture and the Guaranties are referred to herein as the "Operative Documents". The Credit Agreement and the other documents related to the Transactions are referred to herein collectively as the "Transaction Documents". Holders (including subsequent transferees) of the Offered Securities will be entitled to the benefit of a Registration Rights Agreement dated the Closing Date (the "Registration Rights Agreement"), among the Company, the Guarantors and the Purchasers, pursuant to which the Company and the Guarantors will be obligated to file with the Securities and Exchange Commission (the "Commission") (i) a registration statement (the "Exchange Offer Registration Statement") under the Securities Act registering an issue of senior notes of the Company guaranteed by the Guarantors (the "Exchange Securities"), which shall be identical in all material respects to the Offered Securities (except that the Exchange Securities will not contain terms with respect to registration rights or transfer restrictions) to be offered in exchange for the Offered Securities (the "Registered Exchange Offer") and (ii) under certain circumstances specified in the Registration Rights Agreement, a shelf registration statement (the "Shelf Registration Statement") pursuant to Rule 415 under the Securities Act. The Company and the Guarantors jointly and severally agree with the several Purchasers as follows: 2. Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the several Purchasers that: (a) A preliminary offering circular relating to the Offered Securities, dated March 30, 2001 (the "Preliminary Offering Circular"), has been prepared by the Company. A final offering circular relating to the Offered Securities, dated April 12, 2001 (the "Final Offering Circular"), has been prepared by the Company, and as supplemented as of the date of this Agreement, together with any exhibit thereto, any documents incorporated therein by reference or any other document approved by the Company for use in connection with the contemplated resale of the Offered Securities, is hereinafter referred to as the "Offering Document". The Offering Document as of its date does not, and as of the Closing Date will not, include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the 2 circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from the Offering Document based upon written information furnished to the Company by any Purchaser through the Representatives specifically for use therein, it being understood and agreed that the only such information is that described as such in Section 7(b) hereof. Except as disclosed in the Offering Document, on the date of this Agreement, the Company's Annual Report on Form 10-K most recently filed with the Commission and all subsequent reports (collectively, the "Exchange Act Reports") which have been filed by the Company with the Commission or sent to stockholders pursuant to the Securities Exchange Act of 1934 (the "Exchange Act") do not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Such documents, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act and the rules and regulations of the Commission thereunder. (b) The Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Offering Document; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect (as hereinafter defined). (c) Each subsidiary of the Company that is a corporation has been duly incorporated and is an existing corporation in good standing under the laws of the jurisdiction of its incorporation, with power and authority (corporate and other) to own its properties and conduct its business as described in the Offering Document; and each subsidiary of the Company that is a corporation is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect. (d) Each subsidiary of the Company that is a limited partnership has been duly formed and is validly existing and in good standing under the laws of the jurisdiction of its formation, with power and authority (partnership and other) to own its properties and conduct its business as described in the Offering Document; and each subsidiary of the Company that is a limited partnership is duly qualified to do business as a foreign limited partnership in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect. (e) All of the issued and outstanding capital stock of the Company and each subsidiary of the Company that is a corporation has been duly authorized and validly issued 3 and is fully paid and nonassessable; and the capital stock of the Company and each such subsidiary owned by the Company, directly or indirectly, will be owned, as of the Closing Date, free from liens, encumbrances and defects, except liens and encumbrances arising under or not prohibited by the Credit Agreement. (f) All of the outstanding partnership interests of each subsidiary of the Company that is a limited partnership have been issued in accordance with the applicable limited partnership law; and the partnership interests of each such subsidiary owned by the Company, directly or indirectly, will be owned, as of the Closing Date, free from liens, encumbrances and defects, except liens and encumbrances arising under or not prohibited by the Credit Agreement. (g) The Notes have been duly authorized by the Company; each Guaranty has been duly authorized by each respective Guarantor; the Indenture has been duly authorized by the Company and each Guarantor; and when the Offered Securities are delivered and paid for pursuant to this Agreement on the Closing Date, the Indenture will have been duly executed and delivered, such Offered Securities will have been duly executed, authenticated, issued and delivered and will conform to the description thereof contained in the Offering Document, and the Indenture and such Offered Securities will constitute valid and legally binding obligations of the Company and each Guarantor, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. (h) No consent, approval, authorization, or order of, or filing with, any governmental agency or body or any court is required for the consummation of (i) the Transactions or (ii) the transactions contemplated by each of the Operative Documents in connection with the issuance and sale of the Offered Securities by the Company, except for any of the foregoing contemplated by the Registration Rights Agreement and except for filings contemplated by the Credit Agreement in connection with perfecting security interests. (i) Neither the Company nor any of its subsidiaries is in (i) violation of its respective charter, by-laws or other constitutive documents or (ii) default in the performance of any obligation, agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or instrument that is material to the Company and its subsidiaries, taken as a whole, to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or their respective property is bound, except for any default that would not have a Material Adverse Effect. (j) The execution, delivery and performance of each of the Operative Documents, and the issuance and sale of the Offered Securities and compliance with the terms and provisions thereof, will not result in a breach or violation of any of the terms and provisions 4 of, or constitute a default under, any statute, any rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any subsidiary of the Company or any of their properties, or any agreement or instrument to which the Company or any such subsidiary is a party or by which the Company or any such subsidiary is bound or to which any of the properties of the Company or any such subsidiary is subject, or the charter or by-laws of the Company or any such subsidiary. The Company has full power and authority to authorize, issue and sell the Notes, and each Guarantor has full power and authority to authorize and deliver the Guaranties, as contemplated by this Agreement. (k) Each of the Transaction Documents (i) has been duly authorized by the Company and each Guarantor (to the extent a party thereto), (ii) as of the Closing Date will have been executed and delivered by the Company and each Guarantor (to the extent a party thereto) and (iii) conforms in all material respects to the description thereof contained in the Offering Document. Each of the Transaction Documents will, when so executed, constitute a valid and legally binding obligation of the Company and each Guarantor party thereto (as the case may be) and will be enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equitable principles. (l) The execution, delivery and performance of the Transaction Documents by the Company and each Guarantor (to the extent a party thereto) will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, any rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any subsidiary of the Company or any of their properties, or, upon consummation of the Transactions, any agreement or instrument to which the Company or any such subsidiary is a party or by which the Company or any such subsidiary is bound or to which any of the properties of the Company or any such subsidiary is subject, or the charter or by-laws of the Company or any such subsidiary. (m) Each of this Agreement and the Registration Rights Agreement (i) has been duly authorized by the Company and each Guarantor, (ii) as of the Closing Date, will have been executed and delivered by the Company and each Guarantor and (iii) conforms in all material respects to the description thereof contained in the Offering Document. Each of this Agreement and the Registration Rights Agreement will, when so executed, constitute a valid and legally binding obligation of the Company and each Guarantor and will be enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equitable principles. (n) The Company and its subsidiaries have good and marketable title to all real property described in the Offering Document as owned by the Company and its subsidiaries 5 and good title to all other properties described in the Offering Document as owned by them, in each case, free and clear as of the Closing Date of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (i) are pursuant to the Credit Agreement as described in the Offering Document or (ii) do not, singly or in the aggregate, materially interfere with the use made and proposed to be made of such property by the Company or any of its subsidiaries; and all of the leases and subleases material to the business of the Company and its subsidiaries, considered as one enterprise, and under which the Company or any of its subsidiaries holds properties described in the Offering Document, are in full force and effect, and neither the Company nor any subsidiary has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of the Company or any subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of the Company or such subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease, which claim, if upheld, would result in a Material Adverse Effect. (o) The Company and its subsidiaries possess adequate certificates, authorities or permits issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by them, except where the lack thereof would not have a Material Adverse Effect; and the Company and its subsidiaries have not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the condition (financial or other), business, properties, results of operations or prospects of the Company and its subsidiaries taken as a whole ("Material Adverse Effect"). (p) No labor dispute with the employees of the Company or any subsidiary exists or, to the knowledge of the Company, is imminent that might have a Material Adverse Effect. (q) The Company and its subsidiaries own, possess or can acquire on reasonable terms, adequate trademarks, trade names and other rights to inventions, know-how, patents, copyrights, confidential information and other intellectual property (collectively, "intellectual property rights") necessary to conduct the business now operated by them, or presently employed by them (except where the lack thereof would not have a Material Adverse Effect), and have not received any notice of infringement of or conflict with asserted rights of others with respect to any intellectual property rights that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect. (r) Except as disclosed in the Offering Document, neither the Company nor any of its subsidiaries is in violation of any statute, any rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the 6 environment or human exposure to hazardous or toxic substances (collectively, "environmental laws"), owns or operates any real property contaminated with any substance that is subject to any environmental laws, is liable for any off-site disposal or contamination pursuant to any environmental laws, or is subject to any claim relating to any environmental laws, which violation, contamination, liability or claim would individually or in the aggregate have a Material Adverse Effect; and the Company is not aware of any pending investigation which might lead to such a claim. (s) To the knowledge of the Company, there are no costs or liabilities associated with environmental laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with environmental laws or any certificates, authorities or permits, any related constraints on operating activities and any potential liabilities to third parties) which would, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect. (t) Except as disclosed in the Offering Document, here are no pending actions, suits or proceedings against or affecting the Company, any of its subsidiaries or any of their respective properties that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of the Company to perform its obligations under any Operative Document or which are otherwise material in the context of the sale of the Offered Securities; and no such actions, suits or proceedings are, to the Company's knowledge, threatened or contemplated. (u) The accountants, Ernst & Young LLP, that have certified the financial statements and supporting schedules included in the Preliminary Offering Circular and the Offering Document are independent public accountants with respect to Holdings, the Company and the Guarantors, as required by the Act and the Exchange Act. The historical financial statements, together with related schedules and notes, set forth in the Preliminary Offering Circular and the Offering Document comply as to form in all material respects with the requirements applicable to registration statements on Form S-1 under the Securities Act. (v) The historical financial statements, together with related schedules and notes forming part of the Offering Document (and any amendment or supplement thereto), present fairly the consolidated financial position, results of operations and changes in financial position of the Company and its subsidiaries on the basis stated in the Offering Document at the respective dates or for the respective periods to which they apply; such statements and related schedules and notes have been prepared in accordance with generally accepted accounting principles in the United States consistently applied throughout the periods involved, except as disclosed therein; and the other financial and statistical information and data set forth in the Offering Document (and any amendment or 7 supplement thereto) are, in all material respects, accurately presented and prepared on a basis consistent with such financial statements and the books and records of the Company (w) Except as disclosed in the Offering Document, since the date of the latest audited financial statements included in the Offering Document there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or other), business, properties, results of operations or prospects of the Company and its subsidiaries taken as a whole, and, except as disclosed in or contemplated by the Offering Document, there has been no dividend or distribution of any kind declared, paid or made by Holdings on any class of its capital stock. (x) None of the Company or any Guarantor is an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the United States Investment Company Act of 1940 (the "Investment Company Act"); and none of the Company or any Guarantor is and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the Offering Document, will be an "investment company" as defined in the Investment Company Act. (y) No securities of the same class (within the meaning of Rule 144A(d)(3) under the Securities Act) as the Offered Securities are listed on any national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system. (z) Subject to compliance by the Purchasers with their covenants hereunder and assuming the accuracy of the Purchasers' representations and warranties, the offer and sale of the Offered Securities by the Company to the several Purchasers in the manner contemplated by this Agreement and the Offering Document will be exempt from the registration requirements of the Securities Act by reason of Section 4(2) thereof and Regulation S thereunder ("Regulation S"); and it is not necessary to qualify an indenture in respect of the Offered Securities under the United States Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). (aa) None of the Company, the Guarantors, any of their affiliates, or any person acting on its or their behalf (i) has, within the six-month period prior to the date hereof, offered or sold in the United States or to any U.S. person (as such terms are defined in Regulation S under the Securities Act) the Offered Securities or any security of the same class or series as the Offered Securities or (ii) has offered or will offer or sell the Offered Securities (A) in the United States by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act or (B) with respect to any such securities sold in reliance on Rule 903 of Regulation S, by means of any directed selling efforts within the meaning of Rule 902(c) of Regulation S. The Company, the Guarantors, their affiliates and any person acting on any of their behalf (other than the 8 Purchasers) have complied and will comply with the offering restrictions requirement of Regulation S. None of the Company or the Guarantors has entered or will enter into any contractual arrangement with respect to the distribution of the Offered Securities except for this Agreement. (bb) The Company is subject to Section 13 or 15(d) of the Exchange Act. (cc) There are no contracts, agreements or understandings between the Company or any Guarantor and any person granting such person the right to require the Company or such Guarantor to file a registration statement under the Securities Act with respect to any securities of the Company or such Guarantor or to require the Company or such Guarantor to include such securities with the Offered Securities registered pursuant to any Registration Statement, except for (i) the Registration Rights Agreement dated September 29, 1998, among the Company, Richard D. Colburn and certain other persons that were affiliates of U.S. Rentals, Inc., that was entered into in connection with the Company's merger with U.S. Rentals as described in the Company's proxy statement relating to such transaction, (ii) the Amended and Restated Registration Rights Agreement dated as of September 30, 1999, among Holdings, Bradley S. Jacobs, Apollo Investment Fund IV, L.P., and Apollo Overseas Partners IV, L.P., (iii) the Registration Rights Agreement dated as of September 30, 1999, among Holdings, Bradley S. Jacobs and Chase Equity Associates, L.P., and (iv) other agreements pursuant to which Holdings has already filed a registration statement covering all the shares entitled to registration thereunder. (dd) Neither the Company nor any of its subsidiaries nor any agent thereof acting on the behalf of them has taken, and none of them will take, any action that might cause this Agreement or the issuance or sale of the Notes to violate, Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors of the Federal Reserve System. (ee) No "nationally recognized statistical rating organization" as such term is defined for purposes of Rule 436(g)(2) under the Act (i) has imposed (or has informed the Company or any Guarantor that it is considering imposing) any condition (financial or otherwise) on the Company's or any Guarantor's retaining any rating assigned to the Company or any Guarantor, any securities of the Company or any Guarantor or (ii) has indicated to the Company or any Guarantor that it is considering (a) the downgrading, suspension, or withdrawal of, or any review for a possible change that does not indicate the direction of the possible change in, any rating so assigned or (b) any change in the outlook for any rating of the Company, any Guarantor or any securities of the Company or any Guarantor. (ff) Each of the Preliminary Offering Circular and the Offering Document, as of its date, contains all the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the Act. 9 (gg) The sale of the Notes pursuant to Regulation S is not part of a plan or scheme to evade the registration provisions of the Securities Act. (hh) Each certificate signed by any officer of the Company or any Guarantor and delivered to the Purchasers or counsel for the Purchasers shall be deemed to be a representation and warranty by the Company or such Guarantor to the Purchasers as to the matters covered thereby. The Company acknowledges that the Purchasers and, for purposes of the opinions to be delivered to the Purchasers pursuant to Section 9 hereof, counsel to the Company and the Guarantors and counsel to the Initial Purchaser will rely upon the accuracy and truth of the foregoing representations and hereby consents to such reliance. 3. Purchase, Sale and Delivery of Offered Securities. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Company agrees to sell to the Purchasers, and the Purchasers agree, severally and not jointly, to purchase from the Company, at a purchase price of 97.75% of the principal amount thereof plus accrued interest (if any) from April 20, 2001 to the Closing Date (as hereinafter defined), the respective principal amounts of Offered Securities set forth opposite the names of the several Purchasers in Schedule A hereto. The Company will deliver against payment of the purchase price the Offered Securities in the form of one or more permanent Global Securities in definitive form (the "Global Securities") deposited with the Trustee as custodian for The Depository Trust Company ("DTC") and registered in the name of Cede & Co., as nominee for DTC. Interests in any permanent Global Securities will be held only in book-entry form through DTC, except in the limited circumstances described in the Offering Document. Payment for the Offered Securities shall be made by the Purchasers in Federal (same day) funds by wire transfer to an account at a bank acceptable to the Representatives on April 20, 2001, or at such other time not later than seven full business days thereafter as the Representatives and the Company determine, such time being herein referred to as the "Closing Date", against delivery to the Trustee as custodian for DTC of the Global Securities representing all of the Offered Securities at the office of Cravath, Swaine & Moore, 825 Eighth Avenue, New York, NY 10019 at 10:00 A.M. (New York time) on such date. The Global Securities will be made available for checking at the above office of Cravath, Swaine & Moore at least 24 hours prior to the Closing Date. 4. Representations by Purchasers; Resale by Purchasers. (a) Each Purchaser severally represents and warrants to the Company that it is an "accredited investor" within the meaning of Regulation D under the Securities Act. (b) Each Purchaser severally acknowledges that the Offered Securities have not been registered under the Securities Act and may not be offered or sold within 10 the United States or to, or for the account or benefit of, U.S. persons except in accordance with Regulation S or pursuant to an exemption from the registration requirements of the Securities Act. Each Purchaser severally represents and agrees that it has offered and sold the Offered Securities and will offer and sell the Offered Securities (i) as part of their distribution at any time and (ii) otherwise until the later of the commencement of the offering and the Closing Date, only in accordance with Rule 144A ("Rule 144A") or Rule 903 under the Securities Act. Accordingly, neither such Purchaser nor its affiliates, nor any persons acting on its or their behalf, have engaged or will engage in any directed selling efforts with respect to the Offered Securities, and such Purchaser, its affiliates and all persons acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S. Each Purchaser severally agrees that, at or prior to confirmation of sale of the Offered Securities, other than a sale pursuant to Rule 144A, such Purchaser will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases the Offered Securities from it during the restricted period a confirmation or notice to substantially the following effect: "The Securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the "Securities Act") and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the date of the commencement of the offering and the closing date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meanings given to them by Regulation S. Terms used in this subsection (b) have the meanings given to them by Regulation S. (c) Each Purchaser severally agrees that it and each of its affiliates has not entered and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities except for any such arrangements with the other Purchasers or affiliates of the other Purchasers or with the prior written consent of the Company. (d) Each Purchaser severally agrees that it and each of its affiliates will not offer or sell the Offered Securities in the United States by means of any form of general solicitation or general advertising, within the meaning of Rule 502(c) under the Securities Act, including, but not limited to (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or (ii) any seminar or meeting whose attendees have been invited by any general solicitation or general advertising. Each Purchaser 11 severally agrees, with respect to resales made in reliance on Rule 144A of any of the Offered Securities, to deliver either with the confirmation of such resale or otherwise prior to settlement of such resale a notice to the effect that the resale of such Offered Securities has been made in reliance upon the exemption from the registration requirements of the Securities Act provided by Rule 144A. (e) Each Purchaser severally represents and agrees that (i) it has not offered or sold, and prior to the date six months after the date of issue of the Offered Securities will not offer or sell, any Offered Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (ii) it has complied and will comply with all applicable provisions of the Public Offers of Securities Regulations 1995 and the Financial Services Act 1986 with respect to anything done by it in relation to the Offered Securities in, from or otherwise involving the United Kingdom; and (iii) it has only issued or passed on, and will only issue or pass on, in the United Kingdom, any document received by it in connection with the issuance of the Offered Securities to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such document may otherwise lawfully be issued or passed on. (f) Each Purchaser represents and agrees that (i) it has not solicited, and will not solicit, offers to purchase any of the Offered Securities from, (ii) it has not sold, and will not sell, any of the Offered Securities to, and (iii) it has not distributed, and will not distribute, the Offered Document to, any person or entity in any jurisdiction outside of the United States except, in each case, in compliance in all material respects with all applicable laws. For the purpose of this Agreement, "United States" means the United States of America, its territories, its possessions and other areas subject to its jurisdiction. 5. Certain Agreements of the Company. The Company agrees with the several Purchasers that: (a) The Company will advise the Representatives promptly of any proposal to amend or supplement the Offering Document and will not effect such amendment or supplementation without the Representatives' consent, which shall not be unreasonably withheld. If, at any time prior to the completion of the resale of the Offered Securities by the Purchasers any event occurs as a result of which the Offering Document as then amended or supplemented would include (as of its date or the last date of its amendment or supplementation, whichever is later) an untrue 12 statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Company promptly will notify the Representatives of such event and promptly will prepare, at its own expense, an amendment or supplement which will correct such statement or omission. Neither the Representatives' consent to, nor the Purchasers' delivery to offerees or investors of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6. (b) The Company will furnish to the Representatives copies of any Preliminary Offering Circular, the Offering Document and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Representatives may from time to time request, and the Company will furnish to the Representatives on the date hereof three copies of the Final Offering Circular signed by a duly authorized officer of the Company, one of which will include the independent accountants' reports therein manually signed by such independent accountants. At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act, for so long as any Offered Securities are outstanding, the Company will promptly furnish or cause to be furnished to the Representatives (and, upon request, to each of the other Purchasers) and, upon request of holders and prospective purchasers of the Offered Securities, to such holders and purchasers, copies of the information required to be delivered to holders and prospective purchasers of the Offered Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) in order to permit compliance with Rule 144A in connection with resales by such holders of the Offered Securities. The Company will pay the expenses of printing and distributing to the Purchasers all such documents. (c) The Company will promptly from time to time take such action as any Purchaser may reasonably request to arrange for the qualification of the Offered Securities for sale and the determination of their eligibility for investment under the laws of such jurisdictions in the United States and Canada as any Purchaser designates and will continue such qualifications in effect so long as required for the resale of the Offered Securities by the Purchasers provided that the Company will not be required to qualify as a foreign corporation or to file a general consent to service of process in any such state or province. (d) During the period of five years hereafter, the Company will furnish to the Representatives and, upon request, to each of the other Purchasers, as soon as practicable after the end of each fiscal year, a copy of its annual report to stockholders for such year; and the Company will furnish to the Representatives and, upon request, to each of the other Purchasers (i) as soon as available, a copy of each report and any definitive proxy statement of the Company filed with the 13 Commission under the Exchange Act or mailed to stockholders, and (ii) from time to time, such other public information concerning the Company as the Representatives may reasonably request. (e) During the period of two years after the Closing Date, the Company will, upon request, furnish to the Representatives, each of the other Purchasers and any holder of Offered Securities a copy of the restrictions on transfer applicable to the Securities. (f) During the period of two years after the Closing Date, the Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the Securities Act) to, resell any of the Offered Securities (but not the Exchange Securities) that have been reacquired by any of them. (g) During the period of two years after the Closing Date, the Company will not be or become an open-end investment company, unit investment trust or face-amount certificate company that is or is required to be registered under Section 8 of the Investment Company Act. (h) The Company will pay all expenses incidental to the performance of its obligations under the Operative Documents including (i) the fees and expenses of the Trustee and its professional advisers; (ii) all expenses in connection with the execution, issue, authentication, packaging and initial delivery of the Offered Securities and, as applicable, the Exchange Securities, the preparation and printing of this Agreement, the Registration Rights Agreement, the Offered Securities, the Indenture, the Offering Document and amendments and supplements thereto, and any other document relating to the issuance, offer, sale and delivery of the Offered Securities and, as applicable, the Exchange Securities; (iii) the cost of qualifying the Offered Securities for trading in The Portal(SM) Market ("PORTAL") of The Nasdaq Stock Market, Inc. and any expenses incidental thereto; (iv) expenses (including fees and disbursements of counsel) incurred in connection with qualification of the Offered Securities or the Exchange Securities for sale under the laws of such jurisdictions in the United States and Canada as any Purchaser designates and the printing of memoranda relating thereto; (v) any fees charged by investment rating agencies for the rating of the Offered Securities or the Exchange Securities; and (vi) expenses incurred in distributing Preliminary Offering Circulars and the Offering Document (including any amendments and supplements thereto) to the Purchasers. The Company will pay for all travel expenses of the Company's officers and employees and any other expenses of the Company in connection with attending meetings with prospective purchasers of the Offered Securities, including the cost of an airplane for such travel. It is understood that, except as provided in this Section and in Sections 7 and 9 hereof, the Purchasers will pay for all travel expenses of the Purchasers' employees and any other out-of- pocket expenses of the 14 Purchasers in connection with attending or hosting meetings with prospective purchasers of the Offered Securities, the fees of their counsel, transfer taxes on the resale of any of the Offered Securities by them and any advertising expenses connected with any offers they make. (i) In connection with the Offering, until the Representatives shall have notified the Company and the other Purchasers of the completion of the resale of the Offered Securities, neither the Company nor any of its affiliates has or will, either alone or with one or more other persons, bid for or purchase for any account in which it or any of its affiliates has a beneficial interest any Offered Securities or attempt to induce any person to purchase any Offered Securities; and neither it nor any of its affiliates will make bids or purchases for the purpose of creating actual, or apparent, active trading in, or of raising the price of, the Offered Securities. (j) For a period of 90 days after the date of the initial offering of the Offered Securities by the Purchasers, the Company will not offer, sell, contract to sell, pledge, or otherwise dispose of, directly or indirectly, any United States dollar-denominated debt securities that are substantially similar to the Offered Securities and are issued or guaranteed by the Company or guaranteed by Holdings, and having a maturity of more than one year from the date of issue, without the prior written consent of Credit Suisse First Boston Corporation. The Company will not at any time offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any securities under circumstances where such offer, sale, pledge, contract or disposition would cause the exemption afforded by Section 4(2) of the Securities Act to cease to be applicable to the offer and sale of the Securities. (k) The Company will use its best efforts to effect the inclusion of the Offered Securities in PORTAL and to maintain the listing of the Offered Securities on PORTAL for so long as the Offered Securities (not including the Exchange Securities) are outstanding. (l) The Company will obtain the approval of DTC for "book-entry" transfer of the Offered Securities, and will comply with all of its agreements set forth in the representation letters of the Company and the Guarantors to DTC relating to the approval of the Offered Securities by DTC for "book-entry" transfer. (m) The Company will not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) that would be integrated with the sale of the Offered Securities to the Purchasers or pursuant to exempt resales of the Offered Securities in a manner that would require the registration of any such sale of the Offered Securities under the Securities Act. 15 (n) The Company will not voluntarily claim, and will actively resist any attempts to claim, the benefit of any usury laws against the holders of any Notes and the related Guaranties. (o) The Company will cause, as required by the Registration Rights Agreement, and subject to the terms, conditions and limitations thereof, the Registered Exchange Offer to be made in the appropriate form to permit Exchange Securities and guarantees thereof by the Guarantors registered pursuant to the Securities Act to be offered in exchange for the Offered Securities and to comply with all applicable federal and state securities laws in connection with the Registered Exchange Offer. (p) The Company will comply with all of its agreements set forth in the Registration Rights Agreement; provided, however, that the sole monetary damages for breach of this obligation and the obligations set forth in the preceding paragraph shall be the liquidated damages provided for by the Registration Rights Agreement. (q) The Company will use its reasonable best efforts to do and perform all things required or necessary to be done and performed under this Agreement by it prior to the Closing Date and to satisfy all conditions precedent to the delivery of the Offered Securities. 6. Conditions of the Obligations of the Purchasers. The obligations of the several Purchasers to purchase and pay for the Offered Securities will be subject to the accuracy of the representations and warranties on the part of the Company and each Guarantor herein, to the accuracy of the statements of officers of the Company and each Guarantor made pursuant to the provisions hereof, to the performance by the Company and each Guarantor of their respective obligations hereunder and to the following additional conditions precedent: (a) The Purchasers shall have received a letter, dated the date of this Agreement, of Ernst & Young LLP confirming that they are independent public accountants within the meaning of the Securities Act and the applicable published rules and regulations thereunder ("Rules and Regulations") and to the effect that: (i) In their opinion the financial statements examined by them and included in the Offering Document comply as to form in all material respects with the accounting requirements of the Securities Act and the related published Rules and Regulations that would be applicable if the Offering were registered under the Securities Act; (ii) on the basis of a reading of the latest available interim financial statements of the Company, inquiries of officials of the Company who have 16 responsibility for financial and accounting matters and other specified procedures, nothing came to their attention that caused them to believe that: (A) at the date of the latest available balance sheet read by such accountants, or at a subsequent specified date not more than three business days prior to the date of this Agreement, there was any change in the consolidated capital stock or any increase in short-term indebtedness or long-term indebtedness of the Company and its consolidated subsidiaries or, at the date of the latest available balance sheet read by such accountants, there was any decrease in consolidated net current assets, as compared with amounts shown on the latest balance sheet included in the Offering Document; or (B) for the period from the closing date of the latest income statement included in the Offering Document to the closing date of the latest available income statement read by such accountants there were any decreases, as compared with the corresponding period of the previous year, in total consolidated revenues, gross profit, net operating income, consolidated income before extraordinary items or net income; except in all cases set forth in clauses (A) and (B) above for changes, increases or decreases which are described in such letter; and (iii) they have compared specified dollar amounts (or percentages derived from such dollar amounts) and other financial information contained in the Offering Document (in each case to the extent that such dollar amounts, percentages and other financial information are derived from the general accounting records of the Company and its subsidiaries subject to the internal controls of the Company's accounting system or are derived directly from such records by analysis or computation) with the results obtained from inquiries, a reading of such general accounting records and other procedures specified in such letter and have found such dollar amounts, percentages and other financial information to be in agreement with such results, except as otherwise specified in such letter. (b) Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development or event involving a prospective change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as one enterprise which, in the judgment of a majority in interest of the Purchasers, including the Representatives, is material and adverse and makes it impracticable or inadvisable to proceed with completion of the Offering or the sale of and payment for the 17 Offered Securities; (ii) any downgrading in the rating of any debt securities of the Company by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Securities Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities of the Company (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange or any setting of minimum prices for trading on such exchange, or any suspension of trading of any securities of the Company on any exchange or in the over-the-counter market; (iv) any banking moratorium declared by U.S. Federal or New York authorities; or (v) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress or any other substantial national or international calamity or emergency if, in the judgment of a majority in interest of the Purchasers, including the Representatives, the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the Offering or sale of and payment for the Offered Securities. (c) Concurrently with or prior to the issuance and sale of the Offered Securities by the Company, the initial borrowings under the Credit Agreement shall have occurred. There shall exist at and as of the Closing Date (after giving effect to the transactions contemplated by this Agreement and the Transactions) no condition that would constitute a default (or an event that with notice or lapse of time, or both, would constitute a default) under the Credit Agreement or any other Transaction Document. (d) The Purchasers shall have received an opinion, dated the Closing Date, of (i) Ehrenreich Eilenberg & Krause LLP, counsel for the Company and the Guarantors, to the effect set forth in Annex I hereto, and (ii) Weil, Gotshal & Manges LLP, counsel for the Company and the Guarantors, to the effect set forth in Annex II hereto. (e) The Purchasers shall have received from Cravath, Swaine & Moore, counsel for the Purchasers, such opinion or opinions, dated the Closing Date, with respect to the incorporation of the Company, the validity of the Offered Securities, the Offering Document, the exemption from registration for the offer and sale of the Offered Securities by the Company to the several Purchasers and the resales by the several Purchasers as contemplated hereby and other related matters as the Representatives may require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. 18 (f) The Purchasers shall have received a certificate, dated the Closing Date, of the President or any Vice President and a principal financial or accounting officer of each of the Company and the Guarantors in which such officers, to the best of their knowledge after reasonable investigation, shall state that the representations and warranties of the Company or the applicable Guarantor (as the case may be) in this Agreement are true and correct, that the Company or the applicable Guarantor (as the case may be) has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date, and that, subsequent to the dates of the most recent consolidated financial statements of Holdings in the Offering Document there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or other), business, properties or results of operations of the Company and its subsidiaries taken as a whole except as set forth in or contemplated by the Offering Document or as described in such certificate. (g) The Purchasers shall have received a letter, dated the Closing Date, of Ernst & Young LLP which meets the requirements of subsection (a) of this Section, except that the specified date referred to in such subsection will be a date not more than three days prior to the Closing Date for the purposes of this subsection. (h) The Company, the Guarantors and the Trustee shall have entered into the Indenture, and the Purchasers shall have received an executed counterpart thereof. The Company will furnish the Purchasers with such conformed copies of such opinions, certificates, letters and documents as the Purchasers reasonably request. The Representatives may in their sole discretion waive on behalf of the Purchasers compliance with any conditions to the obligations of the Purchasers hereunder. 7. Indemnification and Contribution. (a) The Company and each Guarantor will indemnify and hold harmless each Purchaser, its partners, directors and officers and each person, if any, who controls such Purchaser within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Purchaser may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Offering Document, or any amendment or supplement thereto, or any related Preliminary Offering Circular, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, including any losses, claims, damages or liabilities arising out of or based upon the Company's failure to perform its obligations under Section 5(a) of this Agreement, and, subject to Section 7(c) of this Agreement, will reimburse each Purchaser for any legal or 19 other expenses reasonably incurred by such Purchaser in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with written information furnished to the Company by any Purchaser through the Representatives specifically for use therein, it being understood and agreed that the only such information consists of the information described as such in subsection (b) below. (b) Each Purchaser will severally and not jointly indemnify and hold harmless the Company, the Guarantors, their respective directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities to which the Company or a Guarantor (as the case may be) may become subject, under the Securities Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Offering Document, or any amendment or supplement thereto, or any related Preliminary Offering Circular, or arise out of or are based upon the omission or the alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company or a Guarantor (as the case may be) by such Purchaser through the Representatives specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by the Company or a Guarantor (as the case may be) in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred, it being understood and agreed that the only such information furnished by any Purchaser consists of the following information in the Offering Document furnished on behalf of each Purchaser under the caption "Plan of Distribution": (i) the second and third sentences of paragraph eight, (ii) the information contained in paragraph nine and (iii) the information in paragraphs ten and eleven furnished on behalf of the Purchasers; provided however, that the Purchasers shall not be liable for any losses, claims, damages or liabilities arising out of or based upon the Company's failure to perform its obligations under Section 5(a) of this Agreement. (c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the 20 commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes (i) an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to or an admission of fault or failure to act by or on behalf of any indemnified party. An indemnifying party shall not be required to indemnify an indemnified party hereunder with respect to any settlement or compromise of, or consent to entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder if (i) such settlement, compromise or consent is entered into or made or given by the indemnified party without the consent of the indemnifying party and (ii) the indemnifying party has not unreasonably withheld or delayed any such consent. (d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors on the one hand and the Purchasers on the other from the offering of the Offered Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and the Guarantors on the one hand and the Purchasers on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantors on the one hand and the Purchasers on the other shall be deemed to be in the same proportion as the total net proceeds from the Offering (before deducting expenses) received by the Company and the Guarantors bear to the total discounts and commissions received by the Purchasers from the Company under this Agreement. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or any Guarantor or the Purchasers and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The 21 amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Purchaser shall be required to contribute any amount in excess of the amount by which the discounts and commissions such Purchaser received in connection with the purchase of the Offered Securities exceeds the amount of any damages which such Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The Purchasers' obligations in this subsection (d) to contribute are several in proportion to their respective purchase obligations and not joint. (e) The obligations of the Company or any Guarantor under this Section shall be in addition to any liability which the Company or any Guarantor may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Purchaser within the meaning of the Securities Act or the Exchange Act; and the obligations of the Purchasers under this Section shall be in addition to any liability which the respective Purchasers may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls the Company or any Guarantor within the meaning of the Securities Act or the Exchange Act. 8. Default of Purchasers. If any Purchaser or Purchasers default in their obligations to purchase Offered Securities hereunder and the aggregate principal amount of Offered Securities that such defaulting Purchaser or Purchasers agreed but failed to purchase does not exceed 10% of the total principal amount of Offered Securities, the Representatives may make arrangements satisfactory to the Company for the purchase of such Offered Securities by other persons, including any of the Purchasers, but if no such arrangements are made by the Closing Date, the non-defaulting Purchasers shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Offered Securities that such defaulting Purchasers agreed but failed to purchase. If any Purchaser or Purchasers so default and the aggregate principal amount of Offered Securities with respect to which such default or defaults occur exceeds 10% of the total principal amount of Offered Securities and arrangements satisfactory to the Representatives and the Company for the purchase of such Offered Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non- defaulting Purchaser or the Company, except as provided in Section 9. As used in this Agreement, the term "Purchaser" includes any person substituted for a Purchaser under this Section. Nothing herein will relieve a defaulting Purchaser from liability for its default. 9. Survival of Certain Representations and Obligations. The respective indemnities, agreements, representations, warranties and other statements of the Company or its officers and of the several Purchasers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the 22 results thereof, made by or on behalf of any Purchaser, the Company or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Offered Securities. If this Agreement is terminated pursuant to Section 8 or if for any reason the purchase of the Offered Securities by the Purchasers is not consummated, the Company shall remain responsible for the expenses to be paid or reimbursed by it pursuant to Section 5(h) and the respective obligations of the Company and the Purchasers pursuant to Section 7 shall remain in effect. If the purchase of the Offered Securities by the Purchasers is not consummated for any reason other than solely because of the termination of this Agreement pursuant to Section 8 or the occurrence of any event specified in clause (C), (D) or (E) of Section 6(b)(ii), the Company will reimburse the Purchasers for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Offered Securities. 10. Notices. All communications hereunder will be in writing and, if sent to the Purchasers will be mailed, delivered or telegraphed and confirmed to the Purchasers, c/o Credit Suisse First Boston Corporation, 277 Park Avenue, New York, NY 10172, Attention: Investment Banking Department - Transactions Advisory Group, or, if sent to the Company, will be mailed, delivered or telegraphed and confirmed to it at Five Greenwich Office Park, Greenwich, CT 06830, Attention: Chief Financial Officer, with a copy to Oscar D. Folger, 521 Fifth Avenue, 24th Floor, New York, NY 10175; provided, however, that any notice to a Purchaser pursuant to Section 7 will be mailed, delivered or telegraphed and confirmed to such Purchaser. 11. Representation of the Purchasers. The Representatives will act for the several Purchasers in connection with this Purchase Agreement, and any action under this Agreement taken by the Representatives will be binding upon all the Purchasers. 12. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and affiliates, and the controlling persons referred to in Section 7, and no other person will have any right or obligation hereunder, except that holders of Offered Securities shall be entitled to enforce the agreements for their benefit contained in the second and third sentences of Section 5(b) hereof against the Company as if such holders were parties thereto. 13. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. 14. Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of laws. 23 The Company hereby submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. 24 If the foregoing is in accordance with the Purchasers' understanding of our agreement, kindly sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement among the Company, the Guarantors and the several Purchasers in accordance with its terms. Very truly yours, United Rentals (North America), Inc., By______________________________________________ Name: Title: The Guarantors Listed On Schedule B Hereto, By______________________________________________ Name: Title: The foregoing Purchase Agreement is hereby con- firmed and accepted as of the date first above written. Credit Suisse First Boston Corporation Goldman, Sachs & Co. Salomon Smith Barney inc., Acting on behalf of themselves and as the Representatives of the several Purchasers. By Credit Suisse First Boston Corporation By_________________________________________ Name: Title: 25 SCHEDULE A [Table omitted] SCHEDULE B Guarantor Place of Formation --------- ------------------ Advance Barricades and Signing, Inc. Florida All Cities Trailer Exchange, Inc. California Arrow Equipment Company Illinois Bakersfield Compaction Equipment California BNR Equipment Inc. New York Coast Line Marking, Inc. Florida Dealers Service Corporation New Jersey Equipment Leasing Services, Inc. Massachusetts Flasher Co. of Kansas, Inc. Kansas Flasher Company of Oklahoma, Inc. Oklahoma Frontenac Equipment, Inc. Missouri Highway Supply Company, Inc. New Mexico Jadco Signing, Inc. Florida Liddell Management Co., Inc. Massachusetts Paul E. Carlson, Inc. d/b/a Carlson Equipment Minnesota Company Rentals Unlimited, Incorporated Rhode Island Rocky Mountain Safety Service, Inc. Wyoming Russ Enterprises, Inc. California Shoring & Supply Company, Inc. Kansas Thoesen Equipment Inc. Illinois Traffic Markings South, Inc. Georgia Traffic Safety Services, Inc. North Dakota Guarantor Place of Formation --------- ------------------ Tri-Mac, Corporation, d/b/a Tri-Mack Indiana Barricade Company United Rentals, Inc. Delaware United Rentals Gulf, Inc. Delaware United Equipment Rentals Gulf, L.P. Texas A.S.C. Pavement Markings, Inc. Texas Highway Safety Service Company Texas Lectric Safety Lites Co. Texas Paige Barricades, Inc. Texas United Rentals Highway Technologies, Inc. Massachusetts United Rentals Highway Technologies Gulf, Delaware Inc. United Rentals Highway Technologies, L.P. Texas United Rentals Northwest, Inc. Oregon United Rentals Southeast, Inc. Delaware United Rentals Southeast, L.P. Georgia Wanamaker Rents, Incorporated California Warning Safety Lights, Inc. Florida Warning Safety Lights of Georgia, Inc. Florida West-Co Rental & Sales Colorado WLI Industries, Inc. Illinois Safe-T-Flare Services, Inc. Missouri Warning Lites of Indiana, Inc. Indiana Warning Lites of Iowa, Inc. Iowa Work Zone, Inc. Louisiana Work Zone Safety, Inc. Colorado 2 Guarantor Place of Formation --------- ------------------ Woudenberg Enterprises, Inc. Arizona Highway Rentals, Inc. Nevada Wynne Systems, Inc. California 3 ANNEX I FORM OF OPINION OF EHRENREICH EILENBERG & KRAUSE LLP TO BE DELIVERED PURSUANT TO SECTION 6(d) As to various questions of fact material to our opinion, we have relied upon the certificates of officers and upon certificates of public officials. With regard to the due incorporation of corporations or formation of limited partnerships, as the case may be (other than the Company and the Significant Subsidiaries), and the good standing of entities, we have (subject to the next sentence) relied entirely upon certificates of public officials. With regard to the tax good standing of certain corporations (other than the Company and the Significant Subsidiaries), we have relied solely upon a certificate of an officer of such corporation to the effect that the corporation has filed the most recent annual report required by the law of such jurisdiction and that all franchise taxes required to be paid under such law have been paid. We have also examined such corporate documents and records and other certificates, and have made such investigations of law, as we have deemed necessary in order to render the opinion hereinafter set forth. We have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures, the legal capacity of natural persons and the conformity to the originals of all documents submitted to us as copies. We have also assumed that all documents examined by us have been duly and validly authorized, executed and delivered by each of the parties thereto other than the Company or any Significant Guarantors. In this opinion, (i) "Significant Guarantor" or "Significant Subsidiary" means United Rentals Northwest, Inc., an Oregon corporation, United Rentals Gulf, Inc., a Delaware corporation, and United Equipment Rentals Gulf, L.P., a Texas limited partnership, and (ii) "Corporate Significant Subsidiary" means each Significant Guarantor other than United Equipment Rentals Gulf, L.P. (1) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware. (2) The Company has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Document and to enter into and perform its obligations under the Purchase Agreement. (3) The Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect. (4) The authorized, issued and outstanding capital stock of the Company consists of 3,000 shares of Common Stock, par value $0.01 per share (the "Common Stock"). As of the date hereof, there were 1,000 shares of Common Stock outstanding. The shares of issued and outstanding capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable; and none of the outstanding shares of capital stock of the Company was issued in violation of any preemptive or other similar rights of any security holder of the Company arising by statute or the Company's certificate of incorporation or by-laws or, to the best of our knowledge (after due inquiry), any other preemptive or other similar rights of any security holder of the Company. All of the outstanding capital stock of the Company is owned by United Rentals, Inc., to the best of our knowledge (after due inquiry) free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity (except for any security interest or pledge contemplated by the Transaction Documents). (5) Each Corporate Significant Subsidiary is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect. (6) Each Corporate Significant Subsidiary has been duly incorporated and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Offering Document. Except as otherwise disclosed in the Offering Document and other than as contemplated by the Transaction Documents, all of the issued and outstanding capital stock of each Significant Subsidiary has been duly authorized and validly issued and is fully paid and non-assessable and, to the best of our knowledge, is owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. None of the outstanding shares of capital stock of any Corporate Significant Subsidiary was issued in violation of the preemptive or similar rights of any security holder of such Corporate Significant Subsidiary arising pursuant to statute or such subsidiary's certificate of incorporation or by-laws or, to the best of our knowledge, any other preemptive or other similar rights of any security holder of such Corporate Significant Subsidiary. (7) United Equipment Rentals Gulf, L.P. is duly organized and validly existing as a limited partnership under the laws of the State of Texas and is duly qualified as a foreign limited partnership to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect. Except as otherwise disclosed in the Offering Document and other than as contemplated by the Transaction Documents, all partnership interests in such partnership have been duly issued in accordance with the Texas Revised Limited Partnership Act and, to the best of our knowledge, are owned by the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity. 2 (8) The Purchase Agreement has been duly authorized, executed and delivered by the Company and each Significant Guarantor. (9) The execution, delivery and performance of the Indenture, the Registration Rights Agreement and the Guarantees, and the consummation of the transactions contemplated thereby, have been duly authorized by all necessary corporate action on the part of each Significant Guarantor. Each Significant Guarantor has duly executed and delivered (i) the Indenture, (ii) the Registration Rights Agreement and (iii) their respective Guarantees relating to the Offered Securities being issued on the date hereof that appear on or are attached to such Offered Securities. (10) The Registration Rights Agreement has been duly authorized, executed and delivered by the Company, and constitutes a valid and binding agreement of the Company and each Guarantor, enforceable against the Company and each Guarantor in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or other similar laws relating to or affecting enforcement of creditors' rights generally, or by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). (11) If any documents are incorporated by reference in the Offering Document, such documents (other than the financial statements and supporting schedules therein, as to which no opinion need be rendered), when they were filed with the Commission, complied as to form in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder. (12) To the best of our knowledge, there is not pending or threatened any action, suit, proceeding, inquiry or investigation, to which the Company or any subsidiary is a party, or to which the property or assets of the Company or any subsidiary thereof is subject, before or brought by any court or governmental agency or body, domestic or foreign, which might reasonably be expected to result in a Material Adverse Effect, or which might reasonably be expected to materially and adversely affect the consummation of the transactions contemplated in the Purchase Agreement or the performance by the Company of its obligations thereunder or the transactions contemplated by the Offering Document; (13) The information in the Offering Document under "Business- Environmental Regulation," to the extent that it constitutes summaries of matters of law, has been reviewed by us and is correct in all material respects. Additionally, the information in the Offering Document in the first sentence of the third paragraph under the caption "Description of Notes - Exchange Offer; Registration Rights" is correct in all material respects. We have drawn your attention to the fact that (i) the interpretations of the Commission described in such sentence are contained solely in no-action letters issued 3 by the Commission to various third parties, (ii) the Company has not requested a no-action letter from the Commission relating to the transactions contemplated by the Offering Document and (iii) the Commission is not precluded from changing the interpretations set forth in such no-action letters or from not following such interpretations with respect to the transactions contemplated by the Offering Document. (14) To the best of our knowledge, neither United Rentals, Inc., the Company nor any subsidiary thereof is in violation of its respective charter or by-laws, nor is United Rentals, Inc., the Company or any subsidiary thereof in default in the due performance or observance of, or is in violation of, any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument that is described or referred to in the Offering Document which violations or defaults are required to be described in the Offering Document and are not so described or would, individually or in the aggregate, have a Material Adverse Effect or affect the validity of the Offered Securities or the Guarantees. (15) Assuming (a) the accuracy of the representations and warranties of the Purchasers contained in Section 4 of the Purchase Agreement and (b) compliance by the Purchasers with their covenants and agreements set forth in the Purchase Agreement, no filing, authorization, approval, consent or order of any court or governmental authority or agency (other than such as may be required (i) under the Act and 1939 Act pursuant to the Registration Rights Agreement, or (ii) under the applicable securities laws of the various jurisdictions in which the Offered Securities will be offered or sold, as to which we express no opinion) is required by the Company in connection with the due authorization, execution and delivery of the Purchase Agreement or by the Company or any Guarantor in connection with the due authorization, execution, delivery or performance of the Indenture or the Registration Rights Agreement or in connection with the offering, issuance, sale or delivery of the Offered Securities and the Guarantees, as applicable, to the Purchasers or the initial resale thereof by the Purchasers in accordance with the Purchase Agreement. We express no opinion as to any subsequent resale of the Offered Securities. (16) Assuming (a) the accuracy of the representations and warranties of the Purchasers contained in Section 4 of the Purchase Agreement and (b) compliance by the Purchasers with their covenants and agreements set forth in the Purchase Agreement, it is not necessary in connection with the offer, sale and delivery of the Offered Securities to the Purchasers pursuant to the Purchase Agreement or the initial resales of the Offered Securities by the Purchasers in the manner contemplated by and in accordance with the Purchase Agreement to register the Offered Securities under the Act or to qualify the Indenture under the 1939 Act, it being understood that we express no opinion as to any subsequent resale of the Offered Securities. 4 (17) The execution, delivery and performance of the Purchase Agreement, the letter agreement with DTC, the Indenture, the Registration Rights Agreement, the Offered Securities, the Exchange Securities, the Guarantees and the consummation of the transactions contemplated in the Purchase Agreement and in the Offering Document and compliance by the Company and each Guarantor, as applicable, with its obligations under the Purchase Agreement, the Indenture, the Registration Rights Agreement, the Offered Securities, the Exchange Securities and the Guarantees, (A) to our knowledge, do not and will not (subject to the next sentence), whether with or without the giving of notice or lapse of time or both, conflict with or constitute a breach of, or default or prepayment event under or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any subsidiary thereof pursuant to any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or any other agreement or instrument, known to us, to which the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any subsidiary is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or any subsidiary is subject (except for such conflicts, breaches or defaults, prepayment events or liens, charges or encumbrances that would not have a Material Adverse Effect), (B) result in any violation of the provisions of the charter or by-laws of the Company or any subsidiary, or (C) to the best of our knowledge (after due inquiry), result in any violation by the Company or any subsidiary of the provisions of any applicable law, statute, rule or regulation of the United States of America or included in the Delaware General Corporate Law or Delaware Revised Uniform Limited Partnership Act (except we express no opinion as to "blue sky" laws), judgment, order, writ or decree, known to us, of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or any subsidiary or any of their respective properties, assets or operations. No opinion is rendered pursuant to clause (A) of the preceding sentence with respect to (collectively, the "Excluded Agreements"): (i) any agreement relating to any indebtedness or proposed indebtedness described in the Offering Document under "Information Concerning Certain Indebtedness, Other Obligations and Preferred Securities" or in the Company's Report on Form 10-K for the year ended December 31, 2000 under "Management's Discussion and Analysis of Financial Condition and Results of Operations - Certain Information Concerning the Credit Facility and Other Indebtedness" (excluding the indebtedness described in the paragraph that begins "Other Debt"), (ii) Master Lease Agreement, dated as of December 17, 1999, between United Rentals (North America), Inc. and UR (NA) 1999 Trust, as amended by the amendment thereto dated as of December 27, 2000, and (iii) Master Lease Agreement, dated as of June 30, 2000, between United Rentals (North America), Inc. and UR (NA) 2000 Trust, as amended by the amendment thereto dated as of December 27, 2000. 5 (18) Neither the Company nor any subsidiary which is a Guarantor is an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the 1940 Act. In addition, we have participated in conferences with officers and representatives of the Company, counsel to the Purchasers, representatives of the independent accountants for the Company and the Purchasers at which the contents of the Offering Document and related matters were discussed. Although we have not undertaken, except as otherwise indicated in this opinion, to investigate or verify independently, and do not assume responsibility for, the accuracy, completeness or fairness of the statements contained in the Offering Document, except for those referred to in paragraph 12 above, on the basis of the information that we gained in the course of the performance of such services and our representation of the Company, we confirm to you that nothing that came to our attention in the course of such review or representation has caused us to believe that (i) the Offering Document (except for financial statements and schedules and other financial data included or incorporated by reference therein, as to which we make no statement), contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Offering Document (except for financial statements and schedules and other financial data included or incorporated by reference therein, as to which we make no statement), at the time the Offering Document was issued or at the Closing Date, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading or (ii) that there are any franchise agreements, indentures, mortgages, loan agreements, notes, leases or other contracts or instruments required to be described or referred to in the Offering Document that are not described or referred to in the Offering Document or that any descriptions of or references to any of the foregoing are not correct in all material respects (except that we express no view with respect to the descriptions of the Offered Securities, the Indenture or the Excluded Agreements). The opinions set forth herein are limited to the laws of the State of New York, the General Corporation Law and the Revised Uniform Limited Partnership Act of the State of Delaware, and the federal laws of the United States (except that the opinions in paragraph 5, 6, 7 and 8 cover with respect to each Significant Subsidiary or Significant Guarantor the laws of the jurisdiction of incorporation of such Significant Subsidiary or Significant Guarantor). We have, with your permission, relied without independent investigation on the opinions of local counsel identified on Exhibit B hereto (copies of which have been delivered to you) in rendering the following opinions: (a) the opinions in paragraphs 6, 7 and 8 above insofar as such opinions relate to any Significant Subsidiary that is not incorporated under the laws of the State of New York or the State of Delaware, (b) the opinions in the first sentence of paragraph 9 above insofar as such opinions relate to any Significant Guarantor that is not incorporated under the laws of the State of New York or the State of Delaware and (c) the opinions in the second sentence of paragraph 9 above 6 insofar as it expresses any opinion with respect to the laws of any jurisdiction other than the State of New York or the State of Delaware. The opinion in paragraph 10 hereof requires that the Registration Rights Agreement shall have been duly authorized , executed and delivered by each Guarantor under the laws of its jurisdiction of incorporation. Accordingly, such opinion, insofar as it relates to Significant Guarantors, is based in part on the opinion in paragraph 9 and so relies in part on the opinions of local counsel identified on Exhibit B hereto, as aforesaid. In rendering the opinion in paragraph 10 hereof, we have assumed with your permission that the Registration Rights Agreement has been duly authorized, executed and delivered by each Guarantor that is not a Significant Guarantor. We have reviewed the opinions of local counsel identified on Exhibit B hereto and, based upon such review, we believe that you are we are justified in relying upon them. 7 ANNEX II FORM OF OPINION OF WEIL GOTSHAL & MANGES LLP TO BE DELIVERED PURSUANT TO SECTION 6(d) (1) The Company is a corporation validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as described in the Offering Document and to execute and deliver the Purchase Agreement and to perform its obligations thereunder. (2) The Offered Securities are in the form contemplated by the Indenture. The Securities have been duly authorized by all necessary corporate action on the part of the Company and, when executed by the Company, authenticated by the Trustee, and issued and delivered in the manner provided in the Purchase Agreement and the Indenture against payment of the consideration therefor, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity), and will be entitled to the benefits of the Indenture. (3) The Guarantees are in the form contemplated by the Indenture. Assuming the Guarantees have been duly authorized, executed and delivered on the part of each Guarantor, the Guarantees will constitute a valid and binding obligation of each such Guarantor, enforceable against each such Guarantor in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity), and will be entitled to the benefits of the Indenture. (4) The execution, delivery and performance of the Purchase Agreement by the Company have been duly authorized by all necessary corporate action on the part of the Company. The Purchase Agreement has been duly and validly executed and delivered by the Company. (5) The execution, delivery and performance of the Indenture by the Company have been duly authorized by all necessary corporate action on the part of the Company. The Indenture has been duly and validly executed and delivered by the Company. Assuming the due authorization, execution and delivery of the Indenture by each Guarantor and assuming the due authorization, execution and delivery thereof by the Trustee, the Indenture constitutes the legal, valid and binding obligation of the Company and each such Guarantor, enforceable against the Company and each such Guarantor in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity), and except to the extent that the provision relating to the waiver of any usury, stay or extension law may be deemed unenforceable. (6) The execution, delivery and performance of the Registration Rights Agreement by the Company have been duly authorized by all necessary corporate action on the part of the Company. The Registration Rights Agreement has been duly and validly executed and delivered by the Company. Assuming the due authorization, execution and delivery thereof by the Guarantors, and assuming the due authorization, execution and delivery thereof by the Purchasers, the Registration Rights Agreement constitutes the legal, valid and binding obligation of the Company and each such Guarantor, enforceable against the Company and each such Guarantor in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity) and except that rights to indemnification and contribution thereunder may be limited by federal or state securities laws or public policy relating thereto. (7) The Exchange Securities, when duly executed by the Company, authenticated by the Trustee, and issued and delivered in accordance with and in the manner provided in the Registration Rights Agreement and the Indenture, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity), and will be entitled to the benefits of the Indenture. (8) The statements contained in the Offering Document under the captions "Offering Circular Summary - The Offering", "Description of the Notes" and "Information Concerning Certain Indebtedness, Other Obligations and Preferred Securities", insofar as such statements constitute summaries of (a) the Indenture, (b) the Offered Securities, (c) the Guarantees, (d) the Registration Rights Agreement, (e) the Credit Agreement, (f) the Indenture, dated as of May 22, 1998, among the Company, its United States subsidiaries party thereto, and State Street Bank and Trust Company ("State Street") relating to the Company's 9 1/2% senior subordinated notes due 2008 (the "9 1/2% Indenture"), (g) the Indenture, dated as of August 12, 1998, among the Company, its United States subsidiaries party thereto, and State Street relating to the Company's 8.80% senior subordinated notes due 2008 (the "8.80% Indenture"), (h) the Indenture, dated as of December 15, 1998, among the Company, its United States subsidiaries party thereto, and State Street relating to the 2 Company's 9 1/4% senior subordinated notes due 2009 (the "(9 1/4% Indenture"), (i) the Indenture, dated as of March 23, 1999, among the Company, its United States subsidiaries party thereto, and The Bank of New York, as trustee, relating to the Company's 9% senior subordinated notes due 2009 (the "9% Indenture), (j) (i) the Master Lease Agreement, dated as of December 17, 1999, between United Rentals (North America), Inc. and UR (NA) 1999 Trust, as amended by the amendments thereto dated as of December 27, 2000, and (ii) the Master Lease Agreement dated as of June 30, 2000, between United Rentals (North America), Inc. and UR (NA) 2000 Trust, as amended by the amendment thereto dated as of December 27, 2000 or (k) matters of federal or New York or Delaware corporate law, fairly represent the information called for with respect to such legal matters, documents and proceedings and fairly summarize the matters referred to therein in all material respects. We draw your attention to the fact that (i) the interpretations of the Commission described in the first sentence of the third paragraph under the caption "Description of the Notes -Exchange Offer; Registration Rights" in the Offering Document are contained solely in no- action letters issued by the Commission to various third parties, (ii) the Company has not requested a no-action letter from the Commission relating to the transactions contemplated by the Offering Document and (iii) the Commission is not precluded from changing the interpretations set forth in such no-action letters or from not following such interpretations with respect to the transactions contemplated by the Offering Document. (9) No consent, approval, waiver, license or authorization or other action by or filing with any New York, Delaware corporate or federal governmental authority is required in connection with the execution and delivery by the Company of the Purchase Agreement or the consummation by the Company or any Guarantor of the transactions contemplated thereby, except for filings and other actions required under or pursuant to the Act, the Exchange Act, the 1939 Act and other federal or state securities or "blue sky" laws and the rules of the New York Stock Exchange, as to which we express no opinion. (10) Assuming (a) the representations and warranties of the Purchasers contained in Section 4 of the Purchase Agreement are true, correct and complete and (b) compliance by the Purchasers with its covenants and agreements set forth in the Purchase Agreement, it is not necessary in connection with the offer, sale and delivery of the Offered Securities to the Purchasers pursuant to the Purchase Agreement or the initial resales of the Offered Securities by the Purchasers in the manner contemplated by and in accordance with the Purchase Agreement and described in the Offering Document to register the Offered Securities under the Act or to qualify the Indenture under the 1939 Act, it being understood that we express no opinion as to any subsequent resale of the Offered Securities. (11) The Company is not an "investment company" nor an entity "controlled" by an "investment company," as such terms are defined in the 1940 Act. (12) The execution and delivery of the Purchase Agreement, the Indenture, the Registration Rights Agreement, the Offered Securities, the Exchange Securities and the 3 Guarantees, the consummation of the transactions contemplated thereby and compliance by the Company and the Guarantors with the provisions thereof, do not and will not, whether with or without the giving of notice or lapse of time or both, conflict with or constitute a breach of, or a default or prepayment event under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any subsidiary thereof pursuant to the Financing Documents (as defined below) or any agreement or instrument of which we are aware which was entered into or executed by the Company or any such subsidiary as required under or contemplated by any of the Financing Documents, except for such conflicts, breaches, defaults, prepayment events, liens, charges or encumbrances that would not reasonably be expected to have a Material Adverse Effect. As used above, the term "Financing Documents" means, collectively: (a) the Credit Agreement, (b) the 9 1/2% Indenture, (c) the 8.80% Indenture, (d) the 9 1/4% Indenture, (e) the 9% Indenture, (f) the Master Lease Agreement, dated as of December 17, 1999, between United Rentals (North America), Inc. and UR (NA) 1999 Trust, as amended by the amendments thereto dated as of December 27, 2000, and (g) the Master Lease Agreement dated as of June 30, 2000, between United Rentals (North America), Inc. and UR (NA) 2000 Trust, as amended by the amendment thereto dated as of December 27, 2000. We have participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants for the Company, representatives of the Purchasers and representatives of counsel for the Purchasers in connection with the preparation of the Offering Document and at conferences at which the contents of the Offering Document and related matters were discussed, and although we have not independently verified and are not passing upon and assume no responsibility for the accuracy, completeness or fairness of the statements contained in the Offering Document (except to the extent specified in paragraph 8 above), no facts have come to our attention which lead us to believe that the Offering Document, on the date hereof or the date thereof, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading (it being understood that we express no view with respect to the financial statements and related notes and the other financial and accounting data included in the Offering Document). The opinions expressed herein are limited to the laws of the State of New York, the corporate laws of the State of Delaware and the federal laws of the United States, and we express no opinion as to the effect on the matters covered by this letter of the laws of any other jurisdiction. 4 EX-10.(D) 5 dex10d.txt REGISTRATION RIGHTS AGREEMENT DATED APRIL 20, 2001 EXHIBIT 10(d) $450,000,000 UNITED RENTALS (NORTH AMERICA), INC. 10 3/4% Senior Notes Due 2008 REGISTRATION RIGHTS AGREEMENT ----------------------------- April 20, 2001 Credit Suisse First Boston Corporation Goldman, Sachs & Co. Salomon Smith Barney Inc. Banc of America Securities LLC Deutsche Banc Alex. Brown Inc. Chase Securities Inc. Fleet Securities, Inc. Credit Lyonnais Securities (USA) Inc. First Union Securities, Inc. Scotia Capital (USA) Inc. c/o Credit Suisse First Boston Corporation Eleven Madison Avenue New York, New York 10010-3629 Dear Sirs: United Rentals (North America), Inc., a Delaware corporation (the "Company"), proposes to issue and sell to the initial purchasers, for whom Credit Suisse First Boston Corporation, Goldman, Sachs & Co. and Salomon Smith Barney Inc. are joint book-running managers (collectively, the "Initial Purchasers"), upon the terms set forth in a purchase agreement of even date herewith (the "Purchase Agreement"), $450,000,000 aggregate principal amount of its 10 3/4% Senior Notes due 2008 (the "Notes") to be guaranteed (the "Guaranties") by the entities listed herein (the "Guarantors"). The Notes and the Guaranties are together referred to as the "Initial Securities". The Initial Securities will be issued pursuant to an Indenture, dated as of April 20, 2001 (the "Indenture"), among the Company, the Guarantors named therein and The Bank of New York, as trustee (the "Trustee"). As an inducement to the Initial Purchasers to enter into the Purchase Agreement, the Company agrees with the Initial Purchasers, for the benefit of the Initial Purchasers and the holders of the Securities (as defined below) (collectively the "Holders"), as follows: 1. Registered Exchange Offer. Unless not permitted by applicable law, the Company shall prepare and, not later than 90 days (such 90th day being a "Filing Deadline") after the date on which the Initial Purchasers purchase the Initial Securities pursuant to the Purchase Agreement (the "Closing Date"), file with the Securities and Exchange Commission (the "Commission") a registration statement (the "Exchange Offer Registration Statement") on an appropriate form under the Securities Act of 1933, as amended (the "Securities Act"), with respect to a proposed offer (the "Registered Exchange Offer") to the Holders of Transfer Restricted Securities (as defined in Section 6 hereof), who are not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of debt securities of the Company issued under the Indenture, identical in all material respects to the Initial Securities and registered under the Securities Act (the "Exchange Securities"). The Company shall use its best efforts to (i) cause such Exchange Offer Registration Statement to become effective under the 2 Securities Act within 150 days after the Closing Date (such 150th day being an "Effectiveness Deadline") and (ii) keep the Exchange Offer Registration Statement effective for not less than 30 days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to the Holders (such period being called the "Exchange Offer Registration Period"). If the Company commences the Registered Exchange Offer, the Company will be required to consummate the Registered Exchange Offer no later than 180 days after the Closing Date (such 180th day being the "Consummation Deadline"). Following the declaration of the effectiveness of the Exchange Offer Registration Statement, the Company shall, as soon as practicable, commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder of Transfer Restricted Securities electing to exchange the Initial Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder's business and has no arrangements with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act and without material restrictions under the securities laws of the several states of the United States. The Company acknowledges that, pursuant to current interpretations by the Commission's staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder which is a broker-dealer electing to exchange Initial Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an "Exchanging Dealer"), is required to deliver a prospectus containing the information set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section, and (c) Annex C hereto in the "Plan of Distribution" section of such prospectus in connection with a sale of any such Exchange Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell Securities (as defined below) acquired in exchange for Initial Securities constituting any portion of an unsold allotment, is required to deliver a prospectus containing the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in connection with such sale. The Company shall use its best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for a period of time commencing on the day the Registered Exchange Offer is consummated and continuing for 90 days (or such shorter period during which Exchanging Dealers and other persons, if any, are required by law to deliver such prospectus); provided, however, that such period may be extended pursuant -------- ------- to Section 3(j) below. If, upon consummation of the Registered Exchange Offer, any Initial Purchaser holds Initial Securities acquired by it as part of its initial distribution, the Company, simultaneously with the delivery of the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in exchange (the "Private Exchange") for the Initial Securities held by such Initial Purchaser, a like principal amount of debt securities of the Company issued under the Indenture and identical in all material respects to the Initial Securities (the "Private Exchange Securities"). The Initial Securities, the Exchange Securities and the Private Exchange Securities are herein collectively called the "Securities". In connection with the Registered Exchange Offer, the Company shall: (a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; 3 (b) keep the Registered Exchange Offer open for not less than 30 days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders; (c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee; (d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and (e) otherwise comply with all applicable laws. As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Company shall: (x) accept for exchange all the Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer and the Private Exchange; (y) deliver, or cause to be delivered, to the Trustee for cancelation all the Initial Securities so accepted for exchange; and (z) cause the Trustee to authenticate and deliver promptly to each Holder of the Initial Securities, Exchange Securities or Private Exchange Securities, as the case may be, equal in principal amount to the Initial Securities of such Holder so accepted for exchange. The Indenture will provide that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture and that all the Securities will vote and consent together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter. Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from the date of original issue of the Initial Securities (the "Original Issue Date"). Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of business, (ii) such Holder will have no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an "affiliate," as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker- dealer, that it is not engaged in, and does not intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker- dealer, that it will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. Notwithstanding any other provisions hereof, the Company will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it 4 becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 2. Shelf Registration. If, (i) because of any change in law or in applicable interpretations thereof by the staff of the Commission, the Company is not permitted to effect a Registered Exchange Offer, as contemplated by Section 1 hereof, (ii) the Registered Exchange Offer is not consummated by the 180th day after the Closing Date, (iii) any Initial Purchaser so requests with respect to the Initial Securities (or the Private Exchange Securities) not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following consummation of the Registered Exchange Offer or (iv) any Holder (other than an Exchanging Dealer) is not eligible to participate in the Registered Exchange Offer or, in the case of any Holder (other than an Exchanging Dealer) that participates in the Registered Exchange Offer, such Holder does not receive freely tradeable Exchange Securities on the date of the exchange and any such Holder so requests, the Company shall take the following actions (the date on which any of the conditions described in the foregoing clauses (i) through (iv) occur, including in the case of clauses (iii) or (iv) the receipt of the required notice, being a "Trigger Date"): (a) The Company shall, on or prior to 90 days after the Trigger Date (such 90th day being a "Filing Deadline"), use its best efforts to file with the Commission and thereafter use its best efforts to cause to be declared effective no later than 150 days after the Trigger Date (such 150th day being an "Effectiveness Deadline") a registration statement (the "Shelf Registration Statement" and, together with the Exchange Offer Registration Statement, a "Registration Statement") on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the "Shelf Registration"); provided that if the obligation to file the Shelf Registration Statement arises because the Exchange Offer has not been consummated within 180 days after the Original Issue Date, then the Company will use its best efforts to file the Shelf Registration Statement on or prior to the 30th day after such filing obligation arises; provided, -------- however, that no Holder (other than an Initial Purchaser) shall be entitled ------- to have the Securities held by it covered by such Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder. (b) The Company shall use its best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities for a period of two years (or for such longer period if extended pursuant to Section 3(j) below) from the date of its effectiveness or such shorter period that will terminate when all the Securities covered by the Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are no longer restricted securities (as defined in Rule 144 under the Securities Act, or any successor rule thereof) (such period being the "Shelf Registration Period"). The Company shall be deemed not to have used its best efforts to keep the Shelf Registration Statement effective during the requisite period if it voluntarily takes any action that would result in Holders of Securities covered thereby not being able to offer and sell such Securities during that period, unless such action is required by applicable law. (c) Notwithstanding any other provisions of this Agreement to the contrary, the Company use its best efforts to ensure that the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations thereunder; (ii) the 5 Shelf Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and (iii) any prospectus forming part of any Shelf Registration Statement does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 3. Registration Procedures. In connection with any Shelf Registration contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply: (a) The Company shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that an Initial Purchaser (with respect to any portion of an unsold allotment from the original offering) is participating in the Registered Exchange Offer or the Shelf Registration Statement, the Company shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as such Initial Purchaser reasonably may propose; (ii) include the information set forth in Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer" section and in Annex C hereto in the "Plan of Distribution" section of the prospectus forming a part of the Exchange Offer Registration Statement and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; (iii) if requested by an Initial Purchaser, include the information required by Items 507 or 508 of Regulation S-K under the Securities Act, as applicable, in the prospectus forming a part of the Exchange Offer Registration Statement; (iv) include within the prospectus contained in the Exchange Offer Registration Statement a section entitled "Plan of Distribution," reasonably acceptable to the Initial Purchasers, which shall contain a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential "underwriter" status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a "Participating Broker-Dealer"), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchasers based upon advice of counsel (which may be in-house counsel), represent the prevailing views of the staff of the Commission; and (v) in the case of a Shelf Registration Statement, include the names of the Holders who propose to sell Securities pursuant to the Shelf Registration Statement as selling securityholders. (b) After the Registration Statement has been declared effective, the Company shall give written notice to the Initial Purchasers, the Holders of the Securities and any Participating Broker-Dealer from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer of the occurrence of any of the following that occurs after the Registration Statement has been declared effective (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made): (i) when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective, provided that this clause (i) shall not apply with respect to regular filings of any document or report under the Exchange Act, at any time following the effectiveness of the applicable Registration Statement hereunder, where such filing is made as part of the Company's periodic disclosure obligations under 6 Sections 13 and 15 of the Exchange Act; (ii) of any request by the Commission or any state securities authority for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information; (iii) of the issuance by the Commission or any state securities authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; (v) of the happening of any event that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading; and (vi) of any determination by the Company that a post- effective amendment to a Registration Statement would be appropriate. (c) The Company shall make every reasonable effort to obtain the withdrawal at the earliest possible time, of any order suspending the effectiveness of the Registration Statement. (d) The Company shall furnish to each Holder of Securities included within the coverage of the Shelf Registration, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference). (e) The Company shall deliver to each Exchanging Dealer and each Initial Purchaser, and to any other Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser or any such Holder requests, all exhibits thereto (including those incorporated by reference). (f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement. (g) The Company shall deliver to each Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Company consents, subject to the provisions of this Agreement, to 7 the use of the prospectus or any amendment or supplement thereto by any Initial Purchaser, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto, included in such Exchange Offer Registration Statement. (h) Prior to any public offering of the Securities pursuant to any Registration Statement the Company shall use its reasonable best efforts to register or qualify or cooperate with the Holders of the Securities included therein and their respective counsel in connection with the registration or qualification of the Securities for offer and sale under the securities or "blue sky" laws of such states of the United States as any Holder of the Securities reasonably requests in writing and do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; provided, however, that the Company shall not be required to (i) -------- ------- qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject. (i) The Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Securities pursuant to such Registration Statement. (j) Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company is required to maintain an effective Registration Statement, the Company shall use its best efforts to prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company hereby agrees to notify the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer in accordance with paragraphs (ii) through (v) of Section 3(b) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Initial Purchasers, the Holders of the Securities and any such Participating Broker-Dealers shall suspend use of such prospectus, and the period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in Section 1 above shall each be extended by the number of days from and including the date of the giving of such notice to and including the date when the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer shall have received such amended or supplemented prospectus pursuant to this Section 3(j). (k) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company. (l) The Company will use its best efforts to comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf Registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the 8 Company's first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period. (m) The Company shall cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and containing such changes, if any, as shall be necessary for such qualification. In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture. (n) The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration the Securities of any Holder that unreasonably fails to furnish such information within a reasonable time after receiving such request. (o) Subject to Section 8(c), the Company shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as the Holders of a majority of the aggregate principal amount of Securities covered by such Registration Statement (the "Majority Holders") shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration. (p) For a reasonable period prior to the filing of a Shelf Registration Statement and prior to the execution of any underwriting or similar agreement make available for inspection by counsel selected by the Majority Holders ("Holders' Counsel") and any underwriters participating in an underwritten offering pursuant to a Shelf Registration Statement and not more than one accounting firm retained by the Majority Holders or underwriters, all financial and other records, pertinent corporate documents and properties of the Company reasonably requested by any such persons, and cause the respective officers, directors, employees, and any other agents of the Company to supply all information reasonably requested by any such persons, in connection with a Registration Statement; provided that any such records, documents, properties and such information that is designated in writing by the Company, in good faith, as confidential at the time of delivery of such records, documents, properties or information shall be kept confidential by any such persons and shall be used only in connection with such Registration Statement, unless disclosure thereof is made in connection with a court proceeding or required by law, or such information has become available (not in violation of this agreement) to the public generally or through a third party without an accompanying obligation of confidentiality, and the Company shall be entitled to request that such persons sign a confidentiality agreement to the foregoing effect. (q) Subject to Section 8(c), in the case of any Shelf Registration, the Company, if requested by counsel to the Majority Holders of the Securities covered thereby, shall cause (i) its counsel to deliver an opinion and updates thereof relating to the Securities in customary form addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement in form, substance and scope customarily covered in opinions delivered in connection with shelf registrations; provided, however, that in the case of an underwritten offering such opinions shall also be addressed to the underwriters and also cover the matters customarily covered in opinions delivered by issuers in connection with primary underwritten offerings of debt securities comparable to the Securities (such additional opinions to be agreed upon by the underwriters and the Company, such agreement not to be unreasonably withheld), (ii) its officers to execute and deliver all customary documents and certificates and updates thereof requested by any underwriters of the applicable Securities and (iii) its independent public accountants [and the independent public accountants 9 with respect to any other entity for which financial information is provided in the Shelf Registration Statement] to provide to the selling Holders of the applicable Securities and any underwriter therefor a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with shelf registrations; provided, however, that in the case of an underwritten offering such letters shall also be addressed to the underwriters and cover the matters customarily covered in "comfort letters" delivered by issuers in connection with primary underwritten offerings of debt securities comparable to the Securities (such letters to be agreed upon by the underwriters and such accountants, such agreement not to be unreasonably withheld); subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72. (r) In the case of the Registered Exchange Offer, if requested by any Initial Purchaser or any known Participating Broker-Dealer that is subject to the prospectus delivery requirements of the Securities Act, and if a Registration Statement is required to be filed under the Securities Act, the Company shall cause (i) its counsel to deliver to such Initial Purchaser or such Participating Broker-Dealer a signed opinion in the form set forth in Section 6(d ) of the Purchase Agreement with such changes as are customary in connection with the preparation of a Registration Statement and (ii) its independent public accountants and the independent public accountants with respect to any other entity for which financial information is provided in the Registration Statement to deliver to such Initial Purchaser or such Participating Broker-Dealer a comfort letter, in customary form, meeting the requirements as to the substance thereof as set forth in Section 6(a) and (b) of the Purchase Agreement, with appropriate date changes. (s) If a Registered Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Initial Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company shall mark, or caused to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; in no event shall the Initial Securities be marked as paid or otherwise satisfied. (t) The Company will use its best efforts to (a) if the Initial Securities have been rated prior to the initial sale of such Initial Securities, confirm such ratings will apply to the Securities covered by a Registration Statement, or (b) if the Initial Securities were not previously rated, cause the Securities covered by a Registration Statement to be rated with the appropriate rating agencies, if so requested by the Majority Holders, or by the managing underwriters, if any. (u) In the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or "assist in the distribution" (within the meaning of the Conduct Rules (the "Rules") of the National Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will assist such broker-dealer in complying with the requirements of such Rules, including, without limitation, by (i) if such Rules, including Rule 2720, shall so require, engaging a "qualified independent underwriter" (as defined in Rule 2720) to participate in the preparation of the Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (iii) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules. 10 (v) The Company shall use its best efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement contemplated hereby. 4. Registration Expenses. Subject to Section 8(c), all expenses incident to the Company's performance of and compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement is ever filed or becomes effective, including without limitation; (i) all registration and filing fees and expenses; (ii) all fees and expenses of compliance with federal securities and state "blue sky" or securities laws; (iii) all expenses of printing (including printing certificates for the Securities to be issued in the Registered Exchange Offer and the Private Exchange and printing of Prospectuses), messenger and delivery services and telephone; (iv) all rating agency fees; (v) all fees and disbursements of counsel for the Company; (vi) all application and filing fees in connection with listing the Exchange Securities on a national securities exchange or automated quotation system pursuant to the requirements hereof; and (vii) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance). (viii) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, (ix) all premiums and other costs of policies of insurance maintained by the Company against liabilities arising out of the public offering of the Transfer Restricted Securities being registered (x) all fees and expenses of a "qualified independent underwriter" as defined by Conduct Rule 2720 of the NASD, if required by the NASD rules, in connection with the offering of the Exchange Securities or Transfer Restricted Securities in an underwritten offering, (xi) the reasonable fees and expenses of the Trustee, including its counsel, and any escrow agent or custodian. Notwithstanding the foregoing, the holders of the Exchange Securities or Transfer Restricted Securities being registered shall pay all agency or brokerage fees and commissions and underwriting discounts and commissions attributable to the sale of Transfer Restricted Securities and the fees and disbursements of any counsel or other advisors or experts retained by such holders (severally or jointly) (excluding advisors or other experts retained by the Company, as aforesaid); provided, however, that in the case of a Shelf Registration Statement under Section 2 and Section 3 hereof, the Majority Holders may, in each case, if they so elect, select Holders' Counsel to represent them (which may be counsel to the Initial Purchasers), in which event the aforementioned registration expenses shall include the reasonable fees and disbursements of such counsel up to a maximum of $80,000. The Company will bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of 11 any annual audit and the fees and expenses of any person, including special experts, retained by the Company. 5. Indemnification. (a) Each of the Company and the Guarantors named in the Schedule hereto agree to indemnify and hold harmless the Initial Purchasers, each Holder of the Securities, any Participating Broker-Dealer, each underwriter who participates in an offering of Transfer Restricted Securities and each person, if any, who controls such Initial Purchaser, Holder, Participating Broker-Dealer or underwriter within the meaning of the Securities Act or the Exchange Act (each Initial Purchaser, Holder, any Participating Broker-Dealer, underwriter and such controlling persons are referred to collectively as the "Indemnified Parties") from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or in any amendment or supplement thereto, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; provided, however, that -------- ------- (i) the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration in reliance upon and in conformity with written information pertaining to such Initial Purchaser, Holder, Participating Broker-Dealer or underwriter and furnished to the Company by or on behalf of such Initial Purchaser, Holder, Participating Broker-Dealer or underwriter specifically for inclusion therein and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus relating to a Shelf Registration Statement shall not inure to the benefit of any Initial Purchaser, Holder, Participating Broker-Dealer or underwriter from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, to the extent that a prospectus relating to such Securities was required to be delivered by such Initial Purchaser, Holder, Participating Broker-Dealer or underwriter under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Initial Purchaser, Holder, Participating Broker-Dealer or underwriter results from the fact that there was not sent or given to such person, at or prior to the written confirmation of the sale of such Securities to such person, a copy of the final prospectus if the Company had previously furnished copies thereof to such Initial Purchaser, Holder, Participating Broker-Dealer or underwriter; provided further, however, -------- ------- ------- that this indemnity agreement will be in addition to any liability which the Company may otherwise have to such Indemnified Party. (b) Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Company, the Initial Purchasers, each underwriter who participates in an offering of Transfer Restricted Securities and the other selling Holders and each of their respective directors and officers (including each officer of the Company who signed the Registration Statement) and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or 12 any actions in respect thereof, to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or in any amendment or supplement thereto, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company or any of its controlling persons. (c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action, and does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. The indemnifying party will not be liable for the costs and expenses of any settlement of such action effected by such indemnified party without the consent of the indemnifying party, which consent shall not be unreasonably withheld. (d) If the indemnification provided for in this Section 5 is unavailable or insufficient to hold harmless an indemnified party under subsections (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. 13 The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Initial Purchaser, Holder, Participating Broker-Dealer or underwriter or such other indemnified party, as the case may be, on the other, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 5(d), the Holders of the Securities shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities pursuant to a Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11 (f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company. (e) The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancelation of this Agreement or any investigation made by or on behalf of any indemnified party. 6. Additional Interest Under Certain Circumstances. (a) Additional interest (the "Additional Interest") with respect to the Securities shall be assessed as follows if any of the following events occur (each such event in clauses (i) through (iv) below being herein called a "Registration Default"): (i) any Registration Statement required by this Agreement is not filed with the Commission on or prior to the applicable Filing Deadline; (ii) any Registration Statement required by this Agreement is not declared effective by the Commission on or prior to the applicable Effectiveness Deadline; (iii) the Registered Exchange Offer has not been consummated on or prior to the Consummation Deadline; or (iv) any Registration Statement required by this Agreement has been declared effective by the Commission but, thereafter during the period during which the Company is required to maintain the effectiveness thereof, (A) such Registration Statement thereafter ceases to be effective or (B) such Registration Statement or the related prospectus ceases to be usable in connection with resales of Transfer Restricted Securities, for a period of 60 days, whether or not consecutive, because either (1) any event occurs as a result of which the related prospectus forming part of such Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or (2) it shall be necessary to 14 amend such Registration Statement or supplement the related prospectus, to comply with the Securities Act or the Exchange Act or the respective rules thereunder. Each of the foregoing will constitute a Registration Default whatever the reason for any such event and whether it is voluntary or involuntary or is beyond the control of the Company or pursuant to operation of law or as a result of any action or inaction by the Commission . Additional Interest shall accrue on the Specified Securities over and above the interest set forth in the title of the Securities from and including the date on which any such Registration Default shall occur to but excluding the date on which all such Registration Defaults have been cured, at a rate of 0.25% per annum (the "Additional Interest Rate") for the first 90-day period immediately following the occurrence of such Registration Default. The Additional Interest Rate shall increase by an additional 0.25% per annum with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum Additional Interest Rate of 1.0% per annum. (b) A Registration Default referred to in Section 6(a)(iv) hereof shall be deemed not to have occurred and be continuing in relation to a Shelf Registration Statement, or the related prospectus if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus or (y) other material events, with respect to the Company that would need to be described in such Shelf Registration Statement or the related prospectus and (ii) in the case of clause (y), the Company is proceeding promptly and in good faith to amend or supplement such Shelf Registration Statement and related prospectus to describe such events; provided, however, that in any case if such Registration Default occurs for a - -------- ------- period of 60 days, whether or not consecutive, Additional Interest shall be payable in accordance with the above paragraph from the day such Registration Default occurs until such Registration Default is cured. (c) Notwithstanding the foregoing, any Registration Default specified in clause (i), (ii) or (iii) of the preceding section (a) that relates to the Exchange Offer Registration Statement or the Exchange Offer shall be deemed cured at such time as the Shelf Registration Statement is declared effective by the SEC. (d) Any amounts of Additional Interest due pursuant to Section 6(a) will be payable in cash on the regular interest payment dates with respect to the Securities. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest Rate by the principal amount of the Securities and further multiplied by a fraction, the numerator of which is the number of days such Additional Interest Rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360. (e) Following the cure of all Registration Defaults the accrual of additional interest on the Specified Securities will cease and the interest rate will revert to the original rate; provided, however, that if, after any such additional interest ceases to accrue, a different event specified in clause (i), (ii), (iii) or (iv) of the definition of Registration Default above occurs, such additional interest shall begin to accrue again pursuant to the foregoing provisions. The Company shall notify the Trustee within five business days after the occurrence of each Registration Default. 15 The Company shall pay the additional interest due on the Securities by depositing with the Trustee, in trust, for the benefit of the Holders thereof, by 12:00 noon, New York City time, on or before the applicable semi-annual interest payment date for the Securities, immediately available funds in sums sufficient to pay the additional interest then due. The additional interest amount due shall be payable on each interest payment date to the record Holder of Securities entitled to receive the interest payment to be made on such date as set forth in the Indenture. Additional interest pursuant to this Section 6 constitutes liquidated damages with respect to Registration Defaults and shall be the exclusive monetary remedy available to the Holders and/or the Initial Purchasers with respect to any Registration Default. (f) "Specified Securities" means the securities (not including the Exchange Securities); provided, however, that, if the Registration Default -------- ------- relates solely to a Shelf Registration Statement, then (i) if such Shelf Registration Statement is required to cover both Securities and Exchange Securities, the "Specified Securities" shall mean both the Securities and Exchange Securities and (ii) if such Shelf Registration Statement is required to cover only Exchange Securities, the "Specified Securities" shall mean only the Exchange Securities; provided further, however, that if the Registration Default -------- ------- ------- relates to an Exchange Offer Registration Statement that is unavailable for use during the Participating Broker-Dealer Prospectus Period, the "Specified Securities" shall mean the Exchange Securities. (g) "Transfer Restricted Securities" means each Initial Security until (i) the date on which such Security has been exchanged by a person other than a broker-dealer for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of an Initial Security for an Exchange Security, the date on which such Exchange Security is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement, (iv) the date on which such Security is distributed to the public pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule 144(k) under the Securities Act, (v) the date on which such Security shall have been otherwise transferred by the Holder thereof and a new Security not bearing a legend restricting further transfer shall have been delivered by the Issuer and subsequent disposition of such Security shall not require registration or qualification under the 1933 Act or any similar state law then in force , or (vi) such Security ceases to be outstanding. 7. Rules 144 and 144A. The Company shall use its best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Securities, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rules 144 and 144A. The Company covenants that it will take such further action as any Holder of Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)). The Company will provide a copy of this Agreement to prospective purchasers of Initial Securities identified to the Company by the Initial Purchasers upon request. Upon the request of any Holder of Initial Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act. 16 8. Underwritten Registrations. (a) If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering ("Managing Underwriters") will be selected by the Majority Holders of such Transfer Restricted Securities to be included in such offering. (b) No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. (c) Notwithstanding anything to the contrary contained herein, (i) the Company shall not be required to cooperate with an underwritten offering unless a request for an underwritten offering is made by holders of 33-1/3% of Transfer Restricted Securities outstanding, (ii) the Company shall not be obligated to cooperate with more than one underwritten offering pursuant to this Agreement, (iii) upon receipt of a request to prepare and file an amendment or supplement to a Registration Statement and Prospectus in connection with an underwritten offering, the Company may delay the filing of any such amendment or supplement for up to 120 days if the Company in good faith has a valid business reason for such delay provided that nothing in this clause (iii) limits the Company's obligations under Section 1, and (iv) the Company shall not be required to pay more than an aggregate of $200,000 of registration-related expenses, in addition to internal expenses of the Company (including, without limitation, salaries of officers and employees performing legal and accounting duties) in connection with any such underwritten offering. 9. Miscellaneous. (a) Remedies. The Company acknowledges and agrees that any failure by the Company to comply with its obligations under Section 1 and 2 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company's obligations under Sections 1 and 2 hereof. The Company further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (b) No Inconsistent Agreements. The Company will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's securities under any agreement in effect on the date hereof. (c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and the written consent of the Majority Holders affected by such amendment, modification, supplement, waiver or consents. (d) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery: 17 (1) if to a Holder of the Securities, at the most current address given by such Holder to the Company. (2) if to the Initial Purchasers; Credit Suisse First Boston Corporation Eleven Madison Avenue New York, NY 10010-3629 Fax No.: (212) 325-8278 Attention: Transactions Advisory Group with a copy to: Cravath, Swaine & Moore 825 Eighth Avenue New York, NY 10019 Attention: Kris F. Heinzelman (3) if to the Company, at its address as follows: United Rentals, Inc. Five Greenwich Office Park Greenwich, Ct 06830 Attention: Chief Financial Officer with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Attention: Malcolm Landau Ehrenreich Eilenberg & Krause, LLP 11 E. 44th St., 17th Floor New York, NY 10017 Attention: Joseph Ehrenreich All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient's facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery. (e) Third Party Beneficiaries. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder. (f) Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns. (g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed 18 shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. (j) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. (k) Securities Held by the Company. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. 19 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the several Initial Purchasers and the Company and the Guarantors in accordance with its terms. Very truly yours, United Rentals (North America), Inc. by _________________________ Name: Title: FOR THE GUARANTORS LISTED ON SCHEDULE A by: _________________________ Name: Michael J. Nolan Title: Vice President and Secretary The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written. Credit Suisse First Boston Corporation Goldman Sachs & Co. Salomon Smith Barney Inc. By: Credit Suisse First Boston Corporation by _____________________________________ Name: Title: ANNEX A Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that it will allow Participating Broker-Dealers and any other persons, if any, with similar prospectus delivery requirements to use the prospectus contained in the Exchange Offer Registration Statement in connection with the resale of such Exchange Securities, for a period commencing on the day the Exchange Offer is consummated and continuing for 90 days (or such shorter period during which Participating Broker-Dealers are required by law to deliver such prospectus); provided, however, that if for any day during such period the Company restricts the use of such prospectus, such period shall be extended on a day-for-day basis. See "Plan of Distribution." ANNEX B Each broker-dealer that receives Exchange Securities for its own account in exchange for Initial Securities, where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See "Plan of Distribution." ANNEX C PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that it will allow Participating Broker-Dealers and any other persons, if any, with similar prospectus delivery requirements to use the prospectus contained in the Exchange Offer Registration Statement in connection with the resale of such Exchange Securities, for a period commencing on the day the Exchange Offer is consummated and continuing for 90 days (or such shorter period during which Participating Broker-Dealers are required by law to deliver such prospectus); provided, however, that if for any day during such period the Company restricts the use of such prospectus, such period shall be extended on a day-for-day basis. In addition, until , 200 , all dealers effecting transactions in the Exchange Securities may be required to deliver a prospectus./1/ The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an "underwriter" within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period of 90 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. ____________________ /1/ In addition, the legend required by Item 502(e) of Regulation S-K will appear on the back cover page of the Exchange Offer prospectus. This sentence may be deleted if such delivery requirements do not apply under Rule 174 of the Securities Act. ANNEX D [_] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name:_______________________________ Address:____________________________ If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. 1 SCHEDULE A Guarantor Place of Formation - --------- ------------------ Advance Barricades and Signing, Inc. Florida All Cities Trailer Exchange, Inc. California Arrow Equipment Company Illinois Bakersfield Compaction Equipment California BNR Equipment Inc. New York Coast Line Marking, Inc. Florida Dealers Service Corporation New Jersey Equipment Leasing Services, Inc. Massachusetts Flasher Co. of Kansas, Inc. Kansas Flasher Company of Oklahoma, Inc. Oklahoma Frontenac Equipment, Inc. Missouri Highway Supply Company, Inc. New Mexico Jadco Signing, Inc. Florida Liddell Management Co., Inc. Massachusetts Paul E. Carlson, Inc. d/b/a Carlson Equipment Company Minnesota Paul E. Carlson, Inc. d/b/a Carlson Equipment Company Minnesota Rentals Unlimited, Incorporated Rhode Island Rocky Mountain Safety Service, Inc. Wyoming Russ Enterprises, Inc. California Shoring & Supply Company, Inc. Kansas Thoesen Equipment Inc. Illinois Traffic Markings South, Inc. Georgia Traffic Safety Services, Inc. North Dakota Tri-Mac, Corporation, d/b/a Tri-Mack Barricade Company Indiana United Rentals, Inc. Delaware United Rentals Gulf, Inc. Delaware United Equipment Rentals Gulf, L.P. Texas 2 Guarantor Place of Formation - --------- ------------------ A.S.C. Pavement Markings, Inc. Texas Highway Safety Service Company Texas Lectric Safety Lites Co. Texas Paige Barricades, Inc. Texas United Rentals Highway Technologies, Inc. Massachusetts United Rentals Highway Technologies Gulf, Inc. Delaware United Rentals Highway Technologies, L.P. Texas United Rentals Northwest, Inc. Oregon United Rentals Southeast, Inc. Delaware United Rentals Southeast, L.P. Georgia Wanamaker Rents, Incorporated California Warning Safety Lights, Inc. Florida Warning Safety Lights of Georgia, Inc. Florida West-Co Rental & Sales Colorado WLI Industries, Inc. Illinois Safe-T-Flare Services, Inc. Missouri Warning Lites of Indiana, Inc. Indiana Warning Lites of Iowa, Inc. Iowa Work Zone, Inc. Louisiana Work Zone Safety, Inc. Colorado Woudenberg Enterprises, Inc. Arizona Highway Rentals, Inc. Nevada Wynne Systems, Inc. California -----END PRIVACY-ENHANCED MESSAGE-----