**Exhibit 4.6(i)**

 

----

**LOAN AND SECURITY AGREEMENT**

 

**Dated as of August 17, 2004**

 

**$300,000,000**

 

**by and among**

 

**NES Rentals Holdings, Inc. and Certain Subsidiaries of NES Rentals Holdings, Inc. listed as a Borrower**

**on the Signature Pages Hereto, as Borrowers**

 

**The Financial Institutions From Time to TimeParty Hereto, as Lenders**

 

**Wachovia Bank, National Association,as Syndication Agent**

 

**General Electric Capital Corporation andMerrill Lynch Capital, A Division of Merrill Lynch Business Financial Services, Inc.,  as Co-Documentation agents**

 

**and**

 

**Bank of America, N.A.,as Administrative Agent**

 

----

 

**Banc of America Securities LLC and WachoviaCapital Markets, LLC,as Co-Lead Arrangers and Joint Book Runners**

 

----

 

**TABLE OF CONTENTS**

 
| SECTION 1.   CREDIT  FACILITY           |                                                          |
|-------------------------------------------------------------|---------------------------------------------------------------|
| 1.1                                                         | Loans                                                         |   |
| 1.2                                                         | Letters of Credit                                             |   |
| 1.3                                                         | Term  Loan                                                    |   |
| SECTION 2.   INTEREST, FEES AND CHARGES |                                                          |
| 2.1                                                         | Interest                                                      |   |
| 2.2                                                         | Computation of Interest and Fees                              |   |
| 2.3                                                         | Fee  Letter                                                   |   |
| 2.4                                                         | Letter of Credit Fees                                         |   |
| 2.5                                                         | Unused  Line Fee                                              |   |
| 2.6                                                         | Audit  Fees                                                   |   |
| 2.7                                                         | Reimbursement of Expenses                                     |   |
| 2.8                                                         | Bank  Charges                                                 |   |
| 2.9                                                         | Collateral Protection Expenses; Appraisals                    |   |
| 2.10                                                        | Payment of Charges                                            |   |
| 2.11                                                        | No  Deductions                                                |   |
| SECTION 3.   LOAN  ADMINISTRATION       |                                                          |
| 3.1                                                         | Manner of Borrowing Revolving Credit  Loans/LIBOR Option      |   |
| 3.2                                                         | Payments                                                      |   |
| 3.3                                                         | Mandatory and Optional Prepayments                            |   |
| 3.4                                                         | Application of Payments and Collections                       |   |
| 3.5                                                         | All Loans and Letters of Credit to  Constitute One Obligation |   |
| 3.6                                                         | Loan  Account                                                 |   |
| 3.7                                                         | Statements of Account                                         |   |
| 3.8                                                         | Increased Costs                                               |   |
| 3.9                                                         | Basis for Determining Interest Rate  Inadequate               |   |
| 3.10                                                        | Sharing  of Payments, Etc.                                    |   |
| SECTION 4.   TERM AND  TERMINATION      |                                                          |
| 4.1                                                         | Term of Agreement                                             |   |
| 4.2                                                         | Termination                                                   |   |

 

i

----

 
| SECTION 5.   SECURITY  INTERESTS                                 |                                                                     |
|--------------------------------------------------------------------------------------|--------------------------------------------------------------------------|
| 5.1                                                                                  | Security Interest in Collateral                                          |   |
| 5.2                                                                                  | Other Collateral                                                         |   |
| 5.3                                                                                  | Lien Perfection; Further Assurances                                      |   |
| 5.4                                                                                  | Lien on Realty                                                           |   |
| SECTION 6.   COLLATERAL  ADMINISTRATION                          |                                                                     |
| 6.1                                                                                  | General                                                                  |   |
| 6.2                                                                                  | Administration of Accounts                                               |   |
| 6.3                                                                                  | Administration of Inventory                                              |   |
| 6.4                                                                                  | Payment of Charges                                                       |   |
| SECTION 7.   REPRESENTATIONS  AND WARRANTIES                     |                                                                     |
| 7.1                                                                                  | General Representations and Warranties                                   |   |
| 7.2                                                                                  | Continuous Nature of Representations and  Warranties                     |   |
| 7.3                                                                                  | Survival of Representations and Warranties                               |   |
| SECTION 8.   COVENANTS  AND CONTINUING AGREEMENTS                |                                                                     |
| 8.1                                                                                  | Affirmative Covenants                                                    |   |
| 8.2                                                                                  | Negative Covenants                                                       |   |
| 8.3                                                                                  | Specific Financial Covenants                                             |   |
| SECTION 9.   CONDITIONS  PRECEDENT                               |                                                                     |
| 9.1                                                                                  | Conditions to Initial Loans and Initial  Letters of Credit               |   |
| 9.2                                                                                  | Conditions to all Loans and Letters of  Credit                           |   |
| SECTION 10.   EVENTS OF  DEFAULT; RIGHTS AND REMEDIES ON DEFAULT |                                                                     |
| 10.1                                                                                 | Events of Default                                                        |   |
| 10.2                                                                                 | Acceleration of the Obligations                                          |   |
| 10.3                                                                                 | Other Remedies                                                           |   |
| 10.4                                                                                 | Setoff and Sharing of Payments                                           |   |
| 10.5                                                                                 | Remedies Cumulative; No Waiver                                           |   |
| SECTION 11.   ADMINISTRATIVE  AGENT                              |                                                                     |
| 11.1                                                                                 | Authorization and Action                                                 |   |
| 11.2                                                                                 | Administrative Agent’s and Syndication  Agent’s Reliance, Etc. |   |
| 11.3                                                                                 | BofA and Affiliates                                                      |   |
| 11.4                                                                                 | Lender Credit Decision                                                   |   |
| 11.5                                                                                 | Indemnification                                                          |   |

 

----

 
| 11.6                                            | Rights and Remedies to Be Exercised by  Administrative Agent Only           |   |
|-------------------------------------------------|-----------------------------------------------------------------------------|--------|
| 11.7                                            | Agency Provisions Relating to Collateral                                    |   |
| 11.8                                            | Right to Purchase Commitments                                               |   |
| 11.9                                            | Right of Sale, Assignment, Participations                                   |   |
| 11.10                                           | Amendment                                                                   |   |
| 11.11                                           | Resignation of Administrative Agent;  Appointment of Successor              |   |
| 11.12                                           | Audit and Examination Reports; Disclaimer  by Lenders                       |   |
| 11.13                                           | Syndication Agent; Co-Documentation Agents                                  |   |
| 11.14                                           | No Reliance on Administrative Agent’s  Customer Identification Program |   |
| 11.15                                           | USA Patriot Act                                                             |   |
| 11.16                                           | Withholding                                                                 |   |
| SECTION 12.   MISCELLANEOUS |                                                                        |
| 12.1                                            | Power of Attorney                                                           |   |
| 12.2                                            | Indemnity                                                                   |   |
| 12.3                                            | Severability                                                                |   |
| 12.4                                            | Successors and Assigns                                                      |   |
| 12.5                                            | Cumulative Effect; Conflict of Terms                                        |   |
| 12.6                                            | Execution in Counterparts                                                   |   |
| 12.7                                            | Notice                                                                      |   |
| 12.8                                            | Consent                                                                     |   |
| 12.9                                            | Credit Inquiries                                                            |   |
| 12.10                                           | Time of Essence                                                             |   |
| 12.11                                           | Entire Agreement                                                            |   |
| 12.12                                           | Interpretation                                                              |   |
| 12.13                                           | Confidentiality                                                             |   |
| 12.14                                           | GOVERNING LAW; CONSENT TO FORUM                                             |   |
| 12.15                                           | WAIVERS BY BORROWERS                                                        |   |
| 12.16                                           | Advertisement                                                               |   |
| 12.17                                           | Reimbursement                                                               |   |
| 12.18                                           | Holdings as Agent for Borrowers                                             |   |
| 12.19                                           | Recovery                                                                    |   |
| 12.20                                           | References to Intercreditor Agreement                                       |   |

 

----

 

 

**LOAN AND SECURITY AGREEMENT**

 

**THISLOAN AND SECURITY AGREEMENT**is made as of this 17thday of August, 2004 by and among **BANK OFAMERICA, N.A.**(**“BofA”**),a national banking association, individually as a Lender and as administrativeagent (**“Administrative Agent”**) foritself and any other financial institution which is or becomes a party hereto(each such financial institution, including BofA, is referred to hereinafterindividually as a **“Lender”**andcollectively as the **“Lenders”**),the **LENDERS, NES RENTALS HOLDINGS, INC.,**aDelaware corporation (**“Holdings”**)and each subsidiary of Holdings listed as a **“Borrower”**on the signature pages hereto (together with Holdings each individually a **“Borrower”** and collectively **“Borrowers”**), **WACHOVIA BANK, NATIONAL ASSOCIATION**, as Syndication Agent, and**MERRILL LYNCH CAPITAL, A DIVISION OF MERRILLLYNCH BUSINESS FINANCIAL SERVICES, INC.** and **GENERAL ELECTRIC CAPITAL CORPORATION**, asCo-Documentation Agents.  Capitalizedterms used in this Agreement have the meanings assigned to them in Appendix A,General Definitions.  As more fully setforth in Appendix A, accounting terms not otherwise specifically defined hereinshall be construed in accordance with GAAP consistently applied.

 

**SECTION 1.  CREDIT FACILITY**

 

Subject to theterms and conditions of, and in reliance upon the representations andwarranties made in, this Agreement and the other Loan Documents, Lenders agreeto make a Total Credit Facility of up to $300,000,000 available upon Borrowers’request therefor, as follows:

 

1.1                                 Loans.

 

1.1.1                                                Revolving Credit Loans. Each Lender agrees, severally and not jointly, for so long as no Defaultor Event of Default has occurred and is continuing, to make Revolving CreditLoans to Borrowers from time to time during the period from the date hereof tobut not including the last day of the Term, as requested by BorrowerRepresentative, on its own behalf and on behalf of all other Borrowers in themanner set forth in subsection 3.1.1 hereof, up to a maximumprincipal amount at any time outstanding equal to the lesser of (i) suchLender’s Revolving Loan Commitment minus (x) the product of such Lender’sRevolving Loan Percentage multipliedby the sum of theOutstanding LC Obligations and the LC Amount and (y) the product of such Lender’sRevolving Loan Percentage multipliedby the reserves (other thanthe Availability Reserve but including the Equipment Acquisition Reserve), and(ii) the product of such Lender’s Revolving Loan Percentage multipliedby the Borrowing Base at such time minus the product of suchLender’s Revolving Loan Percentage multipliedby the sum of theLC Amount and the Outstanding LC Obligations. Administrative Agent shall have the right to establish reserves in suchamounts, and with respect to such matters, in Administrative Agent’s PermittedDiscretion, against the amount of Revolving Credit Loans which Borrowers mayotherwise request under this subsection 1.1.1, including withoutlimitation,****with respect to,without duplication, (i) price adjustments, damages, unearned discounts,returned products or other matters for which credit memoranda are

 

----

 

issued in theordinary course of any Borrowing Base Party’s business; (ii) potentialdilution related to Accounts; (iii) obsolescence of any Borrowing BaseParty’s Inventory; (iv) slow moving Inventory; (v) other sums due andpayable and chargeable against Borrowers’ Loan Account as Revolving CreditLoans under any section of this Agreement; (vi) amounts owing by anyBorrowing Base Party to any Person to the extent secured by a Lien on, or trustover, any Property of any Borrowing Base Party; (vii) amounts owing by anyBorrowing Base Party in connection with Product Obligations; (viii) amountsowing by any Account Debtors of the traffic safety business unit of Borrowersto any Borrowing Base Party, the Accounts of which Account Debtor are supportedby surety and/or performance bonds; and (ix)** **suchother specific events, conditions or contingencies as to which AdministrativeAgent, in its Permitted Discretion, determines reserves should be establishedfrom time to time hereunder.  TheRevolving Credit Loans shall be repayable in accordance with the terms hereofand of the Revolving Notes and shall be secured by all of the Collateral.

 

1.1.2                                                Overadvances. Insofar as Borrowers may request and Administrative Agent may be willingin its sole discretion to make (or, as provided below, as Majority Lenders maybe willing to consent to in their sole discretion) Revolving Credit Loans toBorrowers at a time when the unpaid balance of Revolving Credit Loans plus thesum of the LC Amount plus the amount of Outstanding LC Obligations, plusreserves, exceeds, or would exceed with the making of any such Revolving CreditLoan, the Borrowing Base (and such Loan or Loans being herein referred toindividually as an **“Overadvance”**and collectively, as **“Overadvances”**),Administrative Agent shall enter such Overadvances as debits in the LoanAccount.  All Overadvances shall berepaid on demand, shall be secured by the Collateral and shall bear interest asprovided in this Agreement for Revolving Credit Loans generally.  Any Overadvance made pursuant to the termshereof shall be made by all Lenders ratably in accordance with their respectiveRevolving Loan Percentages.  Overadvancesin the aggregate amount of $3,000,000 or less may, unless a Default or Event ofDefault (other than any Default or Event of Default resulting solely from thefunding of such Overadvance) has occurred and is continuing, be made in thesole discretion of Administrative Agent. Overadvances in an aggregate amount of more than $3,000,000 but lessthan $5,000,000 may, unless a Default or an Event of Default (other than anyDefault or Event of Default resulting solely from the funding of suchOveradvance) has occurred and is continuing, be made with the consent of theMajority Lenders.  Overadvances in anaggregate amount of $5,000,000 or more and Overadvances to be made after theoccurrence and during the continuation of a Default or an Event of Default(other than any Default or Event of Default resulting solely from the fundingof such Overadvance) shall require the consent of all Lenders.  The foregoing notwithstanding, in no event,unless otherwise consented to by all Lenders, (w) shall any Overadvancesbe outstanding for more than sixty (60) consecutive days, (x) after alloutstanding Overadvances have been repaid, shall Administrative Agent make anyadditional Overadvances unless sixty (60) days or more have expired since thelast date on which any Overadvances were outstanding, (y) shallOveradvances be outstanding on more than ninety (90) days within any threehundred sixty day (360) period or (z) shall Administrative Agent makeRevolving Credit Loans on behalf of Lenders under this subsection 1.1.2to the extent such Revolving Credit Loans would cause a Lender’s share

 

----

 

of the RevolvingCredit Loans to exceed such Lender’s Revolving Loan Commitment minus theproduct of such Lender’s Revolving Loan Percentage multipliedbythe sum of the LC Amount and the Outstanding LC Obligations.

 

1.1.3                                                Use of Proceeds. The proceeds of Revolving Credit Loans and Term Loans shall be usedsolely for (i) the satisfaction of the Prior Indebtedness and fees andexpenses related to such satisfaction, (ii) Borrowers’ general corporatepurposes, including, without limitation, operating capital needs in a mannerconsistent with the provisions of this Agreement and all applicable laws, and(iii) other purposes permitted under this Agreement.

 

1.1.4                                                Swingline Loans. In order to reduce the frequency of transfers of funds from Lenders toAdministrative Agent for making Revolving Credit Loans and for so long as noDefault or Event of Default exists, Administrative Agent shall be permitted(but not required) to make Revolving Credit Loans to Borrowers upon request byBorrowers (such Revolving Credit Loans to be designated as **“Swingline Loans”**); provided thatthe aggregate amount of Swingline Loans outstanding at any time will not(i) exceed $10,000,000; (ii) when added to the principal amount ofAdministrative Agent’s other Revolving Credit Loans then outstanding plusthe product of Administrative Agent’s Revolving Loan Percentage multipliedby the sum of the LC Amount and the Outstanding LC Obligations, exceedAdministrative Agent’s Revolving Loan Commitment; or (iii) when added tothe principal amount of all other Revolving Credit Loans then outstanding plusthe LC Amount plus the Outstanding LC Obligations, exceed the BorrowingBase.  Within the foregoing limits,Borrowers may borrow, repay and reborrow Swingline Loans.  All Swingline Loans shall be treated asRevolving Credit Loans for purposes of this Agreement and accordingly eachLender shall be deemed to have an undivided interest and participation thereinto the extent of such Lender’s Revolving Loan Percentage thereof, except that(a) all Swingline Loans shall be Base Rate Revolving Portions and(b) notwithstanding anything herein to the contrary (other than as setforth in the next succeeding sentence), all principal and interest paid withrespect to Swingline Loans shall be for the sole account of AdministrativeAgent in its capacity as the lender of Swingline Loans.  Notwithstanding the foregoing, not more than2 Business Days after (1) Lenders receive notice from Administrative Agentthat a Swingline Loan has been advanced in respect of a drawing under a Letterof Credit or (2) in any other circumstance, demand is made byAdministrative Agent (which demand shall be made on a bi-weekly or morefrequent basis in the discretion of Administrative Agent), each Lender shallirrevocably and unconditionally fund, without recourse or warranty fromAdministrative Agent, its undivided interest and participation in eachSwingline Loan to the extent of such Lender’s Revolving Loan Percentagethereof, by paying to Administrative Agent, in same day funds, an amount equalto the product of such Lender’s Revolving Loan Percentage multipliedbythe principal amount of such Swingline Loan.

 

1.1.5                                                Administrative Agent Loans. Upon the occurrence and during the continuance of an Event of Default,Administrative Agent, in its sole discretion, may make Revolving Credit Loanson behalf of Lenders, in an aggregate amount not to exceed $10,000,000, ifAdministrative Agent, in its reasonable business judgment, deems

 

----

 

that such RevolvingCredit Loans are necessary or desirable (i) to protect all or any portionof the Collateral, (ii) to enhance the likelihood, or maximize the amountof, repayment of the Loans and the other Obligations, or (iii) to pay anyother amount chargeable to Borrowers pursuant to this Agreement, includingwithout limitation costs, fees and expenses as described in subsections 2.7and 2.8 (hereinafter, **“AdministrativeAgent Loans”**); provided, that in no event shall the maximumprincipal amount of the Revolving Credit Loans exceed the aggregate RevolvingLoan Commitments. Each Lender shall be obligated to advance its Revolving LoanPercentage of each Administrative Agent Loan. If Administrative Agent Loans are made pursuant to the precedingsentence, then all Lenders that have committed to make Revolving Credit Loansshall be bound to make, or permit to remain outstanding, such AdministrativeAgent Loans based upon their Revolving Loan Percentages in accordance with theterms of this Agreement, provided that Majority Lenders may at any timerevoke Administrative Agent’s authorization to make additional AdministrativeAgent Loans by delivering written notice of such revocation to AdministrativeAgent, which revocation shall become effective prospectively uponAdministrative Agent’s receipt thereof.

 

1.2                                 Lettersof Credit.  On theClosing Date, each Existing Letter of Credit shall be deemed for all purposesof this Agreement to be a Letter of Credit issued hereunder and Wachovia Bank,as issuer of each such Existing Letter of Credit shall be deemed to have soldto each Lender, and each Lender shall be deemed, without further action by anyparty hereto, to have purchased from Wachovia Bank, an undivided interest andparticipation therein equal to the principal amount of the Existing Letter ofCredit and the related LC Obligations multiplied by such Lender’s RevolvingLoan Percentage; providedhowever, that each Existing Letter ofCredit shall expire upon its stated expiration date as in effect on the ClosingDate and shall not be renewed notwithstanding any automatic renewal provisioncontained therein or any other provisions thereof to the contrary.  From and after the Closing Date,Administrative Agent agrees, for so long as no Default or Event of Defaultexists and if requested by Borrower Representative, on its own behalf and onbehalf of all other Borrowers, to issue its, or cause to be issued by Bank oranother Affiliate of Administrative Agent, on the date requested by BorrowerRepresentative, on its own behalf and on behalf of all other Borrowers, Lettersof Credit for the account of Borrowers, provided that the LC Amount(including Existing Letters of Credit) shall not exceed $35,000,000 at anytime.  No Letter of Credit may have anexpiration date after the last day of the Term. Notwithstanding anything to the contrary contained herein, Borrowers,Administrative Agent and Lenders hereby agree that all LC Obligations and allobligations of Borrowers relating thereto shall be satisfied by the promptissuance of one or more Revolving Credit Loans that are Base Rate Portions,which Borrowers hereby acknowledge are requested and Lenders hereby agree tofund without the requirement to satisfy any conditions set forth in Section 9.  In the event that Revolving Credit Loans arenot, for any reason, promptly made to satisfy all then Outstanding LCObligations, each Lender hereby agrees to pay to Administrative Agent, ondemand, an amount equal to such LC Obligations multipliedby suchLender’s Revolving Loan Percentage, and until so paid, such amount shall bear interestand be payable at the same rate and in the same manner as Base RatePortions.  The obligation of theBorrowers to pay all LC Obligations shall be absolute and unconditionalirrespective of any claim, setoff, defense or other right that Borrowers mayhave against the

 

----

 

Administrative Agent or anyother Person; provided that nothing contained herein shall limitBorrower’s rights that arise under the applicable letter of credit applicationand related documents executed by and between the relevant Borrower and theapplicable letter of credit issuer, and hereunder.  Immediately upon the issuance of a Letter ofCredit under this Agreement, each Lender shall be deemed to have irrevocablyand unconditionally purchased and received from Administrative Agent, withoutrecourse or warranty, an undivided interest and participation therein equal tosuch LC Obligations multipliedby such Lender’s Revolving LoanPercentage.

 

1.3                                 Term Loan.

 

1.3.1                                                Term Loan. Each Lender, severally and not jointly, agrees to make a term loan(collectively, the **“Term Loan”**) toBorrowers on the Closing Date, in the aggregate principal amount of such Lender’sTerm Loan Commitment, which shall be repayable in accordance with the termshereof and of the Term Loan Notes and shall be secured by all of theCollateral.  The proceeds of the TermLoan shall be used solely for the purposes for which the proceeds of theRevolving Credit Loans are authorized to be used.

 

**SECTION 2.  **INTEREST, FEESAND CHARGES

 

2.1                                 Interest.

 

2.1.1                                                Rates of Interest. Interest shall accrue on the principal amount of the Base Rate RevolvingPortions and the Base Rate Term Portions outstanding at the end of each day ata fluctuating rate per annum equal to the Applicable Margin then in effect plusthe Base Rate.  Said rate of interestshall increase or decrease by an amount equal to any increase or decrease inthe Base Rate, effective as of the opening of business on the day that any suchchange in the Base Rate occurs.  If BorrowerRepresentative, on its own behalf and on behalf of all other Borrowers,exercises the LIBOR Option as provided in subsection 3.1, interestshall accrue on the principal amount of the LIBOR Revolving Portions and theLIBOR Term Portions outstanding at the end of each day at a rate per annum equalto the Applicable Margin then in effect plus the LIBOR applicable toeach LIBOR Portion for the corresponding Interest Period.

 

2.1.2                                                Default Rate of Interest. At the option of Administrative Agent or the Majority Lenders, upon andafter the occurrence of an Event of Default, and during the continuationthereof upon notice to Borrower Representative, all of the Obligations shallbear interest at a rate per annum equal to 2.0% plus the interest rateotherwise applicable thereto (the **“DefaultRate”**); provided, that (i) the Default Rate of interest shallapply to all of the Obligations automatically without notice to BorrowerRepresentative or any other Person and without further action by any Personupon the occurrence of an Event of Default as described in subsection 10.1.6and (ii) in the event no applicable interest rate is otherwise expressly statedherein with respect to any such Obligation, the Default Rate in respect thereofshall be the sum of the Base Rate, plus the Applicable Margin then in effectfor Base Rate Portions, plus 2.0%.

 

----

 

2.1.3                                                Maximum Interest. In no event whatsoever shall the aggregate of all amounts deemedinterest hereunder or under the Notes and charged or collected pursuant to theterms of this Agreement or pursuant to the Notes exceed the highest ratepermissible under any law which a court of competent jurisdiction shall, in afinal determination, deem applicable hereto (the **“Maximum Rate”**).  If anyprovisions of this Agreement or the Notes are in contravention of any such law,such provisions shall be deemed amended to conform thereto.  If at any time, the amount of interest paidhereunder is limited by the Maximum Rate, and the amount at which interestaccrues hereunder is subsequently below the Maximum Rate, the rate at whichinterest accrues hereunder shall remain at the Maximum Rate, until such time asthe aggregate interest paid hereunder equals the amount of interest that wouldhave been paid had the Maximum Rate not applied.

 

2.2                                 Computationof Interest and Fees. Interest, Letter of Credit fees and Unused Line Fees hereunder shall becalculated daily and shall be computed on the actual number of days elapsedover a year of 360 days, provided that interest on Base Rate RevolvingPortions and Base Rate Term Portions bearing interest based on the Prime Rateshall be computed on the actual number of days elapsed over a year of 365 or366 days, as applicable.

 

2.3                                 Fee Letter.  Borrowers shall pay to Administrative Agentand the Co-Lead Arrangers certain fees and other amounts in accordance with theterms of the fee letter among Borrowers, Administrative Agent and SyndicationAgent, dated June 10, 2004, as amended, restated or otherwise modifiedfrom time to time (the **“Fee Letter”**).

 

2.4                                 Letterof Credit Fees. Borrowers shall pay to Administrative Agent:

 

(i)                                     for all Letters of Credit, for theratable benefit of Lenders a per annum fee equal to (x) the Applicable Marginthen in effect for LIBOR Revolving Portions multiplied by the aggregate undrawnface amount of such Letters of Credit outstanding from time to time during theterm of this Agreement or (y) at any time the Default Rate is applicable to theObligations, the Default Rate multiplied by the aggregate undrawn face amountof such Letters of Credit outstanding from time to time during the term of thisAgreement, plus all normal and customary charges associated with theissuance, processing and administration thereof, which fees and charges shallbe deemed fully earned upon issuance of each such Letter of Credit, shall bedue and payable on the first Business Day of each month and shall not besubject to rebate or proration upon the termination of this Agreement for anyreason;

 

(ii)                                  with respect to all Letters ofCredit, for the account of Administrative Agent only, a per annum fronting feeequal to 0.125% of the aggregate face amount of such Letters of Creditoutstanding from time to time during the term of this Agreement, which frontingfees shall be payable monthly in arrears on the first Business Day of eachmonth and shall not be subject to rebate or proration upon the termination ofthis Agreement for any reason; and

 

----

 

(iii)                               for all Letters of Credit, for theaccount of the issuer of any Letter of Credit, the reasonable and customaryissuance, presentation, amendment, renewal and other processing fees, and otherstandard costs and charges of such issuer relating to letters of credit as fromtime to time in effect.  Such customaryfees and standard costs and charges are due and payable on demand and arenonrefundable.

 

2.5                                 UnusedLine Fee. Borrowers shall pay to Administrative Agent, for the ratable benefit ofLenders, a fee (the **“Unused Line Fee”)**equal to the Applicable Margin for the Unused Line Fee multiplied by theaverage daily amount by which the Revolving Credit Maximum Amount****exceeds the sum of (i) theoutstanding principal balance of the Revolving Credit Loans plus (ii) theLC Amount plus (iii) the Outstanding LC Obligations**;**provided, that for purposes ofallocating the Unused Line Fee among Lenders, outstanding Swingline Loans shallnot be included as part of the outstanding balance of the Loans for purposes ofcalculating such fees owed to Lenders other than Administrative Agent.  The Unused Line Fee shall be payable monthlyin arrears on the first day of each month commencing on September 1, 2004and on the last day of the Term.

 

2.6                                 Audit Fees.  Borrowers shall pay to Administrative Agentaudit fees in accordance with Administrative Agent’s current schedule offees in effect from time to time in connection with Audits and such othermatters as Administrative Agent shall deem appropriate in its reasonablejudgment, plus all reasonable out-of-pocket expenses incurred by AdministrativeAgent in connection with such Audits (including, without limitation, a $850 perday per field examiner charge); provided, that so long as no Event ofDefault has occurred and is continuing and Availability is equal to or greaterthan the Required Minimum Availability, Borrowers shall not be liable for suchAudit fees incurred in connection with more than two (2) such Audits during anyfiscal year, whether such Audits are conducted by employees of AdministrativeAgent or by third parties hired by Administrative Agent (it being understoodand agreed that Borrowers shall bear all fees, costs and expenses of Auditsconducted when an Event of Default has occurred and is continuing or at anytime after Availability fails to equal at least the Required MinimumAvailability until Availability has subsequently exceeded $42,500,000 for eachday during a period of 30 consecutive days). Such Audit fees and out-of-pocket expenses shall be payable within 10days after Borrower Representative’s receipt from Administrative Agent of aninvoice therefor.  Administrative Agentmay, in its sole discretion, provide for the payment of such amounts by makingappropriate Revolving Credit Loans to Borrowers and charging Borrowers’ LoanAccount therefor.

 

2.7                                 Reimbursementof Expenses.  If,at any time or times regardless of whether or not an Event of Default thenexists, (i) Administrative Agent or the Co-Lead Arrangers incur reasonablelegal or accounting expenses or any other reasonable costs or out-of-pocketexpenses in connection with the negotiation and preparation of this Agreementor any of the other Loan Documents, or any syndication or attempted syndicationof the Obligations (including, without limitation, printing and distribution ofmaterials to prospective Lenders and all costs associated with bank meetings,but excluding any closing fees paid to Lenders in connection therewith); or(ii)

 

----

 

Administrative Agent incursreasonable legal or accounting expenses or any other reasonable costs orout-of-pocket expenses in connection with any (1) amendment of or modificationof this Agreement or any of the other Loan Documents, the administration ofthis Agreement or any of the other Loan Documents and the transactionscontemplated hereby and thereby; or (2) any attempt to inspect or verify theCollateral; or (iii) Administrative Agent incurs legal or accounting expensesor other costs or out-of-pocket expenses in connection with (1) any litigation,contest, dispute, suit, proceeding or action (whether instituted byAdministrative Agent, any Lender, any Borrower or any other Person) relating tothe Collateral, this Agreement or any of the other Loan Documents or anyBorrower’s or any of its Subsidiaries’ affairs; (2) any attempt to enforce anyrights of Administrative Agent or any Lender against any Borrower or any otherPerson which may be obligated to Administrative Agent or any Lender by virtueof this Agreement or any of the other Loan Documents, including, withoutlimitation, the Account Debtors; or (3) any attempt to protect, preserve,restore, collect, sell, liquidate or otherwise dispose of or realize upon theCollateral; then all such legal and accounting expenses and other costs andout-of-pocket expenses of Administrative Agent or the Co-Lead Arrangers (asapplicable) shall be charged to Borrowers; provided, that Borrowersshall not be responsible for any such legal and accounting and other costs andout-of-pocket expenses (x) to the extent incurred because of the grossnegligence or willful misconduct of Administrative Agent or such Co-LeadArrangers (as applicable) as determined by a final non-appealable (or the timeto appeal for which has run) judgment of a court of competent jurisdiction or(y) to the extent such costs and expenses result from a claim brought by anyBorrower against Administrative Agent or such Joint Lead Arranger (as applicable)for breach in bad faith of such Person’s obligations hereunder, if suchBorrower has obtained a final non-appealable (or the time to appeal for whichhas run) judgment in its favor on such claim as determined by a court ofcompetent jurisdiction.  All amountschargeable to Borrowers under this subsection 2.7 shall beObligations secured by all of the Collateral, shall be payable on demand toAdministrative Agent or the applicable Co-Lead Arranger, as the case may be,and shall bear interest from the date such demand is made until paid in full atthe rate applicable to Base Rate Revolving Portions from time to time.  Borrowers shall also reimburse AdministrativeAgent for expenses incurred by Administrative Agent in its administration ofthe Collateral to the extent and in the manner provided in subsections 2.8and 2.9 hereof.

 

2.8                                 BankCharges.  Borrowersshall pay to Administrative Agent, for the benefit of itself or the applicableLenders, on demand, any and all reasonable fees, costs or expenses which AdministrativeAgent or any Lender pays to a bank or other similar institution arising out ofor in connection with (i) the forwarding to any Borrower or any otherPerson on behalf of any Borrower, by Administrative Agent or any Lender, ofproceeds of Loans made to Borrowers pursuant to this Agreement and(ii) the depositing for collection by Administrative Agent or any Lenderof any check or item of payment received or delivered to Administrative Agentor any Lender on account of the Obligations.

 

2.9                                 Collateral Protection Expenses; Appraisals.  All reasonable out-of-pocket expensesincurred in protecting, storing, warehousing, insuring, handling, maintainingand shipping the Collateral, and any and all excise, property, sales, and usetaxes imposed

 

----

 

by any state, federal, or localauthority on any of the Collateral or in respect of the sale thereof shall beborne and paid by Borrowers.  All suchexpenses shall be payable upon demand, and if Borrowers fail to promptly payany portion thereof when due, Administrative Agent may, at its option, butshall not be required to, pay the same and charge Borrowers therefor, includingby the making of Revolving Credit Loans to Borrowers in the amount thereof andentering such amount as a debit in the Loan Account.  Additionally, Borrowers shall bear the costand expense of (i) the appraisals of the Rental Equipment Inventoryrequired pursuant to subsection 8.1.1(ii) and (ii) if a Default orEvent of Default shall have occurred and be continuing, appraisals fromappraisers engaged by Administrative Agent from time to time  (who may be personnel of AdministrativeAgent), stating the then current fair market value of all or any portion of thereal estate or personal property of any Borrower or any of its Subsidiaries,including without limitation the Inventory (but excluding the Rental EquipmentInventory) of any Borrower and its Subsidiaries.

 

2.10                           Paymentof Charges.  Allamounts chargeable to Borrowers under this Agreement shall be Obligationssecured by all of the Collateral, shall be, unless specifically otherwiseprovided, payable on demand and shall bear interest from the date demand wasmade or such amount is due, as applicable, until paid in full at the DefaultRate.

 

2.11                           NoDeductions.

 

2.11.1                                          Any and all payments orreimbursements made hereunder or under any other Loan Document shall be madefree and clear of and without deduction for any and all taxes, levies, imposts,deductions, charges or withholdings, and all liabilities with respect thereto;excluding, however, the following:  (x)taxes imposed on or measured by the net income of Administrative Agent or anyLender or franchise taxes by the United States or by the jurisdiction under thelaws of which Administrative Agent or any Lender is organized or doing businessor any political subdivision thereof and (y) taxes imposed on or measured byits net income by the jurisdiction of Administrative Agent’s or such Lender’sapplicable lending office or any political subdivision thereof or franchisetaxes (all such taxes, levies, imposts, deductions, charges or withholdings andall liabilities with respect thereto excluding such taxes imposed on netincome, herein **“Tax Liabilities”**).  If any Borrower shall be required by law todeduct any such Tax Liabilities from or in respect of any sum payable orreimbursable hereunder or under any other Loan Document to Administrative Agentor any Lender, then (x) the sum so payable or reimbursable shall be increasedas may be necessary so that, after all required deductions are made,Administrative Agent or such Lender receives an amount equal to the sum itwould have received had no such deductions been made, (y) such Borrower shallmake such deductions and pay the full amount deducted to the relevant taxingauthority or other authority in accordance with applicable law and (z) suchBorrower shall deliver to Administrative Agent evidence of such payment.

 

2.11.2                                          In addition each Borrower agrees topay any present or future stamp or documentary taxes or any other excise orproperty taxes, charges or similar levies of the United States or any politicalsubdivision thereof or any applicable foreign

 

----

 

jurisdiction, and allliabilities with respect thereto, which arise from any payment made under anyLoan Document or from the execution, delivery or registration of, or otherwisewith respect to, any Loan Document (collectively, **“Other Taxes”**).

 

2.11.3                                          Borrowers shall jointly andseverally indemnify Administrative Agent and each Lender for the amount of TaxLiabilities and Other Taxes (including any Tax Liabilities or Other Taxesimposed by any jurisdiction on amounts payable under this subsection 2.11)paid by Administrative Agent or such Lender (as the case may be) and anyliability (including for penalties, interest and expenses) arising therefrom orwith respect thereto, whether or not such Tax Liabilities or Other Taxes werecorrectly or legally asserted.  Thisindemnification payment shall be made within 30 days from the dateAdministrative Agent or such Lender (as the case may be) makes written demandtherefor.

 

2.11.4                                          Each Lender that is organized underthe laws of any jurisdiction other than the United States or any state orpolitical subdivision thereof agrees (i) to furnish to AdministrativeAgent and Borrowers (x) either IRS Form W-8BEN or IRS Form W-8ECI, in each casecertifying such Lender’s entitlement to a complete exemption from, or a reducedrate of, United States federal withholding tax on all payments made hereunderor under any other Loan Document, (y) to the extent that such Lender does notact or ceases to act for its own account with respect to any portion of anyamounts paid or payable to such Lender hereunder or under any other LoanDocument, IRS Form W-8IMY together with any information such Lender chooses totransmit with such form, and any other certificate or statement required underapplicable United States laws and regulations, to establish that such Lender isnot acting for its own account with respect to a portion of any such amountspaid or payable to such Lender or (z) any other form, certificate or documentprescribed by the IRS certifying as to such Lender’s entitlement to completeexemption from, or a reduced rate of, United States federal withholding tax onall payments made hereunder or under any other Loan Document, (ii) toprovide to Administrative Agent and Borrowers new forms upon the obsolescenceof any previously delivered forms and comparable statements in accordance withapplicable United States laws and regulations and amendments, duly executed andcompleted by such Lender, and (iii) to comply from time to time with allapplicable United States laws and regulations with regard to such withholdingtax exemption or reduction in withholding tax rate.  Notwithstanding any other provision of this subsection 2.11.4,no Lender that is organized under the laws of any jurisdiction other than theUnited States or any state or political subdivision thereof shall be requiredto deliver after the date such Lender became a party to this Agreement anyform, certificate, document or statement pursuant to this subsection 2.11.4that such Lender is not legally entitled to deliver.

 

2.11.5                                          Notwithstanding anything to thecontrary contained in subsection 2.11.1, (i) each Borrower shall beentitled, to the extent it is required to do so by law, to deduct or withholdTax Liabilities imposed by the United States (or any political subdivision ortaxing authority thereof or therein) from interest, fees or other amountspayable hereunder for the account of any Lender that is organized under thelaws of any jurisdiction other than the United States or any state or politicalsubdivision

 

----

 

thereof to the extentthat such Lender has not provided to such Borrower IRS forms that establishentitlement to a complete exemption from, or a reduced rate of, United Statesfederal withholding tax (and each Borrower hereby agrees to give AdministrativeAgent prompt written notice in the event that it is required to so deduct orwithhold) and (ii) Borrowers shall not be obligated pursuant to subsection 2.11.1hereof to pay additional amounts to any Lender that is organized under the lawsof any jurisdiction other than the United States or any state or politicalsubdivision thereof in respect of Tax Liabilities imposed by the United Statesto the extent that (x) the obligation to pay such additional amounts would nothave arisen but for the failure of such Lender to comply with the requirementsof subsection 2.11.4 or (y) the obligation to pay such additionalamounts does not result from a change in applicable laws (including applicablestatutes, regulations, administrative interpretations, judicial decisions andtreaties) occurring after the date on which such Lender became a party to thisAgreement.

 

2.11.6                                          Within 30 days after the date of anypayment of Tax Liabilities or Other Taxes, the relevant Borrower shall furnishto Administrative Agent the original or a certified copy of a receipt (or anyother form, certificate or document reasonably acceptable to AdministrativeAgent) evidencing payment thereof.

 

2.11.7                                          Without prejudice to the survival ofany other agreement of any Borrower hereunder, the agreements and obligationsof Borrowers contained in this subsection 2.11 shall survive thetermination of this Agreement and the payment in full of the Obligations.

 

2.11.8                                          If any Lender determines, in itssole discretion, that it has actually received a refund in respect of any TaxLiabilities with respect to which any Borrower has paid additional amounts tosuch Lender pursuant to subsection 2.11.1, such Lender shallpromptly notify Administrative Agent and pay such refund over to the BorrowerRepresentative (but only to the extent of additional amounts paid by therelevant Borrower under subsection 2.11.1 with respect to TaxLiabilities giving rise to such refund), on an after-tax basis, net of allexpenses incurred by such Lender in connection with obtaining such refund andwithout interest; provided, that Borrower Representative, upon therequest of such Lender, shall repay to such Lender the amount previously paidover to Borrower Representative (plus any penalties, interest or other chargesimposed by the relevant taxing authority) in the event that such Lender isrequired to repay such refund to such taxing authority.  Nothing in this subsection 2.11.8shall interfere with the right of any Lender to arrange its tax affairs inwhatever manner it deems fit or require any Lender to disclose to BorrowerRepresentative, any Borrower or any other Person any information or anycomputations relating to its tax affairs.

 

2.11.9                                          (a)  If Administrative Agent or any Lender claims reimbursement orcompensation under this subsection 2.11, Administrative Agent shalldetermine the amount thereof and shall deliver to Borrower Representative(with, if applicable, a copy to the affected Lender) a statement setting forthin reasonable detail the amount payable to Administrative Agent or the affectedLender, and such statement shall be conclusive and binding on Borrowers in theabsence of manifest error.  Failure ordelay on the part of Administrative Agent or any Lender to demand compensation

 

----

 

pursuant to this subsection 2.11shall not constitute a waiver of Administrative Agent’s or such Lender’s rightto demand such compensation; provided that Borrowers shall not berequired to compensate Administrative Agent or a Lender pursuant to this subsection 2.11for any Tax Liabilities, Other Taxes or additional amounts incurred more than180 days prior to the date that Administrative Agent or such Lender, as thecase may be, notifies Borrower Representative of its intention to claimcompensation under this subsection; providedfurther that, if thecircumstances giving rise to such claim are retroactive, then the 180-dayperiod referred to above shall be extended to include the period of retroactiveeffect thereof.

 

(b)         Ifa Lender claims any compensation pursuant to this subsection 2.11,then (a) such Lender shall use reasonable efforts (consistent with legal andregulatory restrictions) to designate a different lending office or to file anystatement or document reasonably requested by Borrowers if the making of suchdesignation or filing would avoid the need for, or reduce the amount of, anysuch amounts and would not, in the sole discretion of such Lender, be otherwisedisadvantageous to such Lender and (b) at Borrowers’ request, AdministrativeAgent or an Eligible Assignee reasonably acceptable to Administrative Agent andBorrowers shall have the right (but not the obligation) to purchase from suchLender, and each such Lender shall, upon such request, sell and assign toAdministrative Agent or such Eligible Assignee, all of such Lender’soutstanding Loan Commitments hereunder. Such sale and assignment shall be consummated promptly afterAdministrative Agent has arranged for a purchase by Administrative Agent or anEligible Assignee pursuant to an Assignment and Assumption Agreement, and at aprice equal to the outstanding principal balance of such Lender’s Loans, plusaccrued interest and fees, without premium or discount.

 

**SECTION 3. ** LOANADMINISTRATION

 

3.1                                 Manner of Borrowing Revolving Credit Loans/LIBOROption.  Borrowingsunder the credit facility established pursuant to Section 1 hereofshall be as follows:

 

3.1.1                                                Loan Requests for Revolving CreditLoans.** **Arequest for a Revolving Credit Loan shall be made, or shall be deemed to bemade, in the following manner: (a) Borrower Representative, on its own behalf and on behalf of allother Borrowers, may give Administrative Agent notice of its intention toborrow, in which notice Borrower Representative shall specify the amount of theproposed borrowing of a Revolving Credit Loan (which shall be no less than (x)$500,000 or an integral multiple of $100,000 in excess thereof in the case ofBase Rate Revolving Portions and (y) $1,000,000 or an integral multiple of$500,000 in excess thereof in the case of LIBOR Revolving Portions, provided,that such minimum amounts shall not apply to any borrowing consisting ofSwingline Loans as to which there shall be no minimum borrowing amount)****and the proposed borrowing date, whichshall be a Business Day, no later than 11:00 a.m. (Chicago, Illinois time) onthe proposed borrowing date (or in accordance with subsections 3.1.7,3.1.8 or 3.1.9, as applicable, in the case of a request for aLIBOR Revolving Portion), provided, however, that no such requestmay be made at a time when there exists a Default or an Event of Default; and(b) the becoming due of

 

----

 

any amount requiredto be paid and not paid when due under this Agreement, or the Notes, whether asinterest or for any other Obligation, shall be deemed irrevocably to be arequest for a Revolving Credit Loan on the due date in the amount required topay such interest or other Obligation.

 

3.1.2                                                Disbursement. Borrowers hereby irrevocably authorize Administrative Agent to disbursethe proceeds of each Loan requested, or deemed to be requested, pursuant to subsection 3.1.1as follows:  (i) the proceeds ofeach Revolving Credit Loan requested under subsection 3.1.1(a)shall be disbursed by Administrative Agent in lawful money of the United Statesof America in immediately available funds, in the case of the initialborrowing, in accordance with the terms of the written disbursement letter fromBorrower Representative, on its own behalf and on behalf of all otherBorrowers, and in the case of each subsequent borrowing, by wire transfer tosuch bank account as may be agreed upon by Borrowers and Administrative Agentfrom time to time or elsewhere if pursuant to a written direction from Borrowers;and (ii) the proceeds of each Revolving Credit Loan deemed requested undersubsection 3.1.1(b) shall be disbursed by Administrative Agent byway of direct payment of the relevant interest or other Obligation.  If at any time any Loan is funded by AdministrativeAgent or Lenders in excess of the amount requested or deemed requested byBorrowers, Borrowers agree to repay the excess to Administrative Agentimmediately upon the earlier to occur of (a) any Borrower’s discovery of theerror and (b) notice thereof to Borrowers from Administrative Agent or anyLender.

 

3.1.3                                                Payment by Lenders. (a) Administrative Agent shall give to each Lender prompt written noticeby facsimile, electronic mail (including via Intralinks or a similar service),telex or cable of the receipt by Administrative Agent from BorrowerRepresentative of any request for a Revolving Credit Loan.  Each such notice shall specify the requesteddate and amount of such Revolving Credit Loan, whether such Revolving CreditLoan shall be subject to the LIBOR Option, and the amount of each Lender’sadvance thereunder (in accordance with its applicable Revolving LoanPercentage).  Each Lender shall, notlater than 2:00 p.m. (Chicago time) on such requested date, wire to a bankdesignated by Administrative Agent the amount of that Lender’s Revolving LoanPercentage of the requested Revolving Credit Loan.  The failure of any Lender to make theRevolving Credit Loans to be made by it shall not release any other Lender ofits obligations hereunder to make its Revolving Credit Loan.  Neither Administrative Agent nor any otherLender shall be responsible for the failure of any other Lender to make theRevolving Credit Loan to be made by such other Lender.  The foregoing notwithstanding, AdministrativeAgent, in its sole discretion, may from its own funds make a Revolving CreditLoan on behalf of any Lender.  In suchevent, the Lender on behalf of whom Administrative Agent made the RevolvingCredit Loan shall reimburse Administrative Agent for the amount of suchRevolving Credit Loan made on its behalf, on a weekly (or more frequent, asdetermined by Administrative Agent in its sole discretion) basis.  On each such settlement date, AdministrativeAgent will pay to each Lender the net amount owing to such Lender in connectionwith such settlement, including without limitation amounts relating to Loans,fees, interest and other amounts payable hereunder.  The entire amount of interest attributable tosuch Revolving Credit Loan for the period from the date on which such RevolvingCredit Loan was made by

 

----

 

Administrative Agenton such Lender’s behalf until Administrative Agent is reimbursed by suchLender, shall be paid to Administrative Agent for its own account.

 

(b)                               If(i) any Lender fails to make available its Revolving Loan Percentage of anyRevolving Credit Loan to be made on the applicable borrowing date or (ii) inthe event that Administrative Agent has made such Revolving Loan Percentageavailable to Borrowers on behalf of such Lender and, such Lender fails toreimburse Administrative Agent as provided in paragraph (a) above (such Lender,a **“Defaulting Lender****”**), Administrative Agent will notify Borrower Representativeof such failure to fund and, upon demand by Administrative Agent, Borrowersshall pay such amount to Administrative Agent for Administrative Agent’saccount, together with interest thereon for each day elapsed since the date ofsuch borrowing, at a rate per annum equal to the interest rate applicable atthe time to the Revolving Credit Loans comprising that particularborrowing.  Administrative Agent shallnot be obligated to transfer to a Defaulting Lender any payments made byBorrowers to Administrative Agent for the Defaulting Lender’s benefit; norshall a Defaulting Lender be entitled to the sharing of any paymentshereunder.  Amounts payable to aDefaulting Lender shall instead be paid to or retained by AdministrativeAgent.  In its discretion, AdministrativeAgent may loan Borrowers the amount of all such payments received or retainedby it for the account of such Defaulting Lender.  Any amounts so loaned to Borrowers shall bearinterest at the rate applicable to Base Rate Revolving Portions and for allother purposes of this Agreement shall be treated as if they were RevolvingCredit Loans, providedhowever, that for purposes of voting orconsenting to matters with respect to the Loan Documents and determiningRevolving Loan Percentages, such Defaulting Lender shall be deemed not to be a “Lender”.  Until a Defaulting Lender cures its failureto fund its Revolving Loan Percentage of any borrowing (A) such DefaultingLender shall not be entitled to any portion of the Unused Line Fee, (B) theUnused Line Fee shall accrue in favor of the Lenders which have funded theirrespective Revolving Loan Percentages of such requested borrowing and shall beallocated among such performing Lenders ratably based upon their relative LoanCommitments and (C) if all of the conditions to such borrowing had been met byBorrowers and neither Administrative Agent nor any other Lender funds theDefaulting Lender’s Revolving Loan Percentage of such borrowing, the UnusedLine Fee shall be calculated as if the Defaulting Lender’s Revolving LoanPercentage of such borrowing had been funded. This subsection shall remain effective with respect to such Lenderuntil such time as the Defaulting Lender shall no longer be in default of anyof its obligations under this Agreement. The terms of this subsection shall not be construed to increase orotherwise affect the Loan Commitment of any Lender, or relieve or excuse theperformance by any Borrower of its duties and obligations hereunder.

 

3.1.4                                                Authorization. Borrowers hereby irrevocably authorize Administrative Agent, inAdministrative Agent’s sole discretion, to advance to Borrowers, and to chargeto Borrowers’ Loan Account hereunder as a Revolving Credit Loan (which shall bea Base Rate Revolving Portion), a sum sufficient to pay all interest accruedand unpaid on the Obligations then due and to pay all fees, costs and expensesand other Obligations at any time due and payable by any Borrower toAdministrative Agent or any Lender hereunder, provided that accruedinterest on LIBOR Portions shall

 

----

 

only be chargeable tothe Loan Account on the applicable LIBOR Interest Payment Date and any otherdate on which a LIBOR Portion is prepaid.

 

3.1.5                                                Letter of Credit Requests. A request for a Letter of Credit shall be made in the followingmanner:  Borrower Representative, on itsown behalf and on behalf of all other Borrowers, may give Administrative Agentand Bank a written notice of its request for the issuance of a Letter ofCredit, not later than 11:00 a.m. (Chicago, Illinois time), one Business Daybefore the proposed issuance date thereof, in which notice Borrower Representativeshall specify the proposed issuer, issuance date and format and wording for theLetter of Credit being requested (which shall be satisfactory to AdministrativeAgent and the Person being asked to issue such Letter of Credit); provided,that no such request may be made at a time when a Default or Event of Defaulthas occurred and is continuing.  Suchrequest shall be accompanied by an executed application and reimbursementagreement in form and substance satisfactory to Administrative Agent and thePerson being asked to issue the Letter of Credit, as well as any requiredresolutions.

 

3.1.6                                                Method of Making Requests. As an accommodation to Borrowers, unless a Default or an Event ofDefault has occurred and is continuing, (i) Administrative Agent shallpermit telephonic or electronic requests for Revolving Credit Loans toAdministrative Agent, (ii) Administrative Agent and Bank may, in theirsole discretion, permit electronic transmittal of requests for Letters ofCredit to them, and (iii) Administrative Agent may, in AdministrativeAgent’s sole discretion, permit electronic transmittal of instructions,authorizations, agreements or reports to Administrative Agent.  Unless Borrower Representative, on its ownbehalf and on behalf of all other Borrowers specifically directs AdministrativeAgent or Bank in writing not to accept or act upon telephonic or electroniccommunications from any Borrower, neither Administrative Agent nor Bank shallhave any liability to Borrowers for any loss or damage suffered by any Borroweras a result of Administrative Agent’s or Bank’s honoring of any requests,execution of any instructions, authorizations or agreements or reliance on anyreports communicated to it telephonically or electronically and purporting tohave been sent to Administrative Agent or Bank by any Borrower, and neitherAdministrative Agent nor Bank shall have any duty to verify the origin of anysuch communication or the authority of the Person sending it.  Each telephonic request for a RevolvingCredit Loan, Letter of Credit accepted by Administrative Agent and Bank, ifapplicable, hereunder shall be promptly followed by a written confirmation ofsuch request from Borrowers to Administrative Agent and Bank, if applicable.

 

3.1.7                                                LIBOR Portions. Provided that as of both the date of the LIBOR Request and the first dayof the Interest Period, no Default or Event of Default has occurred and iscontinuing, in the event Borrowers desire to obtain a LIBOR Portion, BorrowerRepresentative, on its own behalf and on behalf of all other Borrowers, shallgive Administrative Agent a LIBOR Request no later than 11:00 a.m. (Chicago,Illinois time) on the third Business Day prior to the requested borrowingdate.  Each LIBOR Request shall be irrevocableand binding on Borrowers.  In no eventshall Borrowers be permitted to have outstanding at any one time LIBOR Portionswith more than ten (10) different Interest Periods.

 

----

 

3.1.8                                                Conversion of Base Rate Portions. Provided that as of both the date of the LIBOR Request and the first dayof the Interest Period, no Default or Event of Default has occurred and iscontinuing, Borrowers may, on any Business Day, convert any Base Rate Portioninto a LIBOR Portion.  If Borrowersdesire to convert a Base Rate Portion, Borrower Representative, on its ownbehalf and on behalf of all other Borrowers, shall give Administrative Agent aLIBOR Request no later than 11:00 a.m. (Chicago, Illinois time) on the thirdBusiness Day prior to the requested conversion date.  After giving effect to any conversion of BaseRate Portions to LIBOR Portions, Borrowers shall not be permitted to haveoutstanding at any one time LIBOR Portions with more than ten (10)****different Interest Periods.

 

3.1.9                                                Continuation of LIBOR Portions. Provided that, as of both the date of the LIBOR Request and the firstday of the Interest Period, no Default or Event of Default has occurred and iscontinuing, Borrowers may, on any Business Day, continue any LIBOR Portionsinto a subsequent Interest Period of the same or a different permittedduration.  If Borrowers desire tocontinue a LIBOR Portion, Borrower Representative, on its own behalf and onbehalf of all other Borrowers, shall give Administrative Agent a LIBOR Requestno later than 11:00 a.m. (Chicago, Illinois time) on the third Business Dayprior to the requested continuation date. After giving effect to any continuation of LIBOR Portions, Borrowersshall not be permitted to have outstanding at any one time LIBOR Portions withmore than ten (10) different Interest Periods. If Borrower Representative shall fail to give timely notice of itselection to continue any LIBOR Portion or portion thereof as provided above, orif such continuation shall not be permitted, such LIBOR Portion or portionthereof, unless such LIBOR Portion shall be repaid, shall automatically beconverted into a Base Rate Portion at the end of the Interest Period then ineffect with respect to such LIBOR Portion.

 

3.1.10                                          Inability to Make LIBOR Portions. Notwithstanding any other provision hereof, if any applicable law,treaty, regulation or directive, or any change therein or in the interpretationor application thereof, shall make it unlawful for any Lender (for purposes ofthis subsection 3.1.10, the term **“Lender”**shall include the office or branch where such Lender or any Person thencontrolling such Lender makes or maintains any LIBOR Portions) to make ormaintain its LIBOR Portions, or if with respect to any Interest Period,Administrative Agent is unable to determine the LIBOR relating thereto, or adverseor unusual conditions in, or changes in applicable law relating to, the Londoninterbank market make it, in the reasonable judgment of Administrative Agent,impracticable to fund therein any of the LIBOR Portions, or make the projectedLIBOR unreflective of the actual costs of funds therefor to any Lender, then,on notice thereof by such Lender or Administrative Agent (as applicable) toBorrower Representative (with a copy to Administrative Agent, if applicable),the obligation of Administrative Agent and Lenders to make or continue LIBORPortions or convert Base Rate Portions to LIBOR Portions hereunder shallforthwith be suspended until such Lender or Administrative Agent notifiesBorrower Representative (with a copy to Administrative Agent, if applicable)that such circumstances no longer exist and, Borrowers shall, if any affectedLIBOR Portions are then outstanding, promptly upon request from AdministrativeAgent, convert such affected LIBOR Portions into Base Rate Portions.  Administrative Agent or the relevant Lender(as applicable) will endeavor to

 

----

 

give BorrowerRepresentative prompt notice of the cessation of the circumstance giving riseto the suspension of LIBOR availability, provided that the failure togive any such notice shall not result in any liability of Administrative Agentor any Lender hereunder or in the modification, alteration, impairment, orwaiver of the rights of Administrative Agent or any Lender hereunder.

 

3.2                                 Payments.

 

3.2.1                                                Principal.

 

(i)                                     Revolving Credit Loans. Principal on account of Revolving Credit Loans shall be payable byBorrowers to Administrative Agent for the ratable benefit of Lendersimmediately upon the earliest of (i) the receipt by Administrative Agentor any Borrower of any proceeds of any of the Collateral pursuant to subsections 3.3.1,6.2.4 and 6.2.5, to the extent of said proceeds, providedthat (x) any such prepayment with the proceeds of any of the Property that isrequired to be applied to the Loans and Obligations in accordance with subclauses(i), (ii) or (iii) of subsection 3.3.1 shallresult in a corresponding reduction of the Revolving Loan Commitments and (y)repayments of proceeds of Collateral (other than proceeds required to beapplied pursuant to subclauses (i), (ii) or (iii) of subsection 3.3.1)pursuant to subsection 6.2.4 or 6.2.5 may be reborrowedsubject to the other terms and conditions hereof; (ii)** **the occurrence of an Event of Defaultin consequence of which Administrative Agent or Majority Lenders elect toaccelerate the maturity and payment of the Obligations, or(iii) termination of this Agreement, the Revolving Loan Commitments and/orthe acceleration of the Obligations pursuant to Section 4 hereof; provided,however, that, if at any time an Overadvance shall exist, Borrowers shall,on demand, repay the Overadvance.  If forany other reason the aggregate principal amount of all Revolving Credit Loansplus the unpaid balance of LC Obligations plus the sum of the LC Amount plusthe amount of the Outstanding LC Obligations, plus reserves, exceeds theBorrowing Base, then Borrowers shall immediately repay such excess.  Each such payment (including principalprepayment) by Borrowers on account of principal of the Revolving Credit Loansshall be applied first to Base Rate Revolving Portions and then to LIBORRevolving Portions.

 

(ii)                                  Term Loan. Principal payable on account of the Term Loan shall be payable byBorrowers in twenty (20) quarterly installments.  Each of the first nineteen (19) installmentsof principal shall be in an amount equal to $500,000 and shall be payable onthe first day of each quarter, commencing on September 30, 2004 and endingon June 30, 2009.  The finalinstallment of principal shall be in the amount of $190,500,000 or otherwise inan amount equal to the then remaining principal balance of the Term Loans, andshall be payable on the last day of the Term. Each such installment shall be payable to Administrative Agent for theaccount of the applicable Lender.  TheTerm Loans shall be payable in full on the last day of the Term.  Payments or prepayments of the Term Loans maynot be reborrowed.

 

----

 

3.2.2                                                Interest.

 

(i)                                     Base Rate Portion. Interest accrued on the Base Rate Portion shall be due and payable onthe earliest of (1) the first calendar day of each month (for the immediatelypreceding month), computed through the last calendar day of the precedingmonth, (2) the occurrence of an Event of Default in consequence of whichAdministrative Agent or Majority Lenders elect to accelerate the maturity andpayment of the Obligations (or in consequence of which payment of theObligations is automatically accelerated) or (3) termination of this Agreementpursuant to Section 4 hereof.

 

(ii)                                  LIBOR Portion. Interest accrued on each LIBOR Portion shall be due and payable on eachLIBOR Interest Payment Date and on the earlier of (1) the occurrence of anEvent of Default in consequence of which Administrative Agent or MajorityLenders elect to accelerate the maturity and payment of the Obligations (or inconsequence of which payment of the Obligations is automatically accelerated)or (2) termination of this Agreement pursuant to Section 4 hereof.

 

(iii)                               Default Interest. Interest accrued on the Obligations at the Default Rate shall be due andpayable on demand by Administrative Agent.

 

3.2.3                                                Costs, Fees and Charges. Costs, fees and charges payable pursuant to this Agreement shall bepayable by Borrowers to Administrative Agent, as and when provided in Section 2or Section 3 hereof, as applicable to Administrative Agent or aLender, as applicable, or to any other Person designated by AdministrativeAgent or such Lender in writing.

 

3.2.4                                                Other Obligations. The balance of the Obligations requiring the payment of money, if any,shall be payable by Borrowers to Administrative Agent for distribution toLenders, as appropriate, as and when provided in this Agreement, the OtherAgreements or the Security Documents, or if not so provided, on demand.

 

3.2.5                                                Prepayment of/Failure to BorrowLIBOR Portions.  Borrowers may prepay a LIBOR Portion onlyupon three (3) Business Days’ prior written notice to Administrative Agent(which notice shall be irrevocable).  Inthe event of (i) the payment of any principal of any LIBOR Portion otherthan on the last day of the Interest Period applicable thereto (including as aresult of an Event of Default), (ii) the conversion of any LIBOR Portionother than on the last day of the Interest Period applicable thereto, or(iii) the failure to borrow, convert, continue or prepay any LIBOR Portionon the date specified in any notice delivered pursuant hereto, then, in anysuch event (the events described in the foregoing clauses (i),(ii)and (iii), each a **“Breakage Event”**),Borrowers shall compensate each Lender for the loss, cost and expenseattributable to such event, as determined by such Lender in a manner consistentwith its customs and practices.  If anyLender claims compensation under this subsection 3.2.5, such Lendershall determine the amount thereof and shall deliver to BorrowerRepresentative, within

 

----

 

30 days of theoccurrence of the Breakage Event giving rise to a claim for compensation, astatement setting forth in reasonable detail the amount payable to such Lender,and such statement shall be conclusive and binding on Borrowers in the absenceof manifest error.  Amounts payablepursuant to this subsection 3.2.5 shall be due and payable byBorrowers within 10 days of receipt of such statement from such Lender.

 

3.3                                 Mandatory and Optional Prepayments.

 

3.3.1                                                Proceeds of Sale, Loss, Destructionor Condemnation of Collateral.  Except withrespect to sales or dispositions permitted by subsection 8.2.8(unless subsection 8.2.8 specifically provides for a prepayment ofthe Loans and other Obligations), if any Borrower or any of its Subsidiariessells any of the Property or if any Property of any Borrower or any of theirSubsidiaries is lost or destroyed or taken by condemnation, Borrowers shall,unless otherwise agreed by Majority Lenders, pay to Administrative Agent forthe ratable benefit of Lenders as and when received by any Borrower or suchSubsidiary and as a mandatory prepayment of the Loans and other Obligations, asherein provided, a sum equal to 100% of the Net Cash Proceeds received by suchBorrower or such Subsidiary from such sale, loss, destruction or condemnationto be applied first to any payments or prepayments required, pursuant to subsection 3.2.1(i),  with respect to any Overadvance or othersituation in which the aggregate principal amount of all Revolving Credit Loansplus the unpaid balance of LC Obligations plus the sum of the LC Amount plusthe amount of the Outstanding LC Obligations, plus reserves, exceeds theBorrowing Base, accompanied by a permanent reduction of the Revolving LoanCommitments (such reduction to be on a dollar-for-dollar basis with the amountof such repayment and to be ratable among the Lenders), and thereafter to theLoans and other Obligations as follows:

 

(i)                                     except as provided in clauses(ii) and (iii) below, the applicable prepayment shall be applied firstto the installments of principal payable under the Term Loans, in the inverseorder of maturity (beginning with the payment due on the last day of the Term)and ratably amongst the Lenders until paid in full, second****to repay outstanding principal of RevolvingCredit Loans until paid in full, in each case accompanied by a permanentreduction of the Revolving Loan Commitments (such reduction to be on adollar-for-dollar basis with the amount of such repayment and to be ratableamong the Lenders), and third, to cash collateralize outstanding Lettersof Credit;

 

(ii)                                  notwithstanding clause (i),if any Collateral consisting of all or part of the assets or businessconstituting the Studio and Hoist business units of Borrowers is sold, whetherin a single transaction or a series of related transactions, and BorrowerRepresentative shall have given Administrative Agent written notice prior tothe consummation of such sale of Borrowers’ intention to use the Net CashProceeds thereof to reinvest in the business of Borrowers and theirSubsidiaries (other than Foreign Subsidiaries) through the purchase of assetsused or useful in the business of Borrowers and their Subsidiaries (other thanForeign Subsidiaries), then such Net Cash Proceeds shall be provisionallyapplied to reduce the outstanding principal balance of the

 

----

 

RevolvingCredit Loans until paid in full and thereafter to cash collateralize Letters ofCredit pending such reinvestment; provided, that if (1) any Default orEvent of Default shall have occurred and be continuing on the date such NetCash Proceeds are received by the applicable Borrower or its Subsidiary, (2)the conditions to borrowing set forth in subsection 9.2 can not besatisfied on the date Borrowers elect to reinvest such Net Cash Proceeds or (3)the applicable Borrower or its Subsidiary shall have failed to complete suchreinvestment within 180 days after consummation of the sale of the applicablebusiness unit, then such portion of the Net Cash Proceeds as has not beenreinvested at such time shall be paid to Administrative Agent to be applied tothe Loans and other Obligations as provided in clause (i) of this subsection 3.3.1until payment thereof in full;

 

(iii)                               notwithstanding the foregoing clause(i), if the Net Cash Proceeds with respect to any loss or destruction ofNonrental Equipment or real Property (A) are less than $5,000,000, unlessan Event of Default has occurred and is continuing on the date such Net CashProceeds are received by the applicable Borrower or its Subsidiary or the conditionsto borrowing set forth in subsection 9.2 cannot be satisfied on thedate such Net Cash Proceeds are to be remitted to Borrowers, AdministrativeAgent shall remit such Net Cash Proceeds to Borrowers for use in replacing orrepairing the damaged Collateral or purchasing assets used or useful in thebusiness of Borrowers and their Subsidiaries (other than Foreign Subsidiaries)or (B) are equal to or greater than $5,000,000 and Borrowers have requestedthat Administrative Agent agree to permit Borrowers or the applicableSubsidiary to repair or replace the damaged Collateral or to purchase assetsused or useful in the business of Borrowers and their Subsidiaries (other thanForeign Subsidiaries), such amounts shall be provisionally applied to reduce theoutstanding principal balance of the Revolving Credit Loans until the earlierof Administrative Agent’s decision with respect thereto (provided, thatif such proceeds exceed $10,000,000, the consent of the Majority Lenders shallbe required) or the expiration of 180****daysfrom such request.  If AdministrativeAgent (or Majority Lenders, as applicable) agrees, in its (or their) reasonablejudgment, to permit such repair, replacement or purchase, such amount shall,unless an Event of Default has occurred and is continuing or the otherconditions set forth in subsection 9.2 can no longer be satisfied,be remitted to Borrowers for use in replacing or repairing the damagedCollateral or to purchase assets used or useful in the business of Borrowers;if Administrative Agent (or Majority Lenders, as applicable) declines to permitsuch repair, replacement or purchase or does not respond to Borrowers withinsuch 180****day period, such amountshall be applied to the Loans and other Obligations in the manner specified in clause(i) of this subsection 3.3.1****until payment thereof in full.

 

3.3.2                                                Proceeds from Issuance of AdditionalIndebtedness or Equity.  If anyBorrower issues any additional Indebtedness (other than Permitted Indebtedness)or issues any additional equity (other than any issuance of Securitiespermitted by clauses (i), (ii),(iii) or (iv) of subsection 8.2.9),Borrowers shall pay to Administrative Agent for the ratable benefit of Lenders,when and as received by such Borrower and as a

 

----

 

mandatory prepaymentof the Obligations, a sum equal to 100% of the Net Cash Proceeds to suchBorrower of the issuance of such Indebtedness or equity.  Any such prepayment shall be applied firstto the installments of principal payable under the Term Loans, in the inverseorder of maturity (beginning with the payment due on the last day of the Term)and ratably amongst the Lenders until paid in full, second****to repay outstanding principal ofRevolving Credit Loans until paid in full, in each case accompanied by apermanent reduction of the Revolving Loan Commitments (such reduction to be ona dollar-for-dollar basis with the amount of such repayment and to be ratableamong the Lenders), and third, to cash collateralize outstanding Lettersof Credit.

 

3.3.3                                                Dominion Event. After the occurrence and during the continuance of a Dominion Event, ifon any Business Day (x) the closing balance of cash and cash equivalents ondeposit in bank accounts (including Collection Accounts and Dominion Accounts)plus (y) investments in money market funds and Securities Accounts whose assetsare substantially comprised of securities that consist of cash equivalents ofBorrowers and their Subsidiaries exceeds $1,000,000 in the aggregate, Borrowersshall prepay the Revolving Credit Loans (and, to the extent the RevolvingCredit Loans are paid in full, cash collateralize outstanding letters ofcredit), in the amount of such excess no later than the close of business onsuch Business Day; provided that such prepayments shall not permanentlyreduce the Revolving Loan Commitments.

 

3.3.4                                                Excess Cash Flow Recapture. Borrowers shall prepay the Loansin an amount equal to fifty percent (50%) of Excess Cash Flow with respect tothe period commencing July 1, 2004, and ending December 31, 2005, andfor each fiscal year of Borrowers thereafter during the Term hereof, suchprepayments to be based upon the annual financial statements required by subsection 8.1.3(ii)(A)hereof and to be made no later than the earlier of (x) 100 days after the endof each such period and (y) 10 days following the date on which annual auditedfinancial statements are required to be delivered pursuant to subsection 8.1.3(ii)(A),and each such prepayment shall be applied first to the  installments of principal payable under theTerm Loans, in the inverse order of maturity (beginning with the payment due onthe last day of the Term) and ratably amongst the Lenders until paid in full, second****to repay outstanding principal ofRevolving Credit Loans until paid in full (with a corresponding reduction inRevolving Loan Commitments) and third, to cash collateralize outstandingLetters of Credit; provided, (1) if, during the 30 day periodimmediately preceding such payment, average Available Liquidity is less than$50,000,000, or if, on the date such prepayment is due, Available Liquidity isless than $50,000,000 before giving effect to such prepayment, then Borrowersshall not be required to make such prepayment, (2) if on the date suchprepayment is due, such prepayment would result in Available Liquidity beingless than $50,000,000 (or result in the average Available Liquidity for theimmediately preceding 30 day period being less than $50,000,000), thenBorrowers shall not be required to make such prepayment to the extent suchprepayment would result in Available Liquidity being less than $50,000,000 (orresult in the average Available Liquidity for the immediately preceding 30 dayperiod being less than $50,000,000), and (3) if on the date such prepayment isdue (or, if such mandatory prepayment is made on an earlier date, the date ofsuch prepayment) the Borrowers are permitted to make a mandatory prepayment ofthe Second Lien Debt in accordance with subsection 8.2.6(iii)(1),then Borrowers shall make

 

----

 

such mandatoryprepayment pursuant to the Second Lien Debt Loan Agreement and, to the extentthat such payment is made, no prepayment under this subsection 3.3.4shall be required.

 

3.3.5                                                Optional Prepayments. Borrowers may, at their option from time to time upon not less than 1Business Days’****prior writtennotice to Administrative Agent, prepay the Revolving Loans or installments ofthe Term Notes, provided that the amount of any such prepayment is atleast $500,000****and in integralmultiples of $100,000****above$500,000, and that such prepayments are made ratably amongst Lenders withrespect to all Revolving Notes or Term Notes (as applicable).  Each such prepayment of Term Loans shall beapplied to the installments of principal due under the Term Notes in theinverse order of maturity.  Except forcharges under subsection 3.2.5 applicable to prepayments of LIBORTerm Portions, such prepayments shall be without premium or penalty.

 

3.3.6                                                Optional Reductions of RevolvingLoan Commitments.  Borrowers may, at their option from time totime upon not less than 5 Business Days’ prior written notice to AdministrativeAgent, terminate in whole or permanently reduce ratably in part, the unusedportion of the Revolving Loan Commitments, provided, however,that (i) each such partial reduction shall be in a minimum amount of$1,000,000 or integral multiples of $1,000,000 in excess thereof and (ii)unless this Agreement and the Commitments hereunder have been terminated inaccordance with subsection 4.2.2, the aggregate of all optionalreductions to the Revolving Loan Commitments may not exceed $10,000,000 duringany 12 month period or $30,000,000 during the Term.  Except for charges under subsection 3.2.5applicable to prepayments of LIBOR Revolving Portions, such prepayments shallbe without premium or penalty.

 

3.3.7                                                Mandatory Reductions of RevolvingLoan Commitments.  The Revolving Loan Commitments shall bereduced ratably among the Lenders in connection with mandatory prepayments ofthe Revolving Credit Loans to the extent provided in the applicable prepaymentprovision in Section 3.

 

3.4                                 Application of Payments and Collections.

 

3.4.1                                                Collections. All items of payment received by Administrative Agent by 12:00 noon,Chicago, Illinois, time, on any Business Day shall be deemed received on thatBusiness Day.  All items of paymentreceived after 12:00 noon, Chicago, Illinois, time, on any Business Day shallbe deemed received on the following Business Day.  If as the result of collections of Accountsas authorized by subsection 6.2.4 hereof or otherwise, a credit balanceexists in the Loan Account, such credit balance shall not accrue interest infavor of Borrowers, but shall be disbursed to Borrowers or otherwise atBorrower Representative’s direction in the manner set forth in subsection 3.1.2,upon Borrower Representative’s request at any time, so long as no Default orEvent of Default then exists. Administrative Agent may at its option, offset such credit balanceagainst any of the Obligations upon and during the continuance of an Event ofDefault.

 

----

 

3.4.2                                                Apportionment, Application andReversal of Payments.  Principal and interestpayments shall be apportioned ratably among Lenders (according to the unpaidprincipal balance of the Loans to which such payments relate held by eachLender).  All payments shall be remittedto Administrative Agent and all such payments not relating to principal orinterest of specific Loans, or not constituting payment of specific fees, andall proceeds of Accounts and Inventory, or, except as provided in subsection 3.3.1,other Collateral received by Administrative Agent, shall be applied, ratably,subject to the provisions of this Agreement, first, to pay any fees,indemnities, or expense reimbursements (other than amounts related to ProductObligations) then due to Administrative Agent or Lenders from Borrowers; second,to pay interest due from Borrowers in respect of all Loans, including SwinglineLoans and Administrative Agent Loans; third, to pay or prepay principalof Swingline Loans and Administrative Agent Loans; fourth, to pay orprepay principal of the Revolving Credit Loans (other than Swingline Loans andAdministrative Agent Loans) and unpaid reimbursement obligations in respect ofLetters of Credit; fifth, to pay an amount to Administrative Agent equalto all outstanding Obligations in respect of Letters of Credit to be held ascash Collateral for such Obligations; sixth, to pay or prepay principalof the Term Loan; seventh, to the payment of any other Obligation (otherthan amounts related to Product Obligations) due to Administrative Agent or anyLender by Borrowers; and eighth, to pay any fees, indemnities or expensereimbursements related to, or other amounts due to Administrative Agent and anyLender or Affiliate of any such Lender under or in connection with, ProductObligations.  After the occurrence andduring the continuance of an Event of Default, Administrative Agent shall havethe continuing exclusive right to apply and reapply any and all such paymentsand collections received at any time or times hereafter by Administrative Agentor its agent against the Obligations, in such manner as Administrative Agentmay deem advisable, notwithstanding any entry by Administrative Agent or anyLender upon any of its books and records, provided that such applicationor reapplication shall be consistent with the terms of this subsection 3.4.2.

 

3.5                                 All Loans and Letters of Credit to Constitute OneObligation.  TheLoans and Letters of Credit shall constitute one general Obligation ofBorrowers, and shall be secured by Administrative Agent’s Lien upon all of theCollateral.

 

3.6                                 LoanAccount. Administrative Agent shall enter all Loans as debits to a loan account(the **“Loan Account”**) and shallalso record in the Loan Account all payments made by Borrowers on anyObligations and all proceeds of Collateral which are finally paid toAdministrative Agent, and may record therein, in accordance with customaryaccounting practice, other debits and credits, including interest and allcharges and expenses properly chargeable to Borrowers pursuant to thisAgreement or any other Loan Document.

 

3.7                                 Statementsof Account. Administrative Agent will account to Borrowers monthly with a statementof Loans, charges and payments made pursuant to this Agreement during theimmediately preceding month, and such account rendered by Administrative Agentshall be deemed final, binding and conclusive upon Borrowers absentdemonstrable error unless Administrative Agent is notified by Borrowers in

 

----

 

writing to the contrary within45 days of the date each accounting is received by Borrowers.  Such notice shall only be deemed an objectionto those items specifically objected to therein.

 

3.8                                 IncreasedCosts.  If any lawor any governmental or quasi-governmental rule, regulation, policy, guidelineor directive (whether or not having the force of law) adopted or implementedafter the date of this Agreement and having general applicability to all banksor finance companies within the jurisdiction in which any Lender operates(excluding, for the avoidance of doubt, the effect of and phasing in of capitalrequirements or other regulations or guidelines passed prior to the date ofthis Agreement), or any interpretation or application thereof by anygovernmental authority charged with the interpretation or application thereof,or the compliance of such Lender therewith, shall:

 

(i)                                     (1)  subject such Lenderto any tax with respect to this Agreement (other than (a) any tax based on ormeasured by net income or otherwise in the nature of a net income tax,including, without limitation, any franchise tax or any similar tax based oncapital, net worth or comparable basis for measurement and (b) any taxcollected by a withholding on payments and which neither is computed byreference to the net income of the payee nor is in the nature of an advancecollection of a tax based on or measured by the net income of the payee) or(2)  change the basis of taxation of payments to such Lender ofprincipal, fees, interest or any other amount payable hereunder or under any LoanDocuments (other than in respect of (a) any tax based on or measured by netincome or otherwise in the nature of a net income tax, including, withoutlimitation, any franchise tax or any similar tax based on capital, net worth orcomparable basis for measurement and (b) any tax collected by a withholding onpayments and which neither is computed by reference to the net income of thepayee nor is in the nature of an advance collection of a tax based on ormeasured by the net income of the payee);

 

(ii)                                  impose, modify or hold applicableany reserve (except any reserve taken into account in the determination of theapplicable LIBOR), special deposit, assessment or similar requirement againstassets held by, or deposits in or for the account of, advances or loans by (including,without limitation, any letter of credit), or other credit extended by, anyoffice of such Lender, including (without limitation) pursuant to Regulation Dof the Board of Governors of the Federal Reserve System; or

 

(iii)                               impose on such Lender or the Londoninterbank market any other condition with respect to any Loan Document;

 

and the resultof any of the foregoing is to increase the cost to such Lender of making,renewing or maintaining Loans hereunder or the result of any of the foregoingis to reduce the rate of return on such Lender’s capital as a consequence ofits obligations hereunder, or the result of any of the foregoing is to reducethe amount of any payment (whether of principal, interest or otherwise) inrespect of any of the Loans, then, in any

 

----

 

such case,Borrowers shall pay such Lender, upon written demand therefor, not later thanthirty (30) days following its receipt of notice of the imposition of suchincreased costs, such additional amount as will compensate such Lender for suchadditional cost or such reduction, as the case may be, to the extent suchLender has not otherwise been compensated, with respect to a particular Loan,for such increased cost as a result of an increase in the Base Rate or theLIBOR.  An officer of the applicableLender shall determine the amount of such additional cost or reduced amountusing reasonable averaging and attribution methods and deliver to BorrowerRepresentative a written statement setting forth the amount of such additionalcost or reduced amount, including an explanation of such additional cost orreduction.  Such written statement shallbe conclusive absent demonstrable error. Failure or delay on the part of any Lender to demand compensationpursuant to this subsection 3.8 shall not constitute a waiver ofsuch Lender’s right to demand such compensation; provided that Borrowersshall not be required to compensate a Lender pursuant to this subsection 3.8for any increased costs or reductions incurred more than 180 days prior to thedate that such Lender notifies Borrower Representative of its intention toclaim compensation under this subsection; provided, further that,if the circumstances giving rise to such claim are retroactive, then the180-day period referred to above shall be extended to include the period ofretroactive effect thereof.  If a Lenderclaims any additional cost or reduced amount pursuant to this subsection 3.8,then (a) such Lender shall use reasonable efforts (consistent with legal andregulatory restrictions) to designate a different lending office or to file anystatement or document reasonably requested by Borrowers if the making of suchdesignation or filing would avoid the need for, or reduce the amount of, anysuch additional cost or reduced amount and would not, in the sole discretion ofsuch Lender, be otherwise disadvantageous to such Lender and (b) at Borrowers’request, Administrative Agent or an Eligible Assignee reasonably acceptable toAdministrative Agent and Borrowers shall have the right (but not the obligation)to purchase from such Lender, and each such Lender shall, upon such request,sell and assign to Administrative Agent or such Eligible Assignee, all of suchLender’s outstanding Loan Commitments hereunder.  Such sale and assignment shall be consummatedpromptly after Administrative Agent has arranged for a purchase byAdministrative Agent or an Eligible Assignee pursuant to an Assignment andAssumption Agreement, and at a price equal to the outstanding principal balanceof such Lender’s Loans, plus accrued interest and fees, without premium ordiscount.

 

3.9                                 Basis for Determining Interest Rate Inadequate.  In the event that Administrative Agent or anyLender shall have determined that:

 

(i)                                     reasonable means do not exist forascertaining the LIBOR for any Interest Period; or

 

(ii)                                  Dollar deposits in the relevantamount and for the relevant maturity are not available in the London interbankmarket with respect to a proposed LIBOR Portion, or a proposed conversion of aBase Rate Portion into a LIBOR Portion; then

 

AdministrativeAgent or such Lender shall give Borrower Representative prompt written,telephonic or electronic notice of the determination of such effect.  If such notice is given

 

----

 

and untilAdministrative Agent or such Lender shall notify Borrower Representative thatthe circumstance giving rise to such notice no longer exists, (i) any suchrequested LIBOR Portion shall be made as a Base Rate Portion, unless BorrowerRepresentative, on its own behalf and on behalf of all other Borrowers, shallnotify Administrative Agent no later than 10:00 a.m. (Chicago, Illinois time)three (3) Business Days’ prior to the date of such proposed borrowing that therequest for such borrowing shall be canceled or made as an unaffected type ofLIBOR Portion, and (ii) any Base Rate Portion which was to have been convertedto an affected type of LIBOR Portion shall be continued as or converted into aBase Rate Portion, or, if Borrowers shall notify Administrative Agent, no laterthan 10:00 a.m. (Chicago, Illinois time) three (3) Business Days prior to theproposed conversion, shall be maintained as an unaffected type of LIBORPortion.  Administrative Agent or therelevant Lender (as applicable) will endeavor to give Borrower Representativeprompt notice of the cessation of the circumstances giving rise to thesuspension of LIBOR availability, provided that the failure to give anysuch notice shall not result in any liability of Administrative Agent or anyLender hereunder or in the modification, alteration, impairment, or waiver ofthe rights of Administrative Agent or any Lender hereunder.

 

3.10                           Sharing of Payments, Etc.  If any Lender shall obtain any payment(whether voluntary, involuntary, through the exercise of any right of setoff,or otherwise) on account of any Loan made by it (other than any payment (x)pursuant to subsection 2.11 or subsection 3.8, (y) inconnection with an assignment of its interest hereunder pursuant to subsection 11.9or (z) in connection with any amendment or waiver as contemplated by the lastsentence of subsection 11.10) in excess of its ratable share ofpayments on account of Loans made by all Lenders, such Lender shall forthwithpurchase from each other Lender such participation in such Loan as shall benecessary to cause such purchasing Lender to share the excess payment ratablywith each other Lender; provided that, if all or any portion of suchexcess payment is thereafter recovered from such purchasing Lender, suchpurchase from each Lender shall be rescinded and such Lender shall repay to thepurchasing Lenders the purchase price to the extent of such recovery, togetherwith an amount equal to such Lender’s ratable share (according to theproportion of (i) the amount of such Lender’s required repayment to(ii) the total amount so recovered from the purchasing Lender) of anyinterest or other amount paid or payable by the purchasing Lender in respect ofthe total amount so recovered.  Borrowersagree that any Lender so purchasing a participation from another Lenderpursuant to this subsection 3.10 may, to the fullest extentpermitted by law, exercise all its rights of payment (including the right ofsetoff) with respect to such participation as fully as if such Lender were thedirect creditor of Borrowers in the amount of such participation.  Notwithstanding anything to the contrarycontained herein, all purchases and repayments to be made under this subsection 3.10shall be made through Administrative Agent.

 

**SECTION 4.  TERM ANDTERMINATION**

 

4.1                                 Termof Agreement. Subject to the right of Lenders to cease making Loans to Borrowersduring the continuance of any Default or Event of Default, this Agreement shallbe in effect for a period of 5 years from the date hereof, through and

 

----

 

including August 17, 2009(the **“Term”**), unless terminated asprovided in subsection 4.2 hereof.

 

4.2                                 Termination.

 

4.2.1                                                Termination by Lenders. Administrative Agent may, and at the direction of Majority Lendersshall, terminate the Revolving Loan Commitments and/or accelerate theObligations, all without notice upon or after the occurrence and during thecontinuance of an Event of Default in accordance with subsection 10.2.

 

4.2.2                                                Termination by Borrowers. Upon at least 30****days priorwritten notice to Administrative Agent and Lenders, Borrowers may, at theiroption, terminate this Agreement; provided, however, that no suchtermination shall be effective until Borrowers have paid to AdministrativeAgent’s satisfaction all of the Obligations (other than unasserted contingentindemnification obligations and other than Product Obligations that are notthen due and payable, whether by acceleration, termination or otherwise), inimmediately available funds, all Letters of Credit have expired or beencancelled and returned to Administrative Agent or have been cash collateralizedin a manner satisfactory to Administrative Agent and Borrowers have compliedwith subsection 3.2.5.  Anynotice of termination given by Borrowers shall be irrevocable unless allLenders otherwise agree in writing and no Lender shall have any obligation tomake any Loans or issue or procure any Letters of Credit on or after thetermination date stated in such notice (provided that a notice of arefinancing of the entirety of the Loans delivered by Borrowers may state thatsuch notice is conditioned upon the effectiveness of other credit facilities,in which case such notice may be revoked by Borrowers (by notice toAdministrative Agent on or prior to the effective date) if such condition isnot satisfied).  Borrowers may elect toterminate this Agreement in its entirety only. No section of this Agreement or type of Loan available hereundermay be terminated singly.

 

4.2.3                                                Effect of Termination. All of the Obligations (other than unasserted contingent indemnification obligations and other than ProductObligations that are not then due and payable, whether by acceleration,termination or otherwise) shall be immediately due and payable upon thetermination date stated in any notice of termination of this Agreement.  All undertakings, agreements, covenants,warranties and representations of Borrowers contained in the Loan Documentsshall survive any such termination and the payment in full of the Obligations,and Administrative Agent shall retain its Liens in the Collateral andAdministrative Agent and each Lender shall retain all of its rights andremedies under the Loan Documents notwithstanding such termination until allObligations (other than  unassertedcontingent indemnification obligations and other than Product Obligations thatare not then due and payable, whether by acceleration, termination orotherwise) have been discharged or paid, in full, in immediately availablefunds, including, without limitation, all Obligations under subsection 3.2.5resulting from such termination. Notwithstanding the foregoing or the payment in full of the Obligations,Administrative Agent shall not be required to terminate its Liens in theCollateral unless, with respect to any loss or damage Administrative Agent orany Lender may incur as a result of dishonored checks or other items of paymentreceived by Administrative Agent from any Borrower or any Account

 

----

 

Debtor and applied tothe Obligations, Administrative Agent shall, at its option, (i) havereceived a written agreement reasonably satisfactory to Administrative Agent,executed by any Borrower and by any Person whose loans or other advances toBorrowers are used in whole or in part to satisfy the Obligations, indemnifyingAdministrative Agent or such Lender (as applicable) from any such loss ordamage or (ii) have retained cash Collateral or other Collateral for suchperiod of time as Administrative Agent or such Lender (as applicable), in itsreasonable discretion, may deem necessary to protect Administrative Agent orsuch Lender (as applicable) from any such loss or damage.

 

**SECTION 5.  SECURITY INTERESTS**

 

5.1                                 Security Interest in Collateral.  To secure the prompt payment and performanceto Administrative Agent, each Lender and each Bank Product Provider of theObligations, each Borrower hereby grants to Administrative Agent for thebenefit of itself, each Lender, and each Bank Product Provider a continuingLien upon all of the following Property and interests in Property of suchBorrower, whether now owned or existing or hereafter created, acquired or arisingand wheresoever located:

 

(i)                                     Accounts;

 

(ii)                                  Certificated Securities;

 

(iii)                               Chattel Paper;

 

(iv)                              Computer Hardware and Software andall rights with respect thereto, including, any and all licenses, options,warranties, service contracts, program services, test rights, maintenancerights, support rights, improvement rights, renewal rights andindemnifications, and any substitutions, replacements, additions or modelconversions of any of the foregoing;

 

(v)                                 Deposit Accounts;

 

(vi)                              Documents;

 

(vii)                           Equipment;

 

(viii)                        Financial Assets;

 

(ix)                                Fixtures;

 

(x)                                   General Intangibles, includingPayment Intangibles and Software;

 

(xi)                                Goods (including all of itsEquipment, Fixtures and Inventory), and all accessions, additions, attachments,improvements, substitutions and replacements thereto and therefor;

 

(xii)                             Instruments;

 

----

 

(xiii)                          Intellectual Property;

 

(xiv)                         Inventory;

 

(xv)                            Investment Property;

 

(xvi)                         Money

 

(xvii)                      Letter-of-Credit Rights;

 

(xviii)                   Payment Intangibles;

 

(xix)                           Security Entitlements;

 

(xx)                              Software;

 

(xxi)                           Supporting Obligations;

 

(xxii)                        Uncertificated Securities; and

 

(xxiii)                     To the extent not included in theforegoing, all other personal property of any kind or description;

 

together withall books, records, writings, data bases, information and other propertyrelating to, used or useful in connection with, or evidencing, embodying,incorporating or referring to any of the foregoing, and all proceeds, products,offspring, rents, issues, profits and returns of and from any of the foregoing;provided, however, that in no event shall Collateral includeInvestment Property or General Intangibles consisting of equity securities ofan issuer that is a Subsidiary of a Borrower organized under the laws of ajurisdiction other than the United States or a state thereof (a **“Foreign Subsidiary”**) in excess of 65% ofthe total combined voting power of all equity securities of such ForeignSubsidiary; provided, further, that Collateral shall not includeany lease, license or permit if, to the extent that and for as long as (a) thegrant of a security interest therein constitutes or would result in thetermination of, breach of or a default under the lease, instrument or agreementby which such lease, license or permit is governed and (b) such termination,breach or default is not rendered ineffective pursuant to Sections 9-406,9-407, 9 408 or 9-409 of the UCC, provided, that (1)  such lease, license or permit will beexcluded from the Collateral only to the extent and for as long as theconditions set forth in the foregoing clauses (a) and (b) are and remainsatisfied and to the extent such assets otherwise constitute Collateral, willcease to be excluded, and will become subject to the Liens hereunder,immediately and automatically at such time as such conditions cease to exist,including by reason of any waiver or consent under the applicable lease,instrument or agreement, and (2) the proceeds of any sale, lease or otherdisposition of any such lease, license or permit shall not be excluded from theCollateral and shall at all times be and remain subject to the Liens hereunder.

 

----

 

5.2                                 OtherCollateral.

 

5.2.1                                                CommercialTort Claims.  Borrowers shallpromptly notify Administrative Agent in writing upon any Borrower obtainingknowledge that it has incurred or otherwise obtained a Commercial Tort Claimafter the Closing Date against any third party and, upon request ofAdministrative Agent, promptly enter into an amendment to this Agreement and dosuch other acts or things deemed appropriate by Administrative Agent to grantto Administrative Agent a security interest in any such Commercial TortClaim.  Borrowers represent and warrantthat as of the date of this Agreement, to their knowledge, no Credit Partypossesses any Commercial Tort Claims.

 

5.2.2                                                MotorVehicles.  Upon the acquisition afterClosing Date by any Borrower of any Motor Vehicle, Borrowers shall promptlynotify Administrative Agent of such acquisition in writing, setting forth adescription of the Motor Vehicle acquired and a good faith estimate of thecurrent value of such Motor Vehicle.  Inaddition, Borrowers shall (a) cause all Motor Vehicles, now owned or hereafteracquired by any Borrower, which under applicable law are required to beregistered, to be properly registered in the name of such Borrower, (b) causeall Motor Vehicles, now owned or hereafter acquired by any Borrower, to beproperly titled in the name of such Borrower and (c) cause Administrative Agent’sLien in such Motor Vehicles to be a first priority perfected security interestby noting Administrative Agent’s Lien on such certificates or through any othersecurity arrangement acceptable to Administrative Agent in its sole discretion,and deliver to Administrative Agent evidence of their compliance with theforegoing provisions of this subsection 5.2.2, including, withoutlimitation, if requested by Administrative Agent, originals of all suchcertificates of title or ownership for such Motor Vehicles.  Notwithstanding the foregoing, Borrowersshall have until the date that is 180 days after the Closing Date (as such datemay be extended by Administrative Agent in its sole discretion up to 270 daysafter the Closing Date) to complete the actions in the foregoing clause (c)with respect to Motor Vehicles owned by any Borrower as of the ClosingDate.  Any certificates of title orownership delivered pursuant to the terms hereof shall be accompanied byodometer statements for each Motor Vehicle covered thereby.

 

5.2.3                                                OtherCollateral.  Borrowers shall (i)notify Administrative Agent in writing promptly upon (or in the case of DepositAccounts, prior to) acquiring or otherwise obtaining any Collateral after thedate hereof consisting of Deposit Accounts, Investment Property,Letter-of-Credit Rights or Electronic Chattel Paper and (ii) except with regardto Excluded Deposit Accounts (unless otherwise requested by the AdministrativeAgent), promptly execute such other documents, and do such other acts or thingsnecessary to perfect the Lien of the Administrative Agent by control (withinthe meaning of the UCC) with respect to such Collateral; promptly notifyAdministrative Agent in writing upon acquiring or otherwise obtaining anyCollateral after the date hereof consisting of Documents or Instruments andwill promptly execute such other documents, and do such other acts or thingsnecessary to perfect the Lien of the Administrative Agent by possession (withinthe meaning of Section 9-313 of the UCC) of such Documents which arenegotiable and Instruments, and, with respect to nonnegotiable Documents, tohave such nonnegotiable Documents issued in the name of Administrative Agent;and with respect to Collateral in the possession of a third party, other thanCertificated Securities and Goods covered by a Document, obtain an

 

----

 

acknowledgement from the third party that it is holding the Collateralfor the benefit of Administrative Agent.

 

5.3                                 Lien Perfection; Further Assurances.  Borrowers shall execute such instruments,assignments or documents as are necessary to perfect Administrative Agent’sLien upon any of the Collateral and shall take such other action as may berequired to perfect or to continue the perfection of Administrative Agent’sLien upon the Collateral and shall take such other actions as may be reasonablyrequested by the Administrative Agent to ensure the priority of such Lien.  Each Borrower hereby authorizesAdministrative Agent to file, financing statements that indicate the Collateral(i) as all assets of such Borrower or words of similar effect, or (ii) as beingof an equal or lesser scope, or with greater or lesser detail, than as setforth in subsection 5.1, on such Borrower’s behalf.  Each Borrower also hereby ratifies itsauthorization for Administrative Agent to have filed in any jurisdiction anylike financing statements or amendments thereto if filed prior to the datehereof  In addition, each Borrower herebyappoints Administrative Agent as its attorney-in-fact, effective the datehereof and terminating upon  thetermination of this Agreement, for the purpose of (A) executing on behalf ofsuch Borrower title or ownership applications for filing with appropriate stateagencies to enable Motor Vehicles now owned or hereafter acquired by suchBorrower to be re-titled and Administrative Agent listed as lienholder thereof,and (B) filing such applications with such state agencies.  This appointment as attorney-in-fact iscoupled with an interest and is irrevocable until the date on which all of theObligations have been paid in full in cash. At Administrative Agent’s request, each Borrower shall also promptlyexecute or cause to be executed and shall deliver to Administrative Agent anyand all documents, instruments and agreements deemed necessary byAdministrative Agent, to give effect to or carry out the terms or intent of theLoan Documents.

 

5.4                                 Lien onRealty.  The dueand punctual payment and performance of the Obligations shall also be securedby the Lien created by the Mortgages upon all owned real Property of Borrowersdescribed therein.  If any Borrower shallacquire at any time or times hereafter any fee simple interest or leasehold inother real Property (other than leasehold interests in sales offices orwarehouses), such Borrower agrees promptly to execute and deliver toAdministrative Agent, for its benefit and the ratable benefit of Lenders, asadditional security and Collateral for the Obligations, deeds of trust,security deeds, mortgages or other collateral assignments reasonablysatisfactory in form and substance to Administrative Agent and its counsel(herein collectively referred to as **“NewMortgages”**) covering such real Property.  The Mortgages and each New Mortgage shall beduly recorded (at Borrowers’ expense) in each office where such recording isrequired to constitute a valid Lien on the owned real Property coveredthereby.  In respect to any Mortgage orany New Mortgage, Borrowers shall deliver to Administrative Agent, at Borrowers’expense, mortgagee title insurance policies issued by a title insurance companyreasonably satisfactory to Administrative Agent, which policies shall be inform and substance reasonably satisfactory to Administrative Agent and shallinsure a valid Lien in favor of Administrative Agent for the benefit of itselfand each Lender on the Property covered thereby, subject only to PermittedLiens and those other exceptions reasonably acceptable to Administrative Agentand its counsel.  Borrowers shall alsodeliver to Administrative Agent Phase I Environmental Site

 

----

 

Assessments by a consultantsatisfactory to Administrative Agent reasonably necessary to determinecompliance with or liabilities under Environmental Laws of the Property subjectto such New Mortgage and such other usual and customary documents, including,without limitation, ALTA Surveys of the real Property described in theMortgages or any New Mortgage, as Administrative Agent and its counsel mayreasonably request relating to the real Property subject to the Mortgages orthe New Mortgages.

 

**SECTION 6**.  COLLATERALADMINISTRATION

 

6.1                                 General.

 

6.1.1                                                Locationof Collateral.  All Collateral, otherthan (a) Inventory being leased or rented to third parties by Borrowers in theordinary course of business, (b) Inventory in transit, (c) Inventory in thepossession of a third party for the purpose of repair or maintenance and (d)Motor Vehicles, will at all times be kept by Borrowers and their Subsidiariesat one or more of the business locations set forth in Exhibit 6.1.1hereto, as updated by Borrowers from time to time pursuant to subsection 7.2and if such locations are locations of third parties, such Exhibit soindicates.

 

6.1.2                                                Insuranceof Collateral.  Borrowers shallmaintain and pay for insurance upon all Collateral wherever located and withrespect to the business of Borrowers and each of their Subsidiaries, coveringcasualty, hazard, public liability, workers’ compensation and such other risksin such amounts as is customary for companies similarly situated and with theinsurance companies used by Borrowers on the Closing Date or such otherinsurance companies as are reasonably satisfactory to Administrative Agent.  Borrowers shall deliver certified copies ofsuch policies to Administrative Agent as promptly as practicable, withreasonably satisfactory lender’s loss payable endorsements, namingAdministrative Agent and Lenders as loss payees, assignees or additionalinsureds, as appropriate, as its interest may appear, and showing only suchother loss payees, assignees and additional insureds as are reasonablysatisfactory to Administrative Agent. Each policy of insurance or endorsement shall contain a clause requiringthe insurer to give not less than 10 days’ prior written notice toAdministrative Agent in the event of cancellation of the policy for nonpaymentof premium and not less than 30 days’ prior written notice to AdministrativeAgent in the event of cancellation of the policy for any other reasonwhatsoever and a clause specifying that the interest of Administrative Agentshall not be impaired or invalidated by any act or neglect of any Borrower, anyof its Subsidiaries or the owner of the Property or by the occupation of the premisesfor purposes more hazardous than are permitted by said policy.  Borrowers agree to deliver to AdministrativeAgent, promptly as rendered, true copies of all reports made in any reportingforms to insurance companies.  Allproceeds of business interruption insurance (if any) of Borrowers and theirSubsidiaries shall be remitted to Administrative Agent for application to theoutstanding balance of the Revolving Credit Loans.

 

UnlessBorrowers provide Administrative Agent with evidence of the insurance coveragerequired by this Agreement, Administrative Agent may purchase insurance atBorrowers’ expense to protect Administrative Agent’s interests in theProperties of

 

----

 

Borrowers andtheir Subsidiaries.  This insurance may,but need not, protect the interests of Borrowers and their Subsidiaries.  The coverage that Administrative Agentpurchases may not pay any claim that any Borrower or any Subsidiary makes orany claim that is made against any Borrower or any such Subsidiary inconnection with said Property.  Borrowersmay later cancel any insurance purchased by Administrative Agent, but onlyafter providing Administrative Agent with evidence that Borrowers and theirSubsidiaries have obtained insurance as required by this Agreement.  If Administrative Agent purchases insurance,Borrowers will be responsible for the reasonable costs of that insurance,including interest and any other charges Administrative Agent may impose inconnection with the placement of insurance, until the effective date of the cancellationor expiration of the insurance.  Thecosts of the insurance may be added to the Obligations.  The costs of the insurance may be more thanthe cost of insurance that Borrowers and their Subsidiaries may be able toobtain on their own.

 

6.1.3                                                Protectionof Collateral.  NeitherAdministrative Agent nor any Lender shall be liable or responsible in any wayfor the safekeeping of any of the Collateral or for any loss or damage thereto(except for reasonable care in the custody thereof while any Collateral is inAdministrative Agent’s or any Lender’s actual possession) or for any diminutionin the value thereof, or for any act or default of any warehouseman, carrier,forwarding agency or other person whomsoever, but the same shall be atBorrowers’ sole risk.

 

6.2                                 Administrationof Accounts.

 

6.2.1                                                Records,Schedules and Assignments of Accounts. Borrowers shall keep accurate and complete records of their Accounts andall payments and collections thereon and shall submit to Administrative Agenton such periodic basis as Administrative Agent shall reasonably request a salesand collections report for the preceding period, in form reasonably acceptableto Administrative Agent.  Concurrentlywith the delivery of each Borrowing Base Certificate described in subsection 8.1.4,or more frequently as reasonably requested by Administrative Agent, from andafter the date hereof, Borrowers shall deliver to Administrative Agent adetailed aged trial balance of all of its Accounts, specifying the names,addresses, face values, dates of invoices and due dates for each Account Debtorobligated on an Account so listed (**“Schedule ofAccounts”**), and upon Administrative Agent’s request therefor, copiesof proof of delivery and the original copy of all documents, including, withoutlimitation, repayment histories and present status reports relating to theAccounts so scheduled and such other matters and information relating to thestatus of then existing Accounts as Administrative Agent shall request.  If requested by Administrative Agent,Borrowers shall execute and deliver to Administrative Agent formal writtenassignments of all of its Accounts weekly or daily, which shall include allAccounts that have been created since the date of the last assignment, togetherwith copies of invoices or invoice registers related thereto.

 

6.2.2                                                Discounts,Allowances, Disputes.  If anyBorrower grants any discounts, allowances or credits that are not shown on theface of the invoice for the Account involved, Borrowers shall report suchdiscounts, allowances or credits, as the case may be, to Administrative Agentas part of the next required Schedule of Accounts.

 

----

 

6.2.3                                                AccountVerification.  Any of AdministrativeAgent’s officers, employees or agents shall have the right, at any time ortimes hereafter, in the name of Administrative Agent, any designee ofAdministrative Agent or any Borrower, to verify the validity, amount or anyother matter relating to any Accounts by mail, telephone, electroniccommunication or otherwise.  Borrowersshall cooperate with Administrative Agent in an effort to facilitate andpromptly conclude any such verification process.

 

6.2.4                                                Maintenanceof Dominion Account.  Each depositaccount (other than Excluded Deposit Accounts, unless otherwise requested bythe Administrative Agent) which receives any proceeds of Collateral shall bemaintained by Borrowers pursuant to lockbox and blocked account arrangementsacceptable to Administrative Agent (each such account, a **“Collection Account”** and collectively, the **“Collection Accounts”**) with Bank or suchother banks as may be selected by Borrowers and be acceptable to AdministrativeAgent (each bank maintaining a Collection Account, a **“Collection Bank”** and collectively, the **“Collection Banks”**).  All such blocked account arrangements shallprovide for “control” (within the meaning of the Uniform Commercial Code), andin the event a Dominion Event occurs and is continuing, sole dominion byAdministrative Agent over all cash or other assets deposited into suchaccounts.  In addition, Borrowers shallmaintain one or more Dominion Accounts. Upon the occurrence of a Dominion Event, Administrative Agent shall beentitled to deliver notice to each Collection Bank  instructing such Collection Bank to complyonly with the instructions of Administrative Agent relating to each CollectionAccount maintained by such Collection Bank and to transfer on a daily basis (orless frequently as Administrative Agent may specify) all funds collected insuch Collection Account to the Dominion Accounts (each such notice, a **“Dominion Notice”**).  On or prior to the date hereof, Borrowersshall deliver to Administrative Agent a control agreement for each CollectionAccount maintained as of the Closing Date to provide for control and springingdominion by Administrative Agent over all assets deposited therein as describedabove, each such control agreement to be in form and substance acceptable toAdministrative Agent.  After theoccurrence and during the continuance of a Dominion Event, all funds depositedin any Collection Account and/or transferred to the Dominion Account shallimmediately become the property of Administrative Agent, for the ratablebenefit of Lenders, and Borrowers shall obtain the agreement by each CollectionBank in favor of Administrative Agent to waive any recoupment, setoff rights,and any security interest in, or against, the funds so deposited.  Administrative Agent assumes noresponsibility for lockbox and blocked account arrangements, including, withoutlimitation, any claim of accord and satisfaction or release with respect todeposits accepted by any bank thereunder. If Administrative Agent has delivered a Dominion Notice to anyCollection Bank and, at any time after the effective date of such DominionNotice, Availability for each day during any three consecutive fiscal months ofHoldings equals or exceeds $45,000,000, no Event of Default has occurred duringsuch three consecutive fiscal month period and no Default shall have occurredand be continuing on the last day of such three month period, thenAdministrative Agent agrees to rescind such Dominion Notice.  Upon a subsequent occurrence of a DominionEvent, Administrative Agent’s rights under this subsection 6.2.4,including without limitation, its right to deliver Dominion Notices pursuant tothis Section, shall be reinstated.

 

----

 

6.2.5                                                Collectionof Accounts, Proceeds of Collateral. Each Borrower agrees that all invoices rendered and other requests madeby any Borrower for payment in respect of Accounts shall contain a written statementdirecting payment in respect of such Accounts to be paid to a lockbox orCollection Account established pursuant to subsection 6.2.4.  To expedite collection, each Borrower shallendeavor in the first instance to make collection of its Accounts for AdministrativeAgent.  All remittances received by anyBorrower on account of Accounts, together with the proceeds of any otherCollateral, shall be held as Administrative Agent’s property, for its benefitand the benefit of Lenders, by such Borrower as trustee of an express trust forAdministrative Agent’s benefit and such Borrower shall immediately deposit samein kind to a Collection Account or, during the continuance of a Dominion Event,in the Dominion Account.  AdministrativeAgent retains the right at all times after the occurrence and during thecontinuance of an Event of Default to notify Account Debtors that Borrowers’Accounts have been assigned to Administrative Agent and to collect Borrowers’Accounts directly in its own name, or in the name of Administrative Agent’sagent, and to charge the collection costs and expenses, including attorneys’fees, to Borrowers.

 

6.2.6                                                Taxes.  If an Account includes a charge for any taxpayable to any governmental taxing authority, Administrative Agent is authorized,in its sole discretion, to pay the amount thereof to the proper taxingauthority for the account of Borrowers and to charge Borrowers therefor, exceptfor taxes that (i) are being actively contested in good faith and byappropriate proceedings and with respect to which Borrowers maintain reasonablereserves on its books therefor and (ii) as to which the imposition of any Lienin respect thereof is stayed during the pendency of such proceedings.  In no event shall Administrative Agent or anyLender be liable for any taxes to any governmental taxing authority that may bedue by any Borrower.

 

6.3                                 Administrationof Inventory. Borrowers shall keep records of their Inventory (including, withoutlimitation, Rental Equipment Inventory) which records shall be accurate andcomplete in all material respects. Borrowers’ records of all Rental Equipment Inventory shall be itemizedand describe the kind, type, quality, quantity and book value of such RentalEquipment Inventory and shall list all dispositions made in accordance with subsection 8.2.8.  Borrowers shall furnish to AdministrativeAgent reports relating to Serialized Rental Equipment Inventory concurrentlywith the delivery of each Borrowing Base Certificate described in subsection 8.1.4or more frequently as requested by Administrative Agent, which reports shallcontain the foregoing information and will be in such other format and detailas Administrative Agent shall request and shall include a current list of alllocations of Borrowers’ Serialized Rental Equipment Inventory.  Borrowers shall conduct regular physicalinventories of its Serialized Rental Equipment Inventory and shall maintain theresults of such physical inventories and provide to Administrative Agent areport based on each such physical inventory promptly thereafter, together withsuch supporting information as Administrative Agent shall reasonablyrequest.  In addition, promptly after therequest therefor, Borrowers shall deliver to Administrative Agent any and allevidence of ownership of their Serialized Rental Equipment Inventory.

 

----

 

6.4                                 Paymentof Charges.  Allamounts chargeable to Borrowers under Section 6 hereof shall beObligations secured by all of the Collateral, shall be payable on demand andshall bear interest from the date such advance was made until paid in full atthe rate applicable to Base Rate Revolving Portions from time to time.

 

**SECTION 7**.  REPRESENTATIONSAND WARRANTIES

 

7.1                                 General Representations and Warranties.  To induce Administrative Agent and eachLender to enter into this Agreement and to make advances and other extensionsof credit hereunder, Borrowers warrant, represent and covenant toAdministrative Agent and each Lender, on a joint and several basis, that:

 

7.1.1                                                Qualification.  Each Borrower and each of its Subsidiaries isa corporation, limited partnership or limited liability company duly organized,validly existing and in good standing under the laws of the jurisdiction of itsincorporation or organization.  No Borroweror any Subsidiary is organized under the laws of more than onejurisdiction.  Each Borrower and each ofits Subsidiaries is duly qualified and is authorized to do business and is ingood standing as a foreign limited liability company, limited partnership orcorporation, as applicable, in each state or jurisdiction listed on Exhibit 7.1.1hereto and in all other states and jurisdictions in which the failure of anyBorrower or any of its Subsidiaries to be so qualified could reasonably beexpected to have a Material Adverse Effect.

 

7.1.2                                                Powerand Authority.  Each Borrower andeach of its Subsidiaries is duly authorized and empowered to enter into,execute, deliver and perform this Agreement and each of the other LoanDocuments to which it is a party.  Theexecution, delivery and performance of this Agreement and each of the otherLoan Documents have been duly authorized by all necessary corporate, limitedpartnership or limited liability company action, as applicable, and do not andwill not:  (i) require any consentor approval of the partners, shareholders or members (as applicable) of anyBorrower or any of the shareholders, partners or members, as the case may be,of any Subsidiary of any Borrower; (ii) contravene any Borrower’s or anyof its Subsidiaries’ charter, articles or certificate of incorporation,partnership agreement, certificate of formation, by laws, limited liabilityagreement, operating agreement or other organizational documents (as the casemay be); (iii) violate, or cause any Borrower or any of its Subsidiariesto be in default under, any provision of any law, rule, regulation, order,writ, judgment, injunction, decree, determination or award in effect havingapplicability to such Borrower or any of its Subsidiaries, other than any suchviolation as could not reasonably be expected to have a Material AdverseEffect; (iv) result in a breach of or constitute a default under anyindenture or loan or credit agreement or any other agreement, lease orinstrument to which any Borrower or any of its Subsidiaries is a party or by whichit or its Properties may be bound or affected, the breach of or default underwhich could reasonably be expected to have a Material Adverse Effect; or(v) result in, or require, the creation or imposition of any Lien (otherthan Permitted Liens) upon or with respect to any of the Properties now ownedor hereafter acquired by any Borrower or any of its Subsidiaries.

 

----

 

7.1.3                                                LegallyEnforceable Agreement.  ThisAgreement is, and each of the other Loan Documents has been duly executed anddelivered by each Borrower and each of its Subsidiaries party thereto and is alegal, valid and binding obligation of each such Borrower and each suchSubsidiary, enforceable against it in accordance with its respective terms,except as enforcement may be limited by (i) the effect of any applicablebankruptcy, insolvency, reorganization, moratorium or similar laws affectingcreditors’ rights generally and (ii) general principles of equity.

 

7.1.4                                                CapitalStructure.  Exhibit 7.1.4hereto states, as of the date hereof, (i) the correct name of each of theSubsidiaries of each Borrower, its jurisdiction of incorporation ororganization and the percentage of its Voting Stock owned by the applicableBorrower, (ii) the name of each Borrower’s and each of its Subsidiaries’corporate or joint venture relationships and the nature of the relationship,(iii) the number, nature and holder of all outstanding Securities of eachBorrower and the holder of Securities of each Subsidiary of each Borrower and(iv) the number of authorized, issued and treasury Securities of eachBorrower.  Each Borrower has good titleto all of the Securities it purports to own of each of such Subsidiaries, freeand clear in each case of any Lien other than Permitted Liens.  All such Securities have been duly authorizedand issued and are fully paid and non-assessable to the extent such conceptsare applicable to such types of Securities. There are no outstanding options to purchase, or any rights or warrantsto subscribe for, or any commitments or agreements to issue or sell anySecurities or obligations convertible into, or any powers of attorney relatingto any Securities of any Borrower or any of its Subsidiaries.  Except as set forth on Exhibit 7.1.4,there are no outstanding agreements or instruments binding upon any of anyBorrower’s or any of its Subsidiaries’ partners, members or shareholders, asthe case may be, relating to the ownership of its Securities.

 

7.1.5                                                Names;Organization.  Neither any Borrowernor any of its Subsidiaries has been known as or has used any legal, fictitiousor trade names within 5 years prior to the Closing Date,  except those listed on Exhibit 7.1.5hereto.  Except as set forth on Exhibit 7.1.5,within the 5 years prior to the Closing Date, neither any Borrower nor any ofits Subsidiaries has been the surviving entity of a merger or consolidation orhas acquired all or substantially all of the assets of any Person.  Each of each Borrower’s and each of itsSubsidiaries’ state(s) of incorporation or organization, Type of Organizationand Organizational I.D. Number is set forth on Exhibit 7.1.5.  The exact legal name of each Borrower andeach of its Subsidiaries is set forth on Exhibit 7.1.5.

 

7.1.6                                                BusinessLocations; Administrative Agent for Process.  Each of each Borrower’s and each of itsSubsidiaries’ chief executive office, location of books and records and otherplaces of business are as listed on Exhibit 6.1.1 hereto, asupdated from time to time by Borrowers in accordance with the provisions of subsection 6.1.1.    Except as shown on Exhibit 6.1.1,no Inventory is stored with a bailee, distributor, warehouseman or similarparty, nor is any Inventory consigned to any Person.

 

----

 

7.1.7                                                Titleto Properties; Priority of Liens.

 

(i)                                     Each Borrower and each of itsSubsidiaries has good, indefeasible and marketable title to and fee simpleownership of, or valid and subsisting leasehold interests in, all of its realProperty, and good title to all of the Collateral and all of its otherProperty, in each case, free and clear of all Liens except PermittedLiens.  Each Borrower and each of itsSubsidiaries has paid or discharged all lawful claims which, if unpaid, mightbecome a Lien against any of such Borrower’s or such Subsidiary’s Propertiesthat is not a Permitted Lien.  The Liensgranted to Administrative Agent under Section 5 hereof are firstpriority Liens, subject only to Permitted Liens.

 

(ii)                                  Exhibit 7.1.7 sets forth, as of the Closing Date,a correct and complete list of all real Property owned by each Borrower andeach of its Subsidiaries and all leases (including capitalized leases) andsubleases of real or personal property held by each Borrower and each of itsSubsidiaries as lessee or sublessee, or as lessor, or sublessor.  Each of such leases and subleases is validand enforceable in accordance with its terms and is in full force and effect,and no default by any Borrower or any of its Subsidiaries nor, to Borrowers’knowledge any other party to any such lease or sublease, exists.

 

7.1.8                                                Accounts.  Administrative Agent may rely, in determiningwhich Accounts are Eligible Accounts, on all statements and representationsmade by Borrowers with respect to any Account or Accounts.  With respect to each of Borrowers’ Accounts,whether or not such Account is an Eligible Account, unless otherwise disclosedto Administrative Agent in writing:

 

(i)                                     It is genuine and in all respectswhat it purports to be, and it is not evidenced by a judgment;

 

(ii)                                  It arises out of a completed, bonafide sale and delivery of goods or rendition of services by a Borrower,in the ordinary course of its business and in accordance with the terms andconditions of all purchase orders, contracts or other documents relatingthereto and forming a part of the contract between a Borrower and the AccountDebtor;

 

(iii)                               It is for a liquidated amountmaturing as stated in the duplicate invoice covering such sale or rendition ofservices, a copy of which has been furnished or is available to AdministrativeAgent;

 

(iv)                              To Borrowers’ knowledge, there areno facts, events or occurrences which in any way impair the validity orenforceability of any Accounts or tend to reduce the amount payable thereunderfrom the face amount of the invoice and statements delivered or made availableto Administrative Agent with respect thereto;

 

(v)                                 To Borrowers’ knowledge, the AccountDebtor thereunder (1) had the capacity to contract at the time any contract orother

 

----

 

documentgiving rise to the Account was executed and (2) such Account Debtor is Solvent;and

 

(vi)                              To Borrowers’ knowledge, there areno proceedings or actions which are threatened or pending against the AccountDebtor thereunder which might result in any material adverse change in suchAccount Debtor’s financial condition or the collectibility of such Account.

 

7.1.9                                                NonrentalEquipment and Rental Equipment Inventory. The Nonrental Equipment and Rental Equipment Inventory of each Borrowerand its Subsidiaries is in good operating condition and repair, and allnecessary replacements of and repairs thereto shall be made so that theoperating efficiency thereof shall be maintained and preserved, reasonable wearand tear and casualty events excepted. Neither any Borrower nor any of its Subsidiaries will permit anyNonrental Equipment or Rental Equipment Inventory to become affixed to any realProperty leased to any Borrower or any of its Subsidiaries so that an interestarises therein under the real estate laws of the applicable jurisdiction unlessthe landlord of such real Property has executed a landlord waiver or leaseholdmortgage in favor of and in form reasonably acceptable to Administrative Agent,and Borrowers will not permit any of the Nonrental Equipment or RentalEquipment Inventory of any Borrower or any of its Subsidiaries to become anaccession to any personal Property other than Nonrental Equipment and RentalEquipment Inventory that is subject to first priority (except for PermittedLiens) Liens in favor of Administrative Agent.

 

7.1.10                                          FinancialStatements; Fiscal Year.  TheConsolidated and consolidating****balancesheets of Holdings and its Subsidiaries (including the accounts of allSubsidiaries of Holdings****and theirrespective Subsidiaries for the respective periods during which a Subsidiaryrelationship existed) as of March 31, 2004, and the related statements ofincome, cash flow, changes in shareholder’s equity, and changes in financialposition for the periods ended on such dates, have been prepared in accordancewith GAAP, and present fairly in all material respects the financial positionsof Holdings****and such Persons,taken as a whole,****at such datesand the results of Holdings and such Persons’ operations, taken as a whole,****for such periods.  Since March 31, 2004, there has been nomaterial adverse change in the business, assets, liabilities (actual or contingent),operations or financial condition of Holdings and such other Persons, taken asa whole, as reflected in the Consolidated balance sheet as of such date.  As of the date hereof, the fiscal year ofBorrowers and each of its Subsidiaries ends on December 31 of each year.

 

7.1.11                                          FullDisclosure.  The financial statementsreferred to in subsection 7.1.10 hereof do not, nor does thisAgreement or any other written statement of Borrowers to Administrative Agentor any Lender contain any untrue statement of a material fact or omit amaterial fact necessary to make the statements contained therein or herein, inlight of the circumstances under which they are made, not misleading as of thetime made or delivered.  There is no factwhich Borrowers have failed to disclose to Administrative Agent or any Lenderin writing which could reasonably be expected to have a Material AdverseEffect.

 

----

 

7.1.12                                          SolventFinancial Condition.  Giving effectto subsection 12.17, each Borrower and each of its Subsidiaries isand, after giving effect to the Loans to be made and the Letters of Credit tobe issued hereunder and all related transactions will be, Solvent.

 

7.1.13                                          SuretyObligations.  Except as set forth on Exhibit 7.1.13,as of the date hereof, neither any Borrower nor any of its Subsidiaries isobligated as surety or indemnitor under any surety or similar bond or othercontract or has issued or entered into any agreement to assure payment,performance or completion of performance of any undertaking or obligation of anyPerson other than payment, performance or completion of performance by itselfor any Borrower.

 

7.1.14                                          Taxes.  The federal or other applicable taxidentification number of each Borrower and each of its Subsidiaries is shown onExhibit 7.1.14 hereto.  Each Borrowerand each of its Subsidiaries has filed all federal, state, local and foreignincome and other material tax returns and other reports relating to taxes it isrequired by law to file, and has paid, or made provision for the payment of,all federal, state, local and foreign income and other material taxes,assessments, fees, levies and other governmental charges upon it, its incomeand Properties as and when such taxes, assessments, fees, levies and chargesare due and payable, unless and to the extent any thereof are being activelycontested in good faith and by appropriate proceedings, and the applicableBorrower or the relevant Subsidiary maintains reasonable reserves on its bookstherefor.  The provision for taxes on thebooks of each Borrower and its Subsidiaries is adequate for all years notclosed by applicable statutes, and for the current fiscal year.

 

7.1.15                                          Brokers.  Except as shown on Exhibit 7.1.15hereto and except as may be payable to Administrative Agent or theCo-Arrangers, there are no claims for brokerage commissions, finder’s fees orinvestment banking fees in connection with the transactions contemplated bythis Agreement.

 

7.1.16                                          Patents,Trademarks, Copyrights and Licenses. Each Borrower and each of its Subsidiaries owns, possesses or licensesor has the right to use all the patents, trademarks, service marks, tradenames, copyrights, licenses and other Intellectual Property necessary for thepresent and planned future conduct of its business without any known conflictwith the rights of others, except for such conflicts as could not reasonably beexpected to have a Material Adverse Effect. All such patents, trademarks, service marks, trade names, copyrights,licenses and other similar rights are listed on Exhibit 7.1.16hereto.  No claim has been asserted toany Borrower or any Subsidiary of any Borrower which is currently pending thattheir use of their Intellectual Property or the conduct of their business doesor may infringe upon the Intellectual Property rights of any third party.  To the knowledge of Borrowers and except asset forth on Exhibit 7.1.16 hereto, as of the date hereof, noPerson is engaging in any activity that infringes in any material respect uponany Borrower’s or any of its Subsidiaries’ material Intellectual Property.  Except as set forth on Exhibit 7.1.16,each Borrower’s and each of its Subsidiaries’ (i) material trademarks,service marks and copyrights are registered with the U.S. Patent and TrademarkOffice or in the U.S. Copyright Office, as applicable and (ii) materiallicense agreements and similar arrangements relating to its Inventory

 

----

 

(1) permit, and do not restrict, the assignment by any Borrower orany of its Subsidiaries to Administrative Agent, or any other Person designatedby Administrative Agent, of all of such Borrower’s or such Subsidiary’s, asapplicable, rights, title and interest pertaining to such license agreement orsuch similar arrangement and (2) would permit the continued use by suchBorrower or such Subsidiary, or Administrative Agent or its assignee, of suchlicense agreement or such similar arrangement and the right to sell Inventorysubject to such license agreement for a period of no less than 6 months after adefault or breach of such agreement or arrangement.  The consummation and performance of thetransactions and actions contemplated by this Agreement and the other LoanDocuments, including, without limitation, the exercise by Administrative Agentof any of its rights or remedies under Section 10, will not resultin the termination or impairment of any of such Borrower’s or any of itsSubsidiaries’ ownership or rights relating to its Intellectual Property.  Except as listed on Exhibit 7.1.16,and except as could not reasonably be expected to have a Material AdverseEffect, (i) neither any Borrower nor any of its Subsidiaries is in breachof, or default under, any term of any license or sublicense with respect to anyof its Intellectual Property and (ii) to the knowledge of Borrowers, noother party to such license or sublicense is in breach thereof or defaultthereunder, and such license is valid and enforceable.

 

7.1.17                                          GovernmentalConsents.  Each Borrower and each ofits Subsidiaries has, and is in good standing with respect to, all governmentalconsents, approvals, licenses, authorizations, permits, certificates,inspections and franchises necessary to continue to conduct its business asheretofore or proposed to be conducted by it and to own or lease and operateits Properties as now owned or leased by it, except where the failure to do socould not reasonably be expected to have a Material Adverse Effect.

 

7.1.18                                          Compliancewith Laws.  Each Borrower and each ofits Subsidiaries has duly complied, and its Properties, business operations andleaseholds are in compliance with, the provisions of all federal, state andlocal laws, rules and regulations applicable to such Borrower or suchSubsidiary, as applicable, its Properties or the conduct of its business,except for such non-compliance as could not reasonably be expected to have aMaterial Adverse Effect, and there have been no citations, notices or orders ofnoncompliance issued to any Borrower or any of its Subsidiaries under any suchlaw, rule or regulation, except where such noncompliance could not reasonablybe expected to have a Material Adverse Effect. No Inventory has been produced in violation of the Fair Labor StandardsAct (29 U.S.C. §201 etseq.), as amended.

 

7.1.19                                          Restrictions.  Neither any Borrower nor any of itsSubsidiaries is a party or subject to any contract or agreement which restrictsits right or ability to incur Indebtedness, other than as set forth on Exhibit 7.1.19hereto, none of which prohibit the execution of or compliance with thisAgreement or the other Loan Documents by any Borrower or any of itsSubsidiaries, as applicable.

 

7.1.20                                          Litigation.  Except as set forth on Exhibit 7.1.20hereto, there are no actions, suits, proceedings or investigations pending, orto the knowledge of Borrowers, threatened, against or affecting any Borrower orany of its Subsidiaries, or the

 

----

 

business, operations, Properties, prospects, profits or condition ofany Borrower or any of its Subsidiaries which, singly or in the aggregate,could reasonably be expected to have a Material Adverse Effect.  Neither any Borrower nor any of itsSubsidiaries is in default with respect to any order, writ, injunction,judgment, decree or rule of any court, governmental authority or arbitrationboard or tribunal, which, singly or in the aggregate, could reasonably beexpected to have a Material Adverse Effect.

 

7.1.21                                          NoDefaults.  No event has occurred andno condition exists which would, upon or after the execution and delivery ofthis Agreement or any Borrower’s performance hereunder, constitute a Default oran Event of Default.  Neither anyBorrower nor any of its Subsidiaries is in default (and no event has occurredand no condition exists which constitutes, or which the passage of time or thegiving of notice or both would constitute, a default) under any MaterialContract.

 

7.1.22                                          Distributions.  Except as disclosed on Exhibit 7.1.22and except for Distributions of cash paid to another Borrower or pursuant tothe Reorganization Plan, as of the Closing Date, no Distribution of cash hasbeen declared, paid, or made upon or in respect of any Securities of anyBorrower or any of its Subsidiaries since February 12, 2004.

 

7.1.23                                          ERISACompliance.  Except as specificallydisclosed in Exhibit 7.1.23:

 

(i)                                     Each Plan and Foreign Plan is incompliance with the applicable Requirement of Law including, but not limited toERISA and the Code, except for such non-compliance as could not reasonably beexpected to have a Material Adverse Effect. Each Plan which is intended to qualify under Section 401(a) of theCode has received a favorable determination letter from the IRS and to theknowledge of Borrowers, nothing has occurred which would cause the loss of suchqualification.  Each Borrower and eachERISA Affiliate has made all required contributions to any Pension Plan, and noapplication for a funding waiver or an extension of any amortization periodpursuant to Section 412 of the Code has been made with respect to anyPension Plan.

 

(ii)                                  There are no pending or, to theknowledge of Borrowers, threatened claims, actions or lawsuits, or action byany Governmental Authority, with respect to any Plan, Multiemployer Plan orForeign Plan which has resulted or could reasonably be expected to result in aMaterial Adverse Effect.  There has beenno prohibited transaction or violation of the fiduciary responsibility ruleswith respect to any Plan, Multiemployer Plan or Foreign Plan which has resultedor could reasonably be expected to result in a Material Adverse Effect.

 

(iii)                               Except as could not reasonably beexpected to have a Material Adverse Effect, (A) no ERISA Event has occurred oris reasonably expected to occur; (B) no Pension Plan has any Unfunded PensionLiability; (C) no Borrower nor any ERISA Affiliate has incurred, orreasonably

 

----

 

expectsto incur, any liability under Title IV of ERISA with respect to any PensionPlan (other than premiums due and not delinquent under Section 4007 ofERISA); (D) no Borrower nor any ERISA Affiliate has incurred, orreasonably expects to incur, any liability (and no event has occurred which,with the giving of notice under Section 4219 of ERISA, would result insuch liability) under Section 4201 or 4243 of ERISA with respect to aMultiemployer Plan; or (E) assets of all Foreign Plans equal or exceed anyliabilities accrued thereunder in accordance with the applicable Requirementsof Law.  No Borrower nor any ERISAAffiliate has engaged in a transaction that could reasonably be expected to besubject to Section 4069 or 4212(c) of ERISA.

 

(iv)                              No Borrower nor any ERISA Affiliatesponsors or is otherwise required to contribute to any retiree medical plan,arrangement, contract or policy other than (A) coverage mandated by Requirementof Law, (B) death benefits or retirement benefits under any Pension Plan or (C)benefits, the full direct cost of which is borne by the participating employeeor former employee (or beneficiary thereof).

 

7.1.24                                          TradeRelations.  There exists no actualor, to Borrowers’ knowledge, threatened termination, cancellation or limitationof, or any modification or change in, the business relationship between anyBorrower or any of its Subsidiaries and any customer or any group of customerswhose purchases individually or in the aggregate are material to the businessof Borrowers and their Subsidiaries, or with any material supplier, except in eachcase, where the same could not reasonably be expected to have a MaterialAdverse Effect, and, to Borrowers’ knowledge, there exists no present conditionor state of facts or circumstances which would prevent any Borrower or any ofits Subsidiaries from conducting such business after the consummation of thetransactions contemplated by this Agreement in substantially the same manner inwhich it has heretofore been conducted, which prevention could reasonably beexpected to have a Material Adverse Effect.

 

7.1.25                                          LaborRelations.  Except as described on Exhibit 7.1.25hereto, as of the date hereof, neither any Borrower nor any of its Subsidiariesis a party to any collective bargaining agreement.  There are no asserted pending demands forcollective bargaining by any union or organization of any Borrower’s or any ofits Subsidiaries’ employees, or, to Borrowers’ knowledge, any materialgrievances, disputes or controversies with any such union or otherorganization, or any threats of strikes or work stoppages, except those thatcould not reasonably be expected to have a Material Adverse Effect.

 

7.1.26                                          RelatedBusinesses.  As of the Closing Date,Borrowers are engaged in the businesses of renting general and specialtyequipment to industrial and construction end-users, as well as selling usedequipment and complementary parts, supplies and merchandise and providingrepair and maintenance services to its customers. These operations requirefinancing on a basis such that the credit supplied can be made available fromtime to time to Borrowers, as required for the continued successful operationof Borrowers taken as a whole.  Borrowershave requested the Lenders to make

 

----

 

credit available hereunder primarily for the purposes of subsection 1.1.3and generally for the purposes of financing the operations of Borrowers.  Each Borrower and each Subsidiary of eachBorrower expects to derive benefit (and the Board of Directors of each Borrowerand each Subsidiary of each Borrower has determined that such Borrower or Subsidiarymay reasonably be expected to derive benefit), directly or indirectly, from aportion of the credit extended by Lenders hereunder, both in its separatecapacity and as a member of the group of companies, since the successfuloperation and condition of each Borrower and each Subsidiary of each Borroweris dependent on the continued successful performance of the functions of thegroup as a whole.  Each Borroweracknowledges that, but for the agreement of each of the other Borrowers toexecute and deliver this Agreement, Administrative Agent and Lenders would nothave made available the credit facilities established hereby on the terms setforth herein.

 

7.1.27                                          MarginRegulations.  No Borrower nor anySubsidiary of any Borrower is engaged in the business of purchasing or sellingMargin Stock or extending credit for the purpose of purchasing or carryingMargin Stock.

 

7.1.28                                          RegulatedEntities.  No Borrower, no Personcontrolling any Borrower, nor any Subsidiary of any Borrower, is an “InvestmentCompany” within the meaning of the Investment Company Act of 1940.  No Borrower is subject to regulation underthe Public Utility Holding Company Act of 1935, the Federal Power Act, theInterstate Commerce Act, any state public utilities code or law, or any other federalor state statute or regulation limiting its ability to incur indebtedness.

 

7.1.29                                          EnvironmentalLaws.  Except as otherwise disclosedon Exhibit 7.1.29 and except for any of the following as could notreasonably be expected to have a Material Adverse Effect:

 

(i)                                     Each Borrower and its Subsidiarieshave complied with all Environmental Laws and neither any Borrower nor any ofits Subsidiaries nor any of its presently owned real property or presentlyconducted operations, nor its previously owned real property or prioroperations, is subject to any pending or threatened Environmental Claim or anyenforcement order from or liability agreement with any Governmental Authorityor private Person respecting (A) compliance with any Environmental Law or (B) anypotential liabilities and costs or remedial action arising from the Release orthreatened Release of a Contaminant.

 

(ii)                                  Each Borrower and its Subsidiarieshave obtained all permits necessary for their current operations underEnvironmental Laws, and all such permits are in good standing and each Borrowerand its Subsidiaries are in compliance with all material terms and conditionsof such permits.

 

(iii)                               Neither any Borrower nor any of itsSubsidiaries, nor, to the best of such Borrower’s knowledge, any of its

 

----

 

predecessorsin interest, has in violation of applicable law stored, treated or disposed ofany hazardous waste.

 

(iv)                              Neither any Borrower nor any of itsSubsidiaries has received any summons, complaint, order or similar writtennotice indicating that it is not currently in compliance with, or that anyGovernmental Authority is investigating its compliance with, any EnvironmentalLaws or that it is or may be liable to any other Person as a result of aRelease or threatened Release of a Contaminant.

 

(v)                                 To the best of Borrowers’ knowledge,none of the present or past operations or Properties of any Borrower or itsSubsidiaries is the subject of any investigation by any Governmental Authorityevaluating whether any remedial action is needed to respond to a Release orthreatened Release of a Contaminant, and to the best of Borrowers’ knowledge,there are no facts or circumstances at any such Property that would warrantsuch remedial action.

 

(vi)                              There is not now, nor to the best ofthe Borrowers’ knowledge has there ever been on or in the real Properties ofany Borrower or its Subsidiaries:

 

(A)                     any underground storage tanks orsurface impoundments,

 

(B)                       any asbestos-containingmaterial, or

 

(C)                       any polychlorinated biphenyls(PCBs) used in hydraulic oils, electrical transformers or other equipment.

 

(vii)                           Neither any Borrower nor any of itsSubsidiaries has filed any notice under any requirement of Environmental Lawreporting a spill or accidental and unpermitted Release or discharge of aContaminant into the environment.

 

(viii)                        Neither any Borrower nor any of itsSubsidiaries has entered into any negotiations or settlement agreements withany Person (including the prior owner of its property) imposing materialobligations or liabilities on such Borrower or any of its Subsidiaries withrespect to any remedial action in response to the Release of a Contaminant orenvironmentally related claim.

 

(ix)                                None of the products manufactured,distributed or sold by any Borrower or any of its Subsidiaries contain asbestoscontaining material.

 

(x)                                   No Environmental Lien has attachedto any of the real Properties of any Borrower or its Subsidiaries.

 

----

 

7.1.30                                          MotorVehicles.  As of the Closing Date, Exhibit7.1.30 sets forth a complete and accurate list of all Motor Vehicles ownedby any Borrower or any of its Subsidiaries, together with a good faith estimateof the current value of such Motor Vehicles.

 

7.1.31                                          Anti-TerrorismLaws.

 

(i)                                     General. None of the Borrowers, nor any of their Subsidiaries or Affiliates is inviolation of any Anti-Terrorism Law or engages in or conspires to engage in anytransaction that evades or avoids, or has the purpose of evading or avoiding,or attempts to violate, any Anti-Terrorism Law.

 

(ii)                                  Executive Order No. 13224. None of the Borrowers, nor any of their Subsidiaries or Affiliates isany of the following (each a “**Blocked Person**”):

 

(A)                     a Person owned or controlled by,or acting for or on behalf of, any Person that is listed in the annex to, or isotherwise subject to the provisions of, Executive Order No. 13224;

 

(B)                       a Person or entity with whichany bank or other financial institution is prohibited from dealing or otherwiseengaging in any transaction by any Anti-Terrorism Law;

 

(C)                       a Person or entity that commits,threatens or conspires to commit or supports “terrorism” as defined inExecutive Order No. 13224;

 

(D)                      a Person or entity that is namedas a “specially designed national” on the most current list published by theU.S. Treasury Department Office of Foreign Asset Control at its officialwebsite or any replacement website or other replacement official publication ofsuch list; or

 

(E)                        a Person or entity who isaffiliated with a Person or entity listed above.

 

None of theBorrowers, nor any of their Subsidiaries or Affiliates (i) conducts anybusiness or engages in making or receiving any contribution of funds, goods orservices to or for the benefit of any Blocked Person or (ii) deals in, orotherwise engages in any transaction relating to, any property or interests inproperty blocked pursuant to Executive Order No. 13224.

 

7.1.32                                          Depositand Brokerage Accounts.  Exhibit7.1.32 sets forth as of the Closing Date a complete and accurate list ofall deposit, checking and other bank accounts, all securities and otheraccounts maintained with any securities intermediary or broker dealer and allother similar accounts maintained by each Borrower and its Subsidiaries,together with a description thereof (i.e., the bank, securities intermediary or

 

----

 

broker dealer at which such deposit or other account is maintained andthe account number and the purpose thereof). No Borrower or any of its Subsidiaries maintains any other bank,securities or other similar accounts other than those set forth on Exhibit7.1.32.

 

7.2                                 Continuous Nature of Representations and Warranties.  Each Loan request made or deemed madepursuant to subsection 3.1.1 hereof shall constitute Borrowers’reaffirmation of the accuracy in all material respects, as of the date of eachsuch loan request, of each representation, warranty or other statement made orfurnished to Administrative Agent or any Lender by or on behalf of anyBorrower, any Subsidiary of any Borrower in this Agreement, any of the otherLoan Documents, or any instrument, certificate or financial statement furnishedin compliance with or in reference thereto. If any of the representations and warranties made hereunder becomeincorrect as a result in a change in the information or disclosures provided onany of Exhibits 6.1.1, 7.1.4 or 7.1.5, originally attachedhereto, Borrowers may deliver to Administrative Agent and the Lenders as partof the Compliance Certificate required pursuant to subsection 8.1.3(ii)(D)such revisions or updates to such Exhibit(s) as may be necessary or appropriateto update or correct such Exhibit(s); provided, that no such revisionsor updates to any such Exhibit(s) shall be deemed to have amended, modified orsuperseded such Exhibit(s) then in effect, or to have cured such breach ofrepresentation or warranty resulting from the inaccuracy or incompleteness ofany such Exhibit(s) unless and until Administrative Agent, in its sole andabsolute discretion, shall have accepted in writing such revisions or updatesto such Exhibit(s).

 

7.3                                 Survival of Representations and Warranties.  All representations and warranties ofBorrowers contained in this Agreement or any of the other Loan Documents shallsurvive the execution, delivery and acceptance thereof by Administrative Agentand each Lender and the parties thereto and the closing of the transactionsdescribed therein or related thereto.

 

**SECTION 8.**  COVENANTS ANDCONTINUING AGREEMENTS

 

8.1                                 AffirmativeCovenants.  Duringthe Term, and thereafter for so long as there are any Obligations (other thanunasserted contingent indemnification obligations and Product Obligations thatare not then due and payable, whether by acceleration, termination orotherwise) outstanding, each Borrower covenants that it shall, and shall causeeach of its Subsidiaries to:

 

8.1.1                                                Visitsand Inspections; Appraisals of Rental Equipment Inventory; Lender Meeting.

 

(i)                                     Permit (A) representatives ofAdministrative Agent, from time to time, as often as may be reasonablyrequested, but only during normal business hours, to conduct Audits (not toexceed four (4) times per year if such Audit is to be at the expense of theBorrowers, unless an Event of Default has occurred and is continuing orAvailability is less than the Required Minimum Availability) and(B) appraisers engaged pursuant to subsection 2.9 and

 

----

 

clause(ii)of this subsection 8.1.1****(whetheror not personnel of Administrative Agent), from time to time, as provided insuch Section and clause, but only during normal business hours, to visitand inspect the Properties of each Borrower and each of its Subsidiaries, forthe purpose of completing appraisals pursuant to subsection 2.9 andclause (ii) of this subsection 8.1.1.  Administrative Agent, if no Default or Eventof Default then exists, shall give Borrowers reasonable prior notice of anysuch Audit or appraisals.    Withoutlimiting the foregoing, Borrowers will participate and will cause their keymanagement personnel to participate in a meeting with Administrative Agent andLenders periodically during each year during regular business hours and uponreasonable prior notice, which meeting(s) shall be held at such times and suchplaces as may be reasonably requested by Administrative Agent.  All Audits and appraisals conducted pursuantto this clause (i) shall (except as expressly provided above) be atBorrower’s expense.

 

(ii)                                  On or before the 60th day after theend of each of Holdings’ fiscal quarters (or fiscal months, if requested byAdministrative Agent in its Permitted Discretion), commencing with the fiscalquarter ending September 30, 2004, deliver to Administrative Agent anappraisal of each type of Rental Equipment Inventory (both serialized andnon-serialized) performed by an appraiser selected by Administrative Agent,which appraisal shall be in form and substance reasonably satisfactory toAdministrative Agent and shall state the net orderly liquidation value(expressed as a percentage of net book value) of all such Rental EquipmentInventory.  All inventory appraisalsconducted pursuant to this clause (ii) shall be at Borrowers’ expense.

 

8.1.2                                                Notices.  Furnish to Administrative Agent,

 

(i)                                     promptly after the occurrencethereof, written notice of (A) the occurrence of any event or the existence ofany fact which renders any representation or warranty in this Agreement or anyof the other Loan Documents inaccurate, incomplete or misleading in anymaterial respect as of the date made or remade and (B) any change in theinformation disclosed in any Exhibit hereto, in each case after giving effectto the materiality limits and Material Adverse Effect qualifications containedtherein;

 

(ii)                                  promptly, and in any event within 3Business Days after a Responsible Officer of any Borrower has knowledge of theoccurrence of an Event of Default or Default that is continuing or theoccurrence of any event or development that could reasonably be expected have aMaterial Adverse Effect, the written statement of a Responsible Officer ofBorrower Representative setting forth the details of such Event of Default orDefault or other event or development having a Material Adverse Effect and theaction which the affected Person proposes to take with respect thereto;

 

(iii)                               promptly after the sending or filingthereof, as the case may be, copies of any proxy statements, financialstatements or reports

 

----

 

whichHoldings****has made generallyavailable to its Securities holders and copies of any regular, periodic andspecial reports or registration statements which Holdings****or any of its Subsidiaries files with theSecurities and Exchange Commission or any Governmental Authority which may besubstituted therefor or any national securities exchange;

 

(iv)                              promptly after the receipt thereof,copies of any material notice or communication received by any Borrower or anyof its Subsidiaries from any Governmental Authority (including the Securitiesand Exchange Commission), and promptly after the commencement thereof but inany event not later than five (5) Business Days after service of process withrespect thereto, or the obtaining of knowledge thereof by, any Borrower or anyof its Subsidiaries, notice of each action, suit or proceeding before any courtor other Governmental Authority or other regulatory body or any arbitratorwhich, if adversely determined, could reasonably be expected to have a MaterialAdverse Effect;

 

(v)                                 within five (5) Business Days afterany Borrower or any ERISA Affiliate knows or has reason to know, that an ERISAEvent or a non-exempt prohibited transaction (as defined in Sections 406 ofERISA and 4975 of the Code) has occurred, notice thereof and, when known, anyaction taken or threatened by the IRS, the DOL or the PBGC with respectthereto;

 

(vi)                              upon request, or, in the event thatsuch filing reflects a significant change with respect to the matters coveredthereby, within five (5) Business Days after the filing thereof with the PBGC,the DOL or the IRS, as applicable, copies of the following:  (A) each annual report (Form 5500 series),including Schedule B thereto, filed with the PBGC, the DOL or the IRS withrespect to each Pension Plan and (B) a copy of each funding waiver requestfiled with the PBGC, the DOL or the IRS with respect to any Pension Plan andall communications received by any Borrower or any ERISA Affiliate from thePBGC, the DOL or the IRS with respect to such request;

 

(vii)                           upon request, copies of eachactuarial report for any Pension Plan; and within five (5) Business Days afterreceipt thereof by any Borrower or any ERISA Affiliate, copies of thefollowing:  (A) any notices of the PBGC’sintention to terminate a Pension Plan or to have a trustee appointed toadminister such Pension Plan; (B) any unfavorable determination letter from theIRS regarding the qualification of a Pension Plan under Section 401(a) ofthe Code; (C) any notice from a Multiemployer Plan regarding the imposition ofwithdrawal liability; or (D) any notice from a Governmental Authorityregarding the termination, registration or other event affecting a Foreign Planwhich could reasonably be expected to have a Material Adverse Effect;

 

(viii)                        within five (5) Business Days afterthe occurrence thereof, notice of: (A) any changes in the benefits or fundingof any existing Pension Plan or Foreign Plan which increase any Borrower’sannual costs

 

----

 

withrespect thereto by an amount in excess of $250,000; or (B) any failure by anyBorrower or any ERISA Affiliate to make a required installment or any otherrequired payment under Section 412 of the Code on or before the due datefor such installment or payment;

 

(ix)                                within five (5) Business Days afterany Borrower or any ERISA Affiliate knows or has reason to know that any of thefollowing events has or will occur, notice thereof:  (A) a Multiemployer Plan has been or will beterminated; (B) the administrator or plan sponsor of a Multiemployer Planintends to terminate a Multiemployer Plan; or (C) the PBGC has instituted orwill institute proceedings under Section 4042 of ERISA to terminate aMultiemployer Plan;

 

(x)                                   promptly after the receipt ordelivery thereof, copies of all statements, reports and other information anyCredit Party or any of its Subsidiaries sends to or receives from any theholder of the Second Lien Debt or any agent or other representative in respectthereof;

 

(xi)                                promptly after receiving any noticeof any violation by any Borrower or any of its Subsidiaries of anyEnvironmental Law which could reasonably be expected to have a Material AdverseEffect or that any Governmental Authority has asserted in writing that anyBorrower or any Subsidiary is not in compliance with any Environmental Law oris investigating any Borrower’s or such Subsidiary’s compliance therewith,copies thereof;

 

(xii)                             promptly after receiving any writtennotice that any Borrower or any of its Subsidiaries is or may be liable to anyPerson as a result of the Release or threatened Release of any Contaminant orthat any Borrower or any Subsidiary is subject to investigation by anyGovernmental Authority evaluating whether any remedial action is needed torespond to the Release or threatened Release of any Contaminant which, ineither case, could reasonably be expected to have a Material Adverse Effect,copies of such notice;

 

(xiii)                          promptly after receiving any writtennotice of the imposition of any Environmental Lien against any property of anyBorrower or any of its Subsidiaries, copies of such notice;

 

(xiv)                         at least 10 days prior to theconsummation of any sale or other disposition of any Inventory of any Borroweror any of its Subsidiaries (or the consummation of any related series of salesor dispositions, including any sale or other disposition at auction or pursuantto a trade package with an original equipment manufacturer) which has anaggregate book value or fair market value (whichever is greater) in excess of$5,000,000, notice thereof, which notice shall identify the Inventory to besold, the proposed buyer and the details of such transaction; and

 

----

 

(xv)                            such other data and information(financial and otherwise) as Administrative Agent or any Lender, from time totime, may reasonably request, bearing upon or related to the Collateral orBorrowers’ or any of their Subsidiaries’ financial condition or results ofoperations.

 

8.1.3                                                FinancialStatements and Financial Information.

 

(i)                                     Keep and maintain (A) adequaterecords and books of account with respect to its business activities in whichproper entries are made in accordance with customary accounting practicesreflecting all its financial transactions so as to provide reasonableassurances that transactions are recorded as necessary to permit preparation offinancial statements in conformity with GAAP; and (B) effective disclosurecontrols and procedures designed to ensure that material information relating to the Borrowers and their Subsidiaries ismade known to Holdings and its officers in a timely manner; and

 

(ii)                                  cause to be prepared and furnishedto Administrative Agent and each Lender, the following, all to be prepared inaccordance with GAAP applied on a consistent basis, unless Holdings’ certifiedpublic accountants concur in any change therein and  such change is disclosed to AdministrativeAgent and is consistent with GAAP:

 

(A)                     not later than 90 days after theclose of each fiscal year of Holdings, unqualified (except for a qualificationfor a change in accounting principles with which the accountant concurs)audited Consolidated and consolidating**(**ona line of business basis) balance sheets of Holdings and its Subsidiaries(including the accounts of all Subsidiaries of Holdings****and their respective Subsidiaries for therespective periods during which a Subsidiary relationship existed) as of theend of such year, together with the related statements of income, cash flow,changes in shareholder’s equity, and changes in financial position for theperiods ended on such date, which do not contain any paragraph of emphasis orexplanatory note relating to the ability of Holdings and its Subsidiaries tocontinue business as a going concern, and are certified by KPMG, LLP or anotherfirm of independent certified public accountants of recognized nationalstanding and, within a reasonable time thereafter a copy of any managementletter issued in connection therewith;

 

(B)                       not later than 45 days after theend of each fiscal quarter of Holdings****occurringafter the Closing Date, including the last fiscal quarter of Holdings’ fiscalyear, unaudited interim Consolidated and consolidating****(on a line of business basis) balancesheets of Holdings and its Subsidiaries (including the accounts of allSubsidiaries of Holdings****and theirrespective Subsidiaries for the respective periods during which a Subsidiaryrelationship existed) as of the end of such quarter, together with the relatedstatements of income, cash flow, changes in shareholder’s equity, and changesin financial position for the periods ended on such date and for the portion ofthe fiscal year then elapsed, certified by the chief financial officer ofHoldings,****in

 

----

 

such officer’s capacity as such, as prepared in accordance with GAAPapplied consistently with the audited financial statements required to bedelivered pursuant to subsection 8.1.3(ii)(A) and fairly presentingin all material respects the financial position and results of operations ofHoldings and its Subsidiaries for such quarter and period subject only tochanges from audit and year-end adjustments and except that such statementsneed not contain notes;

 

(C)                       not later than 30 days after theend of each fiscal month of Holdings****occurringafter the Closing Date, including the last fiscal month of Holdings’ fiscalyear, unaudited interim Consolidated balance sheets of Holdings and itsSubsidiaries (including the accounts of all Subsidiaries of Holdings****and their respective Subsidiaries for therespective periods during which a Subsidiary relationship existed) as of theend of such month, together with the related statements of income and cashflow, setting forth in each case in comparative form the figures for thecorresponding date or period of the immediately preceding fiscal year and ofthe Projections, certified by the chief financial officer of Holdings,****in such officer’s capacity as such, asprepared in accordance with GAAP applied consistently with the auditedfinancial statements required to be delivered pursuant to subsection 8.1.3(ii)(A)and fairly presenting in all material respects the financial position andresults of operations of Holdings and its Subsidiaries for such month subjectonly to changes from audit, quarterly and year-end adjustments and except thatsuch statements need not contain notes;

 

(D)                      together with each delivery offinancial statements (1) pursuant to the foregoing clauses (A), (B)and (C), a compliance certificate in the form of Exhibit 8.1.3(iv)hereto executed by the chief financial officer of Holdings (a **“Compliance Certificate”**); and (2) togetherwith the financial information delivered pursuant to the foregoing clause (B)(or upon Administrative Agent’s request from time to time), a list of allcontracts entered into by any Borrower or any of its Subsidiaries with surety,bonding, indemnity or similar entities since the date that the last ComplianceCertificate was delivered pursuant hereto, pursuant to which any performance,surety or similar bonds have been issued for the account of any Borrower or anyof its Subsidiaries, which list identifies any portion thereof that is cashcollateralized.  In addition, uponAdministrative Agent’s request, Borrowers shall deliver to Administrative Agentcopies of any bonds issued pursuant to such agreements; and

 

(E)                        together with the delivery ofthe financial statements described in subsection 8.1.3(ii)(A),Borrowers shall forward to Administrative Agent a copy of the accountants’letter to Holdings’****managementthat is prepared in connection with such financial statements.

 

8.1.4                                                BorrowingBase Certificates.  On or before the20th****day of each month****from and after the date hereof, deliver toAdministrative Agent, a Borrowing Base Certificate as of the last day of theimmediately preceding month, with such supporting materials, as AdministrativeAgent shall reasonably request.  IfBorrowers deem it advisable, or Administrative Agent shall request, Borrowersshall execute and

 

----

 

deliver to Administrative Agent Borrowing Base Certificates morefrequently than monthly.  Concurrentlywith the delivery of each Borrowing Base Certificate pursuant to this Section, Borrowersshall deliver to Administrative Agent, in form reasonably acceptable toAdministrative Agent, a reconciliation of the Borrowing Base (includingAccounts, Inventory and Loans) to the general ledger of Borrowers and of suchgeneral ledger to the financial statements most recently delivered pursuant to subsection 8.1.3(ii)(B).

 

8.1.5                                                Landlord,Processor and Storage Agreements. Provide Administrative Agent with copies of all agreements between anyBorrower or any of its Subsidiaries and any landlord, warehouseman, processor,distributor or consignee which owns or is the lessee of any premises at whichany Collateral may, from time to time, be kept. With respect to any lease (other than leases for sales offices),warehousing agreement or any processing agreement in any case entered intoafter the Closing Date, Borrowers shall provide Administrative Agent withlandlord waivers, bailee letters or processor letters with respect to suchpremises.  Such landlord waivers, baileeletters or processor letters shall be in a form supplied by AdministrativeAgent to Borrowers with such reasonable revisions as are customarily acceptedby Administrative Agent or by similar financial institutions in similarfinancial transactions.

 

8.1.6                                                Projections.  No later than 30 days prior to the end of thelast day of each fiscal year of Holdings, deliver to Administrative AgentProjections of Holdings and each of its Subsidiaries on a Consolidated basis(including on a line of business basis) for the forthcoming fiscal year, monthby month.

 

8.1.7                                                AdditionalBorrowers.    Upon any Personbecoming a direct or indirect Subsidiary of any Borrower, (a) cause such Person(excluding any Foreign Subsidiary) to become a “Borrower” hereunder, jointlyand severally with the other Borrowers, pursuant to a joinder agreement orother supplement hereto in form and substance reasonably satisfactory toAdministrative Agent, (b) cause such Person (excluding any such Person notorganized under the laws of the United States or any state thereof) to pledgeall of its assets to Administrative Agent on a first priority basis (subjectonly to Permitted Liens) pursuant to a security agreement in form and substancereasonably satisfactory to Administrative Agent, (c) cause all of such Person’sSecurities (or in the case of any Person not organized under the laws of theUnited States or any state thereof, sixty-five percent (65%) of its Securitiesentitled to vote and 100% of its non-voting Securities) to be pledged anddelivered to Administrative Agent pursuant to a pledge agreement in form andsubstance reasonably satisfactory to Administrative Agent (together withundated stock powers signed in blank), (d) cause such Person (excluding anysuch Person not organized under the laws of the United States or any statethereof) to grant a mortgage in and to all of such Person’s owned real Propertyin accordance with subsection 5.4, and (e) deliver such otherdocumentation as Administrative Agent may reasonably request in connection withthe foregoing, including, without limitation, certified resolutions and otherorganizational and authorizing documents of such Person and favorable opinionsof counsel to such Person (which shall cover, among other things, the legality,validity, binding effect and enforceability of the documentation referred toabove), all in form, content and scope reasonably satisfactory toAdministrative Agent.

 

----

 

8.1.8                                                Depositand Brokerage Accounts.  For eachdeposit account (other than an Excluded Deposit Account, unless otherwiserequested by the Administrative Agent) or brokerage account (including anySecurities Account) that any Borrower or any of its Subsidiaries at any timeopens or maintains, cause Administrative Agent to have “control” (within themeaning of the Uniform Commercial Code) thereof pursuant to an agreement inform and substance reasonably satisfactory to Administrative Agent.

 

8.1.9                                                ERISA.  Each Borrower shall, and shall cause each ofits ERISA Affiliates to:  (a) maintaineach Pension Plan and Foreign Plan in compliance in all material respects withthe Requirement of Law, including, but not limited to ERISA, the Code and otherfederal or state law; (b) cause each Plan which is qualified under Section 401(a)of the Code to maintain such qualification; (c) make all required contributionsto any Plan subject to Section 412 of the Code; (d) not engage in aprohibited  transaction or violation ofthe fiduciary responsibility rules with respect to any Plan or Foreign Plan and(e) not engage in a transaction that could be subject to Section 4069 or4212(c) of ERISA.

 

8.1.10                                          EnvironmentalLaws.

 

(i)                                     Conduct its business in compliancewith all Environmental Laws applicable to it, including those relating to thegeneration, handling, use, storage, and disposal of any Contaminant.  Each Borrower shall, and shall cause each ofits Subsidiaries to, take prompt and appropriate action to respond to anynon-compliance with Environmental Laws and shall regularly report toAdministrative Agent on such response.

 

(ii)                                  Without limiting the generality ofthe foregoing, submit to Administrative Agent and Lenders annually, commencingon the first anniversary of the Closing Date, and on each anniversary thereofthereafter, an update of the status of each environmental compliance orliability issue.  Administrative Agent orany Lender may request copies of technical reports prepared by Borrowers’ andtheir communications with any Governmental Authority to determine whetherBorrowers or any of their Subsidiaries is proceeding reasonably to correct, cureor contest in good faith any alleged non-compliance or environmentalliability.  Borrowers shall, atAdministrative Agent’s or Majority Lenders’ request and at Borrowers’ expense,(A) retain an independent environmental engineer acceptable to AdministrativeAgent  to evaluate the site, includingtests if appropriate, where the non-compliance or alleged non-compliance withEnvironmental Laws has occurred and prepare and deliver to AdministrativeAgent, in sufficient quantity for distribution by Administrative Agent toLenders, a report setting forth the results of such evaluation, a proposed planfor responding to any environmental problems described therein, and an estimateof the costs thereof, and (B) provide to Administrative Agent and Lenders asupplemental report of such engineer whenever the scope of the environmentalproblems, or the response thereto or the estimated costs thereof, shallincrease in any material respect.

 

----

 

(iii)                               Administrative Agent and itsrepresentatives will have the right at any reasonable time to enter and visitthe real Properties and any other place where any property of the Borrowers islocated for the purposes of observing the real Property, taking and removingsoil or groundwater samples, and conducting tests on any part of the realProperty.  Administrative Agent is underno duty, however, to visit or observe the real Properties or to conduct tests,and any such acts by Administrative Agent will be solely for the purposes ofprotecting Administrative Agent’s Liens in the Collateral and preservingAdministrative Agent’s and Lenders’ rights under the Loan Documents.  No site visit, observation or testing byAdministrative Agent and Lenders will result in a waiver of any default of anyBorrower or impose any liability on Administrative Agent or Lenders.  In no event will any site visit, observationor testing by Administrative Agent be a representation that hazardoussubstances are or are not present in, on or under the real Properties, or thatthere has been or will be compliance with any Environmental Law.  Neither any Borrower nor any other party isentitled to rely on any site visit, observation or testing by AdministrativeAgent.  Administrative Agent and Lendersowe no duty of care to protect the Borrowers or any other party against, or toinform the Borrowers or any other party of, any hazardous substances or anyother adverse condition affecting the real Properties.  Administrative Agent may in its solediscretion disclose to the Borrowers or to any other party if so required bylaw any report or findings made as a result of, or in connection with, any sitevisit, observation or testing by Administrative Agent.  Each Borrower understands and agrees thatAdministrative Agent makes no warranty or representation to any Borrower or anyother party regarding the truth, accuracy or completeness of any such report orfindings that may be disclosed.  EachBorrower also understands that depending on the results of any site visit,observation or testing by Administrative Agent and disclosed to the Borrowers,such Borrower may have a legal obligation to notify one or more environmentalagencies of the results, that such reporting requirements are site-specific,and are to be evaluated by such Borrower without advice or assistance fromAdministrative Agent.  In each instance,Administrative Agent will give the Borrowers reasonable notice before enteringthe real Properties or any other place Administrative Agent is permitted toenter under this subsection 8.1.10. Administrative Agent will make reasonable efforts to avoid interferingwith the Borrowers’ use of the real Properties or any other property inexercising any rights provided hereunder.

 

8.1.11                                          ExistingLetters of Credit.  Use commerciallyreasonable efforts to cause each Existing Letter of Credit to be cancelled andreturned to the issuer thereof on or prior to the date that is 90 days afterthe Closing Date, and, if necessary, replaced with a Letter of Credit issued byAdministrative Agent, Bank or an Affiliate thereof in accordance with theprovisions of subsection 1.2.

 

8.2                                 NegativeCovenants.  Duringthe Term, and thereafter for so long as there are any Obligations (other thanunasserted contingent indemnification obligations and Product Obligations thatare not then due and payable, whether by acceleration,

 

----

 

termination or otherwise)outstanding, each Borrower covenants that it shall not, and shall not permitany of its Subsidiaries to:

 

8.2.1                                                Mergers;Consolidations; Acquisitions; Structural Changes.  Merge or consolidate with any Person; norchange its or any of its Subsidiaries’ state of incorporation or organization,Type of Organization or Organizational I.D. Number; nor change its or any ofits Subsidiaries’ legal name; nor acquire all or any substantial part of the Propertiesof any Person, except for:

 

(i)                                     (A) mergers of any Subsidiary of aBorrower into any  Borrower and (B)mergers of any Borrower into any other Borrower; and

 

(ii)                                  acquisitions of assets thatconstitute Capital Expenditures.

 

8.2.2                                                Loans.  Make any loans or other advances of money toany Person, other than (i) for salary, travel advances, advances againstcommissions and other similar advances to employees in the ordinary course ofbusiness, (ii) extensions of trade credit in the ordinary course of business,(iii) deposits with financial institutions permitted under this Agreement**,**(iv) prepaid expenses,(v) intercompany loans****betweenany Borrower and any other Borrower, (vi) deposits permitted to be made by subsection 8.2.5(vi),(vii) promissory notes received as consideration in connection with the assetdispositions permitted under subsection 8.2.8(ix) and (viii) to theextent constituting a loan or advance, rental agreements that contain optionsgranted to customers of Borrowers to the extent such rental agreements areentered into in the ordinary course of business and consistent with pastpractices, and so long as (x) customers may purchase the Rental EquipmentInventory rented by such customers at the expiration of the applicable rentalterm at a purchase price not less than the fair market value of such RentalEquipment Inventory and (y) at all times prior to the payment of such purchaseprice, the applicable Borrower retains full legal and beneficial ownership ofthe applicable Rental Equipment Inventory.

 

8.2.3                                                TotalIndebtedness.  Create, incur, assume,or suffer to exist, any Indebtedness, except:

 

(i)                                     Obligations owing to AdministrativeAgent or any Lender under this Agreement or any of the other Loan Documents;

 

(ii)                                  Indebtedness existing on the date ofthis Agreement and listed on Exhibit 8.2.3;

 

(iii)                               Permitted Purchase MoneyIndebtedness;

 

(iv)                              contingent liabilities arising outof endorsements of checks and other negotiable instruments for deposit orcollection in the ordinary course of business;

 

----

 

(v)                                 guaranties of any Indebtednesspermitted hereunder;

 

(vi)                              Indebtedness in respect ofintercompany loans permitted under subsection 8.2.2(v);

 

(vii)                           obligations to pay Rentals permittedby subsection 8.2.17;

 

(viii)                        to the extent not included above,trade payables, accruals and accounts payable in the ordinary course ofbusiness (in each case to the extent not overdue) not for Money Borrowed;

 

(ix)                                the Second Lien Debt, and anyReplacement Debt in respect thereof, but only to the extent permitted by subsection 8.2.6;

 

(x)                                   Indebtedness arising underperformance and surety bonds in the ordinary course of business;

 

(xi)                                Indebtedness incurred to finance theunpaid portion of annual insurance premiums payable by Borrowers and theirSubsidiaries in the ordinary course  ofbusiness, provided, that the aggregate principal amount of suchIndebtedness does not exceed at any time, $2,500,000;

 

(xii)                             Derivative Obligations and, to theextent constituting Indebtedness, other Product Obligations, in each caseincurred in the ordinary course of business and not for speculative purposes;and

 

(xiii)                          Indebtedness not included in clauses(i) through (xii) above which does not exceed at any time $7,500,000in aggregate principal amount.

 

8.2.4                                                AffiliateTransactions.  Enter into, or be aparty to, any transaction with any Affiliate of any Borrower or any holder ofany Securities of any Borrower or any Subsidiary of any Borrower (other thanany other Borrower), including without limitation in respect of any management,consulting or similar fees, unless such transaction meets each of the followingconditions (i) such transaction is in the ordinary course of and pursuantto the reasonable requirements of such Borrower’s or such Subsidiary’s businessand upon fair and reasonable terms which are no less favorable to such Borroweror such Subsidiary than would be obtained in a comparable arms-lengthtransaction with a Person not an Affiliate or Security holder of any Borrower, providedthat if such transaction involves consideration in excess of $5,000,000 andBorrowers have knowledge that the other party or parties to such transactionare Affiliates of Borrowers or their Subsidiaries, Borrowers shall fullydisclose the terms of such transaction to Administrative Agent prior to theconsummation thereof****and(ii) such transaction is otherwise permitted under Section 8of this Agreement.

 

----

 

8.2.5                                                Limitationon Liens.  Create or suffer to exist,any Lien upon any of its Property, income or profits, whether now owned or hereafteracquired, except:

 

(i)                                     Liens at any time granted in favorof Administrative Agent for the benefit of Administrative Agent and Lenders;

 

(ii)                                  Liens for taxes, assessments orgovernmental charges (excluding any Lien imposed pursuant to any of the provisionsof ERISA and any Environmental Lien) not yet due, or being contested in themanner described in subsection 7.1.14 hereto, but only if inAdministrative Agent’s judgment such Lien would not reasonably be expected toadversely effect Administrative Agent’s rights or the priority ofAdministrative Agent’s Lien on any Collateral;

 

(iii)                               Liens arising in the ordinary courseof the business of any Borrower or any of its Subsidiaries by operation of lawor regulation, but only if payment in respect of any such Lien is not at thetime required and such Liens do not, in the aggregate, materially detract fromthe value of the Property of such Borrower or any of its Subsidiaries ormaterially impair the use thereof in the operation of the business of suchBorrower or any of its Subsidiaries;

 

(iv)                              Purchase Money Liens securingPermitted Purchase Money Indebtedness;

 

(v)                                 such other Liens existing on theClosing Date and as appear on Exhibit 8.2.5 hereto;

 

(vi)                              Liens incurred or deposits made inthe ordinary course of business in connection with (1) worker’s compensation,social security, unemployment insurance and other like laws or (2) salescontracts, leases, statutory obligations, work in progress advances and othersimilar obligations not incurred in connection with the borrowing of money orthe payment of the deferred purchase price of property;

 

(vii)                           reservations, covenants, zoning andother land use regulations, title exceptions or encumbrances granted in theordinary course of business, affecting real Property owned or leased by aBorrower or one of its Subsidiaries; provided that such exceptions donot in the aggregate materially interfere with the use of such Property in theordinary course of any Borrower’s or such Subsidiary’s business;

 

(viii)                        judgment Liens that do not give riseto an Event of Default under subsection 10.1.12;

 

(ix)                                Liens securing Indebtednesspermitted by subsection 8.2.3(ix), but only so long as theIntercreditor Agreement shall be in full force and effect and applicable to allIndebtedness secured by such Liens;

 

----

 

(x)                                   depositsto secure surety and appeal bonds, performance bonds and other obligations oflike nature, in each case incurred in the ordinary course of business;

 

(xi)                                Lienson proceeds payable under any insurance policy (whether arising by statute orcontract) to the extent securing the payment of the unpaid portion of annualinsurance premiums payable by Borrowers and their Subsidiaries in respect ofsuch insurance policy, provided that the aggregate amount so securedshall not at any time exceed $2,500,000;

 

(xii)                             Liensof a collection bank arising under Section 4-208 of the Uniform CommercialCode on items in the course of collection;

 

(xiii)                          Lienssecuring Product Obligations incurred in the ordinary course of business andnot for speculative purposes; and

 

(xiv)                         Liens infavor of New Holland Credit Company and its parent entities, Daewoo HeavyIndustries America Corporation, Stihl Incorporated and Mitsui MachineryDistribution, Inc. (the **“Specified Vendors”**),to the extent and only to the extent such Liens encumber property sold orleased to Borrowers by such Specified Vendors which has not been paid for infull, and only to the extent that the obligations secured by such Liens do notexceed $2,500,000 in the aggregate at any one time outstanding.

 

8.2.6                                                Paymentsand Amendments of Certain Debt.

 

(i)                                     makeany payment of any part or all of any Subordinated Debt or take any otheraction or omit to take any other action in respect of any Subordinated Debt,except in accordance with the subordination agreement relative thereto or thesubordination provisions thereof; or

 

(ii)                                  amendor modify any agreement, instrument or document evidencing or relating to anySubordinated Debt; or

 

(iii)                               makeany payment (other than regularly scheduled amortization and interest payments)or prepayment of principal of, premium, if any, or interest on, or any  redemption, defeasance, sinking fund paymentor other acquisition for value of, or otherwise satisfy prior to the scheduledmaturity thereof in any manner, any of the Second Lien Debt (including, withoutlimitation, by way of depositing money or securities with the trustee thereforbefore the date required for the purpose of paying any portion of suchIndebtedness when due) (each a **“Second LienDebt Payment”**), or refund, refinance, replace or exchange any otherIndebtedness (the **“Replacement Debt”**)for any Second Lien Debt, except that:

 

(1)                                  Borrowers and their Subsidiaries maymake mandatory prepayments of principal of the Second Lien Debt, so long aseach of the following conditions has been

 

----

 

satisfied: (i) immediately prior to and afterthe making of such payment, no Default or Event of Default shall have occurredand be continuing, (ii) if such prepayment is being made pursuant to an excesscash flow sweep or similar provision in the definitive documentation for theSecond Lien Debt, such payment is made after Borrowers shall have furnished theCompliance Certificate required to be delivered no later than 90 days after theclose of the immediately preceding fiscal year of Holdings in accordance with subsection 8.1.3(ii)(A),(iii) if such prepayment is being made pursuant to an excess cash flow sweep orsimilar provision in the definitive documentation of the Second Lien Debt, suchpayment shall be made within 101 days of after the close of the immediatelypreceding fiscal year, but in any event on or prior to the due date thereforunder the Second Lien Debt Loan Agreement, (iv) (x) the Available Liquidityshall not be less than $50,000,000 on the date such Second Lien Debt Payment ismade immediately before and after giving effect to such Second Lien DebtPayment and (y) the average Available Liquidity shall not be less than$50,000,000 for the 30 day period ending on the date of such payment, bothbefore and after giving effect to such payment, (v) Borrowers and theirSubsidiaries shall have a Fixed Charge Coverage Ratio of not less than 1.25 to1.00 as of twelve-month period ended as of the last day of the fiscal quartermost recently ended prior to the date on which such payment is made and forwhich financial statements are available and (vi) Borrower Representative shallhave submitted a certificate of the chief financial officer of BorrowerRepresentative, in such officer’s capacity as such, setting forth reasonablydetailed calculations demonstrating compliance with the required AvailableLiquidity and Fixed Charge Coverage Ratio tests described above and certifyingthat the other conditions set forth in this clause (1) have beensatisfied;

 

(2)                                  Borrowers and their Subsidiaries maymake voluntary prepayments of principal of the Second Lien Debt after thedelivery of Holdings’ audited financial statements pursuant to and inaccordance with subsection 8.1.3(ii)(A) for the fiscal year ended December 31,2005, so long as each of the following conditions have been satisfied:  (i) immediately prior to and after the makingof such payment, no Default or Event of Default shall have occurred and becontinuing, (ii) only one such Second Lien Debt Payment is made per fiscalquarter of Holdings and its Subsidiaries and such payment is made (x) afterdelivery of Holdings’ quarterly financial statements pursuant to and inaccordance with subsection 8.1.3(ii)(B) for the preceding fiscalquarter, (y) on or before the 30th day after Administrative Agent’sreceipt of such quarterly financial statements and (z) after any mandatoryprepayment pursuant to subsection 3.3.4 (or

 

----

 

corresponding prepayment under the SecondLien Debt Loan Agreement) has been made in respect of Excess Cash Flow for thepreceding year, (iii) (x) the Available Liquidity shall not be less than$75,000,000 on the date such Second Lien Debt Payment is made immediatelybefore and after giving effect to such Second Lien Debt Payment and (y) theaverage Available Liquidity shall not be less than $75,000,000 for the 30 dayperiod ending on the date of such payment, both before and after giving effectto such payment, (iv) Borrowers and their Subsidiaries shall have a FixedCharge Coverage Ratio, calculated after giving effect to such Second Lien DebtPayment, of not less than 1.25 to 1.00 for the twelve-month period ended as ofthe last day of the fiscal quarter most recently ended prior to the date onwhich such payment is made and for which financial statements are available and(v) Borrower Representative shall have submitted a certificate of the chieffinancial officer of Borrower Representative, in such officer’s capacity assuch, setting forth reasonably detailed calculations demonstrating compliancewith the required Available Liquidity and Fixed Charge Coverage Ratio testsdescribed above and certifying that the other conditions set forth in this clause(2) have been satisfied; provided, however, that none of theforegoing conditions shall apply to the extent a voluntary prepayment is madewith the proceeds of a refunding, refinancing, replacement or exchangepermitted under clause (3) of this subsection 8.2.6(iii);and

 

(3)                                  Borrowers and their Subsidiaries mayrefund, refinance, replace and exchange other Indebtedness for the Second LienDebt so long as (i) the principal amount of the Replacement Debt does notexceed the principal amount of the Second Lien Debt outstanding on the ClosingDate, (ii) the final maturity is not a date that is earlier than the dateoccurring 90 days from the last day of the Term and the weighted average lifeto maturity of the Replacement Debt is no shorter than that of the Second LienDebt being refunded, refinanced, replaced or exchanged, (iii) the applicablemargin used in determining the interest rate for such Replacement Debt (or ifthe Replacement Debt bears interest at a fixed rate, the stated interest rate)is not greater than the sum of the applicable margin used in determining theinterest rate for the Second Lien Debt in effect as of the Closing Date (or, ifthe Replacement Debt bears interest at a fixed rate, the interest rate thatwould be applicable to the Second Lien Debt on the date of the refunding,refinancing, replacement or exchange (the “**RefundingDate**”) if such rate were determined by adding the applicable marginas of the Closing Date to the 9 month LIBOR as of the Refunding Date) plus thesum of (1) 2.0% plus (2) the amount, if any, by which the applicablemargin applicable

 

----

 

to any portion of the Loans has beenincreased over (A) 5.0% with respect to LIBOR Portions and (B) 3.0% withrespect to Base Rate Portions; provided that this subsection 8.2.6(iii)(3)shall not prohibit any Second Lien Debt Document from providing that theIndebtedness thereunder shall bear interest at a default rate of up to 2.0% inexcess of the then stated rate at any time an event of default has occurred andis continuing thereunder, (iv) the terms and conditions of the ReplacementDebt, taken as a whole, including any agreements and documents governing orevidencing such Replacement Debt, are not materially more restrictive againstor less favorable to Borrowers and their Subsidiaries than the terms andconditions of the Second Lien Debt and the Second Lien Debt Documents as ineffect on the Closing Date, taken as a whole; provided that no financialcovenant shall be more restrictive against or less favorable to Borrowers andtheir Subsidiaries than the terms and conditions of the Second Lien Debt andthe Second Lien Debt Documents as in effect on the Closing Date, and (v) ifReplacement Debt is to be secured by a Lien, such Replacement Debt shall besubject to the terms of the Intercreditor Agreement and each holder thereofshall be a party to, or otherwise subject to, the Intercreditor Agreement; or

 

(iv)                              amend or modify any Second Lien DebtDocument if such amendment or modification would (A) shorten the final maturityof the Indebtedness thereunder to any date that is earlier than the dateoccurring 90 days from the last day of the Term, (B) shorten the weightedaverage life to maturity of the Indebtedness thereunder, (C) increase theapplicable margin used in determining the interest rate for the Indebtednessunder the Second Lien Debt Documents (or, if the amended Second Lien DebtDocuments provide for a fixed interest rate, increase the effective interestrate) from the applicable margin used in determining the interest ratethereunder on the Closing Date (or, if the amended Second Lien Debt Documentsprovide for a fixed interest rate, the interest rate that would be applicableto the Second Lien Debt on the date of such amendment or modification if suchrate were determined by adding the applicable margin as of the Closing Date tothe 9 month LIBOR as of the date of such amendment or modification by an amountin excess of the sum of (1) 2.0% plus (2) the amount, if any, by whichthe applicable margin applicable to any portion of the Loans has been increasedover (A) 5.0% with respect to LIBOR Portions and (B) 3.0% with respect to BaseRate Portions; provided that this subsection 8.2.6(iv) shallnot prohibit any Second Lien Debt Document from providing that the Indebtednessthereunder shall bear interest at a default rate of up to 2.0% in excess of thethen stated rate at any time an event of default has occurred and is continuingthereunder, (D) add any covenant or obligation which, when taken together withany other amendments or modifications of the Second Lien Debt Documents, wouldcause the applicable Second Lien Debt Documents to be materially morerestrictive against Borrowers and their Subsidiaries than the Second Lien DebtDocuments as in effect on the Closing Date or make any

 

----

 

existing covenant or obligation materiallymore restrictive against Borrowers and their Subsidiaries than such covenant orobligation as in effect on the Closing Date; provided that no financialcovenant shall be more restrictive against Borrowers and their Subsidiariesthan the financial covenants of the Second Lien Debt and the Second Lien DebtDocuments as in effect on the Closing Date, or (E) otherwise be materiallyadverse to Lenders.

 

8.2.7                                                Distributions.  Declare or make any Distributions, exceptfor:

 

(i)                                     Distributions by any Subsidiary of aBorrower to a Borrower;

 

(ii)                                  Distributions paid solely inSecurities (other than Disqualified Capital Stock) of a Borrower or any of itsSubsidiaries; and

 

(iii)                               Distributions by a Borrower inamounts necessary to permit such Borrower to repurchase Securities of aBorrower from employees of any Borrower or any of its Subsidiaries upon thetermination of their employment, so long as no Default or Event of Defaultexists at the time of or would be caused by the making of such Distributionsand the aggregate cash amount of all such Distributions, measured at the timewhen made, does not exceed $250,000 in any fiscal year of Borrowers.

 

8.2.8                                                Dispositionof Assets.  Sell, lease, license orotherwise dispose of any of its Properties, including any disposition ofProperty as part of a sale and leaseback transaction, to or in favor of anyPerson, except for:

 

(i)                                     leases of Serialized RentalEquipment Inventory and other Inventory in the ordinary course of business;

 

(ii)                                  sales or other dispositions ofSerialized Rental Equipment Inventory in the ordinary course of business(including by way of exchange of such Serialized Rental Equipment Inventory forother Serialized Rental Equipment Inventory of an equal or greater fair marketvalue pursuant to original equipment manufacturers’ trade packages in theordinary course of business), provided that if the Net Cash Proceeds ofany single disposition or series of related dispositions of such Propertyexceed $5,000,000 and such Net Cash Proceeds are not reinvested within 180 daysafter receipt of such Net Cash Proceeds, such proceeds shall be remitted toAdministrative Agent for application to the Loans and other Obligations asprovided in subsection 3.3.1;

 

(iii)                               sales of Inventory (other thanSerialized Rental Equipment Inventory) in the ordinary course of business;

 

(iv)                              sales of Property (other thanAccounts or Inventory) with a fair market value or a net book value (whicheveris greater) not exceeding $4,000,000 in the aggregate during any consecutivetwelve-month period;

 

----

 

(v)                                 transfers of Property to a Borrowerby another Borrower or to a Borrower by a Subsidiary of a Borrower;

 

(vi)                              dispositions of Property that isworn, damaged, uneconomic or obsolete or no longer used or useful, providedthat either (A) (I) such Property is replaced with Property which is used oruseful in the business of a Borrower or one of its Subsidiaries (other thanForeign Subsidiaries), (II) the replacement Property is acquired or committedto be purchased within 180 days prior to or following the disposition of theProperty that is to be replaced and (III) the replacement Property shall befree and clear of Liens other than Liens securing Permitted Purchase MoneyIndebtedness or (B) the Net Cash Proceeds of such disposition are remitted toAdministrative Agent for application to the Loans and other Obligations asprovided in subsection 3.3.1;

 

(vii)                           dispositions in the ordinary courseof business of investments described in paragraphs (iv), (v), (vi) and (vii) ofthe definition of the term **“RestrictedInvestments”**;

 

(viii)                        voluntary terminations of DerivativeObligations in the ordinary course of business; and

 

(ix)                                the sale of all or part of theassets or business constituting the Studio and Hoist business units ofBorrowers in one or more transactions, provided that (A) each suchtransaction is for a sales price of not less than $10,000,000, (B) theconsideration received consists solely of (x) cash or (y) a combination of cashand promissory notes issued by the purchaser of such business (provided,that in the case of consideration consisting of promissory notes, (1) suchconsideration shall not exceed 35% of the aggregate sales price in the case ofthe Hoist business and 34% of the aggregate sales price in the case of theStudio business, (2) such promissory notes shall be pledged to AdministrativeAgent, for the benefit of Lenders, pursuant to a pledge agreement in form andsubstance reasonably satisfactory to Administrative Agent, (3) all payments ofprincipal, interest and other amounts payable under such promissory notes andthat are received by Borrowers or their Subsidiaries shall be remitted toAdministrative Agent for application in accordance with subsection 3.3.1(ii)and (4) the aggregate principal amount of all promissory notes received asconsideration for all asset sales permitted under this subsection 8.2.8(ix)shall not exceed $7,500,000 at any one time outstanding) and (C) if Borrowersshall have given Administrative Agent written notice prior to the consummationof such sale of Borrowers’ intention to use the Net Cash Proceeds thereof toreinvest in the business of Borrowers through the purchase of assets used oruseful in the business of Borrowers, then the Net Cash Proceeds of such saleshall not be required to prepay the Loans; providedfurther, thatif (a) any Default or Event of Default shall have occurred and be continuing onthe date such Net Cash Proceeds are received by any Borrower or at the time ofsuch reinvestment or (b) Borrowers shall have failed to complete suchreinvestment within 180 days after consummation of the sale of the applicablebusiness unit, then such portion of the

 

----

 

Net Cash Proceeds as has not been reinvestedat such time shall, if and to the extent required by subsection 3.3.1,be remitted to Administrative Agent for application in accordance with subsection 3.3.1(ii);

 

provided,that sales or other dispositions pursuant to the foregoing clauses (iv), (vi)and (viii) shall only be permitted so long as no Default or Event of Defaultexists at the time of such sale or disposition; and provided, further,that if Administrative Agent shall have delivered a Dominion Notice inaccordance with subsection 6.2.4, the Net Cash Proceeds of any saleor disposition pursuant to the this subsection 8.2.8 shall beremitted to Administrative Agent for application to the Loans and otherObligations as provided in subsection 3.3.1.

 

8.2.9                                                Issuanceof Securities.  Issue any additionalSecurities, except for issuances (i) of Securities of a Borrower (other thanHoldings) to another Borrower, (ii) of Securities of Holdings to management andemployees of any Borrower, (iii) of Securities of Holdings to Persons that areholders of Securities of Holdings on the Closing Date, (iv) of Securities ofHoldings, the Net Cash Proceeds of which are used to purchase Collateral or (v)of Securities of Holdings, the Net Cash Proceeds of which are used to repay theLoans and other Obligations as and to the extent provided in subsection 3.3.2;provided, however, that no Borrower or any of its Subsidiariesmay issue Securities consisting of Disqualified Capital Stock; and provided,further, that no issuance shall be permitted pursuant to this subsection ifsuch issuance would result in a Change of Control.

 

8.2.10                                          Bill-and-HoldSales, Etc.  Make a sale to anycustomer on a bill-and-hold, guaranteed sale, sale and return, sale onapproval, repurchase or return or consignment basis, provided thatBorrowers may provide rental purchase options to their customers in theordinary course of business and consistent with past practices, pursuant towhich customers may purchase the Rental Equipment Inventory rented by suchcustomers at the expiration of the applicable rental term for a purchase pricenot less than the fair market value of such Rental Equipment Inventory.

 

8.2.11                                          RestrictedInvestment.  Make or have any RestrictedInvestment.

 

8.2.12                                          Subsidiariesand Joint Ventures.  Create, acquireor otherwise suffer to exist, any Subsidiary (other than any Subsidiaryorganized under the laws of Canada) or joint venture arrangement, in each case,not in existence as of the date hereof, except that Borrowers and theirSubsidiaries may enter into any joint venture arrangement after the ClosingDate so long as (A) such arrangement will not involve, require or result in orotherwise obligate any cash or cash consideration made or to be made by anyBorrower or any of its Subsidiaries in an aggregate amount in excess of$5,000,000 and no Default or Event of Default shall have occurred and becontinuing immediately before or after entering into such arrangement or (B) ifsuch arrangement will involve, require or result in or otherwise obligate anycash or cash consideration made or to be made by any Borrower or any of itsSubsidiaries in an aggregate amount in excess of $5,000,000, (x) immediatelybefore and after entering into such arrangement,

 

----

 

no Default orEvent of Default shall have occurred and be continuing, (y) immediately beforeand after entering into such arrangement, Borrowers and their Subsidiariesshall have Availability of not less than $25,000,000 for the 90 day periodpreceding such transaction and, after giving effect to such arrangement, on thedate on which the applicable Borrower or Subsidiary enters into sucharrangement and (z) Borrower Representative shall submit a certificate of thechief financial officer of Borrower Representative, in such officer’s capacityas such, setting forth reasonably detailed calculations demonstratingcompliance with such required pro forma Availability and certifying that theother conditions set forth in this clause (B) have been satisfied; and provided,further, that in no event shall any joint venture arrangement enteredinto pursuant to this subsection 8.2.12 involve, require or resultin or otherwise obligate any cash or cash consideration made or to be made byany Borrower or any of its Subsidiaries in an aggregate amount in excess of$12,000,000.

 

8.2.13                                          TaxConsolidation.  File or consent tothe filing of any consolidated income tax return with any Person other thanHoldings, another Borrower and Borrowers’ Subsidiaries.

 

8.2.14                                          OrganizationalDocuments.  Agree to, or suffer tooccur, any amendment, supplement or addition to its or any of theirSubsidiaries’ charter, articles or certificate of incorporation, certificate offormation, limited partnership agreement, bylaws, limited liability agreement,operating agreement or other organizational documents (as the case may be),that, in each case, would reasonably be expected to have a Material AdverseEffect.

 

8.2.15                                          FiscalYear End.  Change its fiscal yearend.

 

8.2.16                                          NegativePledges.  Enter into or suffer toexist any agreement limiting the ability of any Borrower or any of itsSubsidiaries (i) to voluntarily create Liens upon any of its Property,(ii) to pay dividends or to make any other distribution on any Securitiesof any Borrower or any of its Subsidiaries, (iii) to pay or prepay or tosubordinate any Indebtedness owed to any Borrower or any of its Subsidiaries,(iv) to make loans or advances to any Borrower or any of its Subsidiaries or(v) to transfer any of its property or assets to any Borrower or any of itsSubsidiaries, or permit any of its Subsidiaries to do any of the foregoing,except for the Second Lien Debt Documents as in effect on the Closing Date andany replacements or refinancings thereof (as long as such replacement orrefinancing documents contain provisions with respect to the foregoing that arenot more restrictive than those contained in the Second Lien Debt Documents asin effect on the Closing Date).

 

8.2.17                                          Leases.  Become a lessee under any operating lease(other than a lease under which a Borrower or any of its Subsidiaries islessor) of Property if the aggregate Rentals payable during any current orfuture period of twelve (12) consecutive months under the lease in question andall other leases under which Borrowers or any of their Subsidiaries is thenlessee would exceed****$35,000,000.  The term “Rentals” means, as of the date ofdetermination, all payments which the lessee is required to make by the termsof any lease.

 

----

 

8.2.18                                          Anti-TerrorismLaws. (i)  Conduct any business orengage in any transaction or dealing with any Blocked Person, including themaking or receiving of any contribution of funds, goods or services to or forthe benefit of any Blocked Person; (ii) deal in, or otherwise engage in anytransaction relating to, any property or interests in property blocked pursuantto Executive Order No. 13224; or (iii) engage in or conspire to engage in, norpermit any of their Subsidiaries to engage in or conspire to engage in,  any transaction that evades or avoids, or hasthe purpose of evading or avoiding, or attempts to violate, any of theprohibitions set forth in Executive Order No. 13224 or the USA PatriotAct.  Each of the Borrowers shall deliverto Administrative Agent and Lenders any certification or other evidencerequested from time to time by Administrative Agent or any Lender, inAdministrative Agent’s sole discretion, confirming such Person’s compliancewith this subsection 8.2.18.

 

8.2.19                                          Change inNature of Business.  Engage in anymaterial line of business substantially different from those lines of businessgenerally conducted by the Borrowers on the date hereof or any businesssubstantially related or incidental thereto or reasonable extensions thereof.

 

8.2.20                                          Locationof Personal Property.  Have at anytime personal property at any single location having a total value in excess ofthe applicable maximum amount payable per occurrence by the Borrowers’insurance with respect to any loss of such property.

 

8.3                                 Specific Financial Covenants. Duringthe Term, and thereafter for so long as there are any Obligations outstanding,each Borrower covenants that it shall comply with all of the financialcovenants set forth in Exhibit 8.3 hereto.  If GAAP changes from the basis used in preparingthe audited financial statements delivered to Administrative Agent by Borrowerson or before the Closing Date, Borrowers will provide Administrative Agent withcertificates demonstrating compliance with such financial covenants and willinclude, at the election of Borrowers or upon the request of AdministrativeAgent, calculations setting forth the adjustments necessary to demonstrate howBorrowers are also in compliance with such financial covenants based upon GAAPas in effect on the Closing Date.

 

**SECTION 9.  CONDITIONSPRECEDENT**

 

9.1                                 Conditions to Initial Loans andInitial Letters of Credit.  Notwithstandingany other provision of this Agreement or any of the other Loan Documents, andwithout affecting in any manner the rights of Administrative Agent or anyLender under the other sections of this Agreement, no Lender shall be requiredto make the initial Loans, nor shall Administrative Agent be required to issueor procure the initial Letters of Credit unless and until each of the followingconditions has been satisfied on or prior to the Closing Date:

 

9.1.1                                                Documentation.  Administrative Agent shall have received, inform and substance satisfactory to Administrative Agent, Syndication Agent andtheir respective counsel, a duly executed copy of this Agreement and the otherLoan 

 

----

 

Documents,together with such additional documents, instruments, opinions and certificatesas Administrative Agent, Syndication Agent and their respective counsel shallrequire, all in form and substance satisfactory to Administrative Agent,Syndication Agent and their respective counsel.

 

9.1.2                                                RealProperty.  Administrative Agent shallhave received:

 

(i)                                     ALTA title policies, in form andsubstance reasonably acceptable to Administrative Agent, with respect to theMortgages for the properties set forth on Exhibit 7.17; and

 

(ii)                                  Phase I Environmental SiteAssessments by a consultant satisfactory to Administrative Agent reasonablynecessary to determine compliance with or liabilities under Environmental Lawsof each Property subject to a Mortgage for such properties.

 

9.1.3                                                Security Interest Matters. Administrative Agent shall have received:

 

(i)                                     certified copies of lien searchreports for the jurisdictions reasonably requested by Administrative Agent(including UCC, tax and judgment liens and intellectual property filings)listing all effective financing statements or other filings which name asdebtor any Borrower or any of its Subsidiaries and which are filed in theoffices referred to in clause (ii) below, together with copies of suchfinancing statements (or similar filings in any foreign jurisdiction), none ofwhich, except as otherwise agreed in writing by Administrative Agent, shallcover any of the Collateral or show any Liens other than Permitted Liens; and

 

(ii)                                  duly executed UCC-3 TerminationStatements, mortgage releases and such other instruments, in form and substancesatisfactory to Administrative Agent, as shall be necessary to terminate andsatisfy all Liens on the Property of the Credit Parties except Permitted Liens.

 

9.1.4                                                Insurance. Administrative Agent shall have received evidence, in form, scope, andsubstance, satisfactory to Administrative Agent, of all insurance coverage asrequired by this Agreement (including, without limitation a loss payable endorsementnaming Administrative Agent and Lenders as loss payees and as additionalinsureds).

 

9.1.5                                                Solvency. Administrative Agent and Syndication Agent shall have determined totheir satisfaction that (1) Adjusted Consolidated EBITDA (as defined in Exhibit8.3) for Holdings and its Subsidiaries for Holdings****fiscal year ended December 31, 2003shall be equal to or greater than $125,000,000, (2) each Borrower isadequately capitalized, (3) the fair saleable value of each Borrower’sassets exceeds its liabilities on the Closing Date and (4) each Borrowerwill have sufficient working capital to pay its debts as they become due.

 

----

 

9.1.6                                                Payoff of Prior Indebtedness. Administrative Agent shall have received satisfactory evidence that,after giving effect to the making of the Loans made on the Closing Date and thereceipt of the proceeds of the Second Lien Debt, the Prior Indebtedness shallbe fully and finally paid.

 

9.1.7                                                Consents. Administrative Agent shall have received evidence that all governmental,shareholder and third party consents and approvals necessary in connection withthe transactions and related financings contemplated hereby and by the LoanDocuments were obtained by Borrowers and all applicable waiting periods haveexpired without any action being taken by any authority that could restrain,prevent or impose any material adverse conditions on such transactions or thatcould seek or threaten any of the foregoing, and no law or regulation shall beapplicable which in the judgment of Administrative Agent could have sucheffect.

 

9.1.8                                                Financial Statements. Administrative Agent shall have received, each in form and substancesatisfactory to Administrative Agent and Syndication Agent, (a) a proforma balance sheet of Holdings dated as at the Closing Date which balancesheet shall reflect no material adverse changes from the most recent pro formabalance sheet of Holdings previously delivered to Administrative Agent and(b) interim monthly financial statements for Holdings as at June 30,2004.

 

9.1.9                                                Payment of Fees. Administrative Agent shall have received, for its account or the accountof Syndication Agent, the Co-Lead Arrangers or Lenders, as applicable, paymentin full of the fees required to be paid to Administrative Agent, SyndicationAgent or Lenders under or in connection with this Agreement on the ClosingDate, and Administrative Agent shall have received evidence satisfactory toAdministrative Agent that the reasonable fees and expenses of AdministrativeAgent’s, Syndication Agent’s (subject to the limitations set forth herein) andLenders’ counsel, financial advisors, appraisers, commercial finance examinersand other advisers incurred or accrued through the Closing Date have been paid.

 

9.1.10                                          Issuance of Second Lien Debt. (i) Holdings shall have incurred the Second Lien Debt on terms andconditions satisfactory to Administrative Agent and Syndication Agent and(ii) Administrative Agent shall have received (A) evidencesatisfactory to it that Holdings has received gross proceeds of at least $275,000,000from the incurrence of the Second Lien Debt, (B) copies of all of theSecond Lien Debt Documents as in effect on the Closing Date, certified as trueand correct copies thereof by a Responsible Officer of Holdings, in suchofficer’s capacity as such, together with a certificate of a ResponsibleOfficer of Holdings stating that such agreements remain in full force andeffect, have not been otherwise amended or modified, and that, to the knowledgeof such Responsible Officer, none of the Credit Parties is in breach or defaultin any of its obligations under such agreements, other than breaches ordefaults that, individually and in the aggregate, are of immaterial obligationsthereunder, and (C) a duly executed copy of the Intercreditor Agreement.

 

9.1.11                                          Opening Availability. Administrative Agent shall have determined that immediately afterLenders have made the initial Loans and after

 

----

 

AdministrativeAgent has issued or procured the initial Letters of Credit contemplated hereby,and Borrowers have paid (or, if accrued, treated as paid), all closing costsincurred in connection with the transactions contemplated hereby, Availabilityshall not be less than $20,000,000 and Administrative Agent shall have receiveda Borrowing Base Certificate as of June 30, 2004 setting forth acalculation of such Availability.

 

9.1.12                                          Material Adverse Change. As of the Closing Date, since March 31, 2004, there shall not havebeen any material adverse change, in the reasonable opinion of AdministrativeAgent and Syndication Agent, in the business, assets, liabilities (actual orcontingent), results of operations or financial condition of Holdings and itsSubsidiaries taken as a whole and no event or condition exists which would bereasonably likely to result in any Material Adverse Effect.

 

9.1.13                                          Appraisals. Administrative Agent and Syndication Agent shall have received anappraisal, satisfactory to Administrative Agent and Syndication Agent in formand substance, of all of the Serialized Rental Equipment Inventory of Borrowersas of May 31, 2004 and performed by Rouse Asset Services which shall state theorderly liquidation value (expressed as a percentage of net book value) of allsuch Serialized Rental Equipment Inventory.

 

9.1.14                                          USA Patriot Act Certificate. Administrative Agent shall have received, at least five (5) BusinessDays prior to the Closing Date, a certificate of a Responsible Officer ofBorrower Representative, in such officer’s capacity as such, reasonablysatisfactory thereto, for the benefit of Administrative Agent and the Lenders,that sets forth information required by the USA Patriot Act including, withoutlimitation, the identity of Borrowers, the names and addresses of the Borrowersand other information that will allow Administrative Agent or any Lender, asapplicable, to identify the Borrowers in accordance with the USA Patriot Act.

 

9.2                                 Conditions to all Loans and Lettersof Credit.  Notwithstanding anyother provision of this Agreement or any of the other Loan Documents, andwithout affecting in any manner the rights of Administrative Agent or anyLender under the other sections of this Agreement, no Lender shall be requiredto make any Loan, nor shall Administrative Agent be required to issue orprocure any Letter of Credit unless and until each of the following conditionshas been and continues to be satisfied:

 

9.2.1                                                Representations and Warranties; NoDefault.  At the time of and after giving effect to themaking of such Loan and the application of the proceeds thereof or at the timeof issuance of such Letter of Credit, (i) the representations and warrantiescontained in Section 7 and in each other Loan Document delivered toAdministrative Agent or any Lender pursuant hereto or thereto on or prior tothe date of such Loan or such Letter of Credit shall be true and correct in allmaterial respects on and as of such date as though made on and as of such dateand (ii) no Default or Event of Default shall have occurred and be continuing.

 

----

 

9.2.2                                                Second Lien Debt Documents. The making of such Loan or the issuance of such Letter of Credit shallnot contravene, violate or result in a default under the Second Lien DebtDocuments.

 

9.2.3                                                BorrowingBase Certificate.  AdministrativeAgent shall have received the most recent Borrowing Base Certificate requiredto be delivered pursuant to subsection 8.1.4.

 

The request or deemed request by Borrower Representative to theAdministrative Agent for a borrowing pursuant to Section 1(including the issuance of a Letter of Credit), and the Borrowers’ acceptanceof the proceeds of thereof, and the issuance of each Letter of Credit, shalleach be deemed to be a representation and warranty by each Credit Party on thedate of such Loan or the date of issuance of such Letter of Credit that each ofthe foregoing conditions has been satisfied.

 

Without limiting the generality of the provisions of this Section 9,for purposes of determining compliance with the conditions specified in this Section 9on the Closing Date, each Lender that has signed this Agreement shall be deemedto have consented to, approved or accepted or to be satisfied with, eachdocument or other matter required thereunder to be consented to or approved byor acceptable or satisfactory to the Administrative Agent, the SyndicationAgent or a Lender unless Administrative Agent shall have received notice fromsuch Lender prior to the proposed Closing Date specifying its objectionthereto.

 

**SECTION 10.  EVENTS OFDEFAULT;RIGHTS AND REMEDIES ON DEFAULT**

 

10.1                           Events of Default.  The occurrence of one or more of thefollowing events shall constitute an **“Eventof Default”**:

 

10.1.1                                          Payment of Obligations. Borrowers or any of their Subsidiaries shall fail to pay any of theObligations hereunder or under any Note or under any other Loan Document on thedue date thereof (whether due at stated maturity, on demand, upon accelerationor otherwise).

 

10.1.2                                          Misrepresentations. Any representation, warranty or other statement made or furnished toAdministrative Agent or any Lender by or on behalf of any Borrower or any Subsidiaryof any Borrower in this Agreement or any of the other Loan Documents proves tohave been false or misleading in any material respect when made, furnished orreaffirmed pursuant to subsection 7.2 hereof.

 

10.1.3                                          Breach of Specific Covenants. Any Borrower shall fail or neglect to perform, keep or observe anycovenant contained in Section or subsection 5.2, 5.3,5.4, 6.1.1, 6.1.2, 6.2.4, 6.2.5, 8.1.1,8.1.2, 8.1.4, 8.1.8, 8.2 or 8.3 hereof onthe date that Borrowers are required to perform, keep or observe such covenantor shall fail or neglect to perform, keep or observe any covenant contained in subsection 8.1.3or 8.1.6

 

----

 

hereof within10 days following the date on which Borrowers are required to perform, keep orobserve such covenant.

 

10.1.4                                          Breach of Other Covenants. Any Borrower or any of its Subsidiaries shall fail or neglect toperform, keep or observe any covenant contained in this Agreement (other than acovenant which is dealt with specifically elsewhere in subsection 10.1hereof) or any of the other Loan Documents and the breach of such othercovenant is not cured within 15****days.

 

10.1.5                                          Other Defaults. There shall occur any default or event of default on the part of anyBorrower or any Subsidiary of any Borrower under any agreement, document orinstrument to which such Borrower or such Subsidiary of such Borrower is aparty or by which such Borrower or such Subsidiary of such Borrower or any ofits Property is bound, evidencing or relating to (a) any Indebtedness (otherthan the Obligations) with an outstanding principal balance in excess of$2,500,000, if the payment or maturity of such Indebtedness is or could beaccelerated (or the applicable Derivative Obligation could be terminated) inconsequence of such event of default or demand for payment of such Indebtednessis made or could be made in accordance with the terms thereof or (b) the SecondLien Debt.

 

10.1.6                                          Insolvency and Related Proceedings.

 

(i)                                     Any Borrower or any Subsidiary ofany Borrower shall (A) be unable generally to pay its debts as they become due;(B) make any offer of settlement, extension or composition to their respectiveunsecured creditors generally; (C) file a voluntary petition in bankruptcy orfile a voluntary petition or an answer or otherwise commence any action orproceeding seeking reorganization, arrangement or readjustment of its debts orfor any other relief under the U.S. federal bankruptcy laws, or under any otherbankruptcy or insolvency act or law, state or federal, now or hereafterexisting, or consent to, approve of, or acquiesce in, any such petition, actionor proceeding; (D) apply for or acquiesce in the appointment of a receiver,assignee, liquidator, sequestrator, custodian, monitor, trustee or similarofficer for it or for all or any part of its property; or (E) make anassignment for the benefit of creditors;

 

(ii)                                  an involuntary petition shall befiled or an action or proceeding otherwise commenced seeking reorganization,arrangement, consolidation or readjustment of the debts of any Borrower or anySubsidiary of any Borrower or for any other relief under the U.S. bankruptcylaws or under any other bankruptcy or insolvency act or law, state or federal,now or hereafter existing and such petition or proceeding shall not bedismissed within thirty (30) days after the filing or commencement thereof oran order of relief shall be entered with respect thereto;

 

(iii)                               a receiver, assignee, liquidator,sequestrator, custodian, monitor, trustee or similar officer for any Borroweror any Subsidiary of any Borrower or for all or any part of its property shallbe appointed or a

 

----

 

warrant of attachment, execution or similarprocess shall be issued against any part of the property of any Borrower or anySubsidiary of any Borrower;

 

(iv)                              any Borrower or any Subsidiary ofany Borrower (other than any Inactive Subsidiary) shall file a certificate ofdissolution under applicable state law or shall be liquidated, dissolved orwound-up or shall commence or have commenced against it any action orproceeding for dissolution, winding-up or liquidation;

 

(v)                                 any Borrower or any Subsidiary ofany Borrower shall take any corporate action in furtherance of any of thematters described in the foregoing clauses (i) through (iv).

 

10.1.7                                          Business Disruption; Condemnation.  (i) There shall occur a cessation of asubstantial part of the business of any Borrower or any Subsidiary of anyBorrower for a period which materially adversely affects Borrowers’ and theirSubsidiaries’ capacity, taken as a whole, to continue their business on aprofitable basis; or (ii) any Borrower or any Subsidiary of any Borrower shallsuffer the loss or revocation of any material license or permit now held orhereafter acquired by any Borrower or any Subsidiary of any Borrower which isnecessary to the continued or lawful operation of its business if such loss orrevocation could reasonably be expected to have a Material Adverse Effect; or(iii) any Borrower or any Subsidiary of any Borrower shall be enjoined,restrained or in any way prevented by court, governmental or administrativeorder from conducting all or any material part of its business affairs, whichinjunction, restraint or prevention materially adversely affects Borrowers’ andtheir Subsidiaries’ capacity, taken as a whole, to continue their business on aprofitable basis; or (iv) any material lease or agreement pursuant to which anyBorrower or any Subsidiary of any Borrower, uses or occupies any Property shallbe canceled or terminated prior to the expiration of its stated term, except anysuch lease or agreement the cancellation or termination of which could notreasonably be expected to have a Material Adverse Effect; or (v) any materialportion of the Collateral shall be taken through condemnation or the value ofsuch material portion of the Collateral shall be impaired through condemnation.

 

10.1.8                                          Change of Control. A Change of Control shall occur.

 

10.1.9                                          ERISA Event. An ERISA Event shall occur withrespect to a Pension Plan or Multiemployer Plan which has resulted or couldreasonably be expected to result in liability of any Borrower or any ERISAAffiliate under Title IV of ERISA to the Pension Plan, Multiemployer Planor the PBGC in an aggregate amount in excess of $500,000; (ii) theaggregate amount of Unfunded Pension Liability among all Pension Plans at anytime exceeds $500,000; (iii) any Borrower or any ERISA Affiliate shallfail to pay when due, after the expiration of any applicable grace period, anyinstallment payment with respect to its withdrawal liability under Section 4201of ERISA under a Multiemployer Plan; or (iv) a Lien is reasonably expectedto arise in accordance with the provisions of ERISA against the assets of anyBorrower, any Subsidiary thereof or any ERISA Affiliate.

 

----

 

10.1.10                                    Challenge to Agreement. Any Borrower or any Subsidiary of any Borrower, or any Affiliate of anyof them, shall challenge or contest in any action, suit or proceeding thevalidity or enforceability of this Agreement or any of the other LoanDocuments, the legality or enforceability of any of the Obligations or theperfection or priority of any Lien granted to Administrative Agent.

 

10.1.11                                    Criminal Forfeiture. Any Borrower or any Subsidiary of any Borrower shall be criminallyindicted or convicted under any law that could reasonably be expected to leadto a forfeiture of any material portion of the Collateral, and in the case ofany indictment, such indictment is not dismissed within one hundred twenty(120) days.

 

10.1.12                                    Judgments. Any money judgment, writ of attachment or similar processes(collectively, **“Judgments”**) areissued or rendered against any Borrower or any Subsidiary of any Borrower, orany of their respective Property (i) in the case of money judgments, in anamount of $1,500,000 or more for any single judgment, attachment or process or$7,500,000 or more for all such judgments, attachments or processes in theaggregate, in each case in excess of any applicable insurance with respect towhich the insurer has admitted liability, and (ii) in the case ofnon-monetary Judgments, such Judgment or Judgments (in the aggregate) couldreasonably be expected to have a Material Adverse Effect, in each case whichJudgment is not stayed, released or discharged within 60 days.

 

10.1.13                                    Material Adverse Effect. Any event occurs which reasonably could be expected to have a MaterialAdverse Effect.

 

10.1.14                                    Intercreditor Arrangements. (i) any of the Obligations of any Credit Party under the LoanDocuments for any reason shall cease to be permitted under the Second Lien DebtDocuments or in any agreement evidencing any refinancing thereof as permittedunder the terms of the Loan Documents, other than as a result, directly orindirectly, of any acts or omissions of Administrative Agents or Lenders or(ii) the Intercreditor Agreement shall, in whole or in part, cease to beeffective or cease to be legally valid, binding and enforceable against theholders of the Second Lien Debt or any refinanced Indebtedness thereof aspermitted under the terms of the Loan Documents other than as a result, directlyor indirectly, of any acts or omissions of Administrative Agent or thedischarge of Second Lien Obligations (as defined in the IntercreditorAgreement).

 

10.1.15                                    Loan Documents; Liens. Any Loan Document shall at any time for any reason (other than pursuantto the express terms thereof) cease to be valid and binding on or enforceableagainst any Credit Party intended to be a party thereto; or any SecurityDocument shall for any reason fail or cease to create a valid and perfectedand, except to the extent permitted by the terms hereof or thereof, firstpriority Lien in favor of Administrative Agent for the benefit ofAdministrative Agent and Lenders on any material portion of the Collateralpurported to be covered thereby.

 

----

 

10.2                           Acceleration of the Obligations.  Upon or at any time after the occurrenceand during the continuance of an Event of Default, (i) the Revolving LoanCommitments shall, at the option of Administrative Agent or Majority Lenders beterminated and/or (ii) Administrative Agent or Majority Lenders maydeclare all or any portion of the Obligations at once due and payable withoutpresentment, demand protest or further notice by Administrative Agent or anyLender, and Borrowers shall forthwith pay to Administrative Agent, the full amountof such Obligations, provided, that upon the occurrence of an Event ofDefault specified in subsection 10.1.6 hereof, the Revolving LoanCommitments shall automatically be terminated and all of the Obligations shallbecome automatically due and payable, in each case without declaration, noticeor demand by Administrative Agent or any Lender; providedfurtherthat the foregoing shall not apply to Product Obligations, which shall only beaccelerated by the parties to the agreement evidencing such Product Obligationsand in accordance with the terms of such agreement.

 

10.3                           Other Remedies.  Upon the occurrence and during thecontinuance of an Event of Default, Administrative Agent shall have and may(and, at the direction of the Majority Lenders, shall) exercise from time totime the following other rights and remedies:

 

10.3.1                                          All of the rights and remedies of asecured party under the UCC or under other applicable law, and all other legaland equitable rights to which Administrative Agent or Lenders may be entitled,all of which rights and remedies shall be cumulative and shall be in additionto any other rights or remedies contained in this Agreement or any of the otherLoan Documents, and none of which shall be exclusive.

 

10.3.2                                          The right to take immediatepossession of the Collateral, and to (i) require each Borrower and each ofits Subsidiaries to assemble the Collateral, at Borrowers’ expense, and make itavailable to Administrative Agent at a place designated by Administrative Agentwhich is reasonably convenient to both parties, and (ii) enter anypremises where any of the Collateral shall be located and to keep and store theCollateral on said premises until sold (and if said premises be the Property ofany Borrower or any Subsidiary of any Borrower, Borrowers agree not to charge,or permit any of its Subsidiaries to charge, Administrative Agent for storagethereof).

 

10.3.3                                          The right to sell or otherwisedispose of all or any Collateral in its then condition, or after any furthermanufacturing or processing thereof, at public or private sale or sales, withonly such notice, if any, as may be required by law, in lots or in bulk, forcash or on credit, all as Administrative Agent, in its sole discretion, maydeem advisable.  Administrative Agentmay, at Administrative Agent’s option, disclaim any and all warrantiesregarding the Collateral in connection with any such sale.  Borrowers agree that, if any notice isrequired, 10 days’ written notice to Borrowers or any of their Subsidiaries ofany public or private sale or other disposition of Collateral shall bereasonable notice thereof, and such sale shall be at such locations asAdministrative Agent may designate in said notice.  Administrative Agent shall have the right toconduct such sales on any Borrower’s or any of its Subsidiaries’ premises,without charge therefor, and such sales may be adjourned from time to time inaccordance with

 

----

 

applicablelaw.  Administrative Agent shall have theright to sell, lease or otherwise dispose of the Collateral, or any partthereof, for cash, credit or any combination thereof, and Administrative Agent,on behalf of Lenders, may purchase all or any part of the Collateral at publicor, if permitted by law, private sale and, in lieu of actual payment of suchpurchase price, may set off the amount of such price against theObligations.  The proceeds realized fromthe sale of any Collateral may be applied first to the costs, expenses andattorneys’ fees incurred by Administrative Agent in collecting the Obligations,in enforcing the rights of Administrative Agent and Lenders under the LoanDocuments and in collecting, retaking, completing, protecting, removing,storing, advertising for sale, selling and delivering any Collateral, second tothe interest due upon any of the Obligations; and third, to the principal ofthe Obligations.  If any deficiency shallarise, each Borrower shall remain jointly and severally liable toAdministrative Agent and Lenders therefor.

 

10.3.4                                          Administrative Agent is herebygranted a license or other right to use, without charge, each Borrower’s andeach of its Subsidiaries’ labels, patents, copyrights, licenses, rights of useof any name, trade secrets, trade names, trademarks and advertising matter, orany Property of a similar nature, as it pertains to the Collateral, incompleting, advertising for sale and selling any Collateral and each Borrower’sand each of its Subsidiaries’ rights under all licenses and all franchiseagreements shall inure to Administrative Agent’s benefit.

 

10.3.5                                          Administrative Agent may, at itsoption, require Borrowers to deposit with Administrative Agent funds equal tothe LC Amount and, if Borrowers fail to promptly make such deposit,Administrative Agent may advance such amount as a Revolving Credit Loan(whether or not an Overadvance is created thereby).  Each such Revolving Credit Loan shall besecured by all of the Collateral and shall constitute a Base Rate RevolvingPortion.  Any such deposit or advanceshall be held by Administrative Agent as a reserve to fund future drawingsagainst such Letters of Credit.  At suchtime as all Letters of Credit have been drawn upon or expired, any amountsremaining in such reserve shall be applied against any outstanding Obligations,or, if all Obligations have been indefeasibly paid in full, returned toBorrowers.

 

10.4                           Setoff and Sharing of Payments.  In addition to any rights now orhereafter granted under applicable law and not by way of limitation of any suchrights, during the continuance of any Event of Default, each Lender is herebyauthorized by Borrowers at any time or from time to time and with reasonablyprompt subsequent notice to Borrowers (any prior or contemporaneous notice toBorrowers being hereby expressly waived) to set off and to appropriate and toapply any and all (i) balances held by such Lender at any of its officesfor the account of any Borrower or any of its Subsidiaries (regardless ofwhether such balances are then due to a Borrower or its Subsidiaries) and(ii) other property at any time held or owing by such Lender to or for thecredit or for the account of any Borrower or any of its Subsidiaries, againstand on account of any of the Obligations. Any Lender exercising a right to set off shall, to the extent the amountof any such set off exceeds its Revolving Loan Percentage of the amount setoff, purchase for cash (and the other Lenders shall sell) interests in eachsuch other Lender’s pro rata share of the Obligations as would be necessary tocause such Lender to share such excess

 

----

 

with each other Lender in accordance with their respective RevolvingLoan Percentages.  Each Borrower agrees,to the fullest extent permitted by law, that any Lender may exercise its rightto set off with respect to amounts in excess of its pro rata share of theObligations and upon doing so shall deliver such excess to Administrative Agentfor the benefit of all Lenders in accordance with the Revolving LoanPercentages.

 

10.5                           Remedies Cumulative; No Waiver.  All covenants, conditions, provisions,warranties, guaranties, indemnities, and other undertakings of Borrowerscontained in this Agreement and the other Loan Documents, or in any documentreferred to herein or contained in any agreement supplementary hereto or in anyschedule given to Administrative Agent or any Lender or contained in anyother agreement between any Lender and Borrowers or between AdministrativeAgent and Borrowers heretofore, concurrently, or hereafter entered into, shallbe deemed cumulative to and not in derogation or substitution of any of the terms,covenants, conditions, or agreements of Borrowers herein contained.  The failure or delay of Administrative Agentor any Lender to require strict performance by Borrowers of any provision ofthis Agreement or to exercise or enforce any rights, Liens, powers, or remedieshereunder or under any of the aforesaid agreements or other documents orsecurity or Collateral shall not operate as a waiver of such performance,Liens, rights, powers and remedies, but all such requirements, Liens, rights,powers, and remedies shall continue in full force and effect until all Loansand other Obligations owing or to become owing from Borrowers to AdministrativeAgent and each Lender have been fully satisfied.  None of the undertakings, agreements,warranties, covenants and representations of Borrowers contained in thisAgreement or any of the other Loan Documents and no Default or Event of Defaultby Borrowers under this Agreement or any other Loan Documents shall be deemedto have been suspended or waived by Lenders, unless such suspension or waiveris by an instrument in writing specifying such suspension or waiver and issigned by a duly authorized representative of Administrative Agent (with suchconsent of the Lenders as is required hereunder) and directed to Borrowers.

 

**SECTION 11.  ADMINISTRATIVEAGENT**

 

11.1                           Authorization and Action.  Each Lender hereby appoints andauthorizes Administrative Agent to take such action on its behalf and toexercise such powers under this Agreement and the other Loan Documents as aredelegated to Administrative Agent by the terms hereof and thereof, togetherwith such powers as are reasonably incidental thereto.  Each Lender hereby acknowledges thatAdministrative Agent shall not have by reason of this Agreement assumed afiduciary relationship in respect of any Lender.  In performing its functions and duties underthis Agreement, Administrative Agent shall act solely as agent of Lenders andshall not assume, or be deemed to have assumed, any obligation toward, orrelationship of agency or trust with or for, any Borrower.  As to any matters not expressly provided forby this Agreement and the other Loan Documents (including without limitationenforcement and collection of the Notes), Administrative Agent may, but shallnot be required to, exercise any discretion or take any action, but shall berequired to act or to refrain from acting (and shall be fully protected in soacting or refraining from acting) upon the instructions of the MajorityLenders, whenever such instruction shall be requested by Administrative Agentor required hereunder, or a greater

 

----

 

or lesser number of Lenders if so required hereunder, and suchinstructions shall be binding upon all Lenders; provided, thatAdministrative Agent shall be fully justified in failing or refusing to takeany action which exposes Administrative Agent to any liability or which iscontrary to this Agreement, the other Loan Documents or applicable law, unlessAdministrative Agent is indemnified to its satisfaction by the other Lendersagainst any and all liability and expense which it may incur by reason oftaking or continuing to take any such action. If Administrative Agent seeks the consent or approval of the MajorityLenders (or a greater or lesser number of Lenders as required in this Agreement),with respect to any action hereunder, Administrative Agent shall send noticethereof to each Lender and shall notify each Lender at any time that theMajority Lenders (or such greater or lesser number of Lenders) have instructedAdministrative Agent to act or refrain from acting pursuant hereto.

 

11.2                           Administrative Agent’s andSyndication Agent’s Reliance, Etc. Neither Administrative Agent, Syndication Agent, nor any Affiliateof Administrative Agent or Syndication Agent nor any of their respective directors, officers, agents or employeesshall be liable for any action taken or omitted to be taken by it or them underor in connection with this Agreement or the other Loan Documents, except (x)for its or their own gross negligence or willful misconduct, as determined by afinal non-appealable (or the time for appeal for which has run) judgment of acourt of competent jurisdiction or (y) to the extent resulting from a claimbrought by any Borrower against it for breach in bad faith of its obligationshereunder, if such Borrower has obtained a final non-appealable (or the time toappeal for which has run) judgment in its favor on such claim as determined bya court of competent jurisdiction. Without limitation of the generality of the foregoing, each ofAdministrative Agent and Syndication Agent: (i) may treat each Lender party hereto as the holder of Obligationsuntil Administrative Agent receives written notice of the assignment ortransfer or such lender’s portion of the Obligations signed by such Lender andin form reasonably satisfactory to Administrative Agent; (ii) may consultwith legal counsel, independent public accountants and other experts selectedby it and shall not be liable for any action taken or omitted to be taken ingood faith by it in accordance with the advice of such counsel, accountants orexperts; (iii) makes no warranties or representations to any Lender andshall not be responsible to any Lender for any recitals, statements, warrantiesor representations made in or in connection with this Agreement or any otherLoan Documents; (iv) shall not have any duty to ascertain or to inquire asto the performance or observance of any of the terms, covenants or conditionsof this Agreement or the other Loan Documents on the part of Borrowers, toinspect the property (including the books and records) of Borrowers, to monitorthe financial condition of Borrowers or to ascertain the existence or possibleexistence or continuation of any Default or Event of Default; (v) shall not be responsible to any Lender for the due execution,legality, validity, enforceability, genuineness, sufficiency or value of thisAgreement or the other Loan Documents or any other instrument or documentfurnished pursuant hereto or thereto;  (vi) shall not be liable toany Lender for any action taken, or inaction, by Administrative Agent upon theinstructions of Majority Lenders pursuant to subsection 11.1 hereofor refraining to take any action pending such instructions; (vii) shallnot be liable for any apportionment or distributions of payments made by it ingood faith pursuant to Section 3 hereof; (viii) shall incur noliability under or in respect of this Agreement or the other Loan

 

----

 

Documents by acting upon any notice, consent, certificate, message orother instrument or writing (which may be by telephone, facsimile, telegram,cable or telex) believed in good faith by it to be genuine and signed or sentby the proper party or parties; and (ix) may assume that no Event ofDefault has occurred and is continuing, unless Administrative Agent has actualknowledge of the Event of Default, has received notice from Borrowers orBorrowers’ independent certified public accountants stating the nature of theEvent of Default, or has received notice from a Lender stating the nature ofthe Event of Default and that such Lender considers the Event of Default tohave occurred and to be continuing.  Inthe event any apportionment or distribution described in clause (vii)above is determined to have been made in error, the sole recourse of any Personto whom payment was due but not made shall be to recover from the recipients ofsuch payments any payment in excess of the amount to which they are determinedto have been entitled.

 

11.3                           BofA and Affiliates.  With respect to its commitment hereunderto make Loans and with respect to all other rights and remedies hereunder ofthe **“Lender**,**”****“Lenders”**or **“Majority Lenders”**, BofA shallhave the same rights and powers under this Agreement and the other LoanDocuments as any other Lender and may exercise the same as though it were notAdministrative Agent.  BofA and itsAffiliates may lend money to, and generally engage in any kind of businesswith, Borrowers, and any Person who may do business with or own Securities ofany Borrower, all as if BofA were not Administrative Agent and without any dutyto account therefor to any other Lender.

 

11.4                           Lender Credit Decision.  Each Lender acknowledges that it has,independently and without reliance upon Administrative Agent or any otherLender and based on the financial statements referred to herein and such otherdocuments and information as it has deemed appropriate, made its own creditanalysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,independently and without reliance upon Administrative Agent or any otherLender and based on such documents and information as it shall deem appropriateat the time, continue to make its own credit decisions in taking or not takingaction under this Agreement.  AdministrativeAgent shall not have any duty or responsibility, either initially or on anongoing basis, to provide any Lender with any credit or other similarinformation regarding Borrowers.

 

11.5                           Indemnification.  Lenders agree to indemnify AdministrativeAgent (to the extent not reimbursed by Borrowers), in accordance with theirrespective Aggregate Percentages, from and against any and all liabilities,obligations, losses, damages, penalties, actions, judgments, suits, costs,expenses or disbursements of any kind or nature whatsoever which may be imposedon, incurred by, or asserted against Administrative Agent in any way relatingto or arising out of this Agreement or any other Loan Document or any actiontaken or omitted by Administrative Agent under this Agreement; providedthat no Lender shall be liable for any portion of such liabilities,obligations, losses, damages, penalties, actions, judgments, suits, costs,expenses or disbursements resulting from Administrative Agent’s grossnegligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburseAdministrative Agent promptly upon demand for its ratable share, as set forthabove, of any out-of-pocket expenses (including attorneys’ fees) incurred byAdministrative Agent

 

----

 

in connection with the preparation, execution, delivery,administration, modification, amendment or enforcement (whether throughnegotiation, legal proceedings or otherwise) of, or legal advice in respect ofrights or responsibilities under, this Agreement and each other Loan Document,to the extent that Administrative Agent is not reimbursed for such expenses byBorrowers.  The obligations of Lendersunder this subsection 11.5 shall survive the payment in full of allObligations and the termination of this Agreement.  If after payment and distribution of anyamount by Administrative Agent to Lenders, any Lender or any other Person,including Borrowers, any creditor of any Borrower, a liquidator, administratoror trustee in bankruptcy, recovers from Administrative Agent any amount foundto have been wrongfully paid to Administrative Agent and disbursed byAdministrative Agent to Lenders, then Lenders, in accordance with theirrespective Aggregate Percentages, shall reimburse Administrative Agent for allsuch amounts.

 

11.6                           Rights and Remedies to Be Exercisedby Administrative Agent Only.  Each Lenderagrees that, except as set forth in subsection 10.4, no Lendershall have any right individually (i) to realize upon the security createdby this Agreement or any other Loan Document, (ii) to enforce anyprovision of this Agreement or any other Loan Document, or (iii) to makedemand under this Agreement or any other Loan Document.

 

11.7                           Agency Provisions Relating toCollateral.  Each Lenderauthorizes and ratifies Administrative Agent’s entry into this Agreement, theSecurity Documents and the other Loan Documents for the benefit ofLenders.  Each Lender agrees that anyaction taken by Administrative Agent with respect to the Collateral in accordancewith the provisions of this Agreement, the Security Documents or the other LoanDocuments, and the exercise by Administrative Agent of the powers set forthherein or therein, together with such other powers as are reasonably incidentalthereto, shall be authorized and binding upon all Lenders.  Administrative Agent is hereby authorized onbehalf of all Lenders, without the necessity of any notice to or furtherconsent from any Lender to take any action with respect to any Collateral orthe Loan Documents which may be necessary to perfect and maintain perfectedAdministrative Agent’s Liens upon the Collateral, for its benefit and theratable benefit of Lenders.  Lendershereby irrevocably authorize Administrative Agent, at its option and in itssole discretion, to release any Lien granted to or held by Administrative Agentupon any Collateral (i) upon termination of the Agreement and payment andsatisfaction of all Obligations; or (ii) constituting property being soldor disposed of if Borrowers certify to Administrative Agent that the sale ordisposition is made in compliance with subsection 8.2.8 hereof (andAdministrative Agent may rely conclusively on any such certificate, withoutfurther inquiry); or (iii) constituting property in which no Borrowerowned any interest at the time the Lien was granted or at any time thereafter;or (iv) in connection with any foreclosure sale or other disposition ofCollateral after the occurrence and during the continuation of an Event ofDefault; or (v) if approved, authorized or ratified in writing byAdministrative Agent at the direction of all Lenders or (vi) if such release ispermitted by the terms of the Intercreditor Agreement.  Upon request by Administrative Agent at anytime, Lenders will confirm in writing Administrative Agent’s authority torelease particular types or items of Collateral pursuant hereto.  Administrative Agent shall have no obligationwhatsoever to any Lender or to any other Person to assure that the Collateralexists or is owned by any Borrower or is cared for, protected or insured or hasbeen encumbered or

 

----

 

that the Liens granted to Administrative Agent herein or pursuant tothe Security Documents have been properly or sufficiently or lawfully created,perfected, protected or enforced or are entitled to any particular priority, orto exercise at all or in any particular manner or under any duty of care,disclosure or fidelity, or to continue exercising, any of its rights,authorities and powers granted or available to Administrative Agent in this subsection 11.7or in any of the Loan Documents, it being understood and agreed that in respectof the Collateral, or any act, omission or event related thereto,Administrative Agent may act in any manner it may deem appropriate, in its solediscretion, but consistent with the provisions of this Agreement, includinggiven Administrative Agent’s own interest in the Collateral as a Lender andthat Administrative Agent shall have no duty or liability whatsoever to anyLender.

 

11.8                           Right to Purchase Commitments.  If, in connection with any proposedamendment, modification, termination or waiver of or to any of the provisionsof this Agreement or the other Loan Documents Lenders whose consent is requiredis not obtained, then Administrative Agent shall have the right (but not theobligation) to, or at Borrowers’ request, Administrative Agent or an EligibleAssignee reasonably acceptable to Administrative Agent and Borrowers shall havethe right (but not the obligation) to, purchase from such Lender, and each suchLender shall, upon such request, sell and assign to Administrative Agent orsuch Eligible Assignee, all of such Lender’s outstanding Loans and LoanCommitments hereunder for a purchase price equal to the principal balances ofthe outstanding Loans and all accrued interest and fees with respect theretothrough the date of sale pursuant to an Assignment and Assumption Agreement,without premium or discount.

 

11.9                           Right of Sale, Assignment,Participations.  Borrowers herebyconsent to any Lender’s participation, sale, assignment, transfer or otherdisposition, at any time or times hereafter, of this Agreement and any of theother Loan Documents, or of any portion hereof or thereof, including, withoutlimitation, such Lender’s rights, title, interests, remedies, powers and dutieshereunder or thereunder subject to the terms and conditions set forth below:

 

11.9.1                                          Sales,Assignments.  Each Lender herebyagrees that, with respect to any sale or assignment (i) except in the caseof a sale or assignment of the entire remaining amount of the assigning Lender’sCommitments and the Loans at the time owing to it, no such sale or assignmentshall be for an amount of less than $6,000,000, unless otherwise consented toby the Administrative Agent and, in the absence of a Default or Event ofDefault, Borrowers, (ii) Administrative Agent and, in the absence of aDefault or Event of Default, Borrowers, must consent, such consent not to beunreasonably withheld, to each such assignment to a Person that is not a Lenderor Affiliate of a Lender, (iii) the assigning Lender shall pay toAdministrative Agent a processing and recordation fee of $3,500,(iv) Administrative Agent, the assigning Lender and the assignee Lendershall each have executed and delivered an Assignment and Assumption Agreement, (v) suchsale or assignment shall be on a pro rata basis among all Revolving Loans,Revolving Loan Commitments, Term Loans and Term Loan Commitments and (vi) suchsale or assignment shall be to an Eligible Assignee.  After such sale or assignment has been consummated(x) the assignee Lender thereupon shall

 

----

 

become a **“Lender”** for all purposes of this Agreementand (y) the assigning Lender shall have no further liability for fundingthe portion of Revolving Loan Commitments assumed by such other Lender.  Notwithstanding the foregoing, (i) theprovisions of this subsection 11.9.1 shall not apply to sales orassignments pursuant to subsection 11.8 and (ii) any Lendermay at any time create a security interest in, or pledge, all or any portion ofits rights under and interest in this Agreement in favor of any Federal ReserveBank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31CFR §203.14, and such Federal Reserve Bank may enforce such pledge or securityinterest in any manner permitted under applicable law.

 

11.9.2                                          Participations. Any Lender may grant participations in its extensions of credithereunder to any other Lender or other lending institution (a **“Participant”**), provided that(i) no such participation shall be for an amount of less than $5,000,000,(ii) no Participant shall thereby acquire any direct rights under thisAgreement, (iii) no Participant shall be granted any right to consent toany amendment, except to the extent any of the same pertain to (1) reducingthe aggregate principal amount of, or interest rate on, or fees applicable to,any Loan or (2) extending the final stated maturity of any Loan or thestated maturity of any portion of any payment of principal of, or interest orfees applicable to, any of the Loans; provided that the rights describedin this subclause (2) shall not be deemed to include the right toconsent to any amendment with respect to or which has the effect of requiringany mandatory prepayment of any portion of any Loan or any amendment or waiverof any Default or Event of Default, (iv) no sale of a participation inextensions of credit shall in any manner relieve the originating Lender of itsobligations hereunder, (v) the originating Lender shall remain solelyresponsible for the performance of such obligations, (vi) Borrowers andAdministrative Agent shall continue to deal solely and directly with theoriginating Lender in connection with the originating Lender’s rights andobligations under this Agreement and the other Loan Documents, (vii) in noevent shall any financial institution purchasing the participation grant aparticipation in its participation interest in the Loans without the priorwritten consent of Administrative Agent, and, in the absence of a Default or anEvent of Default, Borrowers, which consents shall not unreasonably be withheldand (viii) all amounts payable by Borrowers hereunder shall be determinedas if the originating Lender had not sold any such participation.

 

11.9.3                                          Certain Agreements of Borrowers. Borrowers agree that (i) they will assist and cooperate with eachLender in any manner reasonably requested by such Lender to effect the sale ofparticipation in or assignments of any of the Loan Documents or any portionthereof or interest therein, including, without limitation, assisting in thepreparation of appropriate disclosure documents and making members ofmanagement available at reasonable times to meet with and answer questions ofpotential assignees and Participants; and (ii) subject to the provisionsof subsection 12.13 hereof, such Lender may disclose creditinformation regarding Borrowers to any potential Participant or assignee.

 

11.9.4                                          Non U.S. Resident Transferees. If, pursuant to this subsection 11.9, any interest in thisAgreement or any Loans is transferred to any transferee which is organizedunder the laws of any jurisdiction other than the United

 

----

 

States or anystate or political subdivision thereof, the transferor Lender shall cause suchtransferee (other than any Participant), and may cause any Participant,concurrently with and as a condition precedent to the effectiveness of suchtransfer, to (i) represent to the transferor Lender (for the benefit ofthe transferor Lender, Administrative Agent, and Borrowers) that underapplicable law and treaties no taxes will be required to be withheld byAdministrative Agent, any Borrowers or the transferor Lender with respect toany payments to be made to such transferee in respect of the interest sotransferred, (ii) furnish to the transferor Lender, Administrative Agentand Borrowers either United States Internal Revenue Service Form W-8BEN orUnited States Internal Revenue Service Form W-8ECI (wherein such transfereeclaims entitlement to complete exemption from United States federal withholdingtax on all payments made hereunder or under any other Loan Document), and(iii) agree (for the benefit of the transferor Lender, AdministrativeAgent and Borrowers) to provide the transferor Lender, Administrative Agent andBorrowers a new Form W-8BEN or Form W-8ECI upon the obsolescence of anypreviously delivered form and comparable statements in accordance withapplicable United States laws and regulations and amendments duly executed andcompleted by such transferee, and to comply from time to time with all applicableUnited States laws and regulations with regard to such withholding taxexemption.

 

11.9.5                                          Register. Administrative Agent shall maintain, on behalf of Borrowers, a “register”for recording the name, address, Obligations and principal and interest owing toeach Lender (which register may be the Loan Account).  The entries in such register shall bepresumptive evidence of the amounts due and owing to each Lender in the absenceof manifest error.  Each Borrower,Administrative Agent and each Lender shall treat each Person whose name isrecorded in such register pursuant to the terms hereof as a Lender for allpurposes of this Agreement.  TheObligations are registered and the right, title and interest of any Lender and itsassignees in and to such Obligations shall be transferable only upon notationof such transfer in the register (and each Note shall expressly soprovide).  This subsection 11.9.5  shall be construed so that the Obligationsare at all times maintained in “registered form” within the meaning of Sections163(f), 871(h)(2) and 881(c)(2) of the Code and any related regulations.  The register described herein shall beavailable for inspection by any Borrower or any Lender, at any reasonable timeupon reasonable prior notice.

 

11.10                     Amendment. No amendment or waiver of any provision of this Agreement or anyother Loan Document (including without limitation any Note), nor consent to anydeparture by Borrowers therefrom, shall in any event be effective unless thesame shall be in writing and signed by the Majority Lenders and Borrowers, andthen such waiver or consent shall be effective only in the specific instanceand for the specific purpose for which given; provided, that noamendment, waiver or consent shall be effective, unless (i) in writing andsigned by each Lender, to do any of the following:  (1) increase the aggregate Loan Commitments,or any Lender’s Revolving Loan Commitment, or Term Loan Commitment, (2) reducethe principal of, or interest on, any amount payable hereunder (including any fees)or under any Note, other than those payable only to BofA in its capacity asAdministrative Agent, which may be reduced by BofA unilaterally, (3) decreaseany interest rate or amount of interest payable hereunder, (4) extend thematurity of the Term, or postpone any date fixed for any payment of

 

----

 

principal of, orinterest on, any amounts payable hereunder (including any fees) or under anyNote, other than those payable only to BofA in its capacity as AdministrativeAgent, which may be postponed by BofA unilaterally, (5) increase any of thepercentages contained in the definition of the term **Borrowing Base** or to decrease the amount contained in thedefinition of the term the **AvailabilityReserve**, (6) reduce the number of Lenders that shall be required forLenders or any of them to take any action hereunder, (7) release or dischargeany Borrower from the Obligations or release or discharge any other Personliable for the performance of any obligations of any Borrower hereunder orunder any of the Loan Documents, (8) amend any provision of this Agreement thatrequires the consent of all Lenders or consent to or waive any breach thereof,(9) amend the definition of the term **MajorityLenders**, (10) amend subsections 1.1.2, 3.4.2 or this subsection 11.10,(11) release any substantial portion of the Collateral, unless otherwisepermitted pursuant to subsection 11.7 hereof, (12) permit the sale,assignment or transfer by any Borrower of its interest in this Agreement or anyof the Obligations, or any portion thereof, including, without limitation, suchBorrower’s rights, title, interests, remedies, powers and duties hereunder,(13) subordinate any Lien of Administrative Agent in any material portion ofthe Collateral to the Lien of any other Person or (14) amend subsection 11.9.1(vi)to permit non-pro-rata assignments; or (ii) in writing and signed byAdministrative Agent in addition to the Lenders required above to affect therights or duties of Administrative Agent under this Agreement, any Note or anyother Loan Document.  If a fee is to bepaid by Borrowers in connection with any waiver or amendment hereunder, theagreement evidencing such amendment or waiver may, at the sole discretion ofAdministrative Agent (but shall not be required to), provide that only Lendersexecuting such agreement by a specified date may share in such fee (and in suchcase, such fee shall be divided among the applicable Lenders on a pro ratabasis without including the interests of any Lenders who have not timelyexecuted such agreement).

 

11.11                     Resignation of Administrative Agent; Appointment ofSuccessor.  AdministrativeAgent may resign as Administrative Agent by giving not less than thirty (30)days’ prior written notice to Lenders and Borrowers.  If Administrative Agent shall resign underthis Agreement, then, (i) subject to the consent of Borrowers (whichconsent shall not be unreasonably withheld and which consent shall not berequired during any period in which a Default or an Event of Default exists),Majority Lenders shall appoint from among Lenders a successor agent for Lendersor (ii) if a successor agent shall not be so appointed and approved withinthe thirty (30) day period following Administrative Agent’s notice to Lendersand Borrowers of its resignation, then Administrative Agent shall appoint asuccessor agent who shall serve as Administrative Agent until such time asMajority Lenders appoint a successor agent, subject to Borrowers’ consent asset forth above, provided that if Administrative Agent shall notifyBorrower and the Lenders that no qualifying Person has accepted suchappointment, then such resignation shall nonetheless become effective inaccordance with such notice and (1) the retiring Administrative Agent shall bedischarged from its duties and obligations hereunder and under the other LoanDocuments (except that in the case of any Collateral held by the AdministrativeAgent on behalf of the Lenders under any of the Loan Documents, the retiringAdministrative Agent shall continue to hold such Collateral until such time asa successor Administrative Agent is appointed) and (2) all payments,communications and determinations provided to be made by, to or throughAdministrative Agent shall instead

 

----

 

be made by orto each Lender directly, until such time as the Majority Lenders appoint asuccessor Administrative Agent as provided for above in this subsection 11.11.  Upon its appointment, such successor agentshall succeed to the rights, powers and duties of Administrative Agent and theterm **“Administrative Agent”** shallmean such successor effective upon its appointment, and the formerAdministrative Agent’s rights, powers and duties as Administrative Agent shallbe terminated without any other or further act or deed on the part of suchformer Administrative Agent or any of the parties to this Agreement.  After the resignation of any AdministrativeAgent hereunder, the provisions of this Section 11 shall inure tothe benefit of such former Administrative Agent and such former AdministrativeAgent shall not by reason of such resignation be deemed to be released fromliability for any actions taken or not taken by it while it was anAdministrative Agent under this Agreement.

 

11.12                     Audit and Examination Reports;Disclaimer by Lenders.  By signingthis Agreement, each Lender:

 

(i)                                     is deemed to have requested thatAdministrative Agent furnish such Lender, promptly after it becomes available,a copy of each audit or examination report (each a **“Report”** and collectively, **“Reports”**)prepared by or on behalf of Administrative Agent;

 

(ii)                                  expressly agrees and acknowledgesthat Administrative Agent (i) does not make any representation or warrantyas to the accuracy of any Report, and (ii) shall not be liable for anyinformation contained in any Report;

 

(iii)                               expressly agrees and acknowledgesthat the Reports are not comprehensive audits or examinations, thatAdministrative Agent or other party performing any audit or examination willinspect only specific information regarding Borrowers and will relysignificantly upon Borrowers’ books and records, as well as on representationsof Borrowers’ personnel;

 

(iv)                              agrees to keep all Reportsconfidential and strictly for its internal use, and not to distribute Reportsexcept in accordance with the provisions of subsection 12.13; and

 

(v)                                 without limiting the generality ofany other indemnification provision contained in this Agreement, agrees:  (i) to hold Administrative Agent and anysuch other Lender preparing a Report harmless from any action the indemnifyingLender may take or conclusion the indemnifying Lender may reach or draw fromany Report in connection with any loans or other credit accommodations that theindemnifying Lender has made or may make to Borrowers, or the indemnifyingLender’s participation in, or the indemnifying Lender’s purchase of, a loan orloans of Borrowers; and (ii) to pay and protect, and indemnify, defend andhold Administrative Agent and any such other Lender preparing a Report harmlessfrom and against, the claims, actions, proceedings, damages, costs, expensesand other amounts (including attorneys’

 

----

 

fees and expenses) incurred by AdministrativeAgent and any such other Lender preparing a Report as the direct or indirectresult of any third parties who might obtain all or part of any Report throughthe indemnifying Lender.

 

11.13                     Syndication Agent; Co-Documentation Agents.  Each Lender hereby designates WachoviaBank, National Association as Syndication Agent, and designates Merrill LynchCapital, A Division of Merrill Lynch Business Financial Services, Inc., andGeneral Electric Capital Corporation, as Co-Documentation Agents.  Except as expressly set forth in subsection 9.1and this Section 11, Syndication Agent and Co-Documentation Agents,in their respective capacities as such, shall have no rights, powers, duties orresponsibilities and no rights, powers, duties or responsibilities shall beread into this Agreement or any other Loan Document or otherwise exist onbehalf of or against any such entity, in its capacity as such.  If the Syndication Agent or aCo-Documentation Agent resigns, as such agent, no successor syndication agentor co-documentation agent shall be appointed.

 

11.14                     No Reliance on Administrative Agent’s CustomerIdentification Program. Each Lender acknowledges and agrees that neither such Lender, norany of its affiliates, participants or assignees, may rely on AdministrativeAgent to carry out such Lender’s, affiliate’s, participant’s or assignee’scustomer identification program, or other obligations required or imposed underor pursuant to the USA Patriot Act or the regulations thereunder, including theregulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the **“CIP Regulations”**), or any otherAnti-Terrorism Law, including any programs involving any of the following itemsrelating to or in connection with the Borrowers, their affiliates or agents,the Loan Documents or the transactions hereunder:  (1) any identity verification procedures, (2)any record keeping, (3) any comparisons with government lists, (4) any customernotices or (5) any other procedures required under the CIP Regulations or suchother laws.

 

11.15                     USAPatriot Act.  Each Lenderor assignee or participant of a Lender that is not organized under the laws ofthe United States of America or a state thereof (and is not excepted from thecertification requirement contained in Section 313 of the USA Patriot Actand the applicable regulations because it is both (i) an affiliate of adepository institution or foreign bank that maintains a physical presence inthe United States or foreign country, and (ii) subject to supervision by abanking authority regulating such affiliated depository institution or foreignbank) shall deliver to Administrative Agent the certification, or, ifapplicable, recertification, certifying that such Lender is not a “shell” andcertifying to other matters as required by Section 313 of the USA PatriotAct and the applicable regulations:  (1)within ten (10) days after the Closing Date and (2) at such other times as arerequired under the USA Patriot Act.

 

11.16                     Withholding.  To the extent required by any applicablelaw, Administrative Agent may withhold from any interest payment to any Lenderan amount equivalent to any applicable withholding tax.  If the IRS or any other GovernmentalAuthority asserts a claim that Administrative Agent did not properly withholdtax from amounts paid to or for the account of any Lender because theappropriate form was not delivered or was not properly executed or because suchLender failed to notify

 

----

 

AdministrativeAgent of a change in circumstance which rendered the exemption from, orreduction of, withholding tax ineffective or for any other reason, such Lendershall indemnify Administrative Agent fully for all amounts paid, directly orindirectly, by Administrative Agent as tax or otherwise, including anypenalties or interest and together with all expenses (including legal expenses,allocated internal costs and out-of-pocket expenses) incurred.

 

**SECTION 12.  MISCELLANEOUS**

 

12.1                           Powerof Attorney.  Each Borrowerhereby irrevocably designates, makes, constitutes and appoints AdministrativeAgent (and all Persons designated by Administrative Agent) as such Borrower’strue and lawful attorney (and agent-in-fact), solely with respect to thematters set forth in this subsection 12.1, and AdministrativeAgent, or Administrative Agent’s agent, may, without notice to any Borrower andin any Borrower’s or Administrative Agent’s name, but at the cost and expenseof Borrowers:

 

12.1.1                                          At such time or times as AdministrativeAgent or said agent, in its sole discretion, may determine, endorse anyBorrower’s name on any checks, notes, acceptances, drafts, money orders or anyother evidence of payment or proceeds of the Collateral which come into thepossession of Administrative Agent or under Administrative Agent’s control.

 

12.1.2                                          At such time or times upon or afterthe occurrence and during the continuance of an Event of Default (providedthat the occurrence of an Event of Default shall not be required with respectto clauses (iv), (vi), (viii), and (ix)below), as Administrative Agent or its agent in its sole discretion maydetermine: (i) demand payment of the Accounts from the Account Debtors,enforce payment of the Accounts by legal proceedings or otherwise, andgenerally exercise all of any Borrower’s rights and remedies with respect tothe collection of the Accounts; (ii) settle, adjust, compromise, dischargeor release any of the Accounts or other Collateral or any legal proceedingsbrought to collect any of the Accounts or other Collateral; (iii) sell orassign any of the Accounts and other Collateral upon such terms, for suchamounts and at such time or times as Administrative Agent deems advisable, andat Administrative Agent’s option, with all warranties regarding the Collateraldisclaimed; (iv) take control, in any manner, of any item of payment orproceeds relating to any Collateral; (v) prepare, file and sign anyBorrower’s name to a proof of claim in bankruptcy or similar document againstany Account Debtor or to any notice of lien, assignment or satisfaction of lienor similar document in connection with any of the Collateral;(vi) receive, open and dispose of all mail addressed to any Borrower andnotify postal authorities to change the address for delivery thereof to suchaddress as Administrative Agent may designate; (vii) endorse the name ofany Borrower upon any of the items of payment or proceeds relating to anyCollateral and deposit the same to the account of Administrative Agent onaccount of the Obligations; (viii) endorse the name of any Borrower uponany chattel paper, document, instrument, invoice, freight bill, bill of ladingor similar document or agreement relating to the Accounts, Inventory and anyother Collateral; (ix) use any Borrower’s stationery and sign the name ofany Borrower to verifications of the Accounts and notices thereof to AccountDebtors; (x) use the information recorded on or contained in any dataprocessing

 

----

 

equipment andComputer Hardware and Software relating to the Accounts, Inventory, Equipmentand any other Collateral; (xi) make and adjust claims under policies ofinsurance; and (xii) do all other acts and things necessary, inAdministrative Agent’s determination, to fulfill any Borrower’s obligationsunder this Agreement.

 

The power ofattorney granted hereby shall constitute a power coupled with an interest andshall be irrevocable.

 

12.2                           Indemnity.  Each Borrower hereby agrees to defend,indemnify and hold Administrative Agent, Syndication Agent, the Co-Lead Arrangersand each Lender and each of its respective officers, directors, employees,counsel, representatives, agents, attorneys in fact and Affiliates (each, an **“Indemnitee”**) harmless from and against anyand all liabilities, obligations, losses, damages, penalties, actions,judgments, suits, costs, charges, expenses and disbursements (including,without limitation, reasonable attorneys’ fees) of any kind or naturewhatsoever which may at any time (including at any time following repayment ofthe Loans and the termination, resignation or replacement of AdministrativeAgent or replacement of any Lender)  beimposed on, incurred by or asserted against any such Person in any way relatingto or arising out of this Agreement or any document contemplated by or referredto herein, or the transactions contemplated hereby, or any action taken oromitted by any such Person under or in connection with any of the foregoing,including with respect to any investigation, litigation or proceeding(including any insolvency, bankruptcy or similar proceeding) related to orarising out of this Agreement, any other Loan Document, the Loans, or the useof the proceeds thereof, or the Collateral whether or not any IndemnifiedPerson is a party thereto (all the foregoing, collectively, the **“Indemnified Liabilities”**); provided,that no Borrower shall have any obligation hereunder to any Indemnified  Person with respect to IndemnifiedLiabilities resulting solely from (x) the gross negligence or willfulmisconduct of such Indemnitee as determined by a final non-appealable (or thetime to appeal for which has run) judgment of a court of competent jurisdictionor (y) a claim brought by any Borrower against such Indemnified Person forbreach in bad faith of such Indemnified Person’s obligations hereunder, if suchBorrower has obtained a final non-appealable (or the time to appeal for whichhas run) judgment in its favor on such claim as determined by a court ofcompetent jurisdiction.  Without limitingthe generality of the foregoing, these indemnities shall extend to any claimsasserted against any Indemnitee by any Person under any Environmental Laws byreason of any Borrower’s or any other Person’s failure to comply with lawsapplicable to solid or hazardous waste materials or other toxic substances.  Notwithstanding any contrary provision inthis Agreement, the obligation of Borrowers under this subsection 12.2shall survive the payment in full of the Obligations and the termination ofthis Agreement.

 

12.3                           Severability.  Wherever possible, each provision of thisAgreement shall be interpreted in such manner as to be effective and validunder applicable law, but if any provision of this Agreement shall beprohibited by or invalid under applicable law, such provision shall beineffective only to the extent of such prohibition or invalidity, withoutinvalidating the remainder of such provision or the remaining provisions ofthis Agreement.

 

----

 

12.4                           Successors and Assigns.  This Agreement, the Other Agreements and theSecurity Documents shall be binding upon and inure to the benefit of thesuccessors and assigns of each Borrower, Administrative Agent and each Lenderpermitted under subsection 11.9 hereof.  Notwithstanding anything to the contraryherein, no Borrower may sell, assign or otherwise transfer any of its interestin this Agreement or any of the Obligations, or any portion thereof, including,without limitation, such Borrower’s rights, title, interests, remedies, powersand duties hereunder, unless such sale, assignment or other transfer isapproved in a writing signed by each Lender and Administrative Agent; providedthat this subsection shall not prohibit mergers of Borrowers that are expresslypermitted by subsection 8.2.1.

 

12.5                           Cumulative Effect; Conflict of Terms.  The provisions of the Other Agreements andthe Security Documents are hereby made cumulative with the provisions of thisAgreement.  Except as otherwise providedin any of the other Loan Documents by specific reference to the applicableprovision of this Agreement, if any provision contained in this Agreement is indirect conflict with, or inconsistent with, any provision in any of the otherLoan Documents, the provision contained in this Agreement shall govern andcontrol.

 

12.6                           Execution in Counterparts.  This Agreement may be executed in any numberof counterparts and by different parties hereto in separate counterparts, eachof which when so executed and delivered shall be deemed to be an original andall of which counterparts taken together shall constitute but one and the sameinstrument.

 

12.7                           Notice.  Except asotherwise provided herein, all notices, requests and demands to or upon a partyhereto or pursuant to any other Loan Document, to be effective, shall be inwriting, and shall be sent by certified or registered mail, return receiptrequested, by personal delivery against receipt, by overnight courier or byfacsimile and, unless otherwise expressly provided herein, shall be deemed tohave been validly served, given, delivered or received immediately whendelivered against receipt, three (3) Business Days’ after deposit in the mail,postage prepaid, one (1) Business Day after deposit with an overnight courieror, in the case of facsimile notice, when sent with respect to machineconfirmed, addressed as follows:

 
| (A)             | If to Administrative Agent:                  | Bank of America, N.A. |
|-----------------|----------------------------------------------|-----------------------|
|            | One South Wacker Drive                       |
|            | Suite 3400                                   |
|            | Chicago, Illinois 60606                      |
|            | Attention: Loan Administration Manager       |
|            | Facsimile No.:  (312) 332-6537     |
|            |                                         |
| With a copy to: | Skadden, Arps, Slate, Meagher & Flom LLP |
|            | 333 West Wacker Drive                        |
|            | Chicago, IL 60606                            |
|            | Attention: Seth E. Jacobson                  |
|            | Facsimile No.:  (312) 407-0889     |

 

----

 
|            |                                   |
|-----------------|----------------------------------------|
| (B)             | If to Borrowers:                       | c/o National Equipment Services, Inc. |
|            | 8770 West Bryn Mawr                    |
|            | 4th Floor                              |
|            | Chicago, IL 60631                      |
|            | Attention: Chief Financial Officer     |
|            | Facsimile No.:  773-714-0650 |
|            |                                   |
| With a copy to: | Kirkland & Ellis LLP               |
|            | 200 East Randolph Drive                |
|            | Chicago, Illinois 60601                |
|            | Attention: H. Kurt von Moltke,  P.C.   |
|            | Facsimile: 312-861-2200                |
|                 |                                        |  |

 

(C)                                If to any Lender, atits address indicated on the signature pages hereof or in an Assignment andAssumption Agreement,

 

or to suchother address as each party may designate for itself by notice given inaccordance with this subsection 12.7; provided, however,that any notice, request or demand to or upon Administrative Agent or a Lenderpursuant to subsection 3.1.1 or 4.2.2 hereof shall not beeffective until received by Administrative Agent or such Lender.

 

12.8                           Consent.  Whenever Administrative Agent’s, MajorityLenders’ or all Lenders’ consent is required to be obtained under thisAgreement, any of the Other Agreements or any of the Security Documents as acondition to any action, inaction, condition or event, except as otherwisespecifically provided herein, Administrative Agent, Majority Lenders or allLenders, as applicable, shall be authorized to give or withhold such consent inits or their sole discretion and to condition its or their consent upon the givingof additional Collateral security for the Obligations, the payment of money orany other matter.

 

12.9                           CreditInquiries.  Borrowershereby authorize and permit Administrative Agent and each Lender to respond tousual and customary credit inquiries from third parties concerning any Borroweror any of its Subsidiaries.

 

12.10                     Timeof Essence.  Timeis of the essence of this Agreement, the Other Agreements and the SecurityDocuments.

 

12.11                     EntireAgreement.  ThisAgreement and the other Loan Documents, together with all other instruments,agreements and certificates executed by the parties in connection therewith orwith reference thereto, embody the entire understanding and agreement betweenthe parties hereto and thereto with respect to the subject matter hereof andthereof and supersede all prior agreements, understandings and inducements,whether express or implied, oral or written.

 

12.12                     Interpretation.  No provision of this Agreement or any ofthe other Loan Documents shall be construed against or interpreted to thedisadvantage of any party

 

----

 

hereto by anycourt or other governmental or judicial authority by reason of such partyhaving or being deemed to have structured or dictated such provision.

 

12.13                     Confidentiality.  Administrative Agent and each Lendershall hold all nonpublic information obtained pursuant to the requirements ofthis Agreement in accordance with Administrative Agent’s and such Lender’scustomary procedures for handling confidential information of this nature andin accordance with safe and sound banking practices and in any event may makedisclosure (i) to its Affiliates, (ii) as reasonably required by a participantor assignee or prospective participant or assignee in connection with theparticipation or assignment or contemplated participation or assignment, andshall require any such participant or assignee to agree to comply with thissubsection 12.13, or (iii) as required or requested by anygovernmental authority or representative thereof or pursuant to legal process.

 

12.14                     GOVERNING LAW; CONSENT TO FORUM.  THIS AGREEMENT SHALL BE GOVERNED BY ANDCONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  AS PART OF THE CONSIDERATION FOR NEW VALUERECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACEOF BUSINESS OF ANY BORROWER, ADMINISTRATIVE AGENT OR ANY LENDER, EACH BORROWERHEREBY CONSENTS AND AGREES THAT THE COURTS OF THE STATE OF NEW YORK, OR, ATADMINISTRATIVE AGENT’S OPTION, THE UNITED STATES DISTRICT COURT FOR THESOUTHERN DISTRICT OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR ANDDETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWERS ON THE ONE HAND ANDADMINISTRATIVE AGENT OR ANY LENDER ON THE OTHER HAND PERTAINING TO THISAGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.  EACH BORROWER EXPRESSLY SUBMITS AND CONSENTSIN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCHCOURT, AND EACH BORROWER HEREBY WAIVES ANY OBJECTION WHICH ANY BORROWER MAYHAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUMNONCONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OREQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  EACH BORROWER HEREBY WAIVES PERSONAL SERVICEOF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUITAND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BEMADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWERS AT THE ADDRESS SETFORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPONTHE EARLIER OF BORROWERS’ ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THEU.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHTOF ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHERMANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY ADMINISTRATIVE AGENTOR ANY LENDER OF ANY JUDGMENT OR ORDER

 

----

 

OBTAINED INSUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME INANY OTHER APPROPRIATE FORUM OR JURISDICTION.

 

12.15                     WAIVERSBY BORROWERS.  EACHBORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH ADMINISTRATIVE AGENTAND EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING ORCOUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOANDOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT, DEMAND ANDPROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT, MATURITY,RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALL COMMERCIALPAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS , CHATTEL PAPER ANDGUARANTIES AT ANY TIME HELD BY ADMINISTRATIVE AGENT OR ANY LENDER ON WHICHBORROWERS MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVERADMINISTRATIVE AGENT OR ANY LENDER MAY DO IN THIS REGARD; (iii) NOTICEPRIOR TO ADMINISTRATIVE AGENT’S TAKING POSSESSION OR CONTROL OF THE COLLATERALOR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWINGADMINISTRATIVE AGENT TO EXERCISE ANY OF ADMINISTRATIVE AGENT’S REMEDIES; (iv) THEBENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; (v) NOTICE OFACCEPTANCE HEREOF; AND (vi) EXCEPT AS PROHIBITED BY LAW, ANY RIGHT TOCLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ORANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  EACH BORROWER ACKNOWLEDGES THAT THE FOREGOINGWAIVERS ARE A MATERIAL INDUCEMENT TO ADMINISTRATIVE AGENT’S AND EACH LENDER’SENTERING INTO THIS AGREEMENT AND THAT ADMINISTRATIVE AGENT AND EACH LENDER ISRELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWERS.  EACH BORROWER WARRANTS AND REPRESENTS THAT ITHAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY ANDVOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, THIS AGREEMENTMAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

12.16                     Advertisement.  Borrowers hereby authorize AdministrativeAgent to publish the name of Borrowers and the amount of the credit facilityprovided hereunder in any **“tombstone”**or comparable advertisement which Administrative Agent elects to publish.

 

12.17                     Reimbursement.  The undertaking by Borrowers to repay theObligations and each representation, warranty or covenant of each Borrower areand shall be joint and several.  To theextent that any Borrower shall be required to pay a portion of the Obligationswhich shall exceed the amount of loans, advances or other extensions of

 

----

 

creditreceived by such Borrower and all interest, costs, fees and expensesattributable to such loans, advances or other extensions of credit, then suchBorrower shall be reimbursed by the other Borrowers for the amount of suchexcess.  This subsection 12.17is intended only to define the relative rights of Borrowers, and nothing setforth in subsection 12.17 is intended or shall impair theobligations of each Borrower, jointly and severally, to pay to AdministrativeAgent and Lenders the Obligations as and when the same shall become due andpayable in accordance with the terms hereof. Notwithstanding anything to the contrary set forth in this subsection 12.17or any other provisions of this Agreement, it is the intent of the partieshereto that the liability incurred by each Borrower in respect of theObligations of the other Borrowers (and any Lien granted by each Borrower tosecure such Obligations), not constitute a fraudulent conveyance or fraudulenttransfer under the provisions of any applicable law of any state or othergovernmental unit (**“Fraudulent Conveyance”**). Consequently, each Borrower,Administrative Agent and each Lender hereby agree that if a court of competentjurisdiction determines that the incurrence of liability by any Borrower inrespect of the Obligations of any other Borrower (or any Liens granted by suchBorrower to secure such Obligations) would, but for the application of thissentence, constitute a Fraudulent Conveyance, such liability (and such Liens)shall be valid and enforceable only to the maximum extent that would not causethe same to constitute a Fraudulent Conveyance, and this Agreement and theother Loan Documents shall automatically be deemed to have been amendedaccordingly, nunc pro tunc.

 

12.18                     Holdings as Agent for Borrowers.  Each Borrower hereby irrevocably appointsHoldings as the borrowing agent and attorney-in-fact for itself (the **“Borrower Representative”**) whichappointment shall remain in full force and effect unless and untilAdministrative Agent shall have received prior written notice signed by all ofthe Borrowers that such appointment has been revoked and that another Borrowerhas been appointed Borrower Representative. Each Borrower hereby irrevocably appoints and authorizes BorrowerRepresentative (i) to provide to Administrative Agent and receive fromAdministrative Agent all notices with respect to Loans obtained for the benefitof any Borrower and all other notices and instructions under the Loan Documentsand (ii) to take such action on its behalf as Borrower Representativedeems appropriate to obtain Loans and to exercise such other powers as arereasonably incidental thereto to carry out the purposes of this Agreement.  It is understood that the handling of theLoan Account and Collateral of Borrowers in a combined fashion, as more fullyset forth herein, is done solely as an accommodation to Borrowers in order toutilize the collective borrowing powers of Borrowers in the most efficient andeconomical manner and at their request, and that none of Administrative Agentnor Lenders shall incur liability to Borrowers as a result hereof.  Each Borrower expects to derive benefit,directly or indirectly, from the handling of the Loan Account and theCollateral in a combined fashion since the successful operation of eachBorrower is dependent on the continued successful performance of the integratedgroup.  To induce Administrative Agentand Lenders to do so, and in consideration thereof, each Borrower herebyjointly and severally agrees to indemnify the Indemnitees and hold the Indemniteesharmless against any and all liability, expense, loss or claim of damage orinjury, made against such Indemnitee by any Borrower or by any third partywhosoever, arising from or incurred by reason of (a) the handling of theLoan Account and Collateral of Borrowers as herein provided,

 

----

 

(b) AdministrativeAgent and Lenders relying on any instructions of Borrower Representative, or(c) any other action taken by Administrative Agent or any Lender hereunderor under the other Loan Documents.

 

12.19                     Recovery.  To the extent any payment received byAdministrative Agent or any Lender with respect to the Obligations (whether byor on behalf of any Borrower or any other person, as proceeds of security,enforcement of any right of setoff or otherwise) is declared to be a fraudulentconveyance or a preference in any respect, set aside or required to be paid toany Borrower (a “Recovery”), then the Obligation or part thereof originallyintended to be satisfied shall be deemed to be reinstated and outstanding as ifsuch payment had not occurred and, if this Agreement shall have been terminatedprior to such Recovery, this Agreement shall be reinstated in full force andeffect, and such prior termination shall not diminish, release, discharge,impair or otherwise affect the obligations of Borrowers from such date ofreinstatement.

 

12.20                     References to Intercreditor Agreement.  References to the Intercreditor Agreementherein are intended to define the relative rights and obligations of Lendersand Administrative Agent vis-à-vis the holders of the Second Lien Debt only,and shall not impart any rights on any Borrower.

 

*(Signature Pages Follow)*

 

----

 

IN WITNESSWHEREOF, this Agreement has been duly executed on the day and year specified atthe beginning of this Agreement.

 
| ** ** | **Borrowers:**                         |
|------------|----------------------------------------|
|       |                                   |
|       |                                   |
| ** ** | **NES RENTALS HOLDINGS, INC.**         |
| ** ** | **NATIONAL EQUIPMENT SERVICES, INC.**  |
| ** ** | **NES REAL ESTATE MANAGEMENT, INC.**   |
| ** ** | **NES IT SERVICES, INC.**              |
| ** ** | **NES EQUIPMENT SERVICES CORPORATION** |
| ** ** | **REBEL STUDIO RENTALS, INC.**         |
| ** ** | **NES SHORING ACQUISITION, INC.**      |
| ** ** | **NES MANAGEMENT SERVICE CORPORATION** |
| ** ** | **NES INDIANA PARTNERS, INC.**         |
| ** ** | **FALCONITE REBUILD CENTER, INC.**     |
| ** ** | **NES PARTNERS, INC.**                 |
|       |                                   |
|       |                                   | By: |   |   |
|       |                                   | Name: |
|       |                                   | Title: |
|       |                                   |
| ** ** | **NES TRAFFIC SAFETY, L.P.**           |
| ** ** | **NES EQUIPMENT RENTAL, L.P.**         |
|       |                                   | By: **NES  INDIANA PARTNERS, INC.** |
|       |                                   |
|       |                                   | By: |   |   |
|       |                                   |   | Name: |
|       |                                   |   | Title: |
|       |                                   |
| ** ** | **NES COMPANIES, L.P.**                |
|       |                                   | By: **NES  PARTNERS, INC.** |
|       |                                   |
|       |                                   | By: |   |   |
|       |                                   |   | Name: |
|       |                                   |   | Title: |
|       |                                   |
|            |                                        |  |  |  |  |  |

 

S-1

----

 
| ** ** | **BANK OF AMERICA,  N.A.**                     |
|------------|------------------------------------------------|
|       |  as Administrative Agent and as a  Lender |
|       |                                           |
|       |                                           |
|       | By:                                            |   |   |
|       |                                           | Name: |   |   |
|       |                                           | Title: |   |   |
|            |                                                |  |  |  |  |  |

 

----

 
| ** ** | **WACHOVIA BANK,  NATIONAL**         |
|------------|--------------------------------------|
|       | **ASSOCIATION**,  as a Lender and as |
|       | Syndication Agent                    |
|       |                                 |
|       |                                 |
|       | By:                                  |   |   |
|       |                                 | Name: |   |   |
|       |                                 | Title: |   |   |
|            |                                      |  |  |  |  |  |

 

----

 
| ** ** | **MERRILL LYNCH  CAPITAL, A**                  |
|------------|------------------------------------------------|
|       | **DIVISION OF MERRILL  LYNCH**                 |
|       | **BUSINESS FINANCIAL  SERVICES,**              |
|       | **INC.**,  as a Lender and as Co-Documentation |
|       | Agent                                          |
|       |                                           |
|       |                                           |
|       | By:                                            |   |   |
|       |                                           | Name: |   |   |
|       |                                           | Title: |   |   |
|            |                                                |  |  |  |  |  |

 

----

 
| ** ** | **GENERAL ELECTRIC  CAPITAL**            |
|------------|------------------------------------------|
|       | **CORPORATION**,  as a Lender and as Co- |
|       | Documentation Agent                      |
|       |                                     |
|       |                                     |
|       | By:                                      |   |   |
|       |                                     | Name: |   |   |
|       |                                     | Title: |   |   |
|            |                                          |  |  |  |  |  |

 

----

 
| ** ** | **THE CIT  GROUP/BUSINESS CREDIT,** |
|------------|-------------------------------------|
|       | **INC.**,  as a Lender              |
|       |                                |
|       |                                |
|       | By:                                 |   |   |
|       |                                | Name: |   |   |
|       |                                | Title: |   |   |
|            |                                     |  |  |  |  |  |

 

----

 
| ** ** | **WELLS FARGO  FOOTHILL, LLC**, as a |
|------------|--------------------------------------|
|       | Lender                               |
|       |                                 |
|       |                                 |
|       | By:                                  |   |   |
|       |                                 | Name: |   |   |
|       |                                 | Title: |   |   |
|            |                                      |  |  |  |  |  |

 

----

 
| ** ** | **PNC BANK, NATIONAL**        |
|------------|-------------------------------|
|       | **ASSOCIATION**,  as a Lender |
|       |                          |
|       |                          |
|       | By:                           |   |   |
|       |                          | Name: |   |   |
|       |                          | Title: |   |   |
|            |                               |  |  |  |  |  |

 

----

 
| ** ** | **UBS AG, STAMFORD  BRANCH**, as a |
|------------|------------------------------------|
|       | Lender                             |
|       |                               |
|       |                               |
|       | By:                                |   |   |
|       |                               | Name: |   |   |
|       |                               | Title: |   |   |
|            |                                    |  |  |  |  |  |

 

----

 
| ** ** | **UNION BANK OF  CALIFORNIA, N.A.**, |
|------------|--------------------------------------|
|       | as a Lender                          |
|       |                                 |
|       |                                 |
|       | By:                                  |   |   |
|       |                                 | Name: |   |   |
|       |                                 | Title: |   |   |
|            |                                      |  |  |  |  |  |

 

----

 

**APPENDIX A**

 

GENERALDEFINITIONS

 

When used inthe Loan and Security Agreement dated as of August 17, 2004, by and amongNES Rentals Holdings, Inc. and certain subsidiaries of NES Rentals Holdings,Inc., as borrowers, the financial institutions party thereto, as lenders,Wachovia Bank, National Association as syndication agent, Merrill LynchCapital, A Division of Merrill Lynch Business Financial Services, Inc. andGeneral Electric Capital Corporation, as co-documentation agents, and Bank ofAmerica, N.A., as administrative agent, (a) the terms **Account**, **CertificatedSecurity**, **Chattel Paper**, **CommercialTort Claims**, **Deposit Account**,**Document**, **Electronic Chattel Paper**, **Equipment**, **Financial Asset**, **Fixture**,**General Intangibles**, **Goods**, **Instruments**,**Investment Property**, **Letter-of-Credit Rights**, **Money, PaymentIntangibles**, **Proceeds**, **SecuritiesAccount,****Security Entitlement**, **Software**, **SupportingObligations**, **Tangible ChattelPaper**and **UncertificatedSecurity** have the respective meanings assigned thereto under theUCC; (b) all terms reflecting Collateral having the meanings assigned theretounder the UCC shall be deemed to mean such Property, whether now owned orhereafter created or acquired by any Borrower or in which such Borrower now hasor hereafter acquires any interest; (c) capitalized terms which are nototherwise defined in this Appendix A have the respective meanings assignedthereto in said Loan and Security Agreement; and (d) the following terms shallhave the following meanings (terms defined in the singular to have the samemeaning when used in the plural and vice versa):

 

**AccountDebtor** - any Person who is or may become obligatedunder, or in connection with, or on account of, any Account, Contract Right,Chattel Paper, General Intangible or any Supporting Obligation in respectthereof.

 

**AdministrativeAgent** - as defined in the preamble to the Agreement.

 

**AdministrativeAgent Loans** - as defined in subsection 1.1.5of the Agreement.

 

**Affiliate**- a Person: (i) which directly or indirectly through one or moreintermediaries controls, or is controlled by, or is under common control with,a Person; (ii) which beneficially owns or holds 10% or more of any classof the Voting Stock of a Person; or (iii) 10% or more of the Voting Stock(or in the case of a Person which is not a corporation, 10% or more of theequity interest) of which is beneficially owned or held by a Person or aSubsidiary of a Person.  For purposes ofthis definition, “control” of a Person means the power, directly or indirectly,to direct or cause the direction of the management and policies of such Personwhether by contract or otherwise.

 

**AggregatePercentage** - with respect to each Lender, thepercentage equal to the quotient of (i) such Lender’s Loan Commitment dividedby (ii) the aggregate of all Loan Commitments, provided, that, ifthe aggregate Loan Commitments have been reduced to zero, the numerator shallbe the aggregate unpaid principal amount of such Lender’s Revolving Credit Loansand Term Loans and its interest in the LC Obligations and the

 

A-1

----

 

denominator shall be the aggregate unpaid principal amount of allRevolving Credit Loans, Term Loans and LC Obligations.

 

**Agreement**- the Loan and Security Agreement referred to in the first sentence of thisAppendix A, all Exhibits and Schedules thereto and this Appendix A, as each ofthe same may be amended, restated, supplemented or otherwise modified from timeto time.

 

**ALTASurvey** - a survey prepared in accordance with thestandards adopted by the American Land Title Association and the AmericanCongress on Surveying and Mapping in 1997, known as the **“Minimum Standard Detail Requirements of Land TitleSurveys”**.  The ALTA Survey shallbe in sufficient form to satisfy the requirements of Chicago Title InsuranceCompany to provide extended coverage over survey defects and shall also showthe location of all easements, utilities, and covenants of record, dimensionsof all improvements, encroachments from any adjoining property, and certify asto the location of any flood plain area affecting the subject real estate.  The ALTA Survey shall contain the followingcertification:  “To [**Name of Applicable Borrower**], Bank ofAmerica, N.A., as Administrative Agent, and                   TitleInsurance Company.  This is to certifythat this map of plat and the survey on which it is based were made inaccordance with the “Minimum Standard Detail Requirements for Land TitleSurveys” jointly established and adopted by ALTA and ACSM in 1997.  (signed (SEAL) License No.                   .”

 

**Anti-TerrorismLaw**  – the USAPatriot Act or any other statute, regulation, executive order, or other lawpertaining to the prevention of future acts of terrorism, in each case as suchlaw may be amended from time to time.

 

**ApplicableMargin** – from the Closing Date to, but not including,the first Adjustment Date (as hereinafter defined) the percentages set forthbelow with respect to the Base Rate Revolving Portion, the Base Rate TermPortion, the LIBOR Revolving Portion, the LIBOR Term Portion and the UnusedLine Fee:

 
| Base Rate  Revolving Portion |   | .50   | % |
|------------------------------|--------|-------|---|
| Base Rate  Term Portion      |   | .50   | % |
| LIBOR  Revolving Portion     |   | 2.5   | % |
| LIBOR Term  Portion          |   | 2.5   | % |
| Unused Line  Fee             |   | 0.375 | % |

 

Thepercentages set forth above will be adjusted on the first day of the monthfollowing delivery by Borrowers to Administrative Agent of the quarterlyfinancial statements required to be delivered pursuant to subsection 8.1.3(ii)(B)of the Agreement for each fiscal quarter during the Term, commencing with thefiscal quarter ending March 31, 2005 (each such date an **“Adjustment Date”**), effectiveprospectively, by reference to the applicable **“FinancialMeasurement”** (as defined below) for the four quarters most recentlyending in accordance with the following:

 

A-2

----

 

 
| **Financial Measurement  (Total Funded Senior  Leverage Ratio)** | ** ** | **Level of  Applicable Margins:** |
|------------------------------------------------------------------|------------|-----------------------------------|
| >  4.00                                                       |       | Level I                           |
| >  3.75, but < 4.00                                        |       | Level II                          |
| >  3.25, but < 3.75                                        |       | Level III                         |
| < 3.25                                                        |       | Level IV                          |

 
| ** **                   | ** ** | **Level I** | ** ** | **Level II** | ** ** | **Level III** | ** ** | **Level IV** | ** ** |
|------------------------------|------------|-------------|------------|--------------|------------|---------------|------------|--------------|------------|
| Base Rate  Revolving Portion |       | 1.00        | %          | 0.75         | %          | .50           | %          | .25          | %          |
| LIBOR  Revolving Portion     |       | 3.00        | %          | 2.75         | %          | 2.50          | %          | 2.25         | %          |
| Base Rate  Term Portion      |       | 1.00        | %          | 0.75         | %          | .50           | %          | .25          | %          |
| LIBOR Term  Portion          |       | 3.00        | %          | 2.75         | %          | 2.50          | %          | 2.25         | %          |
| Unused Line  Fee             |       | 0.50        | %          | 0.375        | %          | 0.375         | %          | 0.25         | %          |

 

providedthat, (i) if Holdings audited financial statements for any fiscal yeardelivered pursuant to subsection 8.1.3(ii)(A) of the Agreementreflect a Financial Measurement that yields a higher Applicable Margin thanthat yielded by the quarterly financial statements previously deliveredpursuant to subsection 8.1.3(ii)(B) of the Agreement for the lastmonth of such fiscal year, the Applicable Margin shall be readjustedretroactively for the period that was incorrectly calculated and (ii) ifBorrowers fail to deliver the financial statements required to be deliveredpursuant to subsection 8.1.3(ii)(A) or subsection 8.1.3(ii)(B)of the Agreement on or before the due date thereof, the interest rate shallautomatically adjust to the highest interest rate set forth above, effectiveprospectively from such due date until the next Adjustment Date.  For purposes hereof, **“Financial Measurement”** shall mean the **Total Funded Senior Leverage Ratio**.

 

**ApprovedFund** - any Person (other than a natural person) thatis (or will be) engaged in making, purchasing, holding or otherwise investingin commercial loans and similar extensions of credit (including, to the extentsuch Person becomes a Lender prior to the termination of the aggregate LoanCommitments, revolving loans) in the ordinary course of its business and thatis administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or(iii) an entity or an Affiliate of an entity that administers or manages aLender.

 

**Assignmentand Assumption Agreement** - an assignment andassumption agreement in the form of Exhibit 11.9 or otherwise in formand content reasonably acceptable to Administrative Agent pursuant to which aLender assigns to another Lender all or any portion of any of such Lender’sRevolving Loan Commitment or Term Loan Commitment, as permitted pursuant to theterms of this Agreement.

 

**Audit**– an audit,  inspection, valuation orfield examination of the Properties (including the books and records) ofBorrowers and their Subsidiaries or the Collateral performed by AdministrativeAgent or its representative, which may include making extracts from such booksand records and discussing with the officers, employees and independentaccounts of any Borrower or its Subsidiary, the business, assets, liabilities,

 

A-3

----

 

financial condition, business prospects and results of operations ofsuch Borrower or Subsidiary.

 

**AutomotiveAccount Debtor** – each Account Debtor engaged in theautomotive business listed on Exhibit 9.0 to the Agreement, as suchExhibit may be supplemented from time to time by Borrowers with the priorwritten consent of Administrative Agent in its sole discretion.

 

**Availability**- the amount of additional money which Borrowers are entitled to borrow fromtime to time as Revolving Credit Loans, such amount being the differencederived when the sum of the principal amount of Revolving Credit Loans thenoutstanding (including any amounts which Administrative Agent or any Lender mayhave paid for the account of any Borrower pursuant to any of the Loan Documentsand which have not been reimbursed by Borrowers), the LC Amount, theOutstanding LC Obligations****and anyreserves is subtracted from the lesser of (i) the Revolving Credit MaximumAmount minus the Equipment Acquisition Reserve and (ii) the BorrowingBase.  If the amount outstanding is equalto or greater than the Borrowing Base, Availability is 0.

 

**AvailabilityReserve**  –$20,000,000.

 

**AvailableLiquidity** – the sum of Availability plus cash indeposit accounts meeting either of the following two conditions:  (x) such deposit account is maintained atBank and is subject to a first priority security interest in favor of AdministrativeAgent subject only to bankers liens (including those liens described in clause(xiii) of subsection 8.2.5) and liens junior to the lien of theAdministrative Agent that are otherwise permitted to be incurred hereunder or(y) such deposit account is maintained with any other bank or financialinstitution and is (i) subject to a first priority security interest in favorof the Administrative Agent subject only to bankers liens (including thoseliens described in clause (xiii) of subsection 8.2.5) andliens junior to the lien of the Administrative Agent that are otherwisepermitted to be incurred hereunder; and (ii) subject to a control agreement infavor of Administrative Agent.

 

**Bank**– BofA.

 

**BankProduct Provider**-each of Administrative Agent, Bank, Wachovia Bank, any other Lender and anyAffiliate of Administrative Agent, Bank, Wachovia Bank or any other Lender, ineach case, as provider of the products or services described in the definitionof “Product Obligations.”

 

**BaseRate** – as of any date of determination, the greater of(i) the Prime Rate and (ii) the Fed Funds Rate plus .50% per annum.

 

**BaseRate Portion** - a Base Rate Term Portion or a Base RateRevolving Portion.

 

**BaseRate Revolving Portion** - that portion of the RevolvingCredit Loans that is not subject to a LIBOR Option.

 

A-4

----

 

**BaseRate Term Portion** - that portion of the Term Loan thatis not subject to a LIBOR Option.

 

**BlockedPerson** – as defined in subsection 7.1.31(ii)of the Agreement.

 

**BofA**– as defined in the preamble to the Agreement.

 

**Borrower**– as defined in the preamble to the Agreement.

 

**BorrowerRepresentative** – as defined in subsection 12.18of the Agreement.

 

**BorrowingBase** - as at any date of determination thereof, an amountequal to the sum of (without duplication):

 

(i)                                     eighty five percent (85%) of the netamount of Eligible Accounts, plus

 

(ii)                                  the lesser of (A) $7,500,000 or (B) fiftypercent (50%) of the net amount of Eligible Unbilled General Rental Accounts, plus

 

(iii)                               the lesser of (A) one hundred percent (100%) of thenet book value of Eligible Serialized Rental Equipment Inventory or (B)seventy-five percent (75%) of the Net Orderly Liquidation Value of EligibleSerialized Rental Equipment Inventory; minus

 

(iv)                              the Term Loan Reserve at such time, minus

 

(v)                                 the Availability Reserve, minus

 

(vi)                              reserves, if any, established byAdministrative Agent in its Permitted Discretion.

 

For purposeshereof, (1) the net amount of Eligible Accounts or Eligible Unbilled GeneralRental Accounts (as applicable) at any time shall be the face amount of suchEligible Accounts or Eligible Unbilled General Rental Accounts (as applicable)less bonding subrogation rights to the extent not cash collateralized, any andall returns, rebates, discounts (which may, at Administrative Agent’s option,be calculated on shortest terms), credits, allowances or sales or excise taxesof any nature at any time issued, owing, claimed by Account Debtors, granted,outstanding or payable in connection with such Accounts at such time and (2)the amount of Eligible Rental Equipment Inventory shall be determined on afirst-in, first-out, lower of cost or market basis in accordance with GAAP.

 

**BorrowingBase Certificate** - a certificate by the chieffinancial officer or treasurer of Borrower Representative, on its own behalfand on behalf of all other Borrowers, substantially in the form of Exhibit 8.1.4to the Agreement (or another form acceptable to Administrative Agent) settingforth the calculation of the Borrowing Base, including a calculation of eachcomponent thereof, all in such detail as shall be

 

A-5

----

 

satisfactory to Administrative Agent. All calculations of the Borrowing Base in connection with the preparationof any Borrowing Base Certificate shall originally be made by Borrowers andcertified to Administrative Agent; provided, that Administrative Agentshall have the right to review and adjust, in the exercise of its PermittedDiscretion, any such calculation after giving notice thereof to Borrowers, (1)to reflect its reasonable estimate of declines in value of any of theCollateral described therein, and (2) to the extent that Administrative Agentdetermines that such calculation is not in accordance with this Agreement.

 

**BorrowingBase Party**– each Borrower and each subsidiary of eachBorrower which is organized under the laws of United States of America (or apolitical subdivision thereof).  At theelection of Borrowers, NES Canada shall be a Borrowing Base Party after theClosing Date if: (a) Administrative Agent receives a Collateral exam andthird party appraisal relating to the assets and properties of NES Canada withresults satisfactory to Administrative Agent and (b) Administrative Agentreceives such documents, instruments, agreements and legal opinions asAdministrative Agent requests to (i) cause NES Canada to be liable for,and satisfy Administrative Agent that it is liable for, all of Borrowers’Obligations under the Loan Documents and (ii) cause Administrative Agentto obtain, and satisfy Administrative Agent that Administrative Agent hasobtained, a first priority perfected security interest in the equity and assetsof NES Canada.

 

**BusinessDay** - any day excluding Saturday, Sunday and any daywhich is a legal holiday under the laws of the State of Wisconsin, the State ofIllinois or the State of New York or is a day on which banking institutionslocated in either of such states are closed, provided that with respectto the borrowing, prepayment or continuation of, or determination of theinterest rate on, any LIBOR Portion, Business Day shall include a LondonBanking Day.

 

**CapitalExpenditures** – cash expenditures made for theacquisition or improvement of capital assets as determined in accordance withGAAP.

 

**CapitalizedLease Obligation** - any Indebtedness represented byobligations under a lease that is required to be capitalized for financialreporting purposes in accordance with GAAP.

 

**Changeof Control** – each occurrence of any of the following:

 

(a)                                  theacquisition, directly or indirectly, by any Person or group (within the meaningof Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)(other than any Permitted Holder) of beneficial ownership of more than 20% ofthe aggregate outstanding Voting Stock of Holdings;

 

(b)                                 duringany period of two consecutive years, individuals who at the beginning of suchperiod constituted the Board of Directors of Holdings (together with any newdirectors whose election by such Board of Directors or whose nomination forelection by the shareholders of Holdings was approved by a vote of at least amajority the

 

A-6

----

 

directors of Holdings then still in office who were either directors atthe beginning of such period, or whose election or nomination for election waspreviously approved) cease for any reason to constitute a majority of the Boardof Directors of Holdings;

 

(c)                                  Holdingsshall cease to have beneficial ownership (as defined in Rule 13d-3 under theSecurities Exchange Act of 1934, as amended), directly or indirectly, of 100%of the aggregate Voting Stock of each other Borrower and its Subsidiaries, freeand clear of all Liens (other than any Liens granted under the Loan Documentsand Permitted Liens), except to the extent resulting from a transactionspecifically permitted under subsection 8.2.1 of the Agreement; and

 

(d)                                 any“Change of Control” (or similar term) as defined in the Second Lien DebtDocuments shall occur.

 

**ClosingDate** – August 17, 2004.

 

**Code**-the Internal Revenue Code of 1986, as amended.

 

**Co-LeadArrangers** – each of Banc of America Securities LLC andWachovia Capital Markets, LLC.

 

**Collateral**- all of the Property and interests in Property described in Section 5of the Agreement, and all other Property and interests in Property that now orhereafter secure or purport to secure the payment and performance of any of theObligations.

 

**CollectionAccount** – as defined in subsection 6.2.4of the Agreement.

 

**CollectionBank**– as defined in subsection 6.2.4 ofthe Agreement.

 

**ComplianceCertificate** - as defined in subsection 8.1.3of the Agreement.

 

**ComputerHardware and Software** - all of any Borrower’s rights(including rights as licensee and lessee) with respect to (i) computer andother electronic data processing hardware, including all integrated computersystems, central processing units, memory units, display terminals, printers,computer elements, card readers, tape drives, hard and soft disk drives,cables, electrical supply hardware, generators, power equalizers, accessories,peripheral devices and other related computer hardware; (ii) all Softwareand all software programs designed for use on the computers and electronic dataprocessing hardware described in clause (i) above, including alloperating system software, utilities and application programs in any form(source code and object code in magnetic tape, disk or hard copy format or anyother listings whatsoever); (iii) any firmware associated with any of theforegoing; and (iv) any documentation for hardware, Software and firmwaredescribed in clauses (i), (ii) and (iii) above, includingflow charts, logic diagrams, manuals, specifications, training materials,charts and pseudo codes.

 

**Consolidated**- the consolidation in accordance with GAAP of the accounts or other items asto which such term applies.

 

A-7

----

 

**Contaminant-**any waste, pollutant, hazardous substance, toxicsubstance, hazardous waste, special waste, petroleum or petroleum-derivedsubstance or waste, asbestos in any form or condition, polychlorinatedbiphenyls (**“PCBs”**), or anyconstituent of any such substance or waste.

 

**ContingentObligation** - with respect to any Person, anyobligation of such Person guaranteeing or intended to guarantee anyIndebtedness, leases, dividends or other obligations (**“primary obligations”**) of any other Person(the **“primary obligor”**) in anymanner, whether directly or indirectly, including, without limitation, (i) thedirect or indirect guaranty, endorsement (other than for collection or depositin the ordinary course of business), co-making, discounting with recourse orsale with recourse by such Person of the obligation of a primary obligor, (ii)the obligation to make take-or-pay or similar payments, if required, regardlessof nonperformance by any other party or parties to an agreement, (iii) anyobligation of such Person, whether or not contingent, (A) to purchase any suchprimary obligation or any property constituting direct or indirect securitytherefor, (B) to advance or supply funds (1) for the purchase or payment of anysuch primary obligation or (2) to maintain working capital or equity capital ofthe primary obligor or otherwise to maintain the net worth or solvency of theprimary obligor, (C) to purchase property, assets, securities or servicesprimarily for the purpose of assuring the owner of any such primary obligationof the ability of the primary obligor to make payment of such primaryobligation or (D) otherwise to assure or hold harmless the holder of suchprimary obligation against loss in respect thereof; provided, however,that the term **“Contingent Obligation”**shall not include any product warranties extended in the ordinary course ofbusiness.  The amount of any ContingentObligation shall be deemed to be an amount equal to the stated or determinableamount of the primary obligation with respect to which such ContingentObligation is made (or, if less, the maximum amount of such primary obligationfor which such Person may be liable pursuant to the terms of the instrumentevidencing such Contingent Obligation) or, if not stated or determinable, themaximum reasonably anticipated liability with respect thereto (assuming suchPerson is required to perform thereunder), as determined by such Person in goodfaith.

 

**ContractRight** - any right of any Borrower to payment under acontract for the sale or lease of goods or the rendering of services, whichright is at the time not yet earned by performance.

 

**CreditFacility**- means, with respect to any Borrower or anySubsidiary of any Borrower, one or more debt facilities, debt securities salesarrangements or commercial paper facilities, in each case with, or sold to,banks or other institutional lenders or investors providing for term loans orother Indebtedness, in each case, as amended, restated, modified, renewed,refunded, replaced or refinanced in whole or in part, and without limitation asto amount, terms, conditions, covenants and other provisions from time to time,and any agreement (and related documents and instruments) governingIndebtedness incurred to refinance, in whole or in part, the borrowings andcommitments then outstanding or permitted to be outstanding under such debt orsuccessor debt, whether by the same or any other lender or investor or group oflenders or investors.

 

A-8

----

 

**CreditParty** – each Borrower.

 

**CurrentAssets** - at any date means the amount at which all ofthe current assets of a Person would be properly classified as current assetsshown on a balance sheet at such date in accordance with GAAP.

 

**Default**- an event or condition the occurrence of which would, with the lapse of timeor the giving of notice, or both, become an Event of Default.

 

**DefaultRate** - as defined in subsection 2.1.2 ofthe Agreement.

 

**DefaultingLender** – as defined in subsection 3.1.3 ofthe Agreement.

 

**DerivativeObligations** – every obligation of a Person under anyforward contract, futures contract, exchange contract, swap, option or otherfinancing agreement or arrangement (including, without limitation, caps,floors, collars and similar agreement), the value of which is dependent uponinterest rates, currency exchange rates, commodity values, equity values orother indices.

 

**DisqualifiedCapital Stock**–****shallmean any Security  which, by its terms(or by the terms of any security into which it is convertible or for which itis exchangeable), or upon the happening of any event, (a) matures or ismandatorily redeemable, pursuant to a sinking fund obligation or otherwise, oris redeemable at the option of the holder thereof, in whole or in part, on orprior to the first anniversary of the last day of the Term, (b) is convertibleinto or exchangeable for (i) debt securities or (ii) any Securities referred toin (a) above, in each case at any time prior to the first anniversary of thelast day of the Term, (c) contains any repurchase obligation which may comeinto effect prior to payment in full of all Obligations, (d) requires cashDistributions prior to one year after the last day of the Term, (e) does notprovide that any claims of any holder of such Security may have against anyBorrower (including any claims as a judgment creditor or other creditor inrespect of claims for the breach of any covenants contained therein) shall befully subordinated (including a full remedy bar) to the Obligations in a mannersatisfactory to the Majority Lenders, (f) provides the holders of such Securitythereof with any rights to receive any cash upon the occurrence of a change ofcontrol prior to the first anniversary of the date on which the Obligationshave been paid in full in cash, unless the rights to receive such cash arecontingent upon the prior payment in full in cash of the Obligations or (g) isprohibited by the terms of the Agreement.

 

**Distribution**- in respect of any Person means and includes: (i) the direct or indirectpayment of any dividends or other distributions on Securities (exceptdistributions in such Securities) and (ii) the repurchase, redemption,retirement, defeasance, sinking fund or similar payment or other purchase oracquisition for value of Securities of such Person, as the case may be.

 

**DOL**- the United States Department of Labor or any successor department or agency.

 

A-9

----

 

**DominionAccount** - a special bank account or accounts ofAdministrative Agent established by Borrowers or any one of them pursuant to subsection 6.2.4of the Agreement at banks selected by Borrower Representative, but acceptableto Administrative Agent in its sole discretion, and over which AdministrativeAgent shall have sole and exclusive access and control for withdrawal purposes.

 

**DominionEvent** – the existence of either of the following (i)an Event of Default has occurred and is continuing or (ii) Availability is lessthan $20,000,000 (the **“Initial DominionAvailability Trigger”**), provided that the Initial DominionAvailability Trigger shall be increased up to a maximum of $45,000,000 asfollows: (x) for each dollar that the Equipment Acquisition Reserve is reducedin accordance with the terms of the definition thereof, the Initial DominionAvailability Trigger shall be increased by an amount equal to 50% of suchreduction in the Equipment Acquisition Reserve and (y) on the date that theEquipment Acquisition Reserve is reduced to zero, the Initial DominionAvailability Trigger as then in effect shall be increased to $45,000,000.

 

**DominionNotice**- as defined in subsection 6.2.4 ofthe Agreement.

 

**EligibleAccount** - an Account arising in the ordinary course ofthe business of any Borrowing Base Party from the sale of goods or rendition ofservices which Administrative Agent, in its Permitted Discretion, deems to bean Eligible Account.  Without limitingthe generality of the foregoing, no Account shall be an Eligible Account if:

 

(i)                                     itarises out of a sale made or services rendered by a Borrowing Base Party to aSubsidiary of a Borrowing Base Party or an Affiliate of a Borrowing Base Partyor to a Person controlled by an Affiliate of a Borrowing Base Party; or

 

(ii)                                  itremains unpaid more than 90 days after the original invoice date shown on theinvoice (or, in the case of an Account of an Automotive Account Debtor, itremains unpaid more than 120 days after the original invoice date shown on theinvoice); or

 

(iii)                               thetotal unpaid Accounts of the Account Debtor exceed 10% of the net amount of allEligible Accounts, but only to the extent of such excess; or

 

(iv)                              anycovenant, representation or warranty contained in the Agreement with respect tosuch Account has been breached in any material respect; or

 

(v)                                 theAccount Debtor is also a creditor or supplier of a Borrowing Base Party or anySubsidiary of a Borrowing Base Party, or the Account Debtor has disputed liabilitywith respect to such Account, or the Account Debtor has made any claim withrespect to any other Account due from such Account Debtor to a Borrowing BaseParty or any Subsidiary of a Borrowing Base Party, or the Account otherwise isor may become subject to right of setoff by the Account Debtor, provided,that any such Account shall be eligible to the extent such amount thereofexceeds such contract, dispute, claim, setoff or similar right; or

 

A-10

----

 

(vi)                              theAccount Debtor has commenced a voluntary case under the federal bankruptcylaws, as now constituted or hereafter amended, or made an assignment for thebenefit of creditors, or a decree or order for relief has been entered by acourt having jurisdiction in the premises in respect of the Account Debtor inan involuntary case under the federal bankruptcy laws, as now constituted orhereafter amended, or any other petition or other application for relief underthe federal bankruptcy laws, as now constituted or hereafter amended, has beenfiled against the Account Debtor, or if the Account Debtor has failed,suspended business, ceased to be Solvent, or consented to or suffered areceiver, trustee, liquidator or custodian to be appointed for it or for all ora significant portion of its assets or affairs or called a meeting of itscreditors for the purpose of obtaining any financial concession oraccommodation; or

 

(vii)                           itarises from a sale made or services rendered to an Account Debtor (A) locatedoutside the United States, unless the sale is either (1) to an AccountDebtor located in Ontario or any other province of Canada in which the PersonalProperty Security Act has been adopted in substantially the same form ascurrently in effect in Ontario or (2) on letter of credit, guaranty oracceptance terms, in each case acceptable to Administrative Agent in itsPermitted Discretion; or (B) located in a state or jurisdiction (e.g. NewJersey, Minnesota and West Virginia) that requires, as a condition to access tothe courts of such jurisdiction, that a creditor qualify to transact business,file a business activities report or other report or form, or take one or moreother actions, unless the applicable Borrowing Base Party has so qualified,filed such reports or forms, or taken such actions (and, in each case, paid anyrequired fees or other charges), except to the extent such Borrowing Base Partymay qualify subsequently as a foreign entity authorized to transact business insuch state or jurisdiction and gain access to such courts, without incurringany cost or penalty viewed by Administrative Agent to be significant in amount,and such later qualification cures any access to such courts to enforce paymentof such Account; or

 

(viii)                        (1) itarises from a sale to the Account Debtor on a bill-and-hold, guaranteed sale,sale-or-return, sale-on-approval, consignment, or any other repurchase orreturn basis; or (2) it is subject to a reserve established by a BorrowingBase Party for potential returns or refunds, to the extent of such reserve; or

 

(ix)                                theAccount Debtor is the United States of America or any department, agency orinstrumentality thereof, unless the applicable Borrowing Base Party assigns itsright to payment of such Account to Administrative Agent, in a mannersatisfactory to Administrative Agent, in its Permitted Discretion, so as tocomply with the Assignment of Claims Act of 1940 (31 U.S.C. §203 etseq.,as amended); or

 

(x)                                   itis not at all times subject to Administrative Agent’s duly perfected, firstpriority security interest or is subject to a Lien that is not a PermittedLien; or

 

(xi)                                thegoods giving rise to such Account have not been delivered to and accepted bythe Account Debtor or the services giving rise to such Account have not been performedby the applicable Borrowing Base Party and accepted by the Account Debtor orthe Account otherwise does not represent a final sale; or

 

A-11

----

 

(xii)                             theAccount is evidenced by chattel paper or an instrument of any kind, or has beenreduced to judgment; or

 

(xiii)                          AnyBorrowing Base Party or a Subsidiary of any Borrowing Base Party has made anyagreement with the Account Debtor for any extension, compromise, settlement ormodification of the Account or deduction therefrom, except for discounts orallowances which are made in the ordinary course of business for prompt paymentand which discounts or allowances are reflected in the calculation of the facevalue of each invoice related to such Account; or

 

(xiv)                         25%****or more of the Accounts owing from theAccount Debtor are not Eligible Accounts hereunder (or, in the case of anAccount of an Automotive Account Debtor, 50% or more of the Accounts owing fromsuch Automotive Account Debtor are not Eligible Accounts hereunder); or

 

(xv)                            anyBorrowing Base Party has made an agreement with the Account Debtor to extendthe time of payment thereof; or

 

(xvi)                         itrepresents service charges, late fees or similar charges;

 

(xvii)                      itrepresents an unbilled Account; or

 

(xviii)                   it is nototherwise acceptable to Administrative Agent in its Permitted Discretion.

 

**EligibleAssignee -**(a) any Lender, any Affiliate of any Lenderand any Approved Fund or (b) any other Person (i) which is a commercial bank,finance company, insurance company or other financial institution or fund andwhich, in the ordinary course of business, extends credit of the typecontemplated herein; (ii) which is organized under the laws of the UnitedStates of America or any state thereof; and (iii) which has capital in excessof $500,000,000, provided, however, that “Eligible Assignee”shall not include any Borrower or any of its Affiliates, financial sponsors orSubsidiaries.

 

**EligibleRental Equipment Inventory** – Rental EquipmentInventory of any Borrowing Base Party (other than packaging materials andsupplies, tooling, samples and literature) which Administrative Agent, in itsPermitted Discretion, deems to be Eligible Rental Equipment Inventory.  Without limiting the generality of theforegoing, no Rental Equipment Inventory shall be Eligible Rental EquipmentInventory if:

 

(i)                                     itis not finished goods which meet the specifications of the purchase order orcontract for such Rental Equipment Inventory, if any; or

 

(ii)                                  itis not in good, new and saleable or leasable condition; or

 

(iii)                               itis slow-moving, obsolete or unmerchantable; or

 

(iv)                              itdoes not meet all standards imposed by any governmental agency or authority; or

 

A-12

----

 

(v)                                 itdoes not conform in all respects to any covenants, warranties andrepresentations set forth in the Agreement; or

 

(vi)                              itis not at all times subject to Administrative Agent’s duly perfected, firstpriority security interest or is subject to a Lien that is not a PermittedLien; or

 

(vii)                           it isnot situated at a location in compliance with the Agreement; or

 

(viii)                        it is intransit; or

 

(ix)                                isheld on consignment; or

 

(x)                                   isnot insured in accordance with the terms of the Agreement or other terms reasonablyacceptable to Administrative Agent; or

 

(xi)                                itis not otherwise acceptable to Administrative Agent in its PermittedDiscretion.

 

**EligibleSerialized Rental Equipment Inventory**- EligibleRental Equipment Inventory marked with and identifiable by serial number.

 

**EligibleUnbilled General Rental Accounts** - all Accountsarising from the general rental business unit of a Borrowing Base Party(excluding traffic safety) that would constitute Eligible Accounts but for clause(xvii) of the definition of Eligible Account.

 

**EnvironmentalClaims -**all complaint, summons, citation, notice ofviolation, directive, order, claim, litigation, investigation, judicial oradministrative proceeding, judgment, letter or other written communication fromany Governmental Authority or other Person alleging potential liability orresponsibility for violation of any Environmental Law, or for a Release orinjury to the environment.

 

**EnvironmentalLaws**- all federal, state or local laws, statutes,common law duties, rules, regulations, ordinances and codes, together with alladministrative orders, directed duties, licenses, authorizations and permitsof, and agreements with, any Governmental Authority, in each case relating toenvironmental, health, safety, and land use matters.

 

**EnvironmentalLien -**a Lien in favor of any  Governmental Authority for (a) any liabilityunder Environmental Laws, or (b) damages arising from, or costs incurred bysuch Governmental Authority in response to, a Release or threatened Release ofa Contaminant into the environment.

 

**EquipmentAcquisition Reserve**-$50,000,000, provided that (i) to the extent Borrower excludes anyRental Equipment Inventory from the Borrowing Base because it is not EligibleSerialized Rental Equipment Inventory solely because it does not satisfy clause(vi) of the definition of Eligible Rental Equipment Inventory, theEquipment Acquisition Reserve shall be reduced by an amount equal to theproduct of (A) the

 

A-13

----

 

fraction obtaining by dividing (1) the Equipment Acquisition Reserve by(2) the Availability without taking into account the Equipment AcquisitionReserve and without taking into account such excluded Rental EquipmentInventory and (B) the amount of Rental Equipment Inventory so excluded, and(ii) such amount will be further reduced on a dollar for dollar basis asBorrowers make installment payments of the purchase price of inventoryconsisting of rental equipment purchased by Borrowers as permitted under the Agreement;providedfurther, that prior to any reduction referred to in theforegoing clause (ii), Borrowers shall provide Administrative Agent witha certificate of a Responsible Officer of Borrower’s Representative (togetherwith such other evidence as Administrative Agent may reasonably request)certifying that such payments have been used to pay the purchase price ofRental Equipment Inventory.

 

**ERISA**- the Employee Retirement Income Security Act of 1974,as amended, and any successor statute, and all rules and regulations from timeto time promulgated thereunder.

 

**ERISAAffiliate -**any trade or business (whether or notincorporated) under common control with any Borrower within the meaning of Section 414(b)or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes ofprovisions relating to Section 412 of the Code).

 

**ERISAEvent** – means (a) a Reportable Event with respect to aPension Plan, (b) a withdrawal by any Borrower or any ERISA Affiliate from aPension Plan subject to Section 4063 of ERISA during a plan year in whichit was a substantial employer (as defined in Section 4001(a)(2) of ERISA)or a cessation of operations which is treated as such a withdrawal under Section 4062(e)of ERISA, (c) a complete or partial withdrawal by any Borrower or any ERISAAffiliate from a Multiemployer Plan or notification that a Multiemployer Planis in reorganization, (d) the filing of a notice of intent to terminate, thetreatment of a Pension Plan amendment as a termination under Section 4041or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminatea Pension Plan or Multiemployer Plan, (e) the occurrence of an event orcondition which might reasonably be expected to constitute grounds under Section 4042of ERISA for the termination of, or the appointment of a trustee to administer,any Pension Plan or Multiemployer Plan, or (f) the imposition of any materialliability under Title IV of ERISA, other than for PBGC premiums due but notdelinquent under Section 4007 of ERISA, upon any Borrower or any ERISAAffiliate.

 

**Eventof Default** - as defined in subsection 10.1of the Agreement.

 

**ExcessCash Flow** –with respect to the period beginning July 1,2004, and ending December 31, 2005, and each fiscal year of Borrowersthereafter, the amount equal to the sum of Consolidated Net Income (Loss) (asdefined in Exhibit 8.3), plus depreciation, amortization andother non-cash charges deducted in determining Consolidated Net Income (Loss)and minus the sum of payments of principal on Indebtedness for MoneyBorrowed (excluding payments made on the Closing Date in respect of the PriorIndebtedness and repayments of revolving loans except to the extent theapplicable revolving loan commitments are permanently reduced in connectionwith such

 

A-14

----

 

repayments), non-cash income included in determining Consolidated NetIncome (Loss) and Net Capital Expenditures for such period or fiscal year, asapplicable, all determined for Holdings and its Subsidiaries on a Consolidatedbasis in accordance with GAAP.

 

**ExcludedDeposit Accounts**– accounts which are solely used whenand as needed for the purposes of making payroll, replenishing petty cash,payment of specified accounts payable, and other occasional corporate needs inthe ordinary course of business, so long as the balance in any such accountdoes not exceed $100,000 at any time and the aggregate balances in all suchaccounts does not exceed $200,000 at any time.

 

**ExistingLetter of Credit**-each of the letters of credit listed on Exhibit 1.2 to the Agreementissued by Wachovia Bank for the account of the Persons identified on suchExhibit.

 

**FedFunds Rate** - for any day, the rate per annum (roundedupwards, if necessary, to the nearest 1/100 of 1%) equal to the weightedaverage of the rates on overnight Federal funds transactions with members ofthe Federal Reserve System arranged by Federal funds brokers on such day, aspublished by the Federal Reserve Bank of New York on the Business Day nextsucceeding such day; provided that (a) if such day is not a BusinessDay, the Fed Funds Rate for such day shall be such rate on such transactions onthe next preceding Business Day as so published on the next succeeding BusinessDay, and (b) if no such rate is so published on such next succeeding BusinessDay, the Fed Funds Rate for such day shall be the average rate charged to Bankon such day on such transactions as determined by Administrative Agent.

 

**FeeLetter**- as defined in subsection 2.3 ofthe Agreement.

 

**ForeignPlan** – any material pension, retirement, retireebenefit or similar plan, arrangement or policy sponsored or contributed to byany Borrower in a jurisdiction other than the United States.

 

**ForeignSubsidiary** – as defined in subsection 5.1of the Agreement.

 

**GAAP**- generally accepted accounting principles in the United States of America ineffect from time to time.

 

**GovernmentalAuthority** - any nation or government, any state orother political subdivision thereof, any central bank (or similar monetary orregulatory authority) thereof, any department, commission, board, bureau,instrumentality or agency thereof, any entity exercising executive,legislative, judicial, regulatory or administrative functions of or pertainingto government, and any corporation or other entity owned or controlled, throughstock or capital ownership or otherwise, by any of the foregoing.

 

**Hoist**– the business of the Borrower of renting certain hoist equipment as currentlyconducted by NES Industrial Hoist.

 

**Holdings**– as defined in the preamble to the Agreement.

 

A-15

----

 

**InactiveSubsidiary** – a Subsidiary of any Borrower, whichSubsidiary (x) does not conduct or engage in any business or operations, and(y) has assets and properties with an aggregate book value of not greater than$10,000, and liabilities in an aggregate amount not greater than $10,000 and(z) has aggregate revenues not greater than $10,000 during any twelve-monthperiod.

 

**Indebtedness**- as applied to a Person means, without duplication:

 

(i) allobligations of such Person for borrowed money, (ii) all obligations ofsuch Person evidenced by bonds (other than performance, surety or similarbonds), debentures, notes or similar instruments, or upon which interestpayments are customarily made, (iii) all obligations of such Person underconditional sale or other title retention agreements relating to propertypurchased by such Person (other than customary reservations or retentions oftitle under agreements with suppliers entered into in the ordinary course ofbusiness), (iv) all obligations of such Person issued or assumed as thedeferred purchase price of property or services purchased by such Person (otherthan trade debt incurred in the ordinary course of business and due within 180days of the incurrence thereof), (v) the principal portion of allobligations of such Person under Capitalized Lease Obligations, (vi) themaximum amount of all letters of credit issued or bankers’ acceptancesfacilities created for the account of such Person and, without duplication, alldrafts drawn thereunder (to the extent unreimbursed), (vii) all preferredSecurities issued by such Person and required by the terms thereof to beredeemed, or for which mandatory sinking fund payments are due, by a fixed dateprior to 180 days following the applicable maturity date thereof,(viii) the principal portion of all obligations of such Person underoff-balance sheet financing arrangements (other than leases which, inaccordance with GAAP, would be classified as operating leases), (ix) allContingent Obligations of such Person, (x) all Derivative Obligations of suchPerson, (xi) to the extent not included in the foregoing clauses (i) through(x), all items which in accordance with GAAP would be included in determiningtotal liabilities as shown on the liability side of a balance sheet of suchPerson as at the date as of which Indebtedness is to be determined, (xii) allIndebtedness of another Person of the type referred to in clauses (i)through (xi) above secured by (or for which the holder of suchIndebtedness has an existing right, contingent or otherwise, to be secured by)any Lien on, or payable out of the proceeds of production from, property ownedor acquired by such Person, whether or not the obligations secured thereby havebeen assumed, and (xii) Indebtedness of the type referred to in clauses (i)through (xi) above of any partnership or unincorporated joint venture inwhich such Person is legally obligated or has a reasonable expectation of beingliable with respect thereto.

 

**IndemnifiedLiabilities**– as defined in subsection 12.2of the Agreement.

 

**Indemnitee**– as defined in subsection 12.2 of theAgreement.

 

**IntellectualProperty** - all past, present and future:  trade secrets, know-how and other proprietaryinformation; trademarks, internet domain names, service marks, trade dress,trade names, business names, designs, logos, slogans (and all translations,adaptations, derivations and combinations of the foregoing) indicia and othersource

 

A-16

----

 

and/or business identifiers, and the goodwill of the business relatingthereto and all registrations or applications for registrations which haveheretofore been or may hereafter be issued thereon throughout the world;copyrights (including copyrights for computer programs) and copyrightregistrations or applications for registrations which have heretofore been ormay hereafter be issued throughout the world and all tangible propertyembodying the copyrights, unpatented inventions (whether or not patentable);patent applications and patents; industrial design applications and registeredindustrial designs; license agreements related to any of the foregoing andincome therefrom; books, records, writings, computer tapes or disks, flowdiagrams, specification sheets, computer software, source codes, object codes,executable code, data, databases and other physical manifestations, embodimentsor incorporations of any of the foregoing; the right to sue for all past,present and future infringements of any of the foregoing; all otherintellectual property; and all common law and other rights throughout the worldin and to all of the foregoing.

 

**IntercreditorAgreement** - that certain Intercreditor Agreement byand between Administrative Agent and Second Lien Debt Agent, as acknowledged byBorrowers substantially in the form of Exhibit 8.4 attached heretoand otherwise in form and substance satisfactory to Majority Lenders, asamended, restated, supplemented or otherwise modified from time to time.

 

**InterestPeriod** - as applicable to any LIBOR Portion, a periodcommencing on the date such LIBOR Portion is advanced, continued or converted,and ending on the date which is one (1) month, two (2) months, three (3)months, or six (6) months (or, if available to all Lenders, nine (9) months)later, as may then be requested by Borrowers; provided that unlessAdministrative Agent notifies Borrowers that the initial syndication of theLoan commitments have been completed, each Interest Period commencing (a)within the first 60 days after the Closing Date shall be a period of 1 monthand (b) thereafter shall be a period of 7 days; and providedfurtherthat (i) any Interest Period which would otherwise end on a day which isnot a Business Day shall end in the next preceding or succeeding Business Dayas is Administrative Agent’s custom in the market to which such LIBOR Portionrelates; (ii) there remains a minimum of one (1) month, two (2) months,three (3) months, six (6) months or nine (9) months (depending upon whichInterest Period Borrowers select) in the Term, unless Borrowers and Lendershave agreed to an extension of the Term beyond the expiration of the InterestPeriod in question; (iii) all Interest Periods of the same duration whichcommence on the same date shall end on the same date; and (iv) withrespect to any LIBOR Term Portion, no applicable Interest Period shall extendbeyond the scheduled installment payment date for such LIBOR Term Portion.

 

**Inventory**– as defined in the UCC and including, without limitation, all of each CreditParty’s Property which is rented by such Credit Party in the ordinary course ofbusiness or is held for rent by such Credit Party.

 

**IRS**- the Internal Revenue Service and any Governmental Authority succeeding to anyof its principal functions under the Code.

 

A-17

----

 

**LCAmount** - at any time, the aggregate undrawn faceamount of all Letters of Credit then outstanding.

 

**LCObligations** - any Obligations that arise from any drawagainst any Letter of Credit.

 

**Lender**– as defined in the preamble to the Agreement.

 

**Letterof Credit** - (i) the Existing Letters of Credit and(ii) any standby or documentary letter of credit issued by Administrative Agentor any Affiliate of Administrative Agent for the account of any Borrowerpursuant to subsection 1.2 of the Agreement.

 

**LIBOR**- as applicable to any LIBOR Portion, for the applicable Interest Period, therate per annum (rounded upward, if necessary, to the nearest 1/8 of onepercent) as determined on the basis of the offered rates for deposits in U.S.dollars, for a period of time comparable to such Interest Period which appearson the Telerate page 3750 as of 11:00 a.m. (London time) on the day that is two(2) London Banking Days preceding the first day of such Interest Period; provided,however, that if the rate described above does not appear on theTelerate System on any applicable interest determination date, the LIBOR shallbe the rate (rounded upwards as described above, if necessary) for deposits inU.S. dollars for a period substantially equal to the Interest Period on theReuters Page **“LIBO”** (or such otherpage as may replace the LIBO Page on that service for the purpose of displayingsuch rates), as of 11:00 a.m. (London Time), on the day that is two (2) LondonBanking Days prior to the first day of such Interest Period.  If both the Telerate and Reuters systems areunavailable, then the rate for that date will be determined on the basis of theoffered rates for deposits in U.S. dollars for a period of time comparable tosuch Interest Period which are offered by four (4) major banks in the Londoninterbank market at approximately 11:00 a.m. (London time), on the day that istwo (2) London Banking Days preceding the first day of such Interest Period asselected by Administrative Agent.  Theprincipal London office of each of the major London banks so selected will berequested to provide a quotation of its U.S. dollar deposit offered rate.  If at least two (2) such quotations areprovided, the rate for that date will be the arithmetic mean of thequotations.  If fewer than two quotationsare provided as requested, the rate for that date will be determined on thebasis of the rates quoted for loans in U.S. dollars to leading European banksfor a period of time comparable to such Interest Period offered by major banksin New York City at approximately 11:00 a.m. (New York City time), on the daythat is two (2) London Banking Days preceding the first day of such Interest Period.  In the event that Administrative Agent isunable to obtain any such quotation as provided above, it will be determinedthat LIBOR pursuant to an Interest Period cannot be determined.  In the event that the Board of Governors ofthe Federal Reserve System shall impose a Reserve Percentage with respect toLIBOR deposits of Bank, then for any period during which such ReservePercentage shall apply, LIBOR shall be equal to the amount determined abovedivided by an amount equal to 1 minus the Reserve Percentage.

 

A-18

----

 

**LIBORInterest Payment Date** – with respect to a LIBORPortion, the last day of the Term and the last day of each Interest Periodapplicable to such LIBOR Portion,  provided,however, that if any Interest Period for a LIBOR Portion exceeds threemonths, the respective dates that fall every three months after the beginningof such Interest Period shall also be Interest Payment Dates.

 

**LIBOROption** - the option granted pursuant to subsection 3.1of the Agreement to have the interest on all or any portion of the principalamount of the Revolving Credit Loans or the Term Loan based on the LIBOR.

 

**LIBORPortion** - a LIBOR Revolving Portion****or a LIBOR Term Portion.

 

**LIBORRequest** - a notice in writing (or by telephoneconfirmed electronically or by telecopy or other facsimile transmission on thesame day as the telephone request) from Borrower Representative toAdministrative Agent requesting that interest on a Revolving Credit Loan or allor any portion of the Term Loan be based on the LIBOR, specifying: (i) thefirst day of the Interest Period (which shall be a Business Day); (ii) thelength of the Interest Period; (iii) whether the LIBOR Portion is a newLoan, a conversion of a Base Rate Portion, or a continuation of a LIBORPortion; and (iv) the dollar amount of the LIBOR Revolving Portion orLIBOR Term Portion, which shall be in an amount not less than $5,000,000****or an integral multiple of $1,000,000 inexcess thereof.

 

**LIBORRevolving Portion** - that portion of the RevolvingCredit Loans specified in a LIBOR Request (including any portion of RevolvingCredit Loans which is being borrowed by Borrowers concurrently with such LIBORRequest) which, as of the date of the LIBOR Request specifying such LIBOR RevolvingPortion, has met the conditions for basing interest on the LIBOR in subsection 3.1of the Agreement and the Interest Period of which has not terminated.

 

**LIBORTerm Portion** - that portion of the Term Loan specifiedin a LIBOR Request which, as of the date of the LIBOR Request specifying suchLIBOR Term Portion, has met the conditions for basing interest on the LIBOR in subsection 3.1of the Agreement and the Interest Period of which has not terminated.

 

**Lien**- any interest in Property securing an obligation owed to, or a claim by, aPerson other than the owner of the Property, whether such interest is based oncommon law, statute or contract, including without limitation, any mortgage,deed of trust, pledge, lien (statutory or otherwise), security interest, chargeor other encumbrance or security or preferential arrangement of any nature, anyconditional sale or title retention arrangement, any capital lease,reservations, exceptions, encroachments, easements, rights-of-way, covenants,conditions, restrictions, leases and other title exceptions and encumbrancesaffecting Property and any assignment, deposit arrangement or financing leaseintended as, or having the effect of, security. For the purpose of the Agreement, a Borrower shall be deemed to be theowner of any Property which it has acquired or holds subject to a conditionalsale agreement or other arrangement pursuant to which title to the Property hasbeen retained by or vested in some other Person for security purposes.

 

A-19

----

 

**LoanAccount**- the loan account established on the books ofAdministrative Agent pursuant to subsection 3.6 of the Agreement.

 

**LoanCommitment** - with respect to any Lender, the amount ofsuch Lender’s Revolving Loan Commitment plus such Lender’s Term LoanCommitment.

 

**LoanDocuments** - the Agreement, the Other Agreements andthe Security Documents.

 

**Loans**- all loans and advances of any kind (including any charges to the Loan Accountmade in accordance with the terms of the Agreement) made by AdministrativeAgent, any Lender, or any Affiliate of Administrative Agent or any Lender,pursuant to the Agreement.

 

**LondonBanking Day** - any date on which commercial banks areopen for business in London, England.

 

**MajorityLenders** - as of any date, Lenders holding more than50% of the Term Loan and Revolving Loan Commitments determined on a combinedbasis and following the termination of the Revolving Loan Commitments, Lendersholding more than 50% or more of the outstanding Loans, LC Amounts andOutstanding LC Obligations; provided, that (i) in each case, ifthere are 2 or more Lenders with outstanding Loans, LC Amounts, Outstanding LCObligations or Revolving Loan Commitments, at least 2 Lenders shall be requiredto constitute Majority Lenders; and (ii) prior to termination of theRevolving Loan Commitments, if any Lender breaches its obligation to fund anyrequested Revolving Credit Loan, for so long as such breach exists, its votingrights hereunder shall be calculated with reference to its outstanding Loans,LC Amounts and Outstanding LC Obligations, rather than its Revolving LoanCommitment.

 

**MarginStock -**“margin stock” as such term is defined inRegulation T, U  or X of the FederalReserve Board.

 

**MaterialAdverse Effect** - a material adverse effect on (i) thebusiness, assets, liabilities (actual or contingent), results of operations orfinancial condition of Borrowers and their Subsidiaries taken as a whole,(ii)  the rights and remedies of Administrative Agent or Lenders under theLoan Documents, (iii)  the ability of any Borrower or any of itsSubsidiaries to perform its obligations hereunder or under any Loan Document,(iv) the legality, validity or enforceability of the Agreement or any otherLoan Document or (v) the validity, perfection or priority of any Lien in favorof Administrative Agent on any Collateral.

 

**MaterialContract** - with respect to any Person, each contractor agreement to which any Credit Party is a party as to which the breach,nonperformance, cancellation or failure to renew by any party thereto couldreasonably be expected to have a Material Adverse Effect.

 

**MaximumRate –**as defined in subsection 2.1.3 ofthe Agreement.

 

A-20

----

 

**MoneyBorrowed** - (i) Indebtedness arising from thelending of money by any Person to any Borrower or any of its Subsidiaries;(ii) Indebtedness, whether or not in any such case arising from thelending by any Person of money to any Borrower or any of its Subsidiaries,(1) which is represented by notes payable or drafts accepted that evidenceextensions of credit, (2) which constitutes obligations evidenced bybonds, debentures, notes or similar instruments, or (3) upon whichinterest charges are customarily paid (other than accounts payable) or that wasissued or assumed as full or partial payment for Property;(iii) Indebtedness that constitutes a Capitalized Lease Obligation;(iv) reimbursement obligations with respect to letters of credit orguaranties of letters of credit and (v) Indebtedness of any Borrower orany of its Subsidiaries under any guaranty of obligations that would constituteIndebtedness for Money Borrowed under clauses (i) through (iii)hereof, if owed directly by Borrower or any of its Subsidiaries.  Money Borrowed shall not include tradepayables or accrued expenses.

 

**Mortgages**– each mortgage or deed of trust executed by a Borrower on or about the ClosingDate in favor of Administrative Agent, for the benefit of itself and Lenders,by which such Borrower has granted to Administrative Agent, as security for theObligations, a Lien upon the real Property of such Borrower described therein,together with all mortgages, deeds of trust and comparable documents now or atany time hereafter securing the whole or any part of the Obligations.

 

**MotorVehicle**- any motor vehicleor other Property (including, without limitation, all trucks, trailers,tractors, service vehicles, automobiles and other mobile equipment and anyRental Equipment Inventory) for which the title to such motor vehicle orProperty is governed by a certificate of title or ownership.

 

**MultiemployerPlan -** a “multiemployer plan” as defined in Section 4001(a)(3)of ERISA which is contributed to by any Borrower or any ERISA Affiliate.

 

**NESCanada** - NES Equipment Services, Inc. (Canada), acorporation organized under the laws of Canada.

 

**NetCapital Expenditures** – with respect to any period,cash expenditures made for the acquisition or improvement of capital assetsduring such period, as determined in accordance with GAAP, net of (i) to theextent any asset sales proceeds were reinvested in the acquisition orimprovement of capital assets during such period, the portion of suchexpenditures made with the proceeds of such asset sales up to a maximum of thenet book value of the assets sold and (ii) to the extent any acquisition orimprovement of capital assets during such period were financed withIndebtedness other than the Obligations, the portion of such expenditures madewith the proceeds of such Indebtedness.

 

**NetCash Proceeds **- with respect to (a) any sale, assignment, transfer or otherdisposition of any Property (an **“AssetDisposition”**) by any Borrower or any of its Subsidiaries, allproceeds in the form of cash or cash equivalents received by such Borrower orSubsidiary from or in respect of such Asset Disposition (including any cashproceeds received as income or other proceeds of any noncash proceeds of suchAsset Disposition and including any insurance payment or condemnation award inrespect of

 

A-21

----

 

anyassets of such Borrower or Subsidiary), (b) any issuance of Securities orIndebtedness (a **“Capital Issuance”**)by any Borrower or any of its Subsidiaries, all cash proceeds received inrespect thereof and (c) any loss of, damage to or destruction of, or anycondemnation or other taking for public use of, any Property of any Borrower orany of its Subsidiaries (an **“InvoluntaryDisposition”**), all cash proceeds received by such Borrower orSubsidiary in respect thereof, and inthe case of the foregoing clauses (a), (b) and (c), net of (i) reasonable andcustomary expenses incurred or reasonably expected to be incurred in connectionwith such Asset Disposition, Capital Issuance or Involuntary Disposition, (ii)any income, franchise, transfer or other tax payable by such Borrower or suchSubsidiary in connection with such Asset Disposition, Capital Issuance orInvoluntary Disposition and (iii) any Indebtedness secured by a Lien on suchproperty or assets and required to be repaid as a result of such AssetDisposition, in each case with respect to the foregoing clauses (i), (ii) and(iii) to the extent, but only to the extent, that the amounts so deducted are,at the time of receipt of such cash or cash equivalents, actually paid to aPerson that is not an Affiliate and are properly attributable to suchtransaction or to the asset that is the subject thereof.

 

**NetOrderly Liquidation Value** - as to Rental EquipmentInventory, the orderly liquidation value (expressed as a percentage of net bookvalue) of such Rental Equipment Inventory as set forth in the most recentinventory appraisal relating thereto delivered to and accepted byAdministrative Agent in accordance with the terms of the Agreement lessliquidation expenses in an amount not less than 12% of such orderly liquidationvalue.

 

**NewMortgages**- as defined in subsection 5.4of the Agreement.

 

**NonrentalEquipment** – Equipment as defined in the UCC andincluding, without limitation, all equipment of any Credit Party used or usefulin the conduct of its business, but excluding any equipment which is rented bysuch Credit Party in the ordinary course of business or is held for rent bysuch Credit Party.

 

**Notes**- the Revolving Notes and the Term Notes.

 

**Obligations**- all Loans, all LC Obligations and all other advances, debts, liabilities,obligations, covenants and duties, together with all interest (including,without limitation, all interest that accrues (or, but for the commencement ofany bankruptcy, insolvency or similar proceeding, would accrue) after thecommencement of any insolvency, bankruptcy or other similar proceeding of anyCredit Party, whether or not a claim for post-filing interest is allowed insuch proceeding), fees and other charges thereon, owing, arising, due orpayable from any Borrower to Administrative Agent, for its own benefit, fromany Borrower to Administrative Agent for the benefit of any Lender, from anyBorrower to any Lender or from any Borrower to Bank or any other Affiliate ofAdministrative Agent, of any kind or nature, present or future, whether or notevidenced by any note, guaranty or other instrument, arising under theAgreement or any of the other Loan Documents, whether direct or indirect(including those acquired by assignment), absolute or contingent, primary orsecondary, due or to become due, now existing or hereafter arising and howeveracquired, including without limitation any

 

A-22

----

 

Product Obligations owing to Administrative Agent, Bank, Wachovia Bankor any Affiliate of Bank, Administrative Agent or Wachovia Bank.

 

**OrganizationalI.D. Number** - with respect to any Person, theorganizational identification number assigned to such Person by the applicablegovernmental unit or agency of the jurisdiction of organization of such Person.

 

**OtherAgreements**– the Fee Letter and any and all otheragreements, instruments and documents (other than the Agreement, the SecurityDocuments and any agreement evidencing any Derivative Obligation), heretofore,now or hereafter executed or delivered in connection with the Agreement or thetransactions contemplated thereby.

 

**OtherTaxes** – as defined in subsection 2.11.2 ofthe Agreement.

 

**OutstandingLC Obligations** – at any time, LC Obligations that havenot yet been reimbursed by Borrowers or funded with a Revolving Credit Loan.

 

**Overadvance**- as defined in subsection 1.1.2 of the Agreement.

 

**PBGC**- the Pension Benefit Guaranty Corporation or any Governmental Authoritysucceeding to the functions thereof.

 

**PensionPlan** - a pension plan (as defined in Section 3(2)of ERISA) subject to Title IV of ERISA which any Borrower or any ERISAAffiliate sponsors, maintains, or to which it makes, is making, or is obligatedto make contributions.

 

**PermittedDiscretion** - the commercially reasonable credit judgment of Administrative Agentdetermined on a basis consistent with its credit procedures for lendingpurposes.

 

**PermittedHolder** – each of the Persons identified on Exhibit9.1 to the Agreement.

 

**PermittedIndebtedness** – any Indebtedness of any kind specifiedas permitted in subsection 8.2.3 of the Agreement.

 

**PermittedLiens** - any Lien of a kind specified as permitted in subsection 8.2.5of the Agreement.

 

**PermittedPurchase Money Indebtedness** - Purchase Money Indebtednessof any Borrower incurred after the date hereof which is secured by a PurchaseMoney Lien and the principal amount of which, when aggregated with theprincipal amount of all other such Indebtedness and Capitalized LeaseObligations of Borrowers and their Subsidiaries at the time outstanding, doesnot exceed $10,000,000.  For the purposesof this definition, the principal amount of any Purchase Money Indebtednessconsisting of capitalized leases (as opposed to operating leases) shall becomputed as a Capitalized Lease Obligation.

 

A-23

----

 

**Person**- an individual, partnership, corporation, limited liability company,association, joint stock company, trust, or unincorporated organization, orother enterprise or entity or a government or agency or political subdivisionthereof.

 

**Plan**– an employee benefit plan (as defined in Section 3(3) of ERISA) which anyBorrower sponsors or maintains or to which any Borrower makes, is making, or isobligated to make contributions and includes any Pension Plan.

 

**PledgeAgreement** – the Pledge Agreement, dated as of theClosing Date, by  Borrowers in favor ofAdministrative Agent, as amended, restated, supplemented or otherwise modifiedfrom time to time, and each other pledge or security agreement entered intofrom time to time by any Borrower in favor of Administrative Agent, for thebenefit of itself and Lenders, by which such Borrower has granted toAdministrative Agent, as security for the Obligations, a Lien upon the equityor debt interests held by such Borrower.

 

**PrimeRate** - the rate of interest announced or quoted byBank from time to time as its prime rate for commercial loans, whether or notsuch rate is the lowest rate charged by Bank to its most preferred borrowers; and,if such prime rate for commercial loans is discontinued by Bank as a standard,a comparable reference rate designated by Bank as a substitute therefor shallbe the Prime Rate.

 

**PriorIndebtedness** - all Indebtedness any other liabilitiesor obligations of any Borrower owing pursuant to that certain Credit Agreementdated February 11, 2004 by and among National Equipment Services, Inc.,the financial institutions party thereof as lenders and Wachovia Bank, NationalAssociation, as agent for such lenders, and those agreements, documents andinstruments related thereto, as all of the same may be amended, restated,supplemented or otherwise modified.

 

**ProductObligations** - every obligation of any Borrower underand in respect of any one or more of the following types of services orfacilities extended to such Borrower by Bank, Administrative Agent, WachoviaBank, any other Lender, or any Affiliate of Bank, Administrative Agent,Wachovia Bank or any other Lender:  (i) creditcards or stored value cards, (ii) cash management or related servicesincluding the automatic clearing house transfer of funds for the account ofsuch Borrower pursuant to agreement or overdraft, (iii) cash management,including controlled disbursement services and (iv) Derivative Obligations.

 

**Projections**– Borrowers’ forecasted Consolidated****basis(including on a line of business basis) balance sheets, profit and lossstatements and cash flow statements.

 

**Property**- any interest in any kind of property or asset, whether real, personal or mixed,or tangible or intangible.

 

**PurchaseMoney Indebtedness** - (i) Indebtedness (other thanthe Obligations) for the payment of all or any part of the purchase price ofany Rental Equipment Inventory, (ii) any Indebtedness (other than theObligations) incurred at the time of or within 10 days prior to or after theacquisition of any fixed assets for the purpose of financing all or

 

A-24

----

 

any part of the purchase price thereof, and (iii) any renewals,extensions or refinancings thereof, but not any increases in the principalamounts thereof outstanding at the time.

 

**PurchaseMoney Lien** - a Lien upon Rental Equipment Inventorywhich secures Purchase Money Indebtedness, but only if such Lien shall at alltimes be confined solely to the Rental Equipment Inventory the purchase priceof which was financed through the incurrence of the Purchase Money Indebtednesssecured by such Lien.

 

**Release-**a release, spill, emission, leaking, pumping,injection, deposit, disposal, discharge, dispersal, leaching or migration of aContaminant into the indoor or outdoor environment or into or out of any realProperty or other Property, including the movement of Contaminants through orin the air, soil, surface water, groundwater or real Property or otherProperty.

 

**RentalEquipment Inventory** - all of each Borrowing Base Party’sInventory consisting of Property which is rented by such Credit Party in theordinary course of business or is held for rent by such Credit Party.

 

**Rentals**- as defined in subsection 8.2.17 of the Agreement.

 

**ReorganizationPlan** – certain of Holdings’ Subsidiaries’ andAffiliates’ Fourth Amended Joint Plan of Reorganization Under Chapter 11 of theUnited States Bankruptcy Code dated January 23, 2004, including, withoutlimitation, all exhibits, supplements, appendices, and schedules thereto.

 

**ReplacementDebt** – as defined in subsection 8.2.6 ofthe Agreement.

 

**Report**– as defined in subsection 11.12 of the Agreement.

 

**ReportableEvent** - any of the events set forth in Section 4043(c)of ERISA, other than events for which the 30-day notice period has been waived.

 

**RequiredMinimum Availability**-initially $20,000,000 (the **“Initial RequiredMinimum Availability”**), provided that the Initial RequiredMinimum Availability shall be increased up to a maximum of $40,000,000 asfollows: (x) for each dollar that the Equipment Acquisition Reserve is reducedin accordance with the terms of the definition thereof, the Initial RequiredMinimum Availability shall be increased by an amount equal to 50% of suchreduction in the Equipment Acquisition Reserve and (y) on the date that theEquipment Acquisition Reserve is reduced to zero, the Initial Required MinimumAvailability as then in effect shall be increased to $40,000,000.

 

**Requirementof Law** - as toany Person, any law (statutory or common), treaty, rule or regulation ordetermination of an arbitrator or of a Governmental Authority, in each caseapplicable to or binding upon the Person or any of its property or to which thePerson or any of its property is subject.

 

**ReservePercentage** - the maximum aggregate reserve requirement(including all basic, supplemental, marginal and other reserves) which isimposed on member banks of

 

A-25

----

 

the Federal Reserve System against **“Euro-currencyLiabilities”** as defined in Regulation D.

 

**ResponsibleOfficer**- the chiefexecutive officer or the president of a Borrower, or any other officer havingsubstantially the same authority and responsibility; or, with respect tocompliance with financial covenants and the preparation of the Borrowing BaseCertificate, the chief financial officer or the treasurer of a Borrower, or anyother Responsible Officer having substantially the same authority and responsibility.

 

**RestrictedInvestment** - any investment made in cash or bydelivery of Property to any Person, whether by acquisition of stock,Indebtedness or other obligation or Security, or by loan, advance or capitalcontribution, or otherwise, or in any Property except the following:

 

(i)                                     investmentsby a Borrower, to the extent existing on the Closing Date, in one or moreSubsidiaries of such Borrower;

 

(ii)                                  Propertyto be used in the ordinary course of business;

 

(iii)                               CurrentAssets arising from the sale of goods and services in the ordinary course ofbusiness of any Borrower or any of its Subsidiaries;

 

(iv)                              investmentsin direct obligations of the United States of America, or any agency thereof orobligations guaranteed by the United States of America; provided thatsuch obligations mature within one year from the date of acquisition thereof;

 

(v)                                 investmentsin certificates of deposit maturing within one year from the date ofacquisition and fully insured by the Federal Deposit Insurance Corporation;

 

(vi)                              investmentsin commercial paper given the highest rating by a national credit rating agencyand maturing not more than 180 days from the date of creation thereof;

 

(vii)                           investmentsin money market, mutual or similar funds having assets in excess of $100,000,000and the investments of which are limited to investment grade securities;

 

(viii)                        intercompanyloans permitted under subsection 8.2.2(v) of the Agreement;

 

(ix)                                investmentsexisting on the date hereof and listed on Exhibit 8.2.12 to theAgreement;

 

(x)                                   investmentsconsisting of Product Obligations that are Derivative Obligations, entered intoin the ordinary course of business and not for speculative purposes; and

 

(xi)                                investmentsotherwise expressly permitted pursuant to subsection 8.2.2 of the Agreement.

 

A-26

----

 

**RevolvingCredit Loan** - any Loan made by Administrative Agent orany Lender (including charges made to the Loan Account in accordance with theterms of the Agreement) pursuant to the Agreement other than a Term Loan.

 

**RevolvingCredit Maximum Amount** - $100,000,000, as such amountmay be reduced from time to time pursuant to the terms of the Agreement.

 

**RevolvingLoan Commitment** - with respect to any Lender, theamount of such Lender’s Revolving Loan Commitment pursuant to subsection 1.1.1of the Agreement, as set forth opposite such Lender’s name on Schedule 1.0to the Agreement or any Assignment and Assumption Agreement executed by suchLender, as such amount may be terminated or reduced from time to time inaccordance with the terms of the Agreement.

 

**RevolvingLoan Percentage** - with respect to each Lender, thepercentage equal to the quotient of such Lender’s Revolving Loan Commitment dividedby the aggregate of all Revolving Loan Commitments.

 

**RevolvingNotes** - the Secured Promissory Notes to be executed byBorrowers on or about the Closing Date in favor of each Lender to evidence theRevolving Credit Loans, which shall be in the form of Exhibit 1.1Ato the Agreement, together with any replacement or successor notes therefor.

 

**Schedule ofAccounts** – as defined in subsection 6.2.1of the Agreement.

 

**SecondLien Debt**– any Indebtedness under any Credit Facilityof any Borrower or any of its Subsidiaries pursuant to which the related SecondLien Debt Agent has become a party to the Intercreditor Agreement on behalf ofthe lenders under such Credit Facility in which it has agreed on behalf of suchlenders and on its own behalf to be subject to such Intercreditor Agreement.

 

**SecondLien Debt Agent**- at any time in respect of any CreditFacility, the Person serving at such time as the “Agent,” “AdministrativeAgent,” “Collateral Agent,”  “CollateralTrustee” or “Trustee” under such Credit Facility or any other representative ina similar capacity then most recently designated in accordance with theapplicable provisions of the Credit Facility, together with its successors insuch capacity.

 

**SecondLien Debt Documents**– any and all agreements,instruments and other documents pursuant to which the Second Lien Debt has beenor will be issued or otherwise setting forth the terms of the Second Lien Debt,including the Second Lien Security Documents, any guaranty agreements, bankproduct agreements or hedging agreements related thereto, all ancillary agreementsas to which the Second Lien Agent or any lender is a party or a beneficiary andall other agreements, instruments, documents and certificates executed inconnection with any of the foregoing, in each case as such agreement,instrument or other document may be amended, restated, supplemented, refunded,replaced or otherwise modified from time to time in accordance with the termsthereof, but only to the extent permitted under the terms of the LoanDocuments.

 

A-27

----

 

**SecondLien Debt Loan Agreement** – that certain loan andsecurity agreement, dated as of the date hereof, as amended, restated,supplemented, refunded, replaced or otherwise modified from time to time to theextent permitted under the terms of the Loan Documents, by and among (i) NESRentals Holdings, Inc., as borrower, (ii) certain subsidiaries of NES RentalsHoldings, Inc., as guarantors, (iii) the financial institutions party theretofrom time to time as lenders, (iv) Bear, Stearns & Co. Inc. as syndicationagent and (v) Bank of America, N.A. as administrative agent.

 

**SecondLien Debt Payment** – as defined in subsection 8.2.6(iii)of the Agreement.

 

**SecondLien Debt Security Documents**- all securityagreements, pledge agreements, collateral assignments, mortgages, collateralagency agreements, control agreements, deeds of trust or other grants ortransfers for security executed and delivered by any Borrower or any Subsidiaryof any Borrower or any guarantor of the Second Lien Debt creating (or purportingto create) a Lien upon any assets or properties of such Person in favor of theSecond Lien Debt Agent or the Administrative Agent, as applicable, in eachcase, as amended, modified, renewed, restated or replaced, in whole or in part,from time to time, in accordance with its terms, but only to the extentpermitted under the terms of the Loan Documents.

 

**Security**- all shares of stock, partnership interests, membership interests, membershipunits or other ownership interests in any other Person and all warrants,options or other rights to acquire the same and, for purposes only of Sections5 and 6 and the Security Documents, shall include any other “Security” (asdefined in the UCC).

 

**SecurityDocuments**– the Intercreditor Agreement, the PledgeAgreement, the Mortgages and all other instruments and agreements now or at anytime hereafter securing or guaranteeing the whole or any part of theObligations.

 

**SerializedRental Equipment Inventory** - Rental EquipmentInventory marked with and identifiable by serial number.

 

**Solvent**- as to any Person, that such Person (i) owns Property whose fair saleablevalue is greater than the amount required to pay all of such Person’sIndebtedness (including contingent debts), (ii) is able to pay all of itsIndebtedness as such Indebtedness matures and (iii) has capital sufficientto carry on its business and transactions and all business and transactions inwhich it is about to engage.

 

**Studio**– the business of the Borrower of renting lift equipment to television ormotion picture studios currently conducted by Rebel Studio Rentals, Inc.

 

**SubordinatedDebt** - Indebtedness of any Borrower or any Subsidiaryof any Borrower that is subordinated to the Obligations in a mannersatisfactory to Administrative Agent, and contains terms, including withoutlimitation, payment terms, satisfactory to Administrative Agent.

 

A-28

----

 

**Subsidiary**- any Person of which another Person owns, directly or indirectly through oneor more intermediaries, more than 50% of the Voting Stock at the time ofdetermination.

 

**SwinglineLoans** - as defined in subsection 1.1.4 ofthe Agreement.

 

**TaxLiabilities** – as defined in subsection 2.11of the Agreement.

 

**Term**- as defined in subsection 4.1 of the Agreement.

 

**TermLoan** - the Loan described in subsection 1.3.1of the Agreement.

 

**TermLoan Commitment** - with respect to any Lender, theamount of such Lender’s Term Loan Commitment pursuant to subsection 1.3.1of the Agreement, as set forth opposite such Lender’s name on Exhibit 1.0to the Agreement or any Assignment and Assumption Agreement executed by suchLender, minus all Term Loan payments paid to such Lender.

 

**TermLoan Notes** - the Secured Promissory Notes to beexecuted by Borrowers on or about the Closing Date in favor of each applicableLender to evidence its Term Loan, which shall be in the form of Exhibit 1.1Bto the Agreement, together with any replacement or successor notes therefor.

 

**TermLoan Percentage** - with respect to each Lender, thepercentage equal to the quotient of such Lender’s Term Loan Commitment dividedby the aggregate of all Term Loan Commitments.

 

**TermLoan Reserve** - means $200,000,000; provided, upon written notice from Borrowersto Administrative Agent, the Term Loan Reserve may be reduced to the thenoutstanding principal balance of the Term Loan.

 

**TotalCredit Facility** - $300,000,000, as reduced from timeto time pursuant to the terms of the Agreement.

 

**TotalFunded Senior Leverage****Ratio** – as defined in Exhibit 8.3 to the Agreement.

 

**Typeof Organization** - with respect to any Person, the kindor type of entity by which such Person is organized, such as a corporation orlimited liability company.

 

**UCC**- the Uniform Commercial Code as in effect in the State of New York on the dateof the Agreement, as it may be amended or otherwise modified.

 

**UnfundedPension Liability** - the excess of a Pension Plan’sbenefit liabilities under Section 4001(a)(16) of ERISA, over the currentvalue of that Pension Plan’s assets, determined in accordance with theassumptions used for funding the Pension Plan pursuant to Section 412 ofthe Code for the applicable plan year.

 

A-29

----

 

**UnusedLine Fee** - as defined in subsection 2.5 ofthe Agreement.

 

**USAPatriot Act** - the Uniting and Strengthening America byProviding Appropriate Tools Required to Intercept and Obstruct Terrorism (USAPATRIOT) Act of 2001, as in effect from time to time

 

**VotingStock** - Securities of any class or classes of acorporation, limited partnership or limited liability company or any otherentity the holders of which are ordinarily, in the absence of contingencies,entitled to vote with respect to the election of corporate directors (orPersons performing similar functions).

 

**WachoviaBank** – Wachovia Bank, National Association, in itsindividual capacity.

 

**OtherTerms**- All other termscontained in the Agreement shall have, when the context so indicates, themeanings provided by the UCC to the extent the same are used or definedtherein.

 

**CertainMatters of Construction**-The terms “**herein**”, “**hereof**” and “**hereunder**” and other words of similar import refer to theAgreement as a whole and not to any particular section, paragraph orsubdivision.  Any pronoun used shall bedeemed to cover all genders.  The section titles,table of contents and list of exhibits appear as a matter of convenience onlyand shall not affect the interpretation of the Agreement.  All references to statutes and relatedregulations shall include any amendments of same and any successor statutes andregulations.  All references to any ofthe Loan Documents shall include any and all modifications thereto and any andall extensions or renewals thereof.

 

## **Accounting Terms andDeterminations**

 

Unlessotherwise defined or specified herein, all accounting terms shall be construedherein and all accounting determinations for purposes of determining compliancewith subsection 8.3 of the Agreement and otherwise to be made underthe Agreement shall be made in accordance with GAAP applied on a basisconsistent in all material respects with the financial statements deliveredpursuant to subsection 8.1.3 of the Agreement (the **“Financials”**).  All financial statements required to bedelivered hereunder from and after the Closing Date and all financial recordsshall be maintained in accordance with GAAP and to the extent required orpermitted under GAAP, shall give effect to changes from time to time requiredas a result of the application of fresh start accounting.  If GAAP shall change from the basis used inpreparing the Financials (or the application of fresh start accounting shallrequire such a change), the certificates required to be delivered pursuant to subsection 8.1.3demonstrating compliance with the covenants contained herein shall include calculationssetting forth the adjustments necessary to demonstrate how Borrowers are incompliance with the financial covenants based upon GAAP as in effect on theClosing Date.  If Borrowers shall changeits method of inventory accounting, all calculations necessary to determinecompliance with the

 

A-30

----

 

covenants contained herein shall be made as if such method of inventoryaccounting had not been so changed.

 

Borrowersshall deliver to Administrative Agent and each Lender at the same time as thedelivery of any annual financial statements given in accordance with theprovisions of subsection 8.1.3 of the Agreement, (i) a descriptionin reasonable detail of any material change in the application of accountingprinciples employed in the preparation of such financial statements from thoseapplied in the most recently preceding annual financial statements and (ii) areasonable estimate of the effect on the financial statements on account ofsuch changes in application.

 

A-31

----

 

*****TheRegistrant will deliver exhibits to this agreement upon the request of theSecurities and Exchange Commission*****

 

 

----