**Exhibit 4.6(ii)**

 

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**LOAN AND SECURITY AGREEMENT**

 

**Dated as of August 17, 2004**

 

**$275,000,000**

 

**by and among**

 

**NES Rentals Holdings, Inc.,**

**as Borrower**

 

**The Subsidiaries of NES Rentals Holdings,Inc. From Time to Time Party Hereto,as Subsidiary Guarantors**

 

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

 

**Bear, Stearns & Co. Inc.,as Syndication Agent**

 

**and**

 

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

 

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**Banc of America Securities LLC and Bear,Stearns & Co. Inc.,as Joint Lead Arrangers and Joint Book Managers**

 

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**TABLE OF CONTENTS**

 
| SECTION 1.   CREDIT FACILITY             |   |                                            |
|---------------------------------------------------------|--------|-------------------------------------------------|
|                                                    | 1.1    | Loans                                           |   |
|                                                    |   |                                            |
| SECTION 2.   INTEREST, FEES  AND CHARGES |   |                                            |
|                                                    | 2.1    | Interest.                                       |   |
|                                                    | 2.2    | Computation of Interest and Fees                |   |
|                                                    | 2.3    | Fee  Letter                                     |   |
|                                                    | 2.4    | [Intentionally Omitted].                        |   |
|                                                    | 2.5    | [Intentionally Omitted]                         |   |
|                                                    | 2.6    | [Intentionally Omitted]                         |   |
|                                                    | 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/LIBOR Option                |   |
|                                                    | 3.2    | Payments                                        |   |
|                                                    | 3.3    | Mandatory and Optional Prepayments              |   |
|                                                    | 3.4    | Application of Payments and Collections         |   |
|                                                    | 3.5    | All Term Loans to Constitute One Obligation     |   |
|                                                    | 3.6    | Loan  Account                                   |   |
|                                                    | 3.7    | [Intentionally Omitted]                         |   |
|                                                    | 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                                     |   |
|                                                    |   |                                            |
| 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                              |   |
|                                                         |        |                                                 |  |  |

 

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| SECTION 7.   REPRESENTATIONS  AND WARRANTIES      |   |                                                                              |
|------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|
|                                                             | 7.1    | General Representations and Warranties                                            |   |
|                                                             | 7.1.1  | Qualification                                                                     |   |
|                                                             | 7.1.2  | Power and Authority                                                               |   |
|                                                             | 7.1.3  | Legally Enforceable Agreement                                                     |   |
|                                                             | 7.1.4  | Capital Structure                                                                 |   |
|                                                             | 7.1.5  | Names; Organization                                                               |   |
|                                                             | 7.1.6  | Business Locations; Administrative Agent  for Process                             |   |
|                                                             | 7.1.7  | Title to Properties; Priority of Liens.                                           |   |
|                                                             | 7.1.8  | Accounts.                                                                         |   |
|                                                             | 7.1.9  | Nonrental Equipment and Rental Equipment  Inventory                               |   |
|                                                             | 7.1.10 | Financial Statements; Fiscal Year                                                 |   |
|                                                             | 7.1.11 | Full Disclosure                                                                   |   |
|                                                             | 7.1.12 | Solvent Financial Condition                                                       |   |
|                                                             | 7.1.13 | Surety Obligations                                                                |   |
|                                                             | 7.1.14 | Taxes                                                                             |   |
|                                                             | 7.1.15 | Brokers                                                                           |   |
|                                                             | 7.1.16 | Patents, Trademarks, Copyrights and  Licenses                                     |   |
|                                                             | 7.1.17 | Governmental Consents                                                             |   |
|                                                             | 7.1.18 | Compliance with Laws                                                              |   |
|                                                             | 7.1.19 | Restrictions                                                                      |   |
|                                                             | 7.1.20 | Litigation                                                                        |   |
|                                                             | 7.1.21 | No Defaults                                                                       |   |
|                                                             | 7.1.22 | Distributions                                                                     |   |
|                                                             | 7.1.23 | ERISA Compliance                                                                  |   |
|                                                             | 7.1.24 | Trade Relations                                                                   |   |
|                                                             | 7.1.25 | Labor Relations                                                                   |   |
|                                                             | 7.1.26 | Related Businesses                                                                |   |
|                                                             | 7.1.27 | Margin Regulations                                                                |   |
|                                                             | 7.1.28 | Regulated Entities                                                                |   |
|                                                             | 7.1.29 | Environmental Laws                                                                |   |
|                                                             | 7.1.30 | Motor Vehicles                                                                    |   |
|                                                             | 7.1.31 | Anti-Terrorism Laws                                                               |   |
|                                                             | 7.1.32 | Deposit and Brokerage Accounts                                                    |   |
|                                                             | 7.2    | [Intentionally Omitted]                                                           |   |
|                                                             | 7.3    | Survival of Representations and Warranties                                        |   |
|                                                             |   |                                                                              |
| SECTION 8.   COVENANTS AND  CONTINUING AGREEMENTS |   |
|                                                             | 8.1    | Affirmative Covenants                                                             |   |
|                                                             | 8.1.1  | Visits and Inspections; Appraisals of  Rental Equipment Inventory; Lender Meeting |   |
|                                                             | 8.1.2  | Notices                                                                           |   |
|                                                             | 8.1.3  | Financial Statements and Financial  Information.                                  |   |
|                                                             | 8.1.4  | Collateral Coverage Certificates                                                  |   |
|                                                             | 8.1.5  | Landlord,  Processor and Storage Agreements                                       |   |
|                                                             | 8.1.6  | Projections                                                                       |   |
|                                                             | 8.1.7  | Additional Credit Parties                                                         |   |
|                                                                  |        |                                                                                   |  |  |  |  |  |

 

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|                                                                            | 8.1.8  | ERISA                                                                             |   |
|---------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|
|                                                                            | 8.1.9  | Environmental Laws                                                                |   |
|                                                                            | 8.2    | Negative Covenants                                                                |   |
|                                                                            | 8.2.1  | Mergers;  Consolidations; Acquisitions; Structural Changes                        |   |
|                                                                            | 8.2.2  | Loans                                                                             |   |
|                                                                            | 8.2.4  | Affiliate Transactions                                                            |   |
|                                                                            | 8.2.5  | Limitation on Liens                                                               |   |
|                                                                            | 8.2.6  | Payments and Amendments of Certain Debt                                           |   |
|                                                                            | 8.2.7  | Distributions                                                                     |   |
|                                                                            | 8.2.8  | Disposition of Assets                                                             |   |
|                                                                            | 8.2.9  | Issuance of Securities                                                            |   |
|                                                                            | 8.2.10 | Bill-and-Hold Sales, Etc.                                                         |   |
|                                                                            | 8.2.11 | Restricted Investment                                                             |   |
|                                                                            | 8.2.12 | Subsidiaries and Joint Ventures                                                   |   |
|                                                                            | 8.2.13 | Tax Consolidation                                                                 |   |
|                                                                            | 8.2.14 | Organizational Documents                                                          |   |
|                                                                            | 8.2.15 | Fiscal Year End                                                                   |   |
|                                                                            | 8.2.16 | Negative Pledges                                                                  |   |
|                                                                            | 8.2.17 | Leases                                                                            |   |
|                                                                            | 8.2.18 | Anti-Terrorism Laws                                                               |   |
|                                                                            | 8.2.19 | Change in Nature of Business                                                      |   |
|                                                                            | 8.2.20 | Location of Personal Property                                                     |   |
|                                                                            | 8.3    | Specific Financial Covenants.                                                     |   |
|                                                                            |   |                                                                              |
| SECTION 9.    CONDITIONS PRECEDENT                               |   |                                                                              |
|                                                                            | 9.1    | Conditions to Term Loans                                                          |   |
|                                                                            |   |                                                                              |
| 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 Assign Commitments of  Non-Consenting Lenders                            |   |
|                                                                            | 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                             |   |
|                                                                                 |        |                                                                                   |        |  |  |  |  |

 

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|                                       | 11.13  | Syndication Agent                                                          |   |
|--------------------------------------------|--------|----------------------------------------------------------------------------|--------|
|                                       | 11.14  | No Reliance on Administrative Agent’s Customer Identification Program |   |
|                                       | 11.15  | USA Patriot Act                                                            |   |
|                                       | 11.16  | Withholding                                                                |   |
|                                       |   |                                                                       |
| SECTION 12.   GUARANTY      |   |                                                                       |
|                                       | 12.1   | Guaranty                                                                   |   |
|                                       | 12.2   | Rights of Reimbursement, Contribution and Subrogation                      |   |
|                                       | 12.3   | Amendments,  etc. with respect to the Obligations                          |   |
|                                       | 12.4   | Guaranty Absolute and Unconditional                                        |   |
|                                       | 12.5   | Payments                                                                   |   |
|                                       |   |                                                                       |
| SECTION 13.   MISCELLANEOUS |   |                                                                       |
|                                       | 13.1   | Power of Attorney                                                          |   |
|                                       | 13.2   | Indemnity                                                                  |   |
|                                       | 13.3   | Severability                                                               |   |
|                                       | 13.4   | Successors and Assigns                                                     |   |
|                                       | 13.5   | Cumulative Effect; Conflict of Terms                                       |   |
|                                       | 13.6   | Execution in Counterparts                                                  |   |
|                                       | 13.7   | Notice                                                                     |   |
|                                       | 13.8   | Consent                                                                    |   |
|                                       | 13.9   | Credit Inquiries                                                           |   |
|                                       | 13.10  | Time of Essence                                                            |   |
|                                       | 13.11  | Entire Agreement                                                           |   |
|                                       | 13.12  | Interpretation                                                             |   |
|                                       | 13.13  | Confidentiality                                                            |   |
|                                       | 13.14  | GOVERNING LAW; CONSENT TO FORUM                                            |   |
|                                       | 13.15  | WAIVERS BY CREDIT PARTIES                                                  |   |
|                                       | 13.16  | Advertisement                                                              |   |
|                                       | 13.17  | References to Intercreditor Agreement                                      |   |
|                                       | 13.18  | Recovery                                                                   |   |
|                                            |        |                                                                            |        |  |

 

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**LOAN AND SECURITY AGREEMENT**

 

**THIS LOAN AND SECURITY AGREEMENT**ismade as of this 17th day of August, 2004 by and among **BANK OF AMERICA, N.A.**(**“BofA”**), a national banking association, asadministrative agent (**“Administrative Agent”**)for any financial institution or other entity which is or becomes a partyhereto (each such financial institution or other entity is referred tohereinafter individually as a **“Lender”**andcollectively as the **“Lenders”**),the **LENDERS**party hereto from timeto time,**BEAR, STEARNS & CO. INC.**,as syndication agent (**“Syndication Agent”**),**NES RENTALS HOLDINGS, INC.**, aDelaware corporation (**“Borrower”**),and each subsidiary of Borrower which is or becomes a party hereto (eachindividually a **“Subsidiary Guarantor”**and collectively **“Subsidiary Guarantors”**).  Capitalized terms used in this Agreement havethe meanings assigned to them in Appendix A, General Definitions.  As more fully set forth in Appendix A,accounting terms not otherwise specifically defined herein shall be construedin accordance with GAAP consistently applied.

 

**SECTION 1.  CREDIT FACILITY**

 

Subject to the terms and conditions of, and in reliance upon therepresentations and warranties made in, this Agreement and the other LoanDocuments, Lenders agree to make a Total Credit Facility of up to $275,000,000available upon Borrower’s request therefor, as follows:

 

1.1              Loans.

 

1.1.1                        Term Loan. Each Lender, severally and not jointly, agrees to make a term loan(collectively, the **“Term Loans”**)to Borrower on the Closing Date, in the aggregate principal amount of suchLender’s Term Loan Commitment, which shall be repayable in accordance with theterms hereof and of the Term Notes and shall be secured by all of theCollateral.

 

1.1.2                        Use of Proceeds. The proceeds of Term Loans shall be used solely for (i) the satisfactionof the Prior Indebtedness and fees and expenses related to such satisfactionand (ii) for Borrower’s and the Subsidiary Guarantors’ general corporatepurposes, including, without limitation, operating capital needs in a mannerconsistent with the provisions of this Agreement and all applicable laws.

 

**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 Portionsoutstanding at the end of each day at a fluctuating rate per annum equal to theApplicable Margin then in effect plus the Base Rate.  Said rate of interest shall increase ordecrease by an amount equal to any increase or decrease in the Base Rate,effective as of the opening of business on the day that any such change in theBase Rate occurs.  If Borrower exercisesthe LIBOR Option as provided in subsection 3.1, interest shallaccrue on the principal amount of the LIBOR Portions outstanding at the

 

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end of each day at arate per annum equal to the Applicable Margin then in effect plus theLIBOR applicable to each LIBOR Portion for the corresponding Interest Period.

 

2.1.2                        Default Rate of Interest. If so directed by the Majority Lenders, upon and after the occurrence ofan Event of Default, and during the continuation thereof upon notice toBorrower, all of the Obligations shall bear interest at a rate per annum equalto 2.0% plus the interest rate otherwise applicable thereto (the **“Default Rate”**); provided, that (i)the Default Rate of interest shall apply to all of the Obligationsautomatically without notice to Borrower or any other Person and withoutfurther action by any Person upon the occurrence of an Event of Default asdescribed in subsection 10.1.6 and (ii) in the event no applicableinterest rate is otherwise expressly stated herein with respect to any suchObligation, the Default Rate in respect thereof shall be the sum of the BaseRate, plus the Applicable Margin then in effect for Base Rate Portions, plus2.0%.

 

2.1.3                        Maximum Interest. In no event whatsoever shall the aggregate of all amounts deemedinterest hereunder or under the Term Notes and charged or collected pursuant tothe terms of this Agreement or pursuant to the Term Notes exceed the highestrate permissible under any law which a court of competent jurisdiction shall,in a final determination, deem applicable hereto (the **“Maximum Rate”**).  If any provisions of this Agreement or theTerm Notes are in contravention of any such law, such provisions shall bedeemed amended to conform thereto.  If atany time, the amount of interest paid hereunder is limited by the Maximum Rate,and the amount at which interest accrues hereunder is subsequently below theMaximum Rate, the rate at which interest accrues hereunder shall remain at theMaximum Rate, until such time as the aggregate interest paid hereunder equalsthe amount of interest that would have been paid had the Maximum Rate notapplied.

 

2.2              Computation of Interest and Fees. Interest hereunder shall be calculated daily and shall be computed onthe actual number of days elapsed over a year of 360 days, provided thatinterest on Base Rate Portions bearing interest based on the Prime Rate shallbe computed on the actual number of days elapsed over a year of 365 or 366days, as applicable.

 

2.3              FeeLetter. Borrower shall pay to Administrative Agent certain fees and otheramounts in accordance with the terms of the fee letter between Borrower andAdministrative Agent, dated August 17, 2004, as amended, restated orotherwise modified from time to time (the **“FeeLetter”**).

 

2.4              [Intentionally Omitted].

 

2.5              [Intentionally Omitted].

 

2.6              [Intentionally Omitted].

 

2.7              Reimbursement of Expenses.  If, at anytime or times regardless of whether or not an Event of Default then exists,(i) Administrative Agent or the Joint Lead Arrangers incur reasonablelegal or accounting expenses or any other reasonable costs or out-of-

 

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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 incurs reasonable legal or accounting expenses or anyother reasonable costs or out-of-pocket expenses in connection with any (1)amendment of or modification of this Agreement or any of the other LoanDocuments, the administration of this Agreement or any of the other LoanDocuments and the transactions contemplated hereby and thereby; or (2) anyattempt to inspect or verify the Collateral; or (iii) Administrative Agentincurs legal or accounting expenses or other costs or out-of-pocket expenses inconnection with (1) any litigation, contest, dispute, suit, proceeding oraction (whether instituted by Administrative Agent, any Lender, Borrower, anyof its Subsidiaries or any other Person) relating to the Collateral, thisAgreement or any of the other Loan Documents or any of Borrower’s or any of itsSubsidiaries’ affairs; (2) any attempt to enforce any rights of AdministrativeAgent or any Lender against Borrower, any of its Subsidiaries 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 the Collateral;then all such legal and accounting expenses and other costs and out-of-pocketexpenses of Administrative Agent or the Joint Lead Arrangers (as applicable)shall be charged to Borrower; provided, that Borrower shall not beresponsible for any such legal and accounting and other costs and out-of-pocketexpenses (x) to the extent incurred because of the gross negligence or willfulmisconduct of Administrative Agent or such Joint Lead Arrangers (as applicable)as determined by a final non-appealable (or the time to appeal for which hasrun) judgment of a court of competent jurisdiction or (y) to the extent suchcosts and expenses result from a claim brought by Borrower againstAdministrative Agent or such Joint Lead Arranger (as applicable) for breach inbad faith of such Person’s obligations hereunder, if Borrower has obtained afinal non-appealable (or the time to appeal for which has run) judgment in itsfavor on such claim as determined by a court of competent jurisdiction.  All amounts chargeable to Borrower under thissubsection 2.7 shall be Obligations secured by all of theCollateral, shall be payable on demand to Administrative Agent or theapplicable Joint Lead Arranger, as the case may be, and shall bear interestfrom the date such demand is made until paid in full at the rate applicable toBase Rate Portions from time to time. Borrower shall also reimburse Administrative Agent for expenses incurredby Administrative Agent in its administration of the Collateral to the extentand in the manner provided in subsections 2.8 and 2.9hereof.

 

2.8              Bank Charges.  Borrowershall pay to Administrative Agent, for the benefit of itself or the applicableLenders, on demand, any and all reasonable fees, costs or expenses whichAdministrative Agent or any Lender pays to a bank or other similar institutionarising out of or in connection with (i) the forwarding to Borrower, anyof its Subsidiaries or any other Person on behalf of Borrower, byAdministrative Agent or any Lender, of proceeds of Term Loans made to Borrowerpursuant to this Agreement and (ii) the depositing for collection byAdministrative Agent or any Lender of any check or

 

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item ofpayment received or delivered to Administrative Agent or any Lender on accountof the Obligations.

 

2.9              Collateral Protection Expenses; Appraisals. All reasonable out-of-pocket expenses incurred in protecting, storing,warehousing, insuring, handling, maintaining and shipping the Collateral, andany and all excise, property, sales, and use taxes imposed by any state,federal, or local authority on any of the Collateral or in respect of the salethereof shall be borne and paid by Borrower. All such expenses shall be payable upon demand, and if Borrower fails topromptly pay any portion thereof when due, Administrative Agent may, at itsoption, but shall not be required to, pay the same and charge Borrowertherefor.  Additionally, if a Default orEvent of Default shall have occurred and be continuing, Borrower shall bear thecost and expense of appraisals from appraisers engaged by Administrative Agentfrom time to time (who may be personnel of Administrative Agent), stating thethen current fair market value of all or any portion of the real estate orpersonal property of any Credit Party or any of its Subsidiaries, includingwithout limitation the Inventory of any Credit Party and its Subsidiaries.

 

2.10        Payment of Charges.  All amountschargeable to Borrower under this Agreement shall be Obligations secured by allof the Collateral, shall be, unless specifically otherwise provided, payable ondemand and shall bear interest from the date demand was made or such amount isdue, as applicable, until paid in full at the Default Rate.

 

2.11        No Deductions.

 

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 Borrower or any Subsidiary Guarantor shallbe required by law to deduct any such Tax Liabilities from or in respect of anysum payable or reimbursable hereunder or under any other Loan Document toAdministrative Agent or any Lender, then (x) the sum so payable or reimbursableshall be increased as may be necessary so that, after all required deductionsare made, Administrative Agent or such Lender receives an amount equal to thesum it would have received had no such deductions been made, (y) Borrower orsuch Subsidiary Guarantor shall make such deductions and pay the full amount deductedto the relevant taxing authority or other authority in accordance withapplicable law and (z) Borrower or such Subsidiary Guarantor shall deliver toAdministrative Agent evidence of such payment.

 

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2.11.2                  In addition Borrower agrees to payany 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 all liabilitieswith respect thereto, which arise from any payment made under any Loan Documentor from the execution, delivery or registration of, or otherwise with respectto, any Loan Document (collectively, **“OtherTaxes”**).

 

2.11.3                  Borrower shall indemnifyAdministrative Agent and each Lender for the amount of Tax Liabilities andOther Taxes (including any Tax Liabilities or Other Taxes imposed by anyjurisdiction on amounts payable under this subsection 2.11) paid byAdministrative Agent or such Lender (as the case may be) and any liability(including for penalties, interest and expenses) arising therefrom or withrespect 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 Borrower (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 Borrower new forms upon the obsolescence ofany 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 the contrarycontained in subsection 2.11.1, (i) Borrower shall be entitled, tothe extent it is required to do so by law, to deduct or withhold TaxLiabilities imposed by the United States (or any political subdivision ortaxing authority thereof or therein) from interest, fees or other amounts payable

 

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hereunder for theaccount of any Lender that is organized under the laws of any jurisdictionother than the United States or any state or political subdivision thereof tothe extent that such Lender has not provided to Borrower IRS forms thatestablish entitlement to a complete exemption from, or a reduced rate of,United States federal withholding tax (and Borrower hereby agrees to giveAdministrative Agent prompt written notice in the event that it is required toso deduct or withhold) and (ii) Borrower 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, Borrower shall furnish toAdministrative 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 Borrower hereunder, the agreements and obligations ofBorrower 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 Borrower has paid additional amounts to suchLender pursuant to subsection 2.11.1, such Lender shall promptlynotify Administrative Agent and pay such refund over to Borrower (but only tothe extent of additional amounts paid by Borrower under subsection 2.11.1with respect to Tax Liabilities giving rise to such refund), on an after-taxbasis, net of all expenses incurred by such Lender in connection with obtainingsuch refund and without interest; provided, that Borrower, upon the requestof such Lender, shall repay to such Lender the amount previously paid over toBorrower (plus any penalties, interest or other charges imposed by the relevanttaxing authority) in the event that such Lender is required to repay suchrefund to such taxing authority.  Nothingin this subsection 2.11.8 shall interfere with the right of anyLender to arrange its tax affairs in whatever manner it deems fit or requireany Lender to disclose to Borrower, any of its Subsidiaries or any other Personany information or any computations relating to its tax affairs.

 

2.11.9                  (a) If Administrative Agent or anyLender claims reimbursement or compensation under this subsection 2.11,Administrative Agent shall determine the amount thereof and shall deliver toBorrower (with, if applicable, a copy to the affected Lender) a statementsetting forth in reasonable detail the amount payable to Administrative Agentor the affected Lender, and such statement shall be conclusive and binding onBorrower in the absence of manifest error. Failure or delay on the part of

 

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Administrative Agentor 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 Borrower 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 of its intention to claim compensation underthis subsection; providedfurther that, if the circumstancesgiving rise to such claim are retroactive, then the 180-day period referred toabove shall be extended to include the period of retroactive effect thereof.

 

(b)                                 If a Lender claims anycompensation pursuant to this subsection 2.11, then (a) such Lendershall use reasonable efforts (consistent with legal and regulatoryrestrictions) to designate a different lending office or to file any statementor document reasonably requested by Borrower if the making of such designationor filing would avoid the need for, or reduce the amount of, any such amountsand would not, in the sole discretion of such Lender, be otherwisedisadvantageous to such Lender and (b) at Borrower’s request, AdministrativeAgent or an Eligible Assignee reasonably acceptable to Administrative Agent andBorrower 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 Term Loans hereunder.  Suchsale and assignment shall be consummated promptly after Administrative Agenthas arranged for a purchase by Administrative Agent or an Eligible Assigneepursuant to an Assignment and Acceptance Agreement, at a price equal to theoutstanding principal balance of such Lender’s Term Loan, plus accrued interestand fees, without premium or discount.

 

**SECTION 3.  LOANADMINISTRATION**

 

3.1              Mannerof Borrowing/LIBOR Option. Borrowings under the credit facility established pursuant to Section 1hereof shall be as follows:

 

3.1.1                        Term Loan Request. Borrower shall give Administrative Agent notice of its intention toborrow the Term Loans (such notice to be in the form of Exhibit 3.1.1hereto), in which notice Borrower shall specify the amount of the proposedborrowing of Term Loans and the proposed borrowing date (which shall be theClosing Date), no later than 11:00 a.m. (New York City time) one Business Dayprior to the Closing Date.  Allborrowings made on the Closing Date and during the period ending five (5)Business Days thereafter must be made as Base Rate Portions.

 

3.1.2                        Disbursement. The proceeds of Term Loans requested under subsection 3.1.1shall be disbursed by Administrative Agent in lawful money of the United Statesof America in immediately available funds by wire transfer to such bank accountas may be agreed upon by Borrower and Administrative Agent.

 

3.1.3                        [Intentionally Omitted].

 

3.1.4                        [Intentionally Omitted].

 

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3.1.5                        [Intentionally Omitted].

 

3.1.6                        Electronic Communications. As an accommodation to Borrower, unless a Default or an Event of Defaulthas occurred and is continuing, Administrative Agent may, inAdministrative Agent’s sole discretion, permit electronic transmittal ofinstructions, authorizations, agreements or reports to AdministrativeAgent.  Unless Borrower specificallydirects Administrative Agent in writing not to accept or act upon telephonic orelectronic communications from Borrower, Administrative Agent shall not haveany liability to Borrower or any of its Subsidiaries for any loss or damagesuffered by Borrower or any of its Subsidiaries as a result of AdministrativeAgent’s honoring of any requests, execution of any instructions, authorizationsor agreements or reliance on any reports communicated to it telephonically or electronicallyand purporting to have been sent to Administrative Agent by Borrower, andAdministrative Agent shall not have any duty to verify the origin of any suchcommunication or the authority of the Person sending it.

 

3.1.7                        LIBOR Portions. Each LIBOR Request shall be irrevocable and binding on Borrower.  In no event shall Borrower be permitted tohave outstanding at any one time LIBOR Portions with more than seven (7)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, Borrower may, on any Business Day more than five (5) Business Daysafter the Closing Date, convert any Base Rate Portion into a LIBORPortion.  If Borrower desires to converta Base Rate Portion, it shall give Administrative Agent a LIBOR Request nolater than 11:00 a.m. (New York City time) on the third Business Day prior tothe requested conversion date.  Aftergiving effect to any conversion of Base Rate Portions to LIBOR Portions,Borrower shall not be permitted to have outstanding at any one time LIBORPortions with more than seven (7)****differentInterest 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, Borrower may, on any Business Day, continue any LIBOR Portions intoa subsequent Interest Period of the same or a different permittedduration.  If Borrower desires tocontinue a LIBOR Portion, Borrower shall give Administrative Agent a LIBORRequest no later than 11:00 a.m. (New York City time) on the third Business Dayprior to the requested continuation date. After giving effect to any continuation of LIBOR Portions, Borrowershall not be permitted to have outstanding at any one time LIBOR Portions withmore than seven (7) different Interest Periods. If Borrower shall fail to give timely notice of its election to continueany LIBOR Portion or portion thereof as provided above, or if such continuationshall not be permitted, such LIBOR Portion or portion thereof, unless suchLIBOR Portion shall be repaid, shall automatically be converted into a Base RatePortion at the end of the Interest Period then in effect with respect to suchLIBOR Portion.

 

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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, oradverse or unusual conditions in, or changes in applicable law relating to, theLondon interbank market make it, in the reasonable judgment of AdministrativeAgent, impracticable to fund therein any of the LIBOR Portions, or make theprojected LIBOR unreflective of the actual costs of funds therefor to anyLender, then, on notice thereof by such Lender or Administrative Agent (asapplicable) to Borrower (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 (with a copy to Administrative Agent, if applicable) that suchcircumstances no longer exist and, Borrower shall, if any affected LIBORPortions are then outstanding, promptly upon request from Administrative Agent,convert such affected LIBOR Portions into Base Rate Portions.  Administrative Agent or the relevant Lender(as applicable) will endeavor to give Borrower prompt notice of the cessationof the circumstance giving rise to the suspension of LIBOR availability,provided that the failure to give any such notice shall not result in anyliability of Administrative Agent or any Lender hereunder or in themodification, alteration, impairment, or waiver of the rights of AdministrativeAgent or any Lender hereunder.

 

3.1.11                  Funding by Lenders; Presumption ofAdministrative Agent.  Unless AdministrativeAgent shall have received notice from a Lender prior to the proposed date ofany borrowing that such Lender will not make available to Administrative Agentsuch Lender’s share of such borrowing, Administrative Agent may assume thatsuch Lender has made such share available on such date and may, in relianceupon such assumption, make available to Borrower a corresponding amount.  In such event, if a Lender has not in factmade its share of the applicable borrowing available to Administrative Agent,then the applicable Lender and Borrower severally agree to pay toAdministrative Agent forthwith on demand such corresponding amount inimmediately available funds with interest thereon, for each day from andincluding the date such amount is made available to Borrower to but excludingthe date of payment to Administrative Agent, at (A) in the case of a payment tobe made by such Lender, the greater of the Fed Funds Rate and a rate determinedby the Administrative Agent in accordance with banking industry rules oninterbank compensation and (B) in the case of a payment to be made by Borrower,the interest rate applicable (or that would be applicable) to any Base RatePortion.  If Borrower and such Lendershall pay such interest to Administrative Agent for the same or an overlappingperiod, Administrative Agent shall promptly remit to Borrower the amount ofsuch interest paid by Borrower for such period. If such Lender pays its share of the applicable borrowing toAdministrative Agent, then the amount so paid shall constitute such Lender’sTerm Loan included in such borrowing. Any payment by Borrower shall be without prejudice to any claim Borrowermay have against a Lender that shall have failed to make such payment toAdministrative Agent.

 

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3.2              Payments.

 

3.2.1                        Principal.

 

(i)                                     [Intentionally Omitted].

 

(ii)                                  Term Loan. Principal payable on account of the Term Loan shall be payable byBorrower in twenty-one (21) quarterly installments.  Each of the first twenty (20) installments ofprincipal shall be in an amount equal to $687,500 and shall be payable on thefirst day of each quarter, commencing on September 30, 2004 and ending on June 30, 2009.  The final installment of principal shall bein the amount of $261,250,000 or otherwise in an amount equal to the thenremaining principal balance of the Term Loans, and shall be payable on the lastday of the Term.  Each such installmentshall be payable to Administrative Agent for the account of the applicableLender.  The Term Loans shall be payablein full on the last day of the Term. Payments or prepayments of the Term Loans may not 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 fiscal quarter (for theimmediately preceding fiscal quarter), computed through the last calendar dayof the preceding fiscal quarter, (2) the occurrence of an Event of Default inconsequence of which Administrative Agent or Majority Lenders elect toaccelerate the maturity and payment of the Obligations (or in consequence ofwhich payment of the Obligations is automatically accelerated) or (3)termination of this Agreement pursuant 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 Borrower, as and when provided in Section 2 or Section 3hereof, as applicable, to Administrative Agent or a Lender, as applicable, orto any other Person designated by Administrative Agent or such Lender inwriting.

 

3.2.4                        Other Obligations. The balance of the Obligations requiring the payment of money, if any,shall be payable by Borrower 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.

 

 

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3.2.5                        Prepayment of/Failure to BorrowLIBOR Portions.  Borrower may prepay a LIBOR Portion only uponthree (3) Business Days’ prior written notice to Administrative Agent (whichnotice shall be irrevocable).  In theevent of (i) the payment of any principal of any LIBOR Portion other thanon 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, Borrower shall compensate each Lender for the loss, cost andexpense attributable to such event, as determined by such Lender in a mannerconsistent with its customs and practices. If any Lender claims compensation under this subsection 3.2.5,such Lender shall determine the amount thereof and shall deliver to Borrower,within 30 days of the occurrence of the Breakage Event giving rise to a claimfor compensation, a statement setting forth in reasonable detail the amountpayable to such Lender, and such statement shall be conclusive and binding onBorrower in the absence of manifest error. Amounts payable pursuant to this subsection 3.2.5 shall bedue and payable by Borrower within 10 days of receipt of such statement fromsuch Lender.

 

3.2.6                        Payments by Borrower; Presumptionsby Administrative Agent.  UnlessAdministrative Agent shall have received notice from Borrower prior to the dateon which any payment is due to Administrative Agent for the account of theLenders hereunder that Borrower will not make such payment, AdministrativeAgent may assume that Borrower has made such payment on such date in accordanceherewith and may, in reliance upon such assumption, distribute to the Lendersthe amount due.  In such event, ifBorrower has not in fact made such payment, then each of the Lenders severallyagrees to repay to Administrative Agent forthwith on demand the amount sodistributed to such Lender, in immediately available funds with interestthereon, for each day from and including the date such amount is distributed toit to but excluding the date of payment to Administrative Agent, at the greaterof the Federal Funds Rate and a rate determined by Administrative Agent inaccordance with banking industry rules on interbank compensation.  A notice of Administrative Agent to anyLender with respect to any amount owing under this subsection 3.2.6shall be conclusive, absent manifest error.

 

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 Term Loans and other Obligations), if (a) Borrower or any of itsSubsidiaries sells any of its Property or if any Property of Borrower or any ofits Subsidiaries is lost or destroyed or taken by condemnation, and (b) at thetime that a prepayment of Term Loans or other Obligations would otherwise berequired under this subsection 3.3.1, the Available Liquidity isgreater than or equal to $50,000,000 after giving effect to such prepayment,then Borrower shall, unless otherwise agreed to by the Majority Lenders and, inany event, only to the extent Borrower does not apply such Net Cash Proceeds tothe obligations under the First Lien Debt Documents through the optional ormandatory prepayment of

 

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the principal amountof such obligations (and, if such prepayment is in respect of an amount thatcan, by its terms, be reborrowed, a corresponding permanent reduction ofcommitments) pursuant to the terms thereof, pay to Administrative Agent for theratable benefit of Lenders as and when received by Borrower or any suchSubsidiary as a mandatory prepayment of the Term Loans and other Obligations,as herein provided, a sum equal to the Net Cash Proceeds received by Borroweror such Subsidiary from such sale, loss, destruction or condemnation, to beapplied to the Term Loans as follows:

 

(i)                                     except as provided in clause (ii)below, the applicable prepayments of Term Loans pursuant to this subsection 3.3.1(or pursuant to subsection 3.3.2 or 3.3.4) shall be appliedto the installments of principal payable in respect of the Term Loans, in theinverse order of maturity (beginning with the payment due on the last day ofthe Term), ratably amongst any Base Rate Portion and all LIBOR Portions (andamongst all Interest Periods thereof) and ratably amongst the Lenders untilpaid in full;

 

(ii)                                  notwithstanding clause (i) above,unless an Event of Default has occurred and is continuing on the date such NetCash Proceeds are recovered by Borrower or its applicable Subsidiary,Administrative Agent shall remit any Net Cash Proceeds with respect to any lossor destruction of Nonrental Equipment or real Property received byAdministrative Agent to Borrower or its applicable Subsidiary (so long as suchSubsidiary is not a Foreign Subsidiary) for use in replacing or repairing thedamaged Collateral or purchasing assets used or useful in the business ofBorrower or such applicable Subsidiary. Pending such use such amounts shall not be required to so prepay theTerm Loans until the expiration of 180 days from such receipt at which pointthat portion of such amount which has not been so used during such 180-dayperiod shall be applied to the Term Loans and other Obligations in the mannerspecified in clause (i) of this subsection 3.3.1 until paymentthereof in full.

 

3.3.2                        Proceeds from Issuance of AdditionalIndebtedness or Equity.  If (a)Borrower or any of its Subsidiaries issues any additional Indebtedness (otherthan Permitted Indebtedness) or issues any additional equity (other than anyissuance of Securities permitted by clauses (i), (ii), (iii) or (iv) of subsection 8.2.9),and (b) at the time that a prepayment of Term Loans or other Obligations wouldotherwise be required under this subsection 3.3.2, the AvailableLiquidity is greater than or equal to $50,000,000 after giving effect to suchprepayment, then Borrower shall, to the extent it does not apply such Net CashProceeds to the obligations under the First Lien Debt Documents through theoptional or mandatory prepayment of the principal amount of such obligations(and, if such prepayment is in respect of an amount that can, by its terms, bereborrowed, a corresponding permanent reduction of commitments) pursuant to theterms thereof, pay to Administrative Agent for the ratable benefit of Lenders,when and as received by Borrower or such Subsidiary and as a mandatoryprepayment of the Obligations, a sum equal to, in the case of such an issuanceof Indebtedness, 100%, or, in the case of such an issuance of equity, 50% of theNet Cash Proceeds to Borrower or such Subsidiary of the issuance of suchIndebtedness or equity, as applicable. Any such prepayment shall be applied to the Term Loans in the mannerspecified in clause (i) of subsection 3.3.1.

 

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3.3.3                        [Intentionally Omitted].

 

3.3.4                        Excess Cash Flow. No later than the earlier of (i) 100 days after the end of theperiod beginning July 1, 2004 and ending December 31, 2005 and eachfiscal year of Borrower thereafter and (ii) 10 days following the date on whichthe financial statements with respect to such period are delivered pursuant to subsection 8.1.3(ii)(A),if, and to the extent that, at the time that a prepayment of Term Loans orother Obligations would be otherwise required under this subsection 3.3.4,the Available Liquidity is greater than or equal to $50,000,000 after givingeffect to such prepayment, then Borrower shall, to the extent it does not applysuch Excess Cash Flow to the obligations under the First Lien Debt Documentsthrough the optional or mandatory prepayment of the principal amount of suchobligations (and, if such prepayment is in respect of an amount that can, byits terms, be reborrowed, a corresponding permanent reduction of commitments)pursuant to the terms thereof, pay to Administrative Agent for the ratablebenefit of Lenders an amount equal to 50% of Excess Cash Flow for the period orfiscal year, as applicable, then ended; provided that any Lender mayelect, by notice to Administrative Agent at least five (5) Business Days priorto the applicable prepayment date, to decline all or any portion of anyprepayment of its Term Loans pursuant to this subsection 3.3.4 withrespect to the prepayment to be made for the period ending December 31,2005, in which case the amount of such prepayment that would have been appliedto prepay Term Loans but was so declined may be retained by Borrower to be usedfor any other purpose permitted by this Agreement.  Borrower agrees to notify AdministrativeAgent of the amount of any prepayment to be offered to the Lenders pursuant tothis subsection 3.3.4 at least seven (7) Business Days prior to theapplicable prepayment date.  Any suchprepayment shall be applied to the Term Loans in the manner specified in clause(i) of subsection 3.3.1 until the payment thereof in full.

 

3.3.5                        Optional Prepayments. Borrower may, at its option from time to time upon not less than one (1)Business Day’s****prior writtennotice in the case of a Base Rate Portion or three (3) Business Days’ priorwritten notice in the case of a LIBOR Portion to Administrative Agent (suchnotice to be in the form of Exhibit 3.3.5), prepay installments of theTerm Loans, provided that the amount of any such prepayment is at least$500,000****and in integral multiplesof $100,000****above $500,000, andthat such prepayments are made ratably amongst Lenders with respect to all TermLoans.  Each optional prepayment of TermLoans shall be applied to ratably reduce each scheduled installment of principalthereof set forth in subsection 3.2.1(ii).

 

3.3.6                        Call Premiums. In addition to charges under subsection 3.2.5 applicable toprepayments of LIBOR Portions, if applicable, in the event that the Term Loansare prepaid under subsections 3.3.1, 3.3.2 or 3.3.5 inwhole or in part prior to the second anniversary of the Closing Date, Borrowershall pay to the Lenders a prepayment premium on the amount so prepaid asfollows:

 

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| **Relevant Period**                                                                                                | ** ** | **Prepayment Premium as a  Percentage of the Amount so  Prepaid** | ** ** |
|--------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------|------------|
| On or prior  to the first anniversary of the  Closing Date:                                                        |       | 2.0                                                               | %          |
| On or prior  to the second anniversary of  the Closing Date, but after the first  anniversary of the Closing Date: |       | 1.0                                                               | %          |

 

3.4              Application of Payments and Collections.

 

3.4.1                        Collections. All items of payment received by Administrative Agent by 12:00 noon, NewYork City time, on any Business Day shall be deemed received on that BusinessDay.  All items of payment received after12:00 noon, New York City time, on any Business Day shall be deemed received onthe following Business Day.  Except asotherwise expressly provided herein, all payments by Credit Parties hereundershall be made to Administrative Agent for the account of the respective Lendersto which such payment is owed, at Administrative Agent’s office in dollars andUnited States dollars.  AdministrativeAgent will promptly distribute to each Lender its Aggregate Percentage (orother applicable share as provided herein) of such payment in like funds as receivedby wire transfer to such Lender’s lending office.

 

3.4.2                        Apportionment, Application andReversal of Payments.  Principal and interestpayments shall be apportioned ratably among Lenders (according to the unpaidprincipal balance of the Term 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 in respect of specific Term Loans, or not constituting payment ofspecific fees, and all proceeds of Accounts and Inventory, or, except asprovided in subsection 3.3.1, other Collateral received byAdministrative Agent, shall be applied, ratably, subject to the provisions ofthis Agreement, first, to pay any fees, indemnities, or expensereimbursements then due to Administrative Agent or Lenders from Borrower; second,to pay interest due from Borrower in respect of all Term Loans; third,to pay or prepay principal of all Term Loans; and fourth, to the paymentof any other Obligation due to Administrative Agent or any Lender byBorrower.  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 application orreapplication shall be consistent with the terms of this subsection 3.4.2.

 

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3.5              All Term Loans to Constitute One Obligation. The Term Loans shall constitute one general Obligation of Borrower andshall be secured by Administrative Agent’s Lien upon all of the Collateral.

 

3.6              Loan Account. Administrative Agent shall enter all Term Loans as debits to a loanaccount (the **“Loan Account”**) andshall also record in the Loan Account all payments made by Borrower 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 Borrower pursuant to this Agreementor any other Loan Document.

 

3.7              [Intentionally Omitted]

 

3.8              Increased Costs.  If any law orany governmental or quasi-governmental rule, regulation, policy, guideline ordirective (whether or not having the force of law) adopted or implemented afterthe date of this Agreement and having general applicability to all banks orfinance 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 of principal,fees, interest or any other amount payable hereunder or under any Loan Documents(other than in respect of (a) any tax based on or measured by net income orotherwise in the nature of a net income tax, including, without limitation, anyfranchise tax or any similar tax based on capital, net worth or comparablebasis for measurement and (b) any tax collected by a withholding on paymentsand which neither is computed by reference to the net income of the payee noris in the nature of an advance collection of a tax based on or measured by thenet 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, loans by, or other creditextended by, any office of such Lender, including (without limitation) pursuantto Regulation D of the Board of Governors of the Federal Reserve System; or

 

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

 

and the result of any of the foregoing is to increase the cost to suchLender of making, renewing or maintaining Term Loans hereunder or the result ofany of the foregoing is to reduce the rate of return on such Lender’s capitalas a consequence of its obligations hereunder, or the result of any of theforegoing is to reduce the amount of any payment (whether of principal,interest or otherwise) in respect of any of the Term Loans, then, in any suchcase, Borrower shall pay such Lender, upon written demand therefor not later than thirty (30) days following itsreceipt of notice of the imposition of such increased costs, such additionalamount as will compensate such Lender for such additional cost or suchreduction, as the case may be, to the extent such Lender has not otherwise beencompensated, with respect to a particular Term Loan, for such increased cost asa result of an increase in the Base Rate or the LIBOR.  An officer of the applicable Lender shalldetermine the amount of such additional cost or reduced amount using reasonableaveraging and attribution methods and deliver to Borrower a written statementsetting forth the amount of such additional cost or reduced amount, includingan explanation of such additional cost or reduction.  Such written statement shall be conclusiveabsent demonstrable error.  Failure ordelay on the part of any Lender to demand compensation pursuant to this subsection 3.8shall not constitute a waiver of such Lender’s right to demand suchcompensation; provided that Borrower shall not be required to compensatea Lender pursuant to this subsection 3.8 for any increased costs orreductions incurred more than 180 days prior to the date that such Lendernotifies Borrower of its intention to claim compensation under this subsection;provided, further that, if the circumstances giving rise to suchclaim are retroactive, then the 180-day period referred to above shall beextended to include the period of retroactive effect thereof.  If a Lender claims any additional cost orreduced amount pursuant to this subsection 3.8, then (a) suchLender shall use reasonable efforts (consistent with legal and regulatoryrestrictions) to designate a different lending office or to file any statementor document reasonably requested by Borrower if the making of such designationor filing would avoid the need for, or reduce the amount of, any suchadditional cost or reduced amount and would not, in the sole discretion of suchLender, be otherwise disadvantageous to such Lender and (b) at Borrower’srequest, Administrative Agent or an Eligible Assignee reasonably acceptable toAdministrative Agent and Borrower 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 Term Loans 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 Acceptance Agreement, at aprice equal to the outstanding principal balance of such Lender’s Term Loans,plus accrued interest and fees, without premium or discount.

 

3.9              Basis for Determining Interest Rate Inadequate. In the event that Administrative Agent or any Lender shall havedetermined that:

 

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

 

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(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

 

Administrative Agent or such Lender shall give Borrower 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 that the circumstancegiving rise to such notice no longer exists, (i) any such requested LIBORPortion shall be made as a Base Rate Portion, unless Borrower shall notifyAdministrative Agent no later than 10:00 a.m. (New York City time) three (3)Business Days’ prior to the date of such proposed borrowing that the requestfor such borrowing shall be canceled or made as an unaffected type of LIBORPortion, and (ii) any Base Rate Portion which was to have been converted to anaffected type of LIBOR Portion shall be continued as or converted into a BaseRate Portion, or, if Borrower shall notify Administrative Agent, no later than10:00 a.m. (New York City time) three (3) Business Days prior to the proposedconversion, shall be maintained as an unaffected type of LIBOR Portion.  Administrative Agent or the relevant Lender(as applicable) will endeavor to give Borrower prompt notice of the cessationof the circumstances giving rise to the suspension of LIBOR availability,provided that the failure to give any such notice shall not result in anyliability of Administrative Agent or any Lender hereunder or in themodification, alteration, impairment, or waiver of the rights of AdministrativeAgent or any Lender hereunder.

 

3.10        Sharing of Payments, Etc.  If any Lendershall obtain any payment (whether voluntary, involuntary, through the exerciseof any right of setoff, or otherwise) on account of any Term Loan made by it(other than any payment (x) pursuant to subsection 2.11 or subsection 3.8,(y) in connection 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 Term Loans made by all Lenders, such Lender shallforthwith purchase from each other Lender such participation in such Term Loanas shall be necessary to cause such purchasing Lender to share the excesspayment ratably with each other Lender; provided, that, if all or anyportion of such excess payment is thereafter recovered from such purchasingLender, such purchase from each Lender shall be rescinded and such Lender shallrepay to the purchasing Lenders the purchase price to the extent of suchrecovery, together with an amount equal to such Lender’s ratable share(according to the proportion of (i) the amount of such Lender’s requiredrepayment to (ii) the total amount so recovered from the purchasingLender) of any interest or other amount paid or payable by the purchasingLender in respect of the total amount so recovered.  Borrower agrees that any Lender so purchasinga participation from another Lender pursuant to this subsection 3.10may, to the fullest extent permitted by law, exercise all its rights of payment(including the right of setoff) with respect to such participation as fully asif such Lender were the direct creditor of Borrower in the amount of suchparticipation.  Notwithstanding anythingto the contrary contained herein, all purchases and repayments to be made underthis subsection 3.10 shall be made through Administrative Agent.

 

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**SECTION 4.  TERM AND TERMINATION**

 

4.1              Term of Agreement.  ThisAgreement shall be in effect for a period of 6 years from the date hereof,through and including August 17, 2010 (the **“Term”**), unless terminated as provided in subsection 4.2hereof.

 

4.2              Termination.

 

4.2.1                        Termination by Lenders. Administrative Agent may, and at the direction of Majority Lendersshall, accelerate the Obligations, all without notice upon or after theoccurrence and during the continuance of an Event of Default in accordance withsubsection 10.2.

 

4.2.2                        Termination by Borrower. Upon at least three (3) Business Days prior written notice toAdministrative Agent and Lenders, Borrower may, at its option, terminate thisAgreement; provided, however, that (i) no such termination shall be effectiveuntil Borrower has paid to Administrative Agent’s satisfaction all of theObligations (other than unasserted contingent indemnification obligations thatare not then due and payable, whether by acceleration, termination orotherwise), in immediately available funds, and (ii) any such terminationoccurring prior to the second anniversary of the date hereof shall be accompaniedby the prepayment premium on the amount prepaid set forth in subsection 3.3.6.  Any notice of termination given by Borrowershall be irrevocable unless all Lenders otherwise agree in writing (providedthat a notice of a refinancing of the entirety of the Term Loans delivered byBorrower may state that such notice is conditioned upon the effectiveness ofother credit facilities, in which case such notice may be revoked by Borrower(by notice to Administrative Agent on or prior to the effective date) if suchcondition is not satisfied).  Borrowermay elect to terminate this Agreement in its entirety only.  No section of this Agreement may beterminated singly.

 

4.2.3                        Effect of Termination. All of the Obligations (other than unasserted contingent indemnification obligations that are not then dueand payable, whether by acceleration, termination or otherwise) shall beimmediately due and payable upon the termination date stated in any notice oftermination of this Agreement.  Allundertakings, agreements, covenants, warranties and representations of anyCredit Party contained in the Loan Documents shall survive any such terminationand the payment in full of the Obligations, and Administrative Agent shallretain its Liens in the Collateral and Administrative Agent and each Lendershall retain all of its rights and remedies under the Loan Documentsnotwithstanding such termination until all Obligations (other than  unasserted contingent indemnificationobligations that are not then due and payable, whether by acceleration,termination or otherwise) have been discharged or paid, in full, in immediatelyavailable funds, including, without limitation, all Obligations under subsection 3.2.5or subsection 3.3.6, if any, resulting from such termination.  Notwithstanding the foregoing or the paymentin full of the Obligations, (i) Administrative Agent shall not be required toterminate its Liens in the Collateral unless, with respect to any loss ordamage Administrative Agent or any Lender may incur as a result of dishonoredchecks or other items of payment received by Administrative Agent from Borroweror any Account Debtor and applied to the Obligations, Administrative

 

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Agent shall, at itsoption, (A) have received a written agreement reasonably satisfactory toAdministrative Agent, executed by Borrower and by any Person whose loans orother advances to Borrower are used in whole or in part to satisfy theObligations, indemnifying Administrative Agent or such Lender (as applicable)from any such loss or damage or (B) have retained cash Collateral or otherCollateral for such period of time as Administrative Agent or such Lender (asapplicable), in its reasonable discretion, may deem necessary to protectAdministrative Agent or such Lender (as applicable) from any such loss ordamage and (ii) the indemnification obligations of each Credit Party under subsection 13.2shall survive the payment in full of the Obligations and the termination ofthis Agreement.

 

**SECTION 5.  SECURITY INTERESTS**

 

5.1              Security Interest in Collateral

 

5.1.1                        Grant of Security Interest. To secure the prompt payment and performance to Administrative Agent andeach Lender of the Obligations, each Credit Party hereby grants toAdministrative Agent for the benefit of itself and each Lender a continuingLien upon all of the following Property and interests in Property of suchCredit Party, whether now owned or existing or hereafter created, acquired orarising and 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;

 

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(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 with all books, records, writings, data bases, information andother property relating to, used or useful in connection with, or evidencing,embodying, incorporating or referring to any of the foregoing, and allProceeds, products, offspring, rents, issues, profits and returns of and fromany of the foregoing; provided, however, that in no event shallCollateral include Investment Property or General Intangibles consisting ofequity securities of an issuer that is a Subsidiary of a Credit Party organized under the lawsof a jurisdiction 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, breachor default is not rendered ineffective pursuant to Sections 9-406, 9-407, 9 408or 9-409 of the UCC, provided, that (1) such lease, license or permit will be excluded from the Collateral onlyto the extent and for as long as the conditions set forth in the foregoingclauses (a) and (b) are and remain satisfied and to the extent such assetsotherwise constitute Collateral, will cease to be excluded, and will becomesubject to the Liens hereunder, immediately and automatically at such time assuch conditions cease to exist, including by reason of any waiver or consentunder the applicable lease, instrument

 

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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.

 

5.1.2                        Second Lien. Notwithstanding anything herein to the contrary, the lien and securityinterest granted to Administrative Agent pursuant to this Agreement and theexercise of any right or remedy in respect of the Collateral by AdministrativeAgent hereunder are subject to the provisions of the Intercreditor Agreement,including the rights of the First Lien Debt Agent to exercise control withrespect to such Collateral as and to the extent set forth in the IntercreditorAgreement.  In the event of any conflictbetween the terms of the Intercreditor Agreement and the provisions of Section 5or 6 of this Agreement relating to the Collateral, the terms of theIntercreditor Agreement shall govern.

 

5.2              Other Collateral.

 

5.2.1                        Commercial Tort Claims. Each Credit Party shall promptly notify Administrative Agent in writingupon any Credit Party obtaining knowledge that it has incurred or otherwiseobtained a Commercial Tort Claim after the Closing Date against any third partyand, upon request of Administrative Agent, promptly enter into an amendment tothis Agreement and do such other acts or things deemed appropriate byAdministrative Agent to grant to Administrative Agent a security interest inany such Commercial Tort Claim.  EachCredit Party represents and warrants that as of the date of this Agreement, totheir knowledge, no Credit Party possesses any Commercial Tort Claims.

 

5.2.2                        Motor Vehicles. Upon the acquisition after Closing Date by any Credit Party of any MotorVehicle, such Credit Party shall promptly notify Administrative Agent of suchacquisition in writing, setting forth a description of the Motor Vehicleacquired and a good faith estimate of the current value of such MotorVehicle.  In addition, each Credit Partyshall (a) cause all Motor Vehicles, now owned or hereafter acquired by anyCredit Party, which under applicable law are required to be registered, to beproperly registered in the name of such Credit Party, (b) cause all MotorVehicles, now owned or hereafter acquired by any Credit Party, to be properlytitled in the name of such Credit Party and (c) cause Administrative Agent’sLien in such Motor Vehicles to be a perfected security interest by notingAdministrative Agent’s Lien therein 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, subject in terms ofpriority only to the Lien of the First Lien Debt Agent for so long as any FirstLien Debt remains outstanding, and thereafter a first priority Lien.  Notwithstanding the foregoing, Credit Partiesshall have until the date that is 180 days after the Closing Date (as such datemay be extended by the First Lien Debt Agent in its sole discretion up to 270days after the Closing Date) to complete the actions in the foregoing clause(c) with respect to Motor Vehicles owned by any Credit Party as of the ClosingDate.  Any certificates of title orownership delivered

 

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pursuant to the termshereof shall be accompanied by odometer statements for each Motor Vehiclecovered thereby.

 

5.2.3                        Other Collateral. Each Credit Party shall: (i) notify Administrative Agent in writingpromptly upon (or in the case of Deposit Accounts prior to) acquiring orotherwise obtaining any Collateral after the date hereof consisting of DepositAccounts, Investment Property, Letter-of-Credit Rights or Electronic ChattelPaper; (ii) except with regard to Excluded Deposit Accounts (unless otherwiserequested by the First Lien Debt Agent) promptly execute such other documents,and do such other acts or things necessary to perfect the Lien ofAdministrative Agent with respect to such Collateral by “control” (within themeaning of the applicable section of the UCC), subject to the rights ofthe First Lien Debt Agent to exercise control with respect to such Collateralto the extent required by the Intercreditor Agreement; (iii) 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 things necessaryto perfect the Lien of Administrative Agent by possession (within the meaningof Section 9-313 of the UCC) of such Documents which are negotiable andInstruments, and, with respect to nonnegotiable Documents, subject to the termsof the Intercreditor Agreement, to have such nonnegotiable Documents issued inthe name of Administrative Agent; and (iv) with respect to Collateral in thepossession of a third party, other than Certificated Securities and Goodscovered by a Document, obtain an acknowledgement from the third party that itis holding the Collateral for the benefit of Administrative Agent.

 

5.3              Lien Perfection; Further Assurances. Each Credit Party shall execute such instruments, assignments ordocuments as are necessary to perfect Administrative Agent’s Lien upon any ofthe Collateral and shall take such other action as may be required to perfector to continue the perfection of Administrative Agent’s Lien upon theCollateral and shall take such other actions as may be reasonably requested byAdministrative Agent to ensure priority (subject to the Lien of the First LienDebt Agent) of such Lien.  Each CreditParty hereby authorizes Administrative Agent to file financing statements thatindicate the Collateral (i) as “all assets” of such Credit Party or words ofsimilar effect, or (ii) as being of an equal or lesser scope, or with greateror lesser detail, than as set forth in subsection 5.1, on suchCredit Party’s behalf.  Each Credit Partyalso hereby ratifies its authorization for Administrative Agent to have filedin any jurisdiction any like financing statements or amendments thereto iffiled prior to the date hereof.  Inaddition, each Credit Party hereby appoints Administrative Agent as itsattorney-in-fact, effective the date hereof and terminating upon thetermination of this Agreement, for the purpose of (A) executing on behalf ofsuch Credit Party title or ownership applications for filing with appropriatestate agencies to enable Motor Vehicles now owned or hereafter acquired by suchCredit Party to be re-titled and Administrative Agent listed as lienholderthereof, 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 Credit Party shall also promptlyexecute or cause to be executed and shall deliver to Administrative Agent anyand all documents, instruments and

 

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agreementsdeemed necessary by Administrative Agent, to give effect to or carry out theterms or intent of the Loan Documents.

 

5.4              Lien on Realty.  The due andpunctual payment and performance of the Obligations shall also be secured bythe Lien created by the Mortgages upon all owned real Property of CreditParties described therein.  If any CreditParty shall acquire at any time or times hereafter any fee simple interest orleasehold interest in other real Property (other than leasehold interests insales offices or warehouses), such Credit Party agrees promptly to execute anddeliver to Administrative Agent, for its benefit and the ratable benefit ofLenders, as additional security and Collateral for the Obligations, deeds oftrust, 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 Borrower’s expense) in each office where such recording isrequired to constitute a valid Lien on the owned real Property coveredthereby.  With respect to any Mortgage orany New Mortgage, the relevant Credit Parties shall deliver to AdministrativeAgent, at such Credit Party’s expense, mortgagee title insurance policiesissued by a title insurance company reasonably satisfactory to AdministrativeAgent, which policies shall be in form and substance reasonably satisfactory toAdministrative Agent and shall insure a valid Lien in favor of AdministrativeAgent for the benefit of itself and each Lender on the Property coveredthereby, subject only to Permitted Liens and those other exceptions reasonablyacceptable to Administrative Agent and its counsel.  The relevant Credit Party shall also deliverto 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                        Location of Collateral. All Collateral, other than (a) Inventory being leased or rented to thirdparties by Credit Parties in the ordinary course of business, (b) Inventory intransit, (c) Inventory in the possession of a third party for the purpose ofrepair or maintenance and (d) Motor Vehicles, will at all times be kept byCredit Parties and their Subsidiaries at one or more of the business locationsset forth in Exhibit 6.1.1 hereto, as updated by Borrower from timeto time, and if any such locations are locations of third parties, such Exhibitso indicates.

 

6.1.2                        Insurance of Collateral. Each Credit Party shall maintain and pay for insurance upon allCollateral wherever located and with respect to the business of such CreditParty and each of its Subsidiaries, covering casualty, hazard, public liability,workers’ compensation and such other risks in such amounts as is customary for

 

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companies similarlysituated and with the insurance companies used by Credit Parties on the ClosingDate or such other insurance companies as are reasonably satisfactory toAdministrative Agent.  Borrower shalldeliver certified copies of such policies to Administrative Agent as promptlyas practicable, with reasonably satisfactory lender’s loss payableendorsements, naming the First Lien Debt Agent for so long as any First LienDebt remains outstanding and thereafter naming Administrative Agent and Lendersas loss payees, assignees or additional insureds, as appropriate, as itsinterest may appear, and showing only such other loss payees, assignees andadditional insureds as are reasonably satisfactory to AdministrativeAgent.  Each policy of insurance orendorsement shall contain a clause requiring the insurer to give not less than10 days’ prior written notice to Administrative Agent in the event ofcancellation of the policy for nonpayment of premium and not less than 30 days’prior written notice to Administrative Agent in the event of cancellation ofthe policy for any other reason whatsoever and a clause specifying that theinterest of Administrative Agent shall not be impaired or invalidated by anyact or neglect of any Credit Party, any of its Subsidiaries or the owner of theProperty or by the occupation of the premises for purposes more hazardous thanare permitted by said policy.  Borroweragrees to deliver to Administrative Agent, promptly as rendered, true copies ofall reports made in any reporting forms to insurance companies.  All proceeds of business interruptioninsurance (if any) of each Credit Party and its Subsidiaries shall be remittedto Administrative Agent for application to the outstanding balance of the TermLoans unless required to be applied to the obligations under the First LienDebt Documents.

 

Unless Borrower provides Administrative Agentwith evidence of the insurance coverage required by this Agreement,Administrative Agent may purchase insurance at Borrower’s expense to protectAdministrative Agent’s interests in the Properties of Credit Parties and theirSubsidiaries.  This insurance may, butneed not, protect the interests of Credit Parties and their Subsidiaries.  The coverage that Administrative Agentpurchases may not pay any claim that any Credit Party or any of itsSubsidiaries makes or any claim that is made against any Credit Party or anysuch Subsidiary in connection with said Property.  Credit Parties may later cancel any insurancepurchased by Administrative Agent, but only after providing AdministrativeAgent with evidence that Credit Parties and their Subsidiaries have obtainedinsurance as required by this Agreement. If Administrative Agent purchases insurance, Borrower will beresponsible for the reasonable costs of that insurance, including interest andany other charges Administrative Agent may impose in connection with theplacement of insurance, until the effective date of the cancellation orexpiration of the insurance.  The costsof the insurance may be added to the Obligations.  The costs of the insurance may be more thanthe cost of insurance that Credit Parties and their Subsidiaries may be able toobtain on their own.

 

6.1.3                        Protection of Collateral. Neither Administrative Agent nor any Lender shall be liable orresponsible in any way for the safekeeping of any of the Collateral or for anyloss or damage thereto (except for reasonable care in the custody thereof whileany Collateral is in Administrative Agent’s or any Lender’s actual possession)or for any diminution in the value thereof, or for any act or default of any

 

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warehouseman, carrier,forwarding agency or other person whomsoever, but the same shall be at CreditParties’ sole risk.

 

6.2              Administration of Accounts.

 

6.2.1                        Records, Schedules and Assignmentsof Accounts.  Each Credit Party shall keep accurate andcomplete records of its Accounts and all payments and collections thereon andshall submit to Administrative Agent on such periodic basis as AdministrativeAgent shall reasonably request at any time that an Event of Default shall haveoccurred and be continuing a sales and collections report for the precedingperiod, in form reasonably acceptable to Administrative Agent.

 

6.2.2                        [Intentionally Omitted].

 

6.2.3                        Account Verification. Any of Administrative Agent’s officers, employees or agents shall havethe right, at any time or times hereafter that an Event of Default shall haveoccurred and be continuing, in the name of Administrative Agent, any designeeof Administrative Agent or any Credit Party, to verify the validity, amount orany other matter relating to any Accounts by mail, telephone, electroniccommunication or otherwise.  CreditParties shall cooperate with Administrative Agent in an effort to facilitateand promptly conclude any such verification process.

 

6.2.4                        Collection Accounts. Each deposit account (other than Excluded Deposit Accounts, unlessotherwise requested by the First Lien Debt Agent) which receives any proceedsof Collateral shall be maintained by Credit Parties pursuant to lockbox andblocked account arrangements acceptable to Administrative Agent (each suchaccount, a **“Collection Account”**and collectively, the **“Collection Accounts”**)with BofA or such other banks as may be selected by Credit Parties and beacceptable to Administrative Agent (each bank maintaining a Collection Account,a **“Collection Bank”** andcollectively, the **“Collection Banks”**).  Subject to the terms of the IntercreditorAgreement, all such blocked account arrangements shall provide for theAdministrative Agent’s and the First Lien Debt’s Agent’s “control” (within themeaning of the Uniform Commercial Code) of the relevant Collection Accounts,and if an Event of Default occurs and is continuing, dominion by AdministrativeAgent and the First Lien Debt Agent over all cash or other assets depositedinto such accounts.  Subject to the termsof the Intercreditor Agreement, upon the occurrence of an Event of Default,Administrative Agent shall be entitled to deliver notice to each CollectionBank instructing such Collection Bank to comply only with the instructions ofAdministrative Agent relating to each Collection Account maintained by suchCollection Bank (each such notice, a **“DominionNotice”**).  On or prior to thedate hereof, Borrower shall deliver to Administrative Agent a control agreementfor each Collection Account maintained as of the Closing Date to provide forcontrol and springing dominion by Administrative Agent over all assetsdeposited therein as described above, each such control agreement to be in formand substance acceptable to Administrative Agent.  Subject to the terms of the IntercreditorAgreement, after the occurrence and during the continuance of an Event ofDefault, all funds deposited in any Collection Account shall immediately becomethe property of Administrative Agent, for the ratable benefit of

 

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Lenders, and Borrowershall obtain the agreement by each Collection Bank in favor of AdministrativeAgent to waive any recoupment, setoff rights, and any security interest in, oragainst, the funds so deposited.  AdministrativeAgent assumes no responsibility for lockbox and blocked account arrangements,including, without limitation, any claim of accord and satisfaction or releasewith respect to deposits accepted by any bank thereunder.

 

6.2.5                        Collection of Accounts, Proceeds ofCollateral.  Each Credit Party agrees that all invoicesrendered and other requests made by any Credit Party for payment in respect ofAccounts shall contain a written statement directing payment in respect of suchAccounts to be paid to a lockbox or Collection Account established pursuant to subsection 6.2.4.  To expedite collection, each Credit Partyshall endeavor in the first instance to make collection of its Accounts forAdministrative Agent.  All remittancesreceived by any Credit Party on account of Accounts, together with the proceedsof any other Collateral, shall be held as Administrative Agent’s property, forits benefit and the benefit of Lenders, by such Credit Party as trustee of anexpress trust for Administrative Agent’s benefit and such Credit Party shallimmediately deposit same in kind to a Collection Account.  Administrative Agent retains the right at alltimes after the occurrence and during the continuance of an Event of Default tonotify Account Debtors that Credit Parties’ Accounts have been assigned toAdministrative Agent and, subject to the terms of the Intercreditor Agreement,to collect Credit Parties’ Accounts directly in its own name, or in the name ofAdministrative Agent’s agent, and to charge the collection costs and expenses,including attorneys’ fees, to any Credit Party.

 

6.2.6                        Taxes. If an Account includes a charge for any tax payable to any governmentaltaxing authority, Administrative Agent is authorized, in its sole discretion,to pay the amount thereof to the proper taxing authority for the account of therelevant Credit Party and to charge any Credit Party therefor, except for taxes(i) that are being actively contested in good faith and by appropriateproceedings and with respect to which the relevant Credit Party maintainsreasonable reserves on its books therefor and (ii) as to which theimposition of any Lien in respect thereof is stayed during the pendency of suchproceedings.  In no event shallAdministrative Agent or any Lender be liable for any taxes to any governmentaltaxing authority that may be due by any Credit Party.

 

6.3              Administration of Inventory.  CreditParties shall keep records of their Inventory (including, without limitation,Rental Equipment Inventory) which records shall be accurate and complete in allmaterial respects.  Credit Parties’records of all Rental Equipment Inventory shall be itemized and describe thekind, type, quality, quantity and book value of such Rental Equipment Inventoryand shall list all dispositions made in accordance with subsection 8.2.8.

 

6.4              Payment of Charges.  All amountschargeable to any Credit Party under Section 6 hereof shall beObligations secured by all of the Collateral, shall be payable by any CreditParty on demand and shall bear interest from the date such advance was madeuntil paid in full at the rate applicable to Base Rate Portions from time totime.

 

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**SECTION 7.  REPRESENTATIONSAND WARRANTIES**

 

7.1              General Representations and Warranties. To induce Administrative Agent and each Lender to enter into thisAgreement and to make loans, advances and other extensions of credit hereunder,each Credit Party warrants, represents and covenants to Administrative Agentand each Lender, on a joint and several basis, that:

 

7.1.1                        Qualification.  Each CreditParty and each of its Subsidiaries is a corporation, limited partnership orlimited liability company duly organized, validly existing and in good standingunder the laws of the jurisdiction of its incorporation or organization.  No Credit Party or any Subsidiary thereof isorganized under the laws of more than one jurisdiction.  Each Credit Party and each of itsSubsidiaries is duly qualified and is authorized to do business and is in goodstanding 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 anyCredit Party or any of its Subsidiaries to be so qualified could reasonably beexpected to have a Material Adverse Effect.

 

7.1.2                        Power and Authority.  Each CreditParty and each of its Subsidiaries is duly authorized and empowered to enterinto, 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 anyCredit Party or any of the shareholders, partners or members, as the case maybe, of any Subsidiary of any Credit Party; (ii) contravene any CreditParty’s or any of its Subsidiaries’ charter, articles or certificate ofincorporation, partnership agreement, certificate of formation, by laws,limited liability agreement, operating agreement or other organizational documents(as the case may be); (iii) violate, or cause any Credit Party or any ofits Subsidiaries to be in default under, any provision of any law, rule,regulation, order, writ, judgment, injunction, decree, determination or awardin effect having applicability to such Credit Party or any of its Subsidiaries,other than any such violation as could not reasonably be expected to have aMaterial Adverse Effect; (iv) result in a breach of or constitute adefault under any indenture or loan or credit agreement or any other agreement,lease or instrument to which any Credit Party or any of its Subsidiaries is aparty or by which it or its Properties may be bound or affected, the breach ofor default under which could reasonably be expected to have a Material AdverseEffect; or (v) result in, or require, the creation or imposition of anyLien (other than Permitted Liens) upon or with respect to any of the Propertiesnow owned or hereafter acquired by any Credit Party or any of its Subsidiaries.

 

7.1.3                        Legally Enforceable Agreement.  ThisAgreement, and each of the other Loan Documents, has been duly executed anddelivered by each Credit Party and each of its Subsidiaries party thereto andis a legal, valid and binding obligation of each such Credit Party and each suchSubsidiary, enforceable against it in accordance with its respective terms,except as enforcement may be limited by (i) the effect of any applicable

 

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bankruptcy,insolvency, reorganization, moratorium or similar laws affecting creditors’rights generally and (ii) general principles of equity.

 

7.1.4                        Capital Structure.  Exhibit 7.1.4hereto states, as of the date hereof, (i) the correct name of each of theSubsidiaries of each Credit Party, its jurisdiction of incorporation ororganization and the percentage of its Voting Stock owned by the applicableCredit Party, (ii) the name of each Credit Party’s and each of itsSubsidiaries’ corporate or joint venture relationships and the nature of therelationship, (iii) the number, nature and holder of all outstandingSecurities of each Credit Party and the holder of Securities of each Subsidiaryof each Credit Party and (iv) the number of authorized, issued andtreasury Securities of each Credit Party. Each Subsidiary of Borrower that is not a Foreign Subsidiary as of theClosing Date is party to this Agreement as a Subsidiary Guarantor.  Each Credit Party has good title to all ofthe Securities it purports to own of each of such Subsidiaries, free and clearin 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 Credit Party 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 anyCredit Party’s or any of its Subsidiaries’ partners, members or shareholders,as the case may be, relating to the ownership of its Securities.

 

7.1.5                        Names; Organization.  Neither anyCredit Party nor any of its Subsidiaries has been known as or has used anylegal, fictitious or trade names within 5 years prior to the Closing Date,except those listed on Exhibit 7.1.5 hereto.  Except as set forth on Exhibit 7.1.5,within the 5 years prior to the Closing Date, neither any Credit Party nor anyof its Subsidiaries has been the surviving entity of a merger or consolidationor has acquired all or substantially all of the assets of any Person.  Each of each Credit Party’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 Credit Party andeach of its Subsidiaries is set forth on Exhibit 7.1.5.

 

7.1.6                        Business Locations; Administrative Agent for Process. Each of each Credit Party’s and each of its Subsidiaries’ chiefexecutive office, location of books and records and other places of businessare as listed on Exhibit 6.1.1 hereto, as updated from time to timeby Borrower in accordance with the provisions of subsection 6.1.1.  Except as shown on Exhibit 6.1.1,as updated from time to time by Borrower in accordance with the provisions of subsection 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                        Title to Properties; Priority of Liens.

 

(i)                                     Each Credit Party and each of itsSubsidiaries has good, indefeasible and marketable title to and fee simpleownership of, or valid and subsisting

 

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leasehold interestsin, all of its real Property, and good title to all of the Collateral and allof its other Property, in each case, free and clear of all Liens exceptPermitted Liens.  Each Credit Party andeach of its Subsidiaries has paid or discharged all lawful claims which, ifunpaid, might become a Lien against any of such Credit Party’s or suchSubsidiary’s Properties that is not a Permitted Lien.  The Liens granted to Administrative Agentunder Section 5 hereof are second priority Liens, subject only toPermitted 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 Credit Party andeach of its Subsidiaries and all leases (including capitalized leases) andsubleases of real or personal property held by each Credit Party and each ofits Subsidiaries 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 Credit Party or any of its Subsidiaries nor, to anyCredit Party’s knowledge, any other party to any such lease or sublease,exists.

 

7.1.8                        Accounts.

 

With respectto each of Credit Parties’ Accounts, unless otherwise disclosed toAdministrative 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 CreditParty, in the ordinary course of its business and in accordance with the termsand conditions of all purchase orders, contracts or other documents relatingthereto and forming a part of the contract between a Credit Party and theAccount Debtor;

 

(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 Credit Parties’ knowledge, theAccount Debtor thereunder (1) had the capacity to contract at the time anycontract or other document giving rise to the Account was executed and (2) suchAccount Debtor is Solvent; and

 

(vi)                              To Credit Parties’ knowledge, thereare no proceedings or actions which are threatened or pending against theAccount Debtor thereunder which might result in any material adverse change insuch Account Debtor’s financial condition or the collectibility of suchAccount.

 

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7.1.9                        Nonrental Equipment and Rental Equipment Inventory. The Nonrental Equipment and Rental Equipment Inventory of each CreditParty and 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 Credit Party nor any of its Subsidiaries will permit anyNonrental Equipment or Rental Equipment Inventory to become affixed to any realProperty leased to any Credit Party or any of its Subsidiaries so that aninterest arises therein under the real estate laws of the applicablejurisdiction unless the landlord of such real Property has executed a landlordwaiver or leasehold mortgage in favor of and in form reasonably acceptable toAdministrative Agent, and no Credit Party will permit any of the NonrentalEquipment or Rental Equipment Inventory of any Credit Party or any of itsSubsidiaries to become an accession to any personal Property other thanNonrental Equipment and Rental Equipment Inventory that is subject to secondpriority (except for Permitted Liens) Liens in favor of Administrative Agent.

 

7.1.10                  Financial Statements; Fiscal Year. The Consolidated and consolidating****balancesheets of Borrower and its Subsidiaries (including the accounts of allSubsidiaries of Borrower****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 Borrower****and such Persons,taken as a whole,****at such datesand the results of Borrower’s 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 orcontingent), operations or financial condition of Borrower and such otherPersons, taken as a whole, as reflected in the Consolidated balance sheet as ofsuch date.  As of the date hereof, thefiscal year of each Credit Party and each of its Subsidiaries ends on December 31of each year.

 

7.1.11                  FullDisclosure. The financial statements referred to in subsection 7.1.10hereof do not, nor does this Agreement or any other written statement of anyCredit Party to Administrative Agent or any Lender, contain any untruestatement of a material fact or omit a material fact necessary to make thestatements contained therein or herein, in light of the circumstances underwhich they are made, not misleading as of the time made or delivered.  There is no fact which any Credit Party hasfailed to disclose to Administrative Agent or any Lender in writing which couldreasonably be expected to have a Material Adverse Effect.

 

7.1.12                  Solvent Financial Condition.  Giving effectto subsection 12.2, each Credit Party and each of its Subsidiariesis, and after giving effect to the Term Loans to be made hereunder and allrelated transactions will be, Solvent.

 

7.1.13                  SuretyObligations. Except as set forth on Exhibit 7.1.13, as of the datehereof, neither any Credit Party nor any of its Subsidiaries is obligated assurety or indemnitor under any surety or similar bond or other contract or hasissued or entered

 

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into any agreement toassure payment, performance or completion of performance of any undertaking orobligation of any Person other than payment, performance or completion ofperformance by itself or any Credit Party.

 

7.1.14                  Taxes.  The federalor other applicable tax identification number of each Credit Party and each ofits Subsidiaries is shown on Exhibit 7.1.14 hereto.  Each Credit Party and each of itsSubsidiaries has filed all federal, state, local and foreign income and othermaterial tax returns and other reports relating to taxes it is required by lawto 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 income and Properties as andwhen such taxes, assessments, fees, levies and charges are due and payable,unless and to the extent any thereof are being actively contested in good faithand by appropriate proceedings, and the applicable Credit Party or the relevantSubsidiary maintains reasonable reserves on its books therefor.  The provision for taxes on the books of eachCredit Party and its Subsidiaries is adequate for all years not closed byapplicable statutes, and for the current fiscal year.

 

7.1.15                  Brokers.  Except asshown on Exhibit 7.1.15 hereto and except as may be payable toAdministrative Agent or the Joint Lead Arrangers, there are no claims forbrokerage commissions, finder’s fees or investment banking fees in connectionwith the transactions contemplated by this Agreement.

 

7.1.16                  Patents, Trademarks, Copyrights andLicenses.  Each Credit Party and each of itsSubsidiaries owns, possesses or licenses or has the right to use all thepatents, trademarks, service marks, trade names, copyrights, licenses and otherIntellectual Property necessary for the present and planned future conduct ofits business without any known conflict with the rights of others, except forsuch conflicts as could not reasonably be expected to have a Material AdverseEffect.  All such patents, trademarks, servicemarks, trade names, copyrights, licenses and other similar rights are listed onExhibit 7.1.16 hereto.  Noclaim has been asserted to any Credit Party or any Subsidiary of any CreditParty which is currently pending that its use of its Intellectual Property orthe conduct of its business does or may infringe upon the Intellectual Propertyrights of any third party.  To theknowledge of each Credit Party and except as set forth on Exhibit 7.1.16hereto, as of the date hereof, no Person is engaging in any activity thatinfringes in any material respect upon any Credit Party’s or any of itsSubsidiaries’ material Intellectual Property. Except as set forth on Exhibit 7.1.16, each Credit Party’sand each of its Subsidiaries’ (i) material trademarks, service marks andcopyrights are registered with the U.S. Patent and Trademark Office or in theU.S. Copyright Office, as applicable and (ii) material license agreementsand similar arrangements relating to its Inventory (1) permit, and do notrestrict, the assignment by any Credit Party or any of its Subsidiaries toAdministrative Agent, or any other Person designated by Administrative Agent,of all of such Credit Party’s or such Subsidiary’s, as applicable, rights,title and interest pertaining to such license agreement or such similararrangement and (2) would permit the continued use by such Credit Party orsuch Subsidiary, or Administrative Agent or its assignee, of such licenseagreement or such similar arrangement and the right to sell Inventory subject tosuch license agreement for a period of no less than 6 months after a default orbreach of such agreement or

 

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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 Credit Party’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 Credit Party nor any of its Subsidiaries is inbreach of, or default under, any term of any license or sublicense with respectto any of its Intellectual Property and (ii) to the knowledge of eachCredit Party, no other party to such license or sublicense is in breach thereofor default thereunder, and such license is valid and enforceable.

 

7.1.17                  Governmental Consents. Each Credit Party and each of its Subsidiaries has, and is in goodstanding with respect to, all governmental consents, approvals, licenses,authorizations, permits, certificates, inspections and franchises necessary tocontinue to conduct its business as heretofore or proposed to be conducted byit and to own or lease and operate its Properties as now owned or leased by it,except where the failure to do so could not reasonably be expected to have aMaterial Adverse Effect.

 

7.1.18                  Compliancewith Laws. Each Credit Party and each of its Subsidiaries has duly complied, andits Properties, business operations and leaseholds are in compliance with, theprovisions of all federal, state and local laws, rules and regulationsapplicable to such Credit Party or such Subsidiary, as applicable, itsProperties or the conduct of its business, except for such non-compliance ascould not reasonably be expected to have a Material Adverse Effect, and therehave been no citations, notices or orders of noncompliance issued to any CreditParty or any of its Subsidiaries under any such law, rule or regulation, exceptwhere such noncompliance could not reasonably be expected to have a MaterialAdverse Effect.  No Inventory has beenproduced in violation of the Fair Labor Standards Act (29 U.S.C. §201 etseq.), as amended.

 

7.1.19                  Restrictions.  Neither anyCredit Party nor any of its Subsidiaries is a party or subject to any contractor agreement which restricts its right or ability to incur Indebtedness, otherthan as set forth on Exhibit 7.1.19 hereto, none of which prohibitthe execution of or compliance with this Agreement or the other Loan Documentsby any Credit Party or any of its Subsidiaries, as applicable.

 

7.1.20                  Litigation.  Except as setforth on Exhibit 7.1.20 hereto, there are no actions, suits,proceedings or investigations pending, or to the knowledge of any Credit Party,threatened, against or affecting any Credit Party or any of its Subsidiaries,or the business, operations, Properties, prospects, profits or condition of anyCredit Party or any of its Subsidiaries which, singly or in the aggregate,could reasonably be expected to have a Material Adverse Effect.  Neither any Credit Party 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.

 

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7.1.21                  NoDefaults. No event has occurred and no condition exists which would, upon or afterthe execution and delivery of this Agreement or any Credit Party’s performancehereunder, constitute a Default or an Event of Default.  Neither any Credit Party nor any of itsSubsidiaries is in default (and no event has occurred and no condition existswhich constitutes, or which with the passage of time or the giving of notice orboth would constitute, a default) under any Material Contract.

 

7.1.22                  Distributions.  Except asdisclosed on Exhibit 7.1.22 and except for Distributions of cash paid toanother Credit Party or pursuant to the Reorganization Plan, as of the ClosingDate, no Distribution of cash has been declared, paid, or made upon or inrespect of any Securities of any Credit Party or any of its Subsidiaries since February 12,2004.

 

7.1.23                  ERISACompliance.  Except as specifically disclosed in Exhibit 7.1.23:

 

(i)                                     Each Plan and Foreign Plan is incompliance with applicable Requirements 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 each Credit Party, nothing has occurred which would cause the lossof such qualification.  Each Credit Partyand each ERISA Affiliate has made all required contributions to any PensionPlan, and no application for a funding waiver or an extension of anyamortization period pursuant to Section 412 of the Code has been made withrespect to any Pension Plan.

 

(ii)                                  There are no pending or, to the knowledgeof any Credit Party, threatened claims, actions or lawsuits, or action by anyGovernmental Authority, with respect to any Plan, Multiemployer Plan or ForeignPlan which has resulted or could reasonably be expected to result in a MaterialAdverse Effect.  There has been noprohibited transaction or violation of the fiduciary responsibility rules withrespect to any Plan, Multiemployer Plan or Foreign Plan which has resulted orcould 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 Credit Party nor any ERISA Affiliate has incurred, orreasonably expects to incur, any liability under Title IV of ERISA with respectto any Pension Plan (other than premiums due and not delinquent under Section 4007of ERISA); (D) no Credit Party 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 applicable Requirements ofLaw.  No Credit Party nor any ERISA

 

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Affiliate hasengaged in a transaction that could reasonably be expected to be subject to Section 4069or 4212(c) of ERISA.

 

(iv)                              No Credit Party nor any ERISAAffiliate sponsors or is otherwise required to contribute to any retireemedical plan, arrangement, contract or policy other than (A) coverage mandatedby Requirement of Law, (B) death benefits or retirement benefits under anyPension Plan or (C) benefits, the full direct cost of which is borne by theparticipating employee or former employee (or beneficiary thereof).

 

7.1.24                  TradeRelations. There exists no actual or, to any Credit Party’s knowledge, threatenedtermination, cancellation or limitation of, or any modification or change in,the business relationship between any Credit Party or any of its Subsidiariesand any customer or any group of customers whose purchases individually or inthe aggregate are material to the business of Credit Parties and theirSubsidiaries, or with any material supplier, except, in each case, where thesame could not reasonably be expected to have a Material Adverse Effect, and,to any Credit Party’s knowledge, there exists no present condition or state offacts or circumstances which would prevent any Credit Party or any of itsSubsidiaries 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 7.1.25 hereto, as of the datehereof, neither any Credit Party nor any of its Subsidiaries is a party to anycollective bargaining agreement.  Thereare no asserted pending demands for collective bargaining by any union ororganization of any Credit Party’s or any of its Subsidiaries’ employees, or,to any Credit Party’s knowledge, any material grievances, disputes orcontroversies with any such union or other organization, or any threats ofstrikes or work stoppages, except those that could not reasonably be expectedto have a Material Adverse Effect.

 

7.1.26                  RelatedBusinesses. As of the Closing Date, Credit Parties are engaged in the businesses ofrenting general and specialty equipment to industrial and constructionend-users, as well as selling used equipment and complementary parts, suppliesand merchandise and providing repair and maintenance services to theircustomers.  Borrower has requested theLenders to make credit available hereunder for the purposes set forth in subsection 1.1.2.  Each Credit Party and each Subsidiary of eachCredit Party expects to derive benefit (and the Board of Directors of eachCredit Party and each Subsidiary of each Credit Party has determined that suchCredit Party or Subsidiary may reasonably be expected to derive benefit),directly or indirectly, from the credit extended by Lenders hereunder toBorrower, both in its separate capacity and as a member of the group ofcompanies, since the successful operation and condition of each Credit Partyand each Subsidiary of each Credit Party is dependent on the continuedsuccessful performance of the functions of the group as a whole.  Each Credit Party acknowledges that, but forthe agreement of each of the other Credit Parties to execute and deliver thisAgreement, Administrative Agent and Lenders would not have made available thecredit facilities established hereby on the terms set forth herein.

 

 

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7.1.27                  Margin Regulations.  No CreditParty nor any Subsidiary of any Credit Party is engaged in the business ofpurchasing or selling Margin Stock or extending credit for the purpose ofpurchasing or carrying Margin Stock.

 

7.1.28                  RegulatedEntities. No Credit Party, no Person controlling any Credit Party, nor anySubsidiary of any Credit Party, is an “Investment Company” within the meaningof the Investment Company Act of 1940. No Credit Party is subject to regulation under the Public UtilityHolding Company Act of 1935, the Federal Power Act, the Interstate CommerceAct, any state public utilities code or law, or any other federal or statestatute or regulation limiting its ability to incur indebtedness.

 

7.1.29                  EnvironmentalLaws. Except as otherwise disclosed on Exhibit 7.1.29 and except forany of the following as could not reasonably be expected to have a MaterialAdverse Effect:

 

(i)                                     Each Credit Party and itsSubsidiaries have complied with all Environmental Laws and neither any CreditParty nor any of its Subsidiaries nor any of its presently owned real propertyor presently conducted operations, nor its previously owned real property orprior operations, is subject to any pending or threatened Environmental Claimor any enforcement order from or liability agreement with any GovernmentalAuthority or private Person respecting (A) compliance with any EnvironmentalLaw or (B) any potential liabilities and costs or remedial action arising fromthe Release or threatened Release of a Contaminant.

 

(ii)                                  Each Credit Party and itsSubsidiaries have obtained all permits necessary for their current operationsunder Environmental Laws, and all such permits are in good standing and eachCredit Party and its Subsidiaries are in compliance with all material terms andconditions of such permits.

 

(iii)                               Neither any Credit Party nor any ofits Subsidiaries, nor, to the best of such Credit Party’s knowledge, any of itspredecessors in interest, has in violation of applicable law stored, treated ordisposed of any hazardous waste.

 

(iv)                              Neither any Credit Party nor any ofits Subsidiaries 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 a Releaseor threatened Release of a Contaminant.

 

(v)                                 To the best of each Credit Party’sknowledge, none of the present or past operations or Properties of any CreditParty or its Subsidiaries is the subject of any investigation by anyGovernmental Authority evaluating whether any remedial action is needed torespond to a Release or threatened Release of a Contaminant, and to the best ofeach Credit Party’s knowledge, there are no facts or circumstances at any suchProperty that would warrant such remedial action.

 

 

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(vi)                              There is not now, nor to the best ofany Credit Party’s knowledge has there ever been on or in the real Propertiesof any Credit Party or its Subsidiaries:

 

(A)           any underground storage tanks orsurface impoundments,

 

(B)             any asbestos-containing material, or

 

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

 

(vii)                           Neither any Credit Party nor any ofits Subsidiaries has filed any notice under any requirement of EnvironmentalLaw reporting a spill or accidental and unpermitted Release or discharge of aContaminant into the environment.

 

(viii)                        Neither any Credit Party nor any ofits Subsidiaries has entered into any negotiations or settlement agreementswith any Person (including the prior owner of its property) imposing materialobligations or liabilities on such Credit Party 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 Credit Party or any of its Subsidiaries containasbestos containing material.

 

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

 

7.1.30                  MotorVehicles. As of the Closing Date, Exhibit 7.1.30 sets forth a complete andaccurate list of all Motor Vehicles owned by any Credit Party or any of itsSubsidiaries, together with a good faith estimate of the current value of suchMotor Vehicles.

 

7.1.31                  Anti-TerrorismLaws.

 

(i)                                     General. None of the Credit Parties, nor any of their Subsidiaries or Affiliatesis in violation of any Anti-Terrorism Law or engages in or conspires to engagein any transaction that evades or avoids, or has the purpose of evading oravoiding, or attempts to violate, any Anti-Terrorism Law.

 

(ii)                                  Executive Order No. 13224. None of the Credit Parties, nor any of their Subsidiaries or Affiliatesis any of the following (each a “**BlockedPerson**”):

 

(A)                         a Person owned or controlled by, oracting 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;

 

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(B)                           a Person or entity with which anybank 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 named asa “specially designed national” on the most current list published by the U.S.Treasury Department Office of Foreign Asset Control at its official website orany replacement website or other replacement official publication of such list;or

 

(E)                            a Person or entity who is affiliatedwith a Person or entity listed above.

 

None of the Credit Parties, nor any of their Subsidiaries or Affiliates(i) conducts any business or engages in making or receiving any contribution offunds, goods or services to or for the benefit of any Blocked Person or (ii)deals in, or otherwise engages in any transaction relating to, any property orinterests in property blocked pursuant to Executive Order No. 13224.

 

7.1.32                  Deposit and Brokerage Accounts.  Exhibit 7.1.32 sets forth as of the Closing Date acomplete and accurate list of all deposit, checking and other bank accounts,all securities and other accounts maintained with any securities intermediary orbroker dealer and all other similar accounts maintained by each CreditParty and its Subsidiaries, together with a description thereof (i.e.,the bank, securities intermediary or broker dealer at which such deposit orother account is maintained and the account number and the purposethereof).  No Credit Party or any of itsSubsidiaries maintains any other bank, securities or other similar accountsother than those set forth on Exhibit 7.1.32.

 

7.2              [Intentionally Omitted].

 

7.3              Survival of Representations and Warranties. All representations and warranties of Credit Parties contained in thisAgreement or any of the other Loan Documents shall survive the execution,delivery and acceptance thereof by Administrative Agent and each Lender and theparties thereto and the closing of the transactions described therein orrelated thereto.

 

**SECTION 8.  COVENANTS ANDCONTINUING AGREEMENTS**

 

8.1              Affirmative Covenants.  During theTerm, and thereafter for so long as there are any Obligations (other thanunasserted contingent indemnification obligations that are not then due andpayable, whether by acceleration, termination or otherwise) outstanding, eachCredit Party covenants that it shall, and shall cause each of its Subsidiariesto:

 

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8.1.1                        Visits and 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 ofBorrower, unless an Event of Default has occurred and is continuing) and(B) appraisers engaged pursuant to subsection 2.9 and clause(ii) of this subsection 8.1.1****(whether or not personnel of Administrative Agent), from time totime, as provided in such subsection and clause, but only during normalbusiness hours, to visit and inspect the Properties of each Credit Party andeach of its Subsidiaries, for the purpose of completing appraisals pursuant to subsection 2.9and clause (ii) of this subsection 8.1.1.  Administrative Agent, if no Default or Eventof Default then exists, shall give Credit Parties reasonable prior notice ofany such Audit or appraisals.  Withoutlimiting the foregoing, upon the request of Administrative Agent, CreditParties will participate and will cause their key management personnel toparticipate in meetings with Administrative Agent and Lenders periodicallyduring each year during regular business hours and upon reasonable priornotice, which meeting(s) shall be held at such times and such places as may bereasonably requested by Administrative Agent. All Audits and appraisals conducted pursuant to this clause (i) shall(except as expressly provided above) be at Borrower’s expense.

 

(ii)                                  On or before the 60th day after theend of each of Borrower’s fiscal quarters, commencing with the fiscal quarterending September 30, 2004, deliver to Administrative Agent an appraisal ofeach type of Rental Equipment Inventory (both serialized and non-serialized)performed by an appraiser selected by Borrower (or, if a similar report is thenrequired to be delivered pursuant to the First Lien Loan and SecurityAgreement, by the First Lien Debt Agent), which appraisal shall state the GrossOrderly Liquidation Value of all such Rental Equipment Inventory.  All inventory appraisals conducted pursuantto this clause (ii) shall be at Borrower’s expense.

 

8.1.2                        Notices.  Furnish toAdministrative 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 and (B) any change in the informationdisclosed in any Exhibit hereto, in each case after giving effect to themateriality limits and Material Adverse Effect qualifications containedtherein;

 

(ii)                                  promptly, and in any event withinthree (3) Business Days after a Responsible Officer of any Credit Party hasknowledge of the occurrence of an Event of Default or Default that iscontinuing or the occurrence of any event or development that could reasonablybe expected have a Material Adverse Effect, the written statement of aResponsible Officer of Borrower setting forth the details of such Event ofDefault or Default or other event or development having a Material AdverseEffect and the action which the affected Person proposes to take with respectthereto;

 

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(iii)                               promptly after the sending or filingthereof, as the case may be, copies of any proxy statements, financialstatements or reports which Borrower****hasmade generally available to its Securities holders and copies of any regular,periodic and special reports or registration statements which Borrower or anyof its Subsidiaries files with the Securities and Exchange Commission or anyGovernmental Authority which may be substituted therefor or any nationalsecurities exchange;

 

(iv)                              promptly after receipt thereof,copies of any material notice or communication received by any Credit Party orany of 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 Credit Party orany of its Subsidiaries, notice of each action, suit or proceeding before anycourt or other Governmental Authority or other regulatory body or anyarbitrator which, if adversely determined, could reasonably be expected to havea Material Adverse Effect;

 

(v)                                 within five (5) Business Days afterany Credit Party or any ERISA Affiliate knows or has reason to know, that anERISA Event or a non-exempt prohibited transaction (as defined in Sections 406of ERISA and 4975 of the Code) has occurred, notice thereof and, when known,any action 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 Credit Party 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 Credit Party 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 Credit Party’sannual costs with respect thereto by an amount in excess of $250,000; or (B)any failure by any Credit Party or any ERISA

 

 

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Affiliate tomake a required installment or any other required payment under Section 412of the Code on or before the due date for such installment or payment;

 

(ix)                                within five (5) Business Days afterany Credit Party or any ERISA Affiliate knows or has reason to know that any ofthe following 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 holder ofthe First Lien Debt or any agent or other representative in respect thereof;

 

(xi)                                promptly after receiving any noticeof any violation by any Credit Party 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 anyCredit Party or any Subsidiary is not in compliance with any Environmental Lawor is investigating any Credit Party’s or such Subsidiary’s compliancetherewith, copies thereof;

 

(xii)                             promptly after receiving any writtennotice that any Credit Party or any of its Subsidiaries is or may be liable toany Person as a result of the Release or threatened Release of any Contaminantor that any Credit Party or any Subsidiary is subject to investigation by anyGovernmental Authority evaluating whether any remedial action is needed to respondto the Release or threatened Release of any Contaminant which, in either case,could reasonably be expected to have a Material Adverse Effect, copies of suchnotice;

 

(xiii)                          promptly after receiving any writtennotice of the imposition of any Environmental Lien against any property of anyCredit Party 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 CreditParty or any of its Subsidiaries (or the consummation of any related series ofsales or dispositions, including any sale or other disposition at auction orpursuant to a trade package with an original equipment manufacturer) which hasan aggregate book value or fair market value (whichever is greater) in excessof $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 orCredit Parties’ or any of their Subsidiaries’ financial condition or results ofoperations.

 

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8.1.3                        Financial Statements 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 Credit Parties and theirSubsidiaries is made known to Borrower 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 Borrower’s 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 the close of each fiscalyear of Borrower, unqualified (except for a qualification for a change inaccounting principles with which the accountant concurs) audited Consolidatedand consolidating****(on a line ofbusiness basis) balance sheets of Borrower and its Subsidiaries (including theaccounts of all Subsidiaries of Borrower****andtheir respective Subsidiaries for the respective periods during which aSubsidiary relationship existed) as of the end of such year, together with therelated statements of income, cash flow, changes in shareholder’s equity, andchanges in financial position for the periods ended on such date, which do notcontain any paragraph of emphasis or explanatory note relating to the abilityof Borrower and its Subsidiaries to continue business as a going concern, andare certified by KPMG, LLP or another firm of independent certified publicaccountants of recognized national standing and, within a reasonable timethereafter a copy of any management letter issued in connection therewith;

 

(B)             not later than 45 days after the end of each fiscalquarter of Borrower****occurringafter the Closing Date, including the last fiscal quarter of Borrower’s fiscalyear, unaudited interim Consolidated and consolidating****(on a line of business basis) balancesheets of Borrower and its Subsidiaries (including the accounts of allSubsidiaries of Borrower****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 ofBorrower, in such officer’s capacity as such, as prepared in accordance withGAAP applied consistently with the

 

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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 Borrower and its Subsidiaries for such quarter andperiod subject only to changes from audit and year-end adjustments and exceptthat such statements need not contain notes;

 

(C)             not later than 30 days after the end of each fiscalmonth of Borrower****occurring afterthe Closing Date, including the last fiscal month of Borrower’s fiscal year,unaudited interim Consolidated balance sheets of Borrower and its Subsidiaries(including the accounts of all Subsidiaries of Borrower****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 cash flowsetting 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 Borrower,****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 Borrower 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 of financial statements(1) pursuant to the foregoing clauses (A), (B) and (C), a compliancecertificate in the form of Exhibit 8.1.3(iv) hereto executed by thechief financial officer of Borrower (a **“ComplianceCertificate”**); and (2) together with the financial informationdelivered pursuant to the forgoing clause (B) (or upon Administrative Agent’srequest from time to time) a list of all contracts entered into by any CreditParty or any of its Subsidiaries with surety, bonding, indemnity or similarentities since the date that the last Compliance Certificate was deliveredpursuant hereto, pursuant to which any performance, surety or similar bondshave been issued for the account of any Credit Party or any of itsSubsidiaries, which list identifies any portion thereof that is cashcollateralized.  In addition, uponAdministrative Agent’s request, each Credit Party shall deliver toAdministrative Agent copies of any bonds issued pursuant to such agreements setforth in clause (2); and

 

(E)              together with the delivery of the financial statementsdescribed in subsection 8.1.3(ii)(A), Borrower shall forward toAdministrative Agent a copy of the accountants’ letter

 

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toBorrower’s****management that isprepared in connection with such financial statements.

 

8.1.4                        Collateral Coverage Certificates. On or before any date on which any Credit Party creates, incurs orassumes any First Lien Debt (other than as a result of any borrowing ofrevolving credit loans or any issuance of letters of credit), Borrower shalldeliver to Administrative Agent a certificate in the form of Exhibit 8.1.4hereto executed by the chief financial officer of the Borrower and dated as ofthe date of such creation, incurrence or assumption, together with anysupporting documentation Administrative Agent may reasonably request (which mayinclude information delivered to the First Lien Debt Agent in connection withthe First Lien Loan and Security Agreement).

 

8.1.5                        Landlord, Processor and StorageAgreements.  Provide Administrative Agent with copies ofall agreements between any Credit Party or any of its Subsidiaries and anylandlord, warehouseman, processor, distributor or consignee which owns or isthe lessee of any premises at which any Collateral may, from time to time, bekept.  With respect to any lease (otherthan leases for sales offices), warehousing agreement or any processingagreement in any case entered into after the Closing Date, Credit Parties shallprovide Administrative Agent with landlord waivers, bailee letters or processorletters with respect to such premises. Such landlord waivers, bailee letters or processor letters shall be in aform supplied by Administrative Agent to Credit Parties with such reasonablerevisions as are customarily accepted by Administrative Agent or by similarfinancial institutions in similar financial transactions.

 

8.1.6                        Projections.  No later than30 days prior to the end of the last day of each fiscal year of Borrower,deliver to Administrative Agent Projections of Borrower and each of itsSubsidiaries on a Consolidated basis (including on a line of business basis)for the forthcoming fiscal year, month by month.

 

8.1.7                        Additional Credit Parties.  Upon anyPerson becoming a direct or indirect Subsidiary of any Credit Party (or uponany Person ceasing to be a Foreign Subsidiary of any Credit Party whileremaining a Subsidiary of any Credit Party), (a) cause such Person (excludingany Foreign Subsidiary) to become a “Subsidiary Guarantor” and “Credit Party”hereunder, jointly and severally with the other Subsidiary Guarantors, pursuantto a joinder agreement or other supplement hereto in form and substancereasonably satisfactory to Administrative Agent, (b) cause such Person(excluding any Foreign Subsidiary) to pledge all of its assets toAdministrative Agent on a second priority basis (subject only to PermittedLiens) pursuant to this Agreement or a separate security agreement in form andsubstance reasonably satisfactory to Administrative Agent, (c) cause all ofsuch Person’s Securities (or in the case of any Foreign Subsidiary, sixty-fivepercent (65%) of its Securities entitled to vote and 100% of its non-votingSecurities) to be pledged and delivered to Administrative Agent pursuant to apledge agreement in form and substance reasonably satisfactory toAdministrative Agent (together with undated stock powers signed in blank), (d)cause such Person (excluding any Foreign Subsidiary) to grant a mortgage in andto all of such Person’s owned real Property in accordance with subsection 5.4,and (e) deliver such other

 

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documentation asAdministrative Agent may reasonably request in connection with the foregoing,including, without limitation, certified resolutions and other organizationaland authorizing documents of such Person and favorable opinions of counsel tosuch Person (which shall cover, among other things, the legality, validity,binding effect and enforceability of the documentation referred to above), allin form, content and scope reasonably satisfactory to Administrative Agent.

 

8.1.8                        ERISA.  (i) Maintain, and causeeach of its ERISA Affiliates to maintain, each Pension Plan and Foreign Plan incompliance in all material respects with the Requirement of Law, including, butnot limited to ERISA, the Code and other federal or state law; (ii) cause, andcause each of its ERISA Affiliates to cause, each Plan which is qualified underSection 401(a) of the Code to maintain such qualification; (iii) make, andcause each of its ERISA Affiliates to make, all required contributions to anyPlan subject to Section 412 of the Code; (iv) not engage, and cause eachof its ERISA Affiliates not to engage, in a prohibited  transaction or violation of the fiduciaryresponsibility rules with respect to any Plan or Foreign Plan and (v) notengage, and cause each of its ERISA Affiliates not to engage, in a transactionthat could be subject to Section 4069 or 4212(c) of ERISA.

 

8.1.9                        Environmental Laws.

 

(i)                                     Conduct, and cause each Credit Partyto conduct, its business in compliance with all Environmental Laws applicableto it, including those relating to the generation, handling, use, storage, anddisposal of any Contaminant; take, and cause each of its Subsidiaries to take,prompt and appropriate action to respond to any non-compliance with EnvironmentalLaws (or any Release), and regularly report to Administrative Agent on suchresponse.

 

(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 any Credit Partyand its communications with any Governmental Authority to determine whether anyCredit Party or any of its Subsidiaries is proceeding reasonably to correct,cure or contest in good faith any alleged non-compliance or environmentalliability.  Credit Parties shall, atAdministrative Agent’s or Majority Lenders’ request and at Credit Parties’expense, (A) retain an independent environmental engineer acceptable toAdministrative Agent  to evaluate thesite, including tests if appropriate, where the non-compliance or allegednon-compliance with Environmental Laws has occurred and prepare and deliver toAdministrative Agent, in sufficient quantity for distribution by AdministrativeAgent to Lenders, a report setting forth the results of such evaluation, aproposed plan for responding to any environmental problems described therein,and an estimate of the costs thereof, and (B) provide to Administrative Agentand Lenders a supplemental report of such engineer whenever the scope of theenvironmental problems, or the response thereto or the estimated costs thereof,shall increase in any material respect.

 

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(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 any Credit Partyis located 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 anyCredit Party 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 Credit Party nor any other partyis entitled to rely on any site visit, observation or testing by AdministrativeAgent.  Administrative Agent and Lendersowe no duty of care to protect any Credit Party or any other party against, orto inform any Credit Party or any other party of, any hazardous substances orany other adverse condition affecting the real Properties.  Administrative Agent may in its solediscretion disclose to any Credit Party 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 Credit Party understands and agrees thatAdministrative Agent makes no warranty or representation to any Credit Party orany other party regarding the truth, accuracy or completeness of any suchreport or findings that may be disclosed. Each Credit Party also understands that depending on the results of anysite visit, observation or testing by Administrative Agent and disclosed to anyCredit Party, such Credit Party may have a legal obligation to notify one ormore environmental agencies of the results, that such reporting requirementsare site-specific, and are to be evaluated by such Credit Party without adviceor assistance from Administrative Agent. In each instance, Administrative Agent will give Borrower or the otherapplicable Credit Party reasonable notice before entering the real Propertiesor any other place Administrative Agent is permitted to enter under this subsection 8.1.9.  Administrative Agent will make reasonableefforts to avoid interfering with any Credit Party’s use of the real Propertiesor any other property in exercising any rights provided hereunder.

 

8.2         Negative Covenants.  During theTerm, and thereafter for so long as there are any Obligations (other thanunasserted contingent indemnification obligations that are not then due andpayable, whether by acceleration, termination or otherwise) outstanding, eachCredit Party covenants that it shall not, and shall not permit any of its Subsidiariesto:

 

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 theProperties of any Person, except for:

 

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(i)                                     (A) mergers of any Subsidiary of aCredit Party that is not a Subsidiary Guarantor into any  Credit Party that is not a SubsidiaryGuarantor and (B) mergers of any Subsidiary Guarantor into any other SubsidiaryGuarantor or into Borrower; and

 

(ii)                                  acquisitions of assets thatconstitute Capital Expenditures.

 

8.2.2                        Loans.  Make any loans or otheradvances of money to any Person, other than (i) for salary, traveladvances, advances against commissions and other similar advances to employeesin the ordinary course of business, (ii) extensions of trade credit in theordinary course of business, (iii) deposits with financial institutionspermitted under this Agreement, (iv) prepaid expenses,(v) intercompany loans****betweenany Credit Party and any other Credit Party, (vi) deposits permitted to be madeby subsection 8.2.5(vi), (vii) promissory notes received asconsideration in connection with the asset dispositions permitted under subsection 8.2.8(viii)and (viii) to the extent constituting a loan or advance, rental agreements thatcontain options granted to customers of Credit Parties to the extent suchrental agreements are entered into in the ordinary course of business andconsistent with past practices, and so long as (x) customers may purchase theRental Equipment Inventory rented by such customers at the expiration of theapplicable rental term at a purchase price not less than the fair market valueof such Rental Equipment Inventory and (y) at all times prior to the payment ofsuch purchase price, the applicable Credit Party retains full legal andbeneficial ownership of the applicable Rental Equipment Inventory.

 

8.2.3                        Total Indebtedness.  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 or collectionin 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;

 

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(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 First Lien Debt, and extensionsof maturity, refinancing or modification of the terms thereof, but only to theextent permitted by subsection 8.2.6; provided that (A) theaggregate outstanding principal amount of First Lien Debt (with letters ofcredit issued thereunder being deemed to have a principal amount equal to themaximum potential liability of Borrower or any of its Subsidiaries thereunder)at any time outstanding shall not exceed $350,000,000 less the aggregate amountof (x) all Net Cash Proceeds of asset sales or other dispositions orcasualty or condemnation events, incurrences or issuances of additionalIndebtedness (other than any Indebtedness that refinances the First Lien Debtoutstanding on such date in its entirety) or issuances of additional equity and(y) amounts resulting from an excess cash flow sweep or similar concept, in thecase of each of clauses (x) and (y), that are applied by Borrower or any of itsSubsidiaries after the Closing Date to repay, whether optionally ormandatorily, any term First Lien Debt or to repay, whether optional ormandatorily, any revolving credit First Lien Debt and effect a correspondingcommitment reduction with respect thereto, and (B) Borrower shall not create,incur or assume First Lien Debt (other than Permitted Overadvances) if, aftergiving effect to such creation, incurrence or assumption, the CollateralCoverage Ratio would exceed 1.00 to 1.00;

 

(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 Credit Parties and theirSubsidiaries in the ordinary course of business, provided, that the aggregateprincipal amount of such Indebtedness does not exceed at any time $4,000,000;

 

(xii)                             Indebtedness in respect ofDerivative Obligations and other Product Obligations, in each case, incurred inthe 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                        Affiliate Transactions.  Enter into,or be a party to, any transaction with any Affiliate of any Credit Party or anyholder of any Securities of any Credit Party or any Subsidiary of any CreditParty (other than any other Credit Party), including without limitation inrespect of any management, consulting or similar fees, unless such transactionmeets each of the following conditions: (i) such transaction is in the ordinarycourse of and pursuant to the reasonable requirements of such Credit Party’s orsuch Subsidiary’s business and upon fair and reasonable terms which are no lessfavorable to such Credit Party or such Subsidiary than would be obtained in acomparable arms-length transaction with a Person not an Affiliate or Securityholder of any Credit Party, provided that if such transaction involvesconsideration in excess of $7,500,000 and a Credit Party

 

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has knowledge thatthe other party or parties to such transaction are Affiliates of Credit Partiesor their Subsidiaries, Credit Parties shall fully disclose the terms of suchtransaction to Administrative Agent prior to the consummation thereof and(ii) such transaction is otherwise permitted under Section 8of this Agreement.

 

8.2.5                        Limitation on Liens.  Create orsuffer to exist any Lien upon any of its Property, income or profits, whethernow owned or hereafter acquired, 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 theprovisions of ERISA and any Environmental Lien) not yet due, or being contestedin the manner 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 Credit Party or any of its Subsidiaries by operation oflaw or regulation, but only if payment in respect of any such Lien is not atthe time required and such Liens do not, in the aggregate, materially detractfrom the value of the Property of such Credit Party or any of its Subsidiariesor materially impair the use thereof in the operation of the business of suchCredit Party 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 aCredit Party or one of its Subsidiaries; provided that such exceptionsdo not in the aggregate materially interfere with the use of such Property inthe ordinary course of any Credit Party’s or such Subsidiary’s business;

 

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

 

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(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)                                   deposits to secure surety and appealbonds, performance bonds and other obligations of like nature, in each caseincurred in the ordinary course of business;

 

(xi)                                Liens on proceeds payable under anyinsurance policy (whether arising by statute or contract) to the extentsecuring the payment of the unpaid portion of annual insurance premiums payableby Credit Parties and their Subsidiaries in respect of such insurance policy, providedthat the aggregate amount so secured shall not at any time exceed $2,500,000;

 

(xii)                             Liens securing Product Obligationsincurred in the ordinary course of business and not for speculative purposes;

 

(xiii)                          Liens of a collection bank arisingunder Section 4-208 of the Uniform Commercial Code on items in the courseof collection; and

 

(xiv)                         Liens in favor of New Holland CreditCompany and its parent entities, Daewoo Heavy Industries America Corporation,Stihl Incorporated and Mitsui Machinery Distribution, Inc. (the “SpecifiedVendors”), to the extent and only to the extent such Liens encumberproperty sold or leased to Credit Parties by such Specified Vendors which hasnot been paid in full, and only to the extent that the principal amount of theobligations secured by such Liens does not exceed $2,500,000 in the aggregateat any one time outstanding.

 

8.2.6                        Payments and Amendments of Certain Debt.

 

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

 

(ii)                                  amend or modify any agreement,instrument or document evidencing or relating to any Subordinated Debt; or

 

(iii)                               amend, modify, replace or refinanceany First Lien Debt Document if such amendment, modification, replacement orrefinancing would (A) modify (or have the effect of modifying) the provisionstherein in respect of the repayment, prepayment, amendment or refinancing of(or any like concept with respect to) the Obligations or the documentsevidencing the Obligations or otherwise relating thereto), in each case, in amanner that would be materially adverse to Lenders as compared to those ineffect on the Closing Date or (B) increase the applicable margin used indetermining the interest rate for the Indebtedness under the First Lien DebtDocuments (or, if the amended First Lien Debt Documents provide for a fixedinterest rate, increase the effective interest rate) from the applicable marginused in determining

 

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the interestrate thereunder that would apply on the Closing Date if “Level I” on thepricing grid in the definition of “Applicable Margin” in the First Lien Loanand Security Agreement were to apply (or, if the amended First Lien DebtDocuments provide for a fixed interest rate, the interest rate that would beapplicable to the First Lien Debt on the date of such amendment or modificationif such rate were determined by adding the applicable margin that would applyon the Closing Date if “Level I” on the pricing grid in the definition of “ApplicableMargin” in the First Lien Loan and Security Agreement were to apply to 9 monthLIBOR as of the day of such amendment or modification) by an amount in excessof the sum of (1) 2.0% plus (2) the amount, if any, by which the interest rateapplicable to any portion of the Term Loans has been increased over (A) 8.0%with respect to LIBOR Portions and (B) 7.0% with respect to Base Rate Portions;provided that this subsection 8.2.6(iii) shall not prohibitany First Lien Debt Document from providing that the Indebtedness thereundershall bear interest at a default rate of up to 2% in excess of the then statedrate at any time an event of default has occurred and is continuing thereunder.

 

8.2.7                        Distributions. Declare or make any Distributions, except for:

 

(i)                                     Distributions by any Subsidiary of aCredit Party to a Credit Party;

 

(ii)                                  Distributions paid solely in Securities(other than Disqualified Capital Stock) of a Credit Party or any of itsSubsidiaries (and solely as permitted under Section 8.2.9); and

 

(iii)                               Distributions by a Credit Party inamounts necessary to permit such Credit Party to repurchase Securities of aCredit Party from employees of any Credit Party or any of its Subsidiaries uponthe termination 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 $500,000 in any fiscal year of Credit Parties.

 

8.2.8                        Disposition of Assets.  Sell, lease,license or otherwise dispose of any of its Properties, including any dispositionof Property 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 of anysingle disposition or series of related dispositions of such Property exceed$5,000,000 and such Net Cash Proceeds are not reinvested within 180 days afterreceipt of such Net Cash Proceeds, such proceeds shall, if and to the extentrequired by

 

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subsection 3.3.1, be remitted to AdministrativeAgent for application to the Term Loans and other Obligations as provided 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 $6,000,000 in the aggregate during any consecutivetwelve-month period;

 

(v)                                 transfers of Property to a CreditParty by another Credit Party or to a Credit Party by a Subsidiary of a CreditParty;

 

(vi)                              dispositions of Property that isworn, damaged, uneconomic or obsolete or no longer used or useful, providedthat either (A) (1) such Property is replaced with Property which is used oruseful in the business of a Credit Party or one of its Subsidiaries (other thana Foreign Subsidiary), (2) the replacement Property is acquired or committed tobe purchased within 180 days prior to or following the disposition of theProperty that is to be replaced and (3) the replacement Property shall be freeand clear of Liens other than Liens securing Permitted Purchase MoneyIndebtedness or (B) the Net Cash Proceeds of such disposition, if and to theextent required by subsection 3.3.1, are remitted to AdministrativeAgent for application to the Term Loans as provided 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”**; and voluntary terminations of Derivative Obligationsin the ordinary course of business;

 

(viii)                        the sale of all or part of theassets or business constituting the Studio Business Unit and the Hoist BusinessUnit of Credit Parties in one or more transactions, provided that (A)each such transaction is for a sales price of not less than $10,000,000, (B)the consideration received consists solely of (x) cash or (y) a combination ofcash and promissory notes issued by the purchaser of such business (providedthat 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 35% of the aggregate sales price in the case of theStudio business, (2) such promissory notes shall be pledged to AdministrativeAgent, for the benefit of the Lenders, pursuant to a pledge agreement in formand substance reasonably satisfactory to Administrative Agent, (3) all paymentsof principal, interest and other amounts payable under such promissory notesand that are received by Credit Parties or their Subsidiaries shall be remittedto Administrative Agent for application in accordance with subsection 3.3.1and (4) the aggregate principal amount of all promissory notes received asconsideration for all asset sales permitted under this subsection 8.2.8(viii)shall not exceed $7,500,000 at any one time outstanding) and (C) if Borrowershall have given Administrative Agent written notice prior to the consummationof such sale of Borrower’s intention to use the Net Cash Proceeds thereof toreinvest in the business of

 

 

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Borrower andits Subsidiaries (other than Foreign Subsidiaries) through the purchase ofassets used or useful in the business of Borrower and its Subsidiaries (otherthan Foreign Subsidiaries), then the Net Cash Proceeds of such sale shall notbe required to prepay the Term Loans; provided, further, that if(a) any Default or Event of Default shall have occurred and be continuing onthe date such Net Cash Proceeds are received by Borrower or such applicableSubsidiary or at the time of such reinvestment or (b) Borrower or suchapplicable Subsidiary shall have failed to complete such reinvestment within180 days after consummation of the sale of the applicable business unit, thensuch portion of the Net Cash Proceeds as has not been reinvested at such timeshall, if and to the extent required by subsection 3.3.1, beremitted to Administrative Agent for application in accordance with subsection 3.3.1;and

 

(ix)                                the sale of assets comprising adivision or business unit in one or more transactions, provided that (A)the consideration received in connection with all such sale or sales (x) shallconsist solely of cash and (y) shall not exceed $100,000,000 in the aggregate,(B) the consideration received in connection with each such sale shall, at thetime of execution of definitive documentation with respect to such sale,represent no less than the greater of (1) the Total Funded Senior LeverageRatio as of the last day of the most recently ended fiscal quarter of Borrowerand (2) four (4) times the amount of Adjusted Consolidated EBITDA for thetwelve consecutive month period ending as of the last day of the most recentlyended fiscal quarter of Borrower that is attributable to the correspondingassets sold, (C) the consideration received in connection with each such saleshall be in an amount at least equal to the orderly liquidation value of theassets sold as set forth in the most recent appraisal relating theretodelivered to Administrative Agent in accordance with the terms of the Agreementand (D) if Borrower shall have given Administrative Agent written notice priorto the consummation of such sale of Borrower’s intention to use the Net CashProceeds thereof to reinvest in the business of Borrower and its Subsidiaries(other than Foreign Subsidiaries) through the purchase of assets used or usefulin the business of Borrower and its Subsidiaries (other than ForeignSubsidiaries), then the Net Cash Proceeds of such sale shall not be required toprepay the Term Loans; provided, further, that if (a) any Defaultor Event of Default shall have occurred and be continuing on the date such NetCash Proceeds are received by Borrower or such applicable Subsidiary or at thetime of such reinvestment or (b) Borrower or such applicable Subsidiary shallhave failed to complete such reinvestment within 180 days after consummation ofthe sale of the applicable division or business unit, then such portion of theNet Cash Proceeds as has not been reinvested at such time shall, if and to theextent required by subsection 3.3.1, be remitted to AdministrativeAgent for application in accordance with subsection 3.3.1

 

provided, that sales or other dispositionspursuant to the foregoing clauses (iv), (vi), (viii) and (ix) shall only bepermitted so long as no Default or Event of Default exists at the time of suchsale or disposition; and provided, further, that ifAdministrative Agent shall have delivered a Dominion Notice in accordance with subsection 6.2.4,the Net Cash Proceeds of any sale or disposition pursuant to this subsection 8.2.8shall be, if and to the extent required by subsection 3.3.1,remitted to Administrative Agent for application to the Term Loans and otherObligations as provided in subsection 3.3.1.

 

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8.2.9                        Issuance of Securities.  Issue anyadditional Securities, except for issuances (i) of Securities of a Credit Party(other than Borrower) to another Credit Party, (ii) of Securities of Borrowerto management and employees of any Credit Party, (iii) of Securities ofBorrower to Persons that are holders of Securities of Borroweron the Closing Date, (iv) of Securities of Borrower, the Net Cash Proceeds ofwhich are used to purchase Collateral or (v) of Securities of Borrower, the NetCash Proceeds of which are used to repay the Term Loans as and to the extentprovided in subsection 3.3.2; provided, however, thatno Credit Party or any of its Subsidiaries may issue Securities consisting ofDisqualified Capital Stock; and provided, further, that noissuance shall be permitted pursuant to this subsection if such issuancewould result in a Change of Control.

 

8.2.10                  Bill-and-Hold Sales, Etc. Make a sale to any customer on a bill-and-hold, guaranteed sale, saleand return, sale on approval, repurchase or return or consignment basis, providedthat Credit Parties may provide rental purchase options to their customers inthe ordinary 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 Restricted Investment.

 

8.2.12                  Subsidiariesand JointVentures.  Create, acquire or otherwise suffer to existany Subsidiary (other than any Subsidiary organized under the laws of Canada)or joint venture arrangement, in each case, not in existence as of the datehereof, except that Credit Parties and their Subsidiaries may enter into anyjoint venture arrangement after the Closing Date so long as (A) sucharrangement will not involve, require or result in or otherwise obligate anycash or cash consideration made or to be made by any Credit Party or any of itsSubsidiaries in an aggregate amount in excess of $5,000,000 and no Default orEvent of Default shall have occurred and be continuing immediately before orafter entering into such arrangement or (B) if such arrangement will involve,require or result in or otherwise obligate any cash or cash consideration madeor to be made by any Credit Party or any of its Subsidiaries in an aggregateamount in excess of $5,000,000, (x) immediately before and after entering intosuch arrangement, no Default or Event of Default shall have occurred and becontinuing and (y) Borrower shall submit a certificate of the chief financialofficer of Borrower, in such officer’s capacity as such, certifying that theconditions set forth in this clause (B) have been satisfied; and provided,further, that in no event shall any joint venture arrangements entered intopursuant to this subsection 8.2.12 involve, require or result in orotherwise obligate any cash or cash consideration made or to be made by anyCredit Parties or any of its Subsidiaries in an aggregate amount in excess of$15,000,000.

 

8.2.13                  TaxConsolidation. File or consent to the filing of any consolidated income tax return withany Person other than Borrower, another Credit Party and Credit Parties’Subsidiaries.

 

8.2.14                  OrganizationalDocuments. Agree to, or suffer to occur, any amendment, supplement or addition toits or any of its Subsidiaries’ charter, articles or

 

 

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certificate ofincorporation, certificate of formation, limited partnership agreement, bylaws,limited liability agreement, operating agreement or other organizationaldocuments (as the case may be), that, in each case, would reasonably be expectedto have a Material Adverse Effect.

 

8.2.15                  FiscalYear End. Change its fiscal year end.

 

8.2.16                  NegativePledges. Enter into or suffer to exist any agreement limiting the ability of anyCredit Party or any of its Subsidiaries (i) to voluntarily create Liensupon any of its Property, (ii) to pay dividends or to make any otherdistribution on any Securities of any Credit Party or any of its Subsidiaries,(iii) to pay or prepay or to subordinate any Indebtedness owed to any CreditParty or any of its Subsidiaries, (iv) to make loans or advances to any CreditParty or any of its Subsidiaries or (v) to transfer any of its property orassets to any Credit Party or any of its Subsidiaries, or permit any of itsSubsidiaries to do any of the foregoing, except for the First Lien DebtDocuments as in effect on the Closing Date and any replacements or refinancingsthereof (as long as such replacement or refinancing documents containprovisions with respect to the forgoing that are not more restrictive than thosecontained in the First Lien Debt Documents as in effect on the Closing Date).

 

8.2.17                  Leases.  Become alessee under any operating lease (other than a lease under which a Credit Partyor any of its Subsidiaries is lessor) of Property if the aggregate Rentalspayable during any current or future period of twelve (12) consecutive monthsunder the lease in question and all other leases under which Credit Parties orany of their Subsidiaries are then lessees would exceed****$40,000,000.  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-Terrorism Laws. (i)  Conduct any business or engage in anytransaction or dealing with any Blocked Person, including the making or receivingof any contribution of funds, goods or services to or for the benefit of anyBlocked Person; (ii) deal in, or otherwise engage in any transaction relatingto, any property or interests in property blocked pursuant to Executive OrderNo. 13224; or (iii) engage in or conspire to engage in, nor permit any of theirSubsidiaries 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 Credit Parties shalldeliver to 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                  Changein Natureof Business.  Engage in any material line of businesssubstantially different from those lines of business generally conducted by theCredit Parties on the date hereof or any business substantially related orincidental thereto or reasonable extensions thereof.

 

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8.2.20                  Location of Personal Property. Have at any time personal property at any single location having a valuein excess of the applicable amount payable per occurrence by the Credit Parties’insurance with respect to any loss of such property.

 

8.3              Specific Financial Covenants.During the Term, and thereafter forso long as there are any Obligations outstanding, Borrower covenants that itshall comply with all of the financial covenants set forth in Exhibit 8.3hereto.  If GAAP changes from the basisused in preparing the audited financial statements delivered to AdministrativeAgent by Borrower on or before the Closing Date, Borrower will provideAdministrative Agent with certificates demonstrating compliance with suchfinancial covenants and will include, at the election of Borrower or upon therequest of Administrative Agent, calculations setting forth the adjustmentsnecessary to demonstrate how Borrower is also in compliance with such financialcovenants based upon GAAP as in effect on the Closing Date.

 

**SECTION 9.  CONDITIONS PRECEDENT**

 

9.1              Conditions to Term Loans. Notwithstanding any other provision of this Agreement or any of theother Loan Documents, and without affecting in any manner the rights ofAdministrative Agent or any Lender under the other sections of this Agreement,no Lender shall be required to make the Term Loans unless and until each of thefollowing conditions has been satisfied on or prior to the Closing Date:

 

9.1.1                        Documentation. Administrative Agent shall have received, in form and substancesatisfactory to Administrative Agent, Syndication Agent and their respectivecounsel, a duly executed copy of this Agreement and the other Loan 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 theirrespective counsel.

 

9.1.2                        Real Property. Administrative Agent shall have received ALTA title policies, in formand substance reasonably acceptable to Administrative Agent, with respect tothe Mortgages for the properties set forth on Exhibit 7.17.

 

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 Credit Party or any of its Subsidiaries, together with copies ofsuch financing statements (or similar filings in any foreign jurisdiction),none of which, except as otherwise agreed in writing by Administrative Agent,shall cover any of the Collateral or show any Liens other than Permitted Liens;and

 

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(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 payableendorsement naming Administrative Agent and Lenders as loss payees and asadditional insureds).

 

9.1.5                        Solvency. Administrative Agent and Syndication Agent shall have determined totheir satisfaction that (1) Adjusted Consolidated EBITDA (as defined inExhibit 8.3) for Borrower and its Subsidiaries for Borrower’s****fiscal year ended December 31, 2003shall be equal to or greater than $125,000,000, (2) each Credit Party isadequately capitalized, (3) the fair saleable value of each Credit Party’sassets exceeds its liabilities on the Closing Date and (4) each CreditParty will 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 Term Loans and the receipt of theproceeds of the First Lien Debt to be funded on the Closing Date, the PriorIndebtedness shall be 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 Credit Parties and all applicable waiting periodshave expired without any action being taken by any authority that couldrestrain, prevent or impose any material adverse conditions on suchtransactions or that could seek or threaten any of the foregoing, and no law orregulation shall be applicable which in the judgment of Administrative Agentcould have such effect.

 

9.1.8                        Financial Statements. Administrative Agent shall have received, each in form and substancesatisfactory to Administrative Agent and Syndication Agent, (a) a pro formabalance sheet of Borrower dated as at the Closing Date which balance sheetshall reflect no material adverse changes from the most recent pro formabalance sheet of Borrower previously delivered to Administrative Agent and(b) interim monthly financial statements for Borrower 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 Joint Lead Arrangers or Lenders, as applicable,payment in full of the fees required to be paid to Administrative Agent,Syndication Agent or Lenders under or in connection with this Agreement on theClosing Date, and Administrative Agent shall have received evidencesatisfactory to Administrative Agent that the reasonable fees and expenses ofAdministrative Agent’s, Syndication Agent’s (subject to the limitations setforth herein) and Lenders’ counsel,

 

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financial advisors,appraisers, commercial finance examiners and other advisers incurred or accruedthrough the Closing Date have been paid.

 

9.1.10                  Issuance of First Lien Debt. (i) Borrower shall have incurred the term loan portion of the FirstLien Debt on terms and conditions satisfactory to Administrative Agent andSyndication Agent and (ii) Administrative Agent shall have received(A) evidence satisfactory to it that Borrower has received gross proceedsof at least $200,000,000 from the incurrence of the term portion of the FirstLien Debt (and shall have received revolving credit commitments with respect toan additional $100,000,000 of the First Lien Debt), (B) copies of all ofthe First Lien Debt Documents as in effect on the Closing Date, certified astrue and correct copies thereof by a Responsible Officer of Borrower, in suchofficer’s capacity as such, together with a certificate of a ResponsibleOfficer of Borrower 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                  [Intentionally Omitted].

 

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 Borrower 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 CreditParties as of May 31, 2004 and performed by Rouse Asset Services which shallstate the orderly liquidation value (expressed as a percentage of net bookvalue) of all such 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, in such officer’s capacity as such, reasonably satisfactory thereto,for the benefit of Administrative Agent and the Lenders, that sets forthinformation required by the USA Patriot Act including, without limitation, theidentity of Credit Parties, the names and addresses of the Credit Parties andother information that will allow Administrative Agent or any Lender, as applicable,to identify the Credit Parties in accordance with the USA Patriot Act.

 

9.1.15                  Representations and Warranties; NoDefault.  At the time of and after giving effect to themaking of the Term Loans and the application of the proceeds thereof, (i) therepresentations and warranties contained in Section 7 and in eachother

 

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Loan Documentdelivered to Administrative Agent or any Lender pursuant hereto or theretoshall be true and correct in all material respects on and as of such date asthough made on and as of such date and (ii) no Default or Event of Defaultshall have occurred and be continuing.

 

9.1.16                  First Lien Debt Documents. The making of such Term Loan shall not contravene, violate or result ina default under the First Lien Debt Documents.

 

Without limiting thegenerality of the provisions of this Section 9, for purposes ofdetermining compliance with the conditions specified in this Section 9,each Lender that has signed this Agreement shall be deemed to have consentedto, approved or accepted or to be satisfied with, each document or other matterrequired thereunder to be consented to or approved by or acceptable orsatisfactory to the Administrative Agent, the Syndication Agent or a Lenderunless Administrative Agent shall have received notice from such Lender priorto the proposed Closing Date specifying its objection thereto.

 

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

 

10.1        Events of Default.  Theoccurrence of one or more of the following events shall constitute an **“Event of Default”**:

 

10.1.1                  Payment of Obligations. Credit Parties or any of their Subsidiaries shall fail to pay (a) anyprincipal of any Term Loan hereunder or under any Term Note on the due datethereof (whether due at stated maturity, on demand, upon acceleration orotherwise) or (b) any of the Obligations (other than the amount referred to inclause (a)) hereunder or under any Term Note or under any other Loan Documenton the due date thereof (whether due at stated maturity, on demand, uponacceleration or otherwise) and, in the case of clause (b) only, such defaultshall continue unremedied for a period of three (3) Business Days.

 

10.1.2                  Misrepresentations. Any representation, warranty or other statement made or furnished toAdministrative Agent or any Lender by or on behalf of any Credit Party or anySubsidiary of any Credit Party in this Agreement or any of the other LoanDocuments proves to have been false or misleading in any material respect whenmade or furnished.

 

10.1.3                  Breach of Specific Covenants. Any Credit Party 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, 8.2 or 8.3 hereof on the date thatCredit Parties are required to perform, keep or observe such covenant or shallfail or neglect to perform, keep or observe any covenant contained in subsection 8.1.3or 8.1.6 hereof within 10 days following the date on which CreditParties are required to perform, keep or observe such covenant.

 

10.1.4                  Breach of Other Covenants. Any Credit Party 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

 

 

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subsection 10.1 hereof) or any of the other LoanDocuments and the breach of such other covenant is not cured within 15****days.

 

10.1.5                  Other Defaults. There shall occur any default or event of default on the part of anyCredit Party or any Subsidiary of any Credit Party under any agreement,document or instrument to which such Credit Party or such Subsidiary of suchCredit Party is a party or by which such Credit Party or such Subsidiary ofsuch Credit Party or any of its Property is bound, evidencing or relating to(a) any Indebtedness (other than the Obligations or the First Lien Debt) withan outstanding principal balance in excess of $5,000,000, if the payment ormaturity of such Indebtedness is or could be accelerated in consequence of suchevent of default or demand for payment of such Indebtedness is made or could bemade in accordance with the terms thereof or (b) the First Lien Debt; providedthat with respect to any default or event of default under the First Lien DebtDocuments, such default or event of default shall constitute an Event ofDefault under this Agreement if either (i) such default or event of default isa payment default or (ii) such default or event of default is other than asdescribed in clause (i) and such default or event of default occurs and is notcured or waived within thirty (30) days after the occurrence of such default orevent of default.

 

10.1.6                  Insolvency and Related Proceedings.

 

(i)                                     Any Credit Party or any Subsidiaryof any Credit Party shall (A) be unable generally to pay its debts as theybecome due; (B) make any offer of settlement, extension or composition to theirrespective unsecured creditors generally; (C) file a voluntary petition inbankruptcy or file a voluntary petition or an answer or otherwise commence anyaction or proceeding seeking reorganization, arrangement or readjustment of itsdebts or for any other relief under the U.S. federal bankruptcy laws, or under anyother bankruptcy 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 Credit Party orany Subsidiary of any Credit Party or for any other relief under the U.S.bankruptcy laws or under any other bankruptcy or insolvency act or law, stateor federal, now or hereafter existing and such petition or proceeding shall notbe dismissed within thirty (30) days after the filing or commencement thereofor an order of relief shall be entered with respect thereto;

 

(iii)                               a receiver, assignee, liquidator,sequestrator, custodian, monitor, trustee or similar officer for any CreditParty or any Subsidiary of any Credit Party or for all or any part of itsproperty shall be appointed or a warrant of attachment, execution or similarprocess shall be issued against any part of the property of any Credit Party orany Subsidiary of any Credit Party;

 

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(iv)          any Credit Party or any Subsidiary of any Credit Party(other than any Inactive Subsidiary) shall file a certificate of dissolutionunder applicable state law or shall be liquidated, dissolved or wound-up orshall commence or have commenced against it any action or proceeding fordissolution, winding-up or liquidation;

 

(v)           any Credit Party or any Subsidiary of any Credit Partyshall take any corporate action in furtherance of any of the matters describedin the foregoing clauses (i) through (iv).

 

10.1.7      Business Disruption; Condemnation. (i) There shall occur a cessation of a substantial part of the businessof any Credit Party or any Subsidiary of any Credit Party for a period whichmaterially adversely affects Credit Parties’ and their Subsidiaries’ capacity,taken as a whole, to continue their business on a profitable basis; or (ii) anyCredit Party or any Subsidiary of any Credit Party shall suffer the loss orrevocation of any material license or permit now held or hereafter acquired byany Credit Party or any Subsidiary of any Credit Party which is necessary tothe continued or lawful operation of its business if such loss or revocationcould reasonably be expected to have a Material Adverse Effect; or (iii) anyCredit Party or any Subsidiary of any Credit Party 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 Credit Parties’and their Subsidiaries’ capacity, taken as a whole, to continue their businesson a profitable basis; or (iv) any material lease or agreement pursuant towhich any Credit Party or any Subsidiary of any Credit Party, uses or occupiesany Property shall be canceled or terminated prior to the expiration of itsstated term, except any such lease or agreement the cancellation or terminationof which could not reasonably be expected to have a Material Adverse Effect; or(v) any material portion of the Collateral shall be taken through condemnationor the value of such material portion of the Collateral shall be impairedthrough condemnation.

 

10.1.8      Change of Control.  A Change ofControl shall occur.

 

10.1.9      ERISA Event. An ERISA Event shall occur with respect to a PensionPlan or Multiemployer Plan which has resulted or could reasonably be expectedto result in liability of any Credit Party or any ERISA Affiliate underTitle IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in anaggregate amount in excess of $1,000,000; (ii) the aggregate amount ofUnfunded Pension Liability among all Pension Plans at any time exceeds$1,000,000; (iii) any Credit Party or any ERISA Affiliate shall fail topay 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 anyCredit Party, any Subsidiary thereof or any ERISA Affiliate.

 

10.1.10    Challenge to Agreement. Any Credit Party or any Subsidiary of any Credit Party, or any Affiliateof any of them, shall challenge or contest in any action, suit or proceedingthe validity or enforceability of this Agreement or any of the other 

 

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Loan Documents, the legality orenforceability of any of the Obligations or the perfection or priority of anyLien granted to Administrative Agent.

 

10.1.11    Criminal Forfeiture. Any Credit Party or any Subsidiary of any Credit Party shall becriminally indicted or convicted under any law that could reasonably beexpected to lead to a forfeiture of any material portion of the Collateral, andin the case of any indictment, such indictment is not dismissed within onehundred twenty (120) days.

 

10.1.12    Judgments.  Any moneyjudgment, writ of attachment or similar processes (collectively, **“Judgments”**) are issued or rendered againstany Credit Party or any Subsidiary of any Credit Party, or any of theirrespective Property (i) in the case of money judgments, in an amount of$3,000,000 or more for any single judgment, attachment or process or $9,000,000or more for all such judgments, attachments or processes in the aggregate, ineach case in excess of any applicable insurance with respect to which theinsurer has admitted liability, and (ii) in the case of non-monetaryJudgments, such Judgment or Judgments (in the aggregate) could reasonably beexpected to have a Material Adverse Effect, in each case which Judgment is notstayed, 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 First 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 First Lien Debt or any refinanced Indebtedness thereof aspermitted under the terms of the Loan Documents other than as a result,directly or indirectly, of any acts or omissions of Administrative Agent or theDischarge of the First 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 perfectedLien (subject only to Permitted Liens) in favor of Administrative Agent for thebenefit of Administrative Agent and Lenders on any material portion of theCollateral purported to be covered thereby.

 

10.2      Accelerationof the Obligations. Upon or at any time after the occurrence and during the continuance ofan Event of Default, Administrative Agent or Majority Lenders may declare allor any portion of the Obligations at once due and payable without presentment,demand protest or further notice by Administrative Agent or any Lender,

 

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 andCredit Parties shall forthwith pay to Administrative Agent, the full amount ofsuch Obligations, provided, that upon the occurrence of an Event ofDefault specified in subsection 10.1.6 hereof, all of theObligations shall become automatically due and payable, in each case withoutdeclaration, notice or demand by Administrative Agent or any Lender.

 

10.3      Other Remedies.  Upon the occurrence and during thecontinuance of an Event of Default, Administrative Agent shall have and mayexercise from time to time the following other rights and remedies, whichrights and remedies, when in respect of the Collateral, shall be subject to theIntercreditor Agreement:

 

10.3.1      All of the rights and remedies of a secured partyunder the UCC or under other applicable law, and all other legal and equitablerights to which Administrative Agent or Lenders may be entitled, all of whichrights and remedies shall be cumulative and shall be in addition to any otherrights or remedies contained in this Agreement or any of the other Loan Documents,and none of which shall be exclusive.

 

10.3.2      The right to take immediate possession of theCollateral, and to (i) require each Credit Party and each of itsSubsidiaries to assemble the Collateral, at Credit Parties’ expense, and makeit available to Administrative Agent at a place designated by AdministrativeAgent which 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 Credit Party or any Subsidiary of any Credit Party, Credit Parties agreenot to charge, or permit any of its Subsidiaries to charge, AdministrativeAgent for storage thereof).

 

10.3.3      The right to sell or otherwise dispose of all or anyCollateral in its then condition, or after any further manufacturing orprocessing thereof, at public or private sale or sales, with only such notice,if any, as may be required by law, in lots or in bulk, for cash or on credit, allas Administrative Agent, in its sole discretion, may deem advisable.  Administrative Agent may, at AdministrativeAgent’s option, disclaim any and all warranties regarding the Collateral inconnection with any such sale.  CreditParties agree that, if any notice is required, 10 days’ written notice toCredit Parties or any of their Subsidiaries of any public or private sale orother disposition of Collateral shall be reasonable notice thereof, and suchsale shall be at such locations as Administrative Agent may designate in saidnotice.  Administrative Agent shall havethe right to conduct such sales on any Credit Party’s or any of itsSubsidiaries’ premises, without charge therefor, and such sales may beadjourned from time to time in accordance with applicable law.  Administrative Agent shall have the right tosell, lease or otherwise dispose of the Collateral, or any part thereof, forcash, credit or any combination thereof, and Administrative Agent, on behalf ofLenders, may purchase all or any part of the Collateral at public or, ifpermitted by law, private sale and, in lieu of actual payment of such purchaseprice, may set off the amount of such price against the Obligations.  The proceeds realized from the sale of anyCollateral may be applied: first to the costs, expenses and attorneys’ feesincurred by Administrative Agent in collecting the Obligations, in enforcingthe rights of Administrative Agent and Lenders under the Loan Documents and incollecting, retaking, completing, protecting, removing, storing, 

 

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advertising for sale, selling and deliveringany Collateral; second to the interest due upon any of the Obligations; andthird, to the principal of the Obligations. If any deficiency shall arise, each Credit Party shall remain jointlyand severally liable to Administrative Agent and Lenders therefor.

 

10.3.4      Administrative Agent is hereby granted a license orother right to use, without charge, each Credit Party’s and each of itsSubsidiaries’ labels, patents, copyrights, licenses, rights of use of any name,trade secrets, trade names, trademarks and advertising matter, or any Propertyof a similar nature, as it pertains to the Collateral, in completing,advertising for sale and selling any Collateral and each Credit Party’s andeach of its Subsidiaries’ rights under all licenses and all franchiseagreements shall inure to Administrative Agent’s benefit.

 

10.3.5      [Intentionally Omitted].

 

10.4      Setoffand Sharing of Payments. In addition to any rights now or hereafter granted under applicable lawand not by way of limitation of any such rights, during the continuance of anyEvent of Default, each Lender is hereby authorized by Credit Parties at anytime or from time to time and with reasonably prompt subsequent notice toCredit Parties (any prior or contemporaneous notice to Credit Parties beinghereby expressly waived) to set off and to appropriate and to apply any and all(i) balances held by such Lender at any of its offices for the account ofany Credit Party or any of its Subsidiaries (regardless of whether suchbalances are then due to a Credit Party 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 Credit Party or any of its Subsidiaries,against and on account of any of the Obligations.  Any Lender exercising a right to set offshall 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 accordancewith their respective Aggregate Percentages. Each Credit Party 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 Aggregate Percentages.

 

10.5      RemediesCumulative; No Waiver. All covenants, conditions, provisions, warranties, guaranties,indemnities, and other undertakings of Credit Parties contained in thisAgreement and the other Loan Documents, or in any document referred to herein orcontained in any agreement supplementary hereto or in any schedule given toAdministrative Agent or any Lender or contained in any other agreement betweenany Lender and Credit Parties or between Administrative Agent and CreditParties heretofore, concurrently, or hereafter entered into, shall be deemedcumulative to and not in derogation or substitution of any of the terms,covenants, conditions, or agreements of Credit Parties herein contained.  The failure or delay of Administrative Agentor any Lender to require strict performance by Credit Parties of any provisionof this Agreement or to exercise or enforce any rights, Liens, powers, orremedies hereunder or under any of the aforesaid agreements or other documentsor security or Collateral shall not operate as a waiver of such performance,Liens, rights, powers and remedies, but all such 

 

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requirements, Liens, rights, powers, andremedies shall continue in full force and effect until all Term Loans and otherObligations owing or to become owing from Credit Parties to AdministrativeAgent and each Lender have been fully satisfied.  None of the undertakings, agreements,warranties, covenants and representations of any Credit Party contained in thisAgreement or any of the other Loan Documents and no Default or Event of Defaultby any Credit Party under this Agreement or any other Loan Documents shall bedeemed to have been suspended or waived by Lenders, unless such suspension orwaiver is by an instrument in writing specifying such suspension or waiver andis signed by a duly authorized representative of Administrative Agent anddirected to such Credit Party.

 

**SECTION 11**.  ADMINISTRATIVEAGENT

** **

11.1      Authorizationand Action.  EachLender hereby appoints and authorizes Administrative Agent to take such actionon its behalf and to exercise such powers under this Agreement and the otherLoan Documents as are delegated to Administrative Agent by the terms hereof andthereof, together with 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 Credit Party.  As to any matters not expressly provided forby this Agreement and the other Loan Documents (including without limitationenforcement and collection of the Term Notes), Administrative Agent may, butshall not be required to, exercise any discretion or take any action, but shallbe required to act or to refrain from acting (and shall be fully protected inso acting 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 requiredhereunder, and such instructions shall be binding upon all Lenders; provided,that Administrative Agent shall be fully justified in failing or refusing totake any 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 thisAgreement), with respect to any action hereunder, Administrative Agent shallsend notice thereof to each Lender and shall notify each Lender at any timethat the Majority Lenders (or such greater or lesser number of Lenders) haveinstructed Administrative Agent to act or refrain from acting pursuant hereto.

 

11.2      AdministrativeAgent’s****and Syndication Agent’s Reliance, Etc.  Neither Administrative Agent, SyndicationAgent, any Affiliate of Administrative Agent or Syndication Agent, nor any oftheir respective directors, officers, agents or employees shall be liable forany action taken or omitted to be taken by it or them under or in connectionwith this Agreement or the other Loan Documents, except (x) for its or their 

 

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own gross negligence or willful misconduct,as determined by a final non-appealable (or the time for appeal for which hasrun) judgment of a court of competent jurisdiction or (y) to the extentresulting from a claim brought by Borrower against it for breach in bad faithof its obligations hereunder, if Borrower has obtained a final non-appealable(or the time to appeal for which has run) judgment in its favor on such claimas determined by a court of competent jurisdiction.  Without limitation of the generality of theforegoing, each of Administrative Agent and Syndication Agent:  (i) may treat each Lender party heretoas the holder of Obligations until Administrative Agent receives written noticeof the assignment or transfer or such lender’s portion of the Obligationssigned by such Lender and in form reasonably satisfactory to AdministrativeAgent; (ii) may consult with legal counsel, independent public accountantsand other experts selected by it and shall not be liable for any action takenor omitted to be taken in good faith by it in accordance with the advice ofsuch counsel, accountants or experts; (iii) makes no warranties orrepresentations to any Lender and shall not be responsible to any Lender forany recitals, statements, warranties or representations made in or inconnection with this Agreement or any other Loan Documents; (iv) shall nothave any duty to ascertain or to inquire as to the performance or observance ofany of the terms, covenants or conditions of this Agreement or the other LoanDocuments on the part of Credit Parties, to inspect the property (including thebooks and records) of Credit Parties, to monitor the financial condition ofCredit Parties or to ascertain the existence or possible existence orcontinuation of any Default or Event of Default;  (v) shall not beresponsible to any Lender for the due execution, legality, validity, enforceability,genuineness, sufficiency or value of this Agreement or the other Loan Documentsor any other instrument or document furnished pursuant hereto or thereto; (vi) shall not be liable to any Lender for any action taken, orinaction, by Administrative Agent upon the instructions of Majority Lenderspursuant to subsection 11.1 hereof or refraining to take any actionpending such instructions; (vii) shall not be liable for any apportionmentor distributions of payments made by it in good faith pursuant to Section 3hereof; (viii) shall incur no liability under or in respect of thisAgreement or the other Loan Documents by acting upon any notice, consent,certificate, message or other instrument or writing (which may be by telephone,facsimile, telegram, cable or telex) believed in good faith by it to be genuineand signed or sent by the proper party or parties; and (ix) may assumethat no Event of Default has occurred and is continuing, unless AdministrativeAgent has actual knowledge of the Event of Default, has received notice fromBorrower or Borrower’s independent certified public accountants stating thenature of the Event of Default, or has received notice from a Lender statingthe nature of the Event of Default and that such Lender considers the Event ofDefault to have occurred and to be continuing. In the 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 hereunder tomake Term Loans, BofA shall have the same rights and powers under thisAgreement and the other Loan Documents as any other Lender and may exercise thesame as though it were not Administrative Agent; and the terms **“Lender**,**”****“Lenders”** or **“Majority Lenders”** shall, unless otherwiseexpressly indicated, include BofA in its individual capacity as a 

 

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Lender. BofA and its Affiliates may lend money to, and generally engage in anykind of business with, any Credit Party, and any Person who may do businesswith or own Securities of any Credit Party, all as if BofA were notAdministrative Agent and without any duty to account therefor to any otherLender.

 

11.4      LenderCredit Decision. Each Lender acknowledges that it has, independently and without relianceupon Administrative Agent or any other Lender and based on the financialstatements referred to herein and such other documents and information as ithas deemed appropriate, made its own credit analysis and decision to enter intothis Agreement.  Each Lender alsoacknowledges that it will, independently and without reliance uponAdministrative Agent or any other Lender and based on such documents andinformation as it shall deem appropriate at the time, continue to make its owncredit decisions in taking or not taking action under this Agreement.  Administrative Agent shall not have any dutyor responsibility, either initially or on an ongoing basis, to provide anyLender with any credit or other similar information regarding any Credit Party.

 

11.5      Indemnification.  Lenders agree to indemnify AdministrativeAgent (to the extent not reimbursed by Credit Parties), in accordance withtheir respective Aggregate Percentages, from and against any and allliabilities, obligations, losses, damages, penalties, actions, judgments, suits,costs, expenses or disbursements of any kind or nature whatsoever which may beimposed on, incurred by, or asserted against Administrative Agent in any wayrelating to or arising out of this Agreement or any other Loan Document or anyaction taken 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 byCredit Parties.  The obligations ofLenders under this subsection 11.5 shall survive the payment in full ofall Obligations 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 Credit Parties, any creditor of any Credit Party, a liquidator,administrator or trustee in bankruptcy, recovers from Administrative Agent anyamount found to have been wrongfully paid to Administrative Agent or disbursedby Administrative Agent to Lenders, then Lenders, in accordance with theirrespective Aggregate Percentages, shall reimburse Administrative Agent for allsuch amounts.

 

11.6      Rights and Remedies toBe Exercised by Administrative Agent Only.  Each Lender agrees that, except as set forthin subsection 10.4, no Lender shall have any right individually(i) to realize upon the security created by this Agreement or any otherLoan 

 

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Document, (ii) to enforce any provisionof this Agreement or any other Loan Document, or (iii) to make demandunder this Agreement or any other Loan Document.

 

11.7      Agency Provisions Relatingto Collateral.  Each Lender authorizes and ratifiesAdministrative Agent’s entry into this Agreement, the Security Documents andthe other Loan Documents for the benefit of Lenders.  Each Lender agrees that any action taken byAdministrative Agent with respect to the Collateral in accordance with theprovisions 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 further consentfrom any Lender to take any action with respect to any Collateral or the LoanDocuments 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 (or to authorize the release of) any Lien grantedto or held by Administrative Agent upon any Collateral (i) upontermination of the Agreement and payment and satisfaction of all Obligations;or (ii) constituting property being sold or disposed of if Credit Parties certify toAdministrative Agent that the sale or disposition is made in compliance with subsection 8.2.8hereof (and Administrative Agent may rely conclusively on any such certificate,without further inquiry); or (iii) constituting property in which noCredit Party owned any interest at the time the Lien was granted or at any timethereafter; or (iv) in connection with any foreclosure sale or otherdisposition of Collateral after the occurrence and during the continuation ofan Event of Default; or (v) if approved, authorized or ratified in writingby Administrative Agent at the direction of all Lenders; or (vi) if suchrelease is permitted 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 Credit Party or is cared for, protected or insured orhas been encumbered or that the Liens granted to Administrative Agent herein orpursuant to the Security Documents have been properly or sufficiently orlawfully created, perfected, protected or enforced or are entitled to anyparticular priority, or to exercise at all or in any particular manner or underany duty of care, disclosure or fidelity, or to continue exercising, any of itsrights, authorities and powers granted or available to Administrative Agent inthis subsection 11.7 or in any of the Loan Documents, it beingunderstood and agreed that in respect of the Collateral, or any act, omissionor event related thereto, Administrative Agent may act in any manner it maydeem appropriate, in its sole discretion, but consistent with the provisions ofthis Agreement, including given Administrative Agent’s own interest in theCollateral as a Lender and that Administrative Agent shall have no duty orliability whatsoever to any Lender.

 

11.8      Right to Assign Commitments of Non-Consenting Lenders.  Each Lender grants to Borrower the right tocause the assignment of all (but not less than all) of such Lender’s Term Loansand all of its rights and obligations hereunder and under the other LoanDocuments (with the assignment fee to be paid by Borrower in such instance) to 

 

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one or more Eligible Assignees procured by Borrower, which right may beexercised by Borrower at any time during which no Default shall exist, if suchLender refuses to execute any amendment, modification, waiver or consent whichrequires the written consent of Lenders other than the Majority Lenders and towhich Lenders holding more than 75% of the outstanding Term Loans,Administrative Agent and Borrower have otherwise agreed; provided that(a) Borrower shall also replace each other Lender that refuses to consent tosuch amendment, modification, waiver or consent, (b) the applicable amendment,modification, waiver or consent shall become effective upon giving effect tosuch assignment and any related assignment required to be effected inconnection therewith and (c) on the effective day of any such assignmentBorrower shall pay to the assigning Lender an amount equal to (i) the aggregateamount of outstanding Term Loans owed to such Lender, together with all accruedand unpaid interest, fees and other amounts (other than contingent indemnities)owed to such Lender and (ii) if at least one other Lender (other than anAffiliate of or an Approved Fund in respect of such assigning Lender) is beingreplaced under the same circumstances giving rise to such assignment inaccordance with the requirements of this subsection, the prepayment premiumthat would be payable to such Lender if such assignment were deemed to be avoluntary prepayment of the Term Loans of such Lender for purposes ofsubsection 3.3.6.  Each Lender agreesthat if Borrower exercises its option under this subsection, it shall promptlyexecute and deliver all agreements and documentation necessary to effectuatesuch assignment as set forth in subsection 11.9.  Borrower shall be entitled (but notobligated) to execute and deliver such agreements and documentation on behalfof such non-consenting Lender and any such agreements and documentation soexecuted by Borrower shall be effective for all purposes of documenting anassignment pursuant to subsection 11.9.

 

11.9      Right of Sale, Assignment, Participations.  Each Credit Party hereby consents to anyLender’s participation, sale, assignment, transfer or other disposition, at anytime or times hereafter, of this Agreement and any of the other Loan Documents,or of any portion hereof or thereof, including, without limitation, such Lender’srights, title, interests, remedies, powers and duties hereunder or thereundersubject to the terms and conditions set forth below:

 

11.9.1      Sales, Assignments.  Each Lenderhereby agrees that, with respect to any sale or assignment (i) except inthe case of a sale or assignment of the entire remaining amount of theassigning Lender’s Commitments and the Term Loans at the time owing to it or inthe case of an assignment to a Lender or an Affiliate of a Lender or anApproved Fund with respect to a Lender, no such sale or assignment shall be foran amount of less than $1,000,000, (ii) Administrative Agent and, in theabsence of a Default or Event of Default, Borrower, must consent, such consentnot to be unreasonably withheld, delayed or conditioned, to each suchassignment to a Person that is not an original signatory to this Agreement; providedthat no such consent of Administrative Agent or Borrower shall be required withrespect to an assignment to a Lender, any Affiliate of any Lender or anyApproved Fund, (iii) the assigning Lender shall pay to AdministrativeAgent a processing and recordation fee of $3,500, provided that no suchfee shall be payable in the case of an assignment to another Lender, anAffiliate of a Lender or an Approved Fund with respect to a Lender,(iv) Administrative Agent, the assigning Lender and the assignee Lendershall each have executed and 

 

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deliveredan Assignment and Acceptance Agreement and (v) such sale or assignment shall beto an Eligible Assignee.  From and afterthe effective date specified in each Assignment and Acceptance Agreement, theassignee Lender thereupon shall become a **“Lender”**for all purposes of this Agreement. Notwithstanding the foregoing, (i) except with respect to thepreceding sentence, the provisions of this subsection 11.9.1 shallnot apply to sales or assignments pursuant to subsection 11.8 and(ii) any Lender may at any time create a security interest in, or pledge,all or any portion of its rights under and interest in this Agreement in favorof any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.Treasury Regulation 31 CFR §203.14, and such Federal Reserve Bank may enforcesuch pledge or security interest in any manner permitted under applicable law.

 

11.9.2      Participations.  Any Lendermay grant participations in its extensions of credit hereunder to any otherPerson (a **“Participant”**), providedthat (i) no Participant shall thereby acquire any direct rights under thisAgreement, (ii) no Participant shall be granted any right to consent toany amendment, except to the extent any of the same pertain to(1) reducing the aggregate principal amount of, or interest rate on, orfees applicable to, any Term Loan, (2) extending the final stated maturityof any Term Loan or the stated maturity of any portion of any payment ofprincipal of, or interest or fees applicable to, any of the Term Loans; providedthat the rights described in this subclause (2) shall not be deemedto include the right to consent to any amendment with respect to or which hasthe effect of requiring any mandatory prepayment of any portion of any TermLoan or any amendment or waiver of any Default or Event of Default, (3)releasing all or substantially all of the Collateral or (4) releasing all orsubstantially all of the Subsidiary Guarantors from their obligations undertheir guarantees hereof, (iii) no sale of a participation in extensions ofcredit shall in any manner relieve such Lender of its obligations hereunder,(iv) such Lender shall remain solely responsible for the performance ofsuch obligations, (v) Credit Parties and Administrative Agent shallcontinue to deal solely and directly with such Lender in connection with suchLender’s rights and obligations under this Agreement and the other LoanDocuments and (vi) all amounts payable by Credit Parties hereunder shallbe determined as if such Lender had not sold any such participation.

 

11.9.3      Certain Agreements of Credit Parties. Credit Parties agree that (i) they will assist and cooperate witheach Lender in any manner reasonably requested by such Lender to effect thesale of participation in or assignments of any of the Loan Documents or anyportion thereof or interest therein, including, without limitation, assistingin the preparation of appropriate disclosure documents and making members ofmanagement available at reasonable times to meet with and answer questions ofpotential assignees and Participants; (ii) subject to the provisions of subsection 13.13hereof, such Lender may disclose credit information regarding Credit Parties toany potential Participant or assignee; and (iii) upon request, Borrower (at itsexpense) shall execute and deliver a Term Note to the assignee Lender.

 

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

 

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politicalsubdivision thereof, the transferor Lender shall cause such transferee (otherthan any Participant), and may cause any Participant, concurrently with and asa condition precedent to the effectiveness of such transfer, to(i) represent to the transferor Lender (for the benefit of the transferorLender, Administrative Agent, and Borrower) that under applicable law andtreaties no taxes will be required to be withheld by Administrative Agent,Borrower or the transferor Lender with respect to any payments to be made tosuch transferee in respect of the interest so transferred, (ii) furnish tothe transferor Lender, Administrative Agent and Borrower either United StatesInternal Revenue Service Form W-8BEN or United States Internal Revenue ServiceForm W-8ECI (wherein such transferee claims entitlement to complete exemptionfrom United States federal withholding tax on all payments made hereunder orunder any other Loan Document), and (iii) agree (for the benefit of thetransferor Lender, Administrative Agent and Borrower) to provide the transferorLender, Administrative Agent and Borrower a new Form W-8BEN or Form W-8ECI uponthe obsolescence of any previously delivered form and comparable statements inaccordance with applicable United States laws and regulations and amendmentsduly executed and completed by such transferee, and to comply from time to timewith all applicable United States laws and regulations with regard to suchwithholding tax exemption.

 

11.9.5      Register. Administrative Agent shall maintain, on behalf of Borrower, a “register”for recording the name, address, Obligations and principal and interest owingto each Lender (which register may be the Loan Account), as well as a copy ofeach Assignment and Acceptance Agreement received.  Upon receipt and acceptance of a fullyexecuted Assignment and Acceptance Agreement, the payment of the processing andrecordation fee specified in subsection 11.9.1 and compliance with the otherprovisions set forth in this Agreement, Administrative Agent shall record inthe register each Eligible Assignee party to an Assignment and AcceptanceAgreement as a Lender under this Agreement, subject to the terms thereunder.  The entries in such register shall bepresumptive evidence of the amounts due and owing to each Lender in the absenceof manifest error.  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 andits assignees in and to such Obligations shall be transferable only uponnotation of such transfer in the register (and each Term Note shall expresslyso provide).  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 Borrower or any Lender, at any reasonable time uponreasonable prior notice.

 

11.10    Amendment.  No amendment or waiver of any provision ofthis Agreement or any other Loan Document (including without limitation anyTerm Note), nor consent to any departure by any Credit Party therefrom, shallin any event be effective unless the same shall be approved in writing andsigned by the Majority Lenders (or signed by Administrative Agent with thewritten consent of the Majority Lenders) and Borrower and acknowledged inwriting by Administrative Agent, and then such waiver or consent shall beeffective only in the specific instance and for the specific purpose for which 

 

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given; provided,that no amendment, waiver or consent shall be effective, unless(i) approved in writing and signed by each Lender, to do any of thefollowing:  (1) increase the aggregateTerm Loan Commitment, (2) reduce the principal of, or interest on, any amountpayable hereunder (including any fees) or under any Term Note, other than thosepayable only to BofA in its capacity as Administrative Agent, which may bereduced by BofA unilaterally, (3) decrease any interest rate or amount ofinterest payable hereunder, (4) extend the maturity of the Term or postpone anydate fixed for any payment of principal of, or interest on, any amounts payablehereunder (including any fees) or under any Term Note, other than those payableonly to BofA in its capacity as Administrative Agent, which may be postponed byBofA unilaterally, (5) reduce the number of Lenders that shall be required forLenders or any of them to take any action hereunder, (6) release or dischargeBorrower from the Obligations or release or discharge any Person liable for theperformance of any obligations of any Credit Party hereunder or under any ofthe Loan Documents, (7) amend any provision of this Agreement that requires theconsent of all Lenders or consent to or waive any breach thereof, (8) amend thedefinition of the term Majority Lenders, (9) amend subsection 3.4.2or this subsection 11.10, (10) release any substantial portion of theCollateral, unless otherwise permitted pursuant to subsection 11.7hereof or the Intercreditor Agreement, (11) permit the sale, assignment ortransfer by any Credit Party of its interest in this Agreement or any of theObligations, or any portion thereof, including, without limitation, such CreditParty’s rights, title, interests, remedies, powers and duties hereunder or (12)subordinate any Lien of Administrative Agent in any material portion of theCollateral to the Lien of any other Person (other than the holders of the FirstLien Debt); or (ii) approved in writing and signed by Administrative Agentin addition to the Lenders required above to affect the rights or duties ofAdministrative Agent under this Agreement, any Term Note or any other LoanDocument.  If a fee is to be paid by anyCredit Party 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 of Successor.  Administrative Agent may resign asAdministrative Agent by giving not less than thirty (30) days’ prior writtennotice to Lenders and Borrower.  IfAdministrative Agent shall resign under this Agreement, then, subject to theconsent of Borrower (which consent shall not be unreasonably withheld and whichconsent shall not be required during any period in which a Default or an Eventof Default exists), Majority Lenders shall appoint from among Lenders asuccessor agent for Lenders or (ii) if a successor agent shall not be soappointed and approved within the thirty (30) day period followingAdministrative Agent’s notice to Lenders and Borrower of its resignation, thenAdministrative Agent shall appoint a successor agent who shall serve as AdministrativeAgent until such time as Majority Lenders appoint a successor agent, subject toBorrower’s consent as set forth above, provided that if AdministrativeAgent shall notify Borrower and the Lenders that no qualifying Person hasaccepted such appointment, then such resignation shall nonetheless becomeeffective in accordance with such notice and (1) the retiring 

 

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AdministrativeAgent shall be discharged from its duties and obligations hereunder and underthe other Loan Documents (except that in the case of any Collateral held by theAdministrative Agent on behalf of the Lenders under any of the Loan Documents,the retiring Administrative Agent shall continue to hold such Collateral untilsuch time as a successor Administrative Agent is appointed) and (2) allpayments, communications and determinations provided to be made by, to orthrough Administrative Agent shall instead be made by or to each Lenderdirectly, until such time as the Majority Lenders appoint a successorAdministrative 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 andExamination Reports; Disclaimer by Lenders. By signing this Agreement, each Lender:

 

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

 

(ii)           expressly agrees and acknowledges that AdministrativeAgent (i) does not make any representation or warranty as to the accuracyof any Report, and (ii) shall not be liable for any information containedin any Report;

 

(iii)          expressly agrees and acknowledges that the Reports arenot comprehensive audits or examinations, that Administrative Agent or otherparty performing any audit or examination will inspect only specificinformation regarding Credit Parties and will rely significantly upon CreditParties’ books and records, as well as on representations of Credit Parties’personnel;

 

(iv)          agrees to keep all Reports confidential and strictlyfor its internal use and not to distribute Reports, in each case except inaccordance with the provisions of subsection 13.13; and

 

(v)           without limiting the generality of any otherindemnification 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 Credit Parties, or the indemnifyingLender’s participation in, or 

 

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the indemnifyingLender’s purchase of, a loan or loans of Credit Parties; and (ii) to payand protect, and indemnify, defend and hold Administrative Agent and any suchother Lender preparing a Report harmless from and against, the claims, actions,proceedings, damages, costs, expenses and other amounts (including attorneys’fees and expenses) incurred by Administrative Agent and any such other Lenderpreparing a Report as the direct or indirect result of any third parties whomight obtain all or part of any Report through the indemnifying Lender.

 

11.13    Syndication Agent.  Each Lender hereby designates Bear, Stearns& Co. Inc. as the Syndication Agent. Except as expressly set forth in subsection 9.1 and this Section11, Syndication Agent, in its capacity as such, shall have no rights,powers, duties or responsibilities and no rights, powers, duties orresponsibilities shall be read into this Agreement or any other Loan Documentor otherwise exist on behalf of or against such entity, in its capacity assuch.  If the Syndication Agent resignsas such agent, no successor syndication agent shall be appointed.

 

11.14    NoReliance on Administrative Agent’s Customer Identification Program.  Each Lender acknowledges and agrees thatneither such Lender, nor any of its affiliates, participants or assignees, mayrely on Administrative Agent to carry out such Lender’s, affiliate’s,participant’s or assignee’s customer identification program, or otherobligations required or imposed under or pursuant to the USA Patriot Act or theregulations thereunder, including the regulations contained in 31 CFR 103.121(as hereafter amended or replaced, the **“CIPRegulations”**), or any other Anti-Terrorism Law, including anyprograms involving any of the following items relating to or in connection withthe Credit Parties, their affiliates or agents, the Loan Documents or thetransactions hereunder:  (1) any identityverification procedures, (2) any record keeping, (3) any comparisons withgovernment lists, (4) any customer notices or (5) any other procedures requiredunder the CIP Regulations or such other laws.

 

11.15    USA Patriot Act.  Each Lender or assignee or participant of aLender that is not organized under the laws of the United States of America ora state thereof (and is not excepted from the certification requirementcontained in Section 313 of the USA Patriot Act and the applicable regulationsbecause it is both (i) an affiliate of a depository institution or foreign bankthat maintains a physical presence in the United States or foreign country, and(ii) subject to supervision by a banking authority regulating such affiliateddepository institution or foreign bank) shall deliver to Administrative Agentthe certification, or, if applicable, recertification, certifying that suchLender is not a “shell” and certifying to other matters as required by Section313 of the USA Patriot Act and the applicable regulations:  (1) within ten (10) days after the ClosingDate and (2) at such other times as are required under the USA Patriot Act.

 

11.16    Withholding.  To the extent required by any applicable law,Administrative Agent may withhold from any interest payment to any Lender anamount 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 Administrative Agent of a 

 

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change incircumstance which rendered the exemption from, or reduction of, withholdingtax ineffective or for any other reason, such Lender shall indemnifyAdministrative Agent fully for all amounts paid, directly or indirectly, byAdministrative Agent as tax or otherwise, including any penalties or interestand together with all expenses (including legal expenses, allocated internalcosts and out-of-pocket expenses) incurred.

 

**SECTION 12.  GUARANTY**

** **

12.1      Guaranty

 

12.1.1      Each of the Subsidiary Guarantors hereby, jointly andseverally, unconditionally and irrevocably, guaranties to the AdministrativeAgent, for the ratable benefit of the Secured Parties and their respectivesuccessors, indorsees, transferees and assigns, the prompt and complete paymentand performance by the Borrower when due (whether at the stated maturity, byacceleration or otherwise) of the Obligations of the Borrower and each otherSubsidiary Guarantor.

 

12.1.2      If and to the extent required in order for theObligations of any Subsidiary Guarantor to be enforceable under applicablefederal, state and other laws relating to the insolvency of debtors, themaximum liability of such Subsidiary Guarantor hereunder shall be limited tothe greatest amount which can lawfully be guaranteed by such SubsidiaryGuarantor under such laws, after giving effect to any rights of contribution,reimbursement and subrogation arising under Section 12.2.  Each Subsidiary Guarantor acknowledges andagrees that, to the extent not prohibited by applicable law, (i) suchSubsidiary Guarantor (as opposed to its creditors, representatives of creditorsor bankruptcy trustee, including such Subsidiary Guarantor in its capacity asdebtor in possession exercising any powers of a bankruptcy trustee) has nopersonal right under such laws to reduce, or request any judicial relief thathas the effect of reducing, the amount of its liability under this Agreement,(ii) such Subsidiary Guarantor (as opposed to its creditors, representatives ofcreditors or bankruptcy trustee, including such Subsidiary Guarantor in itscapacity as debtor in possession exercising any powers of a bankruptcy trustee)has no personal right to enforce the limitation set forth in this Section 12.1.2or to reduce, or request judicial relief reducing, the amount of its liabilityunder this Agreement, and (iii) the limitation set forth in this Section12.1.2 may be enforced only to the extent required under such laws in orderfor the obligations of such Subsidiary Guarantor under this Agreement to beenforceable under such laws and only by or for the benefit of a creditor,representative of creditors or bankruptcy trustee of such Subsidiary Guarantoror other person entitled, under such laws, to enforce the provisions thereof.

 

12.1.3      Each Subsidiary Guarantor agrees that the Obligationsmay at any time and from time to time be incurred or permitted in an amountexceeding the maximum liability of such Subsidiary Guarantor under Section12.1.2 without impairing the guaranty contained in this Section 12 oraffecting the rights and remedies of any Secured Party hereunder.

 

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12.1.4      The guaranty contained in this Section 12 shallremain in full force and effect until payment in full in cash of theObligations (other than contingent indemnification obligations not yet due andpayable), notwithstanding that from time to time during the term of thisAgreement and the other Loan Documents the Borrower may be free from anyObligations.

 

12.1.5      No payment made by the Borrower, any of the SubsidiaryGuarantors, any other guarantor or any other person or received or collected byany Secured Party from the Borrower, any of the Subsidiary Guarantors, anyother guarantor or any other person by virtue of any action or proceeding orany set-off or appropriation or application at any time or from time to time inreduction of or in payment of the Obligations shall be deemed to modify,reduce, release or otherwise affect the liability of any Subsidiary Guarantorhereunder which shall, notwithstanding any such payment (other than any paymentmade by such Subsidiary Guarantor in respect of the Obligations or any paymentreceived or collected from such Subsidiary Guarantor in respect of theObligations), remain liable for the Obligations up to the maximum liability ofsuch Subsidiary Guarantor hereunder until the Obligations are paid in full incash and this Agreement has terminated.

 

12.2      Rightsof Reimbursement, Contribution and Subrogation.  In case any payment is made on account of theObligations by any Credit Party or is received or collected on account of theObligations from any Credit Party or its property:

 

12.2.1      If such payment is made by the Borrower or from itsproperty, then, if and to the extent such payment is made on account ofObligations arising from or relating to a Term Loan, the Borrower shall not beentitled (i) to demand or enforce reimbursement or contribution in respect ofsuch payment from any other Credit Party or (ii) to be subrogated to any claim,interest, right or remedy of any Secured Party against any other person,including any other Credit Party or its property.

 

12.2.2      If such payment is made by a Subsidiary Guarantor orfrom its property, such Subsidiary Guarantor shall be entitled, subject to andupon payment in full of the Obligations (other than contingent indemnificationobligations not yet due and payable), (i) to demand and enforce reimbursementfor the full amount of such payment from the Borrower and (ii) to demand andenforce contribution in respect of such payment from each other SubsidiaryGuarantor that has not paid its fair share of such payment, as necessary toensure that (after giving effect to any enforcement of reimbursement rightsprovided hereby) each Subsidiary Guarantor pays its fair share of theunreimbursed portion of such payment. For this purpose, the fair share of each Subsidiary Guarantor as to anyunreimbursed payment shall be determined based on an equitable apportionment ofsuch unreimbursed payment among all Subsidiary Guarantors based on the relativevalue of their assets and any other equitable considerations deemed appropriateby a court of competent jurisdiction.

 

12.2.3      If and whenever (after payment in full of theObligations) any right of reimbursement or contribution becomes enforceable byany Credit Party against any other Credit Party under Sections 12.2.1 or12.2.2, such Credit Party shall be entitled, 

 

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subjectto and upon payment in full of the Obligations (other than contingentindemnification obligations not yet due and payable), to be subrogated (equallyand ratably with all other Credit Parties entitled to reimbursement orcontribution from any other Credit Party as set forth in this Section 12.2)to any security interest that may then be held by the Administrative Agent uponany Collateral granted to it in this Agreement. Such right of subrogation shall be enforceable solely against the CreditParties, and not against the Secured Parties, and neither the AdministrativeAgent nor any other Secured Party shall have any duty whatsoever to warrant,ensure or protect any such right of subrogation or to obtain, perfect,maintain, hold, enforce or retain any Collateral for any purpose related to anysuch right of subrogation.  Ifsubrogation is demanded by any Credit Party, then (after payment in full of theObligations (other than contingent indemnification obligations not yet due andpayable)) the Administrative Agent shall deliver to the Credit Parties makingsuch demand, or to a representative of such Credit Parties or of the CreditParties generally, an instrument satisfactory to the Administrative Agent transferring,on a quitclaim basis without any recourse, representation, warranty orobligation whatsoever, whatever security interest the Administrative Agent thenmay hold in whatever Collateral may then exist that was not previously releasedor disposed of by the Administrative Agent.

 

12.2.4      All rights and claims arising under this Section12.2 or based upon or relating to any other right of reimbursement,indemnification, contribution or subrogation that may at any time arise orexist in favor of any Credit Party as to any payment on account of theObligations made by it or received or collected from its property shall befully subordinated in all respects to the prior payment in full of all of theObligations (other than contingent indemnification obligations not yet due andpayable).  Until payment in full of theObligations (other than contingent indemnification obligations not yet due andpayable), no Credit Party shall demand or receive any collateral security, paymentor distribution whatsoever (whether in cash, property or securities orotherwise) on account of any such right or claim.  If any such payment or distribution is madeor becomes available to any Credit Party in any bankruptcy case orreceivership, insolvency or liquidation proceeding, such payment ordistribution shall be delivered by the person making such payment ordistribution directly to the Administrative Agent, for application to thepayment of the Obligations.  If any suchpayment or distribution is received by any Credit Party, it shall be held bysuch Credit Party in trust, as trustee of an express trust for the benefit ofthe Secured Parties, and shall forthwith be transferred and delivered by suchCredit Party to the Administrative Agent, in the exact form received and, ifnecessary, duly endorsed.

 

12.2.5      The obligations of the Credit Parties under the LoanDocuments, including their liability for the Obligations and the enforceabilityof the security interests granted thereby, are not contingent upon thevalidity, legality, enforceability, collectibility or sufficiency of any rightof reimbursement, contribution or subrogation arising under this Section12.2.  The invalidity, insufficiency,unenforceability or uncollectibility of any such right shall not in any respectdiminish, affect or impair any such obligation or any other claim, interest,right or remedy at any time held by any Secured Party against any Credit Partyor its property.  The Secured Partiesmake no 

 

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representationsor warranties in respect of any such right and shall have no duty to assure,protect, enforce or ensure any such right or otherwise relating to any suchright.

 

12.2.6      Each Credit Party reserves any and all other rights ofreimbursement, contribution or subrogation at any time available to it asagainst any other Credit Party, but (i) the exercise and enforcement of suchrights shall be subject to Section 12.2.4 and (ii) neither theAdministrative Agent nor any other Secured Party shall ever have any duty orliability whatsoever in respect of any such right, except as provided in Section12.2.3.

 

12.2.7      The undertaking by each Credit Party to repay theObligations and each representation, warranty or covenant of each Credit Partyare and shall be joint and several.  Thissubsection 12.2 is intended only to define the relative rights ofCredit Parties, and nothing set forth in subsection 12.2 isintended or shall impair the obligations of each Credit Party, jointly andseverally, to pay to Administrative Agent and Lenders the Obligations as andwhen the same shall become due and payable in accordance with the termshereof.  Notwithstanding anything to thecontrary set forth in this subsection 12.2 or any other provisionsof this Agreement, it is the intent of the parties hereto that the liabilityincurred by each Credit Party in respect of the Obligations ofthe other Credit Parties (and any Lien granted by each CreditParty to secure such Obligations), not constitute a fraudulentconveyance or fraudulent transfer under the provisions of any applicable law ofany state or other governmental unit (**“FraudulentConveyance”**).  Consequently,each Credit Party, Administrative Agent and each Lender hereby agree that if acourt of competent jurisdiction determines that the incurrence of liability byany Credit Party in respect of the Obligations of any other Credit Party (orany Liens granted by such Credit Party to secure such Obligations) would, butfor the application of this sentence, constitute a Fraudulent Conveyance, suchliability (and such Liens) shall be valid and enforceable only to the maximumextent that would not cause the same to constitute a Fraudulent Conveyance, andthis Agreement and the other Loan Documents shall automatically be deemed tohave been amended accordingly, nunc pro tunc.

 

12.3      Amendments, etc. with respect to the Obligations.  Each Subsidiary Guarantor shall remainobligated hereunder notwithstanding that, without any reservation of rightsagainst any Subsidiary Guarantor and without notice to or further assent by anySubsidiary Guarantor, any demand for payment of any of the Obligations made byany Secured Party may be rescinded by such Secured Party and any of theObligations continued, and the Obligations, or the liability of any otherperson upon or for any part thereof, or any collateral security or guarantytherefor or right of offset with respect thereto, may, from time to time, inwhole or in part, be renewed, increased, extended, amended, modified,accelerated, compromised, waived, surrendered or released by any Secured Party,and this Agreement and the other Loan Documents and any other documentsexecuted and delivered in connection therewith may be amended, modified,supplemented or terminated, in whole or in part, as the parties thereto maydeem advisable from time to time, and any collateral security, guaranty orright of offset at any time held by any Secured Party for the payment of theObligations may be sold, exchanged, waived, surrendered or released.  No Secured Party shall have any obligation 

 

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to protect,secure, perfect or insure any Lien at any time held by it as security for theObligations or for the guaranty contained in this Section 12 or anyproperty subject thereto.

 

12.4      Guaranty Absolute and Unconditional  Each Subsidiary Guarantor waives any and allnotice of the creation, renewal, extension or accrual of any of the Obligationsand notice of or proof of reliance by any Secured Party upon the guarantycontained in this Section 12 or acceptance of the guarantycontained in this Section 12; the Obligations, and any of them, shallconclusively be deemed to have been created, contracted or incurred, orrenewed, extended, amended or waived, in reliance upon the guaranty containedin this Section 12; and all dealings between the Borrower and anyof the Subsidiary Guarantors, on the one hand, and the Secured Parties, on theother hand, likewise shall be conclusively presumed to have been had orconsummated in reliance upon the guaranty contained in this Section 12.  Each Subsidiary Guarantor waives diligence,presentment, protest, demand for payment and notice of default or nonpayment toor upon the Borrower or any of the Subsidiary Guarantors with respect to theObligations.  Each Subsidiary Guarantorunderstands and agrees that the guaranty contained in this Section 12shall be construed as a continuing, absolute and unconditional guaranty ofpayment and performance without regard to (a) the validity or enforceability ofthe Credit Agreement or any other Loan Document, any of the Obligations or anyother collateral security therefor or guaranty or right of offset with respectthereto at any time or from time to time held by any Secured Party, (b) anydefense, set-off or counterclaim (other than a defense of payment orperformance hereunder) which may at any time be available to or be asserted bythe Borrower or any other person against any Secured Party, or (c) any othercircumstance whatsoever (with or without notice to or knowledge of the Borroweror such Subsidiary Guarantor) which constitutes, or might be construed toconstitute, an equitable or legal discharge of the Borrower for theObligations, or of such Subsidiary Guarantor under the guaranty contained inthis Section 12, in bankruptcy or in any other instance.  When making any demand hereunder or otherwisepursuing its rights and remedies hereunder against any Subsidiary Guarantor,any Secured Party may, but shall be under no obligation to, make a similardemand on or otherwise pursue such rights and remedies as it may have againstthe Borrower, any other Subsidiary Guarantor or any other person or against anycollateral security or guaranty for the Obligations or any right of offset withrespect thereto, and any failure by any Secured Party to make any such demand,to pursue such other rights or remedies or to collect any payments from theBorrower, any other Subsidiary Guarantor or any other person or to realize uponany such collateral security or guaranty or to exercise any such right ofoffset, or any release of the Borrower, any other Subsidiary Guarantor or anyother person or any such collateral security, guaranty or right of offset,shall not relieve any Subsidiary Guarantor of any obligation or liability hereunder,and shall not impair or affect the rights and remedies, whether express,implied or available as a matter of law, of any Secured Party against anySubsidiary Guarantor.  For the purposeshereof “demand” shall include the commencement and continuance of any legalproceedings.

 

12.5      Payments.  Each Subsidiary Guarantor hereby guarantiesthat payments hereunder will be paid to the Administrative Agent withoutset-off or counterclaim in 

 

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United Statesdollars in immediately available funds at the office of the AdministrativeAgent as specified herein.

 

**SECTION 13.  MISCELLANEOUS**

** **

13.1      Power of Attorney.  Each Credit Party hereby irrevocablydesignates, makes, constitutes and appoints Administrative Agent (and allPersons designated by Administrative Agent) as such Credit Party’s true andlawful attorney (and agent-in-fact), solely with respect to the matters setforth in this subsection 13.1, and Administrative Agent, orAdministrative Agent’s agent, may, without notice to any Credit Party and inany Credit Party’s or Administrative Agent’s name, but at the cost and expenseof Borrower:

 

13.1.1      At such time or times as Administrative Agent or saidagent, in its sole discretion, may determine, endorse any Credit Party’s nameon any checks, notes, acceptances, drafts, money orders or any other evidenceof payment or proceeds of the Collateral which come into the possession ofAdministrative Agent or under Administrative Agent’s control.

 

13.1.2      At such time or times upon or after the occurrence andduring the continuance of an Event of Default (provided that the occurrence ofan Event of Default shall not be required with respect to clauses (iv),(vi), (viii), and (ix) below), as Administrative Agent orits agent in its sole discretion may determine: (i) demand payment of theAccounts from the Account Debtors, enforce payment of the Accounts by legalproceedings or otherwise, and generally exercise all of any Credit Party’srights and remedies with respect to the collection of the Accounts;(ii) settle, adjust, compromise, discharge or release any of the Accountsor other Collateral or any legal proceedings brought to collect any of theAccounts or other Collateral; (iii) sell or assign any of the Accounts andother Collateral upon such terms, for such amounts and at such time or times asAdministrative Agent deems advisable, and at Administrative Agent’s option,with all warranties regarding the Collateral disclaimed; (iv) takecontrol, in any manner, of any item of payment or proceeds relating to anyCollateral; (v) prepare, file and sign any Credit Party’s name to a proofof claim in bankruptcy or similar document against any Account Debtor or to anynotice of lien, assignment or satisfaction of lien or similar document inconnection with any of the Collateral; (vi) receive, open and dispose ofall mail addressed to any Credit Party and notify postal authorities to changethe address for delivery thereof to such address as Administrative Agent maydesignate; (vii) endorse the name of any Credit Party upon any of theitems of payment or proceeds relating to any Collateral and deposit the same tothe account of Administrative Agent on account of the Obligations;(viii) endorse the name of any Credit Party upon any chattel paper,document, instrument, invoice, freight bill, bill of lading or similar documentor agreement relating to the Accounts, Inventory and any other Collateral;(ix) use any Credit Party’s stationery and sign the name of any CreditParty to verifications of the Accounts and notices thereof to Account Debtors;(x) use the information recorded on or contained in any data processingequipment and Computer Hardware and Software 

 

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relatingto the Accounts, Inventory, Equipment and any other Collateral; (xi) makeand adjust claims under policies of insurance; and (xii) do all other actsand things necessary, in Administrative Agent’s determination, to fulfill anyCredit Party’s obligations under this Agreement.

 

The power of attorney granted hereby shall constitute a power coupledwith an interest and shall be irrevocable.

 

13.2      Indemnity.  Each Credit Party hereby agrees to defend,indemnify and hold Administrative Agent, Syndication Agent, the Joint LeadArrangers and each Lender and each of its respective officers, directors,employees, counsel, representatives, agents, attorneys in fact and Affiliates(each, an **“Indemnitee”**) harmlessfrom and against any and all liabilities, obligations, losses, damages,penalties, actions, judgments, suits, costs, charges, expenses anddisbursements (including, without limitation, reasonable attorneys’ fees) ofany kind or nature whatsoever which may at any time (including at any timefollowing repayment of the Term Loans and the termination, resignation orreplacement of Administrative Agent or replacement of any Lender)  be imposed on, incurred by or assertedagainst any such Person in any way relating to or arising out of this Agreementor any document contemplated by or referred to herein, or the transactionscontemplated hereby, or any action taken or omitted by any such Person under orin connection with any of the foregoing, including with respect to anyinvestigation, litigation or proceeding (including any insolvency, bankruptcyor similar proceeding) related to or arising out of this Agreement, any otherLoan Document, the Term Loans, or the use of the proceeds thereof, or theCollateral whether or not any Indemnified Person is a party thereto (all theforegoing, collectively, the **“IndemnifiedLiabilities”**); provided, that no Credit Party shall have anyobligation 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 such Credit Party against such Indemnified Person forbreach in bad faith of such Indemnified Person’s obligations hereunder, if suchCredit Party has obtained a final non-appealable (or the time to appeal forwhich has 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 Credit Party’s or any other Person’s failure to comply with lawsapplicable to solid or hazardous waste materials or other toxicsubstances.  Notwithstanding any contraryprovision in this Agreement, the obligation of each Credit Party under this subsection 13.2shall survive the payment in full of the Obligations and the termination ofthis Agreement.

 

13.3Severability.  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.

 

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13.4      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 Credit Party, Administrative Agent and eachLender permitted under subsection 11.9 hereof.  Notwithstanding anything to the contraryherein, no Credit Party may sell, assign or otherwise transfer any of itsinterest in this Agreement or any of the Obligations, or any portion thereof,including, without limitation, such Credit Party’s rights, title, interests,remedies, powers and duties hereunder, unless such sale, assignment or othertransfer is approved in a writing signed by each Lender and AdministrativeAgent; provided that this subsection shall not prohibit mergers ofCredit Parties that are expressly permitted by subsection 8.2.1.

 

13.5      CumulativeEffect; 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 (other than, as it relates to the Collateral, the IntercreditorAgreement), the provision contained in this Agreement shall govern and control.

 

13.6      Executionin 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.

 

13.7      Notice.  Except as otherwise provided herein, allnotices, requests and demands to or upon a party hereto or pursuant to anyother Loan Document, to be effective, shall be in writing, and shall be sent bycertified or registered mail, return receipt requested, by personal deliveryagainst receipt, by overnight courier or by facsimile and, unless otherwiseexpressly provided herein, shall be deemed to have been validly served, given,delivered or received immediately when delivered against receipt, three (3)Business Days’ after deposit in the mail, postage prepaid, one (1) Business Dayafter deposit with an overnight courier or, in the case of facsimile notice,when sent with respect to machine confirmed, addressed as follows:

 
| (A)          If to Administrative Agent: | Bank of America, N.A.  Agency Management  Mail Code: CA5-701-05-19  Attention:  Charles Graber  Telephone:  415 436-3495  Facsimile:  415 503-5006  Email:   charles.graber@bankofamerica.com |
|---------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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| With a copy to:                                                                         | Bank of America, N.A.                   |
|-----------------------------------------------------------------------------------------|-----------------------------------------|
|                                                                                    | Agency Management                       |
|                                                                                    | Mail Code: NC1-007-13-06                |
|                                                                                    | Attention: Laura Clark                  |
|                                                                                    | Telephone: 704 388-6415                 |
|                                                                                    | Facsimile: 704 409-0564                 |
|                                                                                    | Email:  laura.l.clark@bankofamerica.com |
|                                                                                    | Agency Management                       |
|                                                                                    |                                    |
| And a copy to:                                                                          | Latham & Watkins LLP                |
|                                                                                    | 885 Third Avenue                        |
|                                                                                    | New York, New York 10022                |
|                                                                                    | Attention: Michele Penzer               |
|                                                                                    | Facsimile No.: (212) 751-4864           |
|                                                                                    |                                    |
| (B)           If to any Credit Party: | c/o NES Rentals Holdings, Inc           |
|                                                                                    | 8770 West Bryn Mawr                     |
|                                                                                    | 4th Floor                               |
|                                                                                    | Chicago, Illinois 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 No.: (312) 861-2200           |

 

(C)           Ifto any Lender, at its address indicated on the signature pages hereof or in anAssignment and Acceptance Agreement,

 

or to such other address as each party may designate for itself bynotice given in accordance with this subsection 13.7; provided,however, that any notice, request or demand to or upon AdministrativeAgent or a Lender pursuant to subsection 3.1.1 or 4.2.2hereof shall not be effective until received by Administrative Agent or suchLender.

 

13.8      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 thegiving of additional Collateral security for the Obligations, the payment ofmoney or any other matter.

 

13.9      Credit Inquiries.  Each Credit Party hereby authorizes andpermits Administrative Agent and each Lender to respond to usual and customarycredit inquiries from third parties concerning any Credit Party or any of itsSubsidiaries.

 

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13.10    Time of Essence.  Time is of the essence of this Agreement, theOther Agreements and the Security Documents.

 

13.11    Entire Agreement.  This Agreement and the other Loan Documents,together with all other instruments, agreements and certificates executed bythe parties in connection therewith or with reference thereto, embody theentire understanding and agreement between the parties hereto and thereto withrespect to the subject matter hereof and thereof and supersede all prioragreements, understandings and inducements, whether express or implied, oral orwritten.

 

13.12    Interpretation.  No provision of this Agreement or any of theother Loan Documents shall be construed against or interpreted to thedisadvantage of any party hereto by any court or other governmental or judicialauthority by reason of such party having or being deemed to have structured ordictated such provision.

 

13.13    Confidentiality.  Administrative Agent and each Lender shallhold all nonpublic information obtained pursuant to the requirements of thisAgreement in accordance with Administrative Agent’s and such Lender’s customaryprocedures for handling confidential information of this nature and inaccordance with safe and sound banking practices and in any event may makedisclosure (i) to its Affiliates, (ii) as reasonably required by aparticipant or assignee or prospective participant or assignee in connectionwith the participation or assignment or contemplated participation orassignment and shall require any such participant to agree to comply with this subsection 13.13or (iii) as required or requested by any governmental authority orrepresentative thereof or pursuant to legal process.

 

13.14    GOVERNINGLAW; CONSENT TO FORUM. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THELAWS OF THE STATE OF NEW YORK.  AS PARTOF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT ORFUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF ANY CREDIT PARTY,ADMINISTRATIVE AGENT OR ANY LENDER, EACH CREDIT PARTY HEREBY CONSENTS ANDAGREES THAT THE COURTS OF THE STATE OF NEW YORK, OR, AT ADMINISTRATIVE AGENT’SOPTION, THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK,SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTESBETWEEN ANY CREDIT PARTY ON THE ONE HAND AND ADMINISTRATIVE AGENT OR ANY LENDERON THE OTHER HAND PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OFOR RELATED TO THIS AGREEMENT.  EACHCREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION INANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBYWAIVES ANY OBJECTION WHICH ANY CREDIT PARTY MAY HAVE BASED UPON LACK OFPERSONAL JURISDICTION, IMPROPER VENUE OR FORUMNONCONVENIENSAND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS ISDEEMED APPROPRIATE BY SUCH COURT.  EACHCREDIT PARTY HEREBY WAIVES PERSONAL SERVICE 

 

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OF THESUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT ANDAGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BYREGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH INTHIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THEEARLIER OF ANY CREDIT PARTY’S ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT INTHE U.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 OTHER MANNERPERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OR ANY LENDER OF ANYJUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THISAGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR JURISDICTION.

 

13.15    WAIVERSBY CREDIT PARTIES. EACH CREDIT PARTY WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICHADMINISTRATIVE AGENT AND EACH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT,PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THELOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (ii) PRESENTMENT,DEMAND AND PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON PAYMENT,MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF ANY OR ALLCOMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS , CHATTELPAPER AND GUARANTIES AT ANY TIME HELD BY ADMINISTRATIVE AGENT OR ANY LENDER ONWHICH ANY CREDIT PARTY MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES ANDCONFIRMS WHATEVER ADMINISTRATIVE 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) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS;(v) NOTICE OF ACCEPTANCE HEREOF; AND (vi) EXCEPT AS PROHIBITED BYLAW, ANY RIGHT TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE ORCONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUALDAMAGES.  EACH CREDIT PARTY ACKNOWLEDGESTHAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO ADMINISTRATIVE AGENT’SAND EACH LENDER’S ENTERING INTO THIS AGREEMENT AND THAT ADMINISTRATIVE AGENTAND EACH LENDER IS RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGSWITH EACH CREDIT PARTY.  EACH CREDITPARTY WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITHITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIALRIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN 

 

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THE EVENT OFLITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THECOURT.

 

13.16    Advertisement.  Each Credit Party hereby authorizes Administrative Agentto publish the name of Credit Parties and the amount of the credit facilityprovided hereunder in any **“tombstone”**or comparable advertisement which Administrative Agent elects to publish.

 

13.17    References to Intercreditor Agreement.  References to the Intercreditor Agreementherein are intended to define the relative rights and obligations ofAdministrative Agent and Lenders vis-à-vis the holders of the First Lien Debtonly and shall not impart any rights upon any Credit Party.

 

13.18    Recovery.  To the extent any payment received byAdministrative Agent or any Lender with respect to the Obligations (whether byor on behalf of any Credit Party 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 Credit Party (a “Recovery”), then the Obligation or part thereof originallyintended to be satisfied (and any guaranty in respect thereof pursuant to Section 12or otherwise) shall be deemed to be reinstated and outstanding as if suchpayment 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 any Credit Party from such dateof reinstatement.

 

*(Signature Pages Follow)*

 

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IN WITNESS WHEREOF, this Agreement has been duly executed on the dayand year specified at the beginning of this Agreement.

 
| ** ** | **Borrower:**                          |                       |
|------------|----------------------------------------|----------------------------|
|       |                                   |                       |
| ** ** | **NES RENTALS HOLDINGS, INC.**         |                       |
|       |                                   |                       |
|       |                                   |                       |
|       | By:                                    |                       |   |   |
|       |                                   | Name:                      |   |
|       |                                   | Title:                     |   |
|       |                                   |                       |
|       |                                   |                       |
| ** ** | **Other Credit Parties:**              |                       |
|       |                                   |                       |
| ** ** | **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:                     |   |
|            |                                        |                            |  |  |  |  |  |  |  |

 

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

 

**S-2**

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|   | **BEAR, STEARNS & CO. INC.,** as |
|--------|-------------------------------------------|
|   | Syndication Agent                         |
|   |
|   |
|   | By:                                       |   |   |
|   | Name:                                     |   |   |
|   | Title:                                    |   |   |
|        |                                           |  |  |  |  |

 

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**APPENDIX A**

** **

GENERALDEFINITIONS

 

When used in the Loan and Security Agreement dated as of August 17,2004, by and among NES Rentals Holdings, Inc., as borrower, certainsubsidiaries of NES Rentals Holdings, Inc., as subsidiary guarantors, thefinancial institutions party thereto, as lenders, Bear, Stearns & Co. Inc.,as syndication agent and Bank of America, N.A., as administrative agent, (a)the terms **Account**, **Certificated Security**, **Chattel Paper**, **Commercial Tort Claims**, **Deposit Account**, **Document**, **Electronic ChattelPaper**, **Equipment**, **Financial Asset**, **Fixture**, **General Intangibles**,**Goods**, **Instruments**, **InvestmentProperty**, **Letter-of-Credit Rights**,**Money**,**Payment Intangibles**, **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 Credit Party or in which such Credit Partynow has or 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):

 

**Account Debtor** - anyPerson who is or may become obligated under, or in connection with, or onaccount of, any Account, Contract Right, Chattel Paper, General Intangible orany Supporting Obligation in respect thereof.

 

**Administrative Agent**- as defined in the preamble to the Agreement, together with its successors andassigns.

 

**Affiliate** - aPerson: (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.

 

**Aggregate Percentage**- with respect to each Lender, the percentage equal to the quotient of(i) such Lender’s Term Loan Commitment divided by (ii) theaggregate of all Term Loan Commitments, provided, that, if the aggregateTerm Loan Commitments have been reduced to zero, the numerator shall be theaggregate unpaid principal amount of such Lender’s Term Loans and thedenominator shall be the aggregate unpaid principal amount of all Term Loans.

 

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

 

**ALTA Survey** - asurvey prepared in accordance with the standards adopted by the American LandTitle Association and the American Congress on Surveying and Mapping in 1997,known as the **“Minimum Standard DetailRequirements of Land Title Surveys”**. The ALTA Survey shall be in sufficient form to satisfy the requirementsof Chicago Title Insurance Company to provide extended coverage over surveydefects and shall also show the location of all easements, utilities, andcovenants of record, dimensions of all improvements, encroachments from anyadjoining property, and certify as to the location of any flood plain areaaffecting the subject real estate.  TheALTA Survey shall contain the following certification:  “To [**Nameof Applicable Credit Party**], Bank of America, N.A., asAdministrative 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-Terrorism Law**  - the USA Patriot Act or any other statute,regulation, executive order, or other law pertaining to the prevention offuture acts of terrorism, in each case as such law may be amended from time totime.

 

**Applicable Margin** –(i) with respect to the Base Rate Portion, 5.00% and (ii) with respect tothe LIBOR Portion, 6.00%.

 

**Approved Fund** - anyPerson (other than a natural person) that is (or will be) engaged in making,purchasing, holding or otherwise investing in commercial loans and similarextensions of credit in the ordinary course of its business and that isadministered 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 a Lender.

 

**Assignment and Acceptance Agreement**- an assignment and acceptance agreement entered into by a Lender and anEligible Assignee (with the consent of any party whose consent is required by subsection11.9.1) and accepted by Administrative Agent in substantially the form of Exhibit10 or any other form approved by Administrative Agent.

 

**Audit** – anaudit,  inspection, valuation or fieldexamination of the Properties (including the books and records) of CreditParties 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 Credit Party or its Subsidiary, the business, assets, liabilities,financial condition, business prospects and results of operations of suchCredit Party or Subsidiary.

 

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**Available Liquidity**– the sum of Availability (as defined in the First Lien Debt Documents as ineffect on the date hereof) plus cash in deposit accounts meeting either of thefollowing conditions: (x) such deposit account is maintained at BofA and issubject to a first priority security interest in favor of the First Lien DebtAgent subject only to bankers liens (including those liens described in clause(xiii) of subsection 8.2.5) and liens junior to the lien of the First Lien DebtAgent that are permitted to be incurred under the First Lien Debt Documents (asin existence on the date hereof) or (y) such deposit account is maintainedwith any other bank or financial institution and is (i) subject to a firstpriority security interest in favor of the First Lien Debt Agent subject onlyto bankers liens (including those liens described in clause (xiii) of subsection8.2.5) and liens junior to the lien of the First Lien Debt Agent that arepermitted to be incurred under the First Lien Debt Documents (as in existenceon the date hereof) and (ii) subject to a control agreement in favor ofthe First Lien Debt Agent.

 

**Base Rate** – as ofany date of determination, the greater of (i) the Prime Rate and (ii) the FedFunds Rate plus .50% per annum.

 

**Base Rate Portion** -that portion of the Term Loan that is not subject to a LIBOR Option.

 

**Blocked Person** – as definedin subsection 7.1.31(ii) of the Agreement.

 

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

 

**Borrower** – asdefined in the preamble to the Agreement.

 

**Business Day** - anyday excluding Saturday, Sunday and any day which is a legal holiday under thelaws of the State of Wisconsin, the State of Illinois or the State of New Yorkor is a day on which banking institutions located in any of such states areclosed, provided that with respect to the borrowing, prepayment or continuationof, or determination of the interest rate on, any LIBOR Portion, Business Dayshall include a London Banking Day.

 

**Capital Expenditures**– cash expenditures made for the acquisition or improvement of capital assetsas determined in accordance with GAAP.

 

**Capitalized Lease Obligation**- any Indebtedness represented by obligations under a lease that is required tobe capitalized for financial reporting purposes in accordance with GAAP.

 

**Cash Equivalents** –those investments set forth in clauses (iv) through (vii) of the definition of “RestrictedInvestment”.

 

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

 

(a)           the acquisition,directly or indirectly, by any Person or group (within the meaning of Section13(d)(3) of the Securities Exchange Act of 1934, as amended) (other 

 

A-3

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than any Permitted Holder) of beneficialownership of more than 20% of the aggregate outstanding Voting Stock ofBorrower;

 

(b)           during any period oftwo consecutive years, individuals who at the beginning of such periodconstituted the Board of Directors of Borrower (together with any new directorswhose election by such Board of Directors or whose nomination for election bythe shareholders of Borrower was approved by a vote of at least a majority thedirectors of Borrower then still in office who were either directors at thebeginning 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 Borrower;

 

(c)           Borrower shall ceaseto have beneficial ownership (as defined in Rule 13d-3 under the SecuritiesExchange Act of 1934, as amended), directly or indirectly, of 100% of theaggregate Voting Stock of each other Credit Party 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 ofControl” (or similar term) as defined in the First Lien Debt Documents shalloccur.

 

**Closing Date** –August 17, 2004.

 

**Code** -the InternalRevenue Code of 1986, as amended.

 

**Collateral** - all ofthe Property and interests in Property described in Section 5 ofthe 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.

 

**Collateral Asset Base**– as at any date of determination thereof, solely to the extent that AdministrativeAgent has a perfected security interest in the following, an amount equal tothe sum of (without duplication):

 

(i)            theGross Orderly Liquidation Value of Eligible Rental Equipment Inventory, plus

 

(ii)           Accountsreceivable appearing on the Consolidated balance sheet of the Borrower and itsSubsidiaries less the amount of reserves in respect thereof set forth on suchConsolidated balance sheet, plus

 

(iii)          75%of the value of Inventory (other than Rental Equipment Inventory) on theConsolidated balance sheet of the Borrower and its Subsidiaries less the amountof reserves in respect thereof set forth on such Consolidated balance sheet.

 

**Collateral Coverage Ratio**– at any date, the ratio of (i) aggregate Funded Senior Debt (as defined in Exhibit8.3) of Borrower and its Subsidiaries on a Consolidated basis 

 

A-4

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as of such date minus all cash of CreditParties as of such date in which Administrative Agent holds a perfectedsecurity interest (subject only to Permitted Liens) to (ii) the CollateralAsset Base as of such date.

 

**Collection Account** –as defined in subsection 6.2.4 of the Agreement.

 

**Collection Bank**– asdefined in subsection 6.2.4 of the Agreement.

 

**Compliance Certificate**- as defined in subsection 8.1.3 of the Agreement.

 

**Computer Hardware and Software**- all of any Credit Party’s rights (including rights as licensee and lessee)with respect to (i) computer and other electronic data processinghardware, including all integrated computer systems, 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 relatedcomputer hardware; (ii) all Software and all software programs designedfor use on the computers and electronic data processing hardware described in clause(i) above, including all operating system software, utilities andapplication programs in any form (source code and object code in magnetic tape,disk or hard copy format or any other listings whatsoever); (iii) anyfirmware associated with any of the foregoing; and (iv) any documentationfor hardware, Software and firmware described in clauses (i), (ii)and (iii) above, including flow charts, logic diagrams, manuals,specifications, training materials, charts and pseudo codes.

 

**Consolidated** - theconsolidation in accordance with GAAP of the accounts or other items as towhich such term applies.

 

**Contaminant -**anywaste, pollutant, hazardous substance, toxic substance, hazardous waste,special waste, petroleum or petroleum-derived substance or waste, asbestos inany form or condition, polychlorinated biphenyls (**“PCBs”**), or any constituent of any such substance or waste.

 

**Contingent Obligation**- with respect to any Person, any obligation of such Person guaranteeing orintended to guaranty any Indebtedness, 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 

 

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payment of such primary obligation or (D)otherwise to assure or hold harmless the holder of such primary obligationagainst loss in respect thereof; provided, however, that the term**“Contingent Obligation”** shall notinclude 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.

 

**Contract Right** - anyright of any Credit Party to payment under a contract for the sale or lease ofgoods or the rendering of services, which right is at the time not yet earnedby performance.

 

**Credit Facility**-means, with respect to any Credit Party or any Subsidiary of any Credit Party,one or more debt facilities, debt securities sales arrangements or commercialpaper facilities, in each case with, or sold to, banks or other institutionallenders or investors providing for term loans or other Indebtedness, in eachcase, as amended, restated, modified, renewed, refunded, replaced or refinancedin whole or in part, and without limitation as to amount, terms, conditions,covenants and other provisions from time to time, and any agreement (andrelated documents and instruments) governing Indebtedness incurred torefinance, in whole or in part, the borrowings and commitments then outstandingor permitted to be outstanding under such debt or successor debt, whether bythe same or any other lender or investor or group of lenders or investors.

 

**Credit Party** – eachof Borrower and each Subsidiary Guarantor.

 

**Current Assets** - atany date means the amount at which all of the current assets of a Person wouldbe properly classified as current assets shown on a balance sheet at such datein accordance with GAAP.

 

**Default** - an eventor condition the occurrence of which would, with the lapse of time or thegiving of notice, or both, become an Event of Default.

 

**Default Rate** - asdefined in subsection 2.1.2 of the Agreement.

 

**Derivative Obligations**– every obligation of a Person under any forward contract, futures contract,exchange contract, swap, option or other financing agreement or arrangement(including, without limitation, caps, floors, collars and similar agreements),the value of which is dependent upon interest rates, currency exchange rates,commodity values, equity values or other indices.

 

**Disqualified Capital Stock**–****shall mean any Security which, by itsterms (or by the terms of any security into which it is convertible or forwhich it is exchangeable), or upon the happening of any event, (a) matures oris mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,or is redeemable at the option of the holder thereof, 

 

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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 anyCredit Party (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** - inrespect 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 UnitedStates Department of Labor or any successor department or agency.

 

**Dominion Notice** – asdefined in subsection 6.2.4 of the Agreement.

 

**Eligible Assignee -**(a)any Lender, any Affiliate of any Lender and any Approved Fund. (b) any otherPerson (i) which is a commercial bank, finance company, insurance company orother financial institution or fund and which, in the ordinary course ofbusiness, extends credit of the type contemplated herein; (ii) which isorganized under the laws of the United States of America or any state thereof;and (iii) which has capital in excess of $500,000,000, provided, however, that “EligibleAssignee” shall not include any Credit Party or any of its Affiliates,financial sponsors or Subsidiaries or (c) any other Person consented to byAdministrative Agent and, in the absence of a Default or Event of Default,Borrower (such consent not to be unreasonably withheld, delayed orconditioned).

 

**Eligible Rental Equipment Inventory**– Rental Equipment Inventory of any Credit Party (other than packagingmaterials and supplies, tooling, samples and literature).  Without limiting the generality of theforegoing, no Rental Equipment Inventory shall be Eligible Rental EquipmentInventory if:

 

(i)            it is not finishedgoods which meet the specifications of the purchase order or contract for suchRental Equipment Inventory, if any; or

 

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

 

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(iii)          it is slow-moving,obsolete or unmerchantable; or

 

(iv)          it does not meet allstandards imposed by any governmental agency or authority; or

 

(v)           it does not conformin all respects to any covenants, warranties and representations set forth inthe Agreement; or

 

(vi)          it is not at alltimes subject to Administrative Agent’s duly perfected security interest or issubject to a Lien that is not a Permitted Lien; or

 

(vii)         it is not situatedat a location in compliance with the Agreement, provided that RentalEquipment Inventory situated at a location not owned by a Credit Party will beEligible Rental Equipment Inventory only if Administrative Agent has received asatisfactory landlord’s agreement or bailee letter, as applicable, with respectto such location; or

 

(viii)        it is in transit; or

 

(ix)           it is held onconsignment; or

 

(x)            it is not insuredin accordance with the terms of the Agreement or other terms reasonablyacceptable to Administrative Agent.

 

**Environmental Claims -**allcomplaint, summons, citation, notice of violation, directive, order, claim,litigation, investigation, judicial or administrative proceeding, judgment,letter or other written communication from any Governmental Authority or otherPerson alleging potential liability or responsibility for violation of anyEnvironmental Law, or for a Release or injury to the environment.

 

**Environmental Laws**-all federal, state or local laws, statutes, common law duties, rules,regulations, ordinances and codes, together with all administrative orders,directed duties, licenses, authorizations and permits of, and agreements with,any Governmental Authority, in each case relating to environmental, health,safety and land use matters.

 

**Environmental Lien -**aLien in favor of any  GovernmentalAuthority for (a) any liability under Environmental Laws, or (b) damagesarising from, or costs incurred by such Governmental Authority in response to,a Release or threatened Release of a Contaminant into the environment.

 

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

 

**ERISA Affiliate -**anytrade or business (whether or not incorporated) under common control with any CreditParty within the meaning of Section 414(b) or (c) of the 

 

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Code (and Sections 414(m) and (o) of the Codefor purposes of provisions relating to Section 412 of the Code).

 

**ERISA Event** – means(a) a Reportable Event with respect to a Pension Plan, (b) a withdrawal by anyCredit Party or any ERISA Affiliate from a Pension Plan subject to Section 4063of ERISA during a plan year in which it was a substantial employer (as definedin Section 4001(a)(2) of ERISA) or a cessation of operations which is treatedas such a withdrawal under Section 4062(e) of ERISA, (c) a complete or partialwithdrawal by any Credit Party or any ERISA Affiliate from a Multiemployer Planor notification that a Multiemployer Plan is in reorganization, (d) the filingof a notice of intent to terminate, the treatment of a Pension Plan amendmentas a termination under Section 4041 or 4041A of ERISA, or the commencement ofproceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan, (e)the occurrence of an event or condition which might reasonably be expected toconstitute grounds under Section 4042 of ERISA for the termination of, or theappointment of a trustee to administer, any Pension Plan or Multiemployer Plan,or (f) the imposition of any material liability under Title IV of ERISA, otherthan for PBGC premiums due but not delinquent under Section 4007 of ERISA, uponany Credit Party or any ERISA Affiliate.

 

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

 

**Excess Cash Flow** -with respect to the period beginning July 1, 2004 and ending December 31, 2005and each fiscal year of Borrower and its Subsidiaries thereafter, the amountequal to the sum of Consolidated Net Income (Loss) (as defined in Exhibit8.3), plus depreciation, amortization and other non-cash chargesdeducted in determining Consolidated Net Income (Loss) and minus the sumof payments of principal on Indebtedness for Money Borrowed (excluding paymentsmade on the Closing Date in respect of the Prior Indebtedness and repayments ofrevolving loans except to the extent the applicable revolving loan commitmentsare permanently reduced in connection with such repayments), non-cash incomeincluded in determining Consolidated Net Income (Loss) and Net CapitalExpenditures for such period or fiscal year, as applicable, all determined forBorrower and its Subsidiaries on a Consolidated basis in accordance with GAAP.

 

**Excluded Deposit Accounts**– accounts which are solely used when and as needed for the purposes of makingpayroll, replenishing petty cash, payment of specified amounts payable andother occasional corporate needs in the ordinary course of business, so long asthe balance in any such account does not exceed $100,000 at any time and the aggregatebalances in all such accounts do not exceed $200,000 at any time.

 

**Fed Funds Rate** - forany day, the rate per annum (rounded upwards, if necessary, to the nearest1/100 of 1%) equal to the weighted average of the rates on overnight Federalfunds transactions with members of the Federal Reserve System arranged byFederal funds brokers on such day, as published by the Federal Reserve Bank ofNew York on the Business Day next succeeding such day; provided that (a) ifsuch day is not a Business Day, the Fed Funds Rate for such day shall be suchrate on such transactions on the next preceding Business Day as so published onthe next 

 

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succeeding Business Day, and (b) if no suchrate is so published on such next succeeding Business Day, the Fed Funds Ratefor such day shall be the average rate charged to Administrative Agent on suchday on such transactions as determined by Administrative Agent.

 

**Fee Letter**- asdefined in subsection 2.3 of the Agreement.

 

**First Lien Debt**–any Indebtedness (to the extent permitted under subsection 8.2.3(ix) ofthe Agreement) under any Credit Facility of any Credit Party in respect ofwhich the related First Lien Debt Agent has become a party to the IntercreditorAgreement on behalf of itself and the lenders or other debtholders under suchCredit Facility, which Indebtedness is secured by Liens on all or any portionof the Collateral that are prior to the Liens securing the Obligations.

 

**First Lien Debt Agent**-at any time in respect of any Credit Facility, the Person serving at such timeas the “Agent,” “Administrative Agent,” “Collateral Agent,”  “Collateral Trustee” or “Trustee” under suchCredit Facility or any other representative in a similar capacity then mostrecently designated in accordance with the applicable provisions of the CreditFacility, together with its successors in such capacity.

 

**First Lien Debt Documents**–any and all agreements, instruments and other documents pursuant to which theFirst Lien Debt has been or will be issued or otherwise setting forth the termsof the First Lien Debt, including the First Lien Debt Security Documents, anyguaranty agreements, bank product agreements or hedging agreements relatedthereto, all ancillary agreements as to which the First Lien Agent or anylender is a party or a beneficiary and all other agreements, instruments,documents and certificates executed in connection with any of the foregoing, ineach case as such agreement, instrument or other document may be amended,restated, supplemented, refunded, replaced or otherwise modified from time totime in accordance with the terms thereof, but only to the extent permittedunder the terms of the Loan Documents.

 

**First Lien Debt Security Documents**-all security agreements, pledge agreements, collateral assignments, mortgages,collateral agency agreements, control agreements, deeds of trust or othergrants or transfers for security executed and delivered by any Credit Party orany Subsidiary of any Credit Party or any guarantor of the First Lien Debtcreating (or purporting to create) a Lien upon any assets or properties of suchPerson in favor of the First Lien Debt Agent, in each case, 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 extent permitted under the termsof the Loan Documents.

 

**First Lien Loan and Security Agreement**– that certain loan and security agreement, dated as of the date hereof, asamended, restated, supplemented, refunded, replaced or otherwise modified fromtime to time to the extent permitted under the terms of the Loan Documents, byand among (i) NES Rentals Holdings, Inc. and certain subsidiaries of NESRentals Holdings, Inc., as borrowers, (ii) the financial institutions partythereto from time to time as lenders, (iii) Wachovia Bank, National Associationas syndication agent and (iv) Bank of America, N.A. as administrative agent.

 

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**Foreign Plan** – anymaterial pension, retirement, retiree benefit or similar plan, arrangement orpolicy sponsored or contributed to by any Credit Party in a jurisdiction otherthan the United States.

 

**Foreign Subsidiary** –as defined in subsection 5.1 of the Agreement.

 

**GAAP** - generallyaccepted accounting principles in the United States of America in effect fromtime to time.

 

**Governmental Authority**- any nation or government, any state or other political subdivision thereof,any central bank (or similar monetary or regulatory authority) thereof, anydepartment, commission, board, bureau, instrumentality or agency thereof, anyentity exercising executive, legislative, judicial, regulatory oradministrative functions of or pertaining to government, and any corporation orother entity owned or controlled, through stock or capital ownership orotherwise, by any of the foregoing.

 

**Gross Orderly Liquidation Value**- as to Rental Equipment Inventory, the orderly liquidation value of suchRental Equipment Inventory as set forth in the most recent inventory appraisalrelating thereto delivered to and accepted by Administrative Agent inaccordance with the terms of the Agreement.

 

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

 

**Inactive Subsidiary**– a Subsidiary of any Credit Party, which Subsidiary (x) does not conduct orengage in any business or operations, and (y) has assets and properties with anaggregate book value of not greater than $10,000, and liabilities in anaggregate amount not greater than $10,000 and (z) has aggregate revenues notgreater than $10,000 during any twelve-month period.

 

**Indebtedness** - asapplied to a Person means, without duplication:

 

(i) all obligations of such Person for borrowed money,(ii) all obligations of such Person evidenced by bonds (other thanperformance, surety or similar bonds), debentures, notes or similarinstruments, or upon which interest payments are customarily made,(iii) all obligations of such Person under conditional sale or other titleretention agreements relating to property purchased by such Person (other thancustomary reservations or retentions of title under agreements with suppliersentered into in the ordinary course of business), (iv) all obligations ofsuch Person issued or assumed as the deferred purchase price of property orservices purchased by such Person (other than trade debt incurred in theordinary course of business and due within 180 days of the incurrence thereof),(v) the principal portion of all obligations of such Person underCapitalized Lease Obligations, (vi) the maximum amount of all letters ofcredit issued or bankers’ acceptances facilities created for the account ofsuch Person and, without duplication, all drafts drawn thereunder (to theextent unreimbursed), (vii) all preferred Securities issued by such Personand required by the terms thereof to be redeemed, or for which mandatorysinking fund payments are due, by a fixed date prior to 180 days following theapplicable maturity date thereof, (viii) the principal portion of all 

 

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obligations of such Person under off-balancesheet financing arrangements (other than leases which, in accordance with GAAP,would be classified as operating leases), (ix) all Contingent Obligations ofsuch Person, (x) all Derivative Obligations of such Person, (xi) to the extentnot included in the foregoing clauses (i) through (x), all items which inaccordance with GAAP would be included in determining total liabilities asshown on the liability side of a balance sheet of such Person as at the date asof which Indebtedness is to be determined, (xii) all Indebtedness of anotherPerson of the type referred to in clauses (i) through (xi)above secured by (or for which the holder of such Indebtedness has an existingright, contingent or otherwise, to be secured by) any Lien on, or payable outof the proceeds of production from, property owned or acquired by such Person,whether or not the obligations secured thereby have been assumed, and (xii)Indebtedness of the type referred to in clauses (i) through (xi)above of any partnership or unincorporated joint venture in which such Personis legally obligated or has a reasonable expectation of being liable withrespect thereto.

 

**Indemnified Liabilities**–as defined in subsection 13.2 of the Agreement.

 

**Indemnitee**– asdefined in subsection 13.2 of the Agreement.

 

**Intellectual Property**- all past, present and future:  tradesecrets, know-how and other proprietary information; trademarks, internetdomain names, service marks, trade dress, trade names, business names, designs,logos, slogans (and all translations, adaptations, derivations and combinationsof the foregoing) indicia and other source and/or business identifiers, and thegoodwill of the business relating thereto and all registrations or applicationsfor registrations which have heretofore been or may hereafter be issued thereonthroughout the world; copyrights (including copyrights for computer programs)and copyright registrations or applications for registrations which haveheretofore been or may hereafter be issued throughout the world and alltangible property embodying the copyrights, unpatented inventions (whether ornot patentable); patent applications and patents; industrial designapplications and registered industrial designs; license agreements related toany of the foregoing and income therefrom; books, records, writings, computertapes or disks, flow diagrams, specification sheets, computer software, sourcecodes, object codes, executable code, data, databases and other physicalmanifestations, embodiments or incorporations of any of the foregoing; theright to sue for all past, present and future infringements of any of theforegoing; all other intellectual property; and all common law and other rightsthroughout the world in and to all of the foregoing.

 

**Intercreditor Agreement**- that certain Intercreditor Agreement by and between Administrative Agent andFirst Lien Debt Agent, as acknowledged by Credit Parties substantially in theform of Exhibit 8.4 attached hereto and otherwise in form andsubstance satisfactory to Majority Lenders, as amended, restated, supplementedor otherwise modified from time to time.

 

**Interest Period** - asapplicable to any LIBOR Portion, a period commencing on the date such LIBORPortion is advanced, continued or converted, and ending on the date which isone (1) month, two (2) months, three (3) months, or six (6) months later, asmay 

 

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then be requested by Borrower; providedthat unless Administrative Agent notifies Borrower that the initial syndicationof the Term Loan commitments have been completed, each Interest Periodcommencing (a) within the first 60 days after the Closing Date shall be aperiod of 1 month and (b) thereafter shall be a period of 7 days; and providedfurther that (i) any Interest Period which would otherwise end on aday which is not a Business Day shall end in the next preceding or succeedingBusiness Day as is Administrative Agent’s custom in the market to which suchLIBOR Portion relates; (ii) there remains a minimum of one (1) month, two(2) months, three (3) months, or six (6) months (depending upon which InterestPeriod Borrower selects) in the Term, unless Credit Parties and Lenders haveagreed to an extension of the Term beyond the expiration of the Interest Periodin 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** – asdefined in the UCC and including, without limitation, all of each Credit Party’sProperty which is rented by such Credit Party in the ordinary course ofbusiness or is held for rent by such Credit Party.

 

**IRS** - the InternalRevenue Service and any Governmental Authority succeeding to any of itsprincipal functions under the Code.

 

**Joint Lead Arrangers**– each of Banc of America Securities LLC and Bear, Stearns & Co. Inc.

 

**Lender**– as definedin the preamble to the Agreement.

 

**LIBOR** - asapplicable to any LIBOR Portion, for the applicable Interest Period, the rateper annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”),as published by Reuters (or other commercially available source providingquotations of BBA LIBOR as designated by the Administrative Agent from time totime) at approximately 11:00 a.m., London time, two (2) Business Days prior tothe commencement of such Interest Period, for deposits in U.S. dollars (fordelivery on the first day of such Interest Period) with a term equivalent tosuch Interest Period.  If such rate isnot available at such time for any reason, then “LIBOR” for such InterestPeriod shall be the rate per annum determined by Administrative Agent to be therate at which deposits in U.S. dollars for delivery on the first day of suchInterest Period in same day funds in the approximate amount of the LIBORPortion being made, continued or converted by BofA and with a term equivalentto such Interest Period would be offered by BofA’s London Branch to major banksin the London interbank eurodollar market at their request at approximately 11:00a.m. (London time) two (2) Business Days prior to the commencement of suchInterest Period.  In the event that theBoard of Governors of the Federal Reserve System shall impose a ReservePercentage with respect to LIBOR deposits of BofA, then for any period duringwhich such Reserve Percentage shall apply, LIBOR shall be equal to the amountdetermined above divided by an amount equal to 1 minus the Reserve Percentage.

 

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**LIBOR Interest Payment Date**– with respect to a LIBOR Portion, the last day of the Term and the last day ofeach Interest Period applicable to such LIBOR Portion,  provided, however, that if any InterestPeriod for a LIBOR Portion exceeds three months, the respective dates that fallevery three months after the beginning of such Interest Period shall also beInterest Payment Dates.

 

**LIBOR Option** - theoption granted pursuant to subsection 3.1 of the Agreement to havethe interest on all or any portion of the principal amount of the Term Loanbased on the LIBOR.

 

**LIBOR Portion** - thatportion of the Term Loan specified in a LIBOR Request which, as of the date ofthe LIBOR Request specifying such LIBOR Term Portion, has met the conditionsfor basing interest on the LIBOR in subsection 3.1 of the Agreementand the Interest Period of which has not terminated.

 

**LIBOR Request** - anotice in writing (or by telephone confirmed electronically or by telecopy orother facsimile transmission on the same day as the telephone request) and inthe Form of Exhibit 3.1.7) from Borrower to Administrative Agentrequesting that interest on all or any portion of the Term Loan be based on theLIBOR, specifying: (i) the first day of the Interest Period (which shallbe a Business Day); (ii) the length of the Interest Period;(iii) whether the LIBOR Portion is a new Term Loan, a conversion of a BaseRate Portion, or a continuation of a LIBOR Portion; and (iv) the dollaramount of the LIBOR Portion, which shall be in an amount not less than$5,000,000****or an integral multipleof $1,000,000 in excess thereof.

 

**Lien** - any interestin Property securing an obligation owed to, or a claim by, a Person other thanthe owner of the Property, whether such interest is based on common law,statute or contract, including without limitation, any mortgage, deed of trust,pledge, lien (statutory or otherwise), security interest, charge or otherencumbrance 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 encumbrances affectingProperty and any assignment, deposit arrangement or financing lease intendedas, or having the effect of, security. For the purpose of the Agreement, a Credit Party shall be deemed to be the owner of any Propertywhich it has acquired or holds subject to a conditional sale agreement or otherarrangement pursuant to which title to the Property has been retained by orvested in some other Person for security purposes.

 

**Loan Account**- theloan account established on the books of Administrative Agent pursuant to subsection 3.6of the Agreement.

 

**Loan Documents** - theAgreement, the Other Agreements and the Security Documents.

 

**London Banking Day** -any date on which commercial banks are open for business in London, England.

 

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**Majority Lenders** –as of any date, Lenders holding more than 50% of the outstanding Term Loans.

 

**Margin Stock -**“marginstock” as such term is defined in Regulation T, U  or X of the Federal Reserve Board.

 

**Material Adverse Effect**- a material adverse effect on (i) the business, assets, liabilities (actual orcontingent), results of operations or financial condition of Credit Parties andtheir Subsidiaries taken as a whole, (ii)  the rights and remedies ofAdministrative Agent or Lenders under the Loan Documents, (iii)  theability of any Credit Party or any of its Subsidiaries to perform itsobligations hereunder or under any Loan Document, (iv) the legality, validityor enforceability of the Agreement or any other Loan Document or (v) thevalidity, perfection or priority of any Lien in favor of Administrative Agenton any Collateral.

 

**Material Contract** -with respect to any Person, each contract or agreement to which any CreditParty is a party as to which the breach, nonperformance, cancellation orfailure to renew by any party thereto could reasonably be expected to have aMaterial Adverse Effect.

 

**Maximum Rate –**asdefined in subsection 2.1.3 of the Agreement.

 

**Money Borrowed** -(i) Indebtedness arising from the lending of money by any Person to anyCredit Party or any of its Subsidiaries; (ii) Indebtedness, whether or notin any such case arising from the lending by any Person of money to any CreditParty or any of its Subsidiaries, (1) which is represented by notespayable or drafts accepted that evidence extensions of credit, (2) whichconstitutes obligations evidenced by bonds, debentures, notes or similarinstruments, or (3) upon which interest charges are customarily paid(other than accounts payable) or that was issued or assumed as full or partialpayment for Property; (iii) Indebtedness that constitutes a Capitalized LeaseObligation; (iv) reimbursement obligations with respect to letters ofcredit or guaranties of letters of credit and (v) Indebtedness of anyCredit Party or any of its Subsidiaries under any guaranty of obligations thatwould constitute Indebtedness for Money Borrowed under clauses (i)through (iii) hereof, if owed directly by Borrower or any of itsSubsidiaries.  Money Borrowed shall notinclude trade payables or accrued expenses.

 

**Mortgages** – eachmortgage or deed of trust executed by a CreditParty on or about the Closing Date in favor of Administrative Agent, forthe benefit of itself and Lenders, by which such Credit Party has granted to Administrative Agent, as securityfor the Obligations, a Lien upon the real Property of such Credit Party 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.

 

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

 

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**Multiemployer Plan -**a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA which iscontributed to (or required to be contributed to) by any Credit Party or anyERISA Affiliate.

 

**Net CapitalExpenditures**– with respect to any period, cash expenditures made for the acquisition orimprovement of capital assets during such period, as determined in accordancewith GAAP, net of (i) to the extent any asset sale proceeds were reinvested inthe acquisition or improvement of capital assets during such period, theportion of such expenditures made with the proceeds of such asset sales up to amaximum amount equal to the sum of the net book value of the assets sold plusup to $15,000,000 of proceeds in excess of the net book value of the assets soldand (ii) to the extent any acquisition or improvement of capital assets duringsuch period were financed with Indebtedness (other than the Obligations or theFirst Lien Debt), the portion of such expenditures made with the proceeds ofsuch Indebtedness.

 

**Net Cash Proceeds**-with respect to (a) any sale,assignment, transfer or other disposition of any Property (an **“Asset Disposition”**) by any Credit Party orany of its Subsidiaries, all proceeds in the form of cash or cash equivalentsreceived by such Credit Party or Subsidiary from or in respect of such AssetDisposition (including any cash proceeds received as income or other proceedsof any noncash proceeds of such Asset Disposition and including any insurancepayment or condemnation award in respect of any assets of such Credit Party orSubsidiary), (b) any issuance of Securities or Indebtedness (a **“Capital Issuance”**) by any Credit Party orany of its Subsidiaries, all cash proceeds received in respect thereof and (c) anyloss of, damage to or destruction of, or any condemnation or other taking forpublic use of, any Property of any CreditParty or any of its Subsidiaries (an **“InvoluntaryDisposition”**), all cash proceeds received by such Credit Party or Subsidiary in respectthereof, and in the case of theforegoing clauses (a), (b) and (c), net of (i) reasonable and customaryexpenses incurred or reasonably expected to be incurred in connection with suchAsset Disposition, Capital Issuance or Involuntary Disposition, (ii) anyincome, franchise, transfer or other tax payable by such Credit Party 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.

 

**New Mortgages**- asdefined in subsection 5.4 of the Agreement.

 

**Nonrental Equipment**– Equipment as defined in the UCC and including, without limitation, allequipment of any Credit Party used or useful in the conduct of its business,but excluding any equipment which is rented by such Credit Party in theordinary course of business or is held for rent by such Credit Party.

 

**Obligations** - allTerm Loans and all other advances, debts, liabilities, obligations, covenantsand duties, together with all interest (including, without limitation, 

 

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all interest that accrues (or, but for thecommencement of any bankruptcy, insolvency or similar proceeding, would accrue)after the commencement of any insolvency, bankruptcy or other similarproceeding of any Credit Party, whether or not a claim for post-filing interestis allowed in such proceeding), fees and other charges thereon, owing, arising,due or payable from any Credit Party to Administrative Agent, for its own benefit, fromany Credit Party toAdministrative Agent for the benefit of any Lender, from any Credit Party to any Lender or from anyCredit Party to BofA or anyother Affiliate of Administrative Agent, of any kind or nature, present orfuture, whether or not evidenced by any note, guaranty or other instrument,arising under the Agreement or any of the other Loan Documents, whether director indirect (including those acquired by assignment), absolute or contingent,primary or secondary, due or to become due, now existing or hereafter arisingand however acquired.

 

**Organizational I.D. Number**- with respect to any Person, the organizational identification number assignedto such Person by the applicable governmental unit or agency of thejurisdiction of organization of such Person.

 

**Other Agreements**–the Fee Letter and any and all other agreements, instruments and documents(other than the Agreement, the Security Documents and any agreement evidencingany Derivative Obligation) heretofore, now or hereafter executed or deliveredin connection with the Agreement or the transactions contemplated thereby.

 

**Other Taxes** – asdefined in subsection 2.11.2 of the Agreement.

 

**PBGC** - the PensionBenefit Guaranty Corporation or any Governmental Authority succeeding to thefunctions thereof.

 

**Pension Plan** - apension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISAwhich any Credit Party or anyERISA Affiliate sponsors, maintains, or to which it makes, is making, or isobligated to make contributions.

 

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

 

**Permitted Indebtedness**– any Indebtedness of any kind specified as permitted in subsection 8.2.3of the Agreement.

 

**Permitted Liens** -any Lien of a kind specified as permitted in subsection 8.2.5 ofthe Agreement.

 

**Permitted Overadvances**– revolving credit loans representing First Lien Debt that are made in the formof overadvances, protective advances or administrative agent loans (or similarconcepts) by the applicable lender or lenders in their sole discretion and theaggregate principal amount of which at any time outstanding does not exceed$10,000,000.

 

**Permitted Purchase Money Indebtedness**- Purchase Money Indebtedness of any CreditParty incurred after the date hereof which is secured by a PurchaseMoney 

 

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Lien and the principal amount of which, whenaggregated with the principal amount of all other such Indebtedness andCapitalized Lease Obligations of Credit Parties and their Subsidiaries at thetime outstanding, does not exceed $15,000,000. For the purposes of this definition, the principal amount of anyPurchase Money Indebtedness consisting of capitalized leases (as opposed tooperating leases) shall be computed as a Capitalized Lease Obligation.

 

**Person** - anindividual, partnership, corporation, limited liability company, association,joint stock company, trust, or unincorporated organization, or other enterpriseor entity or a government or agency or political subdivision thereof.

 

**Plan** – an employeebenefit plan (as defined in Section 3(3) of ERISA) which any Credit Party sponsors or maintains orto which any Credit Party makes,is making, or is obligated to make contributions and includes any Pension Plan.

 

**Pledge Agreement** –the Pledge Agreement, dated as of the Closing Date, by  Credit Parties in favor of AdministrativeAgent, as amended, restated, supplemented or otherwise modified from time totime, and each other pledge or security agreement entered into from time totime by any Credit Party infavor of Administrative Agent, for the benefit of itself and Lenders, by whichsuch Credit Party has granted toAdministrative Agent, as security for the Obligations, a Lien upon the equityor debt interests held by such CreditParty.

 

**Prime Rate** - therate of interest announced or quoted by BofA from time to time as its primerate for commercial loans, whether or not such rate is the lowest rate chargedby BofA to its most preferred borrowers; and, if such prime rate for commercialloans is discontinued by BofA as a standard, a comparable reference ratedesignated by BofA as a substitute therefor shall be the Prime Rate.

 

**Prior Indebtedness** -all Indebtedness and any other liabilities or obligations of any Credit Partyowing pursuant to that certain Credit Agreement dated as of February 11, 2004by and among National Equipment Services, Inc., the financial institutionsparty thereto as lenders and Wachovia Bank, National Association, as agent forsuch lenders, and those agreements, documents and instruments related thereto,as all of the same may have been amended, restated, supplemented or otherwisemodified prior to the date hereof.

 

**Product Obligations**- every obligation of any Credit Party under and in respect of any one or moreof the following types of services or facilities extended to such Credit Partyby BofA, Administrative Agent, Wachovia Bank, National Association or anyAffiliate of BofA, Administrative Agent or Wachovia Bank, NationalAssociation:  (i) credit cards or storedvalue cards, (ii) cash management or related services including the automaticclearing house transfer of funds for the account of such Credit Party pursuantto agreement or overdraft, (iii) cash management, including controlleddisbursement services and (iv) Derivative Obligations.

 

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**Projections** – CreditParties’ forecasted Consolidated****(includingon a line of business basis) balance sheets, profit and loss statementsand cash flow statements.

 

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

 

**Purchase Money Indebtedness**- (i) Indebtedness (other than the Obligations) for the payment of all orany part of the purchase price of any Rental Equipment Inventory, (ii) anyIndebtedness (other than the Obligations) incurred at the time of or within 10days prior to or after the acquisition of any fixed assets for the purpose offinancing all or any part of the purchase price thereof, and (iii) anyrenewals, extensions or refinancings thereof, but not any increases in theprincipal amounts thereof outstanding at the time.

 

**Purchase Money Lien**- a Lien upon Rental Equipment Inventory which secures Purchase MoneyIndebtedness, but only if such Lien shall at all times be confined solely tothe Rental Equipment Inventory the purchase price of which was financed throughthe incurrence of the Purchase Money Indebtedness secured by such Lien.

 

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

 

**Rental Equipment Inventory**- all of each Credit Party’s Inventory consisting of Property which is rentedby such Credit Party in the ordinary course of business or is held for rent bysuch Credit Party.

 

**Rentals** - as definedin subsection 8.2.17 of the Agreement.

 

**Reorganization Plan**–certain of Borrower’s Subsidiaries and Affiliates’ Fourth Amended Joint Planof Reorganization Under Chapter 11 of the United States Bankruptcy Code datedJanuary 23, 2004, including, without limitation, all exhibits, supplements,appendices, and schedules thereto.

 

**Report** – as definedin subsection 11.12 of the Agreement.

 

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

 

**Requirement of Law** - as to any Person, any law (statutory orcommon), treaty, rule or regulation or determination of an arbitrator or of aGovernmental Authority, in each case applicable to or binding upon the Personor any of its property or to which the Person or any of its property issubject.

 

**Reserve Percentage** -the maximum aggregate reserve requirement (including all basic, supplemental,marginal and other reserves) which is imposed on member banks of 

 

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the Federal Reserve System against **“Euro-currency Liabilities”** as defined inRegulation D.

 

**Responsible Officer**-the chief executive officer or the president of Borrower, or any other officerhaving substantially the same authority and responsibility; or, with respect tocompliance with financial covenants and the preparation of the CollateralCoverage Certificate, the chief financial officer or the treasurer of Borrower,or any other Responsible Officer having substantially the same authority andresponsibility.

 

**Restricted Investment**- any investment made in cash or by delivery of Property to any Person, whetherby acquisition of stock, Indebtedness or other obligation or Security, or byloan, advance or capital contribution, or otherwise, or in any Property exceptthe following:

 

(i)            investments by aCredit Party, to the extent existing on the Closing Date, in one or moreSubsidiaries of such Credit Party;

 

(ii)           Property to be usedin the ordinary course of business;

 

(iii)          Current Assetsarising from the sale of goods and services in the ordinary course of businessof any CreditParty or any of its Subsidiaries;

 

(iv)          investments indirect 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)           investments incertificates of deposit maturing within one year from the date of acquisitionand fully insured by the Federal Deposit Insurance Corporation;

 

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

 

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

 

(viii)        intercompany loanspermitted 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 theAgreement.

 

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

 

**Secured Parties** –Administrative Agent and the Lenders.

 

**Security** - allshares of stock, partnership interests, membership interests, membership unitsor other ownership interests in any other Person and all warrants, options orother rights to acquire the same and, for purposes only of Sections 5and 6 and the Security Documents, shall include any other “Security” (asdefined in the UCC).

 

**Security Documents**–the Intercreditor Agreement, the Pledge Agreement, the Mortgages and all otherinstruments and agreements now or at any time hereafter securing or guarantyingthe whole or any part of the Obligations.

 

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

 

**Solvent** - as to anyPerson, that such Person (i) owns Property whose fair saleable value isgreater than the amount required to pay all of such Person’s Indebtedness(including contingent debts), (ii) is able to pay all of its Indebtednessas such Indebtedness matures and (iii) has capital sufficient to carry onits business and transactions and all business and transactions in which it isabout to engage.

 

**Studio Business Unit**– the business of Borrower of renting lift equipment to television or motionpicture studios currently conducted by Rebel Studio Rentals, Inc.

 

**Subordinated Debt** -Indebtedness of any Credit Party orany Subsidiary of any Credit Party thatis subordinated to the Obligations in a manner satisfactory to AdministrativeAgent, and contains terms, including without limitation, payment terms,satisfactory to Administrative Agent.

 

**Subsidiary** - anyPerson of which another Person owns, directly or indirectly through one or moreintermediaries, more than 50% of the Voting Stock at the time of determination.

 

**Subsidiary Guarantor**– as defined in the preamble to the Agreement.

 

**Syndication Agent** –as defined in the preamble to the Agreement.

 

**Tax Liabilities** – asdefined in subsection 2.11 of the Agreement.

 

**Term** - as defined insubsection 4.1 of the Agreement.

 

**Term Loan** - the TermLoan described in subsection 1.1.1 of the Agreement.

 

**Term Loan Commitment**- with respect to any Lender, the amount of such Lender’s Term Loan Commitmentpursuant to subsection 1.1.1 of the Agreement, as set forthopposite such Lender’s name on Exhibit 1.0 to the Agreement or anyAssignment 

 

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and Acceptance Agreement executed by suchLender, minus all Term Loans made by such Lender.

 

**Term Notes** - theSecured Promissory Notes to be executed by Borrower on or about the ClosingDate in favor of each applicable Lender who shall request the same to evidenceits Term Loan, which shall be in the form of Exhibit 1.1 to the Agreement,together with any replacement or successor notes therefor.

 

**Total Credit Facility**- $275,000,000, as reduced from time to time pursuant to the terms of theAgreement.

 

**Total Funded Senior Leverage****Ratio** – as defined in Exhibit8.3 to the Agreement.

 

**Type of Organization**- with respect to any Person, the kind or type of entity as which such Personis organized, such as a corporation or limited liability company.

 

**UCC** - the UniformCommercial Code as in effect in the State of New York on the date of theAgreement, as it may be amended or otherwise modified.

 

**Unfunded Pension Liability**- the excess of a Pension Plan’s benefit liabilities under Section 4001(a)(16)of ERISA, over the current value of that Pension Plan’s assets, determined inaccordance with the assumptions used for funding the Pension Plan pursuant toSection 412 of the Code for the applicable plan year.

 

**USA Patriot Act** -the Uniting and Strengthening America by Providing Appropriate Tools Requiredto Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, as in effectfrom time to time

 

**Voting Stock** -Securities of any class or classes of a corporation, limited partnership orlimited liability company or any other entity the holders of which areordinarily, in the absence of contingencies, entitled to vote with respect tothe election of corporate directors (or Persons performing similar functions).

 

**OtherTerms**

 

All other terms contained in the Agreement shall have, when the contextso indicates, the meanings provided by the UCC to the extent the same are usedor defined therein.

 

**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 sectiontitles, table of contents and list of exhibits appear as a matter ofconvenience only and shall not affect the interpretation of the Agreement.  All references to statutes and related regulationsshall include any amendments of same and any successor statutes and 

 

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regulations. All references to any of the Loan Documents shall include any and allmodifications thereto and any and all extensions or renewals thereof.

 

**AccountingTerms and Determinations**

 

Unless otherwise defined or specified herein, all accounting termsshall be construed herein and all accounting determinations for purposes ofdetermining compliance with subsection 8.3 of the Agreement andotherwise to be made under the Agreement shall be made in accordance with GAAPapplied on a basis consistent in all material respects with the financialstatements delivered pursuant 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 subsection8.1.3 of the Agreement demonstrating compliance with the covenantscontained herein shall include calculations setting forth the adjustmentsnecessary to demonstrate how Borrower is in compliance with the financialcovenants based upon GAAP as in effect on the Closing Date.  If Borrower shall change its method ofinventory accounting, all calculations necessary to determine compliance withthe covenants contained herein shall be made as if such method of inventoryaccounting had not been so changed.

 

Credit Parties shall deliver to Administrative Agent and each Lender atthe same time as the delivery of any annual financial statements given inaccordance with the provisions of subsection 8.1.3 of the Agreement, (i)a description in reasonable detail of any material change in the application ofaccounting principles employed in the preparation of such financial statementsfrom those applied in the most recently preceding annual financial statementsand (ii) a reasonable estimate of the effect on the financial statements onaccount of such changes in application.

 

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*****The Registrant will deliver exhibits tothis agreement upon the request of the Securities and Exchange Commission*****

 

 

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