Exhibit 10.12

 

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MCGRATH RENTCORP

 

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NOTE PURCHASE AND PRIVATE SHELF AGREEMENT

 

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JUNE 2, 2004

 

$60,000,000 5.08% SERIES A SENIOR NOTES DUE JUNE 2, 2011

$20,000,000 PRIVATE SHELF FACILITY

 

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TABLE OF CONTENTS

 

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1.

   AUTHORIZATION OF ISSUE OF NOTES    1      1A.   

Authorization of Issue of Series A Notes

   1      1B.   

Authorization of Issue of Shelf Notes

   1

2.

   PURCHASE AND SALE OF NOTES    2      2A.   

Purchase and Sale of Series A Notes

   2      2B.   

Purchase and Sale of Shelf Notes

   2           2B(1).   

Facility

   2           2B(2).   

Issuance Period

   3           2B(3).   

Request for Purchase

   3           2B(4).   

Rate Quotes

   4           2B(5).   

Acceptance

   4           2B(6).   

Market Disruption

   4           2B(7).   

Facility Closings

   5           2B(8).   

Fees

   6

3.

   CONDITIONS OF CLOSING    7      3A.   

Conditions to Series A Closing

   7           3A(1).   

Initial Draw Fee

   7           3A(2).   

Consents

   7           3A(3).   

Other Documents

   7           3A(4).   

Legal Opinion of Special Counsel to PIM and the Series A Purchasers

   8           3A(5).   

Payment of Legal Fees and Expenses

   8           3A(6).   

Extension of Bank Facility

   8      3B.   

Conditions to Each Closing

   8           3B(1).   

Representations and Warranties; No Default

   8           3B(2).   

Purchase Permitted by Applicable Laws

   9           3B(3).   

Payment of Fees

   9           3B(4).   

Delivery of Certain Documents

   9           3B(5).   

UCC Searches

   10           3B(6).   

Private Placement Number

   10

 

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TABLE OF CONTENTS

 

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4.

   PREPAYMENTS.    10      4A.    Required Prepayments of Series A Notes    10  
   4B.    Required Prepayments of Shelf Notes    11      4C.    Optional
Prepayment    11      4D.    Notice of Optional Prepayment    11      4E.   
Partial Payments Pro Rata    12      4F.    Retirement of Notes    12

5.

   AFFIRMATIVE COVENANTS    12      5A.    Financial Statements; Notice of
Defaults    12      5B.    Notices; Reports    14      5C.    Inspection of
Property    14      5D.    Information Required by Rule 144A    15      5E.   
Maintenance of Properties; Preservation of Rights    15      5F.    Compliance
With Laws    15      5G.    Insurance    16      5H.    Payment of Taxes and
Claims    16      5I.    Subsequent Guarantors; Release of Guarantors    16     
5J.    Covenant to Secure Notes Equally    16

6.

   NEGATIVE COVENANTS    17      6A.    Financial Covenants    17      6B.   
Merger and Consolidation; Transfer of Assets    18      6C.    Nature of
Business; Public Company Status    18      6D.    Sale of Stock and Indebtedness
of Subsidiaries    19      6E.    Liens    19      6F.    Priority Debt    20  
   6G.    Prepayment    20      6H.    Related Party Transactions    20      6I.
   Misrepresentations    20      6J.    Use of Proceeds    20

7.

   EVENTS OF DEFAULT    21

 

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TABLE OF CONTENTS

 

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     7A.    Acceleration    21      7B.    Rescission of Acceleration    24     
7C.    Notice of Acceleration or Rescission    24      7D.    Other Remedies   
24

8.

   REPRESENTATIONS, COVENANTS AND WARRANTIES    25      8A.    Organization   
25      8B.    Financial Statements    25      8C.    Actions Pending    26     
8D.    Outstanding Funded Debt    26      8E.    Title to Properties    26     
8F.    Taxes    26      8G.    Conflicting Agreements and Other Matters    26  
   8H.    Offering of Notes    27      8I.    Use of Proceeds    27      8J.   
ERISA    27      8K.    Governmental Consent    28      8L.    Compliance With
Laws    28      8M.    Foreign Assets Control Regulations, etc.    28      8N.
   Disclosure    29      8O.    Hostile Tender Offers    29      8P.   
Regulatory Status    29      8Q.    Solvency    30      8R.    Absence of
Financing Statements    30

9.

   REPRESENTATIONS OF THE PURCHASERS    30      9A.    Nature of Purchase    30
     9B.    Source of Funds    30

10.

   DEFINITIONS; ACCOUNTING MATTERS    32      10A.    Yield-Maintenance Terms   
32      10B.    Other Terms    33      10C.    Accounting Principles, Terms and
Determinations    42

 

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11.

   MISCELLANEOUS    42      11A.    Note Payments    42      11B.    Expenses   
42      11C.    Consent to Amendments    43      11D.    Form, Registration,
Transfer and Exchange of Notes; Lost Notes    44      11E.    Persons Deemed
Owners; Participations    44      11F.    Survival of Representations and
Warranties; Entire Agreement    45      11G.    Successors and Assigns    45  
   11H.    Independence of Covenants    45      11I.    Notices    45      11J.
   Payments Due on Non-Business Days    46      11K.    Severability    46     
11L.    Descriptive Headings    46      11M.    Satisfaction Requirement    46  
   11N.    Governing Law    47      11O.    Severalty of Obligations    47     
11P.    Counterparts    47      11Q.    Binding Agreement    47      11R.   
Confidentiality    47      11S.    Jury Waiver    48      11T.    Personal
Jurisdiction    49

 

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Schedules and Exhibits

 

          Purchaser Schedules           Information Schedule

Schedule 6E

   —    Existing Liens

Schedule 8A

   —    Subsidiaries, etc.

Schedule 8G

   —    Agreements Which Restrict the Incurrence of Funded Debt

Exhibit A-1

   —    Form of Series A Note

Exhibit A-2

   —    Form of Shelf Note

Exhibit B

   —    Series A Notes Funding Instruction Letter

Exhibit C

   —    Form of Request for Purchase

Exhibit D

   —    Form of Confirmation of Acceptance

Exhibit E

   —    Form of Multiparty Guaranty

Exhibit F

   —    Form of Indemnity and Contribution Agreement

Exhibit G-1

   —    Form of Series A Legal Opinion

Exhibit G-2

   —    Form of Shelf Opinion

 

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MCGRATH RENTCORP

5700 Las Positas Road

Livermore, California 94550

 

As of June 2, 2004

 

Prudential Investment Management, Inc.

The Series A Purchasers listed on the Purchaser Schedule hereto

Each Prudential Affiliate (as hereinafter defined)

    which becomes bound by certain provisions

    of this Agreement as hereinafter provided

c/o Prudential Capital Group

Four Embarcadero Center, Suite 2700

San Francisco, California 94111

 

Ladies and Gentlemen:

 

The undersigned, McGrath RentCorp, a California corporation (the “Company”),
hereby agrees with you as follows:

 

1. AUTHORIZATION OF ISSUE OF NOTES

 

1A. Authorization of Issue of Series A Notes.

 

The Company has authorized the issue and sale of its Series A Senior Notes (the
“Series A Notes”) in the aggregate principal amount of $60,000,000, to be dated
the date hereof, to mature June 2, 2011, to bear interest on the unpaid balance
thereof from the date thereof until the principal thereof shall have become due
and payable at the rate of 5.08% per annum and on any overdue payment of
principal, interest or Yield-Maintenance Amount at the rate specified in the
Series A Notes, and to be substantially in the form of Exhibit A-1 attached
hereto.

 

The terms “Series A Note” and “Series A Notes” as used herein shall include each
Series A Note delivered pursuant to any provision of this Agreement and each
Series A Note delivered in substitution or exchange for any such Series A Note
pursuant to any such provision. Certain capitalized terms used in this Agreement
are defined in paragraph 10; references to a paragraph are, unless otherwise
specified, to one of the paragraphs of this Agreement and references to an
“Exhibit” or “Schedule” are, unless otherwise specified, to one of the exhibits
or schedules attached to this Agreement.

 

1B. Authorization of Issue of Shelf Notes.

 

The Company will authorize the issue of additional senior promissory notes (the
“Shelf Notes”) in an aggregate principal amount of up to $20,000,000, to be
dated the date of issue

 

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thereof, to mature, in the case of each Shelf Note so issued, no more than ten
years after the date of original issuance thereof, to have an average life, in
the case of each Shelf Note so issued, of no more than seven years, to bear
interest on the unpaid balance thereof from the date thereof at the rate per
annum, and to have such other particular terms, as shall be set forth, in the
case of each Shelf Note so issued, in the Confirmation of Acceptance with
respect to such Shelf Note delivered pursuant to paragraph 2B(5), and to be
substantially in the form of Exhibit A-2 attached hereto.

 

The terms “Shelf Note” and “Shelf Notes” as used herein shall include each Shelf
Note delivered pursuant to any provision of this Agreement and each Shelf Note
delivered in substitution or exchange for any such Shelf Note pursuant to any
such provision. The terms “Note” and “Notes” as used herein shall include each
Series A Note and each Shelf Note delivered pursuant to any provision of this
Agreement and each Note delivered in substitution or exchange for any such Note
pursuant to any such provision. Notes which have (i) the same final maturity,
(ii) the same principal prepayment dates, (iii) the same principal prepayment
amounts (as a percentage of the original principal amount of each Note), (iv)
the same interest rate, (v) the same interest payment periods and (vi) the same
date of issuance (which, in the case of a Note issued in exchange for another
Note, shall be deemed for these purposes the date on which such Note’s ultimate
predecessor Note was issued), are herein called a “Series” of Notes.

 

2. PURCHASE AND SALE OF NOTES

 

2A. Purchase and Sale of Series A Notes.

 

The Company hereby agrees to sell to each Series A Purchaser and, subject to the
terms and conditions herein set forth, each Series A Purchaser hereby agrees to
purchase from the Company the principal amount of Series A Notes set forth
opposite such Series A Purchaser’s name on the Purchaser Schedule attached
hereto (the “Purchaser Schedule”) at 100% of such principal amount. On June 2,
2004 (herein called the “Series A Closing Day”), the Company will deliver to
each Series A Purchaser at the offices of Bingham McCutchen LLP, Three
Embarcadero Center, San Francisco, California, one or more Series A Notes
registered in its or its nominee’s name (as specified in the Purchaser
Schedule), evidencing the aggregate principal amount of Series A Notes to be
purchased by such Series A Purchaser and in the denomination or denominations
specified with respect to such Series A Purchaser in the Purchaser Schedule,
against payment of the purchase price thereof by wire transfer of immediately
available funds as set forth in the Series A Notes Funding Instruction Letter
attached hereto as Exhibit B.

 

2B. Purchase and Sale of Shelf Notes.

 

2B(1). Facility.

 

Subject to paragraph 2B(2), PIM is willing to consider, in its sole discretion
and within limits which may be authorized for purchase by PIM and Prudential
Affiliates from time to time, the purchase of Shelf Notes pursuant to this
Agreement. The willingness of PIM to consider such purchase of Shelf Notes is
herein called the “Facility.” At any time, (i) $20,000,000, minus (ii) the
aggregate principal amount of

 

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Shelf Notes purchased and sold pursuant to this Agreement prior to such time,
minus (iii) the aggregate principal amount of Accepted Shelf Notes which have
not yet been purchased and sold hereunder prior to such time is herein called
the “Available Facility Amount” at such time. NOTWITHSTANDING THE WILLINGNESS OF
PIM TO CONSIDER PURCHASES OF SHELF NOTES, THIS AGREEMENT IS ENTERED INTO ON THE
EXPRESS UNDERSTANDING THAT NEITHER PIM NOR ANY PRUDENTIAL AFFILIATE SHALL BE
OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE SHELF NOTES, OR TO QUOTE RATES,
SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF SHELF NOTES, AND
THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY PIM OR ANY
PRUDENTIAL AFFILIATE.

 

2B(2). Issuance Period.

 

Shelf Notes may be issued and sold pursuant to this Agreement until the earlier
of (i) the third anniversary of the date of this Agreement (or if any such
anniversary is not a Business Day, the Business Day next preceding such
anniversary) and (ii) the thirtieth day after PIM shall have given to the
Company, or the Company shall have given to PIM, written notice stating that it
elects to terminate the issuance and sale of Shelf Notes pursuant to this
Agreement (or if such thirtieth day is not a Business Day, the Business Day next
preceding such thirtieth day). The period during which Shelf Notes may be issued
and sold pursuant to this Agreement is herein called the “Issuance Period.”

 

2B(3). Request for Purchase.

 

The Company may from time to time during the Issuance Period make requests for
purchases of Shelf Notes (each such request being herein called a “Request for
Purchase”). Each Request for Purchase shall be made to PIM by facsimile or
overnight delivery service, and shall (i) specify the aggregate principal amount
of Shelf Notes covered thereby, which shall not be less than $5,000,000 and not
be greater than the Available Facility Amount at the time such Request for
Purchase is made, (ii) specify the principal amounts, final maturities (which
shall be no more than ten years from the date of issuance), and principal
prepayment dates and amounts (which shall result in an average life of no more
than seven years) of the Shelf Notes covered thereby, (iii) specify the use of
proceeds of such Shelf Notes, (iv) specify the proposed day for the closing of
the purchase and sale of such Shelf Notes, which shall be a Business Day during
the Issuance Period not less than ten days and not more than twenty-five days
after the making of such Request for Purchase, (v) specify the number of the
account and the name and address of the depository institution to which the
purchase prices of such Shelf Notes are to be transferred on the Closing Day for
such purchase and sale, (vi) certify that the representations and warranties
contained in paragraph 8 are true on and as of the date of such Request for
Purchase and that there exists on the date of such Request for Purchase no Event
of Default or Default and (vii) be substantially in the form of Exhibit C
attached hereto. Each Request for Purchase shall be in writing and shall be
deemed made when received by PIM.

 

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2B(4). Rate Quotes.

 

Not later than five Business Days after the Company shall have given PIM a
Request for Purchase pursuant to paragraph 2B(3), PIM may, but shall be under no
obligation to, provide to an Authorized Officer of the Company by telephone
interest rate quotes for the several principal amounts, maturities and principal
prepayment schedules of Shelf Notes specified in such Request for Purchase. Each
such quote shall represent the interest rate per annum payable on the
outstanding principal balance of such Shelf Notes at which PIM or a Prudential
Affiliate would be willing to purchase such Shelf Notes at 100% of the principal
amount thereof.

 

2B(5). Acceptance.

 

Within two minutes after PIM shall have provided any interest rate quotes
pursuant to paragraph 2B(4), or such shorter period as PIM may specify to the
Company (such period herein called the “Acceptance Window”), the Company may,
subject to paragraph 2B(6), elect to accept such interest rate quotes as to not
less than $5,000,000 aggregate principal amount of the Shelf Notes specified in
the related Request for Purchase. Such election shall be made by an Authorized
Officer of the Company notifying PIM by telephone or facsimile within the
Acceptance Window (but not earlier than 9:30 a.m. or later than 1:30 p.m. (or
such later time as PIM may agree), New York City local time) that the Company
elects to accept such interest rate quotes, specifying the Shelf Notes (each
such Shelf Note being herein called an “Accepted Shelf Note”) as to which such
acceptance (herein called an “Acceptance”) relates. The day the Company notifies
PIM of an Acceptance with respect to any Accepted Shelf Notes is herein called
the “Acceptance Day” for such Accepted Shelf Notes. Any interest rate quotes as
to which PIM does not receive an Acceptance within the Acceptance Window shall
expire, and no purchase or sale of Shelf Notes hereunder shall be made based on
such expired interest rate quotes. Subject to paragraphs 2B(2) and 2B(6) and the
other terms and conditions hereof, the Company agrees to sell to PIM or a
Prudential Affiliate, and PIM agrees to purchase, or to cause the purchase by a
Prudential Affiliate of, the Accepted Shelf Notes at 100% of the principal
amount of such Notes. As soon as practicable following the Acceptance Day, the
Company, PIM and each Prudential Affiliate which is to purchase any such
Accepted Shelf Notes will execute a confirmation of such Acceptance
substantially in the form of Exhibit D attached hereto (herein called a
“Confirmation of Acceptance”). If the Company should fail to execute and return
to PIM within two Business Days following receipt thereof a Confirmation of
Acceptance with respect to any Accepted Shelf Notes, PIM may at its election at
any time prior to its receipt thereof cancel the closing with respect to such
Accepted Shelf Notes by so notifying the Company in writing.

 

2B(6). Market Disruption.

 

Notwithstanding the provisions of paragraph 2B(5), if PIM shall have provided
interest rate quotes pursuant to paragraph 2B(4) and thereafter, prior to the
time an Acceptance with respect to such quotes shall have been notified to PIM
in accordance with paragraph 2B(5), the domestic market for U.S. Treasury
securities or derivatives

 

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shall have closed or there shall have occurred a general suspension, material
limitation, or significant disruption of trading in securities generally on the
New York Stock Exchange or in the domestic market for U.S. Treasury securities
or derivatives, then such interest rate quotes shall expire, and no purchase or
sale of Shelf Notes hereunder shall be made based on such expired interest rate
quotes. If the Company thereafter notifies PIM of the Acceptance of any such
interest rate quotes, such Acceptance shall be ineffective for all purposes of
this Agreement, and PIM promptly shall notify the Company that the provisions of
this paragraph 2B(6) are applicable with respect to such Acceptance.

 

2B(7). Facility Closings.

 

Not later than 1:30 p.m. (New York City local time) on the Closing Day for any
Accepted Shelf Notes, the Company will deliver to each Purchaser listed in the
Confirmation of Acceptance relating thereto at the offices of Prudential Capital
Group, Four Embarcadero Center, Suite 2700, San Francisco, California 94111 (or
such other address as PIM may specify in writing), the Accepted Shelf Notes to
be purchased by such Purchaser in the form of one or more Notes in authorized
denominations as such Purchaser may request for each Series of Accepted Shelf
Notes to be purchased on such Closing Day, dated the Closing Day and registered
in such Purchaser’s name (or in the name of its nominee), against payment of the
purchase price thereof by transfer of immediately available funds for credit to
the account(s) specified in the Request for Purchase of such Shelf Notes. If the
Company fails to tender to any Purchaser the Accepted Shelf Notes to be
purchased by such Purchaser on the scheduled Closing Day for such Accepted Shelf
Notes as provided above in this paragraph 2B(7), or any of the conditions
specified in paragraph 3 shall not have been fulfilled by the time required on
such scheduled Closing Day, the Company shall, prior to 2:00 p.m., New York City
local time, on such scheduled Closing Day notify PIM (which notification shall
be deemed received by each Purchaser) in writing whether (i) such closing is to
be rescheduled (such rescheduled date to be a Business Day during the Issuance
Period not less than one Business Day and not more than 10 Business Days after
such scheduled Closing Day (the “Rescheduled Closing Day”)) and certify to PIM
(which certification shall be for the benefit of each Purchaser) that the
Company reasonably believes that it will be able to comply with the conditions
set forth in paragraph 3 on such Rescheduled Closing Day and that the Company
will pay the Delayed Delivery Fee, if applicable, in accordance with paragraph
2B(8)(ii), or (ii) such closing is to be canceled and the Company will pay the
Cancellation Fee as provided in paragraph 2B(8)(iii). In the event that the
Company shall fail to give such notice referred to in the preceding sentence,
PIM (on behalf of each Purchaser) may at its election, at any time after 2:00
p.m., New York City local time, on such scheduled Closing Day, notify the
Company in writing that such closing is to be canceled and the Company is
obligated to pay the Cancellation Fee as provided in paragraph 2B(8)(iii).
Notwithstanding anything to the contrary contained in this Agreement, the
Company may elect to reschedule a closing with respect to any given Accepted
Shelf Notes on not more than one (1) occasion, unless PIM shall have otherwise
consented in writing.

 

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2B(8). Fees.

 

2B(8)(i). Draw Fees.

 

The Company will pay to or as directed by PIM in immediately available funds a
fee (herein called a “Draw Fee”) on or before each Closing Day (including the
Series A Closing Day) in an amount equal to 0.10% of the aggregate principal
amount of Notes sold on such Closing Day.

 

2B(8)(ii). Delayed Delivery Fee.

 

If the closing of the purchase and sale of any Accepted Shelf Note is delayed
for any reason beyond the original Closing Day for such Accepted Shelf Note, the
Company will pay to or as directed by PIM on (x) the Cancellation Date or actual
closing date of such purchase and sale or (y) if earlier, the next Business Day
following 90 days after the Acceptance Day for such Accepted Shelf Note, a fee
(herein called the “Delayed Delivery Fee”) calculated as follows:

 

(BEY - MMY) X DTS/360 X PA

 

where “BEY” means Bond Equivalent Yield, i.e., the bond equivalent yield per
annum of such Accepted Shelf Note; “MMY” means Money Market Yield, i.e., the
yield per annum on a commercial paper investment of the highest quality selected
by PIM on the date PIM receives notice of the delay in the closing for such
Accepted Shelf Note having a maturity date or dates the same as, or closest to,
the Rescheduled Closing Day or Rescheduled Closing Days (a new alternative
investment being selected by PIM each time such closing is delayed); “DTS” means
Days to Settlement, i.e., the number of actual days elapsed from and including
the original Closing Day with respect to such Accepted Shelf Note (in the case
of the first such payment with respect to such Accepted Shelf Note) or from and
including the date of the next preceding payment (in the case of any subsequent
delayed delivery fee payment with respect to such Accepted Shelf Note) to but
excluding the date of such payment; and “PA” means Principal Amount, i.e., the
principal amount of the Accepted Shelf Note for which such calculation is being
made. In no case shall the Delayed Delivery Fee be less than zero. Nothing
contained herein shall obligate any Purchaser to purchase any Accepted Shelf
Note on any day other than the Closing Day for such Accepted Shelf Note, as the
same may be rescheduled from time to time in compliance with paragraph 2B(7).

 

2B(8)(iii). Cancellation Fee.

 

If the Company at any time notifies PIM in writing that the Company is canceling
the closing of the purchase and sale of any Accepted Shelf Note, or if PIM
notifies the Company in writing under the circumstances set forth in the last
sentence of paragraph 2B(5) or the penultimate sentence of paragraph 2B(7) that
the closing of the purchase and sale of such Accepted Shelf Note is to be
canceled, or if the closing of the purchase and sale of such Accepted Shelf Note
is

 

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not consummated on or prior to the last day of the Issuance Period (the date of
any such notification, or the last day of the Issuance Period, as the case may
be, being herein called the “Cancellation Date”), the Company will pay the
Purchasers in immediately available funds an amount (the “Cancellation Fee”)
calculated as follows:

 

PI X PA

 

where “PI” means Price Increase, i.e., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as determined by PIM) of
the Hedge Treasury Note(s) on the Cancellation Date over the bid price (as
determined by PIM) of the Hedge Treasury Notes(s) on the Acceptance Day for such
Accepted Shelf Note by (b) such bid price; and “PA” has the meaning ascribed to
it in paragraph 2B(8)(ii). The foregoing bid and ask prices shall be as reported
by such publicly available source of such market data as is then customarily
used by PIM. Each price shall be based on a U.S. Treasury security having a par
value of $100.00 and shall be rounded to the second decimal place. In no case
shall the Cancellation Fee be less than zero.

 

3. CONDITIONS OF CLOSING.

 

The obligation of any Purchaser to purchase and pay for any Notes is subject to
the satisfaction, on or before the applicable Closing Day, of the following
conditions:

 

3A. Conditions to Series A Closing.

 

3A(1). Initial Draw Fee.

 

The Company shall have paid to or as directed by PIM in immediately available
funds any unpaid balance of the initial Draw Fee payable pursuant to paragraph
2B(8)(i) in connection with the closing for the Series A Notes.

 

3A(2). Consents.

 

PIM shall have received evidence satisfactory to it that all government,
contractual and other third-party approvals and consents, if any, necessary to
the consummation of the transactions contemplated by this Agreement and the
other Transaction Documents as of the Series A Closing Day have been obtained.

 

3A(3). Other Documents.

 

PIM shall have received the following documents, each duly executed and
delivered by the party or parties thereto and in form and substance satisfactory
to PIM:

 

(i) the Multiparty Guaranty, dated as of the date hereof, executed by each of
the Subsidiary Guarantors in favor of the holders from time to time of the
Notes, in the form of Exhibit E hereto (as amended, supplemented or otherwise
modified from time to time, the “Multiparty Guaranty”);

 

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(ii) the Indemnity, Contribution and Subordination Agreement, dated as of the
date hereof, among the Credit Parties, in the form of Exhibit F hereto (as
amended, supplemented or otherwise modified from time to time, the “Indemnity
and Contribution Agreement”); and

 

(iii) such other certificates, documents and agreements as PIM or any of the
Series A Purchasers may request (including those referenced in paragraph 3B).

 

3A(4). Legal Opinion of Special Counsel to PIM and the Series A Purchasers.

 

PIM and the Series A Purchasers shall have received from Bingham McCutchen LLP,
which is acting as their special counsel in connection with this transaction, an
opinion reasonably satisfactory to PIM as to such matters incident to the
matters herein contemplated as it may reasonably request.

 

3A(5). Payment of Legal Fees and Expenses.

 

Without limiting the provisions of paragraph 11B, the Company shall have paid
the fees, charges and disbursements of Bingham McCutchen LLP, special counsel to
PIM and the Series A Purchasers, in connection with the preparation and
negotiation of this Agreement and the other Transaction Documents.

 

3A(6). Extension of Bank Facility.

 

The Company shall have amended and restated its existing revolving credit
facility provided by the Banks, so that the aggregate commitments available
thereunder are not less than $130,000,000 and such commitments are available to
the Company through at least March 31, 2006 and otherwise upon terms and
conditions satisfactory to PIM and the Series A Purchasers. The Company shall
have delivered to PIM and the Series A Purchasers fully executed copies of the
Bank Credit Agreement, the Sweep and each of the other instruments and
agreements executed and/or delivered in connection therewith, each certified as
true, correct and complete by an Authorized Officer of the Company.

 

3B. Conditions to Each Closing.

 

3B(1). Representations and Warranties; No Default.

 

The representations and warranties contained in this Agreement and each of the
other Transaction Documents shall be true on and as of the applicable Closing
Day (both before and after giving effect to the issuance and purchase of Notes
on such Closing Day); if the Company provides updated disclosure schedules
regarding the representations and warranties of paragraph 8, the same shall be
acceptable to PIM; and there shall exist on such Closing Day (both before and
after giving effect to the issuance and purchase of Notes on such Closing Day)
no Event of Default or Default.

 

8

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3B(2). Purchase Permitted by Applicable Laws.

 

The purchase of and payment for the Notes to be purchased by such Purchaser on
the applicable Closing Day (including the use of the proceeds of such Notes by
the Company) shall not violate any applicable law or governmental regulation
(including, without limitation, Section 5 of the Securities Act or Regulation T,
U or X of the Board of Governors of the Federal Reserve System) and shall not
subject such Purchaser to any tax (excluding taxes on the revenue and net income
of such Purchaser), penalty, liability or other onerous condition under or
pursuant to any applicable law or governmental regulation, and such Purchaser
shall have received such certificates or other evidence as it may reasonably
request to establish compliance with this condition.

 

3B(3). Payment of Fees.

 

The Company shall have paid any fees due pursuant to or in connection with this
Agreement, including any Draw Fee due pursuant to paragraph 2B(8)(i) and any
Delayed Delivery Fee due pursuant to paragraph 2B(8)(ii) and, without limiting
the provisions of paragraph 11B, the fees, charges and disbursements of the
Purchasers’ special counsel.

 

3B(4). Delivery of Certain Documents.

 

Each Purchaser shall have received the following, each in form and substance
satisfactory to it:

 

(i) the Notes(s) to be purchased by such Purchaser;

 

(ii) Certified copies of the resolutions of the Board of Directors of each of
the Credit Parties authorizing the execution and delivery of the Transaction
Documents to which such Person is a party and, in the case of the Company,
authorizing the issuance of the Notes, and of all documents evidencing other
necessary corporate or similar action and governmental approvals, if any, with
respect to the Transaction Documents to which such Credit Party is a party and
the Notes (in the case of the Company);

 

(iii) a certificate of the Secretary or an Assistant Secretary of each of the
Credit Parties certifying the names and true signatures of the officers of such
Credit Party authorized to sign the Transaction Documents to which such Person
is a party and, in the case of the Company, the Notes, to be delivered
hereunder;

 

(iv) the Company shall have delivered to such Purchaser an Officer’s
Certificate, dated such Closing Day, certifying that the conditions specified in
paragraph 3B(1) have been satisfied;

 

(v) Certified copies of the Certificate of Incorporation or Articles of
Incorporation (or similar constitutive documents), as applicable, and By-laws of
each of the Credit Parties;

 

9

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(vi) An opinion of Christopher Ream, Esq., counsel to the Credit Parties (or
such other counsel designated by the Credit Parties and acceptable to the
Purchaser(s)), substantially in the form of Exhibit G-1 (in the case of the
Series A Notes) or Exhibit G-2 (in the case of any Shelf Notes) attached hereto
and as to such other matters as such Purchaser may reasonably request. The
Company hereby directs such counsel to deliver such opinion, agrees that the
issuance and sale of any Notes will constitute a reconfirmation of such
direction and understands and agrees that each Purchaser receiving such an
opinion will and is hereby authorized to rely on such opinion;

 

(vii) A good standing certificate for each Credit Party from the Secretaries of
State of each Credit Party’s state of formation, good standing certificates for
each Credit Party from such other states as such Purchaser may reasonably
request, and such other evidence of the status of each Credit Party as such
Purchaser may reasonably request, each dated as of a recent date; and

 

(viii) Additional documents or certificates with respect to legal matters or
corporate or other proceedings related to the transactions contemplated hereby
as may be reasonably requested by such Purchaser.

 

3B(5). UCC Searches.

 

PIM and the Purchasers shall have received certified copies of Requests for
Information or Copies (Form UCC-11) or equivalent reports listing all effective
financing statements which name the Company, the Subsidiary Guarantors or any
Active Subsidiary (under its present name and previous names) as debtor and
which are filed in the offices of the Secretaries of State of each state in
which the Company or any Subsidiary has its executive office or property located
therein, together with copies of such financing statements.

 

3B(6). Private Placement Number.

 

A Private Placement number issued by Standard & Poor’s CUSIP Service Bureau (in
cooperation with the Securities Valuation Office of the National Association of
Insurance Commissioners) shall have been obtained for the Notes of each Series
to be purchased on such Closing Day.

 

4. PREPAYMENTS.

 

The Series A Notes and any Shelf Notes shall be subject to required prepayment
as and to the extent provided in paragraphs 4A and 4B, respectively. The Series
A Notes and any Shelf Notes shall also be subject to prepayment under the
circumstances set forth in paragraph 4C.

 

4A. Required Prepayments of Series A Notes. Until the Series A Notes shall be
paid in full, the Company shall apply to the prepayment of the principal amount
of the Series A Notes, without Yield-Maintenance Amount, the sum of $12,000,000
on June 2 of each year, commencing on June 2, 2007 through and including June 2,
2010, and such principal amounts of

 

10

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the Series A Notes, together with interest thereon to the payment dates, shall
become due on such payment dates. The remaining unpaid principal amount of the
Series A Notes, together with interest accrued thereon, shall become due on the
maturity date of the Series A Notes.

 

4B. Required Prepayments of Shelf Notes.

 

Each Series of Shelf Notes shall be subject to required prepayments, if any, set
forth in the Notes of such Series.

 

4C. Optional Prepayment.

 

The Notes of each Series shall be subject to prepayment, in whole at any time or
from time to time in part (in integral aggregate multiples of $100,000 and in a
minimum aggregate amount of $5,000,000) at the option of the Company, at 100% of
the principal amount so prepaid plus interest thereon to the prepayment date and
the Yield-Maintenance Amount, if any, with respect to each such Note. Any
partial prepayment of a Series of the Notes pursuant to this paragraph 4C shall
be applied in satisfaction of remaining required payments of principal on a pro
rata basis.

 

4D. Notice of Optional Prepayment.

 

The Company shall give the holder of each Note of a Series to be prepaid
pursuant to paragraph 4C irrevocable written notice of such prepayment not less
than five Business Days prior to the prepayment date, specifying (i) such
prepayment date, (ii) the aggregate principal amount of the Notes of such Series
to be prepaid on such date, (iii) the principal amount of the Notes of such
Series held by such holder to be prepaid on that date and (iv) that such
prepayment is to be made pursuant to paragraph 4C. Notice of prepayment having
been given as aforesaid, the principal amount of the Notes specified in such
notice, together with interest thereon to the prepayment date and together with
the Yield-Maintenance Amount, if any, herein provided, shall become due and
payable on such prepayment date. The Company shall, on or before the day on
which it gives written notice of any prepayment pursuant to paragraph 4C, give
telephonic notice of the principal amount of the Notes to be prepaid and the
prepayment date to each holder of the Notes of such Series which shall have
designated a recipient for such notices in the Purchaser Schedule attached
hereto or the applicable Confirmation of Acceptance or by notice in writing to
the Company.

 

11

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4E. Partial Payments Pro Rata.

 

In the case of each prepayment of less than the entire unpaid principal amount
of all outstanding Notes of any Series pursuant to paragraphs 4A or 4C, the
amount to be prepaid shall be applied pro rata to all outstanding Notes of such
Series (including, for the purpose of this paragraph 4E only, all Notes prepaid
or otherwise retired or purchased or otherwise acquired by the Company or any of
its Subsidiaries or Affiliates other than by prepayment pursuant to paragraph 4A
or 4C) according to the respective outstanding principal amounts thereof.

 

4F. Retirement of Notes.

 

The Company shall not, and shall not permit any of its Subsidiaries or
Affiliates to, prepay or otherwise retire in whole or in part prior to their
stated final maturity (other than by prepayment pursuant to paragraphs 4A, 4B or
4C or upon acceleration of such final maturity pursuant to paragraph 7A), or
purchase or otherwise acquire, directly or indirectly, Notes of any Series held
by any holder unless the Company or such Subsidiary or Affiliate shall have
offered to prepay or otherwise retire or purchase or otherwise acquire, as the
case may be, the same proportion of the aggregate principal amount of Notes of
such Series held by each other holder of Notes of such Series at the time
outstanding upon the same terms and conditions. Any Notes so prepaid or
otherwise retired or purchased or otherwise acquired by the Company or any of
its Subsidiaries or Affiliates shall not be deemed to be outstanding for any
purpose under this Agreement, except as provided in paragraph 4E.

 

5. AFFIRMATIVE COVENANTS.

 

During the Issuance Period and so long thereafter as any Note or other amount
owing under this Agreement or any other Transaction Document shall remain
unpaid, the Company covenants as follows:

 

5A. Financial Statements; Notice of Defaults.

 

The Company covenants that it will deliver to each holder of any Notes:

 

(i) as soon as practicable and in any event within 45 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly period), consolidated statements of income and cash flows of the
Company and its Subsidiaries for the period from the beginning of the current
fiscal year to the end of such quarterly period, setting forth in each case in
comparative form figures for the corresponding period in the preceding fiscal
year, and a consolidated balance sheet of the Company and its Subsidiaries as at
the end of such quarterly period, all in reasonable detail and prepared in
accordance with GAAP and certified by an authorized financial officer of the
Company as fairly presenting, in all material respects, the consolidated
financial position of the companies being reported on their consolidated results
of operations and changes in financial position, subject to changes resulting
from year-end adjustments;

 

12

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(ii) as soon as practicable and in any event within 90 days after the end of
each fiscal year, consolidated statements of income, cash flows and
shareholders’ equity of the Company and its Subsidiaries for such year, and a
consolidated balance sheet of the Company and its Subsidiaries as at the end of
such year, setting forth in each case in comparative form corresponding
consolidated figures from the preceding annual audit, all in reasonable detail
and prepared in accordance with GAAP and reported on by independent public
accountants of recognized national standing, selected by the Company whose
report shall be without a “going concern” or like qualification or exception and
without limitation as to scope of the audit;

 

(iii) promptly upon their becoming available, (i) each financial statement,
report, notice or proxy statement sent by the Company or any Subsidiary to
public securities holders generally, and (ii) each regular or periodic report,
each registration statement (without exhibits except as expressly required by
such holder), and each prospectus and all amendments thereto filed by the
Company or any Subsidiary with the Securities and Exchange Commission and of all
press releases and other statements made available generally by the Company or
any Subsidiary to the public concerning developments that are material in
relation to the business, operations, affairs, financial condition, assets,
properties or prospects of the Company and its Subsidiaries taken as a whole;

 

(iv) promptly upon receipt thereof, a copy of any other credit agreement or
similar agreement to which the Company or any Subsidiary is a party not
previously delivered pursuant to which the credit commitments available to the
Company or any Subsidiary, individually or in the aggregate, and/or outstanding
principal indebtedness incurred equals or exceeds $5,000,000, a copy of each
notice of default or noncompliance received by the Company or any of its
Subsidiaries with respect thereto, and promptly following execution and delivery
thereof, a copy of any amendment, waiver or other modification of any such
agreement;

 

(v) promptly upon receipt thereof, a copy of each other report pertaining to
material items submitted to the Company or any Subsidiary by independent
accountants in connection with any annual, interim or special audit made by them
of the books of the Company or any Subsidiary;

 

(vi) within 60 days after the end of each fiscal year, (a) a copy of the
Company’s and its Subsidiaries’ consolidated budget for the forthcoming fiscal
year, in form and substance satisfactory to PIM, and (b) a summary forecast
covering the period for the forthcoming fiscal year and two additional years
(three years in total); and

 

(vii) with reasonable promptness, such other financial data as any holder of the
Notes may reasonably request.

 

Together with each delivery of financial statements required by clause (i)
above, the Company will deliver to each holder of Notes an Officer’s Certificate
demonstrating (with computations in reasonable detail) compliance by the Company
and its Subsidiaries with the provisions of paragraphs 6A, 6B, 6D, 6E and 6F and
stating that there exists no Event of Default or Default, or, if any Event of
Default or Default exists, specifying the nature and period of existence thereof
and what action the Company proposes to take with respect thereto.

 

13

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Together with each delivery of financial statements required by clause (ii)
above, the Company will deliver to each holder of Notes (a) an Officer’s
Certificate demonstrating (with any computations in reasonable detail)
compliance by the Company and its Subsidiaries with the provisions of paragraphs
6A, 6B, 6D, 6E and 6F and stating that there exists no Event of Default or
Default, or, if any Event of Default or Default exists, specifying the nature
and period of existence thereof and what action the Company proposes to take
with respect thereto and (b) a certificate of such accountants stating that, in
making the audit necessary for their report on such financial statements, they
have obtained no knowledge of any Event of Default or Default, or, if they have
obtained knowledge of any Event of Default or Default, specifying the nature and
period of existence thereof. Such accountants, however, shall not be liable to
anyone by reason of their failure to obtain knowledge of any Event of Default or
Default which would not be disclosed in the course of an audit conducted in
accordance with generally accepted auditing standards.

 

5B. Notices; Reports.

 

The Company shall, and shall cause each Subsidiary to:

 

(i) As soon as practicable, and in any event no later than 5 days after any
Responsible Officer obtains knowledge of (a) the occurrence of any Default or
Event of Default, (b) the existence of any threatened or pending litigation,
suit or administrative proceeding affecting the Company or any Subsidiary which
might have a Material Adverse Effect, (c) a material labor dispute resulting in
or threatening to result in a strike, slow down or work stoppage of any kind
against the Company or any Subsidiary, or (d) any other event or circumstance
which could reasonably be expected to result in a Material Adverse Effect, it
will deliver to each holder of the Notes an Officer’s Certificate specifying the
nature and period of existence thereof, the effect, if any, of such event or
circumstance on the results of operations, condition (financial or otherwise) or
the ability of each Credit Party to comply with the Transaction Documents to
which such Credit Party is a party, and what action the Company proposes to take
with respect thereto; and

 

(ii) Promptly upon the transmission thereof by any Credit Party of any
information, reports, statements or other information provided by such Credit
Party to the Bank pursuant to the requirements of the Bank Credit Agreement, it
shall deliver a copy thereof to each holder of the Notes.

 

5C. Inspection of Property.

 

The Company covenants that it will permit any Person designated by any holder of
any Notes to visit and inspect any of the properties of the Company or its
Subsidiaries, to examine the corporate books and financial records of the
Company or its Subsidiaries and make copies thereof or extracts therefrom and to
discuss the affairs, finances and accounts of any of such Person with the
principal officers of such Person and its independent public accountants, all at

 

14

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such reasonable times and as often as such holder may reasonably request. The
fees and costs of such visits, inspections and examinations incurred by or for
the account of any such designated Person shall be at the expense of the Company
if a Default or an Event of Default exists, or at the expense of the holder of
such Notes if no Default or Event of Default exists.

 

5D. Information Required by Rule 144A.

 

The Company covenants that it will, upon the request of the holder of any Note,
provide such holder, and any qualified institutional buyer designated by such
holder, such financial and other information as such holder may reasonably
determine to be necessary in order to permit compliance with the information
requirements of Rule 144A under the Securities Act in connection with the resale
of Notes, except at such times as the Company is subject to and in compliance
with the reporting requirements of section 13 or 15(d) of the Exchange Act. For
the purpose of this paragraph 5D, the term “qualified institutional buyer” shall
have the meaning specified in Rule 144A under the Securities Act.

 

5E. Maintenance of Properties; Preservation of Rights.

 

The Company covenants that it will, and will cause each of its Subsidiaries to,
(i) maintain and keep, or cause to be maintained and kept, all properties useful
or necessary to the business of the Company or such Subsidiary, as the case may
be, in good repair, working order and condition (other than ordinary wear and
tear), and (ii) maintain and preserve all licenses, permits, governmental
approvals, rights, privileges and franchises necessary or desirable for the
normal conduct of its business. The Company shall notify the holders from time
to time of the Notes thirty (30) days in advance of any change in the location
of any of its places of business or of the establishment of any new, or the
discontinuance of any existing, place of business of the Company or any
Subsidiary.

 

5F. Compliance With Laws.

 

The Company covenants that it will, and will cause each of its Subsidiaries to,
comply in a timely fashion with (a) all applicable laws, rules, regulations,
decrees and orders of all federal, state or local courts or governmental
agencies, authorities, instrumentalities or regulatory bodies (including,
without limitation, ERISA, the USA Patriot Act, Environmental Laws and the Fair
Labor Standards Act, as amended), and (b) all material agreements to which it is
a party, other than such requirements or agreement with respect to which the
non-compliance of the Company or such Subsidiary will not have a Material
Adverse Effect. Without limitation of the foregoing, the Company will not, and
will not permit any of its Subsidiaries to, become a Person described in section
1 of the Anti-Terrorism Order, or engage in any dealings or transactions, or
otherwise be associated with, any such Person.

 

15

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5G. Insurance.

 

The Company covenants that it will, and will cause each of its Subsidiaries to,
maintain, with financially sound and reputable insurers, insurance in such
amounts and against such liabilities and hazards as is customarily maintained by
other companies operating similar businesses.

 

5H. Payment of Taxes and Claims.

 

The Company will, and will cause each Subsidiary to, pay and discharge when due
all taxes, assessments and other governmental charges imposed upon it or any of
its properties or assets or in respect of any of its franchises, business,
income or profits before any penalty or interest accrues thereon, including
without limitation federal and state income taxes and state and local property
taxes and assessments and all claims (including claims for labor services,
materials and supplies) for sums that have become due and payable and which by
law have or might become a Lien upon any of its properties or assets; provided,
that no such charge or claim need be paid if subject to a Good Faith Contest.

 

5I. Subsequent Guarantors; Release of Guarantors.

 

Within the earlier of (i) 10 days after any Person (including any Person holding
assets acquired from TRS) becomes an Active Subsidiary and (ii) concurrent with
such time as such Person becomes obligated under a Guarantee of any other credit
facility, the Company will cause such Person to (a) become a party to the
Multiparty Guaranty and the Indemnity and Contribution Agreement, and (b)
execute and deliver to each holder of Notes an opinion of counsel (as to the due
organization, valid existence and good standing of such Person; the power and
authority and due authorization of such Person to execute, deliver and perform
its obligations under each such Transaction Document; and the enforceability
against such Person of its obligations under each such Transaction Document) and
a certificate accompanying authorizing resolutions and corporate or similar
documents of such Person, each of foregoing in form and substance satisfactory
to the Required Holders. If any Subsidiary Guarantor ceases to be a Subsidiary
and if, after giving effect thereto, no Default or Event of Default then exists,
then the Company may deliver to PIM a certificate of a Responsible Officer to
both such effects and, upon the later of (i) such delivery and (ii) concurrently
with such time as that Subsidiary Guarantor has been released from all of its
obligations under each Guarantee of other credit facilities, that Subsidiary
Guarantor automatically shall be released from all of its obligations under the
Multiparty Guaranty and that Subsidiary Guarantor shall no longer be a party to
the Indemnity and Contribution Agreement, in each case without further approval
of or action by any holder of any Notes.

 

5J. Covenant to Secure Notes Equally.

 

The Company covenants that if it or any Subsidiary shall create or assume any
Lien upon any of its property or assets, whether now owned or hereafter acquired
(other than Liens permitted under paragraph 6E), it will promptly notify each
holder of Notes of such occurrence

 

16

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and, upon the request of the Required Holders, make or cause to be made
effective provision whereby the Notes will be secured by such Lien equally and
ratably with any and all other Funded Debt thereby secured so long as any such
other Funded Debt shall be so secured.

 

6. NEGATIVE COVENANTS.

 

During the Issuance Period and so long thereafter as any Note or other amount
owing under this Agreement or any other Transaction Document shall remain
unpaid, the Company covenants as follows:

 

6A. Financial Covenants.

 

6A(1). Minimum Tangible Net Worth.

 

The Company will not permit Tangible Net Worth, calculated as of the last day of
each fiscal quarter, to be less than the sum of (i) $127,500,000, plus (ii) 50%
of the Net Income (but only if a positive number) for each fiscal quarter ended
subsequent to December 31, 2003, plus (iii) 90% of the net cash proceeds from
the issuance of the Company’s capital stock after December 31, 2003, excluding
the first $2,000,000 of such proceeds from the exercise of stock options after
December 31, 2003.

 

6A(2). Leverage Ratio.

 

The Company will not permit the ratio, calculated as of the last day of each
fiscal quarter during the applicable period set forth below, of (i) Funded Debt
as of such date to (ii) EBITDA for the period of four consecutive fiscal
quarters of the Company ended as of such date, to be greater than the ratio set
forth opposite such period:

 

Period

--------------------------------------------------------------------------------

   Ratio

--------------------------------------------------------------------------------

Series A Closing Date through March 30, 2005

   2.50:1.00

March 31, 2005 through March 30, 2006

   2.25:1.00

March 31, 2006 and thereafter

   2.00:1.00

 

For purpose of this paragraph 6A(2), Funded Debt shall exclude Funded Debt
created under the Multiparty Guaranty or under a Guarantee of the obligations of
the Company under the Bank Credit Agreement or the Sweep.

 

6A(3). Consolidated Fixed Charge Coverage Ratio.

 

The Company will not permit the ratio, calculated as of the last day of each
fiscal quarter during the applicable period set forth below, of (i) EBITDA for
the period of four consecutive fiscal quarters of the Company ended as of such
date to (ii) Fixed Charges calculated as of such date, to be less than the ratio
set forth opposite such period:

 

Period

--------------------------------------------------------------------------------

   Ratio

--------------------------------------------------------------------------------

Series A Closing Date through December 31, 2004

   1.50:1.00

January 1, 2005 through December 31, 2005

   1.75:1.00

January 1, 2006 and thereafter

   2.00:1.00

 

17

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6B. Merger and Consolidation; Transfer of Assets.

 

The Company will not, and will not permit any Subsidiary to, consolidate or
merge with or into, or Transfer any of its assets to, any other Person, except
that, so long as no Default or Event of Default has occurred and is continuing
or would result from any such event:

 

(i) the Company or any Subsidiary may sell inventory in the ordinary course of
business;

 

(ii) any Subsidiary may consolidate or merge with or into the Company; provided
that the Company is the continuing or surviving corporation;

 

(iii) any Subsidiary may consolidate or merge with or into any other
wholly-owned Subsidiary or Active Subsidiary; provided that such wholly-owned
Subsidiary or Active Subsidiary is the continuing or surviving corporation;

 

(iv) the Company or a Subsidiary may acquire another entity in a consensual,
negotiated transaction that is structured as a merger with such other entity if
the Company has furnished to the holders of Notes a written statement certified
by a Responsible Officer demonstrating, in reasonable detail, that after giving
effect to the consummation of such transaction, the Company and its Subsidiaries
will remain in compliance with each of the financial tests set forth in
paragraph 6A;

 

(v) any Subsidiary may Transfer assets to the Company, an Active Subsidiary or a
wholly-owned Subsidiary;

 

(vi) the Company may Transfer assets to an Active Subsidiary or a wholly-owned
Subsidiary;

 

(vii) the Company or any Subsidiary may sell worn-out, obsolete or surplus
property (each to be determined by the Company or such Subsidiary in its
reasonable judgment); and

 

(viii) the Company or any Subsidiary may otherwise Transfer assets; provided
that after giving effect thereto (a) the Annual Percentage of Assets Transferred
pursuant to this clause (viii) shall not exceed 10%, and (b) the Cumulative
Percentage of Assets Transferred pursuant to this clause (viii) shall not exceed
30%.

 

6C. Nature of Business; Public Company Status.

 

The Company will not, and will not permit any of its Active Subsidiaries to,
materially change the nature of its business. The Company will not cease to be a
publicly held company.

 

18

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6D. Sale of Stock and Indebtedness of Subsidiaries.

 

The Company will not, and will not permit any Subsidiary to, sell or otherwise
dispose of, or part with control of, any shares of stock, partnership interests,
membership interests or other equity interests in, or indebtedness of, any
Subsidiary (in the case of the Company) or any other Subsidiary (in the case of
a Subsidiary), except the sale of all equity interests and indebtedness of any
Subsidiary at the time owned by or owed to the Company and one or more
Subsidiaries sold as an entirety; provided that (a) such sale or other
disposition is treated as a Transfer of assets of such Subsidiary and is
permitted by paragraph 6B, and (b) at the time of such sale, such Subsidiary
shall not own, directly or indirectly, any equity interests or indebtedness of
any other Subsidiary (unless all of the equity interests and indebtedness of
such other Subsidiary owned, directly or indirectly, by the Company and all
Subsidiaries are simultaneously being sold as permitted by this paragraph 6D).

 

6E. Liens.

 

Neither the Company nor any of its Subsidiaries shall mortgage, pledge, grant,
assume or permit to exist any Lien on property of the Company or any Subsidiary
now or hereafter acquired, except:

 

(i) Liens in existence on the date hereof and disclosed on Schedule 6E or any
Lien which replaces such a Lien; provided that the principal amount of the
indebtedness secured by the replacing Lien does not exceed the principal amount
at the time of replacement of the existing Lien, or cover property other than
the property covered by the existing Lien;

 

(ii) Liens of carriers, warehousemen, mechanics, landlords, materialmen,
suppliers, tax, assessments, other governmental charges and other like Liens
arising in the ordinary course of business securing obligations that are not
incurred in connection with the obtaining of any advance or credit and which are
not overdue or are subject to a Good Faith Contest;

 

(iii) Liens arising in connection with workmen’s compensation, unemployment
insurance, appeal and release bonds and progress payments under government
contracts;

 

(iv) the giving, simultaneously with or within 90 days after the acquisition or
construction of real property or tangible personal property, of any purchase
money Lien (including vendors’ rights under purchase contracts under agreements
whereby title is retained for the purpose of securing the purchase price
thereof) on real property or tangible personal property hereafter acquired or
constructed and not heretofore owned by the Company or any Subsidiary, or the
acquiring hereafter of real property or personal tangible property not
heretofore owned by the Company or any Subsidiary subject to any then existing
Lien (whether or not assumed); provided that (a) in each such case such Lien is
limited to such acquired or constructed real or tangible personal property, and
(b) the Company is and remains in compliance with paragraph 6F;

 

19

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(v) judgment Liens in existence less than 30 days after the entry thereof or
with respect to which execution has been stayed or the payment of which is
covered in full by insurance; and

 

(vi) Liens arising from Real Property Debt; provided that the Company is and
remains in compliance with paragraph 6F.

 

6F. Priority Debt.

 

The Company will not permit at any time Priority Debt to exceed 15% of Tangible
Net Worth.

 

6G. Prepayment.

 

The Company will not, and will not permit any of its Subsidiaries to, prepay any
Funded Debt (other than Funded Debt evidenced by the Notes and Funded Debt under
and pursuant to the Bank Credit Agreement or the Sweep), or enter into or modify
any agreement as a result of which the terms of payment of the Funded Debt
(other than Funded Debt evidenced by the Notes and Funded Debt under and
pursuant to the Bank Credit Agreement or the Sweep) are waived or modified
unless such prepayment or modification will have no Material Adverse Effect.

 

6H. Related Party Transactions.

 

The Company will not, and will not permit any Subsidiary to, directly or
indirectly, purchase, acquire or lease any property from, or sell, transfer or
lease any property to, pay or agree to pay any management, advisory, consulting
or other fees to, or otherwise deal with, in the ordinary course of business or
otherwise, any Related Party other than on fair and reasonable terms and
conditions at least as favorable to the Company or such Subsidiary as those that
would be obtained through an arm’s-length negotiation with an unaffiliated third
party.

 

6I. Misrepresentations.

 

The Company will not, and will not permit any of its Subsidiaries to, furnish
PIM or any holder of a Note any certificate or other document that contains any
untrue statement of material fact or that will omit to state a material fact
necessary to make it not misleading in light of the circumstances under which
its was furnished.

 

6J. Use of Proceeds.

 

The Company will not use any of the proceeds from the sale of the Notes except,
in the case of the Series A Notes for the purposes set forth in paragraph 8I
and, in the case of any Shelf Notes, for the purpose set forth in the applicable
Request for Purchase. In no event will the proceeds from the sale of any Notes
be used to fund a Hostile Tender Offer.

 

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7. EVENTS OF DEFAULT.

 

7A. Acceleration.

 

If any of the following events shall occur and be continuing for any reason
whatsoever (and whether such occurrence shall be voluntary or involuntary or
come about or be effected by operation of law or otherwise):

 

(i) the Company defaults in the payment of any principal of, or
Yield-Maintenance Amount payable with respect to, any Note when the same shall
become due, either by the terms thereof or otherwise as herein provided; or

 

(ii) the Company defaults in the payment of any interest on any Note for more
than five days after the date due; or

 

(iii) any Credit Party or any Subsidiary of a Credit Party defaults (whether as
primary obligor or as guarantor or other surety) in any payment of principal of
or interest on any other obligation for money borrowed (or any Capitalized Lease
Obligation, any obligation under a conditional sale or other title retention
agreement, any obligation issued or assumed as full or partial payment for
property whether or not secured by a purchase money mortgage or any obligation
under notes payable or drafts accepted representing extensions of credit) beyond
any period of grace provided with respect thereto, or any Credit Party or any
Subsidiary of a Credit Party fails to perform or observe any other agreement,
term or condition contained in any agreement under which any such obligation is
created (or if any other event thereunder or under any such agreement shall
occur and be continuing) and the effect of such failure or other event is to
cause, or to permit the holder or holders of such obligation (or a trustee on
behalf of such holder or holders) to cause, such obligation to become due (or to
be repurchased by any Credit Party or any Subsidiary of a Credit Party) prior to
any stated maturity; provided that the aggregate amount of all obligations as to
which such a payment default shall occur and be continuing or such a failure or
other event causing or permitting acceleration (or resale to any Credit Party or
any Subsidiary of a Credit Party) shall occur and be continuing exceeds
$500,000; or

 

(iv) any representation or warranty made by any Credit Party herein or in any of
the other Transaction Documents, or by any Credit Party or any of the officers
of any such Credit Party in any writing furnished in connection with or pursuant
to this Agreement or any of the other Transaction Documents shall be false in
any material respect on the date as of which made; or

 

(v) the Company fails to perform or observe any agreement contained in
paragraphs 5B, 5I, 5J or paragraph 6; or

 

(vi) any Credit Party fails to perform or observe any other agreement, term or
condition contained herein or in any other Transaction Document and such failure
shall not be remedied within 30 days after any Responsible Officer obtains
actual knowledge thereof; or

 

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(vii) any Credit Party or any Active Subsidiary makes an assignment for the
benefit of creditors or is generally not paying its debts as such debts become
due; or

 

(viii) any decree or order for relief in respect of any Credit Party or any
Active Subsidiary is entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law, whether now or hereafter in effect (herein called the “Bankruptcy
Law”), of any jurisdiction; or

 

(ix) any Credit Party or any Active Subsidiary petitions or applies to any
tribunal for, or consents to, the appointment of, or taking possession by, a
trustee, receiver, custodian, liquidator or similar official of any Credit Party
or any Active Subsidiary, or of any substantial part of the assets of any such
Person, or commences a voluntary case under the Bankruptcy Law of the United
States or any proceedings (other than proceedings for the voluntary liquidation
and dissolution of a Subsidiary) relating to any Credit Party or any Active
Subsidiary under the Bankruptcy Law of any other jurisdiction; or

 

(x) any such petition or application is filed, or any such proceedings are
commenced, against any Credit Party or any Active Subsidiary and such Credit
Party or Active Subsidiary by any act indicates its approval thereof, consent
thereto or acquiescence therein, or an order, judgment or decree is entered
appointing any such trustee, receiver, custodian, liquidator or similar
official, or approving the petition in any such proceedings, and such order,
judgment or decree remains unstayed and in effect for more than 30 days; or

 

(xi) any order, judgment or decree is entered in any proceedings against any
Credit Party or any Active Subsidiary decreeing the dissolution of such Credit
Party or Active Subsidiary and such order, judgment or decree remains unstayed
and in effect for more than 30 days; or

 

(xii) any order, judgment or decree is entered in any proceedings against any
Credit Party or any Active Subsidiary decreeing a split-up of such Credit Party
or Active Subsidiary which requires the divestiture of assets representing a
substantial part, or the divestiture of the stock of a Subsidiary whose assets
represent a substantial part, of the consolidated assets of the Company and its
Subsidiaries (determined in accordance with generally accepted accounting
principles) or which requires the divestiture of assets, or stock of a
Subsidiary, which shall have contributed a substantial part of the consolidated
net income of the Company and its Subsidiaries (determined in accordance with
generally accepted accounting principles) for any of the three fiscal years then
most recently ended, and such order, judgment or decree remains unstayed and in
effect for more than 30 days; or

 

(xiii) one or more final judgments in an aggregate amount in excess of $500,000
in any one (1) year period is rendered against any Credit Party or any
Subsidiary of any Credit Party and, within 30 days after entry thereof, any such
judgment is not discharged or execution thereof stayed pending appeal, or within
30 days after the expiration of any such stay, such judgment is not discharged;
or

 

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(xiv) (A) any Plan shall fail to satisfy the minimum funding standards of ERISA
or the Code for any plan year or part thereof or a waiver of such standards or
extension of any amortization period is sought or granted under Section 412 of
the Code, (B) a notice of intent to terminate any Plan shall have been or is
reasonably expected to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA Section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified any Credit Party, any
Subsidiary of any Credit Party or any ERISA Affiliate that a Plan may become a
subject of such proceedings, (C) the aggregate “amount of unfunded benefit
liabilities” (within the meaning of Section 4001(a)(18) of ERISA) under all
Plans of any Credit Party or any Subsidiary of any Credit Party, determined in
accordance with Title IV of ERISA, shall exceed $500,000, (D) any Credit Party,
any Subsidiary of any Credit Party or any ERISA Affiliate shall have incurred or
is reasonably expected to incur any liability pursuant to Title I or IV of ERISA
or the penalty or excise tax provisions of the Code relating to employee benefit
plans, (E) any Credit Party, any Subsidiary of any Credit Party or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (F) any Credit Party, any
Subsidiary of any Credit Party establishes or amends any employee welfare
benefit plan that provides post-employment welfare benefits in a manner that
would materially increase the liability of any Credit Party or any Subsidiary of
any Credit Party thereunder; and any such event or events described in clauses
(A) through (F) above, either individually or together with any other such event
or events, could reasonably be expected to have a Material Adverse Effect; or

 

(xv) any of the Transaction Documents shall cease for any reason to be in full
force and effect or any party thereto (other than any holder from time to time
of a Note) shall purport to disavow its obligations thereunder, shall declare
that it does not have any further obligation thereunder or shall contest the
validity or enforceability thereof;

 

then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A, any holder of any Note may at its option during the
continuance of such Event of Default, by notice in writing to the Company,
declare all of the Notes held by such holder to be, and all of the Notes held by
such holder shall thereupon be and become, immediately due and payable at par
together with interest accrued thereon and together with the Yield-Maintenance
Amount, if any, payable with respect to such Notes, without presentment, demand,
protest or notice of any kind, all of which are hereby waived by the Company,
(b) if such event is an Event of Default specified in clause (viii), (ix) or (x)
of this paragraph 7A with respect to the Company, all of the Notes at the time
outstanding shall automatically become immediately due and payable together with
interest accrued thereon and together with the Yield-Maintenance Amount, if any,
payable with respect to the Notes, without presentment, demand, protest or
notice of any kind, all of which are hereby waived by the Company and (c) with
respect to any event constituting an Event of Default (including an Event of
Default described in clause (i) or (ii) of this paragraph 7A), the Required
Holder(s) of the Notes of any Series may at its or their option during the
continuance of such Event of Default, by notice in writing to the Company,
declare all of the Notes of such Series to be, and all of the Notes of such
Series shall thereupon be and become, immediately due and payable together with
interest accrued thereon and together with the Yield-Maintenance Amount, if any,
with respect to each Note of such Series, without presentment, demand, protest
or notice of any kind, all of which are hereby waived by the Company.

 

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7B. Rescission of Acceleration.

 

At any time after any or all of the Notes of any Series shall have been declared
immediately due and payable pursuant to paragraph 7A, the Required Holder(s) of
the Notes of such Series may, by notice in writing to the Company, rescind and
annul such declaration and its consequences if (i) the Company shall have paid
all overdue interest on the Notes of such Series, the principal of and
Yield-Maintenance Amount, if any, payable with respect to any Notes of such
Series which have become due otherwise than by reason of such declaration, and
interest on such overdue interest and overdue principal and Yield-Maintenance
Amount at the rate specified in the Notes of such Series, (ii) the Company shall
not have paid any amounts which have become due solely by reason of such
declaration, (iii) all Events of Default and Defaults, other than non-payment of
amounts which have become due solely by reason of such declaration, shall have
been cured or waived pursuant to paragraph 11C, and (iv) no judgment or decree
shall have been entered for the payment of any amounts due pursuant to the Notes
of such Series or this Agreement. No such rescission or annulment shall extend
to or affect any subsequent Event of Default or Default or impair any right
arising therefrom.

 

7C. Notice of Acceleration or Rescission.

 

Whenever any Note shall be declared immediately due and payable pursuant to
paragraph 7A or any such declaration shall be rescinded and annulled pursuant to
paragraph 7B, the Company shall forthwith give written notice thereof to the
holder of each Note at the time outstanding.

 

7D. Other Remedies.

 

If any Event of Default or Default shall occur and be continuing, the holder of
any Note may proceed to protect and enforce its rights under this Agreement and
such Note and the other Transaction Documents by exercising such remedies as are
available to such holder in respect thereof under applicable law, either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or any other Transaction
Document or in aid of the exercise of any power granted in this Agreement or any
other Transaction Document. No remedy conferred in this Agreement or any other
Transaction Document upon the holder of any Note is intended to be exclusive of
any other remedy, and each and every such remedy shall be cumulative and shall
be in addition to every other remedy conferred herein, in any other Transaction
Document or now or hereafter existing at law or in equity or by statute or
otherwise.

 

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8. REPRESENTATIONS, COVENANTS AND WARRANTIES.

 

The Company represents, covenants and warrants as follows:

 

8A. Organization.

 

The Company is a corporation duly organized and existing in good standing under
the laws of the State of California, each other Credit Party is duly organized
and existing in good standing under the laws of the jurisdiction in which it is
formed. Schedule 8A hereto is an accurate and complete list as of the Series A
Closing Day of all Subsidiaries as of the date hereof, including the
jurisdiction of organization and ownership of all such Subsidiaries. The Company
and each Subsidiary has the corporate power to own its respective properties and
to carry on its respective businesses as now being conducted and is duly
qualified and authorized to do business in each other jurisdiction in which the
character of its respective properties or the nature of its respective
businesses require such qualification or authorization except where the failure
to be so qualified or authorized could not reasonably be expected to have a
Material Adverse Effect.

 

8B. Financial Statements.

 

The Company has furnished each Purchaser of the Series A Notes and any Accepted
Shelf Notes with the following financial statements: (i) consolidated balance
sheets of the Company and its Subsidiaries as at December 31st in each of the
three fiscal years of the Company most recently completed prior to the date as
of which this representation is made or repeated to such Purchaser (other than
fiscal years completed within 90 days prior to such date for which audited
financial statements have not been released) and consolidated statements of
income, cash flows and shareholders’ equity of the Company and its Subsidiaries
for each such year, all reported on by Arthur Andersen LLP (in the case such
financial statements for the fiscal year ended December 31, 2001) or by Grant
Thornton LLP (in the case of all such financial statements for each fiscal year
ended after December 31, 2001) and (ii) consolidated balance sheets of the
Company and its Subsidiaries as at the end of the quarterly period (if any) most
recently completed prior to such date and after the end of such fiscal year
(other than quarterly periods completed within 45 days prior to such date for
which financial statements have not been released) and the comparable quarterly
period in the preceding fiscal year and consolidated statements of income, cash
flows and shareholders’ equity for the periods from the beginning of the fiscal
years in which such quarterly periods are included to the end of such quarterly
periods, prepared by the Company. Such financial statements (including any
related schedules and/or notes) are true and correct in all material respects
(subject, as to interim statements, to changes resulting from audits and
year-end adjustments), have been prepared in accordance with GAAP consistently
followed throughout the periods involved and show all liabilities, direct and
contingent, of the Company and its Subsidiaries required to be shown in
accordance with such principles. The balance sheets fairly present the
consolidated condition of the Company and its Subsidiaries as at the dates
thereof, and the statements of income, stockholders’ equity and cash flows
fairly present the results of the operations of the Company and its Subsidiaries
and their cash flows for the periods indicated. There has been no material
adverse change in the business, property or assets, financial condition,
operations or prospects of the Company or its Subsidiaries taken as a whole
since the end of the most recent fiscal year for which such audited financial
statements have been furnished.

 

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8C. Actions Pending.

 

There is no action, suit, investigation or proceeding pending or, to the
knowledge of the Company, threatened against any of the Credit Parties or any
Subsidiaries or any properties or rights of such Persons, by or before any
court, arbitrator or administrative or governmental body which could reasonably
be expected to have a Material Adverse Effect.

 

8D. Outstanding Funded Debt.

 

The Credit Parties do not have outstanding any Funded Debt except as permitted
by paragraphs 6A(2) and 6F. There exists no default under the provisions of any
instrument evidencing such indebtedness or of any agreement relating thereto.

 

8E. Title to Properties.

 

Each of the Credit Parties and Subsidiaries has good and marketable title to its
respective real properties and good and merchantable title to all of its other
respective properties and assets, including the properties and assets reflected
in the most recent audited balance sheet referred to in paragraph 8B (other than
properties and assets disposed of in the ordinary course of business), subject
to no Lien of any kind except Liens permitted by paragraph 6E. All leases
necessary in any material respect for the conduct of the respective businesses
of the Credit Parties and Subsidiaries are valid and subsisting and are in full
force and effect.

 

8F. Taxes.

 

Each of the Credit Parties and Subsidiaries has filed all federal, state and
other income tax returns which, to the best knowledge of the officers of such
Credit Parties are required to be filed, and each has paid all taxes as shown on
such returns and on all assessments received by it to the extent that such taxes
have become due, except such taxes as are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with GAAP. The Company has no knowledge of any pending assessments or
adjustments of its income tax payable with respect to any year that could, with
reasonable likelihood, have a Material Adverse Effect.

 

8G. Conflicting Agreements and Other Matters.

 

None of the Credit Parties or Active Subsidiaries is a party to any contract or
agreement or subject to any restriction which materially and adversely affects
its business, property or assets, condition (financial or otherwise) or
operations. Neither the execution and delivery of this Agreement, the Notes or
any other Transaction Document, nor the offering, issuance and

 

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sale of the Notes, nor the fulfillment of, nor the compliance with, the terms
and provisions hereof and of the Notes will conflict with, or result in a breach
of the terms, conditions or provisions of, or constitute a default under, or
result in any violation of, or result in the creation of any Lien upon any of
the properties or assets of any Credit Party or Subsidiary pursuant to the
charter or by-laws (or comparable governing documents) of any such Person, any
award of any arbitrator or any agreement (including any agreement with
equityholders of such Persons), instrument, order, judgment, decree, statute,
law, rule or regulation to which such Person is subject. None of the Credit
Parties or any Active Subsidiaries is a party to, or otherwise subject to any
provision contained in, any instrument evidencing Funded Debt of such Person,
any agreement relating thereto or any other contract or agreement (including its
charter) which limits the amount of, or otherwise imposes restrictions on the
incurring of, Funded Debt of such Person of the type to be evidenced by the
Notes or created by the Multiparty Guaranty except as set forth in the
agreements listed in Schedule 8G attached hereto (as such Schedule 8G may have
been modified from time to time by written supplements thereto delivered by the
Company to PIM).

 

8H. Offering of Notes.

 

Neither the Company nor any agent acting on its behalf has, directly or
indirectly, offered the Notes or any similar security of the Company for sale
to, or solicited any offers to buy the Notes or any similar security of the
Company from, or otherwise approached or negotiated with respect thereto with,
any Person other than PIM and the Purchasers, and neither the Company nor any
agent acting on its behalf has taken or will take any action which would subject
the issuance, offer or sale of the Notes to the provisions of Section 5 of the
Securities Act or to the provisions of any securities or Blue Sky law of any
applicable jurisdiction.

 

8I. Use of Proceeds.

 

The proceeds of the Series A Notes will be used to (i) refinance a portion of
certain existing Funded Debt of the Company, (ii) provide working capital and
funds for other corporate purposes, and (iii) to finance the acquisition of TRS.
None of the proceeds of the sale of any Notes will be used, directly or
indirectly, for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any “margin stock” as defined in Regulation U of the
Board of Governors of the Federal Reserve System (herein called “margin stock”)
or for the purpose of maintaining, reducing or retiring any indebtedness which
was originally incurred to purchase or carry any stock that is then currently a
margin stock or for any other purpose which would constitute the purchase of
such Notes a “purpose credit” within the meaning of such Regulation U. Neither
the Company nor any agent acting on its behalf has taken or will take any action
which might cause this Agreement or the Notes to violate Regulation U,
Regulation T or any other regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act, in each case as in effect now or
as the same may hereafter be in effect.

 

8J. ERISA.

 

No accumulated funding deficiency (as defined in section 302 of ERISA and
section 412 of the Code), whether or not waived, exists with respect to any Plan
(other than a Multiemployer

 

27

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Plan). No liability to the Pension Benefit Guaranty Corporation has been or is
expected by the Credit Parties, any Subsidiary or any ERISA Affiliate to be
incurred with respect to any Plan (other than a Multiemployer Plan) by the
Credit Parties, any Subsidiary or any ERISA Affiliate which is or would be
materially adverse to the business, property or assets, condition (financial or
otherwise) or operations of the Credit Parties and Subsidiaries taken as a
whole. Neither the Credit Parties, any Subsidiary nor any ERISA Affiliate has
incurred or presently expects to incur any withdrawal liability under Title IV
of ERISA with respect to any Multiemployer Plan which is or would be materially
adverse to the business, property or assets, condition (financial or otherwise)
or operations of the Credit Parties and Subsidiaries taken as a whole. The
execution and delivery of this Agreement and the issuance and sale of the Notes
will be exempt from or will not involve any transaction which is subject to the
prohibitions of section 406 of ERISA and will not involve any transaction in
connection with which a penalty could be imposed under section 502(i) of ERISA
or a tax could be imposed pursuant to section 4975 of the Code. The
representation by the Company in the next preceding sentence is made in reliance
upon and subject to the accuracy of the representation of each Purchaser in
paragraph 9B as to the source of funds to be used by it to purchase any Notes.

 

8K. Governmental Consent.

 

Neither the nature of the Credit Parties or any Subsidiary, nor any of their
respective businesses or properties, nor any relationship between any of the
Credit Parties or any Subsidiary and any other Person, nor any circumstance in
connection with the offering, issuance, sale or delivery of the Notes or the use
of the proceeds thereof is such as to require any authorization, consent,
approval, exemption or any action by or notice to or filing with any court or
administrative or governmental body (other than routine filings after the
Closing Day for any Notes with the Securities and Exchange Commission and/or
state Blue Sky authorities) in connection with the execution and delivery of
this Agreement and the other Transaction Documents, the offering, issuance, sale
or delivery of the Notes or fulfillment of or compliance with the terms and
provisions hereof or of any other Transaction Document.

 

8L. Compliance With Laws.

 

The Company and its Subsidiaries and all of their respective properties and
facilities have complied at all times and in all respects with all foreign,
federal, state, local and regional statutes, laws, ordinances and judicial or
administrative orders, judgments, rulings and regulations, including all
Environmental Laws and the Fair Labor Standards Act except, in any such case,
where failure to comply could not, with reasonable likelihood, have a Material
Adverse Effect.

 

8M. Foreign Assets Control Regulations, etc.

 

(i) Neither the sale of the Notes by the Company hereunder nor its use of the
proceeds thereof will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.

 

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(ii) Neither the Company nor any Subsidiary (a) is, or will become, a Person
described or designated in the Specially Designated Nationals and Blocked
Persons List of the Office of Foreign Assets Control or in Section 1 of the
Anti-Terrorism Order or (b) engages or will engage in any dealings or
transactions, or is or will be otherwise associated, with any such Person. The
Company and its Subsidiaries are in compliance, in all material respects with
the USA Patriot Act.

 

(iii) No part of the proceeds from the sale of the Notes hereunder will be used,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming
in all cases that such Act applies to the Company.

 

8N. Disclosure.

 

Neither this Agreement or any of the other Transaction Documents nor any other
document, certificate or statement furnished to PIM or any Purchaser by or on
behalf of any Credit Party or any Subsidiary in connection herewith or in
connection with the issuance of the Notes contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact
peculiar to any Credit Party or any Subsidiary that has or in the future may (so
far as the Company can now foresee) have a Material Adverse Effect that has not
been set forth herein or in the other documents, certificates and other writings
delivered to any Purchaser by or on behalf of any Credit Party specifically for
use in connection with the transactions contemplated hereby.

 

8O. Hostile Tender Offers.

 

None of the proceeds of the sale of any Notes will be used to finance a Hostile
Tender Offer.

 

8P. Regulatory Status.

 

Neither any of the Credit Parties nor any Subsidiary (i) is an “investment
company” or a company “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940, as amended, (ii) is a “holding company”
or a “subsidiary company” or an “affiliate” of a “holding company” or a
“subsidiary company” of a “holding company” within the meaning of the Public
Utility Act of 1935, as amended, (iii) is a “public utility” within the meaning
of the Federal Power Act, as amended, or (iv) is a Person described by section 1
of the Anti-Terrorism Order or engages in any dealings or transactions, or is
otherwise associated, with any such Persons or entities.

 

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8Q. Solvency.

 

Both before and after giving effect to the transactions contemplated by this
Agreement, each of the Company and its Active Subsidiaries is solvent.

 

8R. Absence of Financing Statements.

 

Except with respect to Liens permitted by paragraph 6E hereof, there is no
financing statement, security agreement, chattel mortgage, real estate mortgage
or other document filed or recorded with any filing records, registry or other
public office, that purports to cover, affect or give notice of any present or
possible future Lien on, or security interest in, any assets or property of the
Credit Parties or any rights relating thereto.

 

9. REPRESENTATIONS OF THE PURCHASERS.

 

Each Purchaser represents as follows:

 

9A. Nature of Purchase.

 

Such Purchaser is purchasing the Notes to be purchased by it hereunder for its
own account or for one or more separate accounts or investment funds maintained
or managed by it or for the account of one or more pension or trust funds (or
commingled pension trust funds) and not with a view to the distribution thereof
within the meaning of the Securities Act; provided that the disposition of such
Purchaser’s or such other Person’s property shall at all times be and remain
within its or their control.

 

9B. Source of Funds.

 

At least one of the following statements is an accurate representation as to
each source of funds (a “Source”) to be used by such Purchaser to pay the
purchase price of the Notes to be purchased by such Purchaser hereunder:

 

(i) the Source is an “insurance company general account” (as the term is defined
in the United States Department of Labor’s Prohibited Transaction Exemption
(“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by
the annual statement for life insurance companies approved by the National
Association of Insurance Commissioners (the “NAIC Annual Statement”)) for the
general account contract(s) held by or on behalf of any employee benefit plan
together with the amount of the reserves and liabilities for the general account
contract(s) held by or on behalf of any other employee benefit plans maintained
by the same employer (or affiliate thereof as defined in PTE 95-60) or by the
same employee organization in the general account do not exceed 10% of the total
reserves and liabilities of the general account (exclusive of separate account
liabilities) plus surplus as set forth in the NAIC Annual Statement filed with
such Purchaser’s state of domicile; or

 

30

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(ii) the Source is a separate account that is maintained solely in connection
with such Purchaser’s fixed contractual obligations under which the amounts
payable, or credited, to any employee benefit plan (or its related trust) that
has any interest in such separate account (or to any participant or beneficiary
of such plan (including any annuitant)) are not affected in any manner by the
investment performance of the separate account; or

 

(iii) the Source is either (a) an insurance company pooled separate account,
within the meaning of PTE 90-1 or (b) a bank collective investment fund, within
the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the
Company in writing pursuant to this clause (iii), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or

 

(iv) the Source constitutes assets of an “investment fund” (within the meaning
of Part V of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified
professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM
Exemption), no employee benefit plan’s assets that are included in such
investment fund, when combined with the assets of all other employee benefit
plans established or maintained by the same employer or by an affiliate (within
the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of the total
client assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling or
controlled by the QPAM (applying the definition of “control” in Section V(e) of
the QPAM Exemption) owns a 5% or more interest in the Company and (a) the
identity of such QPAM and (b) the names of all employee benefit plans whose
assets are included in such investment fund have been disclosed to the Company
in writing pursuant to this clause (iv); or

 

(v) the Source constitutes assets of a “plan(s)” (within the meaning of Section
IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager”
or “INHAM” (within the meaning of Part IV of the INHAM exemption), the
conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied,
neither the INHAM nor a person controlling or controlled by the INHAM (applying
the definition of “control” in Section IV(h) of the INHAM Exemption) owns a 5%
or more interest in the Company and (a) the identity of such INHAM and (b) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have
been disclosed to the Company in writing pursuant to this clause (v); or

 

(vi) the Source is a governmental plan; or

 

(vii) the Source is one or more employee benefit plans, or a separate account or
trust fund comprised of one or more employee benefit plans, each of which has
been identified to the Company in writing pursuant to this clause (vii); or

 

(viii) the Source does not include assets of any employee benefit plan, other
than a plan exempt from the coverage of ERISA.

 

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As used in this paragraph 9B, the terms “employee benefit plan,” “governmental
plan,” and “separate account” shall have the respective meanings assigned to
such terms in Section 3 of ERISA.

 

10. DEFINITIONS; ACCOUNTING MATTERS.

 

For the purpose of this Agreement, the terms defined in paragraphs 10A and 10B
(or within the text of any other paragraph) shall have the respective meanings
specified therein and all accounting matters shall be subject to determination
as provided in paragraph 10C.

 

10A. Yield-Maintenance Terms.

 

“Called Principal” shall mean, with respect to any Note, the principal of such
Note that is to be prepaid pursuant to paragraph 4C or becomes immediately due
and payable pursuant to paragraph 7A, as the context requires.

 

“Discounted Value” shall mean, with respect to the Called Principal of any Note,
the amount obtained by discounting all Remaining Scheduled Payments with respect
to such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis on which interest on such Note is payable) equal to the
Reinvestment Yield with respect to such Called Principal.

 

“Reinvestment Yield” shall mean, with respect to the Called Principal of any
Note, 0.50% over the yield to maturity implied by (i) the yields reported, as of
10:00 a.m. (New York City local time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, for actively traded U.S.
Treasury securities having a maturity equal to the Remaining Average Life of
such Called Principal as of such Settlement Date on the display designated as
“Page PX1” on Bloomberg Financial Markets (or, if Bloomberg Financial Markets
shall cease to report such yields in Page PX1 or shall cease to be PIM’s
customary source of information for calculating yield-maintenance amounts on
privately placed notes, then such source as is then PIM’s customary source of
such information), or if such yields shall not be reported as of such time or
the yields reported as of such time shall not be ascertainable, (ii) the
Treasury Constant Maturity Series yields reported, for the latest day for which
such yields shall have been so reported as of the Business Day next preceding
the Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. Such
implied yield shall be determined, if necessary, by (a) converting U.S. Treasury
bill quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between yields reported for various
maturities. The Reinvestment Yield shall be rounded to that number of decimal
places as appears in the applicable Notes.

 

“Remaining Average Life” shall mean, with respect to the Called Principal of any
Note, the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) such Called Principal into (ii) the sum of the products obtained
by multiplying (a) each Remaining Scheduled Payment of such Called Principal
(but not of interest thereon) by (b) the number of

 

32

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years (calculated to the nearest one-twelfth year) which will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.

 

“Remaining Scheduled Payments” shall mean, with respect to the Called Principal
of any Note, all payments of such Called Principal and interest thereon that
would be due on or after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date.

 

“Settlement Date” shall mean, with respect to the Called Principal of any Note,
the date on which such Called Principal is to be prepaid pursuant to paragraph
4C or becomes immediately due and payable pursuant to paragraph 7A, as the
context requires.

 

“Yield-Maintenance Amount” shall mean, with respect to any Note, an amount equal
to the excess, if any, of the Discounted Value of the Called Principal of such
Note over the sum of (i) such Called Principal plus (ii) interest accrued
thereon as of (including interest due on) the Settlement Date with respect to
such Called Principal. The Yield-Maintenance Amount shall in no event be less
than zero.

 

10B. Other Terms.

 

“Acceptance” shall have the meaning specified in paragraph 2B(5).

 

“Acceptance Day” shall have the meaning specified in paragraph 2B(5).

 

“Acceptance Window” shall have the meaning specified in paragraph 2B(5).

 

“Accepted Shelf Note” shall have the meaning specified in paragraph 2B(5).

 

“Active Subsidiary” shall mean any Subsidiary which owns assets with a fair
market value or book value greater than $1,000,000 or is engaged in any
operations or business.

 

“Affiliate” shall mean any Person directly or indirectly controlling, controlled
by, or under direct or indirect common control with, the Company or another
specified Person, except a Subsidiary. A Person shall be deemed to control
another Person if such first Person possesses, directly or indirectly, the power
to direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities, by contract or
otherwise.

 

“Agreement” shall mean this Note Purchase and Private Shelf Agreement, together
with all exhibits and schedules hereto, as any of the foregoing may be amended,
supplemented or otherwise modified from time to time.

 

“Annual Percentage of Assets Transferred” shall mean, as of any time of
determination thereof, the sum of the Percentages of Assets Transferred for each
of the assets of the Company or Subsidiaries that has been Transferred during
the then current fiscal quarter and the three fiscal quarters immediately
preceding the then current fiscal quarter.

 

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“Anti-Terrorism Order” means United States Executive Order 13,224 of September
24, 2001 (Executive Order Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten To Commit, or Support Terrorism), 31 CFR Part 595
et seq., issued by the President of the United States.

 

“Authorized Officer” shall mean (i) in the case of the Company, its chief
executive officer, its chief financial officer, any other officer of the Company
designated as an “Authorized Officer” of the Company in the Information Schedule
attached hereto or any other officer of the Company designated as an “Authorized
Officer” of the Company for the purpose of this Agreement in an Officer’s
Certificate executed by the Company’s chief executive officer or chief financial
officer and delivered to PIM, and (ii) in the case of PIM, any officer of PIM
designated as its “Authorized Officer” in the Information Schedule or any
officer of PIM designated as its “Authorized Officer” for the purpose of this
Agreement in a certificate executed by one of its Authorized Officers. PIM or
the Company may, by written notice to the other given by an Authorized Officer,
de-designate any person as one of its Authorized Officers hereunder. Any action
taken under this Agreement on behalf of the Company by any individual who on or
after the date of this Agreement shall have been an Authorized Officer of the
Company and whom PIM in good faith believes to be an Authorized Officer of the
Company at the time of such action shall be binding on the Company even though
such individual shall have ceased to be an Authorized Officer of the Company,
and any action taken under this Agreement on behalf of PIM by any individual who
on or after the date of this Agreement shall have been an Authorized Officer of
PIM, and whom the Company in good faith believes to be an Authorized Officer of
PIM at the time of such action shall be binding on PIM even though such
individual shall have ceased to be an Authorized Officer of PIM.

 

“Available Facility Amount” shall have the meaning specified in paragraph 2B(1).

 

“Banks” shall mean, collectively, each financial institution from time to time
party to the Bank Credit Agreement acting in the capacity as lender thereunder.

 

“Bank Credit Agreement” shall mean that certain Third Amended and Restated
Credit Agreement, dated as of May 7, 2004, by and among the Company, the Banks
and Union Bank of California, N.A., in its capacity as Agent for the Banks,
together with any renewal or replacement of said Third Amended and Restated
Credit Agreement.

 

“Bankruptcy Law” shall have the meaning specified in clause (viii) of paragraph
7A.

 

“Business Day” shall mean any day other than (i) a Saturday or a Sunday, (ii) a
day on which commercial banks in New York, New York or San Francisco, California
are required or authorized to be closed and (iii) for purposes of paragraph
2B(3) hereof only, a day on which PIM is not open for business.

 

“Cancellation Date” shall have the meaning specified in paragraph 2B(8)(iii).

 

“Cancellation Fee” shall have the meaning specified in paragraph 2B(8)(iii).

 

“Capitalized Lease Obligation” shall mean, with respect to any Person, any
rental obligation which, under GAAP, is or will be required to be capitalized on
the books of such Person, taken at the amount thereof accounted for as
indebtedness (net of interest expense) in accordance with such principles.

 

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“Closing Day” shall mean, with respect to the Series A Notes, the Series A
Closing Day and, with respect to any Accepted Shelf Note, the Business Day
specified for the closing of the purchase and sale of such Accepted Shelf Note
in the Request for Purchase of such Accepted Shelf Note; provided that (i) if
the Company and the Purchaser which is obligated to purchase such Accepted Shelf
Note agree on an earlier Business Day for such closing, the “Closing Day” for
such Accepted Shelf Note shall be such earlier Business Day, and (ii) if the
closing of the purchase and sale of such Accepted Shelf Note is rescheduled
pursuant to paragraph 2B(7), the Closing Day for such Accepted Shelf Note, for
all purposes of this Agreement except references to “original Closing Day” in
paragraph 2B(8)(ii), shall mean the Rescheduled Closing Day with respect to such
Accepted Shelf Note.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Company” shall have the meaning specified in the introductory sentence of this
Agreement.

 

“Confirmation of Acceptance” shall have the meaning specified in paragraph
2B(5).

 

“Credit Parties” shall mean the Company and the Subsidiary Guarantors.

 

“Cumulative Percentage of Assets Transferred” shall mean, as at any time of
determination thereof, the sum of the Percentages of Assets Transferred for each
asset of the Company or Subsidiaries that has been Transferred from and after
the date hereof.

 

“Delayed Delivery Fee” shall have the meaning specified in paragraph 2B(8)(ii).

 

“Draw Fee” shall have the meaning specified in paragraph 2B(8)(i).

 

“EBIT” shall mean, for the Company and its Subsidiaries on a consolidated basis
for any period of determination, the sum of (i) Net Income, (ii) provision for
income taxes, (iii) interest expense, and (iv) minority interest in the Net
Income (if positive) of any Subsidiary, and minus minority interest in the Net
Income (if negative) of any Subsidiary.

 

“EBITDA” shall mean, for the Company and its Subsidiaries on a consolidated
basis for any period of determination, EBIT minus (i) non-cash items of income,
and (ii) extraordinary income, plus (a) depreciation expense, (b) amortization
expense, (c) other non-cash charges (provided that to the extent that any
non-cash charge subsequently becomes a cash charge, such amount will be deducted
in determining EBITDA for such subsequent period), and (d) extraordinary
expense; provided that EBITDA shall, in addition, include a pro forma amount
attributable to TRS (as defined below) calculated by multiplying $3,500,000 by
the number of full months prior to the acquisition of TRS included in the
determination of EBITDA.

 

“Environmental Laws” shall mean all federal, state, local and foreign laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or

 

35

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hazardous substances or wastes into the environment (including, without
limitation, ambient air, surface water, ground water or land), or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes, and any and all
regulations, codes, plans, orders, decrees, judgments, injunctions, notices or
demand letters issued, entered, promulgated or approved thereunder.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

 

“ERISA Affiliate” shall mean any corporation which is a member of the same
controlled group of corporations as the Company within the meaning of section
414(b) of the Code, or any trade or business which is under common control with
the Company within the meaning of section 414(c) of the Code.

 

“Event of Default” shall mean any of the events specified in paragraph 7A;
provided that there has been satisfied any requirement in connection with such
event for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act, and “Default” shall mean any of such events,
whether or not any such requirement has been satisfied.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Facility” shall have the meaning specified in paragraph 2B(1).

 

“Fixed Charges” shall mean, for any date of determination, the aggregate amount
of (i) interest expense of the Company and its Subsidiaries on a consolidated
basis for the four consecutive fiscal quarter period ended on such date, (ii)
the current portion of long term debt (as determined in accordance with GAAP) on
such date, (iii) cash dividends paid by the Company and its Subsidiaries for the
four consecutive fiscal quarter period ended on such date, and (iv) cash taxes
paid by the Company and its Subsidiaries for the four consecutive fiscal quarter
period ended on such date.

 

“Funded Debt” shall mean, with respect to the Company and its Subsidiaries on a
consolidated basis, without duplication: (i) any indebtedness for borrowed money
(including commercial paper, bankers’ acceptances, revolving credit line
borrowings whether under the Series A Notes, the Shelf Notes, the Bank Credit
Agreement, the Sweep or otherwise and any and all Real Property Debt), or which
is evidenced by bonds (other than assessment and other special bonds associated
with real property holdings not issued in connection with the borrowing of
money), debentures or notes, or which represents the deferred purchase price of
property (but shall exclude accounts payable, accrued expenses, deferred income,
minority interest in Subsidiaries and deferred taxes), (ii) indebtedness of a
third party secured by Liens on the assets of such Person whether or not such
obligation or liability is assumed by such Person, (iii) Capitalized Lease
Obligations, and (iv) Guarantees.

 

“GAAP” shall mean generally accepted accounting principles as in existence from
time to time.

 

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“Good Faith Contest” shall mean an active contest or challenge initiated in a
timely manner and in good faith by appropriate proceedings for which adequate
reserves have been established in accordance with GAAP.

 

“Guarantee” shall mean, with respect to any Person, any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable, including, without
limitation, any such obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to (i) maintain the solvency or any balance
sheet or other financial condition of another Person or (ii) make payment for
any products, materials or supplies or for any transportation or services
regardless of the non-delivery or non-furnishing thereof, in any such case if
the purpose or effect of such agreement is to provide assurance that such
obligation will be paid or discharged, or that any agreements relating thereto
will be complied with, or that the holders of such obligation will be protected
against loss in respect thereof. Guarantees shall include obligations of
partnerships and joint ventures of which such Person is a general partner or
co-venturer that are not expressly non-recourse to such Person.

 

“Hedge Treasury Note(s)” shall mean, with respect to any Accepted Shelf Note,
the United States Treasury Note or Notes whose duration (as determined by PIM)
most closely matches the duration of such Accepted Shelf Note.

 

“Hostile Tender Offer” shall mean, with respect to the use of proceeds of any
Note, any offer to purchase, or any purchase of, shares of capital stock of any
corporation or equity interests in any other entity, or securities convertible
into or representing the beneficial ownership of, or rights to acquire, any such
shares or equity interests, if such shares, equity interests, securities or
rights are of a class which is publicly traded on any securities exchange or in
any over-the-counter market, other than purchases of such shares, equity
interests, securities or rights representing less than 5% of the equity
interests or beneficial ownership of such corporation or other entity for
portfolio investment purposes, and such offer or purchase has not been duly
approved by the board of directors of such corporation or the equivalent
governing body of such other entity prior to the date on which the Company makes
the Request for Purchase of such Note.

 

“including” shall mean, unless the context clearly requires otherwise,
“including without limitation.”

 

“Indemnity and Contribution Agreement” shall have the meaning specified in
paragraph 3A(3).

 

“INHAM Exemption” shall have the meaning specified in paragraph 9B.

 

“Institutional Investor” shall mean (i) an insurance company, bank, savings and
loan association, finance company, mutual fund, registered money manager,
pension fund, investment company, in each case, that is also an “accredited
investor” within the meaning of Regulation D

 

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of the Securities Act, or (ii) a “qualified institutional buyer” (as such term
is defined under Rule 144A promulgated under the Securities Act, or any
successor law, rule or regulation) or “accredited investor” (as such term is
defined under Regulation D promulgated under the Securities Act, or any
successor law, rule or regulation).

 

“Issuance Period” shall have the meaning specified in paragraph 2B(2).

 

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, security
interest, encumbrance, lien (statutory or otherwise) or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof, and the filing
of or agreement to give any financing statement (other than precautionary
filings in respect of true leases and consignment filings) under the Uniform
Commercial Code of any jurisdiction) or any other type of preferential
arrangement for the purpose, or having the effect, of protecting a creditor
against loss or securing the payment or performance of an obligation.

 

“Material Adverse Effect” shall mean a material adverse change in, or a material
adverse effect upon, any of (i) the business, assets, operations, affairs,
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries taken as a whole or (ii) the ability of any Credit Party to perform
its respective obligations under the Transaction Documents to which such Person
is a party, or (iii) the validity or enforceability of this Agreement, any Note,
the Multiparty Guaranty, the Indemnity and Contribution Agreement or any other
Transaction Document.

 

“Multiemployer Plan” shall mean any Plan which is a “multiemployer plan” (as
such term is defined in section 4001(a)(3) of ERISA.

 

“Multiparty Guaranty” shall have the meaning specified in paragraph 3A(3).

 

“NAIC Annual Statement” shall have the meaning specified in paragraph 9B.

 

“Net Income” shall mean, for the Company and its Subsidiaries on a consolidated
basis for any period of determination, net income determined in accordance with
GAAP.

 

“Notes” shall have the meaning specified in paragraph 1B.

 

“Officer’s Certificate” shall mean a certificate signed in the name of the
Company by a Responsible Officer of the Company.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation.

 

“Percentage of Assets Transferred” shall mean, with respect to each asset
Transferred pursuant to paragraph 6B, the ratio (expressed as a percentage) of
(i) the greater of such asset’s fair market value or net book value on the date
of such Transfer to (ii) the consolidated total assets of the Company and
Subsidiaries as of the last day of the fiscal quarter immediately preceding the
date of such Transfer.

 

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“Person” shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.

 

“PIM” shall mean Prudential Investment Management, Inc.

 

“Plan” shall mean any employee pension benefit plan (as such term is defined in
section 3 of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by the Company or any ERISA Affiliate.

 

“Priority Debt” shall mean, at any time of determination, the sum of, without
duplication, (i) Funded Debt of the Company’s Subsidiaries (other than (a)
Funded Debt owed to the Company or another Subsidiary, and (b) Funded Debt
created under the Multiparty Guaranty or under a Guarantee of the obligations of
the Company under the Bank Credit Agreement or the Sweep), plus (ii) Funded Debt
of the Company secured by consensual Liens.

 

“Prudential Affiliate” shall mean (i) any corporation or other entity
controlling, controlled by, or under common control with, PIM and (ii) any
managed account or investment fund which is managed by PIM or a Prudential
Affiliate described in clause (i) of this definition. For purposes of this
definition, the terms “control,” “controlling” and “controlled” shall mean the
ownership, directly or through subsidiaries, of a majority of a corporation’s or
other Person’s Voting Stock or equivalent voting securities or interests.

 

“PTE” shall have the meaning specified in paragraph 9B.

 

“Purchaser Schedule” shall have the meaning specified in paragraph 2A.

 

“Purchasers” shall mean the Series A Purchasers with respect to the Series A
Notes and, with respect to any Accepted Shelf Notes, PIM and/or the Prudential
Affiliate(s) which are purchasing such Accepted Shelf Notes.

 

“QPAM Exemption” shall have the meaning specified in paragraph 9B.

 

“Real Property Debt” shall mean Funded Debt which is secured by any or all of
the Company’s or any of its Subsidiaries’ real property holdings.

 

“Related Party” shall mean: (i) any 10% or greater shareholder of the Company or
any Subsidiary; (ii) all Persons to whom any Person described in clause (i)
above is related (in not greater than the second degree) by blood, adoption or
marriage; and (iii) all Affiliates of the Company and the foregoing Persons.

 

“Request for Purchase” shall have the meaning specified in paragraph 2B(3).

 

“Required Holder(s)” shall mean the holder or holders of at least 51% of the
aggregate principal amount of the Notes or of a Series of Notes, as the context
may require, from time to time outstanding and, if no Notes are outstanding,
shall mean PIM.

 

“Rescheduled Closing Day” shall have the meaning specified in paragraph 2B(7).

 

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“Responsible Officer” shall mean the chief executive officer, chief financial
officer or chief accounting officer of the Company or any other officer of the
Company involved principally in its financial administration or its
controllership function.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Series” shall have the meaning specified in paragraph 1B.

 

“Series A Closing Day” shall have the meaning specified in paragraph 2A.

 

“Series A Note(s)” shall have the meaning specified in paragraph 1A.

 

“Series A Purchasers” shall mean each purchaser of Series A Notes named in the
Purchaser Schedule.

 

“Shelf Note(s)” shall have the meaning specified in paragraph 1B.

 

“Solvent” shall mean, with respect to any Person at the applicable time of
determination, that at such time (i) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (ii) the present fair salable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (iii) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person’s ability to pay as such
debts and liabilities mature, and (iv) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person’s property would constitute an unreasonably small capital
required for such Person’s participation in such business or transaction. The
amount of contingent liabilities at the applicable time of determination shall
be computed as the amount that, in light of all the facts and circumstances
existing at such time, reasonably can be expected to become an actual or matured
liability.

 

“Source” shall have the meaning specified in paragraph 9B.

 

“Subsidiary” shall mean, as of any time of determination and with respect to any
Person, any corporation, limited liability company, partnership, joint venture,
association or other entity of which a majority of the Voting Stock (other than
securities having such power only by reason of the happening of a contingency)
are at the time beneficially owned, held or controlled by such Person and/or one
or more Subsidiaries of such Person. Unless the context otherwise clearly
requires otherwise, any reference to a “Subsidiary” is a reference to a
Subsidiary of the Company.

 

“Subsidiary Guarantors” shall mean Enviroplex, Inc., a California corporation,
Mobile Modular Management Corporation, a California corporation, and each Person
that hereafter becomes a party to the Multiparty Guaranty pursuant to the
requirements of paragraph 5I; provided that in the event a Person is released
from the Multiparty Guaranty pursuant to paragraph 5I, such Person shall no
longer be a Subsidiary Guarantor.

 

“Sweep” shall mean that certain committed credit facility of $5,000,000,
evidenced by that certain Credit Line Note, dated May     , 2004, made by the
Company in favor of Union

 

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Bank of California, N.A. and the commitment letter dated May 11, 2004, from
Union Bank of California, N.A. to the Company, to facilitate the automatic
borrowing and repayment of the Company’s loans in conjunction with its cash
management services with Union Bank of California, N.A.; provided that the Sweep
shall also mean any renewal or replacement of this type of credit extension to
facilitate the Company’s cash management services.

 

“Tangible Net Worth” shall mean, with respect to the Company and its
Subsidiaries on a consolidated basis, total assets determined in accordance with
GAAP, minus (i) total liabilities determined in accordance with GAAP, (ii) all
intangible assets, including all assets which should be classified under GAAP as
intangible assets (such as goodwill, patents, trademarks, copyrights,
franchises, and deferred charges (including unamortized debt discount and
research and development costs)), (iii) treasury stock, (iv) cash held in a
sinking or other similar fund established for the purpose of redemption or other
retirement of capital stock or Funded Debt, but only to the extent the amount of
such Funded Debt is not included in the total liabilities of the Company and its
Subsidiaries determined in accordance with GAAP, (v) to the extent not already
deducted from total assets, reserves for depreciation, depletion, obsolescence
or amortization of properties and other reserves or appropriations of retained
earnings which have been or should be established in connection with the
business conducted by the Company or its Subsidiaries, and (vi) any revaluation
or other write-up in book value of assets subsequent to December 31, 2003.

 

“Transaction Documents” shall mean this Agreement, the Series A Notes, the Shelf
Notes, the Multiparty Guaranty, the Indemnity and Contribution Agreement, and
any and all other agreements, documents, certificates and instruments from time
to time executed and delivered by or on behalf of any Credit Party related
thereto.

 

“Transfer” shall mean, with respect to any property, the sale, exchange,
conveyance, lease, transfer or other disposition of such property.

 

“Transferee” shall mean any direct or indirect transferee of all or any part of
any Note purchased by any Purchaser under this Agreement.

 

“TRS” shall mean Technology Rentals and Services, a division of CIT Technologies
Corporation; and references to the acquisition of TRS shall mean the acquisition
of substantially all the operating assets of TRS and at the same time the
acquisition of similar assets from CIT Financial, Ltd., an Ontario company.

 

“Voting Stock” shall mean, with respect to any Person, any shares of stock (or
similar equity interests) of such Person whose holders are entitled under
ordinary circumstances to vote for the election of directors (or similar body
that has management authority of such Person) of such Person (irrespective of
whether at the time stock (or similar equity interests) of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency).

 

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10C. Accounting Principles, Terms and Determinations.

 

All references in this Agreement to “GAAP,” and “generally accepted accounting
principles” shall be deemed to refer to generally accepted accounting principles
in effect in the United States of America at the time of application thereof.
Unless otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all unaudited financial statements and certificates and
reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with generally accepted accounting principles applied on
a basis consistent with the most recent audited consolidated financial
statements of the Company and its Subsidiaries delivered pursuant to clause (ii)
of paragraph 5A or, if no such statements have been so delivered, the most
recent audited financial statements referred to in clause (i) of paragraph 8B.

 

11. MISCELLANEOUS.

 

11A. Note Payments.

 

The Company agrees that, so long as any Purchaser shall hold any Note, it will
make payments of principal of, interest on, and any Yield-Maintenance Amount
payable with respect to, such Note, which comply with the terms of this
Agreement, by wire transfer of immediately available funds for credit (not later
than 1:00 p.m., New York City local time, on the date due) to (i) the account or
accounts of such Purchaser specified in the Purchaser Schedule attached hereto
in the case of any Series A Note, (ii) the account or accounts of such Purchaser
specified in the Confirmation of Acceptance with respect to such Note in the
case of any Shelf Note or (iii) such other account or accounts in the United
States of America as such Purchaser may from time to time designate in writing,
notwithstanding any contrary provision herein or in any Note with respect to the
place of payment. Each Purchaser agrees that, before disposing of any Note, it
will make a notation thereon (or on a schedule attached thereto) of all
principal payments previously made thereon and of the date to which interest
thereon has been paid. The Company agrees to afford the benefits of this
paragraph 11A to any Transferee which shall have made the same agreement as the
Purchasers have made in this paragraph 11A.

 

11B. Expenses.

 

The Company agrees, whether or not the transactions contemplated hereby shall be
consummated, to pay, and save PIM, each Purchaser and any Transferee harmless
against liability for the payment of, all out-of-pocket expenses arising in
connection with such transactions, including (i) all document production and
duplication charges and the fees and expenses of any special counsel engaged by
PIM, the Purchasers or any Transferee in connection with this Agreement and the
other Transaction Documents, the transactions contemplated hereby and thereby
and any subsequent proposed modification of, or proposed consent under, this
Agreement or the other Transaction Documents, whether or not such proposed
modification shall be effected or proposed consent granted, and (ii) the costs
and expenses, including attorneys’ fees, incurred by PIM, any Purchaser or any
Transferee in enforcing (or determining whether or how to enforce) any rights
under this Agreement or the Notes or any other Transaction

 

42

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Document or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or any other
Transaction Document or the transactions contemplated hereby or thereby or by
reason of PIM, any Purchaser or any Transferee having acquired any Note,
including, without limitation, costs and expenses incurred in any bankruptcy
case. The obligations of the Company under this paragraph 11B shall survive the
transfer of any Note or portion thereof or interest therein by PIM, any
Purchaser or any Transferee and the payment of any Note.

 

11C. Consent to Amendments.

 

This Agreement may be amended, and any Credit Party or Subsidiary may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, if the Company shall consent thereto and shall obtain the
written consent to such amendment, action or omission to act, of the Required
Holder(s) of the Notes except that, (i) with the written consent of the holders
of all Notes of a particular Series, and if an Event of Default shall have
occurred and be continuing, of the holders of all Notes of all Series, at the
time outstanding (and not without such written consents), the Notes of such
Series may be amended or the provisions thereof waived to change the maturity
thereof, to change or affect the principal thereof, to change or affect the rate
or time of payment of interest on or any Yield-Maintenance Amount payable with
respect to the Notes of such Series, (ii) without the written consent of the
holder or holders of all Notes at the time outstanding, no amendment to or
waiver of the provisions of this Agreement shall change or affect the provisions
of paragraph 7A or this paragraph 11C insofar as such provisions relate to
proportions of the principal amount of the Notes of any Series, or the rights of
any individual holder of Notes, required with respect to any declaration of
Notes to be due and payable or with respect to any consent, amendment, waiver or
declaration, (iii) with the written consent of PIM (and not without the written
consent of PIM) the provisions of paragraph 2B may be amended or waived (except
insofar as any such amendment or waiver would affect any rights or obligations
with respect to the purchase and sale of Notes which shall have become Accepted
Shelf Notes prior to such amendment or waiver), and (iv) with the written
consent of Purchasers which shall have become obligated to purchase a majority
of the Accepted Shelf Notes of any Series (and not without the written consent
of such Purchasers), any of the provisions of paragraphs 2B and 3 may be amended
or waived insofar as such amendment or waiver would affect only rights or
obligations with respect to the purchase and sale of the Accepted Shelf Notes of
such Series or the terms and provisions of such Accepted Shelf Notes. Each
holder of any Note at the time or thereafter outstanding shall be bound by any
consent authorized by this paragraph 11C, whether or not such Note shall have
been marked to indicate such consent, but any Notes issued thereafter may bear a
notation referring to any such consent. No course of dealing between any of the
Credit Parties and the holder of any Note nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any
holder of such Note. As used herein and in the Notes, the term “this Agreement”
and references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.

 

43

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11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes.

 

The Notes are issuable as registered notes without coupons in denominations of
at least $1,000,000, except as may be necessary to reflect any principal amount
not evenly divisible by $1,000,000. The Company shall keep at its principal
office a register in which the Company shall provide for the registration of
Notes and of transfers of Notes. Upon surrender for registration of transfer of
any Note at the principal office of the Company, the Company shall, at its
expense, execute and deliver one or more new Notes of like tenor and of a like
aggregate principal amount, registered in the name of such transferee or
transferees. At the option of the holder of any Note, such Note may be exchanged
for other Notes of like tenor and of any authorized denominations, of a like
aggregate principal amount, upon surrender of the Note to be exchanged at the
principal office of the Company. Whenever any Notes are so surrendered for
exchange, the Company shall, at its expense, execute and deliver the Notes which
the holder making the exchange is entitled to receive. Each installment of
principal payable on each installment date upon each new Note issued upon any
such transfer or exchange shall be in the same proportion to the unpaid
principal amount of such new Note as the installment of principal payable on
such date on the Note surrendered for registration of transfer or exchange bore
to the unpaid principal amount of such Note. No reference need be made in any
such new Note to any installment or installments of principal previously due and
paid upon the Note surrendered for registration of transfer or exchange. Every
Note surrendered for registration of transfer or exchange shall be duly
endorsed, or be accompanied by a written instrument of transfer duly executed,
by the holder of such Note or such holder’s attorney duly authorized in writing.
Any Note or Notes issued in exchange for any Note or upon transfer thereof shall
carry the rights to unpaid interest and interest to accrue which were carried by
the Note so exchanged or transferred, so that neither gain nor loss of interest
shall result from any such transfer or exchange. Upon receipt of written notice
from the holder of any Note of the loss, theft, destruction or mutilation of
such Note and, in the case of any such loss, theft or destruction, upon receipt
of such holder’s unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, the Company will make
and deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Note.

 

11E. Persons Deemed Owners; Participations.

 

Prior to due presentment for registration of transfer, the Company may treat the
Person in whose name any Note is registered as the owner and holder of such Note
for the purpose of receiving payment of principal of and interest on, and any
Yield-Maintenance Amount payable with respect to, such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue, and the Company
shall not be affected by notice to the contrary. Subject to the preceding
sentence and applicable securities laws and regulations, the holder of any Note
may from time to time grant participations in all or any part of such Note to
any Person on such terms and conditions as may be determined by such holder in
its sole and absolute discretion.

 

44

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11F. Survival of Representations and Warranties; Entire Agreement.

 

All representations and warranties contained herein or made in writing by or on
behalf of any Credit Party or Purchasers in connection herewith shall survive
the execution and delivery of this Agreement, the Notes and the other
Transaction Documents, the transfer by any Purchaser of any Note or portion
thereof or interest therein and the payment of any Note, and may be relied upon
by any Transferee, regardless of any investigation made at any time by or on
behalf of any Purchaser or any Transferee. Subject to the preceding sentence,
this Agreement, the Notes and the other Transaction Documents embody the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter.

 

11G. Successors and Assigns.

 

All covenants and other agreements in this Agreement contained by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including, without
limitation, any Transferee) whether so expressed or not.

 

11H. Independence of Covenants.

 

All covenants hereunder shall be given independent effect so that if a
particular action or condition is prohibited by any one of such covenants, the
fact that it would be permitted by an exception to, or otherwise be in
compliance within the limitations of, another covenant shall not avoid the
occurrence of a Default or Event of Default if such action is taken or such
condition exists.

 

11I. Notices.

 

All written communications provided for hereunder (other than communications
provided for under paragraph 2) shall be sent by first class mail or nationwide
overnight delivery service (with charges prepaid) and (i) if to any Purchaser,
addressed as specified for such communications in the Purchaser Schedule
attached hereto (in the case of the Series A Notes) or the Purchaser Schedule
attached to the applicable Confirmation of Acceptance (in the case of any Shelf
Notes) or at such other address as any such Purchaser shall have specified to
the Company in writing, (ii) if to any other holder of any Note, addressed to it
at such address as it shall have specified in writing to the Company or, if any
such holder shall not have so specified an address, then addressed to such
holder in care of the last holder of such Note which shall have so specified an
address to the Company and (iii) if to the Company, addressed to it at 5700 Las
Positas Road, Livermore, California 94551, Fax No. 925-453-3333, Attention:
Chief Financial Officer. Any communication pursuant to paragraph 2 shall be made
by the method specified for such communication in paragraph 2, and shall be
effective to create any rights or obligations under this Agreement only if, in
the case of a telephone communication, an Authorized Officer of the party
conveying the information and of the party receiving the information are parties
to the telephone call, and in the case of a facsimile communication, the
communication is signed by an Authorized Officer of the party conveying the
information, addressed to the attention of an

 

45

--------------------------------------------------------------------------------

Authorized Officer of the party receiving the information, and in fact received
at the facsimile terminal the number of which is listed for the party receiving
the communication in the Purchaser Schedule or at such other facsimile terminal
as the party receiving the information shall have specified in writing to the
party sending such information.

 

11J. Payments Due on Non-Business Days.

 

Anything in this Agreement, the Notes or the other Transaction Documents to the
contrary notwithstanding, any payment of principal of or interest on, or
Yield-Maintenance Amount payable with respect to, any Note that is due on a date
other than a Business Day shall be made on the next succeeding Business Day. If
the date for any payment is extended to the next succeeding Business Day by
reason of the preceding sentence, the period of such extension shall not be
included in the computation of the interest payable on such Business Day.

 

11K. Severability.

 

If any provision of this Agreement is held to be prohibited or unenforceable in
any jurisdiction, it shall be interpreted, to the extent possible, as to such
jurisdiction to enhance its enforceability in order to achieve the intent of the
parties to this Agreement; provided, if no feasible construction would save the
provision, the parties agree to renegotiate such provision in good faith. In the
event the parties cannot reach a mutually agreeable and enforceable replacement
for such provision, its invalidity, illegality or unenforceability in such
jurisdiction shall not affect any other provision of this Agreement; rather,
this Agreement shall be construed as to such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein. The
prohibition or unenforceability of any provision in any such jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
The invalidity of any provision of this Agreement as applied to certain
circumstances shall not affect the validity or enforceability of such provision
as applied to other circumstances or any other provisions of this Agreement.

 

11L. Descriptive Headings.

 

The descriptive headings of the several paragraphs of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.

 

11M. Satisfaction Requirement.

 

If any agreement, certificate or other writing, or any action taken or to be
taken, is by the terms of this Agreement required to be satisfactory to any
Purchaser, to any holder of Notes or to the Required Holder(s), the
determination of such satisfaction shall be made by such Purchaser, such holder
or the Required Holder(s), as the case may be, in the sole and exclusive
judgment (exercised in good faith) of the Person or Persons making such
determination.

 

46

--------------------------------------------------------------------------------

11N. Governing Law.

 

THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAW OF THE STATE OF NEW
YORK, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD
REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

 

11O. Severalty of Obligations.

 

The sales of Notes to the Purchasers are to be several sales, and the
obligations of PIM and the Purchasers under this Agreement are several
obligations. No failure by PIM or any Purchaser to perform its obligations under
this Agreement shall relieve any other Purchaser or the Company of any of its
obligations hereunder, and neither PIM nor any Purchaser shall be responsible
for the obligations of, or any action taken or omitted by, any other such Person
hereunder.

 

11P. Counterparts.

 

This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.

 

11Q. Binding Agreement.

 

When this Agreement is executed and delivered by the Company, on the one hand,
and PIM and the Series A Purchasers, on the other hand, it shall become a
binding agreement between the Company, on the one hand, and PIM and the Series A
Purchasers, on the other hand. This Agreement shall also inure to the benefit of
each Purchaser which shall have executed and delivered a Confirmation of
Acceptance, and each such Purchaser shall be bound by this Agreement to the
extent provided in such Confirmation of Acceptance.

 

11R. Confidentiality.

 

For the purposes of this paragraph 11R, “Confidential Information” means
information delivered to PIM or any Purchaser by or on behalf of the Company or
any Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary or confidential in nature and
that was clearly marked or labeled or otherwise adequately identified when
received by PIM or such Purchaser as being confidential information of the
Company or such Subsidiary; provided that such term does not include information
that (a) was publicly known or otherwise known to PIM or such Purchaser prior to
the time of such disclosure, (b) subsequently becomes publicly known through no
act or omission by PIM or such Purchaser or any Person acting on its behalf, (c)
otherwise becomes known to PIM or such Purchaser other than through disclosure
by the Company or any Subsidiary or (d) constitutes financial statements
delivered to PIM or such Purchaser under paragraph 5A that are otherwise

 

47

--------------------------------------------------------------------------------

publicly available. Each of PIM and the Purchasers will maintain the
confidentiality of such Confidential Information in accordance with procedures
adopted by it in good faith to protect confidential information of third parties
delivered to it; provided that PIM or such Purchaser may deliver or disclose
Confidential Information to (i) its directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by its Notes) who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this paragraph 11R, (ii) its financial advisors and other professional
advisors who agree to hold confidential the Confidential Information
substantially in accordance with the terms of this paragraph 11R, (iii) any
other holder of any Note, (iv) any Institutional Investor to which it sells or
offers to sell such Note or any part thereof or any participation therein (if
such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this paragraph 11R), (v) any Person
from which it offers to purchase any security of the Company (if such Person has
agreed in writing prior to its receipt of such Confidential Information to be
bound by the provisions of this paragraph 11R), (vi) any federal or state
regulatory authority having jurisdiction over it, (vii) the National Association
of Insurance Commissioners or any similar organization, or any nationally
recognized rating agency, or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (w) to effect compliance with any
law, rule, regulation or order applicable to PIM or such Purchaser, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which PIM or such Purchaser is a party or (z) if an Event of
Default has occurred and is continuing, to the extent PIM or such Purchaser may
reasonably determine such delivery and disclosure to be necessary or appropriate
in the enforcement or for the protection of the rights and remedies under its
Notes and the other Transaction Documents. Prior to the disclosure of
Confidential Information pursuant to clauses (viii)(x) or (viii)(y), PMI or such
Purchaser, as the case may be, to the extent permitted by applicable law, shall
use its best effort to give the Company reasonable advance written notice, by
nationwide overnight delivery service (the charges prepaid and with proof of
delivery), of the intention to make such disclosure in order to enable the
Company to take whatever action it may deem appropriate to protect the
confidentiality of such Confidential Information. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this paragraph 11R as though it were a party to this
Agreement.

 

11S. Jury Waiver.

 

THE COMPANY, PIM, THE PURCHASERS AND THE OTHER HOLDERS FROM TIME TO TIME OF THE
NOTES AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OTHER
TRANSACTION DOCUMENT, OR ANY DEALINGS BETWEEN OR AMONG THEM RELATING TO THE
SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY AND THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER
IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING,
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. THE COMPANY, PIM, THE

 

48

--------------------------------------------------------------------------------

PURCHASERS AND EACH OF THE OTHER HOLDERS OF NOTES FROM TIME TO TIME EACH
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS
BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING
INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, AND THAT EACH WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. THE COMPANY,
PIM, THE PURCHASERS AND EACH OF THE OTHER HOLDERS OF NOTES FROM TIME TO TIME
FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

11T. Personal Jurisdiction.

 

The Company irrevocably agrees that any legal action or proceeding with respect
to this Agreement, the Notes, the other Transaction Documents or any of the
agreements, documents or instruments delivered in connection herewith may be
brought in the courts of the State of California, the State of New York, or the
United States of America for the Northern District of California or the Southern
District of New York as PIM, the Purchasers and the other holders from time to
time of Notes (as applicable) may elect, and, by execution and delivery hereof,
the Company accepts and consents to, for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts and
agrees that such jurisdiction shall be exclusive, unless waived by PIM, the
Purchasers and the other holders from time to time of Notes (as applicable) in
writing, with respect to any action or proceeding brought by the Company against
any Purchaser or any holder of Notes. The Company hereby waives, to the full
extent permitted by law, any right to stay or to dismiss any action or
proceeding brought before said courts on the basis of forum non conveniens.

 

[Remainder of page intentionally left blank. Next page is signature page.]

 

49

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Very truly yours,

MCGRATH RENTCORP,

a California corporation

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

The foregoing Agreement is hereby accepted

as of the date first above written.

 

PRUDENTIAL INVESTMENT MANAGEMENT, INC.

By:

 

 

--------------------------------------------------------------------------------

   

Name:

       

Title:

 

Vice President

    GIBRALTAR LIFE INSURANCE CO., LTD. By:   Prudential Investment Management
(Japan), Inc., as Investment Manager By:   Prudential Investment Management,
Inc., as Sub-Advisor

By:

 

 

--------------------------------------------------------------------------------

   

Name:

       

Title:

 

Vice President

    THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

By:

 

 

--------------------------------------------------------------------------------

   

Name:

       

Title:

 

Vice President

    BAYSTATE INVESTMENTS, LLC By:   Prudential Private Placement Investors,
L.P., as Investment Advisor By:   Prudential Private Placement Investors, Inc.,
General Partner

By:

 

 

--------------------------------------------------------------------------------

   

Name:

       

Title:

 

Vice President

   

 

[Signature Page to Note Purchase and Private Shelf Agreement]

--------------------------------------------------------------------------------

UNITED OF OMAHA LIFE

INSURANCE COMPANY

By:  

Prudential Private Placement

Investors, L.P., as Investment Advisor

By:  

Prudential Private Placement

Investors, Inc., General Partner

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

 

Vice President

FARMERS NEW WORLD LIFE

INSURANCE COMPANY

By:  

Prudential Private Placement

Investors, L.P., as Investment Advisor

By:  

Prudential Private Placement

Investors, Inc., General Partner

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

 

Vice President

FORTIS BENEFITS INSURANCE COMPANY By:  

Prudential Private Placement

Investors, L.P., as Investment Advisor

By:  

Prudential Private Placement

Investors, Inc., General Partner

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

 

Vice President

PRUCO LIFE INSURANCE COMPANY

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

 

Vice President

AMERICAN BANKERS LIFE ASSURANCE COMPANY OF FLORIDA, INC. By:  

Prudential Private Placement

Investors, L.P., as Investment Advisor

By:  

Prudential Private Placement

Investors, Inc., General Partner

By:

 

 

--------------------------------------------------------------------------------

Name:

   

 

[Signature Page to Note Purchase and Private Shelf Agreement]

--------------------------------------------------------------------------------

SCHEDULE A

 

PURCHASER INFORMATION

 

Purchaser Name

--------------------------------------------------------------------------------

 

GIBRALTAR LIFE INSURANCE CO., LTD.

--------------------------------------------------------------------------------

Name in Which Notes are to be Registered

 

GIBRALTAR LIFE INSURANCE CO., LTD.

Note Registration Numbers;

Principal Amounts

 

RA-1; $13,762,000

Payment on Account of Note

 

                Method

 

                Account Information

 

 

 

Federal Funds Wire Transfer

 

The Bank of New York

New York, New York

ABA # 021-000-018

Account: Gibraltar Life Insurance Co., Ltd.

                Account # 890-0543-612

 

Re:     (See “Accompanying information” below)

Accompanying Information

 

Name of Company:              McGRATH RENTCORP

 

Description of Security:     5.08% Series A Senior Notes Due June 2, 2011

 

PPN:                                       580589 A@ 8

    Due Date and Application (as among principal, premium and interest) of the
payment being made:

Address for Notices Related to Payments

 

Gibraltar Life Insurance Co., Ltd.

2-13-10, Nagatacho

Chiyoda-ku

Tokyo 100-8953

Japan

Attn:         Yoshiki Saito

                  Vice President of Investments, Operations Team

 

Fax:           81-3-5501-6432

Email:       yoshiki.saito@gib-life.co.jp

Address for All Other Notices

 

Prudential Capital Group

Four Gateway Center

100 Mulberry Street

Newark, NJ 07102

Attn:         Albert Trank

                  Managing Director

Fax:           973-624-6432

Email:       albert.trank@prudential.com

Other Instructions

 

GIBRALTAR LIFE INSURANCE CO., LTD.

By:         Prudential Investment Management (Japan), Inc.,

               as Investment Manager

By:         Prudential Investment Management, Inc., as Sub-Advisor

    By:  

 

--------------------------------------------------------------------------------

    Title:        Vice President

 

Purchaser Schedule-1

--------------------------------------------------------------------------------

Purchaser Name

--------------------------------------------------------------------------------

  

GIBRALTAR LIFE INSURANCE CO., LTD.

--------------------------------------------------------------------------------

Instructions re Delivery of Notes

  

Prudential Capital Group

Four Embarcadero Center, Suite 2700

San Francisco, CA 94111-4180

Attn:        James Evert

Tax Identification Number

  

98-0408643

 

Purchaser Schedule-2

--------------------------------------------------------------------------------

Purchaser Name

--------------------------------------------------------------------------------

  

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

--------------------------------------------------------------------------------

Name in Which Notes are to be Registered

  

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

Note Registration Numbers;

Principal Amounts

  

RA-2; $11,090,000

Payment on Account of Note

 

                Method

 

                Account Information

  

Federal Funds Wire Transfer

 

The Bank of New York

New York, New York

ABA # 021-000-018

Account # 890-0304-391

 

Re: (See “Accompanying information” below)

Accompanying Information

  

Name of Company:             McGRATH RENTCORP

 

Description of Security:     5.08% Series A Senior Notes Due June 2, 2011

 

PPN:                                      580589 A@ 8

 

Due Date and Application (as among principal, premium and interest) of the
payment being made:

Address for Notices Related to Payments

  

The Prudential Insurance Company of America

c/o Investment Operations Group

Gateway Center Two, 10th Floor

100 Mulberry Street

Newark, NJ 07102-4077

Attn:         Manager, Billings and Collections

 

with telephonic prepayment notices to:

 

Manager, Trade Management Group

Tel:         973-367-3141

Address for All Other Notices

  

The Prudential Insurance Company of America

c/o Prudential Capital Group

Four Embarcadero Center, Suite 2700

San Francisco, California 94111-4180

Attn:         Managing Director

Fax:          415-421-6233

Other Instructions

  

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

     By:  

 

--------------------------------------------------------------------------------

     Name:          Title:       Vice President

Instructions re Delivery of Notes

  

Prudential Capital Group

Four Embarcadero Center, Suite 2700

San Francisco, CA 94111-4180

Attn:     James Evert

Tax Identification Number

  

22-1211670

 

Purchaser Schedule-3

--------------------------------------------------------------------------------

Purchaser Name

--------------------------------------------------------------------------------

  

BAYSTATE INVESTMENTS, LLC

--------------------------------------------------------------------------------

Name in Which Notes are to be Registered

  

BAYSTATE INVESTMENTS, LLC

Note Registration Numbers;

Principal Amounts

  

RA-3; $8,350,000

Payment on Account of Note

 

                Method

 

                Account Information

  

Federal Funds Wire Transfer

 

Fleet Bank

ABA # 011-000-138

Account # 9429114060

 

Re: (See “Accompanying information” below)

Accompanying Information

  

Name of Company:             McGRATH RENTCORP

 

Description of Security:     5.08% Series A Senior Notes Due June 2, 2011

 

PPN:                                      580589 A@ 8

 

Due Date and Application (as among principal, premium and interest) of the
payment being made:

Address for Notices Related to Payments

  

Baystate Investments, LLC

200 Berkeley Street, Floor B-3

Mail Stop B-03-01

Boston, MA 02116

Attn:         Bank Relations

 

with telephonic prepayment notices to:

 

Manager, Trade Management Group

Tel:           973-802-8107

Address for All Other Notices

  

Prudential Private Placement Investors, L.P.

Four Gateway Center

100 Mulberry Street

Newark, NJ 07102

Attn:        Albert Trank

                  Managing Director

 

Fax:           973-624-6432

Email:       albert.trank@prudential.com

Other Instructions

  

BAYSTATE INVESTMENTS, LLC

By:     Prudential Private Placement Investors, L.P., as Investment Advisor

By:     Prudential Private Placement Investors, Inc., General Partner

     By:   

 

--------------------------------------------------------------------------------

     Name:           Title:        Vice President

 

Purchaser Schedule-4

--------------------------------------------------------------------------------

Purchaser Name

--------------------------------------------------------------------------------

  

BAYSTATE INVESTMENTS, LLC

--------------------------------------------------------------------------------

Instructions re Delivery of Notes

  

Baystate Investments, LLC

200 Clarendon Street, T-55

Boston, MA 02117

Attn:         Scott Navin

                  Investment Strategy Group

                  Ph (617) 572-4386

 

with a copy to:

 

Prudential Capital Group

Four Gateway Center, 7th Floor

100 Mulberry Street

Newark, NJ 07102

Attn:       Manager, Trade Management

Tax Identification Number

  

04-1414660

 

Purchaser Schedule-5

--------------------------------------------------------------------------------

Purchaser Name

--------------------------------------------------------------------------------

  

UNITED OF OMAHA LIFE INSURANCE COMPANY

--------------------------------------------------------------------------------

Name in Which Notes are to be Registered

  

UNITED OF OMAHA LIFE INSURANCE COMPANY

Note Registration Numbers;

Principal Amounts

  

RA-4; $6,700,000

Payment on Account of Note

 

                Method

 

                Account Information

  

Federal Funds Wire Transfer

 

JPMorgan Chase Bank

ABA # 021-000-021

Attn:                  Private Income Processing

For credit to:    United of Omaha Life Insurance Company

Account #:       900-9000-200

A/C:                   G09588

 

Re: (See “Accompanying information” below)

Accompanying Information

  

Name of Company:             McGRATH RENTCORP

 

Description of Security:     5.08% Series A Senior Notes Due June 2, 2011

 

PPN:                                      580589 A@ 8

 

Due Date and Application (as among principal, premium and interest) of the
payment being made:

Address for Notices Related to Payments

  

JPMorgan Chase Bank

14201 Dallas Parkway, 13th Floor

Dallas, TX 75254-2917

Attn:         G. Ruiz

                   Income Processing

 

Re:             A/C: G09588

Address for All Other Notices

  

Prudential Private Placement Investors, L.P.

Four Gateway Center

100 Mulberry Street

Newark, NJ 07102

Attn:         Albert Trank

                  Managing Director

 

Fax:           973-624-6432

Email:       albert.trank@prudential.com

Other Instructions

  

UNITED OF OMAHA LIFE INSURANCE COMPANY

By:     Prudential Private Placement Investors, L.P., as Investment Advisor

By:     Prudential Private Placement Investors, Inc., General Partner

 

     By:   

 

--------------------------------------------------------------------------------

     Name:           Title:     

 

Purchaser Schedule-6

--------------------------------------------------------------------------------

Purchaser Name

--------------------------------------------------------------------------------

  

UNITED OF OMAHA LIFE INSURANCE COMPANY

--------------------------------------------------------------------------------

Instructions re Delivery of Notes

  

JP Morgan Chase

North America Insurance, 5th Floor

3 Chase Metrotech Center

Brooklyn, NY 11245

Attn:         Patricia Radzicki

                  Ph (718) 242-8475

 

Ref:           United of Omaha Insurance Company

                  Account # G09588

 

with a copy to:

 

Prudential Capital Group

Four Gateway Center, 7th Floor

100 Mulberry Street

Newark, NJ 07102

Attn:         Manager, Trade Management

Tax Identification Number

  

47-0322111

 

Purchaser Schedule-7

--------------------------------------------------------------------------------

Purchaser Name

--------------------------------------------------------------------------------

  

FARMERS NEW WORLD LIFE INSURANCE COMPANY

--------------------------------------------------------------------------------

Name in Which Notes are to be Registered

  

FARMERS NEW WORLD LIFE INSURANCE COMPANY

Note Registration Numbers;

Principal Amounts

  

RA-5; $6,600,000

Payment on Account of Note

 

                Method

 

                Account Information

  

 

 

Federal Funds Wire Transfer

 

JPMorgan Chase Bank

New York, NY

ABA # 021-000-021

Account:     Farmers Insurance

Account #:  900-9000-168

Ref:               PTFS

For further credit to P58834 New World Life

 

Re: (See “Accompanying information” below)

Accompanying Information

  

Name of Company:             McGRATH RENTCORP

 

Description of Security:     5.08% Series A Senior Notes Due June 2, 2011

 

PPN:                                      580589 A@ 8

 

Due Date and Application (as among principal, premium and interest) of the
payment being made:

Address for Notices Related to Payments

  

Farmers Insurance Company

4680 Wilshire Boulevard, 4th Floor

Los Angeles, CA 90010

Attn (1):         Jim DeNicholas

                        Director, Investment Operations / Accounting

 

Attn (2):         Laszlo Heredy

                        Vice President and Chief Investment Officer

 

with a copy to:

 

Farmers New World Life Insurance Company

3003 77th Avenue Southeast, 5th Floor

Mercer Island, WA 98040-2837

 

Attn (1):         Joann Bronson

                        Director, Investments & Separate Account

 

Attn (2):         Oscar Tengtio

                        Vice President and Chief Financial Officer

Address for All Other Notices

  

Prudential Private Placement Investors, L.P.

Four Gateway Center

100 Mulberry Street

Newark, NJ 07102

Attn:         Albert Trank

                  Managing Director

Fax:           973-624-6432

Email:       albert.trank@prudential.com

 

Purchaser Schedule-8

--------------------------------------------------------------------------------

Purchaser Name

--------------------------------------------------------------------------------

       

FARMERS NEW WORLD LIFE INSURANCE COMPANY

--------------------------------------------------------------------------------

Other Instructions

  

FARMERS NEW WORLD LIFE INSURANCE COMPANY

By:         Prudential Private Placement Investors, L.P., as Investment Advisor

By:         Prudential Private Placement Investors, Inc., General Partner

     By:   

 

--------------------------------------------------------------------------------

     Name:           Title:     

Instructions re Delivery of Notes

  

JP Morgan Chase Bank

4 New York Plaza

Ground Floor Window

New York, NY 10004

Attn:         Jennifer John

 

                  Ph (212) 623-5953

 

Ref:           Farmers New World Life Private Placement

                  P58834

 

with a copy to:

 

Prudential Capital Group

Four Gateway Center, 7th Floor

100 Mulberry Street

Newark, NJ 07102

Attn:         Manager, Trade Management

Tax Identification Number

  

91-0335750

 

Purchaser Schedule-9

--------------------------------------------------------------------------------

Purchaser Name

--------------------------------------------------------------------------------

  

FORTIS BENEFITS INSURANCE COMPANY

--------------------------------------------------------------------------------

Name in Which Notes are to be Registered

  

FORTIS BENEFITS INSURANCE COMPANY

Note Registration Numbers;

Principal Amounts

  

RA-6; $5,350,000

Payment on Account of Note

 

                Method

 

                Account Information

  

Federal Funds Wire Transfer

 

M&I Marshall & Ilsley Bank

Milwaukee, WI

ABA # 075-000-051

DDA Account #:         27006

Account Name:            General Trust Fund

FFC:                               Account # 89-0035-76-9

                                         Fortis Benefits Prudential Private
Placements

 

Re: (see “Accompanying Information” below)

Accompanying Information

  

Name of Company:             McGRATH RENTCORP

 

Description of Security:     5.08% Series A Senior Notes Due June 2, 2011

 

PPN:                                      580589 A@ 8

 

Due Date and Application (as among principal, premium and interest) of the
payment being made:

Address for Notices Related to Payments

  

Marshall & Ilsley Trust Company

1000 North Water Street

Milwaukee, WI 53202

Attn:         Kim Palleon

Fax:           414-287-7125

 

with a copy to:

 

Fortis, Inc.

One Chase Manhattan Plaza

New York, NY 10005

Attn:         Kevin Mahoney

                  AVP, Investment Accounting and Treasury Operations

Fax:           212-859-7043

Address for All Other Notices

  

Prudential Private Placement Investors, L.P.

Four Gateway Center

100 Mulberry Street

Newark, NJ 07102

Attn:         Albert Trank

                  Managing Director

 

Fax:            973-624-6432

Email:        albert.trank@prudential.com

Other Instructions

  

FORTIS BENEFITS INSURANCE COMPANY

By:     Prudential Private Placement Investors, L.P., as Investment Advisor

By:     Prudential Private Placement Investors, Inc., General Partner

     By   

 

--------------------------------------------------------------------------------

     Name:           Title:     

 

Purchaser Schedule-10

--------------------------------------------------------------------------------

Purchaser Name

--------------------------------------------------------------------------------

  

FORTIS BENEFITS INSURANCE COMPANY

--------------------------------------------------------------------------------

Instructions re Delivery of Notes

  

Marshall & Ilsley Trust Company, N.A.

1000 North Water Street

Milwaukee, WI 53202

Attn:         Margaret Armstrong

                  Asset Booking, TR14

                   Ph (414) 287-8531

 

Ref:             Fortis Benefits - Prudential Private Placements

                    Account # 89-0035-76-9

 

with a copy to:

 

Prudential Capital Group

Four Gateway Center, 7th Floor

100 Mulberry Street

Newark, NJ 07102

Attn:         Manager, Trade Management

Tax Identification Number

  

81-0170040

 

Purchaser Schedule-11

--------------------------------------------------------------------------------

Purchaser Name

--------------------------------------------------------------------------------

  

PRUCO LIFE INSURANCE COMPANY

--------------------------------------------------------------------------------

Name in Which Notes are to be Registered

  

PRUCO LIFE INSURANCE COMPANY

Note Registration Numbers;

Principal Amounts

  

RA-7; $5,148,000

Payment on Account of Note

 

                Method

 

                Account Information

  

Federal Funds Wire Transfer

 

Bank of New York

New York, New York

ABA # 021-000-018

Account # 890-0304-421

 

Re: (see “Accompanying Information” below)

Accompanying Information

  

Name of Company:             McGRATH RENTCORP

 

Description of Security:     5.08% Series A Senior Notes Due June 2, 2011

 

PPN:                                      580589 A@ 8

 

Due Date and Application (as among principal, premium and interest) of the
payment being made:

Address for Notices Related to Payments

  

Pruco Life Insurance Company

c/o The Prudential Insurance Company of America

c/o Investment Operations Group

Gateway Center Two, 10th Floor

100 Mulberry Street

Newark, NJ 07102-4077

Attn:         Manager, Billings and Collections

 

with telephonic prepayment notices to:

 

Manager, Trade Management Group

 

Tel:           973-367-3141

Address for All Other Notices

  

The Prudential Insurance Company of America

c/o Prudential Capital Group

Four Embarcadero Center, Suite 2700

San Francisco, California 94111-4180

Attn:         Managing Director

Fax:           415-421-6233

Other Instructions

  

PRUCO LIFE INSURANCE COMPANY

     By:   

 

--------------------------------------------------------------------------------

     Name:           Title:     

Instructions re Delivery of Notes

  

Prudential Capital Group

Four Embarcadero Center, Suite 2700

San Francisco, CA 94111-4180

Attn:         James Evert

Tax Identification Number

  

22-1944557

 

Purchaser Schedule-12

--------------------------------------------------------------------------------

Purchaser Name

--------------------------------------------------------------------------------

  

AMERICAN BANKERS LIFE ASSURANCE COMPANY OF FLORIDA, INC.

--------------------------------------------------------------------------------

Name in Which Notes are to be Registered

   AMERICAN BANKERS LIFE ASSURANCE COMPANY OF FLORIDA, INC.

Note Registration Numbers;

Principal Amounts

  

RA-8; $3,000,000

Payment on Account of Note

 

                Method

 

                Account Information

  

 

 

Federal Funds Wire Transfer

 

JPMorgan Chase Bank

ABA # 021-000-021

Account:             JP Morgan Chase

Account #:         900-9000-168

FFC:                     ABLAC - Prudential Private Placements

                             Account # G09888

 

Re: (See “Accompanying information” below)

Accompanying Information

  

Name of Company:             McGRATH RENTCORP

 

Description of Security:     5.08% Series A Senior Notes Due June 2, 2011

 

PPN:                                      580589 A@ 8

 

Due Date and Application (as among principal, premium and interest) of the
payment being made:

Address for Notices Related to Payments

  

JP Morgan Chase

North America Insurance, 5S5

3 Chase Metrotech Center

Brooklyn, NY 11245

Attn:         Anna Marie Mazza

                  Investor Services

 

Fax:           718-242-8328

 

with a copy to:

 

Fortis, Inc.

One Chase Manhattan Plaza

New York, NY 10005

Attn:         Kevin Mahoney

                  AVP, Investment Accounting and Treasury Operations

 

Fax:           212-859-7043

Address for All Other Notices

  

Prudential Private Placement Investors, L.P.

Four Gateway Center

100 Mulberry Street

Newark, NJ 07102

Attn:         Albert Trank

                  Managing Director

Fax:           973-624-6432

Email:       albert.trank@prudential.com

 

Purchaser Schedule-13

--------------------------------------------------------------------------------

Purchaser Name

--------------------------------------------------------------------------------

  

AMERICAN BANKERS LIFE ASSURANCE COMPANY OF FLORIDA, INC.

--------------------------------------------------------------------------------

Other Instructions

  

AMERICAN BANKERS LIFE ASSURANCE COMPANY OF FLORIDA, INC.

By:         Prudential Private Placement Investors, L.P., as Investment Advisor

By:         Prudential Private Placement Investors, Inc., General Partner

     By:   

 

--------------------------------------------------------------------------------

     Name:           Title:     

Instructions re Delivery of Notes

  

JP Morgan Chase Bank

4 New York Plaza

Ground Floor Window

New York, NY 10004

Attn:         Receive Window

 

Ref:           ABLAC - Prudential Private Placements

                  Account # G09888

 

with a copy to:

 

Prudential Capital Group

Four Gateway Center, 7th Floor

100 Mulberry Street

Newark, NJ 07102

Attn:       Manager, Trade Management

Tax Identification Number

  

59-0676017

 

Purchaser Schedule-14

--------------------------------------------------------------------------------

INFORMATION SCHEDULE

 

Authorized Officers for PIM

 

Mitchell W. Reed

Senior Vice President

Prudential Capital Group

Four Embarcadero Center, Suite 2700

San Francisco, California 94111

 

Telephone:

 

(415) 291-5059

Facsimile:

 

(415) 421-6233

 

Iris Krause

Vice President

Prudential Capital Group

Four Embarcadero Center, Suite 2700

San Francisco, California 94111

 

Telephone:

 

(415) 291-5060

Facsimile:

 

(415) 421-6233

 

Joseph Y. Alouf

Senior Vice President

Prudential Capital Group

Four Embarcadero Center, Suite 2700

San Francisco, California 94111

 

Telephone:

 

(415) 291-5056

Facsimile:

 

(415) 421-6233

 

Stephen J. DeMartini

Managing Director

Prudential Capital Group

Four Embarcadero Center, Suite 2700

San Francisco, California 94111

 

Telephone:

 

(415) 291-5058

Facsimile:

 

(415) 421-6233

 

James McCrane

Prudential Capital Group

100 Mulberry St.

7 Gateway Center Four

Newark NJ 07102

 

Telephone:

 

(973) 802-4222

Facsimile:

 

(973) 624-6432

 

Information Schedule-1

--------------------------------------------------------------------------------

Charles Senner

Prudential Capital Group

100 Mulberry St.

7 Gateway Center Four

Newark NJ 07102

 

Telephone:

 

(973) 802-6660

Facsimile:

 

(973) 624-6432

 

Authorized Officers for the Company

 

Dennis C. Kakures

President and CEO

5700 Las Positas Road

Livermore, California 94551

 

Telephone:

 

(925) 453-3103

Facsimile:

 

(925) 453-3333

 

Thomas J. Sauer

Vice President and CFO

5700 Las Positas Road

Livermore, California 94551

 

Telephone:

  (925) 453-3105

Facsimile:

  (925) 453-3333

 

Information Schedule-2

--------------------------------------------------------------------------------

EXHIBIT A-1

 

[FORM OF SERIES A NOTE]

 

MCGRATH RENTCORP

 

5.08% SERIES A SENIOR NOTE DUE JUNE 2, 2011

 

No. RA-[    ]

   [Date]

$[            ]

   PPN: 580589 A@ 8

 

FOR VALUE RECEIVED, the undersigned, MCGRATH RENTCORP (the “Company”), a
corporation organized and existing under the laws of the State of California,
hereby promises to pay to [                    ], or registered assigns, the
principal sum of [                    ] DOLLARS ($[            ]) on June 2,
2011, with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 5.08% per annum from
the date hereof, payable semi-annually on the 2nd day of each June and December,
commencing with the June 2 or December 2 next succeeding the date hereof, until
the principal hereof shall have become due and payable, and (b) on any overdue
payment (including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Yield-Maintenance Amount (as defined in
the Agreement (as defined below)), payable semi-annually as aforesaid (or, at
the option of the registered holder hereof, on demand), at a rate per annum from
time to time equal to the greater of (i) 7.08% or (ii) 2.0% over the rate of
interest publicly announced by The Bank of New York from time to time in New
York City as its prime rate.

 

Except as otherwise provided in paragraph 11A of the Agreement, payments of
principal of, interest on and any Yield-Maintenance Amount payable with respect
to this Note are to be made at the main office of The Bank of New York in New
York City or at such other place as the holder hereof shall designate to the
Company in writing, in lawful money of the United States of America.

 

This Note is one of the Series A Notes (herein called the “Notes”) issued
pursuant to a Note Purchase and Private Shelf Agreement, dated as of June 2,
2004 (as amended, supplemented, restated or otherwise modified from time to
time, the “Agreement”), between the Company, on the one hand, and the other
Persons named as parties thereto, on the other, and is entitled to the benefits
thereof.

 

This Note is a registered Note and, as provided in and subject to the terms of
the Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder’s attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.

 

Exhibit A-1-1

--------------------------------------------------------------------------------

The Company agrees to make required prepayments of principal on the dates and in
the amounts specified in the Agreement. This Note is also subject to optional
prepayment, in whole or from time to time in part, on the terms specified in the
Agreement.

 

In case an Event of Default, as defined in the Agreement, shall occur and be
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner and with the effect provided in the Agreement.

 

This Note shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the internal laws of the State of New York
without giving effect to principles of conflicts of laws.

 

MCGRATH RENTCORP

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

 

Exhibit A-1-2

--------------------------------------------------------------------------------

EXHIBIT A-2

 

[FORM OF PRIVATE SHELF NOTE]

 

MCGRATH RENTCORP

 

SENIOR NOTE

 

No. R-[    ]

 

Original Principal Amount:

Original Issue Date:

Interest Rate:

Interest Payment Dates:

Final Maturity Date:

Principal Prepayment Dates and Amounts:

 

FOR VALUE RECEIVED, the undersigned, MCGRATH RENTCORP (the “Company”), a
corporation organized and existing under the laws of the State of California,
hereby promises to pay to [                    ], or registered assigns, the
principal sum of [                    ] DOLLARS ($[            ]) [on the Final
Maturity Date specified above] [, payable on the Principal Prepayment Dates and
in the amounts specified above, and on the Final Maturity Date specified above
in an amount equal to the unpaid balance of the principal hereof,] with interest
(computed on the basis of a 360-day year, 30-day month) (a) on the unpaid
balance thereof at the Interest Rate per annum specified above, payable on each
Interest Payment Date specified above and on the Final Maturity Date specified
above, commencing with the Interest Payment Date next succeeding the date
hereof, until the principal hereof shall have become due and payable, and (b) on
any overdue payment (including any overdue prepayment) of principal, any overdue
payment of interest, and any overdue payment of any Yield-Maintenance Amount,
payable on each Interest Payment Date as aforesaid (or, at the option of the
registered holder hereof, on demand) at a rate per annum from time to time equal
to the greater of (i) [**]% or (ii) 2% over the rate of interest publicly
announced by The Bank of New York from time to time in New York City as its
prime rate.

 

Payments of principal of, interest on and any Yield-Maintenance Amount payable
with respect to this Note are to be made at the main office of The Bank of New
York in New York City or at such other place as the holder hereof shall
designate to the Company in writing, in lawful money of the United States of
America.

 

This Note is one of the Shelf Notes (herein called the “Notes”) issued pursuant
to a Note Purchase and Private Shelf Agreement, dated as of June 2, 2004 (the
“Agreement”), between the Company, on the one hand, and the other Persons named
as parties thereto, on the other, and is entitled to the benefits thereof. As
provided in the Agreement, this Note is subject to optional prepayment, in whole
or from time to time in part, on the terms specified in the Agreement.
Capitalized terms used and not otherwise defined herein shall have the meanings
provided in the Agreement.

 

Exhibit A-2-1

--------------------------------------------------------------------------------

This Note is a registered Note and, as provided in and subject to the terms of
the Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder’s attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.

 

In case an Event of Default, as defined in the Agreement, shall occur and be
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner and with the effect provided in the Agreement.

 

This Note shall be construed and enforced in accordance with, and the rights of
the parties shall be governed by, the internal laws of the State of New York
without giving effect to principles of conflicts of laws.

 

MCGRATH RENTCORP

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

   

--------------------------------------------------------------------------------

**   [2% over the stated coupon]

 

Exhibit A-2-2

--------------------------------------------------------------------------------

EXHIBIT B

 

SERIES A NOTES FUNDING INSTRUCTION LETTER

 

Exhibit B-1

--------------------------------------------------------------------------------

EXHIBIT C

 

[FORM OF REQUEST FOR PURCHASE]

 

MCGRATH RENTCORP

 

Reference is made to the Note Purchase and Private Shelf Agreement (the
“Agreement”), dated as of June 2, 2004, between McGrath RentCorp (the “Company”)
and the other Persons named therein as parties thereto. All terms herein that
are defined in the Agreement have the respective meanings specified in the
Agreement. Pursuant to paragraph 2B(3) of the Agreement, the Company hereby
makes the following Request for Purchase:

 

Aggregate principal amount of the Notes covered hereby (the “Notes”) $
                    

 

Individual specifications of the Notes:

 

Principal Amount

--------------------------------------------------------------------------------

 

Final Maturity Date

--------------------------------------------------------------------------------

 

Principal Prepayment

Dates and Amounts

--------------------------------------------------------------------------------

 

Interest Payment

Period

--------------------------------------------------------------------------------

*   **   ***   semi-annually

 

Use of proceeds of the Notes:

 

Proposed day for the closing of the purchase and sale of the Notes:

 

The purchase price of the Notes is to be transferred to:

 

Name, Address and ABA

Routing Number of Bank

--------------------------------------------------------------------------------

 

Number of Account

--------------------------------------------------------------------------------

 

Name & Telephone No. of Bank Officer

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

       

--------------------------------------------------------------------------------

       

--------------------------------------------------------------------------------

 

The Company certifies (a) that the representations and warranties contained in
paragraph

--------------------------------------------------------------------------------

*   Minimum of $5,000,000

**   Not more than ten years.

***   Average life of not more than seven years.

 

Exhibit C-1

--------------------------------------------------------------------------------

8 of the Agreement are true on and as of the date of this Request for Purchase
and (b) that there exists on the date of this Request for Purchase no Event of
Default or Default (both before and after giving effect to the issuance and
purchase of the Notes contemplated hereby).

 

Dated:                          ,             

 

MCGRATH RENTCORP

By:

 

 

--------------------------------------------------------------------------------

Name:

        Authorized Officer

 

Exhibit C-2

--------------------------------------------------------------------------------

EXHIBIT D

 

[FORM OF CONFIRMATION OF ACCEPTANCE]

 

MCGRATH RENTCORP

 

Reference is made to the Note Purchase and Private Shelf Agreement (the
“Agreement”), dated as of June 2, 2004, between McGrath RentCorp (the “Company”)
and the other Persons named therein as parties thereto. All terms used herein
that are defined in the Agreement have the respective meanings specified in the
Agreement.

 

PIM or the Prudential Affiliate which is named below as a Purchaser of Notes
hereby confirms the representations as to such Notes set forth in paragraph 9 of
the Agreement, and agrees to be bound by the provisions of paragraphs 2B(5) and
2B(7) of the Agreement.

 

Pursuant to paragraph 2B(5) of the Agreement, an Acceptance with respect to the
following Accepted Shelf Notes is hereby confirmed:

 

I.   Accepted Shelf Notes: Aggregate principal amount $                    .

 

  (A)   (a)    Name of Purchaser:

 

(b)    Principal amount:

 

(c)    Final maturity date:

 

(d)    Principal prepayment dates and amounts:

 

(e)    Interest rate:

 

(f)    Interest payment period: semi-annually

 

(g)    Payment and notice instructions: As set forth on attached Purchaser
Schedule.

 

  (B)   (a)    Name of Purchaser:

 

(b)    Principal amount:

 

(c)    Final maturity date:

 

(d)    Principal prepayment dates and amounts:

 

(e)    Interest rate:

 

(f)    Interest payment period: semi-annually

 

(g)    Payment and notice instructions: As set forth on attached Purchaser
Schedule.

 

[(C), (D) . . . same information as above.]

 

II.   Closing Day:                          ,             

 

Dated:                          ,             

 

Exhibit D-1

--------------------------------------------------------------------------------

MCGRATH RENTCORP

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

    PRUDENTIAL INVESTMENT MANAGEMENT, INC.

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

 

Vice President

[PRUDENTIAL AFFILIATE]

By:

 

 

--------------------------------------------------------------------------------

Name:

   

Title:

 

Vice President

 

Exhibit D-2

--------------------------------------------------------------------------------

EXHIBIT E

 

[FORM OF MULTIPARTY GUARANTY]

 

Exhibit E-1

--------------------------------------------------------------------------------

EXHIBIT F

 

[FORM OF INDEMNITY AND CONTRIBUTION AGREEMENT]

 

Exhibit F-1

--------------------------------------------------------------------------------

EXHIBIT G-1

 

[FORM OF SERIES A LEGAL OPINION]

 

Exhibit G-1-1

--------------------------------------------------------------------------------

EXHIBIT G-2

 

[FORM OF SHELF OPINION]

 

Exhibit G-2-1