Exhibit 10.1
FORBEARANCE AGREEMENT
This FORBEARANCE AGREEMENT (“Agreement”), dated as of October 8, 2009, is
entered into by and among GREAT AMERICAN GROUP ENERGY EQUIPMENT, LLC, a
California limited liability company (“Borrower”), the Lenders party hereto and
GARRISON LOAN AGENCY SERVICES LLC (“GLAS”), as Administrative Agent for the
Lenders (“Administrative Agent”). Unless otherwise defined above or elsewhere in
this Agreement, capitalized terms used herein shall have the meanings ascribed
to them in the Credit Agreement (as hereinafter defined).
RECITALS:
WHEREAS, the Borrower, the Guarantor party thereto, the Lenders party thereto
and the Administrative Agent have entered into that certain Credit Agreement,
dated as of May 29, 2008 (as has been amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”);
WHEREAS, on September 26, 2009 the Maturity Date occurred and Borrower and
Guarantor failed to repay the principal amount of all outstanding Loans, due and
unpaid interest and all other Obligations under the Credit Agreement and the
other Loan Documents, notwithstanding that such Obligations have become due and
payable in full, and such Obligations remain due and payable and unpaid (the
“Payment Defaults”);
WHEREAS, the Non-Payment Defaults (as hereinafter defined) have occurred and are
continuing under the Credit Agreement and Security Agreement none of which has
been cured or waived;
WHEREAS, as a result of the Specified Defaults (as hereinafter defined), the
Collateral Agent has the rights specified under Section 4.01 of the Security
Agreement to, among other rights, take possession of the Article 9 Collateral
and to exercise any or all other rights of a secured party under the Uniform
Commercial Code;
WHEREAS, in an effort to repay the Obligations and to maximize the value of the
assets, Borrower and Guarantor have determined to effectuate a sale of
Borrower’s assets pursuant to an auction;
WHEREAS, the Borrower has requested that Administrative Agent and the Lenders
forbear from the exercise of remedies available to them as a result of the
Specified Defaults; and
WHEREAS, in reliance on Borrower’s determination to dispose of its assets, the
Administrative Agent and the Lenders are willing to forbear from exercising
their rights and remedies under the Loan Documents subject to the terms and
conditions hereinafter set forth, provided that Borrower and the Guarantor
comply with the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements contained in the
Credit Agreement and the other Loan Documents and herein, and for other good and
valuable

 

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consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

SECTION 1.   Definitions.

(a) The “Effective Date” of this Agreement shall be 12:01 a.m. New York City
time on September 27, 2009.
(b) “Forbearance Period” shall mean the period beginning on the Effective Date
of this Agreement and ending at 12:01 a.m. New York City time on the earlier to
occur of (i) the occurrence of any Forbearance Default and (ii) November 17,
2009.
(c) “Forbearance Default” shall mean any of the following: (i) the occurrence of
any Event of Default other than the Specified Defaults; (ii) the failure of
Borrower or Guarantor timely to comply with any term, condition, or covenant set
forth in this Agreement; (iii) the failure of any representation or warranty
made by Borrower or Guarantor under or in connection with this Agreement to be
true and complete in all material respects as of the date when made or deemed
made; (iv) the filing of any petition (voluntary or involuntary) under the
insolvency or bankruptcy laws of the United States or any state thereof, or of
any foreign jurisdiction, with respect to Borrower, Guarantor, any of their
Affiliates, or any of their Subsidiaries; or (v) any postponement of the Auction
Date (as hereinafter defined) or modification of any term or provision of the
Auction Services Agreement (as hereinafter defined) including, without
limitation, any change to the Acceptable Reserve Pricing (as hereinafter
defined).
(d) “Non Payment Defaults” shall mean, collectively, (i) the Defaults and Events
of Defaults asserted by the Administrative Agent and expressly referred to in
that certain letter dated as of December 10, 2008 from the Administrative Agent
to Borrower and (ii) the Event of Default arising directly as a result of the
existence of the Tax Lien.
(e) “Specified Defaults” means the Payment Defaults and the Non Payment
Defaults.
(f) “Tax Lien” shall mean the Lien or purported Lien asserted by (i) the
treasurers of each of Blaine, Logan and Kingfisher Counties, Oklahoma, in the
aggregate amount of $220,000, for unpaid and overdue property taxes for the 2007
and 2008 tax years and (ii) the Klein Independent School District, Texas, in the
aggregate amount of $29,000 for the 2007 tax year.

SECTION 2.   Confirmation by Borrower of Obligations and Specified Defaults
Under the Credit Agreement.

Each of the Borrower and Guarantor represents, warrants, acknowledges and agrees
that:
(a) As of the Maturity Date, the aggregate principal balance of the outstanding
Obligations under the Credit Agreement is not less than $10,485,500.62;

 

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(b) The amount specified in clause (a) does not include interest (the amount of
that is due and payable as of the Maturity Date is not less than $1,966,097.99),
fees, expenses and other amounts which are chargeable or otherwise reimbursable
under the Credit Agreement and the other Loan Documents;
(c) As of the date hereof, the applicable interest rate under the Credit
Agreement is 20%;
(d) Each of the Specified Defaults constitutes an Event of Default that has
occurred and is continuing as of the date of this Agreement;
(e) None of the Specified Defaults has been cured as of the Effective Date;
(f) Except for the Specified Defaults, no other Defaults or Events of Default
have occurred and are continuing as of the date hereof, or are expected to occur
during the Forbearance Period, as the case may be;
(g) Prior to, and from and after the Effective Date, the Specified Defaults:
(i) except to the extent expressly provided in Section 7 of this Agreement,
relieves the Lenders from any obligation to extend any Loan or provide other
financial accommodations under the Credit Agreement or other Loan Documents
(including consenting to Borrower’s or Guarantor’s use of cash collateral); and
(ii) permits the Administrative Agent, Collateral Agent, Lenders and other
Secured Parties, as the case may be, to, among other things, (A) make other
extensions of credit under any or all of the Credit Agreement and the other Loan
Documents, (B) accelerate all or any portion of the Obligations, (C) commence
any legal or other action to collect any or all of the Obligations from Borrower
and/or any Collateral, (D) foreclose or otherwise realize on any or all of the
Collateral, and/or appropriate, set-off and apply to the payment of any or all
of the Obligations, any or all of the Collateral, and/or (E) take any other
enforcement action or otherwise exercise any or all rights and remedies provided
for by any or all of the Credit Agreement, the other Loan Documents or
applicable law. For the avoidance of doubt, each of Borrower and Guarantor
represents, warrants, acknowledges and agrees that as a result of the Specified
Defaults, the Obligations have become, and remain, immediately due and payable
in their entirety.

SECTION 3.   No Waiver.

Except as expressly set forth in this Agreement, no Lender or other Secured
Party has waived or is by this Agreement waiving, and no Lender or other Secured
Party has any intention of waiving, any other provisions of the Loan Documents,
any Default or Event of Default which may be continuing on the date hereof or
any Event of Default which may occur after the date hereof (whether the same or
similar to the Specified Defaults or otherwise).

SECTION 4.   Forbearance; Forbearance Default Rights and Remedies.

(a) As of the Effective Date, each of the Lenders and the Administrative Agent
agrees that until the expiration or termination of the Forbearance Period, it
will forbear from exercising its default-related rights and remedies against
Borrower or Guarantor arising solely with respect to the Specified Defaults;
provided, however, (i) the Obligations shall continue to bear interest as
specified herein, (ii) the Lenders shall have no obligation to make any further

 

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Loans or make other extensions of credit to Borrower or Guarantor,
(iii) Borrower and Guarantor shall comply with all limitations, restrictions or
prohibitions that would otherwise be effective or applicable under the Credit
Agreement or any of the other Loan Documents during the continuance of any Event
of Default, (iv) except as otherwise expressly set forth herein, nothing herein
shall restrict, impair or otherwise affect any Lender’s or other Secured Party’s
other rights and remedies under any agreements, including, without limitation,
any agreement containing subordination provisions in favor of any or all of the
Lenders or amend or modify any provision thereof, (v) nothing herein shall
restrict, impair or otherwise affect Administrative Agent’s right to file,
record, publish or deliver a notice of default or document of similar effect
under any state foreclosure law and (vi) nothing herein shall restrict, impair
or otherwise affect Administrative Agent’s and Lenders’ rights referred to
herein.
(b) Any Forbearance Default shall constitute an immediate Event of Default under
the Credit Agreement. No Forbearance Default shall be a Specified Default.
(c) Upon the occurrence of a Forbearance Default, the agreement of the Lenders
hereunder to forbear from exercising their respective default-related rights and
remedies shall immediately terminate without the requirement of any demand,
presentment, protest, or notice of any kind, all of which Borrower and Guarantor
each waives; provided, however, the Lenders agree to provide notice of any such
Forbearance Default to the Borrower, but the failure to provide such notice
shall not affect the occurrence or existence of any such Forbearance Default or
delay or modify any of the Administrative Agent’s and Lenders’ rights. Borrower
agrees that any or all of the Lenders and other Secured Parties may at any time
thereafter proceed to exercise any and all of their respective rights and
remedies under any or all of the Credit Agreement and any other Loan Document
and/or applicable law, including, without limitation, their respective rights
and remedies with respect to the Specified Defaults. Without limiting the
generality of the foregoing, upon the occurrence of a Forbearance Default, the
Lenders may, in their sole discretion and without the requirement of any demand,
presentment, protest, or notice of any kind, (i) suspend or terminate any
commitment to provide Loans or other extensions of credit under any or all of
the Credit Agreement and other Loan Documents, (ii) continue to charge interest
on any or all of the Obligations in accordance with the Credit Agreement,
(iii) commence any legal or other action to collect any or all of the
Obligations from Borrower, Guarantor and/or any Collateral, (iv) foreclose or
otherwise realize on any or all of the Collateral, and/or appropriate, setoff or
apply to the payment of any or all of the Obligations and any or all of the
Collateral, and (v) take any other enforcement action or otherwise exercise any
or all rights and remedies provided for by any or all of the Loan Documents
and/or applicable law, all of which rights and remedies are fully reserved by
the Lenders.
(d) Any agreement by the Lenders to extend the Forbearance Period, if any, must
be set forth in writing and signed by a duly authorized signatory of each of the
Administrative Agent, Borrower, Guarantor and the Lenders under the Credit
Agreement.
(e) Borrower and Guarantor each acknowledges that, although the Administrative
Agent has not denied Borrower’s request to discuss an extension of the
Forbearance Period after the auction referred to herein is conducted, neither
the Administrative Agent nor any of the Lenders have made any assurances
concerning any

 

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possibility of an extension of the Forbearance Period or the terms and
conditions of any such possible extension.
(f) The parties hereto agree that the running of all statutes of limitation or
doctrine of laches applicable to all claims or causes of action that any Lender
or other Secured Party may be entitled to take or bring in order to enforce its
rights and remedies against Borrower or Guarantor is, to the fullest extent
permitted by law, tolled and suspended during the Forbearance Period.
(g) Borrower and Guarantor each acknowledges and agrees that any Loan or other
financial accommodation which any Lender makes (or may be deemed to make) on or
after the Effective Date has been made by such party in reliance upon, and is
consideration for, among other things, the general releases and indemnities
contained in this Agreement and the other covenants, agreements, representations
and warranties of Borrower and Guarantor hereunder.

SECTION 5.   Supplemental Terms, Conditions and Covenants During the Forbearance
Period.

Borrower and Guarantor, in an effort to repay the Obligations, have determined
that it is in the best interests of them and their creditors to effectuate a
sale of the Borrower’s assets by way of an auction to be managed by an Auction
Services Company, and that each such determination is, in the opinion of each of
Borrower and Guarantor, commercially reasonable. Accordingly, each of Borrower
and Guarantor hereby covenants and agrees to comply with the following terms,
conditions and covenants during the Forbearance Period, in each case
notwithstanding any provision to the contrary set forth in this Agreement, the
Credit Agreement or any other Loan Document:
(a) Retention of Auction Services Company. As of the Effective Date, and
thereafter at all times during the Forbearance Period, Borrower shall have
engaged and retained, at its cost and expense, an auction services company
reasonably acceptable to the Administrative Agent (it being agreed that Great
American Group, LLC is acceptable to the Administrative Agent) (an “Auction
Services Company”), in connection with the sale of Borrower’s assets, to, among
other things, (a) organize, implement, manage and conduct an auction of the
Borrower’s assets, (b) oversee and control the liquidation, disposal and removal
of all assets sold at the auction, (c) implement appropriate advertising to
effectively sell the assets at the auction, (d) tag and catalogue the assets for
the auction and (e) provide such other related services deemed necessary or
prudent by the Borrower to effectively conduct the auction and maximize the
value of the assets subject to such sale. The Auction Services Company shall
undertake all services in a manner that is consistent in every material respect
with any auction for which such company is engaged by a Person other than its
Affiliate.
(b) Auction Process. Deliver to the Administrative Agent on or before: (A) (i)
October 8, 2009, marketing materials relating to Borrower’s proposed auction,
and such materials shall have been approved by and acceptable to the Auction
Services Company and the

 

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Administrative Agent prior to distribution to potential purchasers, and such
materials shall specify the Auction Date as the date of the auction (it being
agreed by the Administrative Agent that such materials have been delivered and
approved by and acceptable to the Administrative Agent, and Borrower and
Guarantor hereby certify that such materials also have been delivered to and
approved by the Auction Services Company and further certify that such materials
are commercially reasonable) and (ii) October 12, 2009, evidence acceptable to
the Administrative Agent that the materials referred to in clause (i) have been
distributed to potential purchasers; and (B) October 12, 2009, the reserve
prices established under the Auction Services Agreement with respect to the
Borrower’s assets to be subject to auction (with such prices to be satisfactory
to the Administrative Agent) (the “Acceptable Reserve Pricing”) and cause such
Acceptable Reserve Pricing to have been incorporated into the Auction Services
Agreement. Together with each deliverable referred to in this clause (b),
Borrower also shall deliver a writing signed by Borrower and Guarantor
certifying that, in their opinions, the materials, scope of distribution and
reserve prices are commercially reasonable.
(c) Auction. On or before November 3, 2009 (the “Auction Date”), the Borrower
shall cause the Auction Services Company to conduct an auction (it being agreed
by the Borrower and Guarantor that such date is a commercially reasonable date)
substantially in accordance with the terms and provisions of the Auction
Services Agreement, and Borrower shall permit a representative of the
Administrative Agent to be present at such auction. In compliance with the
Credit Agreement and for the avoidance of doubt, any request to release a Lien
on any asset shall be subject to approval or disapproval by the Administrative
Agent. All proceeds received as a result of the auction shall be utilized by the
Borrower to repay the Obligations (except to the extent set forth in Section 7
of this Agreement) and, accordingly, shall be paid by the buyer(s) directly to
the Collection Account (or such other account as designated in writing by the
Administrative Agent).
(d) Other. Promptly following any such request, Borrower shall provide all other
available financial and operational information of Borrower that is reasonably
requested by the Administrative Agent.
(e) General Cooperation from Borrower. Borrower shall, and shall cause its
officers, other members of senior management and advisors (including, without
limitation, the Auction Services Company) to, cooperate fully with
Administrative Agent, Collateral Agent and/or the Lenders and any of its or
their respective advisors in furnishing information as and when reasonably
requested by any of them regarding the matters described in this Agreement, the
Collateral or Borrower’s financial affairs, finances, financial condition,
business and operations. Borrower authorizes Administrative Agent, Collateral
Agent and/or the Lenders and any of its or their respective advisors to meet
and/or have discussions with any of their officers, other members of senior
management and advisors (including, without limitation, the Auction Services
Company) from time to time as reasonably requested by Administrative Agent,
Collateral Agent and/or the Lenders or any of its or their respective advisors
to discuss any matters regarding the matters described in this Agreement, the
Collateral or Borrower’s financial affairs, finances, financial condition,
business and operations, and shall direct and authorize all such persons and
entities to fully disclose to Administrative Agent, Collateral Agent, any of the
Lenders and any of its or their respective advisors all information reasonably
requested by any of them regarding the foregoing.
(f) Prohibition Against Voluntary Repayment of Other Indebtedness. Borrower
agrees that it shall not voluntarily prepay, redeem or repurchase any principal
of, or

 

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interest or other amounts owing with respect to, any Indebtedness other than the
Obligations during the Forbearance Period.

SECTION 6.   General Release; Indemnity.

(a) In consideration of, among other things, Administrative Agent’s and Lenders’
execution and delivery of this Agreement, each of Borrower and Guarantor, on
behalf of itself and its agents, representatives, officers, directors, advisors,
employees, subsidiaries, affiliates, successors and assigns (collectively,
“Releasors”), hereby forever agrees and covenants not to sue or prosecute
against any Releasee (as hereinafter defined) and hereby forever waives,
releases and discharges, to the fullest extent permitted by law, each Releasee
from any and all claims (including, without limitation, crossclaims,
counterclaims, rights of set-off and recoupment), actions, causes of action,
suits, debts, accounts, interests, liens, promises, warranties, damages and
consequential damages, demands, agreements, bonds, bills, specialties,
covenants, controversies, variances, trespasses, judgments, executions, costs,
expenses or claims whatsoever (collectively, the “Claims”), that such Releasor
now has or hereafter may have, of whatsoever nature and kind, whether known or
unknown, whether now existing or hereafter arising, whether arising at law or in
equity, against the Collateral Agent, Administrative Agent and any or all of the
Lenders and/or any other Secured Party in any capacity and their respective
affiliates, subsidiaries, shareholders and “controlling persons” (within the
meaning of the federal securities laws), and their respective successors and
assigns and each and all of the officers, directors, employees, agents,
attorneys and other representatives of each of the foregoing (collectively, the
“Releasees”), based in whole or in part on facts, whether or not now known,
existing on or before the date hereof, that relate to, arise out of or otherwise
are in connection with: (i) any or all of the Loan Documents and this Agreement,
or transactions contemplated thereby or hereby, or any actions or omissions in
connection therewith or herewith, or (ii) any aspect of the dealings or
relationships between or among Borrower and Guarantor, on the one hand, and any
or all of the Lenders and/or any other Secured Party, on the other hand,
relating to any or all of the documents, transactions, actions or omissions
referenced in clause (i) hereof. In entering into this Agreement, Borrower and
Guarantor consulted with, and has been represented by, legal counsel and
expressly disclaims any reliance on any representations, acts or omissions by
any of the Releasees and hereby agrees and acknowledges that the validity and
effectiveness of the releases set forth above do not depend in any way on any
such representations, acts and/or omissions or the accuracy, completeness or
validity hereof. The provisions of this Section shall survive the termination of
this Agreement, the Credit Agreement, other Loan Documents and payment in full
of the Obligations.
(b) Borrower hereby agrees that it shall be obligated to indemnify and hold the
Releasees harmless with respect to any and all liabilities, obligations, losses,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever incurred by the Releasees, or any of them, whether
direct, indirect or consequential, as a result of or arising from or relating to
any proceeding by, or on behalf of any person, including, without limitation,
the respective officers, directors, agents, trustees, creditors, partners or
shareholders of Borrower, or any of their respective subsidiaries, whether
threatened or initiated, in respect of any claim for legal or equitable remedy
under any statute, regulation or common law principle arising from or in
connection with the negotiation, preparation, execution, delivery, performance,
administration and enforcement of the Credit Agreement,

 

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the other Loan Documents, this Agreement or any other document executed and/or
delivered in connection herewith; provided, that Borrower shall have no
obligation to indemnify or hold harmless any Releasee hereunder with respect to
liabilities to the extent they result from the gross negligence or willful
misconduct of that Releasee as finally determined by a court of competent
jurisdiction. To the extent that the undertakings to defend, indemnify, pay and
hold harmless set forth in this Section 6 may be unenforceable in whole or in
part because they are violative of any law or public policy, Borrower agrees to
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified liabilities
hereunder incurred by any of them. The foregoing indemnity shall survive the
termination of this Agreement, the Credit Agreement, the other Loan Documents
and the payment in full of the Obligations.
(c) Each of Borrower and Guarantor, on behalf of itself and its successors,
assigns, and other legal representatives, hereby absolutely, unconditionally and
irrevocably, covenants and agrees with and in favor of each Releasee that it
will not sue (at law, in equity, in any regulatory proceeding or otherwise) any
Releasee on the basis of any Claim released, remised and discharged by Borrower
or any Guarantor pursuant to Section 6 hereof. If Borrower, Guarantor or any of
its successors, assigns or other legal representatives violates the foregoing
covenant, Borrower and Guarantor, each for itself and its successors, assigns
and legal representatives, agrees to pay, in addition to such other damages as
any Releasee may sustain as a result of such violation, all attorneys’ fees and
costs incurred by any Releasee as a result of such violation.

SECTION 7.   Auction Services Company Expenses; Satisfaction of Tax Lien.

Notwithstanding the occurrence and continuation of the Specified Defaults, the
Administrative Agent and the Lenders agree that Borrower may, upon request,
(a) reimburse the Auction Services Company up to $250,000 of “Auction Expenses”
(as such term is defined in the Auction Services Agreement) from the proceeds
initially paid to the Collection Account and received as a result of the auction
and (b) pay up to the Tax Lien amounts only to the extent due and payable on the
asset that has been sold as a result of the auction, and only to the extent
actually necessary to convey to the buyer title to the applicable asset free of
such Tax Lien, with any such payment solely to be from proceeds scheduled to be
received (provided, that such payment shall be permitted only to the extent that
the sale of such asset is subject to a closing pursuant to which all of the
proceeds otherwise will be remitted to the Collection Account in accordance with
the terms hereof and such payment shall be made directly from buyer to the
applicable taxing authority or to the collection account for further application
to the applicable taxing authority, or as may be otherwise agreed by the
Administrative Agent). For the avoidance of doubt, any amount paid to satisfy
the applicable Tax Lien shall not reduce the amount of the Obligations otherwise
owed to the Administrative Agent and the Lenders.

SECTION 8.   Representations and Warranties of Borrower and Guarantor.

To induce Administrative Agent, Collateral Agent and Lenders to execute and
deliver this Agreement, each of Borrower and Guarantor represents and warrants
that:
(a) The execution, delivery and performance by each of Borrower and Guarantor of
this Agreement and all documents and instruments delivered in connection

 

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herewith and the Loan Agreement and all other Loan Documents have been duly
authorized by Borrower’s and Guarantor’s respective board of directors (or
similar governing body), and this Agreement and all documents and instruments
delivered in connection herewith and the Credit Agreement and all other Loan
Documents are legal, valid and binding obligations of Borrower and Guarantor
enforceable against such parties in accordance with their respective terms,
except as may be limited by (i) the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and (ii) general principles of equity (regardless of whether
such enforcement is sought in a proceeding in equity or at law);
(b) Except as a result of the Specified Defaults, each of the representations
and warranties contained in the Credit Agreement and the other Loan Documents is
true and correct in all material respects on and as of the date hereof to the
same extent as though made on the date hereof, except to the extent that such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties shall have been true and correct in all
material respects on and as of such earlier date, and each of the agreements and
covenants in the Credit Agreement and the other Loan Documents is hereby
reaffirmed with the same force and effect as if each were separately stated
herein and made as of the date hereof;
(c) Neither the execution, delivery and performance of this Agreement and all
documents and instruments delivered in connection herewith nor the consummation
of the transactions contemplated hereby or thereby does or shall contravene,
result in a breach of, or violate (i) any provision of Borrower’s or Guarantor’s
corporate charter, bylaws, operating agreement, or other governing documents,
(ii) any law or regulation, or any order or decree of any court or government
instrumentality, or (iii) any indenture, mortgage, deed of trust, lease,
agreement or other instrument to which Borrower or Guarantor is a party or by
which Borrower or Guarantor or any of their respective property is bound;
(d) As of the date hereof, except for the Specified Defaults, no Event of
Default has occurred or is continuing under this Agreement, the Credit Agreement
or any other Loan Document; and
(e) The Lenders’ and the other Secured Parties’ security interests in the
Collateral continue to be valid, binding and enforceable first-priority
perfected security interests which secure the Obligations subject only to the
Permitted Liens and, potentially, the Tax Lien.

SECTION 9.   Ratification of Liability.

Borrower, as debtor, grantor, pledgor, assignor, or in other similar capacities
in which such parties grant liens or security interests in their properties or
otherwise act as accommodation parties, as the case may be, under the Loan
Documents, hereby ratifies and reaffirms all of its payment and performance
obligations and obligations to indemnify, contingent or otherwise, under each of
such Loan Documents to which such party is a party, and such party hereby
ratifies and reaffirms its grant of liens on or security interests in its
properties pursuant to such Loan Documents to which it is a party as security
for the Obligations under or with respect to the Credit Agreement and confirms
and agrees that such liens and security

 

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interests hereafter secure all of the Obligations, including, without
limitation, all additional Obligations hereafter arising or incurred pursuant to
or in connection with this Agreement, the Credit Agreement or any other Loan
Document. Borrower further agrees and reaffirms that the Loan Documents to which
it is a party now apply to all Obligations as defined in the Credit Agreement,
as modified hereby (including, without limitation, all additional Obligations
hereafter arising or incurred pursuant to or in connection with this Agreement,
the Credit Agreement or any other Loan Document). Such party (i) further
acknowledges receipt of a copy of this Agreement and all other agreements,
documents, and instruments executed and/or delivered in connection herewith,
(ii) consents to the terms and conditions of same, and (iii) agrees and
acknowledges that each of the Loan Documents, as modified hereby, remains in
full force and effect and is hereby ratified and confirmed. Except as expressly
provided herein, the execution of this Agreement shall not operate as a waiver
of any right, power or remedy of any Lender, nor constitute a waiver of any
provision of any of the Loan Documents nor constitute a novation of any of the
Obligations under the Credit Agreement or other Loan Documents.

SECTION 10.   Reference to and Effect Upon the Credit Agreement.

(a) Except as specifically amended hereby, all terms, conditions, covenants,
representations and warranties contained in the Credit Agreement and other Loan
Documents, and all rights of the Lenders and all of the Obligations, shall
remain in full force and effect. Each of Borrower and Guarantor hereby confirms
that the Credit Agreement and the other Loan Documents are in full force and
effect and that each of Borrower and Guarantor has no right of setoff,
recoupment or other offset or any defense, claim or counterclaim with respect to
any of the Obligations, the Credit Agreement or any other Loan Document.
(b) Except as expressly set forth herein, the execution, delivery and
effectiveness of this Agreement shall not directly or indirectly (i) continue to
defer any enforcement action after the occurrence of any other Default or Event
of Default (including, without limitation, any Forbearance Default),
(ii) constitute a consent or waiver of any past, present or future violations of
any provisions of the Credit Agreement or any other Loan Documents, (iii) amend,
modify or operate as a waiver of any provision of the Credit Agreement or any
other Loan Documents or any right, power or remedy of any Lender,
(iv) constitute a consent to any merger or other transaction or to any sale,
restructuring or refinancing transaction, or (v) constitute a course of dealing
or other basis for altering any Obligations or any other contract or instrument.
Except as expressly set forth herein, each Lender and each of the other Secured
Parties reserves all of its rights, powers, and remedies under the Credit
Agreement, the other Loan Documents and applicable law. All of the provisions of
the Credit Agreement and the other Loan Documents, including, without
limitation, the time of the essence provisions, are hereby reiterated.
(c) No Lender or other Secured Party has waived or is by this Agreement waiving,
and no Lender or other Secured Party has any intention of waiving (regardless of
any delay in exercising such rights and remedies), any Default or Event of
Default which may be continuing on the date hereof or any Event of Default which
may occur after the date hereof (whether the same or similar to the Specified
Defaults or otherwise), and no Lender or any other Secured Party has agreed to
forbear with respect to any of its rights or remedies concerning any Events of
Default (other than, during the Forbearance Period, the Specified

 

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Defaults solely to the extent expressly set forth herein), which may have
occurred or are continuing as of the date hereof, or which may occur after the
date hereof.
(d) Borrower agrees and acknowledges that the Lenders’ agreement to forbear from
exercising certain of their default-related rights and remedies with respect to
the Specified Defaults during the Forbearance Period does not in any manner
whatsoever limit any Lender’s or other Secured Party’s right to insist upon
strict compliance by Borrower and Guarantor with the Credit Agreement, this
Agreement or any other Loan Document during the Forbearance Period, except as
related to the Specified Defaults to the extent provided herein and otherwise as
expressly set forth herein.
(e) This Agreement shall not be deemed or construed to be a satisfaction,
reinstatement, novation or release of the Credit Agreement or any other Loan
Document.

SECTION 11.   Costs And Expenses.

In addition to (to the extent not otherwise provided in the Credit Agreement),
and not in lieu of, the terms of the Credit Agreement and other Loan Documents
relating to the reimbursement of fees and expenses, Borrower shall reimburse
Administrative Agent and the other Lenders, as the case may be, promptly
following demand therefor, for all fees, costs, charges and expenses, including
the fees, costs and expenses of counsel and other expenses, incurred in
connection with this Agreement and the other agreements and documents executed
and/or delivered in connection herewith. The Borrower agrees upon submission of
any invoice by counsel to the Administrative Agent, to wire the invoiced amount
to such counsel (in accordance with the wire instructions set forth in such
invoice), less the amount (if any) held by such counsel from the retainer paid
in accordance with Section 21(e) of this Agreement.

SECTION 12.   Governing Law; Consent to Jurisdiction and Venue.

THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST BORROWER AND/OR GUARANTOR ARISING OUT OF OR
RELATING HERETO OR ANY OTHER LOAN DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE,
COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH OF
BORROWER AND GUARANTOR, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS; (B) WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO BORROWER OR GUARANTOR AT ITS ADDRESS PROVIDED IN THE CREDIT
AGREEMENT; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT
TO CONFER PERSONAL JURISDICTION OVER BORROWER AND/OR GUARANTOR IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES

 

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EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT AGENTS AND
LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR TO BRING PROCEEDINGS AGAINST BORROWER OR GUARANTOR IN THE COURTS OF ANY OTHER
JURISDICTION.

SECTION 13.   Construction.

This Agreement and all other agreements and documents executed and/or delivered
in connection herewith have been prepared through the joint efforts of all of
the parties hereto. Neither the provisions of this Agreement or any such other
agreements and documents nor any alleged ambiguity therein shall be interpreted
or resolved against any party on the ground that such party or its counsel
drafted this Agreement or such other agreements and documents, or based on any
other rule of strict construction. Each of the parties hereto represents and
declares that such party has carefully read this Agreement and all other
agreements and documents executed in connection therewith, and that such party
knows the contents thereof and signs the same freely and voluntarily. The
parties hereto acknowledge that they have been represented by legal counsel of
their own choosing in negotiations for and preparation of this Agreement and all
other agreements and documents executed in connection herewith and that each of
them has read the same and had their contents fully explained by such counsel
and is fully aware of their contents and legal effect. If any matter is left to
the decision, right, requirement, request, determination, judgment, opinion,
approval, consent, waiver, satisfaction, acceptance, agreement, option or
discretion of one or more Lenders, the other Secured Parties or their respective
employees, counsel, or agents in the Credit Agreement or any other Loan
Documents, such action shall be deemed to be exercisable by such Lenders, such
other Secured Parties or such other Person in its sole and absolute discretion
and according to standards established in its sole and absolute discretion.
Without limiting the generality of the foregoing, “option” and “discretion”
shall be implied by the use of the words “if” and “may.”

SECTION 14.   Counterparts.

This Agreement may be executed in any number of counterparts, each of which when
so executed shall be deemed an original, but all such counterparts shall
constitute one and the same instrument, and all signatures need not appear on
any one counterpart. Any party hereto may execute and deliver a counterpart of
this Agreement by delivering by facsimile or other electronic transmission a
signature page of this Agreement signed by such party, and any such facsimile or
other electronic signature shall be treated in all respects as having the same
effect as an original signature. Any party delivering by facsimile or other
electronic transmission a counterpart executed by it shall promptly thereafter
also deliver a manually signed counterpart of this Agreement.

SECTION 15.   Severability.

The invalidity, illegality, or unenforceability of any provision in or
obligation under this Agreement in any jurisdiction shall not affect or impair
the validity, legality, or enforceability of the remaining provisions or
obligations under this Agreement or of such provision or obligation in any other
jurisdiction. If feasible, any such offending provision shall be deemed modified
to be within the limits of enforceability or validity; however, if the

 

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offending provision cannot be so modified, it shall be stricken and all other
provisions of this Agreement in all other respects shall remain valid and
enforceable.

SECTION 16.   Time of Essence.

Time is of the essence in the performance of each of the obligations of Borrower
and Guarantor hereunder and with respect to all conditions to be satisfied by
such parties.

SECTION 17.   No Other Creditor Action.

The Lenders’ and the other Secured Parties’ obligations to forbear are expressly
conditioned upon all other creditors of Borrower (including, without limitation,
trade creditors) refraining or otherwise forbearing from exercising remedies or
otherwise taking any enforcement action against Borrower or the Collateral
(including, without limitation, acceleration of indebtedness) during the
Forbearance Period. In the event that any such creditor takes any such action,
all of the Lenders’ and the other Secured Parties’ obligations hereunder shall
automatically and immediately terminate without further notice or demand.

SECTION 18.   Further Assurances.

Borrower agrees to take all further actions and execute all further documents as
Administrative Agent may from time to time reasonably request to carry out the
transactions contemplated by this Agreement, the Credit Agreement, other Loan
Documents and all other agreements executed and delivered in connection
herewith.

SECTION 19.   Section Headings.

Section headings in this Agreement are included herein for convenience of
reference only and shall not constitute part of this Agreement for any other
purpose.

SECTION 20.   Notices.

All notices, requests, and demands to or upon the respective parties hereto
shall be given in accordance with the Credit Agreement.

SECTION 21.   Effectiveness.

This Agreement shall become effective as of the Effective Date, provided that
all of the following conditions precedent have been met (or waived) as
determined by Administrative Agent in its sole discretion:
(a) GAG Guaranty. Administrative Agent shall have received $1,200,000 in
immediately available funds pursuant to the GAG Guaranty in full satisfaction of
the Guarantor’s obligations to the Lenders under the GAG Guaranty, but subject
to each provision of the GAG Guaranty, including, without limitation, Section 7
thereof, that, by its terms, survives the payment of the Guarantor’s
obligations.
(b) Required Deliveries. Administrative Agent shall have received a duly
executed and effective auction services agreement (an “Auction Services
Agreement”) by

 

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and between the Borrower and an Auction Services Company, such agreement to be
in form and substance reasonably satisfactory to the Administrative Agent (it
being understood that such agreement shall not obligate the Borrower to pay the
Auction Services Company more than $250,000, in the aggregate, for its services,
shall not permit the setting of reserve prices except the Acceptable Reserve
Pricing and, consistent with the requirements of the Credit Agreement, including
Section 6.01(d)(ii) thereof, shall require the consent of the Administrative
Agent and the requisite Lenders prior to the final acceptance of any bid lower
than the Acceptable Reserve Pricing) and accompanied by a written certification
by the Borrower that the terms, conditions and provisions of such agreement
(including, without limitation, the procedures to effectuate the sale of assets)
all are commercially reasonable.
(c) Agreement. Administrative Agent shall have received duly executed signature
pages for this Agreement signed by Administrative Agent, Lenders, Borrower and
Guarantor.
(d) Representations and Warranties. The representations and warranties contained
herein shall be true and correct, and no Forbearance Default, Default or Event
of Default, other than the Specific Defaults, shall exist on the date hereof.
(e) Expenses. Borrower shall have remitted to the Administrative Agent’s
counsel, Kirkland & Ellis LLP, a retainer in the amount of $15,000 in
immediately available funds, which amount shall be used towards the legal fees
and expenses incurred by the Administrative Agent through the date hereof and,
to the extent of any remaining amount, any legal fees and expenses incurred from
and after the Effective Date.

SECTION 22.   Waiver of Jury Trial Right and Other Matters.

BORROWER AND GUARANTOR EACH HEREBY WAIVES (i) THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED
TO THIS AGREEMENT, THE CREDIT AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, THE
OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND AND PROTEST, AND NOTICE
OF PRESENTMENT, PROTEST, DEFAULT, NONPAYMENT, MATURITY, RELEASE WITH RESPECT TO
ALL OR ANY PART OF THE OBLIGATIONS OR ANY COMMERCIAL PAPER, ACCOUNTS, CONTRACT
RIGHTS, DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY
ANY LENDER ON WHICH BORROWER OR GUARANTOR MAY IN ANY WAY BE LIABLE AND HEREBY
RATIFIES AND CONFIRMS WHATEVER SUCH LENDER MAY DO IN THIS REGARD; (iii) NOTICE
PRIOR TO TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY
WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING ANY LENDER TO EXERCISE
ANY OF THEIR RESPECTIVE RIGHTS AND REMEDIES; (iv) THE BENEFIT OF ALL VALUATION,
APPRAISAL AND EXEMPTION LAWS AND ALL RIGHTS WAIVABLE UNDER ARTICLE 9 OF THE
UNIFORM COMMERCIAL CODE; (v) ANY RIGHT BORROWER OR GUARANTOR MAY HAVE UPON
PAYMENT IN FULL OF THE OBLIGATIONS TO REQUIRE ANY LENDER OR OTHER SECURED PARTY
TO TERMINATE ITS SECURITY INTEREST IN THE COLLATERAL OR IN ANY OTHER PROPERTY OF
BORROWER OR GUARANTOR UNTIL TERMINATION OF THE CREDIT AGREEMENT IN ACCORDANCE
WITH ITS

 

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TERMS AND THE EXECUTION BY BORROWER, AND BY ANY PERSON WHO PROVIDES FUNDS TO
BORROWER WHICH ARE USED IN WHOLE OR IN PART TO SATISFY THE OBLIGATIONS, OF AN
AGREEMENT INDEMNIFYING ANY OR ALL OF THE LENDERS AND THE OTHER SECURED PARTIES
FROM ANY LOSS OR DAMAGE ANY SUCH PARTY MAY INCUR AS THE RESULT OF DISHONORED
CHECKS OR OTHER ITEMS OF PAYMENT RECEIVED BY SUCH LENDER OR OTHER SECURED PARTY
FROM BORROWER, OR ANY ACCOUNT DEBTOR AND APPLIED TO THE OBLIGATIONS AND
RELEASING AND INDEMNIFYING, IN THE SAME MANNER AS DESCRIBED IN SECTION 6 OF THIS
AGREEMENT, THE RELEASEES FROM ALL CLAIMS ARISING ON OR BEFORE THE DATE OF SUCH
TERMINATION STATEMENT; AND (vi) NOTICE OF ACCEPTANCE HEREOF, AND BORROWER AND
GUARANTOR EACH ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT
TO ADMINISTRATIVE AGENT’S AND SIGNING LENDER’S ENTERING INTO THIS AGREEMENT AND
THAT SUCH PARTIES ARE RELYING UPON THE FOREGOING WAIVERS IN THEIR FUTURE
DEALINGS WITH BORROWER AND GUARANTOR. BORROWER AND GUARANTOR EACH WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND
HAS KNOWINGLY AND VOLUNTARILY WAIVED 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.

SECTION 23.   Assignments; No Third Party Beneficiaries.

This Agreement shall be binding upon and inure to the benefit of Borrower,
Guarantor, the Lenders and the other Secured Parties and their respective
successors and assigns; provided, that neither Borrower nor Guarantor shall be
entitled to delegate any of its duties hereunder and shall not assign any of its
rights or remedies set forth in this Agreement without the prior written consent
of Administrative Agent in its sole discretion. No Person other than the parties
hereto, and in the case of Section 6 hereof, the Releasees, shall have any
rights hereunder or be entitled to rely on this Agreement and all third-party
beneficiary rights (other than the rights of the Releasees under Section 6
hereof) are hereby expressly disclaimed.

SECTION 24.   Final Agreement.

This Agreement, the Credit Agreement, the other Loan Documents, and the other
written agreements, instruments, and documents entered into in connection
therewith (collectively, the “Borrower/Lender Documents”) set forth in full the
terms of agreement between the parties hereto and thereto and are intended as
the full, complete, and exclusive contracts governing the relationship between
such parties, superseding all other discussions, promises, representations,
warranties, agreements, and understandings between the parties with respect
thereto. No term of the Borrower/Lender Documents may be modified or amended,
nor may any rights thereunder be waived, except in a writing signed by the party
against whom enforcement of the modification, amendment, or waiver is sought.
Any waiver of any condition in, or breach of, any of the foregoing in a
particular instance shall not operate as a waiver of other or subsequent
conditions or breaches of the same or a different kind. Administrative Agent’s,
any Lender’s or any other Secured Party’s exercise or failure to exercise any
rights or remedies under any of the foregoing in a particular instance shall not
operate as a waiver of its

 

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right to exercise the same or different rights and remedies in any other
instances. There are no oral agreements among the parties hereto.

SECTION 25.   Administrative Agent.

The Lenders hereby authorize the Administrative Agent to execute this Agreement.
Signature pages to follow

 

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IN WITNESS WHEREOF, as of the Effective Date, the duly authorized
representatives of the parties have caused this Agreement to be executed and
acknowledge that they have read and understood this Agreement.

            GREAT AMERICAN GROUP
ENERGY EQUIPMENT, LLC
as Borrower
      By:   /s/ Harvey M. Yellen         Name:   Harvey M. Yellen       
Title:           GREAT AMERICAN GROUP, LLC
as Guarantor
      By:   /s/ Mark P. Naughton         Name:   Mark P. Naughton       
Title:   Senior VP/General Counsel        GARRISON LOAN AGENCY SERVICES, LLC
as Administrative Agent
      By:   /s/ Brian S. Chase         Authorized Signatory               
GARRISON SPECIAL OPPORTUNITIES FUND LP
as Lender
      By:   /s/ Brian S. Chase         Name:   Brian S. Chase        Title:  
Chief Financial Officer        GAGE INVESTMENT GROUP, LLC
      By:   /s/ J. Tim Pruban         Name:   J. Tim Pruban        Title:  
Managing Member