EXHIBIT 4.1
[LETTERHEAD]
July 24, 1997
(415) 765-2614
Ms. Delight Saxton
Chief Financial Officer and
Vice President of Administration
McGrath RentCorp
2500 Grant Avenue
San Lorenzo, CA 94580
Re: $3,000,000.00 Committed Credit Facility
Dear Ms. Saxton:
Union Bank of California, N.A. ("Bank") is pleased to offer McGrath RentCorp,
a California corporation ("Borrower") a committed credit facility
("Facility") under which the Bank will make advances to the Borrower from
time to time up to and including June 30, 1998, not to exceed at any time the
maximum principal amount of Three Million Dollars ($3,000,000), to be
governed by the terms of the enclosed Credit Line Note ("Credit Line Note")
in favor of Bank, and subject to the conditions and agreements set forth
below.
1. This Facility is made available only in connection with Borrower's use of
the Bank's sweep service for management of its checking account balances
("Sweep Service"). Therefore, this Facility shall commence on the date
("Effective Date") Borrower becomes a Sweep Service customer and this
Facility shall terminate, if not earlier terminated, on the date Borrower
ceases to continue as a Sweep Service customer. Upon such termination Bank
shall have no further obligation to fund advances under this Facility, and
all amounts owing under the Credit Line Note shall become immediately due and
payable.
2. As provided in the Credit Line Note, the occurrence of an Event of
Default under the Multibank Agreement shall be a default under this Facility.
The term "Multibank Agreement" as used herein means that certain Credit
Agreement dated as of July 10, 1997, by and among Borrower, Bank, Fleet Bank,
N.A. and Bank of America, National Trust & Savings Association, and shall
include any amendments thereto as are consented to by Bank as set forth
herein. Each capitalized term not otherwise defined herein shall have the
meaning set forth in the Multibank Agreement.
3. Borrower shall comply with, and repeats as if fully set forth herein as
of the date hereof, all of the representations, covenants and obligations of
Borrower set forth under Articles 6, 7, 8, and 11 (and including any
definitions and related provisions) of the Multibank Agreement. In the event
the Multibank Agreement terminates or expires prior to the termination or
expiration of this Facility the foregoing representations, covenants and
obligations of Borrower shall nevertheless survive as between Borrower and
Bank with respect to this Facility and shall continue in effect until this
Facility terminates or expires. No amendment or waiver of any provision of
the Multibank Agreement after the date hereof shall be effective with respect
to this Facility unless the Bank consents thereto in writing.
4. Borrower acknowledges that any amount outstanding under the Credit Line
Note is included within the definition of "Debt" and "Outside Debt" under
the Agreement.
5. Borrower shall pay to Bank a non-refundable commitment fee for this
Facility for the period of time during which this Facility is available. Such
fee shall be payable in arrears in quarterly installments on the last day of
each March, June, September, and December, and on the last day this Facility
is
Ms. Delight Saxton
July 24, 1997
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available, to be computed at the rate per annum equal to 0.125% on the
average unused amount of the Facility during such period.
6. This Facility letter will be governed by the laws of the State of
California.
Enclosed is the original Credit Line Note and a copy of the this Facility
letter together with an Authorization to Pay Proceeds of Note and Loan
Disbursement Instructions, and any other contract, instrument or document Bank
requires to be executed and delivered in connection with this Facility (each
a "Loan Document"). The Borrower's executing the Loan Documents and returning
them to Bank together with an appropriate corporate resolution and incumbency
certificate acceptable to Bank constitutes its agreement to the terms and
conditions of this Facility.
BORROWER AND BANK HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS FACILITY LETTER, THE
CREDIT LINE NOTE OR ANY OTHER LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND
ANY SUCH CLAIM, DEMAND ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY. BORROWER OR BANK MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THIS CONSENT OF
BORROWER AND BANK TO WAIVE THEIR RIGHT TO TRIAL BY JURY.
This offer expires on August 8, 1997, unless the executed Loan Documents and
the corporate resolution and incumbency certificate are returned to the Bank
by then. If the Effective Date has not occurred by October 30, 1997, this
Facility letter and the Credit Line Note shall terminate and be of no further
force and effect on such date.
We look forward to serving you.
Yours truly,
Union Bank of California, N. A.
By: /s/ Robert John Vernagallo
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Robert John Vernagallo,
Vice President
ACCEPTED AND AGREED:
MCGRATH RENTCORP, a
California Corporation
By: /s/ Delight Saxton
------------------------------
Title: VICE PRESIDENT OF ADMIN
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By: /s/ Thomas J. Sauer
------------------------------
Title: VICE PRESIDENT
------------------------------
Date: July 29, 1997
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RV/da/11095
CREDIT LINE NOTE
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Borrower Name
McGrath RentCorp, a California corporation
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Borrower Address Office Loan Number
2500 Grant Avenue ------------ --------------
San Lorenzo, California 94580 Maturity Date Amount
June 30, 1998 $3,000,000
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- ---------------------------------------------------------------------------
Date July 24, 1997 $3,000,000
FOR VALUE RECEIVED, on June 30, 1998, the undersigned ("Debtor") promises to
pay to the order of UNION BANK OF CALIFORNIA, N.A. ("Bank") as indicated
below, the principal sum of THREE MILLION DOLLARS ($3,000,000), or so much
thereof as is disbursed, together with interest on the balance of such
principal sum from time to time outstanding, at a per annum rate equal to the
Reference Rate, such per annum rate to change as and when the Reference Rate
shall change. Debtor may borrow, repay and reborrow under this note.
As used herein, the term "Reference Rate" shall mean the rate announced by
Bank from time to time at its corporate headquarters as its "Reference Rate."
The Reference Rate is an index rate determined by Bank from time to time as a
means of pricing certain extensions of credit and is neither directly tied to
any external rate of interest or index nor necessarily the lowest rate of
interest charged by Bank at any given time. All computations of interest
under this note shall be made on the basis of a year of 360 days, for actual
days elapsed.
1. PAYMENTS.
1.1 INTEREST PAYMENTS. Debtor shall pay interest on the last day of each
month commencing July, 1997. Should interest not be so paid, it shall become
a part of the principal and thereafter bear interest as herein provided.
1.2 PRINCIPAL PAYMENTS. All principal outstanding on this note is due
and payable on the earlier of June 30, 1998 or any accelerated maturity date.
Debtor shall pay all amounts due under this note in lawful money of the
United States at Bank's San Francisco Office or such other office as may be
designated by Bank from time to time.
2. INTEREST RATE FOLLOWING DEFAULT. In the event of default, at the option
of Bank, and, to the extent permitted by law, interest shall be payable on
the outstanding principal under this note at a per annum rate equal to two
percent (2%) in excess of the interest rate specified in the initial
paragraph of this note, calculated from the date of default until all amounts
payable under this note are paid in full.
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3. DEFAULT AND ACCELERATION OF TIME FOR PAYMENT. Default shall include, but
not be limited to, any of the following: (a) the failure of Debtor to make
any payment required under this note when due; (b) any breach
misrepresentation or other default by Debtor, any guarantor, co-maker
endorser, or any person or entity other than Debtor providing security for
this note (hereinafter individually and collectively referred to as the
"Obligor") under any security agreement, guaranty or other agreement between
Bank and any Obligor; (c) the insolvency of any Obligor or the failure of any
Obligor generally to pay such Obligor's debts as such debts become due; (d)
the commencement as to any Obligor of any voluntary or involuntary proceeding
under any laws relating to bankruptcy, insolvency, reorganization,
arrangement, debt adjustment or debtor relief; (e) the assignment by any
Obligor for the benefit of such Obligor's creditors; (f), the appointment, or
commencement of any proceedings for the appointment, of a receiver, trustee,
custodian or similar official for all or substantially all of any Obligor's
property; (g) the commencement of any proceeding for the dissolution or
liquidation of any Obligor; (h) the termination of existence or death of any
Obligor; (i) the failure of any Obligor to comply with any order, judgment,
injunction, decree, writ or demand of any court or other public authority;
(j) the filing or recording against any Obligor, or the property of any
Obligor of any notice of levy, notice to withhold, or other legal process for
taxes other than property taxes; (k) the default by any Obligor liable for
amounts owed hereunder on any obligation concerning the borrowing of money;
(i) the issuance against any Obligor or the property of any Obligor, of any
writ of attachment, execution or other; judicial lien; (m) the deterioration
of the financial condition of any Obligor which results in Bank deeming
itself, in good faith, insecure, (n) Debtor's failure to comply with any
provision of the Multibank Agreement (as defined in the facility letter
between Debtor and Bank executed in connection herewith), or (o) Debtor's
failure to comply with any provision of the facility letter between Debtor
and Bank executed in connection herewith. Upon the occurrence of any such
default, Bank, in its discretion, may cease to advance funds hereunder and
may declare all obligations under this note immediately due and payable;
however, upon the occurrence of an event of default under d, e, f, g, or n
all principal and interest shall automatically become immediately due and
payable.
4. ADDITIONAL AGREEMENTS OF DEBTOR. If any amounts owing under this note
are not paid when due, Debtor promises to pay all costs and expenses,
including reasonable attorney's fees, incurred by Bank in the collection or
enforcement of this note. Debtor and any endorsers of this note, for the
maximum period of time and the full extent permitted by law (a) waive
diligence, presentment, demand notice of nonpayment, protest, notice of
protest, and notice of every kind; (b) waive the right to assert the defense
of any statute of limitations to any debt or obligation hereunder; and (c)
consent to renewals and extensions of time for the payment of any amounts due
under this note. If this note is signed by more than one party, the term
'Debtor" includes each of the undersigned and any successors in interest
thereof; all of whose liability shall be joint and several. The receipt of
any check or other item of payment by Bank, at its option, shall not be
considered a payment on account until such check or
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other item of payment is honored when presented for payment at the drawee
bank. Bank may delay the credit of such payment based upon Bank's schedule of
funds availability, and interest under this note shall accrue until the
funds are deemed collected. In any action brought under or arising out of
this note, Debtor and any endorser of this note, including their successors
and assigns, hereby consents to the jurisdiction of any competent court
within the State of California, except as provided in any alternative dispute
resolution agreement executed between Debtor and Bank, and consents to
service of process by any means authorized by said state law. The term "Bank"
includes, without limitation, any holder of this note. This note shall be
construed in accordance with and governed by the laws of the State of
California. This note is subject to the terms of the facility letter between
Debtor and Bank executed in connection herewith but in the event of any
conflict between the terms of such facility letter and this note the terms of
this note shall prevail.
MCGRATH RENTCORP, a
California corporation
By: /s/ Delight Saxton
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Title: Vice President of Admin.
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